A Critique of VC, Founders, and Tech

This talk by Maciej Ceglowski (the founder of Pinboard among other things) is mostly a discussion of ad:tech and privacy issues. It raises a number of interesting points and echoes a view of ad blockers that my partner Albert has convinced me is correct (that they are a logical extension of the user agent concept embedded in web browsers).

But the most biting critique is saved for the end of the talk and aimed at the VC and founder communities and the tech sector more broadly.

Our venture capitalists have an easy answer: let the markets do the work. We’ll try crazy ideas, most of them will fail, but those few that succeed will eventually change the world.

But there’s something very fishy about California capitalism.

Investing has become the genteel occupation of our gentry, like having a country estate used to be in England. It’s a class marker and a socially acceptable way for rich techies to pass their time. Gentlemen investors decide what ideas are worth pursuing, and the people pitching to them tailor their proposals accordingly.

The companies that come out of this are no longer pursuing profit, or even revenue. Instead, the measure of their success is valuation—how much money they’ve convinced people to tell them they’re worth.

There’s an element of fantasy to the whole enterprise that even the tech elite is starting to find unsettling.

We had people like this back in Poland, except instead of venture capitalists we called them central planners. They too were in charge of allocating vast amounts of money that didn’t belong to them.

They too honestly believed they were changing the world, and offered the same kinds of excuses about why our day-to-day life bore no relation to the shiny, beautiful world that was supposed to lie just around the corner.

Even those crusty, old-fashioned companies that still believe in profit are not really behaving like capitalists. Microsoft, Cisco and Apple are making a fortune that just sits offshore. Apple alone has nearly $200 billion in cash that is doing nothing .

We’d be better off if Apple bought every employee a fur coat and Bentley, or even just burned the money in a bonfire. At least that would create some jobs for money shovelers and security guards.

Everywhere I look there is this failure to capture the benefits of technological change.

So what kinds of ideas do California central planners think are going to change the world?

Well, right now, they want to build space rockets and make themselves immortal. I wish I was kidding.

I don’t agree with all of Maciej’s critiques, but he is directionally correct, particularly the bit about profits, revenues, and valuations. He nailed that. There is more truth to his critique than many would like to admit. That’s why I am copying and pasting it here. It’s important to look at yourself sometimes and think you could use some work.