This Wednesday I went to a London Web event to hear venture capitalist and ex-Goldman Sachs employee John Frankel talk about “Using VC Funds To Change The World”. I took it to be implicit in the title that it referred to changing the world for the better. I think what it actually referred to was changing the world by making a lot of money for yourself, and, if you are lucky, John Frankel.
Two topics particularly caught my attention. Firstly the way the dialogue between audience and speaker dwelt on why Europe couldn’t produce Startups like “the Valley”, echo ing Eric Schmidts’ comments later in the week to the Edinburgh TV festival. My natural response is to feel that there are few circumstances where aiming to be more like the US is a useful policy. Calling Old Street Silicone Roundabout is symbolic of a naff, and hopeless, attempt to ape America. Anyway, I think that observation sets the context for what I felt was the most salient point of the evening.
A lot of questions were asked about what qualities Mr Frankel looked for in a startup, questions he was clearly used to fielding. Taking the liberty of summarising him, he wanted to invest in a future monopoly like Google or Facebook. Though expressed in many different ways, the idea was that he would put his money in services that could hold society to ransom by using their scale to ensure that they have no competitors.
In too many places to list, I’ve heard the San Francisco originated cyberculture of the web is one of Doing No Evil and being generally lovely. You might think I’m naive to believe this stuff, but actually I kind of do. Whilst I’m not saying that I think Google and Facebook are run for the good of the world, Google.org exists, Bill Gates is the biggest philanthropist in history and Mark Zuckerberg has signed a pledge to give at least half his wealth away. I’d also point to the fact that Google, Yahoo and Facebook have been prepared to open source all kinds of things, in many instances where they stood little to gain. These firms seem distinct from the gray homogeneity of normal capitalism. Just look at how frivolous their names and logos are: Yahoo! insists on an exclamation mark while Google’s logo was designed by a friend of the founders and is, by any normal standard, terrible. Facebook is not a name that a marketing department would come up with.
I strongly got the impression that this is not the MO of the next wave of startups – they are funded by former Goldman Sachs wonks with a view to earning money by exploiting consumers using their monopoly powers. Startups will not be sparked from an exciting PhD paper or from a dorm in a university – they will be the spawn of business plans and spreadsheets and market research.
For reasons I don’t fully understand the web seems to make monopolies easier to build, which is incredibly bad news for everyone except their owners. And now I realise there is a whole world of funding for anyone who wants to seize that opportunity. Inevitable perhaps, but normally when I go to a talk about the web it will be about (perhaps overblown) claims that the Internet will make everyone’s lives better, especially poor people, especially in developing countries. This talk was exactly the opposite.Google+