It's the nerd version of college football/basketball recruiting.
It's like the entire system is desperate to keep optimists optimistic and pessimists pessimistic.
Why is it that investors actively seek out starry-eyed individuals?
It sounds like an economic bubble factory. If every new person who joins elite circles is optimistic to a delusional level, then that level of optimism may be contagious and propagate delusional beliefs among the elite.
There are people in the tech sector who were very successful decades ago and are now in their 40s and still haven't come out of their highs. They have the same worldview as I had when I was 15.
Tech VC's are in the business of selling business futures, not building mature businesses. The buyer they sell to can install a practical CEO and worry about actual operations when that time comes.
In the meantime, enthusiastic kids provide a relatively cheap, manipulable, supply of powerpoints and pizazz -- whereas sober, mature professionals often need more personal income and tend to focus more on executing the business that they have experience in (mostly irrelevant to the VC's own business) instead of matching the investment pitch for upcoming rounds (all that matters).
Is the company slowly declining into unprofitability? Sell it off and cash that big payout.
Can't sell it off? Scrap it for parts and scavage the remains, cash that big payout.
Did it implode in on itself in a spectacular fashion? Sue leadership to recoup your losses.
As the saying goes, the house always wins.
It might not be in the best interest of the company, it just needs to be a hype train long enough for the VC to get theirs. The Greater Fool meets real life. The VC doesn't care one way or another if the founder benefits in the end, as long as it doesn't affect their ability to make their next play.
There are good reasons for this: their parents were last season's elites and want to pass it on, their classmates will likely be good contacts in other elite institutions, and they've already been trained to please establishment figures enthusiastically (or they wouldn't be Stanford wiz kids).
Not to sound like a crank, but information technology is now (and, really, has been since it's inception) an important theater in the class war, and elites are recruiting for it the same way they always have.
The only thing stopping me from being an angel investor is that I don't have $1M burning a hole in my pocket. But if I did, suddenly I could sit down in a conference room, put a polo shirt on, dangle the money from a fishhook, and people would take what I said about their business idea seriously. It's such a joke.
Not actually the case. The average Silicon Valley founder is in their 40s. It’s just the young ones that get all the press (because they need it).
Why is it that investors actively seek out starry-eyed individuals?
> Apart from the fact that pessimists are not founding companies, the answer is: narrative. There’s a ready-made place in our society for the hero’s story - the lone individual who (like ourselves) is special and has a unique vision. We have multiple millennia-old religions based off this same narrative. It works. It gets press, it gets followers. Humans naturally take any boring story and fashion it into this shape if they can. It takes the large, confusing, abstract or confusing and makes it personal.
GE actually had real business units. Energy, aerospace, consumer, industrial, healthcare, you name it, they had a presence. Welch couldn't squeeze enough money to meet Wall Street's expectations out of these units, and didn't innovate when microcomputers were coming onto the scene in the 90s, so he cannibalized the company to boost share price at the expense of the business being able to continue long-term. Of course, he would be dead by then.
The guys in the valley are the opposite because many of them don't actually have a product, or even business, to sell - or they do, and the product itself is realizing it doesn't want to be sold. We've had social media and ad-based online services for 20+ years now and it's generally seen as a net negative for society. The subscription-based business model wouldn't work for most social media companies as it would limit the network effect and thus the TAM of the company's business. They're having to find more and more creative ways to monetize eyeballs when the eyeballs don't want to be monetized anymore.
Then you have the people who are swapping out their FLOSS licenses for proprietary ones on software offerings (looking at you Redis) because they realize if you just give stuff away for free, there is no monetization route, and dammit, they want - nay, deserve - their massive payday like the Steves and Bill and Larry got.
TL;DR Jack had a lot to sell at the expense of GE as a long-term going concern; SV has nothing to sell but wants to be a long-term going concern.
Having the ability to pay every month for health insurance doesn't do much to protect you from losing everything to health-related bills. Unless, of course, you are rich enough to afford the 'Cadillac' health plans.
So yes, I agree the general lack of regulation is part of why America has "high innovation", but it comes at a great cost to society, and yields a highly stratified society with a lot of losers, and this causes society to be rather dangerous, with a lot of crime, homelessness, drug abuse, etc.