Silicon Valley is fond of exits – isn’t a meaningful exit the dream and endgame of every investor and entrepreneur in tech? You have to admire – or shake your head in total disbelief at – Silicon Valley, when it comes to what they’ve managed to accomplish: namely, disrupt a number of industries, as well as the basic principles of economics and business, to get to those astronomical exits, whether or not they were real, or just so much smoke and mirrors.
When Twitter launched in 2006 and started picking up steam after its debut at SXSW the following year, they had no revenue model, but the company’s investors assured us that there would be a revenue model by 2009. Then came the IPO in 2013 and, as The Wall Street Journal noted, “The San Francisco-based company raised as much as $2.1 billion and ended the day with a market capitalization of about $25 billion. That made the six-year-old company bigger than more than half of the firms in the S&P 500 and larger than well-known brands such as Kellogg Co. and Whole Foods Market Inc.”
That was then and this is now, and the company is now worth well under its IPO price and as Bloomberg News notes on the eve of three-year-old Snap going public, Snap’s IPO to Be Haunted by Twitter and GoPro. As MarketWatch warns, Snap’s cost of revenue has exceeded sales for two years, and could grow more. Which is Silicon Valley newspeak for the company is losing money, in case you’ve never read George Orwell’s 1984 and evidently, we don’t know what the hell they’re teaching out there. As for Twitter’s revenue model (what to speak of the fact that the company is hemorrhaging users), we’re still waiting.
But Silicon Valley and the techsphere at large seem preoccupied these days with the new policies coming from Washington, and this is not about politics, it’s about exits. Read on.
Some 100 so-called tech luminaries voiced their protest against the current administration’s immigration ban, and it’s not surprising: many of the largest tech companies tend to draw from a global talent pool, having brought in record numbers of H1B under the last administration, and who wants to lose cheap labor?
The tech community cheers on the Sergei Brins, Mark Zuckerbergs and Travis Kalanicks of the world for having taken a stand, overlooking the fact that the moral compass of the Silicon sultanate doesn’t always necessarily point to true north: while their rank and file will come out in force to protest the discriminatory nature of the ban, the tech uberlords have no compunctions about discriminating against job applicants closer to home, based on age, gender or race. 15% of Facebook positions are filled by H1Bs, while there are Yelp employees who are struggling to make ends meet on their salaries. As Talia Jane famously wrote in her open letter to Yelp CEO Jeremy Stoppelman, not only could she not afford to buy groceries, but “Every single one of my coworkers is struggling. They’re taking side jobs, they’re living at home. One of them started a GoFundMe because she couldn’t pay her rent.” To refresh your memory, Jane was fired from her job at Yelp. And speaking of Facebook’s push for H1Bs with their support of Fwd, we wonder what percentage of the company’s employees are over 40? And how many people of color occupy senior positions at the company?
Virtue signaling/moral posturing, tomato/tomahto.
Tech CEOs are quick to rally the forces against labor and immigration policies with which they do not agree, as it would hurt their bottom lines and/or they’d prefer having representative in government who cater to their particular needs and dictates, all the while being cheered on. While there may be an article or two here and there about their own discriminatory employment policies, where is the sustained outrage – or the change?
We will also remind you of the case of New York City and Airbnb, who were quick to hang the very people who enable their economy out to dry. To refresh your memory: Airbnb cut a deal with the city of New York to make people who rented out/shared their apartments responsible for any legal repercussions. So much for sharing. Or fighting on behalf of their own customers.
While the tech community likes to think of itself as being among the best and the brightest on the planet – rank and file included – it also has a very short attention span, or maybe it’s tunnel vision. We see the community out protesting the so-called discrimination against people from various countries, and wonder where the outrage is for people closer to home who have been systematically discriminated against, as we noted, based on gender, age and/or race . Does this group lack the ability to multitask – or think on multiple levels? It’s a fair issue to raise, especially in light of the fact that, when Uber founder Travis Kalanick accepted an advisory position in the current administration, some 200,000+ Uber users deleted the app in protest, using Lyft instead, no doubt little considering the fact that they were enriching the coffers of Lyft investor and administration advisor Peter Thiel, and thanks for playing.
As the masses continue to be whipped into a frenzy over the outrage of the day and as Snap prepares for its IPO, which will no doubt enrich both its founders and investors, never mind that there’s no current sustainable business model, we recall what New York Angels Chairman Brian Cohen repeats at every one of his speaking engagements to rooms full of entrepreneurs: that investors are in the exits business. One of the leading characteristics that sets both successful tech investors and entrepreneurs apart is their prescience – their ability to seemingly know what’s coming down the road and to act on it, which may account for this segment’s buying up property in New Zealand and other so-called safe havens, including abandoned missile silos and other such spots that you can’t access on the Google bus or Facebook shuttle, should it turn out that the proverbial center does not hold. As the Daily Mail noted, what do they know that we don’t? Which goes hand in hand with that other uncanny knack of the extremely successful: whatever else may be going on around them, they always make sure to have an exit. Onward and forward.