You have fought the hydra bravely, and I commend you for that. May the road rise up to meet you. May the wind be always at your back.
What do you suppose we do?
For the long-term, here's the financial structure for the solution that I see: http://michaelochurch.wordpress.com/2013/03/26/gervais-macle... . Essentially, I think VC-istan and MegaCorps are both dead ends when it comes to genuine technical excellence (which weird people like us care about). I think it's time to have a serious conversation about financing a fleet of mid-growth K-strategist startups instead of these red-ocean, r-strategist, get-big-or-die marketing gambits.
Here's an insane thought that I had that just might work. Find a Midwestern city that has $25 million to blow on becoming a top technology hub and set up an Autonomy Fund. (I'll do the "grunt work" of screening for talent; if this idea has legs I'd drop everything to implement it.) 100 top-notch programmers, $125k per year (out of which their resource/AWS costs come, so no one's living high on the hog), and 2 years. First, these companies are designed to become profitable, not to exit, so compensation is profit-sharing, not the joke equity offered by VC-istan. The city that funds this takes a 37.5% profit-share of whatever they build (it's valuating their work at $333k per year, which is lower than a VC valuation, but the terms are better.) If it works, then add time to the schedule (i.e. more years of life and more startups) and possibly more engineers. This is like Y Combinator, but without the feeder-into-VC dynamic; it's to build real businesses that generating lasting value both to a geographical area and to technology itself.
I seriously think that Autonomy Funds are going to be big in the next 10 years-- VC-istan is essentially a shitty implementation of an Autonomy Fund, except with selection based on connections rather than technical ability-- but there are some obvious problems (moral hazard, principal-agent issues) that need to be solved.
>> First, these companies are designed to become profitable, not to exit, so compensation is profit-sharing, not the joke equity offered by VC-istan
That really, really resonated! Now for a counterpoint. When I read that remark, I recalled reading a recent interview of Groupon's COO and I quote this para:
In 2007, he started Global Scholar to “help teachers give differentiated education to kids using technology. It was a fantastic experience. I raised $50 (INR 2,698.63) million in the toughest economy since the Depression. In 30 months, I gave four times returns to my investors and then sold the company in 2010-11.” On why he did so, he quips, “The moment you start a company, it is for sale… at the right price. You can’t have emotions…” (emphasis mine)
Now tell me, just how exactly are you even going to combat deeply entrenched mindsets like those, which also happen foster the usual confirmation and survivor bias dreams in most, if not all aspiring "wantapreneurs"?
Michael, I really commend your insight into the problem, but "you have an uphill struggle ahead of you" might be the understatement of the year.
EDIT: formatting and word rearrangements and deleted some line that might be misconstrued!
EDIT 2: Sigh. I really wish, that when people downvote something they don't agree with, they take a moment to tell why.
Now tell me, just how exactly are you even going to combat deeply entrenched mindsets like those, which also happen foster the usual confirmation and survivor bias dreams in most, if not all aspiring "wantapreneurs"?
I don't think selling a company is a bad thing. I think building a company with the idea in mind that one must sell (because one's backers will flip out if there isn't a sale) is bad.
It sounds like a lot of what bothers you about VC startups is that they've become a way for megacorps to outsource risky marketing experiments (aka "convex work") and buy the winners while discarding the losers. But through the usual avenues of corruption it's become a rigged game where the sociopaths inside the megacorps are working with their sociopath friends in the VCs and actually picking winners instead of only buying truly viable startups.
So they're closing the circle and turning it into a revolving door for an incestuous aristocracy where the amount of value you capture is a function of who you know and who owes you a favor instead of being a function of how much value you actually create.
How do you stop any market from getting taken over by psychopaths who want to turn it into an incest-fest? This is also a problem in every other industry ever, and also in government. Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it?
"How do you stop any market from getting taken over by psychopaths who want to turn it into an incest-fest?"
I suggest replacing these useless leeches with open source software.
I believe that most administrative tasks in large organizations are by now routine. For instance, there is absolutely zero invention in the insurance case processing industry : get claimee's documents, validate them and check contract's term. The only thing managers do is add useless overhead that justifies their presence and aimlessly complexify software that could be written once for the next 50 years at least.
With good open-source case management software, any organization can use it readily; no need for clueless suits to come in and pretend they analyze it because they can't; no need for them to demand costly and dangerous changes without any justification (other than the inept rules they created in the first place).
There is no need for the bums any more : just use free software that will readily organize your service.
Won't work. To play devil's advocate: 'let's see if we can make some money alongside the social good; maybe getting a bit grey.' Then: 'It's only a "stated goal" to make social good, but this is an organization, organizations are made to wield power and make money, so let's make money!'
Is there a such thing as a corruption-repellent, paychopath-kryptonite system, and if so, what is it?
I doubt it. I think we have to just keep reinventing. There's no system we can set up and have it run on its own.
I like the way the Scandinavians think: they hybridize between the socialist welfare state and a capitalistic market for innovation in a way we could stand to learn from.
I don't think there's a set-and-forget model solution.
But that's not what the US Constitution is, either. It was a legal framework and social contract that set up an elaborate system of checks and balances to prevent psychopaths from amassing too much political power. The democracy still running on that framework is a living, evolving thing, that has struggled to adapt with changing times, but it's done a pretty good job of keeping the psychos out of supreme ruling power (or at least keeping any one particular psycho from holding onto it very long) since 1787.
Meanwhile in the corporate world, we don't have that. Most private organizations are not even remotely democratic in nature. I think that's the core essence of what needs to change. And I think that's sort of what you're getting at by advocating open allocation and profit sharing.
Either that, or we need to at least strengthen the welfare state enough to decouple employment from basic livelihood, so that business failure doesn't impose the risk of homelessness/starvation, and most people aren't compelled to become MacLeod Losers, selling all their economic upside risk off in exchange for stable shelter, food, and medical care.
>> I don't think selling a company is a bad thing.
Neither do I see it as an inherently bad thing. There are valid and compelling reason to sell a company. E.g., There might be no "family successors". Your heart may no longer be in it. You might want to do other things. You might feel that someone else might take it to the next level better than yourself at the helm.... etc., etc..
>> building a company with the idea in mind that one must sell [........] is bad
And that's exactly what was being implied here.... "The moment you start a company, it is for sale… at the right price". And I have a problem with that one too!
When I saw this story, my first thought was to go to the comments and do a ctrl-F "michaelochurch". Was not disappointed. I think this story is essentially the Clueless -> Loser transition in Gervais principle terminology.
That might be his future, but Clueless -> Loser is "going completely sane".
Technocrats are Clueless who go the other way and turn into "Sociopath with a heart of gold" types. We actually believe that there's something worth fighting for. Since we tend to disadvantage our own employability and, therefore, our incomes, I believe this puts us into the "insane" category.
We are here to use technology and rationality to do what our Boomer forebears never did (they came too soon, and had a lack of insight into the real problem) which is end industrial authoritarianism. The '60s radicals are back, 45 years later, but we sling code and like markets (in a left-libertarian, hybridize-the-welfare-state-and-market-economy, sort of way).
So, you define technocrats as white-hat sociopaths, basically. But don't you think that almost every sociopath sees himself or herself as being white-hat? You've built this narrative about a cosmic struggle between good vs. evil, but do you think anyone self-identifies as being evil?
I think your chaotic/lawful dichotomy is very real, but the good/evil dichotomy is really a matter of perspective, I don't think it exists in a concrete sense. Selfish/generous might be a closer representation of reality. What most of us perceive as "evil" is really just a person wielding power over others for selfish means.
There's a growing contingent of people using technology for generous rather than selfish means (yeah that's what "open source" is) and their philosophy is extending into social activism, but the industrial authoritarians have a big head start on us. They've been using technology as an expedient to their selfish purposes for a very long time already. (What's worse than being a MacLeodian Loser? Not even being one anymore because your former employer figured out how to make a machine do your job and had no reason to keep paying you. That describes 11 million Americans.)
I've always found it funny that generosity and sharing are "radical" and "activist" while greed and selfishness, even to the extreme, are now considered normal.
>> Technocrats are Clueless who go the other way and turn into "Sociopath with a heart of gold" types. We actually believe that there's something worth fighting for.
Thanks! So there's hope for me. Let me know when you are ready with the offices. I might pack my bags and book that ticket to join you. I hope the pay's sufficient ;-)
I completely agree. If you look at the foundation of (in our case) America, it is comprised of a lot of hard work by small businesses and families. They don't dream of "making it big" but they're realistic, offer a product or service that is useful to the community, and try to serve it whole-souled.
I like the idea; however, don't like the relocation. Not that I have anything against a Midwestern town but artificially designating a city to build a "tech hub" has rarely work. Many places have tried but failed. I don't see how it would be different this time. You will get more takers and talents if location is not an issue.
Location is only an issue if we focus on local govts.
Who else do you see investing in an Autonomy Fund? Once the concept is proven, everyone will want in (and then there will be saturation + a bunch of crappy ones that don't vet and underperform) but I think the first ones are going to be very hard sells. My thought was that local governments' desires to build tech hubs might be used to justify the first Autonomy Fund.
The Fed can invest. Federal government has a lot of development grants. The Fed had the stimulus money ready to spend. Lots of them probably had gone to the banks or infrastructure projects to hire bodies off the street but 25M is a rounding error in the scheme of things. It's time for the Fed to invest in hi-tech.
I have several friends who have stayed there after graduating from NDSU to work as developers and engineers. If you make $50K/year you can easily live high on the hog. It also continues to keep a "small town" feel even though its grown a ton over the past ten years.
I would say SD would be friendlier. They actively advertise in the Minneapolis area boasting of their business friendly government. They'd completely go for something like this, but then, nobody'd want to live anywhere in SD. Ever.
For myself? Not a chance in hell. Sorry, I lived in Grand Forks for several years, and between the wind, extreme temperature differences, and flooding, you'd not be able to get me to live there. Sure, you could eventually offer enough money, but it wouldn't fit in this plan.
a) There might already be something like that. A local guy sold Great Plains to MS years ago for over a billion dollars, and has done a lot to renovate the downtown area and has a local venture fund.
This discussion is shaping up in the other thread: https://news.ycombinator.com/item?id=5578195 . Also, I've been discussing it with other people for the past 48 hours. Austin is getting a lot of recommendation. I feel like #4-10 tech hubs are probably better targets than nonentities, but we'll see.
As I think about it, I don't want the governments footing the bill. I'd prefer to have at least 50% private investment (1:! matching?) as long as it's willing to stay passive enough not to interfere with engineer autonomy. Furthermore, over the long term, I'd want the ability of engineers to buy into the fund.
Interesting topic. There were early operating systems that served as an infrastructure for user's programs, they trusted the user, etc.., as nation-states basically trust their citizens to trust the government. But then too much malicious os simply unsafe software got written (as developmen became easier; life of citizen demanded much less care for the state) and the OS began morphing into restrictive and oppressive systems like OSX and Win8. As these restrictions inflicted real inconveniences on the well-behaved individuals, and voilà, the government's no longer trusted and has to be fought with.
AFAIK, in software world the way to deal with this situation is to build a new level of infrastructure abstraction to deal with oppressive OSes (ie webapps) and let the old system slowly die out because its services aren't really needed.
Wonder what will become the political analog of the Web.
Oh wait, the Web will itself evolve to become oppressive, no new analogs needed.
Hegel would be happy, now that's dialectics in action.
Wait, web-apps didn't evolve to get past "oppressive" operating systems. They evolved because centralized IT departments and centralized application deployment were easier than providing adequate deployment support and keeping data closed for desktop applications. They're technologically inferior in almost every other way.
This is so true. The country I live in has about the same number of inhabitants as NYC. Today I read an article in a business magazine local to this country saying something like "we [as a country] need to be able to compete with the world".
I mean, if we're supposed to compete with the bio mass of India or China, we're gonna have a bad time...
I live in a country with a similarly small population and much smaller land-area.
Just because nation-states aren't the forefront of the most interesting stuff going on in the world today doesn't mean they don't perform a necessary function. The psychological problem with a functioning, well-done nation-state is that it fades into the background, and people just suddenly act surprised when they wake up one day after voting for neoliberals and find they've lost their rent subsidies, their child allowance, and half the coverage on their health insurance.
not to derail your derailing, but "nation state" has a specific definition that I think is different than what you are referring to. China, India and the US are not nation states. Neither is Belgium. Japan is the largest.
> The state is a political and geopolitical entity; the nation is a cultural and/or ethnic entity. The term "nation state" implies that the two geographically coincide.
No, I'm referring to nation-states in specific. If you asked me for three major examples of why multinational empire-states are a Bad Idea, I would point to China, India, and the United States.
Though their are arguments to be made that China is a Han nation-state that simply forces everyone else to go along with what the ruling clique of Han want.
What do you suppose we do?
For the long-term, here's the financial structure for the solution that I see: http://michaelochurch.wordpress.com/2013/03/26/gervais-macle... . Essentially, I think VC-istan and MegaCorps are both dead ends when it comes to genuine technical excellence (which weird people like us care about). I think it's time to have a serious conversation about financing a fleet of mid-growth K-strategist startups instead of these red-ocean, r-strategist, get-big-or-die marketing gambits.
Here's an insane thought that I had that just might work. Find a Midwestern city that has $25 million to blow on becoming a top technology hub and set up an Autonomy Fund. (I'll do the "grunt work" of screening for talent; if this idea has legs I'd drop everything to implement it.) 100 top-notch programmers, $125k per year (out of which their resource/AWS costs come, so no one's living high on the hog), and 2 years. First, these companies are designed to become profitable, not to exit, so compensation is profit-sharing, not the joke equity offered by VC-istan. The city that funds this takes a 37.5% profit-share of whatever they build (it's valuating their work at $333k per year, which is lower than a VC valuation, but the terms are better.) If it works, then add time to the schedule (i.e. more years of life and more startups) and possibly more engineers. This is like Y Combinator, but without the feeder-into-VC dynamic; it's to build real businesses that generating lasting value both to a geographical area and to technology itself.
I seriously think that Autonomy Funds are going to be big in the next 10 years-- VC-istan is essentially a shitty implementation of an Autonomy Fund, except with selection based on connections rather than technical ability-- but there are some obvious problems (moral hazard, principal-agent issues) that need to be solved.