The sad thing is a bunch of the old SV billionaire VCs have ascended to the ranks of the "bored billionaire" class, hung out with Obama and the Goracle and drank the "green economy" Kool-aid. Never trust a guy who's rich enough that he worries more about "building a legacy" than building value.

Vinod Khosla and John Doerr, come on down!

After all, who wants to grind it out at bored meetings :) at a gazillion weird startups when you can hang out with Important People at Davos?

They do seem to have invested remarkably poorly in the political sphere.

Venture capitalists are not immune to rent-seeker's disease. Check out the KP portfolio...

True - why bother earning your money when you can steal it from the taxpayers?

And billionaire geeks are just as susceptible to the charms of the celebrity world that politicians and other Important People inhabit nowadays. Their finely-honed bullsh1t detectors go dark and suddenly they're funding yet another company with a bunch of smelly vats of green slime somewhere in New Mexico.

Not that something useful may emerge from those vats of goo, but it's likely that the ones that actually work will be funded by Exxon and its armies of people who know a thing or three about hydrocarbons, not starry-eyed SV types...

Randall Parker authors Futurepundit.

The Futurist, a different blog, is not authored by Randall Parker.

Sorry, GK. Will correct. Not sure how that got crossed in my head.

Foobarista, I think you're half right.

The part about the BS detectors going dark, and the lure of celebrity, is correct.

The part about "...it's likely that the ones that actually work will be funded by Exxon and its armies of people who know a thing or three about hydrocarbons" - not necessarily.

Large organizations generally do a poor job of leveraging their internal R&D. Heck, they frequently do a lousy job of leveraging their developed products, especially if they're outside the firm's main focus. And in a field where the right answers are deeply uncertain, the limited bets they have made may or may not be the winners.

Silicon Valley, as GK correctly notes, has built itself on people with expertise, who left jobs in large organizations, to devote full attention to their idea. Backed by VCs who aren't just mart people, they do due diligence. Using research networks that also know a thing or two.

Most of these new firms fail. Some succeed, wildly. The VC model relies on 1 success in 10 (and about 2 partial successes).

They are not immune to blindness. They're human. In fairness to KPCB, however, I see a few companies there that could do very well even if Al Gore got thrown in jail for fraud.

Lehigh: powder from recycled tire rubber, claims performance and cost advantages. Sounds like one that would have fit your old firm, Tim.

Kotah: Solar in India. Where it may make a lot of sense, since infrastructure there so often sucks.

Hara Software is a good example of a rent seeker, but if half of their customers say the reason they're looking at them is to cut costs... then if you think energy is headed up, even relative to the US dollar rather in absolute terms (i.e. no cap-and-trade, just Obamanomics disaster), they could be a good business bet.

Now, do the number of rent-seekers create probability issues for the portfolio if the subsidies and fads go away, as they did in the early 80s? Absolutely. If that happens, KP's funds - and its hard-won reputation - could both take big hits.

But, seeking rents, like undertaking carry trades, is a choice people can make. It's usually profitable, until it isn't, and the "isn't" can be rather sudden.

We'll see how they do.

But no mater how they do, the bigger picture is worrisome: the dearth of IPOs, VC struggles, valley unemployment rate and exodus of long-resident trained people... these things are not good. And the cliff-like drop-off, long, long before the national recession, is a very bad sign of policy failure.

At least 10 Enrons worth of economic damage there, unless the trends reverse soon. But that doesn't look likely.

Having spent 20 years working in various startups in the Valley, I agree generally, and after I wrote the post, I wish I'd rewritten the last bit as I realized it sounded pretty silly if generalized to my own experience in startups that beat far larger teams in big companies.

That said, I still think a lot of greentech is subsidy chasing and rent seeking, as well as wanting to hang out with greenie celebs, although some of it isn't - even some of the vats of green goo :)

Thanks, Joe.

All of Silicon Valley really is dependent on a 'core' of 10,000 people that guide the wealth-creation process. Half of those are born overseas, and either went through or are still stuck in an 11-year immigration process hell.

A disproportionate amount of California tax revenue, and national real estate prices (since a Bay Area home costs 10X the national average) is dependent on this core. The sum total of all the homes in Ohio + Pennsylvania are worth less than the sum total of the Bay Area. Thus the weighted average national home price cannot recover until California in general, and the Bay Area in particular, recover.

By the way, if this subject is fair game here, then I would certainly like to present my most important article ever, The Misandry Bubble.

Terrorism was the issue of the previous decade. Misandry in the Anglosphere is the issue of the upcoming decade, and it is time to marshall the forces accordingly. You heard it here.