January '21 in Silicon Valley
Capitol insurrection, capital insurrection, and a16z eating the media
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At the beginning of 2021, I decided on a new focus for Silicon Valley Outsider: less timely, more timeless.
And, of course, this January seriously tested my resolve. On four consecutive Wednesdays, the top news stories were:
A horned, shirtless man leading a Capitol insurrection
The first-ever second impeachment of a sitting President
Bernie Sanders wearing mittens to Biden’s inauguration
Redditors leading a capital insurrection against short sellers
Lesson learned: if a Presidential Inauguration is the least exciting thing in the news, it’s going to be hard to get people to care about the future of work.
But, ultimately, giving myself a few weeks to let news cycles settle before writing has been net positive. Some seemingly huge stories — like Twitter’s Trump ban and the supposed exodus to Parler — have faded away. Others, like the Robinhood story, have shifted after a few days of information-gathering.
With the benefit of hindsight, here are three stories from January 2021 that can help you understand Silicon Valley:
📈 Robinhood’s Big Mistake
😎 The Return of Slate Star Codex
📰 Andreessen Horowitz Eats the Media
📈 Robinhood’s Big Mistake
By now, everyone has heard of the GameStop saga: a get-rich-quick scheme turned class uprising.
Once upon a time, a no-name gambler made crazy, 18-month bet that the shares of GameStop ($GME), the beleaguered video game retailer, would double from $4 to $8 a piece by January 12, 2021. He was wrong. It quintupled.
As more and more people heard his story, some saw an opportunity for something bigger. “We won’t just make millions,” they thought. “We will take down the jerks at Wall Street that bankrupted our parents during the financial crisis of 2008! They’re betting against GME, so if we buy it, they will lose.”
And they were winning — until, at least as the story goes, Robinhood (a Silicon Valley startup that offers no-cost stock buying) decided that the little guys didn’t deserve to win. They shut down GameStop stock buying on their app, intentionally tanking the price and bailing out their hedge fund buddies. This made everyone — from AOC to Ted Cruz, Dave Portnoy to Chamath Palihapitiya — very angry.
It’s a hell of a story. The only problem is that it isn’t true.
First, this wasn’t a malicious decision by Robinhood to enrich Wall Street at the expense of their users. (The reality is much more boring.)
Second, this wasn’t a Robinhood-specific intervention: many stock brokers shut down GME buying last Thursday.
Third, this wasn’t a battle of Everyday Joes vs. Hedge Fund Bros. Professionals were on both sides of the trade. Just check out $GME’s top investors:
And finally, this wasn’t even a PR nightmare for Robinhood. All press is good press — they’re apparently raising money at a $30B valuation, after raising at a $12B valuation last September.
The ultimate legacy of the Robinhood-GME saga is yet to be determined.
But for now, it’s a great reminder: don’t overreact to same-day news. The internet rewards amplification and simplification, which means that reality is often less exciting and messier than viral narratives suggest.
😎 The Return of Slate Star Codex
Slate Star Codex is a beloved blog in Silicon Valley, and it’s back as of Jan. ‘21!
Its author, pseudonymously known as Scott Alexander, is a Bay Area psychologist who deleted all 1,557 posts of his blog after the New York Times threatened to reveal his true name. He wrote,
I still had this really strong sense that my career hung on this thread of staying anonymous. Sure, my security was terrible, and a few trolls and malefactors found my real name online and used it to taunt me. But my attendings and my future employers couldn't just Google my name and find it immediately. Also, my patients couldn't Google my name and find me immediately, which I was increasingly realizing the psychiatric community considered important. Therapists are supposed to be blank slates, available for patients to project their conflicts and fantasies upon. Their distant father, their abusive boyfriend, their whatever. They must not know you as a person.
His business was threatened, so he lit himself on fire. But now, he has risen from the ashes and has emerged with a new Substack: Astral Codex Ten.
People call Scott a “rationalist,” which I suppose means that he is smart and cares about having well-informed opinions about things. (What this is opposed to is left as an exercise to the reader.) I love Scott’s blog as a window into the mindset of Silicon Valley: every assumption is meant to be tested, and every subject is worth understanding deeply.
If you’re interested in diving in, try starting with these three pieces:
I Can Tolerate Anything, Except the Outgroup — Why conservatives in America are like dark matter to many liberals, and why the Red and Blue tribes in America are so antagonistic.
Silicon Valley: A Reality Check — Scott’s counter to pessimistic takes on Silicon Valley.
Considerations on Cost Disease — Some things, like healthcare, education, infrastructure, and housing have gotten incredibly expensive over the past fifty years. And nobody knows why.
📰 Andreessen Horowitz is Eating the Media
a16z, a top-tier venture capital firm in Silicon Valley, announced this month that they are starting their own media empire. In their words:
We want to be the go-to place for understanding and building the future, for anyone who is building, making, or curious about tech… Our lens is rational optimism about technology and the future.
This isn’t a new model. First Round launched First Round Review (a great startup blog, highly recommended) in 2013; Y Combinator has been relentlessly generating content through Startup School and through Paul Graham’s personal blog before that; and even a16z itself has started a number of successful podcasts over the years.
It is, however, a bold play worth tracking. Andreessen Horowitz has effectively frozen out the media recently, refusing to contribute to pieces about its portfolio companies, even anonymously. To hear the full, checkered history of a16z and the media, check out this article by Eric Newcomer. It’s epic.
While there’s a lot of loose talk on Twitter about cutting out the media and “going direct” – publishing your own story to the world without the press as an intermediary – Andreessen Horowitz is really doing it, consciously and methodically. The firm’s strategy has dramatic implications for the future of media and the venture capital industry.
This is the story of how Andreessen Horowitz disrupted the world of venture capital by cozying up to the media and then, how they purposefully threw that relationship away.
🌍 The Outsider in January 2021
On January 1st, I had 128 subscribers. I now have 177. Thank you so much for tuning in! My “surprises” post was my most popular post of all time.
My posts:
An Outsider’s take on Silicon Valley culture: an interview with Kim Lear, focused on the unequal promise of high-risk entrepreneurship
Why there’s no such thing as a startup: an explainer on the stages of startup life, and what it feels like to be an employee at each stage
The Grand Experiment: the future of remote work, and why most of us are probably headed back into the office post-vaccine
What surprises does Silicon Valley have in store for 2021?: three questions for 2021 — How long can financial markets stay irrational? Where will the next wave of innovation take place? Is this a new golden era for hard tech?
My most-clicked links:
12% of all readers clicked: How to find a job at a startup
A billion-dollar email chain between Instagram and Facebook
How the founder of Calm made his first million dollars
