General solicitation and Techno-utopianism

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The news of AngelList announcing their syndicates program coupled with this JOBS Act Title II press release is going to make headlines for a while.

It’s extraordinarily powerful, and many people will write at length about why. In brief, the most exciting piece for me is: it pushes the influence of investors even further down to the individual level. Put another way: it empowers the individual so much more. There was a point in venture capital when blue chip firms (of which there were only a very small handful) would gobble up all the good dealflow, and by virtue of their monopolistic networks, ability to take huge chunks of companies (Kleiner Perkins’ investment in Genentech was at a $800K pre-money, inflation adjusted), and the early nature of the ecosystem, would be able to concentrate value within firms opportunistically. These days, every single partner at every single firm has to fight tooth-and-nail for relevance, whether it is by constantly challenging, refreshing, and expanding their theses, hiring fresh blood to keep the dealflow current, or investing in deeper sets of services. All of this benefits the entrepreneur – gives them access to more transparency, freedom of choice, and agency in deciding their capital partners. Freedom, transparency, and the power of independence. Great for the world, right?

While they are the bad guy these days, unions were a critical stabilizing force in the 20th century. They gave the working class a voice in politics, which protected society from creating a permanent underclass, as the majority of employees were not equity holders in their companies, therefore not fully invited into the wealth creation. Changes like the above and the unionization of entrepreneurs through accelerators makes me feel better about startups having a stabilizing voice against VC as the entrepreneurial ecosystem explodes into the mainstream.

Running parallel to that is an interesting trend being driven by the same group of people, which some refer to as techno-utopianism. When I first entered the tech industry, George W. Bush was president. I (perhaps narrowly) saw the U.S. political system was divided around the axis of ‘9/11 and the Iraq War’. Once the 2008 crash hit, the axis shifted precipitously to ‘regulation and spending’ for some, and ‘jobs and healthcare’ for others. I have a sneaking suspicion, and this was inspired by a tweet I read a few weeks ago (forgive me for not remembering where it came from) that there is a new emergent political axis, particularly among the tech overclass, around “freedom, privacy, and security”. SOPA/PIPA, the NSA spying revelations, and government regulations around collaborative consumption and virtual currencies suggests that libertarianism is the de facto moral high ground among the tech literati. And it gives me pause.

California has persistently high unemployment, and San Francisco’s home to the “most visible homeless problem in the country”, and there have been two public transit strikes in the city of San Francisco, the beating center of the technology industry, in the last 3 months. I live in SoMa, and so that means I am often stepping over human feces left by homeless, waking among tourists en route to Union Square, and also in what increasingly feels literally like an urban campus for tech geeks and their funders. There is a new high-rise condominium going up in every micro-neighborhood of SoMa, and judging by Avalon, Beacon, and Rincon Towers, one can assume they won’t be wanting for occupancy. There are 1.3 million unemployed in California, and almost every company founder I know is struggling to hire, for lack of sufficient supply. If San Francisco, the new center of the Silicon Valley, with a mayor very close to the tech community, is in this position, then geez. And this cognitive dissonance seems to be just starting, and the rule, not the exception. I am thrilled about the JOBS Act II and rise of individualism in investing and entrepreneurship, but I’m just, well, worried about what we’re ignoring along the way. Monday musings…

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