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The fundamental problem with Silicon Valley’s favorite growth strategy

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Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#31

Post by anongraddebt »

nostrademons wrote: post #25
johnvanatta wrote: post #22

Earlier quoted context omitted.

Some of that is happening in the US right now. Dense (mostly coastal) cities; built on clustering effects, immigration, and highly skilled workers; are thriving. That model is working, but it brings with it high pay disparities and disruption of outdated social structures and values. Whereas the older model of geographically disbursed industrialism, which peaked in the 60's or 70's, is faltering. How does that manife…

Yup. The "two economies; two moneys" divide between urban coastal America & the Rust Belt / Deep South is probably one of the greatest silent threats to American security. Historically nation-states do not survive divides in regional inequality that are this big or this entrenched; the temptation grows for the rich region to secede and engage more with the global economy, while the resentment from the poor region bui…

Happening in other developed countries as well. Mega-cities and urban coastal corridors are globalizing faster than the nation-states to which they are legally subsumed under. Cities are beginning to test the boundaries of their prescribed sovereignty in trade and other matters.

Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#32

Post by WalterBright »

ergothus wrote: post #26
Animats wrote: post #7

"blitzscaling isn’t really a recipe for success but rather survivorship bias masquerading as a strategy." That says it all. Really, that's how YC works - fail fast and cheap, profit from the survivors. Great for VCs, not so much for the cannon fodder. "We have reserves."

> That says it all. Does it? Competition and survivorship have long been accepted as the premise of capitalism. What I find more disturbing is that we've been told competition will be to the benefit of the consumer, and this focus on network effects means that companies are looking for a way to stay on top WITHOUT the virtue of providing the best benefit. This leads to Comcast-like situations, with customers that hat…

Comcast's dominance is propped up by regulatory capture, not free market capitalism.

Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#34

Post by mdorazio »

ghobs91 wrote: post #27
Animats wrote: post #7

"blitzscaling isn’t really a recipe for success but rather survivorship bias masquerading as a strategy." That says it all. Really, that's how YC works - fail fast and cheap, profit from the survivors. Great for VCs, not so much for the cannon fodder. "We have reserves."

That's better than a tech landscape with no access to venture capital at all, and startups taking 10x longer to reach critical mass, if they even do. There's a reason why the US tech industry is orders of magnitude larger than the rest of the world, access to capital. Go try to grow a startup in Europe with its risk averse investors, and see how far you get. You'll start to see this effect even more in the biotech sp…

I'm not convinced that access to capital is the sole, or even primary, reason the US tech industry is much stronger than elsewhere. There are many factors like entrepreneurial culture, low corruption, and established/concentrated support infrastructure that seem a lot more important.

Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#36

Post by mark_l_watson »

I know a few people who became very wealthy by starting companies or businesses but entrepreneurship is not the only path to success.

IMO, the world is better off with a good mix of long shot bets to build large scale businesses and also many people being very happy to run solo or small businesses providing services or selling products on a small scale.

I am sometimes critical of Google, FB, Microsoft, and Amazon - sometimes they deserve criticism - but except for FB all of these companies also enrich my life and I am happy they are in business.

I am also happy personally to have been a consultant, very well paid wage slave for large companies, and have a small business as an author and sometimes selling niche AI software products. I never got very rich, but I have usually just worked 25 to 32 hours a week, with several times in my life taking many years of mostly leisure time.

There are many ways to be successful in life - choose wisely!

Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#37

Post by chubot »

As someone who's lived and worked in the Bay Area for 16+ years, this is a fantastic article. It's just spot on in its characterization of the old and new Microsoft, the old and new Google, Lyft/Uber, and many other companies.

I worry that many won't read it because it's so long.

Now I need to go look up everything else Tim O'Reilly has written. He is a wise man. I of course know who he is -- mainly through books and conferences I suppose -- but I didn't know about his other experience in business.

It's interesting that in the early days of the web he started a Yahoo-like company before Yahoo and sold it to AOL, and a Windows web server company that competed with Netscape.

Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#38

Post by chubot »

nostrademons wrote: post #5

There's a broader historical perspective that's missing in this article. The Second Industrial Revolution (1870-1914) was much like today. You had extremely rapid growth of new industries fueled by widespread availability of capital; a pervasive bubble economy punctuated by massive stock market panics & depressions; rapid development of new technologies; widespread fraud & corruption; a feeling that the common man wa…

That's a good point, but shouldn't we have learned from history?

I don't think "we don't really have a choice" is true. Societies DO learn from their mistakes, albeit slowly. "Culture" exists for a reason -- it's how groups of people change their behavior.

For example, I think the memory of World War II absolutely did make decision makers behave differently. Nobody wants total war again -- they know how bad it is. We learned from our mistakes. (This doesn't stop stronger countries from picking on weak ones, but that's not total war.)

As an aside, I do think there is a form of "group selection" that happens in nature. Societies that are unable to collectively change their behavior -- learning big lessons on long time scales -- don't survive. "Sapiens" is largely about these "mass delusions" and I think he's onto something (although many would argue its unscientific, and many have argued against group selection as a mechanism of evolution).

In the past we had mass delusion to start religious wars, but that same mechanism can perhaps be used to put value on measured growth rather than winner-take-all outcomes.

Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#39

Post by ackbar03 »

mark_l_watson wrote: post #36

I know a few people who became very wealthy by starting companies or businesses but entrepreneurship is not the only path to success. IMO, the world is better off with a good mix of long shot bets to build large scale businesses and also many people being very happy to run solo or small businesses providing services or selling products on a small scale. I am sometimes critical of Google, FB, Microsoft, and Amazon - s…

What kind of niche ai products do you work with? Curious to know if your ok to share

Re: The fundamental problem with Silicon Valley’s favorite growth strategy

#40

Post by SkyMarshal »

Animats wrote: post #7

"blitzscaling isn’t really a recipe for success but rather survivorship bias masquerading as a strategy." That says it all. Really, that's how YC works - fail fast and cheap, profit from the survivors. Great for VCs, not so much for the cannon fodder. "We have reserves."

That's the whole VC industry model, not just YC. And it's a more economically healthy model than half of Wall St.'s money makers. Limited downside, comparatively unlimited upside, relatively low systemic risk (eg no TBTF).
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