Entrepreneur

Silicon Valley has ‘an unsustainable amount of companies,’ says Alex Payne

Image Credit: Michael O'Donnell/VentureBeat

Startup culture is homogenous. It feeds itself into a cycle of startups that build features and sell them as businesses. Few are making big solutions for big problems. Racism and misogyny are still issues.

But there’s hope. At least, that’s what programmer and investor Alex Payne says.

“It does seem like there are an unsustainable amount of companies,” said Payne in an interview with VentureBeat. “We’re good at the building blocks, not as strong in laying the foundation for enduring opportunity.”

That is, Payne sees the Silicon Valley startup ecosystem as a place that breeds companies that don’t think about the longevity of their product. Instead, the focus is on grabbing the money they can with a little risk as possible. Think those companies that prefer the acqui-hire (or manquisition, if you please) exit, where the product is shoved off and the engineering talent absorbed.

The Silicon Valley of yesteryear, according to Payne, paid more attention to the legacy that technology left.

“Tim O’Reilly described this nicely a few years ago as ‘extractive value,'” explained Payne. “When you come along, are you building something that other people are going to get long term value from or is this something others have built and say ‘I’m going to strip that to get my millions.'”

Payne spoke at VentureBeat’s DevBeat conference today saying one of the biggest problems is that there isn’t a strong relationship between the government, military, schools, and private sector when it comes to starting one company. Back in the day, according to Payne, people pulled in their educations to start their companies. Or, on the same track, those in the military or government would pull in and include their agencies in the building of their products.

Payne used Doug Engelbart as an example, who got funding from DARPA, NASA, and the Airforce for his projects.

“What I’d really like to see is I guess a more open flow of ideas and capital between that public private academic partnership,” said Payne. “Universities are churning out people who start companies, but they show up to Stanford, find their co-founder, and drop out before they ever get a degree.”

He also attributes today’s issues to the current state of venture capital and angel investing, saying that the pool of angel investors is way too saturated. Of course, he admits that as an angel investor he contributes to the issue, but the at this point, angel funding can only get a company so far. Eventually, he says, they’re going to need some real cash, from a VC firm.

But right now, Payne doesn’t seem to see a lot of big-name venture firms with an interest in “heavy tech” or the innovations that are going to push us beyond the features-like products we see today.

If we can meld a bit of Silicon Valley’s past with today’s hunger to build, then we might actually get somewhere. Certainly Silicon Valley from decades ago wasn’t a Golden Age, as Payne notes, but there may be elements of it we need to recapture.


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