The tech companies behind the top 100 fortunes also form a well-differentiated group in the sense that they’re all companies that venture capitalists would readily invest in, and the others mostly not. And there’s a reason why: these are mostly companies that win by having better technology, rather than just a CEO who’s really driven and good at making deals.
Source: How People Get Rich Now
I’m sorry, but this is pure fiction, told to one’s self to feel better about the real facts on the ground. What we’re seeing in “tech,” over and over, is not an effort to come up with “better technology,” but the play to capitalize on some particular niche, and then monopolize it. This is key.
It’s not good enough to provide nice co-working spaces; the goal is to own every rentable building in a city. It’s not good enough to provide a ride sharing solution; the goal is to run taxis out of business, and be the only ride share in town. It’s not good enough to run a respectable social media site; you have to be the only one that people use for a particular purpose. It’s not good enough to provide a food delivery service, you have to be deliver all the food in a metro area.
VC’s are not looking for the next “better mousetrap;” they’re looking for the next monopoly. That’s where all their money is going. Don’t go to Y Combinator with an idea that you think can make “X” millions of dollars per year. Go to Y Combinator with an idea to corner the market on some product or service, and make all the money for it. Established companies (like the latest $20 billion Microsoft gobble) are scrambling to own a monopoly vertical workflow stacks of their own, but it’s all the same idea at play. The only people left standing at the end of this century will be monstrous, global companies which control an entire end-to-end chains of a particular thing, or entire walled gardens that provide so much of what you want that you never step outside of them, and the only people who will be able to pull their strings are billionaires who fund them.
Unless the governments of this world suddenly find their spines, and learn how to tell a billionaire “no,” we’re heading directly for the cyberpunk, citizens-of-global-corporations future that people have been writing about for decades.
Also, this guy has a great deconstruction on the actual wealth inequality fiction Graham was spinning here. It shows how the middle class is being decimated by increasing disparity.
Paul paints a rosy picture but doesn’t mention that incomes for lower and middle-class families have fallen since the 80s. This golden age of entrepreneurship hasn’t benefitted the vast majority of people and the increase in the Gini coefficient isn’t simply that more companies are being started. The rich are getting richer and the poor are getting poorer.