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Silicon Valley Founders Are Not the Protagonists of Reality

The fall of bloated tech start-ups isn’t tragic, regardless of what the recent spate of TV series would have you believe.

Malcolm Harris

March 31, 2022

There are currently three television series about what we might call “tech founders”: Elizabeth Holmes of Theranos (The Dropout on Hulu), Travis Kalanick of Uber (Super Pumped on Showtime), and Adam Neumann of WeWork (WeCrashed on Apple TV). With mountainous valuation charts that already look like rise-and-fall narrative diagrams, their companies cook into miniseries easily. “Pump,” “drop,” “crash”—hubris has never been so ready to package. But if these founders are classically tragic figures, why are two of them still billionaires? Until we can answer that kind of question, there’s no sense to be made of their stories. These formulaic shows don’t need to exist, but neither did the companies they’re based on; each can tell us something useful about the other.

For leading figures in broadcast dramas, Holmes, Kalanick, and Neumann all have rather narrow shoulders. Sanding down her subject’s roughest edges, Amanda Seyfried’s Holmes is more millennial Chauncey Gardiner than Charles Foster Kane. And it’s not clear what distinguishes Joseph Gordon Levitt’s Kalanick from frat boys in business classes across the nation. Robbed by Jared Leto of his signature dimples and six-foot-five height, Adam Neumann is a replaceable Israeli summer camp counselor. These are generic figures, and, even with some poetic license, the TV shows—based on a book and two podcasts—can’t convince the viewer otherwise. But what the protagonists have in common, what makes them exceptional in the same way, is an elite willingness to get in over their heads. In today’s economy, that’s a very important job.

Theranos, Uber, and maybe WeWork could be described as technology companies, but insofar as they represent “tech” to the viewing public, it’s because they were capital-driven start-ups. All three companies raised investment wildly disproportionate to their revenues, as “angels” and venture capitalists bet on their plans and forked over the cash to realize them. To get to the next level of funding—from millions to tens of millions, to hundreds of millions—founders didn’t need to demonstrate corresponding income; they just needed to spend the previous round and tell a good story about where it went. Instead of growing by pouring profits back into their companies, they looked to take bigger and bigger tranches from professional asset managers before (hopefully) making an initial public offering and handing over the bag to retail investors. Expensive parties look less cumbersome on start-up balance sheets than employee benefits do, so people who threw expensive parties rose to the top. Like market mechanisms come to life, these founders found shortcuts (bluffing, cheating, and fraud).

Uber and WeWork had more dispositionally cautious, reasonable cofounders, both of whom ended up playing sidekicks to their maverick buddies. It takes a special kind of person to plow through millions in investor cash and come back smiling for more—not an especially smart or creative or interesting or thoughtful person necessarily, but special nonetheless. They may have been the pursuers at first, but not for long: Capital funds of various types lined up to throw in with these promising fools, spurring them on.

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Adam Neumann’s benefactor, Masayoshi Son of Softbank, infamously told the huckster not only that he wasn’t crazy but that he needed to think even bigger, and “Masa” piled more and more money into the office subleasing concept. Neumann rose to the challenge, burying millions in poorly planned and ill-fated projects like We-gyms and We-schools. But Masa didn’t invest so much because he fell for Neumann’s charm; he invested so much because he had agreed to deploy $60 billion in Gulf oil money and needed places to put it. Neumann didn’t pay off, but another big bet on Harvard Business School dropout Bom Kim and his South Korean e-commerce play Coupang did, so don’t be surprised if no one “learns” anything.

Knowing better won’t save you. Uber’s fast-talking Kalanick lamented to journalist Brad Stone that he didn’t actually want to raise so much money as fast as Uber did—more than any company ever, including $3.5 billion from the Saudi Public Investment Fund—but the market gave him no choice. If he didn’t take it, it’d go to Lyft, which would scale faster and push him out of business. We can see what the capital markets are looking for based on what they keep finding: These characters are not great fundraisers per se, but they are great spenders.

An economy based on finance-led growth, as the US economy is, tends toward some unfortunate situations. Investors are compelled to make bigger and bigger bets as their wealth accumulates, crowding each other in the search for high returns amid a global slowdown in output. Properties that promise higher-than-average payback, like Marvel movies and “Triple-A” videogames, bloat as owners see how much investment capital these franchises can absorb before the returns start to sink. The portion of domestic theatrical releases with a budget over $100 million tripled between 2006 and 2017. Aristotle would probably say that this doesn’t sound like a good idea, but investors don’t have a better one, and people keep watching superhero flicks no matter how long and stupidly expensive they get. “Tech” start-ups are much the same, always vowing to keep becoming exponentially more valuable, inviting out-of-control expectations as if that were the job itself.

The personal stories of Holmes, Neumann, and Kalanick lend this phenomenon a tragic shape, but the hubristic arc doesn’t actually fit their situation any better than it fit their predecessors in the so-called dot-com bust. It is impossible to reconcile a story about irrational exuberance in tech stocks with what has happened over the last 20 years, as Internet firms have dominated the markets. This has led to some very confused messaging, as when The New York Times recently cautioned newbie crypto investors excited to get in on “the next Google” that “the dot-com boom went bust.” Did it? Some public stocks crashed, but Google sure didn’t. Even also-ran Yahoo founder Jerry Yang is still a billionaire. In WeCrashed, Neumann hypes the “tech” of his ersatz WeWork Labs in Wired magazine, another supposed dot-com victim. Among the biggest dot-com “losers” were none other than Jeff Bezos and Yahoo investor Masayoshi Son. The bottom line is that if the lesson some investors took from 2001 was that they shouldn’t put their money in wacky high-spending tech companies headed by arrogant jerks, then they have spent the last two decades missing out big time.

Every finance-led company exists in a state of quantum uncertainty, as the record $200 billion+ fall in Facebook’s market capitalization proved. Without proportional revenue and assets to fall back on, CEO-founders are one bad day away from becoming some Oscar-winning actor’s next middlebrow project. (The prevalence of big-name movie actors in these series points to a similar kind of financial bloating in the televisual market.) It wouldn’t surprise me if screenwriters were right now already plotting the descent of Elon Musk, a perfect example of the hubristic type who, atop a cloud of stock market fluff, has been the pandemic economy’s biggest individual winner. What goes up is supposed to come down—a law of physics and classical narrative alike—but Silicon Valley prides itself on defying gravity, and recent history has punished the doubters. Between 2015 and now, the number of “unicorn” tech start-ups valued at over $1 billion increased by more than a factor of 10.

Holmes, Kalanick, and Neumann are symptoms of a finance-led economy. Until there’s a deep reckoning with what people like them are for, what structural purposes they serve in our world, they will be back in one form or another. For now, hubris pays.

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• In 1996, Wired published a book of futuristic predictions based on the best turn-of-the-century thinking had to offer. We’ve missed the mark on self-driving cars (2019), settling on Mars (2020), and mag-lev trains in the United States (2021). But we’re ahead of the curve on electric vehicles (2034, for 50 percent adoption). Read at the Internet Archive’s Open Library, which beat the 2016 “large, public virtual library” prediction by 10 years.

• For more ’90s tech history, check out the 1998 PBS series Nerds 2.0.1, featuring many of today’s oligarchs before they started trying to dress cool. Watch a VHS rip on YouTube, the way it was meant to be seen.

• For more on the market dynamics of tech investment, check out Aaron Benanav’s series on “Automation and the Future of Work,” in the New Left Review: part 1 and 2.

Malcolm HarrisTwitterMalcolm Harris is the author, most recently, of Palo Alto: A History of California, Capitalism, and the World.


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