This page has been archived and commenting is disabled.
The Increasing Cracks In The Silicon Valley Mirror
There’s probably no other place more enthralled with its own state of being today than Silicon Valley. Now probably more than ever the tech capital just might be believing their own hype more now, than in the “glory days” of the 90’s.
Today the belief is so strong, so internalized that the coding kingdom is where the new rulers of the universe reside, that it would make the Kadashians think about trying to keep up with the “Coders.” (does anyone need anymore proof than the new Kim Kadashian app?)
The problem with mirrors is just that – they’re mirrors. And unless you take your gaze away from it and look around once in a while, what happens more times than not is you miss all that’s happening around you. Till one day you either walked smack dab into a wall, or worse – never left the couch as the city around you fell into chaos.
This is where I believe a great many in the “disruptive” world are going to find themselves. No, not them disrupting – but the world they now inhabit is about to be – disrupted. i.e., The valuations, the deals, the whatever that were once taken for granted as a “never-ending story” is seemingly not only coming to an end. That end – might already have taken place.
Personally I read a lot of tech blogs, tech sites, and more. One reason is I’m just plain interested as well as curious. The other is that I’m in the “entrepreneur/business advice” business. And nothing has fascinated me more than some of the “pie in the sky,” “unicorn and rainbow” type thinking and metric measuring than what I both read and hear from the tech world.
This area is so audacious in its shunning of pure true business models (i.e., making real money via repeatable commerce transactions as opposed to the singularity event of IPO-ing) it would make a Krugman-ite proud. However, as I alluded to earlier: there seems to be cracks appearing in the looking-glass.
There’s an underlying truth when it comes to business. And I do mean – all business: When times are good those at the top are jubilant – when jubilant fades and testiness begins to appear, regardless of how faint – that is the time to begin paying very, very, close attention.
Recently I read an article that is becoming more and more prevalent within both the investing world and in particular the tech arena. The article was titled: “The Thin Skin of the Venture Capital Market”
One of the quotes that caught my eye was this. It was in response to a point on a valuation…
“And then I promptly got Twitter flack from one of the people who works at one of the company’s investors. They seemed annoyed that I said anything in the first place.
What was said, who’s right, etc., doesn’t much matter. The fact is, it’s just not cool to criticize the investing side of the venture capital market.”
Remember my assertions – It’s not about making a profit in business, it’s now only about the business in making an “investment” profit. As I’ve reiterated repeatedly, the business per se is irrelevant – it’s all about can the business “story” be sold to Wall Street. Then who gives a rats arse how the story ends, that’s for the poor saps that bought into it, not us. We cha-chinged out!
Increasingly the proverbial “cha-ching” machine is growing more silent. One would think with the markets once again pushing beyond stratospheric levels into black sky territory that the deals would just keep coming. Well, they are yet again there seems to be something a little different in the ways these deals are coming forward than previous.
To the casual observer one might think “they’re doing more deals than ever before!” Yet, what may seem as an uptick might be more of an illusion. More in a shorter time span doesn’t necessarily mean “more.” What it could be signalling is a rush to get as many in as soon as possible because there just might be “no moar.”
Recently a few articles have caught my eye. One showing up on Pandodaily™ as reported by their West Coast Editor Michael Carney. What I found quite telling was the headline along with the timing: Does the shrinking time between early stage rounds signal market bullishness or disaster planning?
Is it not precariously illuminating that suddenly, what some may think as “out-of-the-blue” the investing meme once thought of as “unstoppable” is suddenly causing those within the very industry itself to contemplate?
And why would this meme even be questioned? For are we not in a glorious time for investing? Especially in new and never-ending “disruptive” agents? What would cause any change in this meme?
How about the meme killing realization that QE, the once unthinkable, unstoppable, buying spree fuel additive has been throttled. (for how long is anyone’s guess, but for now – the valve is closed)
That is the (and I do mean “the”) only variable that has changed. And with it, there seems to be an undercurrent of possible disruption coming to the royalty-class aka the “disruptive” class.
Another article that is also quite informative into what maybe transpiring within the VC arena along with its overarching mindset is the Q2 2014 Halo Report.
Highlights of the Q2 2014 Halo Report include:
- Pre-Money Valuations Climb to $3M. Median pre-money valuations rose to $3.0 million in Q2 2014 from $2.7 million in Q1, and after several steady quarters at $2.5 million.
- Angel Round Size Falls. Median angel financing rounds fall to $600k in Q2 2014 – down 40% from Q1; remain flat versus Q2 2013 where the median round size was $595k.
Again, at first glance I found it quite interesting that today, when the markets are hitting upward prints of nearly 1% per week that the median financing round would fall 40%.
I can’t stress this point enough: The markets are rising, and investment in median financing rounds are falling by double-digit percentages?
Sorry to repeat ad nausea but (and it’s a very big but), all that’s changed in this period of time is QE has stopped.
Is this causation or correlation? That’s the call. For my money – it’s causation. However only time will tell for if one thing is clear, I never dreamed we could get up this high based on QE, but here we are. Although too not pay attention to these possible cracks would be ludicrous. Especially when paired with the timing of their appearance.
There are two more glaring signs that things have changed. First is what I warned to watch for in this latest earnings cycle where the once “darlings” of Wall Street might be met with more of a cold shoulder than open wallets with the realization QE was in actuality going to stop. e.g. Facebook™ and the concern about whether or not this new reality of “no QE” will be expressed via investor concerns.
From my article “The Shot Heard Round The Valley World” I opined…
“Let me go on the record here and point out what I believe will prove my point in the coming weeks and months.
Currently Zuck and crew have been lauded over with the prowess in its acquisition choices. You will know everything has changed when the calls to rescind Mark Zuckerberg’s authority in having carte blanche via not needing board approval for acquisitions going forward is demanded by Wall Street.”
What transpired during the most recent earnings call? At first it was heralded as “hitting on all cylinders” then it was revealed – it was also going to spend at just as impressive rate.
Suddenly “woo-hoo” turned into “WTF!” and the shares gapped down and as of yet – with the ever rising, incessant push higher, and higher in the markets, where both the indexes for everything tech as well as the S&P are hitting “never before seen in the history of mankind highs.” Facebook not only hasn’t filled that gap (which by all accounts should be viewed as on sale) it hasn’t basically moved at all.
Again, as everything else is roaring higher. Suddenly it seems that ability to “spend” is coming under far more scrutiny than the once “blind-eye” it was turned just a few months prior. And it’s only the beginning in my view.
For those wanting to see what may be coming and dig a little deeper the article by Todd W. Schneider titled, “The TechCrunch Bubble Index: Parsing Headlines to Quantify Startup Hype” breaks down this idea of growing changes in an easy viewable form.
There’s nothing wrong with pushing the needles when it comes to business, entrepreneurship, and more. However, it’s once you not only start believing your own press, but you look to place mirrors around you as to get an even grander view is when you just might be having more in common with the Kadashians than you do with creating and maintaining your business.
»
- 21225 reads
- Printer-friendly version
- Send to friend
- advertisements -
Fuck that cesspool, and I don't give a shit WHAT they bring to the table
The ethos of Silicon Valley, the depth of the self-absorption and attachment to temporal illusions of surreal proportions is paralleled only by Los Angeles.
Now more than ever this fellow needs Strunk & White more now. Precariously illuminating? WTF?
Kudos to Knukles, who clearly read S&W...
< Silicon valley.
< Silly, con valley.
So much fucking money, yet they won't fix the damn potholes on 101, El Camino Real, etc. WTF kind of rich place is this...
Unlike the '90s, entrepreneurs today do not need expensive infrastructure or development tools. Both are basically free due to the cloud and the plethora of mature, high level programming languages.
Most startups today only require a fraction of the venture funding they needed 15 years ago.
Today you see more stupid ideas funded but they usually get less money and often it is by individuals and not institutions.
There is a lot of over valuation but instead of one big tech bubble it is lots of little bubbles scattered amongst a few gems that produce value and are profitable.
I think you hit the key: "produce value". When you go down the checklist, most of this stuff is grasping for straws.
Yes. Grasping for straws. Throwing darts at the wall.
It's a lot like how our politicians govern.
The only determining factor is how well the BS is pitched and how gullible the investor is.
Either way the result is the same in the long run.
Once you have silicon, you start thinking you are special.
Bottom line: the NASDAQ should be @ 1200 and that's where it's going.
Bauhaus before the Nazi's took over.
http://www.ft.com/intl/fastft/233452
UBER The San Francisco car-hailing service is in early talks with investors about raising at least $1bn in new capital, less than six months after it received $1.2bn in funding...The hubris...to come back to the table after just convincing investors to pony up $1.2B...is off the charts. It's a fucking app...they don't own the cars and they don't cover the expenses. What could they possibly justify the need for $2.3B?
Bitches and cocaine, player.
I am Chumbawamba.
You're an idiot.
He's an idiot?
Pre-IPO cashout for the founders.
It's their golden parachute in case their plans for world domination fail.
It's simple: UBER created value, and you didn't.
You just sat on your ass in your parent's basement and told yourself that all the good ideas were already taken. And besides, it's too hard.
What value? Besides evading bilions in taxes, privatizing municipal revenue while destroying thousands of small businesses, you twit?
Look in your wallet. There's nothing there, is there.
Look in Uber's wallet. There's a billion dollars there. Somebody gave them the billion dollars for something.
Go figure.
I hear Pets.com and Enron created "value" too.
Guano Alert - Re-Tweet!
Fuck 101. 280, 680, 85, 237, all of em. Close the motherfuckers. everyone telecommute. It's pretend work anyway.
.
And then there's New York City.
I am Chumbawamba.
Same f**king story in both places. AH's pitching scripts and a new show in LA and AH's in SiliCon Valley pitching the newest app to go IPO.
Aw, I live and work here. It's pretty awesome. Life is good. Don't be jealous.
Im not
You've got another year or two. Enjoy!
GoPro/Twitter/Facebook... = Pets.com Sock puppet
You are nuts for thinking anything different
Well.. Facebook and Twitter do control information flows. I guess that's valuable to someone.
Yeah it sucks there. Anyone who can afford to moves either North Bay or south towards Carmel. The smarter ones leave the state.
I would not want to be there with the Black (Fuki MOX) Rain. The oh so smart SiliCon Valleyers probably have no idea about Fukiishima.
So what you're saying is that Silicon Valley is like the Fed - rigging things to create more wealth at the top at the expense of everyone else?
"it’s all about can the business “story” be sold to Wall Street"
It's not whether it can be sold to Wall Street, its whether Wall Street can repackage it and sell it to the shluubs the inhabit Walmart.
If you can get one dumbass to download it on his iPenis then you can IPO it and cash in.
i don't have iphone.
Silcon Valley is a purely white male thing. Othr than pro hockey, it's the last such bastion.
Yeah, those bastids.
Are you kidding? Very few white males left in the Valley. Mostly Asians now, with the odd Russian and Northern European thrown in there.
White, male, and socially retarded. A dating mecca for the ladies.
I am Chumbawamba.
The white male is an endangered species in the South Bay, at least in terms of residence. All chased out by the squinties and curries. Those who remain are the older folks (and their kids who came back home to stay with the 'rents after college), waiting for their retirement in homes 8-10x the amount they purchased it for back in the day. Next generation of kids can't afford homes here. Very sad. I think I was the last class of elementary school students to have a >70% white composition in Cupertino 15 years ago. I hear it's like 3000% Asian now.
They'll be able to afford the homes, when the market corrects. Patience.
Don't forget the wetbacks!
-Chumblez.
The white male is under sustained and multi-pronged attack everywhere, not just South Bay.
Re. Everywhere - Ukraine and then Russia is the plan as stated by zbig.
It will be interesting when Silicon Valley implodes with the gangs in East Palo Alto start invading Atherton and the other enclaves. MS-13 and such. These people voted for it.
Your posts are are neither intelligent, nor funny. Go play somewhere else.
If you're craving whiteness, spend some quality time with the Sierra Club or the "Global Warming" crowd.
White trust fund children as far as the eye can see.
What, no Ferguson-style diversity there yet?
We're working on it.
But before we start encouraging people to have race riots here, we need to educate them on how to complete an Environmental Impact Report, and make sure they undertand that there is a limit to the amount of burning and looting they're allowed to do on a Spare The Air day.
Also, they can only torch privately owned vehicles and they should refrain from interfering with mass transit.
To be clearer, I meant to say, "... those at the top positions of leadership among the high tech firms in Silicon Valley ..." My bad.
I'm fully aware of the decaying demographics of the various communities constituting the Bay Area.
Here in this river valley, I am more enthralled with my state of being than those weenies.
As long as they keep their disruptive asses far away.
And it will be fun to watch from afar the easily predictible psychological breakdown of these "rulers of the universe" at the first test of true character.
When the iPhone update came out, I looked at the new features which would pile on my 5S, which list was about 30 items or so if I recall, and just closed the update window. I've reached "tech saturation point". It's not that I'm not tech savvy, I am. I build computers for my friends if they want. But I'm seeing the struggles of all the tech companies, trying to push their products forward, and they are just plain running out of ideas that people really need - ones that return more useful value than the effort to use them. It's like building a house. You build the house, and then what? Start hanging junk on it? Gold plated shutters? Three or four weather vanes? Silicon Valley thinkers think the sky is the limit for their ideas. New ideas are never bad, but practical application has its limits - and expecting endless profits forever into the future from this exercise is not realistic.
Do not forget, peak complexity. How many lines of code in Winders95? How many in Winders8? That's not to mention all the stuff that has been offloaded to more and more complex hardware and it all has to interact seemlessly. Good luck defending that from the criminal mind or simple typo.
<”..This is where I believe a great many in the “disruptive” world are going to find themselves. No, not them disrupting – but the world they now inhabit is about to be – disrupted. i.e., The valuations, the deals, the whatever that were once taken for granted as a “never-ending story” is seemingly not only coming to an end. That end – might already have taken place…”>
Agree 100%, as do many others. Detroit was never going to fail, it was the heartland of America, and U.S. automakers ruled the world for forty years. The Japanese put an end to the party, then came the Koreans and Chinese. There is nothing done in Silicon Valley anymore that cannot be done just as well or better, and cheaper, in Asia.
Facebooks is a drug for the masses, it creates no productive value. How many more f***ing electronic toys can the idiots buy on credit? I-Phone 7,8,9…? Really? Throw away your 1080P T.V. from last year and buy a 4K T.V. this year.
It is all insane, and all made possible by the Fed bankers and loose credit. The final collapse will begin in Silicon Valley and will be unstoppable. Hyper-inflated property values will plunge and fear will take over. You cannot work at McD’s in Palo Alto and afford a modest older home for $1.7 mil.
When the bubble bursts it will be truly spectacular. Thousands will have no choice put to walk away, and the spiral down will be fast. Nearly all the tech companies are quietly downsizing and buying back shares to hide decreasing sales numbers and high valuations. When APPL mania finally ends, it all ends.
Bears will be dancing in the streets, while their unemployed neighbors take shots at them from the backs of their U-Haul trucks, heading for the in-laws double-wide.
I'm still hanging onto my old Samsung flip phone. The one with "AIM", which I never used. I do like the 2.5 day battery life...
Key take away - "It is all insane, and all made possible by the Fed bankers".
The party was over when it was all shifted to Taiwan and China. Silicon Valley is another rust belt, you just can't see it through the BS.
Exactly. It was all over when they stopped hiring domestic grads and decided to staff most positions in the Valley with foreigners on the H-1B and various other work visas. Once home to large numbers of highly profitable companies, the majority of SV firms cannot and will not ever make a profit.
Working in IT my whole career (not in Sillicon Valley though), I worry about this. The same thing happened during the dot-com bust. What bothers me is the throwing of the baby out with the bath water. Some tech companies are legit, make a real product that actually helps people, and a have a revenue model that actually makes sense.
What does it help society when a company that makes emergency vehicle dispatch systems can't get funding for a needed upgrade to their infrastructure because they've been lumped in with all the bullshit hyped companies with no earnings, and no real value?
Yeah, I actually saw that back around 2000-2001.
Though I've been all my life in IT as well I don't have a good sense of the macro picture. What I do know though is that we'll still witness the same pathology whereby the real initiators and innovators - those who did the donkey work - will get stiffed by the Zuckerbergs of this world and their financiers.
Its the age old story of the Grasshopper and the Ant. While some take the moral of the story to heart, work productively and save for future hard times, many others put as much effort into becoming grasshoppers.
Circa mid-late 90s I had reason to visit an EMS training building in a major US city. I read with absolute amazement an article posted on a bill board behind a glass door. Per this article authored by one or more lifetime professionals in the subject field, a station wagon could replace the ambulance in every patient trasnport in history, with absolutely same net patient outcome, no worse, no better.
Check the cost of an ambulance ride in your locality and report back to class. Presumably most of the cost results from FTE (full time employees, medics, etc.) but I estimate a Chrysler mini van costs less than 1/10th as much as a fully outfitted dual axle truck ambulance conversion.
Over the years I asked many professionals in the field about that article but all denied any knowledge about it.
I know first hand EMS job is as follows, listed in descending priority:
IOW, EMS job is to unload the patient ASAP at a hospital. Is not a $25k Chrysler panel mini van (extended bed, HD suspension, no luxury features, fleet equipment only) every bit the equal of any ambulance for this usually brief but critical task? Maybe the ambulance conversion industry has opposite opinion?
BTW, if you think intubation procedure looks anything like it appears on TV, that would be wrong.
Here's support for your position (a new study):
"Patients who had cardiac arrest at home or elsewhere outside of a hospital had greater survival to hospital discharge and to 90 days beyond if they received basic life support vs. advanced life support from ambulance personnel, according to a report."
http://www.sciencedaily.com/releases/2014/11/141124162922.htm
Adding on extra treatment in the ambulance leads to worse outcomes, because it slows transport.
All the EMS units now around my parts and most of the state are these state of the art deals. It was all about getting the fire dept unions in on the medical gravy train. I would guess these big EMS trucks have pretty state of the art stuff.
It's True!! Virtually everything related to ambulance services in the US is a scam, but I think we already knew that.
What a bunch of fucking whining nonsense.
Thus article could have been written in 200at the height of the internet bubble.
Tech hubs aren't disappearing. They aren't out sourceable like cheap labor is.
Mega cities around theworld are all attempting to socially engineer their own tech hubs.
Technology is the real magic. Black magic . go to Colorado springs oother tech hubs in the u.s.
The empire will pay its soldiers less. It will steal from its slaves more.
Our religion of empire will always focus on the temple of black magic the ame way ancient Hebrews sacrificed food to yaweh at the temple altar. Our empires sacrifice capital at the altar of the military industrial technology complex to the gods of growth and conquest.
So this current mega bubble wilburst soon. It is 2015 by 2030 we will have new bubbles...and they'll be in tech.
It is true that many of the startups product and services do not appear to have value other than of 'social engineering'. But, the global financial system is skewed to force feed frivolous needs of the 'developed' world by making available cheap credit.
The 'real' demand is in third world countries where people can potentially be provided with roads, water, electricity, etc. but the financial system is not able to deliver cheap funding for such needs (of course there is leakage due to corruption, etc.). So, as long as global financial system is reserve currency and related swappable currency centric (and not bilateral), capital is going to continue to flow to what appears to many of us as trivial.
Kardashian, not Kadashian. Get with the program, man! /s
Fuck its "Creativity" and "Smart". You know what? All of the fundamental, risky, and costy research projects, from semiconductor to internet protocols, have always been paid for by the US taxpayers aka the middle class. If any project fails, no problem, after all it's other people's money. If it succeeds, big time, corporations will commercialize the know-how and make shareholders super rich. In essence, it's facism in the purest form. Fuck its free market. There is no such a free market in the first place. It's that big government of the chief corporate shareholders, by the chief corporate shareholders, for the chief corporate shareholders, whom Lincoln called the people. Without funding from the state, there wouldn't be even a place called Silicon Valley in the first place, history says. Those tech billionaries are nothing but arbitrageurs who took advanatage of the knowledge that was freely available but only known in some academic circle.
It's all Google's fault, they produce so much revenue out of so little apparent benefit, it beggars the imagination. SV has been con-game central for a long time, but only because they lived under the umbrella of companies that really made stuff like HP (the *old* HP) and Intel. There is so much money from the winners, that there is an old-boy network to spread it around among the losers as well, and that accounts for about 90% of the profits. Of course that attracts frauds and slick willies. Then we got Twitter and Facebook under the Google umbrella, making billions off stock sales, anyway - more in the Amazon model I guess. Oh and I almost forgot, Apple and the iPhone, talk about your accidental empires, hasn't really been a VC thing for a long, long time but also provides an umbrella for a lot more silliness.
SV may be a model for success, but it's not what we teach kids in school - it's not anything we *should* teach kids in school, anyway, I suppose they learn it all one way or another.
I exited 101N at Shoreline around noon the other day and the righthand lanes took up half the fucking offramp. I'm guessing most of the cars there were headed to the Google campus.
The offramp is a good quarter mile long. It was put in about a decade ago. It allows exiting cars to stack up without affecting traffic on the 101. Someone apparently anticipated Google.
I am Chumbawamba.
I miss the airshows at Moffet and the empty fields before Silicon Graphics, and then Google. Now it's just one long miracle mile of singularity...
They sure did anticipate Sploogle, but that off ramp was for the amphitheater. You know what those lines look like. The Shoreline exit gets backed up all the way to Moffet field when there's a concert. My boss had to take that right on Shoreline last week. He said it took seven light changes to make the turn.
SnapChat will rue the day they rejected the $3B FaceBook offer. All I see are articles about their latest round of funding which highlight the "valuation".
Snapchat Fetches $10 Billion ValuationKleiner Perkins Funding Puts Messaging App Among Most Valuable Startups; Still No Revenue
http://online.wsj.com/articles/snapchat-fetches-10-billion-valuation-140...
gee, if only i could patent, or incorporate products after the tax-payers have paid for all r&d, and continue to do so a decade later.
partner with the govt. to illegally spy on virturaly every human, or machine in the world, i bet i could turn a dollar also.
Silicon Valley is another branch of the NWO. Let them perish along with the fools from Harvard and the CFR.
It might help your credibility if you didn't write in malapropisms. This article would get an F from a 3rd-grade English teacher. Get a proofreader:
ad nausea
Now probably more than ever the tech capital just might be believing their own hype more now
even when the VC bubble cracks there will be demand for programmers. There are lots of tech jobs that dont involve silly apps which provide no value.
The companies that are getting ahead (legitiamately) and not by borrowing cheap cash are investing in IT infrastructure and see it as an asset. Unfortunately, there are many old man industies out there like insurance who do not view IT as an asset and are going to get their asses handed to them when companies like google get into the insurance business.
~DipshitMiddleClassWhiteKid
so was Steve Jobs a genious or a criminal sociopath. Just curious ?
ha ha ha
none of them see the poison tentacles of diminishing returns slowly strangling everything everywhere.
'Lord, what fools these investors be'
I worked 10 years in IT business and appreciate very much effort of millions of hard working American software engineers that build backbone of digital revolution.
But with heavy heart I must say that it has been clear, for a while, for everyone, except for bloated media gurus, and their sedated, gluttonous former revolutionary prophets of new digital age, that Silicon Valley has become serious or fatal impediment to further development of digital technology, similarly to their ill-conceived, insane ideas, which only purpose nowadays is to obstruct, sleaze, slime, hype and expel odorous gases of their inventors’ digestive track before spatter us with their next creative destruction diarrhea.
On the top of the above reality check, one observation.
Almost none of comments of this post noticed one major point made by author. Namely, that all those half insane pseudo-leaders of silicon Neverland, many years ago abandoned idea of any genuine RD here in the USA or even reasonable, long term business development and gave up on sound business plan based of social demand and operational profit, for hype and narcissistic overtures of their paid disciples.
They, on the wave of QE+? and deliberate economic policies of US government, completely gave up idea of making money from their businesses and became all producers of stocks, corporate bonds and other financial instruments for profit, de facto becoming wall street businesses of financial manipulation, pretending to be tech companies and not bankers (like Apple Inc, Fourth biggest bank by cash holdings) or investors (Google inc. etc.) at large, and in process committing slew of securities, insider trading as well as anti-monopoly crimes with impunity.
In other words old Silicon Valley driven by, cold war enabled, true science and innovation of 50-ties and 60-ties is DEAD and already stinks to heavens but not burry yet, to delight of necrophiliac hungry crowd, and cheerleading cannibalistic media. Do you smell it?