Once again, Silicon Valley breeds a new batch of millionaires: #TwitterIPO.
Given this new surge of wealth in the Bay Area, you might ask: How does the average Joe survive in the uber expensive San Francisco Bay Area? After all, parking lots the length of 101 are filled with Teslas, M3s, Porsches and Mercedes. Palo Alto real estate has become synonymous with McMansions. And now Mark Zuckerberg and Marissa Mayer have taken conspicuous consumption to all new levels by buying up property around their homes.
My take? Wealth in itself is not a bad thing. Wealth causing a talent drain as people leave the Bay Area because they can’t get ahead is a problem.
And it’s only getting worse.
Where are the average Joes?
It may be hard to believe, but not everyone in Silicon Valley is sitting on stock options. And that means the San Francisco Bay Area is priced beyond the average person’s means: Off-the-charts housing costs, $6.00 coffee, and runaway arrogance have created a not-so subtle shift in the mindset of entrepreneurs: from aiming to change the world to bragging rights on bloated bank accounts.
This seems especially true for millennials. It’s not necessarily their fault; rather, a product of the environment in which they grew up. Before Twitter, we had plenty of other get rich quick precedents, including Instagram and Facebook. The whole Silicon Valley mythos has everyone wanting to jump on the startup bandwagon of “Get Acquired or Bust.”
Venture capitalists have vested interests in continuing that effort. The question remains: who is going to step up and build a real, sustainable product that changes the world as we know it?
The buyout sellout
The entire purpose of technology (in a utopian world) is to make the world a better place. But right now, people are being rewarded — for failing.
Startups come out of incubators valued at $12 million, when they’re really worth 1/3 of that amount. VCs continue to pour millions into them. Everything is focused on making obscenely large profits versus creating technology that will benefit society.
Take Snapchat, the mobile image and video-sharing app in which pictures disappear seconds after you receive them. Its revenue to date: $0.
What do you suppose a company like that would be valued at? Probably not in the neighborhood of $3.6 billion, which — if rumors of a new round of investments are true, would be its current valuation. This is after the founders raised $60 million from investors.
Like blowing up a balloon, Snapchat and its investors are inflating its valuation and trying to get a bigger player like Facebook to buy it out. In the end, it’s all hot air.
Millennials are entering the workforce primed for this bubble mentality. Research shows them to be an entitled generation that’s dismissive of others and intolerant of hardship and negative feedback. Silicon Valley’s current culture enforces this delusion.
Back in 2010, PayPal and Palantir co-founder Peter Thiel tried to address the problem by offering teenagers $100,000 to drop out of college and build innovative companies that would change the world. Three years later, what has the Thiel Fellowship produced? Caffeine spray. An app, now acquired, that helped users connect musicians with venues. More of the same shallow product that has come to define the Valley.
Thinking outside the bubble
It’s not that millennials lack talent. They’re just not leveraging their skills and intelligence to make a real difference. The rich have an obligation to make a difference in society. Look at Steve Jobs, Richard Branson or Salesforce founder Marc Benioff, who took a $10 annual salary for 10 years when he started his business. Look at Google.org and more recently Calico, Google’s new research-based biotech venture that will focus on aging. The Bill and Melinda Gates Foundation is making real progress in eliminating poverty and disease in the world’s poorest countries. Even Gen-Yer Mark Zuckerberg donated $100 million in Facebook stock to his homegrown public education reform program, Startup: Education.
Time for a cultural shift
How do we breed a culture that encourages entrepreneurs not to go after the quick buck, but to produce game-changing products? How do we get more Aaron Levies and fewer Wobbles?
The onus is on established tech entrepreneurs to help the younger generation realize the consequence of the get-rich-quick ecosystem. It’s unsustainable, it creates more bubbles and it does nothing to change lives or improve society. Any concerned parties, myself included, must make it a priority to make the Bay Area not only better from a technological standpoint — but a better place to live for everyone — regardless of income.
Congrats to the Twitter millionaires. Now, let’s really change the world.
Marcus Nelson has founded five successful startups. He is now the founder and chief executive officer at Addvocate, which helps companies humanize their brand experience by enabling all employees to engage with customers. A recognized leader is social media marketing, Marcus holds a patent for technology that determines someone’s brand influence, wrote the original specifications and helped build the prototype of Salesforce Chatter, and is an expert in user-experience design. Follow Marcus on Twitter: @addvocate