Tomorrow's producer (part 3)
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Silicon Valley is fifteen square miles of coast in an hour south of San Francisco. Until the advent of microprocessors in the 1970s, the valley bore the name of Saint Clara ★ . Battles do not stop in the Valley. Army startups are attacking everyone who sets foot on this land. The first employees of companies — sometimes even lawyers and landowners — work for deferred compensation. They hope that options and guarantees will pay back costs a hundredfold when the time comes. And such employee loyalty does not extend to specific companies or business ideas, but to the endless promises of this very land. “Uber is built on the achievements of thousands of people in the Valley,” explains investor Naval Ravikant ★ . "It is based on the iPhone, and Android, and GPS, and energy-saving technologies, and online payments, put all together in one high pile."
Venture capitalists ensure the continuous development of the Valley. Including, delivering in it "ammunition". They are gunsmiths, ready to take a crazy idea and your irrevocable youth, and re-forge them into a team of ruthless coders, armed with Thunderbolt ★ monitors ( thunderclap ). In ancient times, Apple and Microsoft started with venture capital. The same fate befell Starbucks ★ , Home Depot ★ , Whole Foods Market ★ and JetBlue ★ . Investors are studying Sun Tzu ★ , drawing inspiration from him and borrowing warfare techniques to conquer markets. At the same time, venture capitalists confusedly hide their activities. They declare that they are “just investors”, or “working on technologies”, because in the Valley, which exalts the entrepreneur, they do not want to look like ordinary bags of money. “I tell everyone that I am engaged in software development,” one of the most famous venture capitalists of the Valley told me. "I am ashamed of the truth."
A rent of one hundred and eleven dollars per square foot makes Sand Hill Road the most expensive office market in America. The wide street is framed by rows of oaks and eucalyptus trees. Their shadows gently fall on double-decker chalets, the modest façades of which tell of the realm of inconspicuous consumption of ★ , broken only by Tesla ★ cars dormant on lawns. This is a community of paranoid optimists ★ . The best companies alternately cooperate or compete. The company is suspicious if it failed to receive funding from the top five funds. But she will face envy and jealousy, if suddenly she succeeds. Here, this malevolent relationship is called "competition" ★ . Companies trumpet about their insolence and simultaneously follow each other. They are like lemmings, they are being conducted on novelties - pen input, biotechnologies, interactive television, superconductors, pure technologies - and they are going beyond the edge of the cliff.
')
It was here that venture capital turned into a profession when back in 1968 an investor named Arthur Rock ★ provided financing for Intel. Gordon Moore ★ , co-founder of Intel, introduced the apt phrase "wolf capital" ★ , because venture capitalists still strive to gnaw you to the bone. If you are lucky, one of the millionaires who deigned to work several hours a day, habitually being late for the pitch, will take half of your company so that later, without asking for advice, you will be replaced by the CEO. But a venture investor can be a blessing to you. The highest approval of the largest funds is valued so much that entrepreneurs without objection agree with an underestimation by a quarter, just to make a deal. Patrick Collison ★ , co-founder of Stripe ★ online payment service, said that when he received seed funding from Sequoia, Peter Thiel, and a16z, "this was a very visible positive signal for the banks we wanted to work with." In the next round, the company's valuation reached one hundred million dollars "for a company that is just preparing to launch, under the guidance of a completely inexperienced entrepreneur, with read customers," Patrick explains with a grin. Stewart Butterfield ★, co-founder of Slack ★ office messenger, says the same thing: “It’s hard to overestimate how the quality of the foundation affects how you are perceived. An investment in you sends a signal to other funds, potential employees, customers, the press. It’s like college entry. ”
A venture company (say, one hundred and fifty million) convenes bayonets under the banner, encouraging investors such as university and pension funds to become “limited partners” ★ . The company invests money for three to four years, then collects profits before the end of the ten-year investment cycle of the fund. In theory, venture capitalists, like entrepreneurs, are motivated by deferred remuneration. The standard rule of deductions is “two and twenty” ★ : two percent of the fund annually, and twenty percent of the total profit. (The largest funds, including a16z, take thirty percent.) Limited partners expect returns at least at the level of what can be obtained on the stock market, plus five percent for the illiquidity of investments. The best companies dream about a 5 to 10 times increase.
At the moment, the gross volume of venture financing is less than 0.3% of US GDP. “Risky investments are often called rounding errors in the economy,” explains Herbert Allen III (Herbert Allen III), head of the Allen & Company investment bank. “But the investment comes back a hundredfold. It is venture capital investments that are the main source of optimism supporting the American myth ★ . ”High-risk investments accelerate the cycles of American impatience: what is there is already bad, and what comes in place is good only until it turns out to push out these new items.
Corporate culture, social responsibility, support of the foundations of society - all this does not care about venture capital. Andy Weissman ★ , one of the partners of Union Square Ventures ★ , a New York-based company, believes that venture capital investors in the Valley are the perfect embodiment of the driving force of capital that economist Joseph Schumpeter called “creative destruction” ★ . Weissman continues: “All Silicon Valley ventures are techno-optimists. They have an arrogant assurance that you can take geography and remove all obstacles, leaving nothing but free capital flows and ideas. They consider it a good deed, a good goal, the creative destruction of everything that was here before them. ”Some Valley capitalists believe that these values would have had more influence if their community left America: just give the nation of nerds Andrissen a plane and a piece of land. Peter Thiel prefers "rejuvenation" - the creation of floating cities in the middle of the ocean. Balaji Srinivasan (Balaji Srinivasan ★ ), more recently the general partner of a16z, and now the head of one of their Bitcoin companies, calls for "final care". He assures that the United States has become stuck with Aki Microsoft, and that the power of the Valley has exceeded Boston, New York, Los Angeles and Washington combined. Srinivasan believes that its inhabitants should "build a society with voluntary participation, based on technology and driven by them, completely independent of the United States."
Playing in Silicon Valley, as long as it remains part of California, does not require hellish intelligence or skills of opposing investment ★ : everyone can join. And it's not even about wealth: it's easy to become a billionaire just by sitting in the same room with Mark Zuckerberg ★ . The point is the ability to anticipate. That it allows you to remove all obstacles to a radical purity of perception. You will not be stopped by rulers, rules, morals, people. Can you not just see the future, but embody it? ▼
Part 1 | Part 2 ← | Part 3 | → Part 4 | Part 5 | Part 6 | Part 7 | Part 8
About the author: Ted Friend has been a regular contributor to The New Yorker since 1998. Author of various reports and investigations, multiple winner of awards in the field of journalism.
Photo: LPS.1 (Own work) [ CC0 ], via Wikimedia Commons
Silicon Valley is fifteen square miles of coast in an hour south of San Francisco. Until the advent of microprocessors in the 1970s, the valley bore the name of Saint Clara ★ . Battles do not stop in the Valley. Army startups are attacking everyone who sets foot on this land. The first employees of companies — sometimes even lawyers and landowners — work for deferred compensation. They hope that options and guarantees will pay back costs a hundredfold when the time comes. And such employee loyalty does not extend to specific companies or business ideas, but to the endless promises of this very land. “Uber is built on the achievements of thousands of people in the Valley,” explains investor Naval Ravikant ★ . "It is based on the iPhone, and Android, and GPS, and energy-saving technologies, and online payments, put all together in one high pile."
Venture capitalists ensure the continuous development of the Valley. Including, delivering in it "ammunition". They are gunsmiths, ready to take a crazy idea and your irrevocable youth, and re-forge them into a team of ruthless coders, armed with Thunderbolt ★ monitors ( thunderclap ). In ancient times, Apple and Microsoft started with venture capital. The same fate befell Starbucks ★ , Home Depot ★ , Whole Foods Market ★ and JetBlue ★ . Investors are studying Sun Tzu ★ , drawing inspiration from him and borrowing warfare techniques to conquer markets. At the same time, venture capitalists confusedly hide their activities. They declare that they are “just investors”, or “working on technologies”, because in the Valley, which exalts the entrepreneur, they do not want to look like ordinary bags of money. “I tell everyone that I am engaged in software development,” one of the most famous venture capitalists of the Valley told me. "I am ashamed of the truth."
A rent of one hundred and eleven dollars per square foot makes Sand Hill Road the most expensive office market in America. The wide street is framed by rows of oaks and eucalyptus trees. Their shadows gently fall on double-decker chalets, the modest façades of which tell of the realm of inconspicuous consumption of ★ , broken only by Tesla ★ cars dormant on lawns. This is a community of paranoid optimists ★ . The best companies alternately cooperate or compete. The company is suspicious if it failed to receive funding from the top five funds. But she will face envy and jealousy, if suddenly she succeeds. Here, this malevolent relationship is called "competition" ★ . Companies trumpet about their insolence and simultaneously follow each other. They are like lemmings, they are being conducted on novelties - pen input, biotechnologies, interactive television, superconductors, pure technologies - and they are going beyond the edge of the cliff.
')
It was here that venture capital turned into a profession when back in 1968 an investor named Arthur Rock ★ provided financing for Intel. Gordon Moore ★ , co-founder of Intel, introduced the apt phrase "wolf capital" ★ , because venture capitalists still strive to gnaw you to the bone. If you are lucky, one of the millionaires who deigned to work several hours a day, habitually being late for the pitch, will take half of your company so that later, without asking for advice, you will be replaced by the CEO. But a venture investor can be a blessing to you. The highest approval of the largest funds is valued so much that entrepreneurs without objection agree with an underestimation by a quarter, just to make a deal. Patrick Collison ★ , co-founder of Stripe ★ online payment service, said that when he received seed funding from Sequoia, Peter Thiel, and a16z, "this was a very visible positive signal for the banks we wanted to work with." In the next round, the company's valuation reached one hundred million dollars "for a company that is just preparing to launch, under the guidance of a completely inexperienced entrepreneur, with read customers," Patrick explains with a grin. Stewart Butterfield ★, co-founder of Slack ★ office messenger, says the same thing: “It’s hard to overestimate how the quality of the foundation affects how you are perceived. An investment in you sends a signal to other funds, potential employees, customers, the press. It’s like college entry. ”
A venture company (say, one hundred and fifty million) convenes bayonets under the banner, encouraging investors such as university and pension funds to become “limited partners” ★ . The company invests money for three to four years, then collects profits before the end of the ten-year investment cycle of the fund. In theory, venture capitalists, like entrepreneurs, are motivated by deferred remuneration. The standard rule of deductions is “two and twenty” ★ : two percent of the fund annually, and twenty percent of the total profit. (The largest funds, including a16z, take thirty percent.) Limited partners expect returns at least at the level of what can be obtained on the stock market, plus five percent for the illiquidity of investments. The best companies dream about a 5 to 10 times increase.
At the moment, the gross volume of venture financing is less than 0.3% of US GDP. “Risky investments are often called rounding errors in the economy,” explains Herbert Allen III (Herbert Allen III), head of the Allen & Company investment bank. “But the investment comes back a hundredfold. It is venture capital investments that are the main source of optimism supporting the American myth ★ . ”High-risk investments accelerate the cycles of American impatience: what is there is already bad, and what comes in place is good only until it turns out to push out these new items.
Corporate culture, social responsibility, support of the foundations of society - all this does not care about venture capital. Andy Weissman ★ , one of the partners of Union Square Ventures ★ , a New York-based company, believes that venture capital investors in the Valley are the perfect embodiment of the driving force of capital that economist Joseph Schumpeter called “creative destruction” ★ . Weissman continues: “All Silicon Valley ventures are techno-optimists. They have an arrogant assurance that you can take geography and remove all obstacles, leaving nothing but free capital flows and ideas. They consider it a good deed, a good goal, the creative destruction of everything that was here before them. ”Some Valley capitalists believe that these values would have had more influence if their community left America: just give the nation of nerds Andrissen a plane and a piece of land. Peter Thiel prefers "rejuvenation" - the creation of floating cities in the middle of the ocean. Balaji Srinivasan (Balaji Srinivasan ★ ), more recently the general partner of a16z, and now the head of one of their Bitcoin companies, calls for "final care". He assures that the United States has become stuck with Aki Microsoft, and that the power of the Valley has exceeded Boston, New York, Los Angeles and Washington combined. Srinivasan believes that its inhabitants should "build a society with voluntary participation, based on technology and driven by them, completely independent of the United States."
Playing in Silicon Valley, as long as it remains part of California, does not require hellish intelligence or skills of opposing investment ★ : everyone can join. And it's not even about wealth: it's easy to become a billionaire just by sitting in the same room with Mark Zuckerberg ★ . The point is the ability to anticipate. That it allows you to remove all obstacles to a radical purity of perception. You will not be stopped by rulers, rules, morals, people. Can you not just see the future, but embody it? ▼
Part 1 | Part 2 ← | Part 3 | → Part 4 | Part 5 | Part 6 | Part 7 | Part 8
About the author: Ted Friend has been a regular contributor to The New Yorker since 1998. Author of various reports and investigations, multiple winner of awards in the field of journalism.
Photo: LPS.1 (Own work) [ CC0 ], via Wikimedia Commons
Source: https://habr.com/ru/post/292760/
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