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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

#21

Post by hannasanarion »

jiveturkey wrote: post #10
thebokehwokeh2 wrote: post #3

The fundamental problem with capitalism (not just in silicon valley) is that access to capital is what defines winners and losers. Of course I'm being simplistic and there will always be underdog stories, but the reason any company becomes as big as it is, is capital, plain and simple. The immediate effect of gaining massive capital is tremendous. Outcompeting for both workers as well as getting to market sooner is a…

> The fundamental problem with capitalism (not just in silicon valley) is that access to capital is what defines winners and losers. Well yeah, it's fundamental because that's the definition! So it's not a problem . Capitalism works as designed.

Working as designed is not the same as working as intended or working well.

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

#22

Post by johnvanatta »

nostrademons wrote: post #16
Erazal wrote: post #14

Earlier quoted context omitted.

I agree with you on the effect of massive capital investment : bringing us the future faster ; at the cost of social turmoils. However the necessity of going through those turmoils is false : why don't we really have a choice ?

Because somebody else is will get there first and then inflict those turmoils first, on their terms. This looks different at different scales. On an individual level, it's being passed over for promotion because the blowhard in the next cube has this great idea for how to apply deep learning, or losing out on a job to the college kid who's up-to-date in Solidity and React while you still work in VB.NET and SQL Server…

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 That model is working, but it brings with it high pay disparities and disruption of outdated social structures and values.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 manifest politically? Look no further than Trump:

https://hbr.org/2016/11/what-so-many-people-dont-get-about-t...

His entire candidacy was about "owning the libs" and their globalist, diverse, cosmopolitan world. A backlash against socioeconomic change, with very real consequences.

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

#23

Post by new_here »

I’ve read and listened to quite a bit of stuff from Reid Hoffman (Masters of Scale, LinkedIn’s pitch deck etc) and have never found him or any of his advice particularly convincing.

Maybe I’m speculating wildly here but it feels like the main thing that made LinkedIn successful was that it was a first mover in the business social network space that used every dark pattern and email notification they could conceive of at a time when users were less cautious about their privacy. Now they have their moat and defend it with every trick they have. Their social auth API provides watermarked profile pics and they drop attributes without any notice.

If that’s the way you want to do it, I guess that’s your choice. But the professional social networking space could seriously use a breath of fresh air.

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

#24

Post by woolvalley »

l3robot wrote: post #4

On Monopoly: It has been a though I have for some time. I wonder how could they not form monopolies. Who has 4-5 taxi apps on their phone? Who has 2-3 social profiles? Who has the habits of jumping from a searching engine to another? A minority. Their product are almost natural monopolies. They are very difficult to fight against monopolies because when they have user commitment, the need for the product is filled en…

Most people shop at more than one shop, fly multiple airlines and buy more than one brand of clothing.

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

#25

Post by nostrademons »

johnvanatta wrote: post #22
nostrademons wrote: post #16

Earlier quoted context omitted.

Because somebody else is will get there first and then inflict those turmoils first, on their terms. This looks different at different scales. On an individual level, it's being passed over for promotion because the blowhard in the next cube has this great idea for how to apply deep learning, or losing out on a job to the college kid who's up-to-date in Solidity and React while you still work in VB.NET and SQL Server…

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 builds and can lead to outright violence. And America's biggest defensive weapon, historically, has been two oceans: this doesn't apply when the potential enemies share a continent.

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

#26

Post by ergothus »

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 hate their provider but want the product and have no real options. Or Facebook, where people can join get disgusted and join an alternative...that can't provide the desired service because the desired service requires that everyone else be there.

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

#27

Post by ghobs91 »

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 space, where up front access to capital is crucial in developing and testing products/medicines that must go through expensive FDA approval.

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

#28

Post by zby »

l3robot wrote: post #4

On Monopoly: It has been a though I have for some time. I wonder how could they not form monopolies. Who has 4-5 taxi apps on their phone? Who has 2-3 social profiles? Who has the habits of jumping from a searching engine to another? A minority. Their product are almost natural monopolies. They are very difficult to fight against monopolies because when they have user commitment, the need for the product is filled en…

Uber is actually not the best example of a natural global monopoly - because it needs to compete locally - most taxi rides are for local population. So there might be a natural monopoly (or duopoly) for a taxi app - but one per a metro area. This is different from AirBnB - where the app works truly globally. https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-kno...

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

#29

Post by johnvanatta »

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…

And the modern side will also be the losing side if violence breaks out. The urban prosperity machine requires trade and highly specialized work, which is vulnerable to political turmoil. Whereas the guns and food are overwhelmingly in the rural parts of the country.

I don't think it's all doom and gloom though. There are some promising signs that cities don't have to be coastal to embrace the new model and prosper. Austin, Pittsburgh, Denver; to name a few.

And even though the Trump administration is doing damage, it could also act as an inoculation. Their complete lack of competence is a limiting reagent. And in response, a lot of people who took benign, stable political institutions for granted (their relative rarity could easily be missed from a typical education) no longer do.

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

#30

Post by Apocryphon »

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…

Surely VCs would be amenable to reforming their practices and demands upon companies, and be content with less drastic growth targets, to create an environment that is more sustainable and less race to the bottom? No one's calling for them to be abolished, until they've at least tried to fix the conditions they've created.
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