Silicon Valley startups: being evil, again and again
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Tech Ethics
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What is disturbing is how the hype-machine around "startups" and the unicorn myth encourages people to believe they can be the next big thing. But basic arithmetic makes that impossible: you can't have an abundance of unicorns when the attention economy, capital, and market share are structurally limited.
But hey, without this, our public schools wouldn't get funding from lottery tickets! So I'm forced to conclude it's a good thing.
If they're entertaining, then presumably it's from the thrill of maybe winning. Why would winning be thrilling? Why, because you get money- potentially a life-changing amount of it. If they made a lotto game with a maximum payout of a dollar I'm reasonably certain nobody would play it. Or hell, anyone could write down a series of heads/tails on a paper and then flip a coin to see if they're a winner! Yet, we don't see that, even though it's free and (I would argue) has the same entertainment value.
So yeah, I'm sure entertainment is the facade, but underneath it all, it's financially motivated for the vast majority.
(Or perhaps they're when they tell you it is "for entertainment" they're entertaining fantasies of winning—which is probably what you can say for a lot of people buying lottery tickets.)
I'm not talking about UBI or forced austerity, but about developing smarter ways to live frugally without feeling deprived. That mindset would relieve a lot of the pressure that the "you must win the startup lottery" narrative creates.
Well, I suppose I do know of one. Mindfulness training I think has been shown to help with this, but that's still at a very personal level.
What has changed, and this is where I agree with your point about difficulty, is the scale and precision of behavioural manipulation. We've never had a period where advertising, content, and emotional triggers were personalized with such speed and accuracy. Tobacco harmed the body, today's hyper-personalized content ecosystems can easily harm attention, mood regulation, and overall mental health.
So yes, it's hard to shift things at a societal level when the environment is engineered to keep people reactive.
On mindfulness: in its modern form it's often packaged as another consumer product, but its roots, like those of yoga, Zen, and other contemplative traditions, come from outside capitalist logic. The original practices were tools for resisting impulse and cultivating awareness, not selling calmness subscriptions.
Woz and the nerds were making machines at home, later hooking them up to one another with the janky telephone service as the interconnect. And this kid, just getting a taste of BBSs in Kansas in the mid 1980's, was so envious of the outrageous number of BBSs in Sunnyvale, Mountain View, Cupertino, San Jose…—all strange names to me. But I saw that they were all in California.
When a job offer got me to move out to the Bay Area in the early 90's there was still a kind of soft echo of those times. Plenty of electronics recycling warehouses you could wander through (and recognizing some of the same faces, often older men, as you moved through your morning circuit to the next warehouse). Disk Drive Depot, Computer Literacy Bookstore, etc.
I had a career there, raised a family there. I watched the dot-com boom/bust, the rise of the internet, Google, and the slow decline of the hardware focus of "The Valley".
When the last of my daughters left the nest, the wife and I sold the house and I retired back to the Midwaste where the two of us grew up. Weird Stuff Warehouse had recently closed up shop and that seems now as fitting a time as any to have said goodbye to The Valley.
That bargaining power came from our ability to surf the crest of the wave that was over and over crashing through existing industries, turning them on their head with the promise and practice of automating via computation. In many cases deskilling the jobs of other workers.
We could play the part of magicians who knew these arcane arts and get paid accordingly.
There is precisely zero guarantee that any of this will continue. In the latest wave it seems like it is we ourselves who are being submerged beneath the wave.
To put the scale shift in perspective: Apple sold only a couple of million Apple IIs in that entire era. Today, the iPhone sits in the multi-billion range since 2007. Once a technology ecosystem expands by three orders of magnitude, its culture cannot remain the same.
The early Valley wasn’t "good" in an absolute sense, it was simply relatively small, intimate, and guided by shared values. As growth, global competition, and finances took over, the culture changed in ways that were probably inevitable.
Transgenerational greed?
And still, not respecting these concepts make you the thief today. So, what now?
I don't necessarily think of my stocks and bonds in my retirement funds in the same category as my toothbrush, suit jacket, or even my house or garden or whatever.
Classical liberalism and its descendants want to blur the distinction between the two. And you're welcome to adopt that view. But you shouldn't assume there aren't legitimate challenges to that point of view.
Proudhon himself wasn't terrible coherent. Marx I think clarified the distinction between dominance and control of capital and production vs personal private property better.
From a certain perspective, capitalism has been the process of enclosing things that were once common, or could be common, into "private" property. And despite the rhetoric of free exchange and liberty, it has mainly done this by force and coercion since the acts of enclosure and the age of colonialism until now.
My 6 acres of "private property" that my house sits on here was acquired mainly by force from its prior inhabitants two centuries ago. What does that do its status -- and to me -- now?
This argument can be used for practically any piece of earth, it's nonsensical to fixate on it.
The issue has always been that capital (and it's quiet sibling power) can compound itself endlessly absent any checks against it. Societal unification against power and wealth consolidation should be the same as it would be against a plague or cancer in a body.
My point is you can't form an ethical framework around property as intrinsic right because really property is less "theft" than it is power, so you end up at the end of the argument having to actually defend might makes right as your world view. (Which is why I see the logical end point of radical libertarianism as being a kind of fascism.)
Capitalism is an incredibly efficient machine. All that is solid melts, etc. etc. It is beautiful in its own way. I agree about the compounding. I suspect we mostly agree generally.
Personally, I'm thinking the whole point of libertarianism is to obscure a genuine belief that might makes right on behalf of some people who have a lot of might, and sell it to a bunch of rubes.
> (Which is why I see the logical end point of radical libertarianism as being a kind of fascism.)
That's especially clear with things like "anarcho-capitalism," where it's obvious that the kind of social relationships its proponents go on and on about at book-length are impossibly unstable and wouldn't last a nonosecond before decaying into something like feudalism.
But there are other philosophies that don't have this problem. Philosophies where there's no notion of ownership at all, or ownership is by the entirety of humanity/the world (which makes it meaningless), and one person can only borrow something for an extended period of time. This is how a lot of native peoples viewed land, which makes sense since it cannot be created or destroyed. Or philosophies where, for example, all humans collectively own all land and houses, but it's very practical to uniquely assign one human to each house, but there's nothing special about that connection, and it doesn't give the rights to, say, hold that object hostage for money. (This is how socialists view toothbrushes, I'm told.)
Do you mean they naturally understand property, or do you mean they naturally understand theft, or what?
We couldn't have airplanes if property didn't exist. Anyone could just walk away with parts off the airplane if they felt like it. And in fact that's exactly what happens if you leave an airplane unprotected for too long.
Hydroelectric dams would be impossible. You couldn't even have light bulbs or computers because their production methods require so much coordinated effort as well as protection from theft and damage.
Without property, all you'd have are bands of foragers because without the ability to control access, any group efforts could be undone overnight by anyone.
This assertion needs to be substantiated, even if it is true. You give an example of how property "allows us to build complex things", but you don't prove that it's impossible for any other system of ownership or of mediating access to resources/"things" to allow that.
You can’t prove a negative, so the onus is actually on you to show an example of a working alternative that does not rely on property.
And it has been tried in the 20th century. Several times, in fact. Despite all the industrial espionage committed by the Soviet Union (which saved them the resources to do the research themselves) and the slave labor of people who spoke or wrote about the “wrong” ideas (which surplus was given to the rest of the population), ordinary people in the USSR had much worse lives than those in the West.
[1] But… they did make a go of it without property before discovering that it wouldn’t work. It turns out (shockingly!) that indentured serfs (who make the food) like the idea of land reform when it means they own the land. But they don’t like it so much when it means nobody owns the land. And when they are not happy then you have no food. And then those quotes about “x meals until y” start to have some salience. And then you start to think about the most effective way to use the number of bullets you have on hand (which is smaller than the number of mouths you need to feed).
Also, socialist states with advanced economies built airplanes, hydroelectric dams and all kinds of complex things. This is a joke of an argument. Say what you will about the living conditions, fairness, corruption or other issues with socialist states, but to pretend they "didn't build complex things" is ridiculous when you look up the number of scientific achievements made first by the USSR.
Yes, by having property … owned by the state!
Used to be that the people themselves were property, then it was the machines they used, now it's some abstraction related to shares and companies, but it's all the same: what you're doing belongs to me not because I bought it from you but because of something to do with my position in society as it relates to yours.
The Playbook is always the same: Run global Propaganda (ads/PR), while behind the public's back extract the capital from the general public into the private hands of a select few and "socialise" the costs (health, mental-health, polarisation, extremism, populism, ...) to the state (taxpayer).
Basically: screwing the public and letting them pay the bill, but hidden by X-layers of obfuscation.
From the article:
> And I’m talking to you now, fellow workers of the Valley! If you really want to do no evil, to be good, disrupt the status quo and make the world a better place, then don’t create a capitalist firm: it’s a top-down dictatorship, where the dictators steal the money. There’s nothing progressive about this kind of social institution. Founding such a startup is deeply unethical, represents institutionalised theft, and is a prime cause of diverse social ills.
That is an extreme claim (in the sense of surprising, remarkable, unusual, and one that needs a lot more support than ordinary claims).
It is inadequately defended here. The argument that it violates fair exchange is tautological.
So yeah, even though on first skim I think I agree with the thrust of this article, I think you're right it's poorly defended, assuming it's at all for an audience outside of people who already think this way.
One could probably say that the privatisation of human communication is a form of "initial accumulation", or maybe just another step toward appropriation of culture, but that's apparently not the angle that the author decided to explore (can't be sure, I couldn't do better than skim that text which looked wrong in too many ways).
Oh, ok. Anyways.
First section of Capital Vol I is all about "surplus value" and exploitation, with a heavy dose of the labour theory of value. It has nothing to do with "initial accumulation" at all, it's about ongoing extraction of surplus value in production, and no, Marx doesn't call it "theft" -- he calls it "exploitation" (which to him is actually somewhat of a value neutral world describing a technical process, actually).
Whether it's a defensible position in economics or philosophy is a whole other discussion. There's nuance.
Also I assuming you mean "citing", not "siting"
Marx’s writing predates the US civil war. When you “own” someone and then “own” their labor the fruits of that labor aren’t yours any more than the person. By that reasoning, if you then use the fruits of that labor to buy a house it’s a stolen house.
I get that the status quo has huge issues, but can we have some new ideas maybe instead of continuing to try to revive late 19th century ones that have repeatedly and disastrously failed?
Maybe some people get that impression because they've conflated "Marxism" with general socialist urges or even cultural "left" wing identity politics, but that in fact is proof exactly of the opposite. It's never been more heretical to advocate for wealth redistribution or dismantling or restricting parts of the capitalist market, even in the context of a total ecological crisis brought on by industrial production and exponential growth.
It's not even on the table of discussion in any western country, so I am not sure where you fear comes from. That a claim like this could be made shows me exactly how far to the right we've drifted since e.g. the 60s. That someone like Mamdani could be smeared or red-baited as a "Marxist" for advocating for rent control is hilarious really.
(But frankly I'm not here to debate the merits or get into a drive-by debate with your half-formed opinions, nor was that the aim or thrust of what my comment above was about.)
I'm not sure how to square this statement with reality. Which countries were Marxist? The obvious "communist"/"socialist" country was the USSR, but it was Leninist/Stalinist.
Why should they get ownership of the business? When you get a mortgage for your house, the bank doesn’t permanently own part of your house after you pay it off.
But that's obviously less desirable to the person providing the money, and they've obviously got all the cards... Hence the argument of this post.
I wouldn't call it evil myself, unless I wanted to classify capitalism as evil in it's entirety - which would feel disingenuous to me, considering the alternatives were always worse in hindsight.
This is the same reason the bank asks for an independent valuation of a house (and requires the buyer to maintain insurance) before releasing the money to pay for it: The value of the collateral needs to plausibly match the value of the loan, so that the value of the loan can be recovered in case of default.
The only way this works is for the founder to personally guarantee the loan. Which means the founder needs to have sufficient personal assets to keep the bank happy. It also means the founder risks personal bankruptcy if those assets are not enough to cover the loan if the startup defaults.
The company will have some value left on default. E.g if it's a software company it will have the IP for the software etc pp
Now wherever that's enough for anyone to be willing to take that risk with the loan is another story and thus I could now quote my previous comment in its entirety
I acknowledged as much...
Failed startups don’t have value left at the end. They go until they run out of money. Then they liquidate the office furniture to make the last payroll. Sometimes they don’t wrap up early enough and the founder and board members are personally liable for it.
Nobody wants to buy the custom software needed to run “The pets.com for GenAI” because it would be cheaper to start from scratch than to understand the codebase and make it do what you want.
Companies like 23-and-me that accumulate valuable data while going bankrupt are the rare exception… but banks/VCs do not know a-priori which ones will be that exception! If they did, they just wouldn’t make the bad loans in the first place!
> Now wherever that's enough for anyone to be willing to take that risk
Well, but it clearly isn’t, right? So everything else you wrote is sort of irrelevant.
I mean, why don’t you lend a startup $1000 on the condition they pay you back $1500 in two years[1] if they succeed and nothing if they fail? Pass the hat around your neighborhood and I bet you could fund a few real startups!
Except that.. oh.. when it’s your money on the line, suddenly you realize those are very stupid terms. You lose the whole $1000 90% of the time, break even 5% of the time and make a +$500 profit 5% of the time. The math isn’t mathing here.
So you’ll want to very carefully vet the founders and their plan. Be very picky about who you fund. Maybe you’ll ask them to personally guarantee some fraction of the loan. Suddenly, your highly moral terms look exactly like the business loans that approximately 0% of startups use because VCs offer them a better deal.
[1] Any more than that would be usury, which is immoral, right?
Because the VCs are funding the startup on extremely favorable terms?
If the startup fails, the founders can just walk away. They are not personally liable for anything. They can (and often do) subsequently form another startup, often funded by the very same VCs who funded the one that just failed!
If, OTOH, you fail to pay your mortgage, the bank takes your house. And they make hard for you to get another mortgage from any bank by reporting the foreclosure to credit ratings agencies.
You absolutely can keep the equity (and surplus) for yourself… but you will need to personally guarantee the loan. You may need to declare bankruptcy if the startup fails, and all that entails.
VCs are happy to throw away money on 99 failed startups precisely because they are entitled to the continued surplus from 1 successful startup. Banks are happy to make failure to pay extremely unpleasant for you because they are not entitled to any surplus from business loans which lead to successful outcomes.
And why is this a good thing? I think the past decade and the current bubble point to this being a bug, not a feature. What I mean to say is that VCs seem far too eager to throw money at ventures with untenable business plans or that lack any edge over competing firms, which is a waste.
But this comment only makes sense when starting from a whole bunch of assumptions, which happen to be true right here and now, but are in no way universal.
Let me make a comparison: Me: "People should be able to walk to work" You: "If someone can't walk 10 miles to work along the side of a road with cars whizzing by at 100mph, why should they be able to walk to work?" and that just makes no sense because there are other ways to build cities, and it's completely possible to build a city where people's routes to work aren't 10 miles along the shoulder of a highway.
Yeah, like I said, you completely missed the point of my comment. Here, let me fix the analogy for you:
A: The fact that people drive cars on roads is a bug, not a feature.
B: A bug where? Like, in people's minds for thinking that driving cars on roads is a practical mode of transportation?
C: People should be able to walk to work.
Do you see how C's reply to B is a non sequitur? It doesn't answer the question that was posed, it presents an irrelevant "should", and even if one is generous enough to grant that people should be able to walk to work, it doesn't make choosing to drive cars on roads for other purposes an irrational decision.
To borrow your analogy: there is, in fact, major issue in people driving cars on roads. This is why many cities elect to reduce car use by means of policy. This is accomplished because there's a dialectic where "should" translates into "must." It's called governance.
Ok, well, I personally really like driving a car with zero tailpipe emissions, and the cleaner air that comes from it (Tesla).
I think it’s awesome having a little rectangle in my pocket that sends text messages from anywhere on earth and summons an encyclopedia (Apple, Google, Starlink, Intel).
I enjoy talking to (and seeing) my friends and family while they are thousands of miles away (Cisco, Apple, and many others).
I think it is fantastic that we continue to find new labor-saving methods of farming so that fewer people need toil in the fields (the current batch of ag-drone and ag-AI startups).
This is like asking “well, why do we need that science mumbo jumbo anyhow?”
There's a subtle difference and it shows by how we even see wealth. We associate wealth with utility to society. That is, after all, why we create economies. We want to reward those who make society better.
But that's where there's been a disconnect. We figured out we could make money without pushing society forward. We'd historically refer to those people by different names... worse than that, we are focused on the short term. Silicon Valley has perfected the hype cycle. You get in cheap, pump up the price, sell, and do it all over again. It does not matter if it is vaporware, it matters that you can make a profit.
The problem is alignment. The economy is not aligned with its intentions.
Do we see much innovation these days? Is there even an incentive? No doubt there's innovation, but people are claiming it is accelerating. I'm unconvinced we're innovating faster than we did in the 90's. That decade changed society more than the 00's and 10's, even with the advent of the smartphone.
Unlike the author, I'm actually in favor of capitalism, yet I firmly believe that an economy still needs to by well regulated. There's very few economists who believe such regulation does not need to exist (we listen to partisans more than actual economists), and I've found even the most staunch free-market believers (often not actual economists) will have concessions. It's no secret that an unregulated market is not a free market. An unregulated market is a market regulated by the largest entities of the market.
They also have several older articles directly targeting insider trading by politicians.
Obviously, nobody would take that kind of deal. But what if regular loans were just flat out not made available to you? Like, if tomorrow, banks as a class individually decided they would only accept payment in this sort of lifetime wage equity. Then it's not really a choice anymore. One of the options has been taken away from you. If I take a fair deal and have one of the counterparties flat out remove some of the negotiating options - even if they were not the ones taken - is it still a fair deal?
In other words, the argument that fair exchange has been violated is based on the idea that market power can be a form of coercion. If you don't agree, then you can argue that every possible counterparty deciding to only offer you a bad deal is perfectly acceptable and non-coercive. "Natural shorts[0] are not coercion", in other words. But why stop there? I mean, even in outright theft, where I'm holding a literal gun to your head and demanding payment, you could still choose to eat lead. We can redefine theft and coercion down to excuse any behavior we want on libertarian terms. The tautology is not with the argument, it's with fair exchange itself.
[0] As in, "thing you need to exist". You have a natural short position in food, drink, and shelter.
Weird analogy. It's more like "what if you borrowed money to buy something, didn't have to return it, but if you made money with that thing, you give the lender a cut, forever".
Because the point is: it's not a loan, you don't have to pay it back, and you're not on the hook for it if things go wrong. That's the big upside and why lots of people do that instead of getting a loan. Because loans are available, but people don't want that risk and are willing to give up some of their ownership to avoid it.
This article (warning: obnoxious ads) is the only one I can find that claims to know who nvidea’s shareholders are and puts the number at 4.3%
https://capital.com/en-int/analysis/nvidia-shareholder-who-o...
I would not consider that to be employee owned (although I certainly wouldn’t mind the 25m)
One of these, is not like the others.
I’ve been writing software for Apple systems since 1986, and it was already a well-established company, by then.
I have watched people declare it dead, numerous times, since then.
That doesn’t excuse some of its behavior, nowadays, but it’s a very different creature, and lumping it in with them, seems like a cheap grab for Apple-haters.
I completely agree with most of the stuff in the article, and even that I’m quite unhappy about Apple’s trajectory, recently.
But I still believe that looping in irrelevant data, poisons the dataset.
Either the article should expand its scope, or it shouldn’t include older SV companies into its dataset. Salesforce, Qualcomm, Adobe, Intel, Oracle, etc. have many of the same attributes as Apple (even worse, in some cases).
A fairly typical thing that some folks like to do, is attach unpopular people to their targets. It energizes people that might not otherwise care.
We’re seeing quite a bit of that stuff, nowadays.
Any engineer today could start their own business. They could instantly become equity owners. Especially with AI. Many giants paid salaries and equity packages to the best, to keep them from starting competition.
En engineer can also leave a tech giant and in California, unlike NY, non-competes don’t apply. Tech work scales infinitely - so you can make a product for millions of users with your own two hands, unlike manual labor workers, who are limited by physics.
The evil not recognized is when the scalability of tech and AI is used to create and power up addictions that drain human brains, instead of giving them bycicles of the mind. Leaches on the brain. Industries where you can do well by the customers but you make a LOT more money if you do badly by them: Advertising (pumping ad impressions by refreshing pages, putting ads under common buttons to create unintended clicks that charge small businesses dollars per click, not delivering traffic or real audiences and making the small business pay even more thinking it’s their fault). Making gambling and games with horrible dark patter dynamics that wake users at night and expose them to chronic sleep depravation and wallet draining just to keep them addicted or with some status or in some league.
If you count human brain time and attention as the most valuable and sparse of resource - think about how much of it is killed by true evil. VC funding won’t be needed when AI is used to build things without the need for much funding anymore. What truly matters is not building evil things.
But it's not, though. Human brain time (just in general, with no additional conditions) is pretty worthless, that's why people piss it away in idle activities. Just look at services like Mechanical Turk. The so-called attention economy is not about the attention itself. It's about getting the brains that give the attention to spend money.
https://en.wikipedia.org/wiki/Beholder_(Dungeons_%26_Dragons...
The individual owes nothing to society: no limit to what I can own. Society owes nothing to me: my share of the wealth is my own fault. Might makes right. A deal is fair regardless of the terms: a deal is a deal. Workers don’t deserve a vote: they agreed to their servitude.
Businesses are "people" now, according to the US Supreme Court, so it's our job to make them face consequences if they refuse to behave like actual "humans" bound by laws. But it's only if we elect representatives who are not corrupt grifters.
===
i'm told "Almost none.
The only concrete mechanisms mentioned are:
Founding worker-owned cooperatives instead of equity-based startups.
Raising capital as loans rather than selling equity.
“Creative ways to solve the political problem of capitalists’ monopoly on capital.” This is referenced but not elaborated.
No operational steps, no policy proposals, no institutional models, no financing frameworks, no examples of working co-op ecosystems, no strategy for scaling co-ops, and no plan to change investor incentives."
===
Dear author, please come back with more specific recommendations. I'm curious what you think early stage startup founders and funders should be doing instead of what they're currently doing. I think you want founders and funders to effectively make massively unilateral economic concessions to early employees, since they are "labor". And then you want those early employees to in turn make massive unilateral concessions to later employees because those are "labor" too.
But what about the rest of labor in society?
Why not instead have massive tax rates on the gains, so that all of society's labor can get in on the fruits, rather than the startups relatively few employees?
Correct me if I am wrong, I am open to ideas. My knowledge of economics is all from social studies class, my brother almost dying because insurance at first denied to pay for his surgery, and making money from yard work and fixing electronics because I am not old enough to get a legit job. I have never paid taxes, but I somewhat understand disdain towards taxation in an age where the cost of living is as high as it is relative to the amount of money one is capable of making.
Comically though, it's also self-refuting, since it leads with how voluntary exchange of something for money is ok, even if someone gets a bad deal. Buy, you see, if you voluntarily exchange your labor for money - creating that something; and then your counterparty voluntarily exchanges that product for somewhat more money with someone else, that is now theft, and also evil.
This is just propaganda. Collectivism is evil, startups are fine.
The preference for traditional corporate structures over cooperatives is not a conspiracy but an optimization for speed and scalability. Centralized decision-making allows startups to pivot rapidly in competitive markets, whereas committee-based governance often introduces fatal latency. Furthermore, employment is a voluntary exchange where engineers trade skills for compensation, often including equity to align incentives. Labeling this voluntary cooperation as "evil" ignores that this model has driven the greatest reduction in information costs in history. We are not victims of a theft-based institution but participants in a high-performance engine that rewards efficiency and problem-solving.
None of those reasons are related to Marxist bullshit. Grow up.
https://web.archive.org/web/20190204123209/https://notesfrom...
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