The article actually addresses that SV is building things. Wood mentions how 95 percent of start-ups fail. Presumably most of what is being built is crap, or destroyed.
Would you rate that as building value or ripping people off?
Would you rate that as building value or ripping people off?
1. A startup that fails doesn't mean it has built crap. Sometimes things fail for unrelated reasons, whether ahead of their time or because the economy took a downturn, etc etc. SOMETIMES because they are "ripping us off".
2. 95% of scientific experiments "fail". Are scientists ripping us off?
The whole idea of the market place IS failure. In fact, if our larger market was healthier, we'd see MORE failure (and in more established corporations, such as the "too big to fails"). The fact that 95% of startups fail is one of the healthiest indicators of SV. Experimentation necessarily means many failures in search of the one success. Maybe some day we'll have a magical simulation machine where we can run product ideas ahead of time and know "the right place" to put our money, but until then, the best system is one that invests in diverse companies with oftentimes mutually exclusive ideas.
Um, source?
Also, source for 95% of startups fail?
The idea of the market place isn't to encourage failure, it is (arguably) to efficiently allocate resources. One can imagine that, at steady state some point in the future, we've gotten enough businesses providing enough reliable value that there is no great rate of failure.
More bluntly: the average laundromat lasts longer than the average venture-backed startup. That should at least be worth some minor reflection.
Its not sloppy thinking at all, it is very clear thinking: it shows that that fact ALONE is not sufficient in making a value judgement. As such, the argument must be "95% of startups fail, this is bad because in the specific case of markets ____".
The idea of the market place isn't to encourage failure, it is (arguably) to efficiently allocate resources. One can imagine that, at steady state some point in the future, we've gotten enough businesses providing enough reliable value that there is no great rate of failure.
This is an "end of history" mentality ( https://en.wikipedia.org/wiki/End_of_history ). If you don't have sufficient failure, your system is either corrupt (see financial sector), or almost by definition people are not trying interesting enough ideas and taking enough risks. The personal computer was a HUGE bet that could have failed, in fact, many personal computer companies DID fail along the way (sometimes because they were only a few years ahead of their time). The only way we'll reach a 'steady state' is if you believe there will be a a 'steady state' of technology to underline it: as long as there are more revolutionary technologies to be invented and discovered, you will have incredible failures associated with them.
More bluntly: the average laundromat lasts longer than the average venture-backed startup. That should at least be worth some minor reflection.
It does: I hope we don't reach the point in our society where we have a bunch of laundromats instead of a bunch of super interesting crazy ideas being tried out. Areas that don't have a lot of failure usually don't have a lot of innovation. It is really unfortunate that we fear failure so much, corporate death is an important part of an economic system. Car companies should die when new modes of transportation are discovered, rental stores when internet video is delivered, and as the pace of technology picks up, we should expect failures to happen quicker. Block Buster didn't necessarily last as long as it did because of its "fundamentals", but rather a historical accident that at the time in our technological and economic development the window of time between vhs/dvd and internet video happened to be "long".
This is incorrect. There is no law that says "Hey, if you're not failing a whole bunch you clearly aren't learning new things and trying out stuff!". A great deal of progress can and has been made by people making conservative market decisions. A great deal of success has happened without spastic startupcanistan spending of cash with no rhyme or reason.
Steady-state in an industry doesn't mean stagnation, it doesn't mean no progress, and so forth. It means the same number of firms leaving as entering--usually because crazy gold-rush investment and whatnot isn't taking place. It means that wages settle towards a more reasonable and sustainable distribution, that customers are getting value reliably, and that resources aren't getting thrown away and careers screwed up by rapid business spinups and shutdowns.
I don't mind that people claim that the startup scene, Valley, etc. are somehow "building value"...what I do mind is the complete and utter denial of valid criticisms of that claim. A steady-state economy is, by definition, one that has built non-transient value: it remains to be seen whether the last five years of companies have accomplished that.
The thing about your last point is that, honestly, the fundable things aren't "super interesting crazy ideas". They're me-too followers on where a VC or angel is trying to bet on their favorite second-mouse to get the cheese.
Don't conflate technological progress with what the current startup ecosystem is doing, because that idea is the flimsiest propaganda imaginable. Innovation happens outside startuplandia in, I'd suggest, greater quantity (if not rate!) than inside.
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There is a lot of blind regurgitation of "startup fail fast only way to progress must progress fail faaaaster" going on right now, least of all because it kinda suits the investing class--and a lot of bright and well written people, you included, seem to be parroting it without much critical thought.
Yeah, that's a generous reading. I'm in the startup world and let me tell you, there are a LOT of clowns running around right now with completely shit ideas, just trying to grab some of the sweet sweet VC money before the music stops. It's appalling.
The big winners have huge economic impact and create things that change the world.
0% of "non-startups" create money. And if they do make money, they do it by ripping people off.
So yes only startups creates wealth.