Did I bring a value investor’s patience to a trading floor, or a philosopher’s timescale to a gold rush?
“Come to Silicon Valley for the ambition,” they said. “Leave academia for the ‘real world,’ the stakes are much larger. You’ll be surrounded by the greatest set of innovators in San Francisco.”
I’ve lived the San Francisco founder life for a few years now. I went through Demo Day, I’ve been on flights in and out of SFO, and I’ve both sat in a Waymo and walked through the Tenderloin.
I’m not sure the people here are the most ambitious ones I know.
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I grew up in academia where problems were measured in decades and often centuries. Could a 1700s philosopher like David Hume make me question my trust in science? Could I integrate 100 years of psychological research into developing a novel theory of cognitive fatigue? Can I now pursue the Turing Test, initially formulated in 1950, and now a worldwide security concern in the age of generative AI?
Academia may be derided as slow, but it’s also not optimizing for speed. It’s building to last. I always admired the ‘test of time’ awards, the discoveries that compound over time, and I viewed this progress as an idealized form of scholarship. Of course, academia in practice also had its short-term pressures. The ‘publish-or-perish’ culture was real, and many academics prioritized quantity of research and papers over quality, especially when metrics like citations and h-index were introduced.
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Silicon Valley and San Francisco are different. San Francisco is the prototypical Gold Rush town (go ‘49ers!), and the technology industry is built on capitalizing on boom-and-bust cycles in periods of massive discontinuity. I came to Silicon Valley on the eve of the AI gold rush, with my laptop as my pickaxe and Matt Hardy as my co-conspirator.
San Francisco in 2023 was a dark place. The pandemic had ravaged the city, and streets in the Tenderloin and Mission filled with homeless fentanyl addicts. Most were harmless, but I never expected to witness this in the ‘land of innovation.’ That summer was the first time as a grown man I felt unsafe at night.
But, I was AI-pilled. My interest in machine learning, data science, statistics had spanned since childhood, and AI was always going to be an unbounded market. I was also aware that ‘artificial intelligence’, the intellectual discipline, has had its fair share of boom-and-bust cycles, e.g. around the connectionist / neural network boom in the 1990s and the computer vision / deep learning breakthroughs in the early 2010s.
And more than AI-pilled, I was AGI-pilled. The big problem in artificial intelligence had always been artificial general intelligence, when machine cognitive output could start to rival and surpass human cognitive output. This would surely be massively disruptive to the market, and so Silicon Valley was heading towards a societal discontinuity closer to the 1999-era Internet revolution than even, say, the mobile revolution.
I had been following AGI and the research labs closely throughout college and graduate school. When GPT-3 launched, Matt and I heard Silicon Valley’s rumbling and we quickly packed our bags, defended our dissertations, and came to the land of innovation and opportunity.
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There are many ways to make money, and Silicon Valley makes money through growth. If you can grow your revenue year-over-year at a very fast rate with very high margins, you will eventually become one of the biggest, profitable companies in the world. Growth is magnified during periods of discontinuity, where you might see rapid change in consumer behavior across social media, mobile, and – now – AI use.
One feature that makes Silicon Valley and the technology startup scene unique is the ease of acquisition. Companies and investment firms have deep pockets, and so it becomes very lucrative for them to invest in high-growth businesses, and it correspondingly becomes very lucrative for the company’s founders and employees who are given cash exits.
This creates an interesting incentive structure. If you are a technology entrepreneur trying to maximize your wealth with minimal risk, the rational thing to do is start a new business every two to three years, exit after a round or two of funding, and repeat. (Of course, success is not guaranteed – startups are notably hard and the odds of success are stacked against you). This then normalizes failure: it is cool to be on your fourth startup. It is seen as a badge of honor and someone who will likely eventually find monetary success in Silicon Valley.
What is unsexy in Silicon Valley is building to last: an antonym of how academics describe success. Working at the same company for more than five years is a faux pas. Building for an IPO rather than a private acquisition is simply met with a, “Why?” Silicon Valley institutional investors are more ambitious than the average company they fund. Sequoia Capital and Y Combinator aim to be around for decades, and it’ll be through repeatedly picking market winners – some of which are built to last, but often not.
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This has been disorienting to me. For a while, I wondered if I made a huge mistake. Did I bring a value investor’s patience to a trading floor, or a philosopher’s timescale to a gold rush?
And to further complicate, Silicon Valley is very right about discontinuities being rare and lucrative. People made money in the Gold Rush and in the dot-com bubble.
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If AGI is what I believe it is – a discontinuity closer to the greatest technological advances of society (i.e. not just 2010s mobile) – then the companies, labs, and norms founded in this chapter have the potential to shape the next century. There will be many two- and three-year exits. But the ambitious people are here for something else.
Dee Hock founded Visa in the Bay Area and built the world’s most trusted economic network. 50 years later, Visa moves trillions of dollars a year, nobody remembers it was a startup, and the American consumer can’t imagine life without electronic payments.
So no, I’m not sure the people rushing between Demo Days and exits are the most ambitious people I know. The most ambitious people I know are playing the longest games, i.e. the professor whose theory outlives her, the investor who continues to compound, the family that plans in generations.
I came to Silicon Valley for the discontinuity, but I am here to outlive it.