Most people seem convinced that Silicon Valley has lost its way. They will tell you that we collectively have stopped focusing on disruptive innovation. That we have fallen into the trap of funding incremental innovation or solving meaningless problems. A minority of these folks actually believe that we’ve skipped over innovation at all and now just do anything we think might have a chance to sell to a greater fool.
Many examples can be (and frequently are) cited here, each reader can probably easily list three from the past week. Even notable people immersed in the industry often feel intuitively like we’ve stopped innovating.
Take Founder’s Fund now infamous statement:
“We wanted flying cars, instead we got 140 characters.”
Yet their intuition turns out to be wrong, there are more ambitious ideas being pursued today, not less. If you were to re-write the Founder’s Fund Manifesto today, it would probably look more like this:
“We wanted flying cars, instead we got: private space travel, printable organs, fast global communication, cheap online education, self-driving cars, synthetic biology, Nano-satellites, digital currency, half the number of people who live under extreme poverty, and… Flying cars.”
There are two primary reasons why we incorrectly feel like we’re losing ground.
The first stems from the way innovation works — you have to fund a large number of experiments in the hope that a few will emerge as wildly important. You can’t tell which ones matter. In the early days of their lives, almost every important company looks either trivial or impossible.
“Trivial” things like desktop computers for normal people (Apple) or yet another search engine (Google), have gone on to become some of the most important companies in the world. These innovations often started with a sociological insight — the discovery of a new form of interaction that lots of people wanted, but didn’t know they wanted it until they saw it.
“If I asked what [people] wanted, they would have said faster horses. — Henry Ford
“I think there is a world market for maybe five computers. — Thomas Watson (in 1943, alleged)
Usually, the initial insight allows the founder to show progress and convince some early believers that it isn’t trivial. After that, this initial insight is then backed up by an incredible amount of hard work (both technical work and work on refining the sociological insight to amplify the signal of what people want) to actually build and deliver that new form of interaction to millions of people.
Impossible problems are different — usually, everyone agrees that solving the problem would be great, but everyone assumes that you’re delusional to try and do it. Innovations in this space tend to start with a deep technical insight into something that makes the impossible look merely difficult. SpaceX is an excellent example of this type of innovation. Before SpaceX, everyone knew that lowering space access costs by 70% would be incredibly valuable, but no one knew how to do it.
All new ideas sound either trivial or impossible. This makes it easy to dismiss all new ideas as not innovative, especially compared to established ideas that are now clearly meaningful. With gestation time, innovations mature and it becomes easier to identify which are truly important.
There’s also a second reason that we tend to undervalue the amount of innovation going on today — increased activity.
About 0.0005% of companies are meaningfully disruptive [1]. Increased rates of entrepreneurship mean that more companies are created (both meaningful and not meaningful companies). When so few companies are meaningful, increased activity exposes us to a dramatic number of new companies that aren’t meaningful and very few new ones who are. The total number of meaningful companies goes up, but the noise from all of the less meaningful companies drowns out their signal [2].
We now hear a lot more about new startups than we used to, many of which are often clearly bad ideas. Even the ones that aren’t clearly bad ideas sound either impossible or trivial. Given that, the easiest conclusion to arrive at is that we’ve lost our way. That’s the opinion we hear most often from friends, relatives, co-workers, journalists, etc. — which reinforces the conclusion in our mind.
There are many more examples. If you stop and look for them, there are lots and lots of people who are inventing the future [3]. And for each one that you hear about, there are easily ten more working hard in obscurity in their labs. Inventing the future is hard work. The inventors tend to spend lots of time working, and not much time doing PR.
It has never been a better time to be a techno-optimist. Today is better than yesterday, and with continued responsible cultural maturation, our future looks incredibly bright [4]. But if we want that future, we have to collectively invent it.
Our increased rate of technological advancement creates a lot of new insights at each fringe that could bear fruit if followed. This goes for both sociological and technical insights. Discovering and testing each of those insights takes hard work.
If an initial test seems to confirm the insight, it takes even more hard work to develop that insight into a meaningful contribution to our shared future. More potentially meaningful companies waiting to be discovered means that we need far more support from venture capitalists, engineers, business people, politicians, educational institutions, philanthropists, and you.
Understanding the world through this realistically optimistic lens can motivate us towards increased action, but it can also encourage people towards apathy. Please do not let this essay make you a spectator on your path to improvement. Our future is bright, but it is not guaranteed – we have the raw materials for success, but we must do the hard work to make it so.
So, I’ll leave you with a question that I hope we can all revisit frequently for inspiration:
WHAT CAN YOU DO TO HELP INVENT A BETTER FUTURE?
“Our greatest responsibility is to be good ancestors. — Jonas Salk
“I believe we possess all the resources and talents necessary. But the facts of the matter are that we have never made the national decisions or marshaled the national resources required for such leadership. We have never specified long-range goals on an urgent time schedule, or managed our resources and our time so as to insure their fulfillment. — John F. Kennedy
Footnotes:
[1] 250 companies out of 550,000 (source)
[2] Similarly, increased number of investors has led to a dramatic increase in both good and bad investors. There’s no doubt that many venture firms deliver lackluster returns by trying to time the market and investing in un-meaningful companies that they hope Google will buy. But, there are also a large number of investors out there who work to profit “from [helping create] a wildly more advanced future.” My angel investments come out of a very small fund, but we certainly look at the world this way. VCs like Founders Fund, Andreessen Horowitz, and Khosla Ventures have all been very vocal about doing something similar. New funds like OS Fund and Obvious have started with this explicit purpose. There are many others; by looking at the companies they’ve chosen to fund, you can see DFJ, Accel, Sequoia, Floodgate, Lightspeed, Battery, Trinity, Greylock, Benchmark and many other top-tier VCs aren’t taking bets on “iterative” companies and then shooting for “safe” M&A exits.
[3] Lots of possibly meaningful companies are being built right now. Here are a few:
Planet Labs and Nanosatisfi are both building large networks of satellites that are more than two orders of magnitude cheaper than existing satellites, and they are doing it with small teams and small amounts of money from offices in downtown San Francisco. Planetary Resources is building the ability to tow asteroids into near-earth orbit and mine them for natural resources. Organovo prints functional human tissue using a 3D bioprinter. Cambrian Genomics and Genome Complier are building tools to help you manipulate DNA and print out new organisms. J. Craig Venter Institute is trying to invent biological sources of energy that can lower the cost of creating energy and reverse climate change. [4] It deserves to be said that while I’m obviously a strong techno-optimist, I’m not blind to some of the key ways that other techno-optimists have failed on in the past. Our ideal future involves positive cultural change as well as technical innovation. Frankly, if cultural change doesn’t accompany technical innovation, it’s likely that the quality of our future will be worse than our present. I’m worried about this, especially noting the current climate in the US at the time that I’m posting this. That said, we’ve done a surprisingly good job of this historically and globally have done a good job of this over the past several decades. I am optimistic that we’ll continue to improve here.