“There is a new hope in the horizon, the Valley Jedi – a few brave people that try to change the world, to make it a better place with great products and believe that great products are more important than short term financials. They stand against an ancient dark force, that dark force sometimes referred to as Wall St., but the that dark force is strong in every financial market, that force is powerful and has only one goal – maximize profits, ignore long term, ignore users, ignore social impact – buy cheap sell high – it is the basis of rational economics.
At the end of the 20th century, there was hope, the internet brought in new fresh IPO’s in irrational multiples, driving everyone to believe the world can be better, but then the dark forces closed in and for almost 10 years the Valley Jedi have been hiding. The Jedi are back, but they are still afraid by the dark forces markets, they fear the markets will turn against them again. “
My point is very simple over the past couple of month, and even recent days, the rules of the game ARE changing, more battles are won towords Valleys Vs. Wall St. :
Howard Lindzon (my lovely crazy awesome angel) has just posted how instagram tells to wall street – you failed !He explains how good it is that all this Valley Money stays out of the reach of bankers and even sent a letter to saying he should put his money with eToro instead of “old” private wealth management (so I hope). At a later post he simply says it is more about the product than the financials
Google in their founder letters yesterday have told the market basically they are giving more super voting rights to the founders (super voting rights for founders are the highest degree of the force, power to the founders to ignore the dark side).
founder Mark Pincus, said in the IPO “Games should do good. We want to help the world while doing our day jobs.”
Facebook founder Mark Zuckerberg promises that a similar philosophy will guide the social network. “Simply put: we don’t build services to make money; we make money to build better services. And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”
There is still opposition to the moral the Valley silicon-valleys-undeserved-moral-exceptionalism/ but it seems to come from conservatism and inability to undertake what the Internet revolution is about (openness, freedom, innovation).
Although Facebook, Zynga, Google and LinkdedIn all changed the rules of the game, there is still skepticism that the rules can be changed, that the markets can be a part of the good force, that being public means the company will join the dark side. Fred Wilson is looking for alternative ways for companies to stay independent, but I think the best solution is already here, super voting rights = stay independent while being public.The only problem is the buy side demand and acceptance for it. The only way for that to happen is for the Jedi VC’s to grow (up) and start controlling the power of the markets, while crowdfunding will increase significantly the early stage investments, the VC’s must tier up and raise 100X what they did until now ! Why is the VC industry under 100B (from XYZ) while the hedge fund (ally of the dark side) industry is 3 trillion ? If the Jedi VC (there are some dark side VC’s) would raise 1 trillion USD (give up the 2/20 model while doing it), and invest it in the good companies when they are public and base their investments on new KPI’s, instead of PE multiple, users multiple, etc. Then the market forces will help the world become a better place.
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