SHEER MADNESS: Devolution (Part One)

By Jim Burnett

July 20, 2017

Happy belated 241st Birthday America! And best wishes for the next 241 years! May you continue to thrive!

But it’s not looking too good, is it? When I first started writing this column a few years ago, I chose the title “SHEER MADNESS” to describe the folly of a 60 something-year-old founding a startup. (At the time my consumer guide was called ExpertOpinions.com. Now it’s morphed into ExpertRex.com: Your Guide to THE BEST of [Almost] Everything!)

But today it just as accurately describes the state of America. We are led by a twitwit-in-chief – Code Orange! – primarily distinguished by a hair-trigger temper and the attention span of a 5-year-old, who spouts conspiracy porn and spews childish insults in all directions.

Everything Trump does is filtered through the twitwit’s mental illness – narcissistic personality disorder, perhaps coupled with the no-skin rage of a borderline personality. Plus, he’s clearly suffering from the Dunning-Kruger effect: the phenomenon in which an incompetent person is too incompetent to understand his own incompetence.

Trump’s illness and incompetence are on display for anyone who cares to look.

And there’s the rub. A significant percentage of Americans have elected to ignore reality, with the possible exception of reality TV shows, which everyone knows are fake. They see a fully clothed Emperor, complete with goofy caps.

Consider the following quote from George Orwell’s “1984.” “Whatever the party holds to be truth is truth. It is impossible to see reality except by looking through the eyes of the party.”

Now substitute Trump and/or the Republican Congress for the word “party.” In his valuable new book, “Churchill and Orwell,” journalist Thomas Ricks writes: “The struggle to see things as they are is perhaps the fundamental driver of Western civilization … It is the agreement that objective reality exists, that people of goodwill can perceive it, and that other people will change their views when presented with the facts of the matter.”

That agreement has been shredded. And as a result, we are living in a country much closer to Mike Judge’s unfortunately prescient 2006 movie “Idiocracy” than anyone could have imagined.

Conservative writer John Podheretz cited that flick after Trump posted a doctored photo of the twitwit-in-chief wrestling a figure labeled “CNN” to the ground. Other signs and symptoms of “Idiocracy, American Style,” surface on a daily basis.

When “NPR” continued its long tradition of posting the Declaration of Independence on the 4th of July, a number of Trump supporters thought it was some sort of lefty propaganda. According to a recent Pew Research Center poll, a 52% to 36% majority of Republicans now claim that colleges and higher education are harmful to America. Climate change deniers say “What, Me Worry?” as wildfires rage. Last summer parts of Alaska – Alaska! – were ablaze. This summer British Columbia is burning.

Want a truly somber assessment of the state of America? Consider “New York Times” columnist Timothy Egan’s piece on June 23. Entitled “Our Fake Democracy,” Egan delineates a country run by leaders who no longer give a shit about the will of the people, unless we’re talking about rich people or “people”, a.k.a corporations, who somehow have been given the same Constitutionally-sanctioned rights as living and breathing humans.

Egan pulls no punches.

“We have a fake democracy, growing less responsive and less representative by the day. The biggest example of this is the monstrosity of the health care bill … people will die because of this bill. States will be making life and death decisions as they drop the mandated benefits of Obamacare and cut vital health care for the poor, the elderly, the sick and the drug-addicted through Medicaid. The sunset of Obamacare is the dawn of death panels.”

Death panels for the poor, the disabled, and the elderly. A windfall for the wealthy, if Republicans are able to repeal the taxes on the rich that largely financed Obamacare and the expansion of Medicaid.

But the poor don’t vote – Egan notes that some 80% of people in poverty don’t bother to show up at the polls. Maybe they think it won’t matter. Maybe they are right. Nevertheless, Republicans are working hard to disenfranchise as many poor people and people of color as they can through state laws setting up hoops to jump through that mostly target the down and out.

If Republican adopted a truthful slogan, it would be something along the lines of: “The Republican Party: Cruel, Corrupt, and Proud of It.”

But the Democrats are almost as bad. The donkeys’ slogan might as well be: “The Democratic Party: Clueless, Semi-Corrupt, and Cowardly.”

If you haven’t already guessed, I’m a registered Independent.

Egan offers plenty of other examples of a democracy that suffers from hardened arteries and perhaps creeping dementia. A Congress that does nothing about stagnating wages and rising college tuition, nothing to date about our crumbling infrastructure. An Administration that touts policies such as a wall at the Mexican border, abandoning the Paris climate accord, harsh penalties for non-violent drug offenders, and many more that are opposed by a majority of Americans. And let’s not even get into the whole Russian collusion-obstruction of justice thing, with a bizarre cast of characters that includes pop stars, oligarchs, paranoid generals, music promoters, the Miss Universe Pageant, and, briefly, The Mooch.

Perhaps most tellingly, Egan cites Edward Luce’s new book, “The Retreat of Western Liberalism,” which states that the lowest level of class mobility of any Western democracy is right here in the good ol’ USA. For most people, the American Dream has become just that – a fantasy if not a nightmare.

Finally, Egan notes that Trump lost the popular vote by some 3 million people – one of those facts that never quite manages to dent his delusional grandiosity — and his approval rating has fallen below 40%. Yet “he’s primed to change life for every citizen, against the wishes of a majority of Americans. Try calling that a democracy while keeping a straight face.”

Okay, so the grand American experiment in democracy just might be in a death-spiral.

But look on the bright side. With luck, we’ll have a few more decades before the hammer comes down.  Plenty of time to enjoy the fruits of 21st century America – massive supplies of drugs, a zillion shows on Netflix, and phones that are deliberately designed to be as addictive as the slots in Vegas.

If we just bury our heads and keep staring into the tiny magic screen in the palm of our hand, everything will be fine. Just fine.

Really, don’t worry about a thing. Just pop another anti-depressant or pain pill and check your Facebook page. Look at all your friends! Including a few that you’ve actually met! Everything is fine. Just fine.

But what, you might ask, does this screed have to do with Startupland? Perhaps quite a bit.  Because I would submit that Startupland has devolved, in just a few decades, into something almost unrecognizable from it early glory days, largely mirroring the decline of America itself.

Consider the two fine shows about Startupland, “Silicon Valley” and “Halt and Catch Fire.”  The latter, which chronicles the startup scene in the 80’s, is a drama filled with strivers trying to change the world. Sure, it’s a realistically portrayed world filled with the same kind of schemers and charlatans and backstabbers that have always been around. But the optimism and idealism of the entrepreneurs shines brightly. When the entrepreneurs in “Halt” talk about doing something to change the world, it’s not just a marketing slogan.

But the idealism of the 80’s is so old school — and we know that anything old is viewed with fear and loathing in today’s Startupland.

In contrast, the Pied Piper cohort’s stubborn integrity and idealism is portrayed as amusingly naïve, if not downright foolish, in present day “Silicon Valley,” where greed, dirty dealing, and eccentric incompetence is portrayed as the norm. It’s a really funny show, but the humor is overlaid with a thick layer of corruption and fatigue in an environment where, in the immortal words of Gordon Gecko, “Greed is Good.”

The humorously grim portrayal of Startupland in “Silicon Valley” is not surprising, since it was created by Mike Judge and one of its chief writers is Dan Lyons, a distinguished journalist who was downsized after covering tech for “Newsweek.” Needing a job, the 50-something Lyons hooked up with the hot Boston startup HubSpot as a “content generator.” And found himself working in a little shop of horrors, subservient to youngsters who gobbled up free candy as they ran the asylum.

At least that’s how Lyons describes it in his book “Disrupted: My Misadventures in the Start-up Bubble.” HubSpot, in his telling, was more like a cult than a business, where wide-eyed millennials pledged allegiance to a hype-machine selling software and advice to small companies with messianic zeal. The HubSpot true believers thought they were “changing the world” by selling marketing assistance that Lyons described as little more than online spam.

HubSpot reeked of Orwellian overtones. People were hired and fired willy-nilly. Those who were fired were said to have “graduated.”

HubSpot lost over $100 million in seven years. But it kept raising money, which fueled the type of meteoric growth that makes VCs drool.

When HubSpot went public in 2014, raising $100 million, the three founders and a handful of early backers, who collectively owned 80% of the company, made out like bandits. Other employees, especially those who had “graduated,” not so much.

“Suddenly there was a new business model,” Lyons wrote. “Grow fast, lose money, go public. That model persists today. It’s a simple racket.”

But one that often is amazingly effective. Give HubSpot its due – revenues topped $200 million in 2016, the stock price rose some 30 percent, and many analysts continue to tout it as a “Buy.” It continues to lose money, but so what?

If Lyons description of Startupland as largely a racket is correct, it’s a racket tinged with insanity. Consider the remarkable case of Juicero, almost certain to be mocked on an upcoming episode of “Silicon Valley.”

Juicero’s founders and backers trumpeted their juice-squeezing machine with the pompous and overhyped grandiosity that is typical in Startupland. Founder and CEO Doug Evans compared himself to Steve Jobs, declaring Juicero would do for juicing perfection what Jobs did for the computer. He said his juice-squeezer generated four tons of force – “enough to lift two Teslas.”

Some of the best and brightest in the Valley, including Kleiner Perkins and Google Ventures, poured $118 million into Juicero, despite the fact they never even saw a working prototype of its $700 juice-squeezing machine, which was soon discounted to $399.

That didn’t turn out to be much of a bargain when a couple of intrepid reporters from Bloomberg discovered they could squeeze the pre-bagged fruits and veggies sold with the machine as fast as the machine itself.

Oops.

But founders and VCs who can raise $118 rarely lack for chutzpah. As part of its current effort to “pivot” – Startupland speak for frantically shit-canning the lousy product you’ve created in favor of something, anything, that people might actually pay for – the Juicero board replaced its original founder and CEO with Jeff Dunn, a former high level executive at Coca-Cola and Campbell’s Soup.

Dunn offered a brazen gem of an explanation for his desire to take the helm of Juicero. It would enable him to “connect work to personal passion: solving some of our nation’s nutritional and obesity challenges.”

Which, of course, is just what he was doing when he was hawking spoonfuls of sugar and empty calories in each bottle of Coke and loads of sodium in each can of soup.

In the last 10 years or so, what has Startupland produced to change the world for the better?

Social media? Sure, if you think creating a breeding ground for ISIS and neo-Nazi recruitment is a big step forward. Sure, if you think creating a forum that encourages people to be their most narcissistic, impulsive, and nasty selves – and in the process destroying common courtesy, one of underrated elements that glue a society together – has done anything to advance the human race. Sure, if you think increasing the partisan divide in America to the breaking point is something to brag about.

Google’s search engine was truly revolutionary. But what has the company done lately? Instead of Do No Evil, Google is embroiled in battles over billions of dollars in taxes it allegedly owes and fighting accusations that it rigs that remarkable search engine to favor its advertisers. And what about Apple, Microsoft, Facebook, and Amazon? The Big Five mostly seems to be interested in acquiring smaller fish and fighting off charges of monopolistic practices.

(Although, to be fair, founders Zuckerberg, Bezos, and especially Gates, are personally taking admirable actions on behalf of society.)

Some critics thought Dave Eggers novel “The Circle” was over the top, with its portrayal of a company obsessed with leaching every bit of personal information from you and me. “Privacy is Theft” was the operating principle of The Circle, and that notion is not much of a stretch from present-day reality.

As author Ricks put it, “Orwell saw that people might become slaves of the state, but he did not foresee that they might also become something else that would horrify him – products of corporations, data resources to be endlessly mined and peddled elsewhere.”

And we haven’t even mentioned the rotten underbelly of Startupland, the astonishing level of sexism that permeates Silicon Valley. The blatant mistreatment of women was like a boil that almost every mover and shaker in Startupland pretended not to see as it grew larger and larger. I wrote about it almost 4 years ago in a two-part column entitled “Animal Farm,” and I was hardly the first to do so.

Finally the boil burst, thanks to a number of women, from Ellen Pao to Susan Fowler, who were brave enough to raise a ruckus. And thanks to Uber, whose rancid behavior finally proved to be too odious to ignore.

“In all too many cases, what ventures capitalists are investing in are assholes,” stated Sarah Lacy, the publisher of “Pando,” in 2014. That’s the same year Uber execs threatened to dig into her personal life in retribution for her tough but fair coverage of the company.

A kissing cousin to sexism in Startupland is pattern recognition, the notion that successful founders can be identified in advance by the schools they went to (Harvard, Stanford, MIT), their age (20 – 30), their degree (computer science or engineering), the big tech companies they worked for (Google, Apple, etc.) and their attire (hoodies). When I wrote about this two years ago in a piece entitled “The Conventional Wisdom (Sucks!)”, I thought pattern recognition was a business model devised by lazy, arrogant, and elitist VCs who couldn’t get out of their comfort zones.

But now I see it as something far more nefarious.

Pattern  recognition is — by definition — sexist, racist, ageist, exclusionist, and probably a few more “ists” that haven’t yet occurred to me. It could be compared to redlining, the illegal practice that some banks used in refusing to make housing loans in minority neighborhoods.

It also doesn’t work well. As Peter Thiel states on his Founders Fund website, since the late 1990s, Startupland “has ceased to be the funder of the future, and instead has become the funder of features, widgets, irrelevances.” In Thiel’s words, this approach “broke venture capital.” In 2013, the “Harvard Business Journal” reached a similar conclusion, stating, “since 1999 VC funds on the average have barely broken even.”

The strike rate of VC firms is terrible. Think about it. VC firms take meetings with a tiny percentage of startups that approach them. They fund a minute percentage of the startups they do take meetings with. Despite all that winnowing, they stink at picking winners. If VC firms were professional baseball players, most wouldn’t get out of the lowest level of the minors.

And pattern recognition plays a big role in their lousy batting average. Reading “Inside Venture Capital,” Jason Calacanis’ newsletter detailing weekly funding deals, is often like a trip down the rabbit hole of largely trivial millennial desires created by those who fit the pattern recognition model, featuring startups devoted to delivering meals or beer or laundry service to youngsters with lots of disposable income in big cities. A round of applause for companies that are changing the world by delivering craft beers and clean clothes to your doorstep!

And congrats to the visionaries at SpotHero, a Chicago-based parking spot reservation service that just raised a $30 million C round! It’s a service that should be especially useful when the United States devolves into a blasted landscape that resembles a cross between “The Road” and “Mad Max.”

Perhaps it’s not surprising that much of the energy in Startupland has moved from Silicon Valley to distant shores.

Steven Hoffman, the captain of Founder’s Space and creator of defendourdemocracy.com, has opened accelerators/incubators in China, Japan, Korea, and the Caribbean in the past two years.

“Innovation is happening everywhere, not just in Silicon Valley,” says Hoffman. “I grew up in Northern California, but I can tell you that we don’t have a monopoly on innovation or on venture capital. We’re seeing great startups appear all over the globe. If Silicon Valley doesn’t address some of its fundamental shortcomings, it will have serious competition in a few years.”

Startupland, like America, is stagnant and decaying, stuck with a business model that often produces damaged, diseased, and dishonorable offspring.  Theranos anyone?

Astute entrepreneurs in Startupland have come to realize that a fledgling company shouldn’t bother talking about generating profits. Or sometimes even revenues.

Perhaps the most viable formula for obtaining VC funding in the 21st century is as follows: mix a slick, charismatic, media savvy founder (extra points for a bad boy past) with a flashy idea  – “We’re the AIR BNB for sex parties!.” Put it in a blender and add the buzziest, bubbliest, frothiest public relations campaign imaginable. Then whip it. Whip it good.

But hey, why the long face Mr. Ed?

While pessimism is fully warranted, we’re not required to succumb to it. It once took me seven years to sell a book proposal. I eventually wrote the book for Scribner, home to Hemingway, Fitzgerald, and Faulkner, making the long wait almost worth it.

So I’m not throwing in the towel. Although I think media companies are the most likely funding source for ExpertRex, I’ll continue to approach VC firms and anyone else who might fund us. Why not?

Especially since there are VC firms who have rejected much of the conventional wisdom in Startupland. Examples include the Foundry Group in Boulder, Union Square in New York, Upfront Ventures in LA, and Forerunner Ventures in San Francisco.

Very different VC firms. But with at least a few common denominators. Partners who are interested in the wider world and in doing well by doing good, as evidenced by the blogs being written and the extracurricular work being done by Brad Feld, Fred Wilson, and Mark Suster.

Partners who have led the financing of such companies as the Foundry Group backed Impact Health. Dedicated to helping people find the best and most affordable health insurance, Impact Health just raised a $13 A round. Partners such as the almost all-female team led by Kirsten Green at Forerunner, who are backing consumer companies making products that people actually want and need.

Such VC firms represent shards of hope for Startupland. There are shards of hope for America as well. The likely death of the Republican health care bill. The gerrymandering case the Supreme Court has elected to hear, which might address and fix one of the main drivers of the partisan divide in Congress. Who knows, maybe the twitwit-in chief will decide he’d rather play golf every day and resign. And if all else fails, we can always binge-watch all of that great TV, at least until the power grids explode.

Personally, I’m shopping a proposal for an investigative reporting institute to colleges, universities and private organizations. It’s intended to be a constructive response to the forces that aim to defang the media and gut the 1st Amendment.

So I’m holding on to those shards of hope. Maybe you are as well. But don’t clutch them too tightly. Most likely, those shards are going to cut us to ribbons as devolution continues to lengthen its shadow over the fruited plains of this once-great land.

 

Note: Written by Jim Burnett, a writer in Northern California and the founder of ExpertRex.com.

 

More Madness…

SHEER MADNESS: Animal Farm (Part 2)

https://www.foundersspace.com/a/sheer-madness-animal-farm-part-ii/

SHEER MADNESS: The Conventional Wisdom (Sucks!) Part 2

https://www.foundersspace.com/a/sheer-madness-the-conventional-wisdom-sucks/