How Silicon Valley is not like Wall Street

Saving the world and off-menu omakases

Ranjan here. This week I’m going to be talking about the way Silicon Valley talks.

Pop quiz: What is Goldman Sachs' motto? Or their corporate mission?

We all know Google's Don't Be Evil. Or how Facebook is connecting the world. What is the pithy, high-minded statement that defines how Goldman Sachs will make the world a better place?

It's a rhetorical question because of course, Goldman doesn’t have some catchy phrase that tries to ascribe some deeper meaning to their work. I mean, I'm sure in 2020 they have something on a website about empowering a million businesses, but it's not central to who they are and what they do. They are a bank filled with bankers. They make money. They try to make the most money possible. For clients and for themselves.

SV : WS

I think a lot about the ways that Silicon Valley is the new Wall Street. SV unquestionably represents the new center of American power. It attracts a similar hyper-competitive, driven personality. There is plenty of money. People are into off-menu omakases and expensive wine. Sure, the Valley folks bike while the Street folks golf. The shoes are Lanvin sneakers instead of Gucci bit loafers, but they still cost 500 bucks. These are all surface-level differences, but at the core, the culture of money, power, and success has moved from East to West. As my co-host Can is a longtime SF'er, it's fun to draw these parallels and it’s been a central theme of Margins' discussion.

But today’s newsletter is on how Silicon Valley is different than Wall Street.

JUST ADMIT YOU’RE INCREDIBLY SUCCESSFUL

I left trading because I never quite acclimated to the Wall Street culture. I just wasn't driven by money in the way that I needed to be. I saw a grown man cry when his bonus, in the hundreds of thousands, wasn't quite what he expected. There was a yearly dance every January, where you would be told your bonus number by your boss and have to make a big deal about how you got screwed by the bank. I had a hard time feigning anger when it was always more money than I could've previously imagined. That was not how to play the game.

During that time, I definitely bought into the Silicon Valley ethos of dorm room disruption and transforming the world. I marveled at my iPhone and Facebook feed. I never lived out West, but I tried living that dream here in New York. I worked at a WeWork, went to Meetups, and dreamily read Techcrunch. Most of my MBA friends all set up shop at one of the big tech firms. The weird thing was, the more I became exposed, the tech people, in startups and big tech alike, felt almost identical to my previous life. Money. Competition. Intensity. Lots of dudes. 

But the one thing I could never quite understand was how no one talked about how they were the powerful ones. Software ate the world and tech was the beneficiary. Everyone got a supercomputer in their pocket and tech was the beneficiary. The Fed kept rates low and vast new pools of private capital flooded in and tech was the beneficiary (you knew I was going to bring in ZIRP). But people were always loath to speak of how much money was swirling around and how much power was being concentrated. It was this quiet, open secret. 

One of the unique traits of Silicon Valley culture I've observed is that aversion to an admission of power. It's maddening, but feels ingrained. These are now trillion-dollar companies. They control the world's information. They are in our homes and our pockets and watching our every move, 24 hours a day. They won and are continuing to win.

But there is still that consistent us-against-the-world phrasing. That dorm-room, garage and ramen framing of rebellious hackers flipping the middle finger to the system. The system is broken, and only the Valley can fix it, even thought it has, in fact, become the system. `

I've never understood why they don't publicly own the power.

LIAR’S POKER

I'll never forget when I started in my training program for Bank of America, I was shocked that the other trading analysts celebrated Liar's Poker. They wanted to emulate the Salomon brothers characters who I thought were supposed to be the bad guys. You saw it with bankers and Bonfire of the Vanities and Barbarians at the Gate. There were even guys who watched American Psycho and came away wanting new business cards (side note: I just found out that it's Gavin Belson in that scene!)

On Wall Street, everyone was not only okay with being the douchebag, they often troublingly wanted to be the douchebag. In Silicon Valley, no one yet seems to want to admit they're the new douchebags. And this more an observation than a value judgment. Power and money beget douchebags. It’s just the nature of the beast.

It's the resistance to acknowledging the power that kills me. It's the ‘connecting the world’ and not being evil while...being conventionally evil. That way of speaking that has seeped far from its Northern Californian roots. It's Adam Neumann talking about a collectivist revolution and then trying to pocket 1.6 billion as workers were laid off. It's not selling mattresses but revolutionizing the sleep economy. That need to ascribe greater meaning to the code you write or the ads you sell felt like the defining feature of the 2010s, and it was the perfect reflection of how powerful Silicon Valley became. They changed the way every business talked to be more like them.

DO THEY BELIEVE IT?

I’ve always wondered whether people believe what they say.

My friends at big tech firms don’t really believe in anything too mission-driven. They came on pretty late in the game and mostly have that corporatist attitude of "it's a prestigious job that provides me with a very comfortable lifestyle". But they're admittedly the MBAs who would've gone into finance if they graduated a few years earlier. 

Does the rank and file Facebook or Googler really believe they're doing great things for society? As their stock holdings rise and rise, and the companies, especially in our current pandemic, rush to concentrate power even more, do these employees still believe it? Or does the positivist language simply provide convenient air cover for the aggressive and underhanded business things it often takes to keep winning. Is Don't Be Evil the equivalent of the Sacklers donating to art museums?

Pmarca's Let's Build essay captured everything about this modern-day Silicon Valley ethos perfectly. He blames our political divide for societal stagnation while ignoring that he sits on the board of the very company that helps drive this divide. He literally has a seat at the table! Bemoaning America's inability to create our own PPE while helping drive the distributed, globalized supply chains that got us here. Just look at how much of a16z’s portfolio was successfully acquired by big tech firms, choking off the very startup-driven innovation that Silicon Valley espouses.

a16z's very reason for existence is to drive innovation and they are among the most successful among their peers. They spent the past decade choosing the type of companies that would power the economy of 2020. But the Silicon Valley verbal gymnastics of lamenting the state of America while having a central role in building this current version of America kind of captures everything.

SV HISTORY

Why does Silicon Valley speak in this way? If anyone has any good articles on how this style came about, please send them my way. Is it simply an awkward transition where they were genuine underdogs and have now assumed the throne? Maybe the next generation of SV leaders will happily operate in the style of tobacco, big oil and banker execs. It feels like how Belichick and the Patriots always managed to refer to themselves as the underdogs who were somehow getting screwed by everyone else. 

But the us against the world thing is funny and fine if you’re a sports team and it motivates you. It’s dangerous when your doublespeak leads to real, widespread problems. It’s Uber pitching a new lexicon around a sharing economy and empowering individual entrepreneurs while creating a new underclass of underpaid, benefit-less workers. It’s AirBnB talking about sharing your home while becoming dominated by professional hosts resulting in all sorts of problematic distortions in urban real estate markets. It’s Facebook….well, just being Facebook. 

The words provide air cover. We were all distracted for so long by the shiny words that we missed what was really happening. Industries were decimated and concentrated. New richest men in the world were minted. Genocides happened. Elections were won and lost. The same company is now my robotic butler, delivers me deodorant, streams me movies (that they produced), hosts the remnant code of my former startup, is how I read books, and I’m sure I’m missing a few other areas where Amazon dominates my life. Power begets more power, and tech accumulates it in a ruthless way that clearly has made Goldman Sachs jealous enough to relax their dress code.

It makes me wonder if I respect the Peter Thiel-ian mold of Silicon Valley more. While the rest of SV couches industry concentration in terms like winner-take-all markets, he proudly tells you to build a monopoly. When Palantir wins a government contract, I mean, no one is even beginning to pretend it’s will realize any liberal values.

They are incredibly consistent and forthright. I may disagree with almost everything they say, but there is nothing disingenuous about the way they speak. You have 100% clarity on their motivations. It’s positively Wall Street-ian.  

The tide has finally turned. People are at least questioning big tech. There’s still plenty of backlash to the techlash, but from most conversations, there is at least mild skepticism. But it’s worth questioning how much of our current predicament, one rife with industry concentration and unintended consequences, is the result of a very specific save-the-world, underdog verbiage that kept us all distracted.


Note 1: Can and I were debating this post in Slack quite a bit. He has much more direct experience, while I view this trend as an observer. I brought up whether the way Mark Zuckerberg spoke of Facebook would be different if he didn’t build the company in SV. Reddit serves as kind of an amazing alternate timeline. This site that I find to be equally, if not greater, a connector of ideas and information was built in Boston. While Zuckerberg turned down a billion, Reddit sold early on for a solid return. It was allowed to thrive in a weird, idealized corporate structure under Conde Nast. It just grew and connected more and more people. It’s clearly been looked at as an asset whose value was under-extracted under their new $3 billion valuation regime. If Reddit grew up in Silicon Valley what would it look like?

An old Reddit pitch deck