Silicon Valley is working well, but is increasingly broken. We have venture capitalists to thank and blame for both.
Mission, people, focus
One of the truly great things about Silicon Valley is that we change the world daily. Inventive genius within the greater Bay Area has literally transformed the planet, from shrinking electronics to microscopic levels, to interconnecting much of humanity at a peer level. We do it through coopetition, entrepreneurism combined with being tech savvy, and allowing ourselves to fail as well as succeed. This is the part that works.
Yet much of Silicon Valley’s potential is squandered by wealth obsession. There is nothing wrong with getting rich. Leading the Silicon Valley semiconductor company I founded certainly put more than enough lucre in my pockets. But money was never the motivation, and by not using venture capital to launch Micrel, we never fell victim to the stifling effect of other people’s money.
A key secret is that money, like life itself, is transient. What we do to change the fate of humanity is not. The vision that Silicon Valley entrepreneurs have is what makes a difference. Anything that distracts the focus of an entrepreneur from building his company or nurturing her people harms innovation. Anything that distracts from focusing people on a common mission and a shared vision harms innovation.
And money is a huge distraction.
Venture capital innovation traps
Silicon Valley has unfortunately perfected the entrepreneur money trap. It begins with VCs and, more often than not, ends with them as well.
Nobody argues that money is necessary to launch a business. But every moment spent focused on raising money is a moment not invested in crafting corporate culture, mentoring employees, exploring markets, talking to customers, and the thousands of other important tasks business leaders have to do.
Yet most Silicon Valley founders spend the lion’s share of their time doing little more than raising funds. Seed money gets burnt fast, and angels quite expect it. Series A rounds get wasted on maniacal short-term top-line growth, regardless of long-term consequences. Cash depletion then drives the march to Series B funding, and so on. Before failure or a forced exit, entrepreneurs find that they have spent all their time raising money and little time building their company.
Throughout this process, innovation of the company, deep exploration of the market, and the caretaking of employees lapses. Chasing money supplants chasing a dream.
Export, living and money
Part of the problem is Silicon Valley itself. On any day, you can find a news article claiming one or another city will soon be the next Silicon Valley. These predictions have been made for 50 years and it still has not come to pass.
A byproduct of the incestuous cluster of technology and venture capital in the relatively tiny Silicon Valley area is that geniuses are taught to come here and few can ever leave. Because of this, the great parts of Silicon Valley culture – the drive, the energy, the inventiveness, the love of risk – never escape. This has led to a local cost-of-living problem. Talented developers now live in panel trucks to obtain an affordable lifestyle. This breeds a focus on money for employees as well as entrepreneurs, which perversely makes exporting the positive aspects of Silicon Valley culture harder still.
We can change that.
Change is good; exporting Silicon Valley is large-scale change
Entrepreneurs are not initially driven by wealth. They are driven by change. They deeply want to change things. The changes could be small, such as an improvement on an existing product type. Or it could be huge, such as interconnecting a billion people online. This is the core of Silicon Valley culture.
Yet money is now in the way. Venture capitalists encourage bad business practices to obtain short-term exits. Founders spend all their time raising rounds. Startup employees live in perpetual unemployment fear while battling a skyrocketing cost of living. Fewer people in Silicon Valley are happy and our congenital lust for innovative risk-taking stays stubbornly rooted here.
If we still collectively desire to change things, then we need to change ourselves and change the entrepreneurial center of gravity around the globe. This begins by depreciating our focus on money and accelerating the exportation of ourselves and our core culture. By not focusing on money, by focusing instead on the disciplines of building enduring companies and transferring our innovation culture elsewhere, we quite literally will change the way people perceive the value of humans and the human spirit on a global scale.