Silicon Valley Has It All Wrong: Allow Me to Offer Some Real Change
Under my Christmas tree this year was a copy of Michael Lewis’ “The New New Thing.” This 2001 account of serial entrepreneur and dotcom billionaire Jim Clark takes you on wild ride that has you alternately reaching for my pad to scratch down ideas, and for a barf bag. Published well before the ultimate Wall Street demise of 2008, it is both intriguing and disgusting to watch one man force his vision of the future on the world with the weight of big bank’s and venture capitalist’s Sand Hill Road money. Clark practically invented the notion of selling an initial public offering (IPO) for a company with no current profits and no solid business plan to create them. But it is pitiful that just as AOL thought that it could make money by having a lots of subscribers back in the 1990’s, Twitter is successfully selling the same idea on Wall Street in 2013.
We all lust for the new, new thing. We will trample anyone to get just a piece of it. When a company goes public, merger and acquisition banks make millions to run the IPO, institutional banks and brokerages buy when the price is low and sell when it is high, and magnanimous Silicon Valley coders become billionaires. Very few others financially benefit. But look on the bright side, the world gets new technology to improve the human condition, right?
It may sound like the American Dream, but we are forgetting one thing. All that money is coming from somewhere. Let me explain. During the height of the dotcom years, my employer offered an IPO of a spinoff company for $35 per share. Many employees bought in. After the first day of trading the stock sank to $17 and never moved. The big investors sold on the first day, leaving the employee investors holding the bag. The stock was eventually delisted and bought back by the parent company at $15 per share. In retrospect, the new spinoff was not a game changer. But the huge infusion of cash through the IPO was enough to not only make payroll, but also to beat down any competing ideas for the next three years in that market. We funded a monster that resisted and crushed good ideas. The IPO ensured that the spinoff could outspend and therefore outlast any competitor. And let’s face it, when we bought that stock, we just wanted to get rich. People got rich alright, but not us. Somehow, I don’t consider this the change the world needs. It seems a lot more like the same sad human history.
However, don’t allow me to be too harsh here. Because I think that some of the technology born in the dotcom bubble may be able to get this formula right.
Overfunding one man’s ideas so that the market cannot resist a new idea is just Silicon Valley hubris. The art of convincing, is the art of first understanding and then synthesizing another’s beliefs with yours. The Greek word ‘Techne’ originally meant ‘art.’ The appreciation and use of art is the function of the beholder not the creator and her cadre of unimaginative bankers. I agree new ideas, platforms and software are needed to make the world a better place, but I think that technology needs to be democratized and popularized by the people who will use it and, over time, adapt it.
Social media channels connect us in a way we have never been connected in the past. Creating relationships and avenues for potential users to encounter our ideas is possible in a way that didn’t exist during the docom bubble years. Putting your ideas in the market of humanity (not Wall Street) creates lasting and respected change. I believe that many people who resist technology do so because they do not feel included in the process. Give them the ability to engage and interact with your ideas. Engaging others with your ideas is the only way to truly win over a market.
Whether you are planning on launching the next big IPO or hoping to promote your products and services to a new vertical market, create relationships with the people who will truly benefit by your ideas. By being open to feedback and expressing your ideas in a framework of how others may help others, your ideas can take flight and create real change in the world.