No, it’s the business model of YC and “New Silicon Valley.” The original companies that caused people to start calling this entire region Silicon Valley were making—and, in a few cases, are still making—real things intended to make their users’ lives better.
It was the dot-com bubble and its couple of resurgences that really fucked things up here and made everything off-kilter. The finance bros were drawn like vultures to “easy profit,” and brought with them attitudes like treating Google’s chef getting rich too as a “problem” to be “solved” rather than the system working as designed.
Well when everything is based on unsound money, and a literal ponzi scheme the entire financial sector is the largest con ever created
I am not sure how civilization was dupped into the mass delusion of our current economic systems but I do believe we are seeing them unwind right now... the Fed and other controllers have been attempting to catch a falling knife for at least 15 years if not longer... at some point they will loose that battle
I think a traditional venture capital model makes sense for some businesses, but not others. There are many cases where you might need initial investment to reach escape velocity, and you probably won't be very profitable in the first few years.
Something like Spotify is a good example of this working as intended. It's not without its problems, especially their blatant rent-seeking within the podcast sphere, but at the core it's VC working well.
That's not what Reddit and indeed many other VC funded enterprises are doing. Reddit was never going to make a profit without upending its entire value proposition. They may or may not successfully cash out, but what's in store for them if they don't flame out immediate is essentially turning into Facebook. Not cool 2008 facebook, but lame minions memes and grandmas Facebook.
> There are many cases where you might need initial investment to reach escape velocity, and you probably won't be very profitable in the first few years.
>Something like Spotify is a good example of this working as intended.
Spotify is a 26 year old business with zero moat. It’s most valuable to the 3 major record labels as a negotiating tool against Apple, Alphabet, and Amazon. That means the 3 record labels need to price their music just low enough to keep Spotify limping along, resulting in a cap on the profit margin Spotify can earn.
Spotify’s only move is to try to become a record label themselves, but due to excessively long copyright terms and cultural longevity of music, they basically have to keep buying from the 3 major record labels.
Spotify's moat is the byzantine legal maze of negotiating music rights with the record labels which needs to happen in a by-country basis.
Their profit cap is mostly the result of actual competition. That's a healthy market, which is fundamentally a good thing for the consumers since it means they need to innovate and provide a good service.
Wall Street felt they had lightning in a bottle with Silicon Valley in the 1970s.
This turned business plans from making money at scale to IPO machines. The fundamentals of financial exchange have been distorted to take the form a rent seeking sine that is what VCs want to buy.
I feel like there's irony to be found in Facebook holdovers posting minions memes amongst themselves, but I'm going to hold off on explicitly trying to find it in fear that I don't actually know what irony means.
