Everyone's nice in the Valley, until they're not

In SF, the ugly lights come on at 1:30

Dear reader - my first post is an attempt at clarifying thoughts that have been stewing in my head for a while. It is likely representative of what I intend to write about in the future. However, I hope the quality of my thinking and writing goes up; I skewed toward pushing this out. Fail fast, fail often :)

In this piece I attempt to argue that the uniquely high-cooperation culture (“let me know how I can be helpful”) of Bay Area Tech is driven on an ecosystem level, but that might collapse if/when growth slows.

Let’s start with context:

Premise 1: Bay Area Tech culture cooperates by default; other cultures don’t necessarily

Premise 2: The rules can change

Instead of trying to be unique, I’ll just quote from Jerry Neumann’s excellent The Deployment Age (emphasis mine):

Everything you’ve learned in your career has to be re-examined every once in awhile to see if it will be as true in the future as it was in the past.

Some things we’ve learned over the past 30 years–that novelty is more important than quality; that if you’re not disrupting yourself someone else will disrupt you; that entering new markets is more important than expanding existing markets; that technology has to be evangelized, not asked for by your customers–may no longer be true. Almost every company will continue to be managed as if these things were true, probably right up until they manage themselves out of business. There’s an old saying that generals are always fighting the last war, it’s not just generals, it’s everyone’s natural inclination.

On to the argument…

Most startup advice I read is either from already-successful entrepreneurs or VCs, and both the fortune cookie tweets and essays heavily lean toward the “cooperate”, “infinite games” type of thinking - play the long positive-sum game and in aggregate everyone wins. This is absolutely the right advice on an ecosystem level.

In the prisoner’s dilemma, it is rational for each criminal to defect. It is also rational for their hypothetical crime boss to encourage cooperation. It probably also helps established players to have a no-shivving culture. The pool of public advice is also massively skewed away from the ‘defect’ column because nobody wants the reputation of being a defector! It’s left to Robert Greene and (still!) Machiavelli.

Incentives for powerful players aside, the pro-cooperation advice is probably mostly genuine, coming from personal experience. Historically, cooperation has been the good general strategy in the Valley. Historically, it HAS served you well to be founder-friendly in the venture business.

Right up until you need to fire a CEO to ensure that your 10x-returning-the-fund-investment goes public. Quoting from Ben Thompson’s excellent The Uber Dilemma (emphasis mine):

That almost assuredly changed Benchmark’s internal calculus when it came to filing this lawsuit. Does it give the firm a bad reputation, potentially keeping it out of the next Facebook? Unquestionably. The sheer size of Uber though, and the potential return it represents, means that Benchmark is no longer playing an iterated game. The point now is not to get access to the next Facebook: it is to ensure the firm captures its share of the current one…

…In other words, an iterated game is good for founders: it ensures venture capitalists are nice. Single move games, though, which Uber has become, often end badly for everyone, particularly founders.

In the current, stable era, conflicts have been infrequent. In the Valley, pretty much everyone’s been winning. Our industry is so young that we’ve only really seen a boom. Few of us actually went through the dot-com bubble. Our culture has been shaped by that.

It’s not clear to me that the Valley attracts especially cooperative people anymore. Even before you get into the whole invasion-of-the-MBAs rhetoric - it’s just too big. You have to have reversion to the mean.

We can see the cooperate-by-default strategy isn’t as common in other places, in other industries. It’s not as common in Asia. It hasn’t been common on Wall Street. It’s not true in politics.

I spent some time at a company that went from growth to cost-cutting and was astounded by behavior changes from people I’d previously thought were the nicest. Maybe I was just naive.

I’m not trying to scare anybody, we should just be careful to note that public advice and perception will never catch up with private activities - even more so should the environment shift from growth. Don’t go into meetings expecting to get shivved, but maybe don’t label your vital organs.

Related thought that didn’t make the cut: In the broad context of history, the current era is uniquely stable

(i.e., absence of large-scale conflicts, reliable trade / contract enforcement, etc.) due to a combination of the following and other factors:

  1. US-led geopolitical stability, globalization, etc. in the after WWII

  2. Productivity gains from effective exploitation of fossil fuel energy

Further Reading: The Accidental Superpower, podcast interview