Silicon Valley Runs on Saudi (2019) | Hacker News Reader

Silicon Valley Runs on Saudi (2019)

vicki.substack.com

198 pointsthunderbong153 comments

When I was fundraising for my startup, after pitching I always emailed to ask about the LPs and if there's any Saudi/oil money in the pool. More than 10 firms just ghosted me after that email, potentially because they think it's poor form to ask about LPs. (edit:We were still able to raise over $3.5MM seed though, so don't necessarily let asking put you off.)

Am an LP in a couple of tiny funds…a lot of the funds have verbiage to the effect that the GP will not reveal any information about LPs except as required by law (I'm not saying that's what happened here, and the firms should have just responded that they don't disclose information about their LPs rather than ghosting you). There's also typically verbiage restricting what LPs can reveal about the fund, a recent one requires divesting from the fund if the LP becomes subject to FOIA, for example.

Is it also possible that asking about the LPs, and especially saudi influence, could indicate that the founders has morals that could be “annoying” down the road?

Anything's possible... unreturned phone calls are hard to reach conclusions from. Here's a Douglas Adams quote:

"I don’t know if I’m right in thinking this, but I only have silence to go on, which is always a poor source of information."

Possibly. I mean, I'm a stereotypical East Coast liberal "elite SJW" so the founder's question would have been perfectly acceptable to me (if I were the GP of the fund). I would say that the closer a fund is to one of the coastal centers of influence …the more complex and restrictive the partnership documents have been.

well the point is that you wouldn’t know

its standard verbaige industry wide

your LPs can just be two neighbors that dont like each other

you can make up whatever helps you sleep at night its just not that complicated

> potentially because they think it's poor form to ask about LPs.

It is, but I'm not sure it's for the reasons you are implying. First and foremost, Saudi money and oil money is an enormous part of global wealth /full stop/. That deep degree of intermixing happened decades ago; there's no putting that cat back in the bag. Asking a question like this to VCs who you are ostensibly trying to make a good first impression upon is akin to telling someone that you don't have sex on the first date. Perhaps you don't, but phrasing it that way is a seriously tonedeaf way to signal it.

If your primary motivation as a founder is to raise "untainted" money rather than money on good terms and from partners who can help you, I wonder whether you should be fundraising for a VC funded startup at all. This isn't meant as a dig at you -- I just think that the VC funded startup path is often considered a default path, and there are a lot of founders with amazing things to offer the world that might benefit from alternate financing more than VC. If you're concerned about LP fund sources for VC, then alternate funding may be something worth considering.

You make some really excellent points, and having done this rodeo so many times now, if I was going to do it again, I would most certainly consider alternative funding. Thankfully I was able to raise the money I wanted and feel at least that it wasn't directly tied to things I felt uncomfortable with.

I also think that even though you're right, avoiding truly tainted money is near impossible, asking the question puts VCs on blast, something I feel fortunate to have been able to do (even if not common and they just ignore me as an edge case).

Just as one point of clarification, I always asked after the partner pitch, so I felt like we'd dated enough that it was an acceptable question to ask (I could very well be wrong).

That makes a ton of sense. Also:

> I always asked after the partner pitch, so I felt like we'd dated enough that it was an acceptable question to ask (I could very well be wrong).

This is a key piece of information that does not match my presumption. At that level in the process, to continue our dating analogy, I think this kind of question or concern is a lot more reasonable. But with that said, I think it is unfortunately a concern that will be a dealbreaker for a vast majority of VCs.

With that said, the plus side is that alternate funding vehicles are more powerful than ever, whether that's crowdfunding, angels, alumni syndicates, revenue based funding, user based pre-orders. I respect that this may not have been the case when you last raised, but certainly this past year has minted an enormous amount of new HNW investors chomping at the bit to put their money into interesting causes, some for profit and some not. Dis-intermediating the VC has never been so viable as it is now, in my opinion.

> It is, but I'm not sure it's for the reasons you are implying.

I'm curious now. Why is it poor form?

> Perhaps you don't, but phrasing it that way is a seriously tonedeaf way to signal it.

So you're saying they should have phrased the question differently - perhaps they did in fact do that.

But I think asking is perfectly legitimate.

Now I'm not implying you said this, but I feel like I should point something out anyways: Raising questions of morality is not poor form because it might make someone uncomfortable about what they're doing. That's kind of what morality is about. "How dare you make me think about the bloodstains on my money" is not exactly a form of indignation that'll get you people rallying in support.

It's an bad question to ask outside the context of a relationship. It's like asking a very personal question of someone before even meeting them for a first date.

'Who the LP's are' is basically none of your business unless you are entering into some kind of relationship, even then - it may be out of bounds. Of course you have the right to not take money even in that case, but that's a different thing then knowing when to ask.

All of this talk about 'tainted money' is bordering on naive - it's very subjective, moreover, if people would actually take a moment to grasp how this world operates they might find a lot of things they don't agree with.

I'm not suggesting people don't make decisions about where their money comes from - that's very reasonable - rather that it's much more complicated than 'boycott Nike or Chic-Filet' populism.

As far as LP's - it's definitely not a question you ask, unsolicited, over email, without an established relationship.

You can try to do your own research on it, or, ask 'in person' once you have some semblance of a material conversation with an investor and hope they give you a hint one way or another. It would help to ask it in an informal, indirect manner, possibly lumped in with a few other speculative LP questions.

You still haven't explained why it is poor form, besides saying "it's a bad question to ask". I see many words but no explanation.

I said it clearly: it's private information.

It would be like some random person on the internet sending you an email, asking about specific details on your cap table.

One can care about fundraising for their startup and care about raising untainted money without it being one's primary concern. Then you move the goalposts a little more and essentially say that you shouldn't be concerned with funding sources at all. The latter point especially seems amoral.

It's all a bit of a straw man. I'm curious what motivations are backing your reasons for advocating for this position?

I just think that all big money is tainted and founders should be honest about what they're raising when they raise, so there aren't surprises later. If one reads the Panama Papers, this comes into very clear detail.

I guess I should add a bit more color here, which is I also don't necessarily think of this tainting as a purely moral question, as I believe it's also a logistical one. The more money is being managed by a fund, the more likely it is that some nefarious utilizations of it will come into the picture. I think of it a lot like the law of large numbers.

What's a LP?

A VC firm has general partners (GPs) who own the firm and manage the money and funds. It may also (and usually does) have limited partners (LPs) who invest money in one or more funds but don't play any management role.

And, more importantly, who have no say in how their money will be invested.

You got a couple of technical replies (which are correct) but the answer what you are looking for is that they are the VC’s customers.

They pay the investment firm to invest their money, typically 2% of funds invested annually plus 20% of any realized profits.

Limited Partner. The people who invest in Venture Capital funds

Because fuck ethics, right?

I’m curious what your ethics say about your implicit buy in to the destabilization of the environment for future generations?

Everyone is a hypocrite given the right context.

I didn’t really see concerned Americans setting aside their superfluous materialism to spring child political prisoners from cages.

To the people of the U.S.: time to stop believing what the TV told you about your place in the world when you were children. Your military and elite are responsible for the vast majority of the environmental destruction impacting everyone.

Let’s sober up a bit, shall we?

Username does not check out

I'm guessing the people downvoting don't know about "The Line"

At least one person noticed. Thank you.

Downvoters probably prejudged my political position from the observation. No hard feelings.

Or more likely they don't like low quality reddit jokes showing up here.

This whole website is pretty much a sub-reddit. It wasn't really a joke either, more an observation.

This is one of those nerdbait topics. Every tunnel in the rabbit warren splits into more and everyone ends up arguing with themselves about completely disparate topics.

Does money have a nationality? / If you owe the bank a million, it owns you. If you owe the bank a billion, you own the bank. Does that apply here? / Taking money from morally questionable people... what about X? / Is Saudi Arabia going to liberalize? Will there be a republican revolution? Do monarchies suck? / Islamic banking? / Foreign shareholders = censorship?

Down in my tunnel... I'm getting kind of fascinated by these sovereign wealth funds. Norway, being democratic and having a better run wealth fund, is a better example. The last 15 years of bull markets have been sort of fraught. Government and personal debts got big, as asset prices grew. Sovereign wealth funds give the government/public a stake... and countries that have these are in very strong positions.

It makes so much more sense to hold stocks and bonds than gold and forex... maybe. That way, national treasuries finance real economic activity.

In an adjoining tunnel someone is worried about malinvestments.

I agree. Americans have always had it but the 'We are better than everyone else' seems to be getting worse. He brings up 'Women not being able to drive' and other reasons for not accepting their capital.

Certain groups in the middle east don't seem to have the same opinions about accepting American money. So instead of saying "Saudi bad, American good" people need to do alittle bit more research into where the US spends it's money. It's not as pretty as slack and Uber I can tell you that :)

I am not looking forward to the rehabilitation of MBS's image that will take place over the next couple of years.

After Khashoggi was killed, some prominent people took a bit of stand and pulled out of the Future Investment Conference. The narrative there was clear: we don't do business with people who murder journalists.

So now, the US has essentially confirmed it: yeah, MBS did in fact have that journalist killed. So what comes next?

What should happen is all of those people who boycotted the conference a couple years ago come out and say "we will not do business with MBS connected businesses, investment funds, etc moving forward!"

What will actually happen? Probably the something worse than what seems to be the official US government stance: "Yeah, he did it, but we aren't going to punish him or allow what he did to impact business as usual." Business leaders can't even afford to take a position that weak. They have considerably less leverage, so they have to kowtow. I expect for the most part they will refuse to discuss their relationship with MBS as they move forward with partnerships and investments. The real question is when his tours of US tech campuses will resume.

You could also say the same about Russia making the UK basically their poison playing ground. You would think much more would be done when a whole city needs to be shut down due to the spread of the poison between people.

Money is money, people are fickle minded and will look beyond incredibly awful things if need be. It's a helluva drug.

I assume it’ll be similar to what’s happening with China.

Putin & company have done the same and more, and their money is still more than welcome in Silicon Valley and elsewhere.

Well Biden did say he was going to direct companies to increase semiconductor production. He says critical components need to be identified as a national security concern. A similar effort could be introduced here. Identify what Arabia provides that’s so critical and introduce alternatives as a national security effort.

> Identify what Arabia provides that’s so critical

Lots of oil. And money. Mostly oil.

Worth noting that earlier this year US imports of Saudi Oil hit zero. Granted it was just for one week but certainly reflective of the broader trend.

Source: https://www.bloomberg.com/news/articles/2021-01-06/saudi-oil...

US was never really dependent on Saudi oil, and US governments knew it.

Even before the shale oil, US had no problem to expand its oil production to match its own consumption.

What prevented US oil industry to just work was a very strange regulatory framework where it was both shielded from competition, and prevented from expanding, keeping it in subservient role as a supplier to US strategic petroleum reserve.

For all intents, and purposes the US legislation only benefitted Saudi interests after 1975.

US policy in the Middle East is not necessarily about the fact that we get our imports directly from there, but to keep price stability for the global price of oil, which is still something we pay even if we don’t pay SA and friends directly.

Now that we have shale, it seems like this policy is less worth it.

An enemy.

In the context of tech, KSA has a massive amount of wealth that they’re trying to diversify into other sectors to avoid civil unrest over the next 50 years when oil usage is decreased.

So, don’t take VC money funded by KSA?

It’s not that simple. You may never know where the money you’re accepting is coming from.

While I find the actions of MBS and the assassination to be morally reprehensible, you should be aware that the US has a storied history of extrajudicial assassinations. Further, dissidents who have spoken out against the government in the form of leaking of classified information are routinely jailed for 20 years, which is IMO akin to a death sentence.

The fact that something is hard to do doesn’t mean that it’s impossible, or that a good faith effort shouldn’t be made. Nor does it mean that those efforts won’t have some deterrent effect that reduces bad behavior in the future.

The problem is you need to rectify “MBS had a journalist assassinated” with “The US should stop meddling in the affairs of sovereign nations”.

It's hard to square that attitude on non-interference abroad with a killing by Saudi on Turkish soil of a man resident in the US for things he wrote in a US newspaper.

This is why we should not rely on businesses to lead the vanguard of social progress. A recent example is BLM. If you actually think most businesses that aired an ad or have a BLM webpage on their homepage actually care about advancing black interests in America, then I've got a bridge to sell you. These businesses only jumped on the bandwagon when it became untenable to say nothing, and saying _something_, anything really, is just cheap way of earning some social credential.

In the Saudi example, the dynamics are even more atrocious. Every dollar received from the Saudi sovereign fund allows that government to stave off collapse by allowing it to diversify its income streams away from fossil fuels. Every dollar returned to the House of Saud allows a regime that would've been considered repressive two centuries ago to continue repressing women, homosexuals, foreign workers, non-Muslims, etc. And those dollars were invested in companies who likely pitch themselves as trying to make the world a better place through some SaaS product. Give me a break.

> Every dollar returned to the House of Saud allows a regime that would've been considered repressive two centuries ago to continue repressing women, homosexuals, foreign workers, non-Muslims, etc.

Saying this make no justice to the fact that it's Saudi Sunni Arab Muslims, practicing, or not who suffer the most under the regime.

While Shia are the ones who suffer repressions by Saudi analogue of Stasi nearly all the time, the repression, domestic espionage, and political inquisition against Sunni populace is their primary activity.

Regular Saudis fear talking about Sauds even in their own homes.

I studied in Vancouver along tons of Saudi students picked among children of state employees, and ones given the "loyalty exam" to score their passport. Even among such hand-picked selection, people said nobody in the kingdom can speak about the king without chills running their spine. Were they having an option, they would've stayed in Canada.

> Saying this make no justice to the fact that it's Saudi Sunni Arab Muslims, practicing, or not who suffer the most under the regime.

Considering KSA’s funding of terrorists, I would say Iraqis, Syrians, Afghanis and especially Yemenis suffer an order of magnitude more than Saudi citizens. The millions of Philipino, Malaysian, Indian and Pakistani slaves in Saudi Arabia aren’t exactly thriving either.

Indeed, I believe there is now not a single Arab country in which KSA did not try to stage something at some time. From staging coups, to financing armed insurgency, to economic warfare, to an outright invasion.

To be fair, there are few which have mot suffered the same fate from the British Empire or USA either. This is probably why KSA has never faced any punishment from western powers, they are members of the club.

Money = Power over what is spoken and done. Think about this:

MSB meets Bezos and gives him a video that installs spyware into his smartphone.

MSB taunts Bezos about his extramarital affair before it's widely known. Then his affair is leaked to the press. Bezos thinks MSB might be involved in the process that led to revealing the information.

MSB kills one of Bezos's employers. Bezos flies Turkey to meet his fiancee and wows to help.

Bryan Fogel, Oscar-winning film director and producer makes a documentary about the Assassination of Jamal Khashoggi. It takes eight months to find a streaming service for The Dissident. No streaming platform wants it. Not even Amazon Prime.

I'm wondering how many similar cases there are involving politicians where some sort of video (using a toilet, squeezing a pimple and eating it, having sex [or related activities like water sports ... the mysterious Trump tape], nudes, Epstein's peado island, ...) is being used for blackmailing and influencing political positions. I mean attempting this is almost risk-free and simple for a well organized group of hackers, criminals and spies. All you they need is access to a camera in the right place. It's so easy that I have difficulties not coming to the conclusion that such dynamics play an active role in decision making.

If you have a video of a politician having sex with an underage person or doing something disgusting - how far will s/he go to make sure this video is never going to be published.

... and I didn't even put on my tin foil hat.

i founding hit everywhere, amazon included

https://www.amazon.com/Dissident-Jamal-Kashoggi/dp/B08QTQFNT...

It took eight months to find first one to do it and break the spell. Amazon turned them initially down, so did Netflix.

It was not question of price, it was already funded and was basically free. It became instant hit once it was released.

https://www.nytimes.com/2020/12/24/business/media/dissident-...

https://www.hollywoodreporter.com/news/bryan-fogel-on-hollyw...

According to at least one review, that might be just because The Dissident isn't very good. Little White Lies 88 (sorry, link not online yet) complains about "the film's commitment to a tired and gimmicky school of documentary filmmaking" describes its technique as "Juvenile and crass", and says it "lacks all feeling and creativity". Of course, that could be another instance of the reach of the Saudi propaganda...

https://en.wikipedia.org/wiki/The_Dissident#Reception

If memory serves I believe AMD was rescued by oil money as well, otherwise you won't see today's booming $90 per share AMD at all. Money talks no matter what.

Michael: My father is no different than any powerful man, any man with power, like a president or senator.

Kay Adams: Do you know how naive you sound, Michael? Presidents and senators don't have men killed.

Michael: Oh. Who's being naive, Kay?

Great movie.

Great article. I try to stay in top of tech, economy, and politics at the global level but I must say this subject never crossed my radar before.

This reminds me of the scene from the Godfather:

- "but Michael senators and presidents don't have men killed"

- "Now who is being naive Kay"

Here is an idea:

  Don't take the Saudi money.   Don't take any money.  

  Just build it, and ship it.  Work a regular job and work on your startup at night.  

  Create a product and charge very little for it.  Wipe out the competition with a better / cheaper product.  

  Once you think you are having an effect, short your competitor.  Continue to ship your as good or better product for 1/3 the cost.  

  Take down the world powers.

  Just an idea.

I like your style. I may be skeptical about how practical this approach is, but I sure do like the style.

It might work for software startups, but for almost any kind of hardware or biotech startup, you're going to need funding.

A key to changing this is to invest in public research universities that release research papers publicly & emphasize reducing the cost of manufacturing & distribution.

Another key is to fund nonprofit foundations that act as custodians of science & engineering tech released under open source licenses.

Software startups are possible because manufacturing costs have been minimized to near zero & key tech is effectively public domain. Hardware is about 20 years behind the curve, but open hardware licenses are appearing & patents expire quicker than copyrights.

I would add to that: encouraging people to choose open standards and technologies over closed systems that promote vendor lock-in.

It doesn't really + it's not like it's child slave money or something, this is money from oil paid for by almost every country in the world, you know since everyone needs oil. I can't believe the hypocrisy if you really have an issue with that money, go after the countries that are purchasing their oil from them. Let me make it easy for you, here are the top three counties:

1 Japan

2 China

3 South Korea

Yeah, the article neglects the fact that one of the main reasons for the US dollar being a world reserve currency is because of the petrodollar system (basically the US made a deal with oil-rich Middle East countries to only sell their oil in dollars, and get extensive military protection in return). Since everyone needs to use oil in order to produce anything, the demand for dollars rises globalwide, and there is nothing you can do about it unless that relationship is terminated, or oil becomes fully replaced with other renewable energy sources (although keep in mind that oil isn’t just used for power). Saudi’s non-problem(?) after this lucrative deal is that they are now flooded in a surplus US dollars, and after realizing that they can’t outspend this with only luxury cars and hotels (!), they have invested that surplus heavily into US corporations, like which the article is describing.

> TL;DR: it’s very ironic that, for all of Silicon Valley’s noise about moving fast, breaking things, accessibility, equality, and good old-fashioned American innovation and Freedom, a not insignificant part of it continues funded by foreign governments whose values are fundamentally at odds with what Silicon Valley claims to promote.

Just put the TLDR at the top of the article, next time.

> What does it mean for American innovation to be backed by oil wealth?

> Uber. WeWork. Flexport. Slack. MapBox. DoorDash.

Chat app? Office rentals? Adding a layer of ripping off restaurants to food delivery? If this is the “American innovation” the Saudis want a piece of, let them have it.

It's probably less about raw "innovation" and more about integrating themselves within the fabric of American society.

This achieves simultaneous financial investment and political insurance.

It's about survival. The Middle East is not full of stupid people. They all see the writing on the wall. Yes, we will always need petrochemicals, but we're rapidly approaching a world where we need very little of them.

In another 80-100 years' time, we'll have nuclear fusion, and if for some reason we've decided we don't want unlimited cheap power with easily disposed of waste, then we'll settle for solar, wind, geothermal, and hydroelectric power. Battery technology improves dramatically every decade. Eventually we'll make some kind of breakthrough with some kind of material that makes storage capacity a moot point.

Dubai is already trying very very hard to diversity and become the Silicon Valley of the Middle East. Saudi Arabia wants to ensure they have enough investment to maintain the current Saudi way of life, because most Saudis are totally and hopelessly addicted to their government checks they receive from oil profits. It's quite literally pacifying the masses and preventing a type of radical Islam from taking over there, and I mean ISIS-type radical.

No one talks about this except for people who have to work intricately and intimately with Saudi companies and the government or three-letter agency analysts who know the country well, but to say that, "It's a problem" is the mother of all understatements.

Had this been about diversifying their future income streams, the most efficient way would be the most boring one - buy yet another 1% of everything.

Pouring tens of billions into startups with questionable business models, in the world's most overpriced market, while conspicuously avoiding UK, EU, ANzAC and Japan - that's a clear sign they're not in this for money. They're trying to trade money for cultural influence.

Great point.. but I immediately thought, they probably are doing the boring thing as well.

> It's about survival.

Uber, DoorDash, and WeWork will either be shells of their current selves or nonexistent in a decade or two, let alone a century from now.

I think DoorDash, MapBox, FlexPort, and WeWork are far less integrated into the fabric of American society than you might suspect. Slack I suspect will hang around for awhile out of corporate inertia.

I can only hope Uber is on its way out. But markets staying irrational longer than I can stay solvent, yada yada yada.

Honestly is most likely just about spreading investment. They know that, or most, of these investments will fail, but those who survive will make up for the loses.

The “wokeness” of the silicon valley is skin deep when it comes to money.

It’s about giving us coastal liberals fake warm and fuzzies so that we will ignore the source of our employers’ wealth.

“We are super lgbt+ friendly and our CEO is gay. We are so inclusive here is a picture of him with Mohammed BoneSaw, who would gladly behead 80% of the company for being infidels who do not follow wahhabist philosophies”.

Don’t worry. If it comes up in conversation, Somebody will quickly change the subject and say: “women can kind of drive there, and now that Ivanka made it so Israel can trade with KSA and UAE thanks to the ‘Abraham Accord’ it’s all good, man”.

The important thing is that money exchanges hands and the forms have been followed (intentional Dune reference). It doesn’t matter where that money came from as long as it isn’t Iran or North Korea.

This is about disrupting it, crushing some sweet valuations, and making a killing.

Now get back to bitching aboit the homeless people you have to step over on your way to $10 lattes and $15 avocado toasts.

Cash rules everything around me, get the money.

Dollah dollah bill y’all.

(Edits: typos. Neuropathy + small iphone screen makes accuracy difficult)

> The “wokeness” of the silicon valley is skin deep when it comes to money.

Realistically, decoupling from that dependency is tough. Just read through the "Free Land - Living off Grid With No Money" thread [1], and the challenges of decoupling are laid out on just the individual level. It's going to be even tougher to accomplish as you scale up.

I think that decoupling is a worthy goal. It adds resilience. But not everyone shares that point of view.

2019.

(I upvoted you for adding context). The reason this is being brought up right now is because of Biden escalating tensions with Saudia Arabia over the murder of Khashoggi.

E.g. https://edition.cnn.com/2021/02/25/politics/biden-us-saudi-r...

Interesting. Relevant to the same story, it appears the Biden administration is pulling support for Saudi Arabia's offensive in Yemen. https://www.aljazeera.com/news/2021/2/4/biden-to-announce-a-...

I wonder, since this comes hot on the heels of a peace deal between Israel and Saudi Arabia, whether the US is in the process of pulling support for its client states in the region.

That is an interesting narrative take. A more detailed look shows that a report that was begun well before Biden has been released and Biden's first reaction was to have a diplomatic phone call to ease tensions. Biden is trying to moderate tensions, not escalate them, which is the opposite of what you assert.

CNN, who themselves lean Democrat, do not seem to agree with your perspective in the article I linked. They are stressing the Democrats' and Biden's role in this

> Democratic lawmakers are expected to introduce a resolution on Friday to hold Saudi Arabia accountable for Khashoggi's death and dismemberment as well as other human rights violations.

> the President has ended US support for the Saudi-led war in Yemen launched by the crown prince six years ago. Biden has also ordered an end to some weapons sales to the kingdom and will soon release the report,

> Dennis Ross, who has worked on Middle East issues in multiple administrations, said Biden is using the report's release to send a message to Congress,

> "I think the Biden administration wants to demonstrate clearly that it is a new day after the Trump administration

Runs on Saudi what?

What I see in those photos are Muslims, Jews and Gays, even Arabs and Iranians getting along ... all because their greed trumps their mutual hostility! Go capitalism?!

Otherwise this is the face of Globalism, and to the extent there is 1) Massive international trade with any amount of 2) Trade deficits in countries where there is 3) Big concentration of wealth or power (most of the world) - then this is going to happen.

The MBS issue specifically is not easy to contemplate, it cannot be avoided.

... what is the problem here? Investment is being made and people are better off for it. Isn't this how trickle down works?

The problem is these companies often claim liberal, progressive values and that they are forces for social good. On the other hand they are flattering and fawning to a murdering oppressive brute in person.

It's an exasperating situation to be in. We need Saudi oil so we need to be able to work with them, but they are a grievous threat to freedoms and civil society globally. It's not just MBS either, look at the way gulf rulers have their daughters abducted off the streets of England or international waters and locked and drugged up. Yet the livelihoods of millions of westerners depend on these people.

Shunning them completely isn't practical, nor is turning away their money in every case, but that doesn't mean bowing and scraping to them is acceptable.

I see, that's a fair argument. Thanks missed that from the article which at the surface seemed to me like a great thing.

> We need Saudi oil

How much do we need oil vs wanting to sell them weapons?

Only if you think it purely in cold hard economic terms and believe trickle down economics is a real thing.

I don't know if I "believe" in trickle down, but it seems like this is whats happening. Are people not better off that money has moved from someones bank vault into employment?

The trickle-down theory is not a claim that rich peoples' money flows to less-rich people. (And claiming the opposite would be absurd; rich people do not permanently take money out of circulation.)

The trickle-down theory posits that the best way to get money to poor people is to flatter the rich with more money. It is a goofy excuse for tax cuts. About the only positive feature it has is that it is useful for detecting the economically gullible.

“Best” needs to be qualified here. The simplest/fastest way to get money to poor people is to just give it to them.

If you do that, what happens that’s good and what happens that’s bad?

Another route is to support private employment (what trickle-down seems to be seeking).

If you do that, what happens that’s good and what happens that’s bad?

Unsurprisingly, people who prefer the government to be more powerful and more directly involved in economic outcomes of people tend to prefer the former. People who prefer a government with less power and less direct involvement tend to prefer the latter.

Trickle down doesn't support private employment, it just enriches wealth holders. Lowering cap gains taxes isn't convincing any new rich people to throw more money in the investment pool, it's just increasing the amount margin that capital can extract. Returns are so low that rich people just throw the money they make back into the market anyways, but now we have a ton of capital anyways chasing little returns, which creates speculative asset bubbles.

It’s certainly theoretically possible that people generally don’t consider the effects of taxes and after-tax returns in the inter-linked areas of investing, employment, and new business formation activities, but that doesn’t match my own personal experience nor the behavior of others I see making those decisions.

I find it incredibly hard to believe that increasing the amount by which we tax away the prospective rewards of being successful in a business doesn’t have a negative effect on propensity to form new or expand existing businesses.

https://www.bbc.com/news/world-europe-45812399

https://www.npr.org/2021/02/25/971215788/biden-administratio...

Unfortunate to see you buried for asking a simple question (that I also had). So, take an upvote from me, for what it's worth. Either way, thanks for taking a hit for those of us wondering what the issue was.

The capitalist mentality is becoming deeply unpopular, and I'm curious to see how it will play out. It no longer seems "okay" in a certain sense to simply focus on the money without considering the ethical implications.

I remember this kind of thing being an issue several years ago, when a certain Russian investor was courting a lot of unicorns and offering some pretty incredible termsheets that you'd be foolish to turn down.

Obviously there is reluctance to support a ruler implicated in murder. Yet Saudi Arabia's oil-based economy has been recognized as a problem and risk for the country's own innocent people and there have long been hopes of diversification into other industries.

That these investment schemes are linked to the Saudi government should not be too much cause for upset, because the Saudi Arabian populace benefits from a strong welfare state; the money brought in by the government does go to benefit the average Saudi. Thus outright attempts to deny any Saudi government-led investment schemes end up impacting normal people, not just the rulers. There shoukd be carefully tailored actions to punish MBS and his circle, but if the USA wants to avoid alienating the Saudi people and creating lasting resentment, then it ought not to make their quality of life worse.

> the money brought in by the government does go to benefit the average Saudi

Except the oppressed 33% of the population might not actually benefit:

https://aeon.co/essays/are-the-persian-gulf-city-states-slav...

> Thus attempts to deny Saudi government-led investment schemes ends up impacting normal people, not just the rulers.

This is a weak argument, as it could be extended to mean that any government should be supported as long as any fraction of the support benefits the average population.

The 33% of the population you talk about are foreign gastarbeiter, not Saudis. Certainly they deserve better treatment and an end to the controls compared to slavery. However, even if gastarbeiter were free, they would not necessarily be entitled to the welfare state that Saudis enjoy; it is common even in free countries that foreign workers have limited recourse to benefits.

And again, in solving the problem of exploited laborers in these countries, one must simultaneously avoid any drop in the local population's standard of living, because that will only breed resentment. I can see that my post above has offended some readers, but can't we learn lessons from the past and avoid e.g. another Iran?

While I mostly agree with the rest, this part:

> However, even if gastarbeiter were free, they would not necessarily be entitled to the welfare state that Saudis enjoy

is not the (only) alternative. The alternative is working under better conditions in general, not necessarily in Saudi Arabia. This shines some light on which countries (?) one should cooperate with, in order to make this cooperation benefit average people the most.

Opinion like yours must be heavily censured.

Saudi populace is begging the West to do something about its despotic regime of state terror.

It is this, and West's CYNICAL BETRAYAL of its own stated democratic principles what paints a target on US populace for Saudi radicals.

US is equated with the Saudi regime, and gets reprisals for that.

US government association with Saudi regime is dangerous for America, it's damaging to was majority of Saudi populace, it server no reason at all.

Private individuals choose who they want to do business with, including who they take money from.

Your argument really goes both ways. If the sovereign citizens of Saudi Arabia want their national wealth invested in private industry, maybe they need to first change their country to be the sort of place these investment seekers want to do business with. There's great examples of positive changes toward business and investment from liberalization across the globe, which the Saudi people could take as example for how to become a more attractive investment and funding partner.

Welfare states depend on economies of scale that only states can provide. Switching to a culture of totally private mode of investment would mean an end to the welfare state and the slipping of much of the population into precarity. So, the best thing for both Saudis and the world would be politically liberalizing moves that maintain all that state investment and high standard of living, but with authorities that aren't corrupt murderers.

However, as we have abundantly seen in the Middle East, making life worse for the populace tends to hinder those very moves towards more just government because of the resentment it breeds.

There's no need to make the question binary; plenty of liberal states have strong social systems, and yes changing federal state management structures though would be one change that could make Saudi Arabia more attractive an investment partner.

Going into business with the royal family strengthens its power globally and domestically and decreases the chance that the Saudi population could effect a change, whether they wanted to or not. It also legitimizes the actions of the Saudi royal family. That's a consideration that a private individual is under no greater political obligation to make one way or the other, and a consideration that should be made with deliberation (as should any decision of this kind be made).

We're missing I think a good argument for forcing private founders to be critical of how they run their business but to avoid due diligence on whether funding sources come from the Saudi monarchy. How the government of the US and other countries negotiate relations and sovereign trade with Saudi Arabia is a separate though indeed important topic.

Making the lives of civilian people utterly miserable in order to force them to topple unwanted governments has been a corner stone of US foreign policy for decades. It's why countries like Iran are facing so harsh sanctions; they punish the people severely into desperation. At least that's what the terribly flawed theory predicts. In reality, the rulers can easily circumvent sanctions through smuggling, foreign travel, sophisticated financial setups, etc.

Venture capital is only involved with a fraction of development in Silicon Valley. It may be a large and very loud fraction, but it is still just a fraction. On top of that these well known attention getting firms are just another fraction of the whole. Again, very large and loud, but still just a component.

Just to call out one potentially interesting exception, much medical device development goes on in Silicon Valley. Medical development is much less sexy because it tends to be used as needed and is typically only marketed to medical providers. Medical devices need to function rigorously and demand for radical new developments is moderated by pervasive caution. As a result there is not a great deal of Saudi money in medical device development, or at least not in an obvious and influential way.

So the headline is way off. People would be well served by dealing with Silicon Valley as if it were something big and complex with many involve inputs and factors rather than something simple that you can recognize immediately because you access the Internet on a laptop and can do some basic research.

Quite a bit of Chinese investment though, no? Different thing entirely but may be of interest to some.

I thought Chinese investment significantly tapered off a few years ago.

Possibly. I recently interviewed for an infosec role at a SV medical device manufacturer and China was involved in a few ways above and beyond being a major part of the supply chain.

I had to nope out.

Not just VC but all aspects of American life is subsidized by China. High real estate valuations, university operations wnd expansion and the ability foe the government to take on seemingly infinite debt is significantly impacted by Chinese money. If the CCP forced all Chinese nationals and corporations to withdraw their money from the USA we would be starving in the streets.

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