The Unproductive Entrepreneurship of Silicon Valley

Or, Why I Can't Be a Pure Techno-Optimist

Photo by Greg Bulla on Unsplash

The hard-working staff here at Drezner’s World has previously expressed skepticism about Marc Andreessen’s manifesto. Writing in the City Journal, however, Neil Chilson suggests that this is just because I’m a paid-up member of the intelligentsia:

In short, a large chunk of America’s intelligentsia and politicos are pessimistic to the core about the future and about human capabilities.

No surprise, then, that Andreessen’s argument has touched a nerve….

What this shows is that Andreessen’s manifesto is working as intended. In the face of a constant media barrage about the dangers of technology and innovation, the Up Wing has been awaiting a rallying cry. The “Techno-Optimist Manifesto” presents a compelling vision for a brighter future driven by technological innovation and human potential. It challenges prevailing pessimism within U.S. culture and argues for a return to the spirit of progress and entrepreneurialism that has historically propelled humanity forward. It is unapologetically in favor of permissionless innovation and free markets.

And it triggers all the right people.

As a pretty big fan of economic globalization and technological innovation, perhaps I should reconsider my skepticism. After all, “triggering the right people” is one of the hallmarks of free markets amirite?

Somewhat more seriously, Chilson’s ethos is sympatico with the quasi-libertarian culture of Silicon Valley. One would like to believe that left to their own devices with the massive subsidy that was the creation of ARPANET, the entrepreneurs of Silicon Valley can invent the way out of all our current problems.

This is certainly how Silicon Valley views itself, which is why the Washington Post reported last week that the right-wing libertarians of Silicon Valley were not going to back Trump right now:¹

Just two months before Republican primary season kicks off in Iowa, Thiel is one of several powerful Silicon Valley conservatives reevaluating their participation in politics. Tech heavyweights who helped ignite Trump’s candidacy have told close associates they feel alienated from the GOP and are casting about for a candidate who more closely aligns with their extreme pro-business agenda….

The ambivalence among tech leaders goes well beyond a distaste for the former president, who was scorned by several high-profile tech-world supporters in the aftermath of the Jan. 6, 2021, attack on the U.S. Capitol. Although the tech elite often have criticized the left and “wokeness,” some now say the GOP has overemphasized divisive social issues such as transgender rights and abortion at the expense of the tech titans’ primary political goal: radical deregulation.

Once enticed by the prospect that Trump would usher in a new, ultra-capitalist era in Republican politics, members of the right-leaning tech elite are now looking for allies to protect the industry from bruising attacks by both parties and champion its worth as the country’s most dynamic economic engine. These views have been calcified by government efforts to regulate artificial intelligence, which the Silicon Valley figures see as a transformative technology that would suffer from government meddling….

While some tech leaders, such as Thiel, supported Trump and the GOP’s attacks on Big Tech, today the tech elite across the political spectrum fear that Washington has become overly meddlesome in industries such as cryptocurrency and artificial intelligence (emphasis added).

There is an argument to be made that excessive regulation and caution can lead to a stifling of innovation. Reading about the dismissal of Sam Altman from OpenAI, I could be convinced that the board overreacted pretty badly.

I do have one question, however: what if the reason for government intervention comes from the incompetence and malfeasance of, you know, the entrepreneurs of Silicon Valley?

Never forget that it was the likes of Andreessen that invested considerable amount of time and capital into cryptocurrencies, proclaiming that U.S. “hyperinflation” meant a switch to crypto was inevitable. Ironically, it was precisely when U.S. inflation spiked that crypto crashed. The crypto market was not regulated much at all, and the result has been an awful lot of schemes, scams, and cons defrauding the uninformed. That accurately describes what Silicon Valley progeny Sam Bankman-Fried tried to do, and the outcome for him and his investors was pretty bad.

The more serious indictment of Silicon Valley at this point is that its moguls keep following the wrong business model. For example, back in August the Washington Post’s Naomi Nix and Sarah Ellison noted how Big Tech firms were following Elon Musk’s lead in handling disinformation:

Almost immediately, Musk’s reign at Twitter forced his peers to rethink other industry standards.

On his first night as owner, Musk fired Trust and Safety head Vijaya Gadde, whose job it was to guard the companies’ users against fraud, harassment and offensive content. Soon after, just days before the midterms, the company laid off more than half of its 7,500 workers, crippling the teams responsible for making high-stake decisions about what to do about falsehoods.

The cuts and the evolving approach to moderating toxic content prompted advertisers to flee. But while advertisers were leaving, other tech companies were paying close attention to Musk’s moves.

In a June interview with the right-leaning tech podcast host Lex Fridman, Zuckerberg said Musk’s decision to make drastic cuts to Twitter’s workforce — including by cutting non-engineers who worked on things such as public policy but didn’t build products — encouraged other tech leaders such as himself to consider making similar changes.

“It was probably good for the industry that he made those changes,” Zuckerberg said.

In the time since Musk took over, Twitter’s stock valuation has fallen anywhere from 50 percent to 90 percent. And that was before Musk’s latest anti-Semitic meltdown, which has triggered another exodus of advertisers. The latest plan for Twitter’s revival is to rely on a 25-fold boost from 2024 political advertising. In an impressive act of meritocracy, Twitter CEO Linda Yaccarino has decided to put her son in charge of that last-ditch gambit.

So here’s my question: why on God’s green earth is Silicon Valley copying Musk’s management practices at Twitter? Is it so they can rake in the income from fake news — or is it so they can appease political groups they fear will be in power in 2025?

When I look at Silicon Valley these days, it is hard to see folks dedicated to free markets and productive entrepreneurship. This crew of moguls looks to be far more dedicated to unproductive and destructive entrepreneurship. Rather than innovating their way into a greater return, they are relying way more on their market power and political influence to increase profits.

If that is the case, then it is the likes of Chilson who should feel triggered.

1. I have my doubts about whether this will last.