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slowtech, July 2007.
In a world which values speed and novelty, traditional American business virtues are overlooked in the venture capital investment arena.
Natural business principles are abandoned. These can include: simplicity, caution, deliberation, loyalty, forbearance, locality, and generally execution based on pre-defined principles.
Today it must be “new” and “fast” and “big” and “global” and “tomorrow.”
The prevailing wind of this recent epoch is an historic shift from fundamentals to novelty. This shift is driven by an unhealthy obsession with technological innovation aroused by the boredom of the human condition in an over-stimulated world. This is irrational and unnatural.
Free beer tomorrow. Web 2.0 is now passé. Gen-X, even, is in decline.
The next best thing is, more often than not, only next to the best things. What made one a “sucker” before makes one “bold” and “visionary” today. Before when people went “out on a limb” they first ascertained that there was some tree there. Today for some any limb will do.
Example: a penny invested with care in a proven undertaking or in proven principles is likely to receive both security and a return.
However a penny invested in the breaking technological innovation might receive a bigger return but little or no security. Is the increased risk of loss (an uncertainty) mitigated sufficiently by the potential of increased return (another uncertainty)? Is it rational to leave cashier for casino?
And yet, surprisingly a frenetic philosophy of this line animates much of the American venture capital investment community whose participatory priorities follow.
So fast is this world that even “technology” has become just “tech.”
Why? And, how could this be? Will this not lead to market extinction?
If this growing predilection to nouveau sans deliberation were a bad thing, why would so many do it? “People, especially the successful ones, would not be able to adopt a wrong-headed position and survive or retain credibility. Therefore, what you say makes no sense.”
In reply, consider the aforementioned casino. In gambling (or gaming as it is modernly termed) a few win a great deal while most lose a little to a great deal. All have the odds stacked against them. One would think based on this that few would play, and yet industry trends indicate an ever-growing population in all varieties of ‘gaming.’
Why is this so? New games, bigger payouts. Larger payouts draw the aggregate. Thus ‘gaming’ modernly is an apt metaphor for the milieu of the American venture capital market. Few but big winners, with new games and “bigger payouts,” inspire more others to play.
Do the participants in the aggregate come out ahead? Can one carefully succeed in long-term participation in this venue? Will a few make out big time but most lose everything?
The venture capital/private equity vehicle has prepared for this with a format which presupposes little losses while presupposing large supplementary gains. Is this a safe bet? Do you want to bet?
Enter slowtech. It is time for a principled approach to business creation emphasizing proven commercial concepts instead of a blind adoption of unchecked innovations and the allure of total tech novelty.
The innovation is tradition.
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