Roger McNamee is one of the smartest investors in tech, seemingly always ahead of the curve. A long-time sounding board to Bill Gates he was an early investor in companies like Palm, Electronic Arts, and Facebook. He has also not hesitated to be fiercely critical, writing an unsparing book about the danger social media poses to democracy.
So his recent op-ed about “Big Tech’s Lost Decade” is something we should take seriously. McNamee points out that the enormous tech valuations — more than 1000 startups have been valued at over a billion dollars — is more due to a loose financial and regulatory environment than to significant innovation.
The signs have been there for awhile. I wrote about how the digital era was ending five years ago. Yet McNamee takes it further, calling for stricter regulation and a “transformation in culture, business models and industrial structure.” It seems that reckoning is approaching. Hopefully, it will make our economy safer, more equitable, innovative and productive.
The Great Digital Dissonance
In 1982, when Steve Jobs was trying to lure John Sculley from Pepsi to Apple, he asked him, “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” The ploy worked and Sculley became the first CEO of a major conventional company to join a hot Silicon Valley startup.
That was 40 years ago and since then, with the exception of eight years in the late nineties and early aughts, productivity growth has remained depressed. At the same time, income inequality has increased and business has become less dynamic, with fewer startups and less churn among market leaders.
You would think that the decades of consistent failure would be some cause for reflection, but not at all. Lean startup guru Eric Ries — who never ran a successful business himself — went to indoctrinate General Electric on The Startup Way (and we know the results of that!). Tech entrepreneurs like Marc Andreesen and Peter Thiel seek to reshape politics. Elon Musk trolls Twitter while Tesla loses massive value.