You might be tempted to roll your eyes when you hear the words "Silicon Valley" these days. Lots of people are increasingly disillusioned with what was once characterized as the most vibrant, innovative and valuable industry in the world.

This disillusionment isn't necessarily a bad thing. Healthy skepticism could go a long way in developing a more realistic, sober-minded approach to innovation that will allow entrepreneurs to succeed in building companies that make the world easier, safer, more connected, more prosperous, and more fun.

Here's why.

Don't believe the hype.

As a venture capitalist with years of experience funding and launching new companies, I can tell you that some bubbles need to be burst.

And the short-sightedness and Peter Pan thinking that leads company founders and investors to believe that their new technologies' cure all ills--and do so without any externalities or pitfalls--is that kind of fantastical bubble. A more sobering view of reality is needed if the Valley is to realize its true potential and reinvigorate our social, economic, and political landscape.

Many of the most radical modern technologies are conceived of, developed, funded and launched within a 10-mile radius in Northern California, where there is a concentration of brilliant people who have the wherewithal to bring new ideas to the world. I'm proud to be a part of it.

But these creations can't and shouldn't stay within that radius and still be successful. The best of them quickly move beyond it.  And when they do, we sometimes see Silicon Valley's naïve thinking in stark relief.

For example:

  • Uber insisting it's just a technology company and not a taxi company in an attempt to avoid regulation. Plus, its complete dismissal of anyone concerned about labor laws, passenger safety, thousands of cab drivers losing their jobs, or the price of public transportation being driven up.
  • Airbnb insisting it's just "connecting people" and not running a traditional hospitality business, so it can't be faulted if its service enables the skirting of consumer safety protections and engagement in illegal or criminal activity.
  • Bitcoin's "fanboy" miners and users asserting that it'll remain untouchable by regulators, even though the digital currency has enabled drug dealing and other nefarious transactions. Not to mention, it's set the stage for geopolitical crises associated with currency manipulation and governments secretly buying currency to manipulate its impact.
  • Apple pursuing policies that imply privacy always trumps danger to human life, publicly rebuffing most attempts by the intelligence community to protect its users from individual and state actors with harmful ambitions.
  • Facebook painfully contorting itself to construct a policy to address the societal and political impact of fake news that completely abrogates the company's responsibility and puts the onus on its users, with minimal chance of achieving the necessary outcomes.
  • Innovation may occur in a bubble, but growth doesn't.

    The above are examples of distorted or purposefully disingenuous thinking that won't hold up over time. Too many founders and investors believe their innovations--groundbreaking as they are--can and should avoid addressing their real-world impact.

    They're wrong.

    We live in a country where powerful industries are regulated to ensure everything from fairness to efficacy to safety. Cryptocurrency, ride-sharing and other creations are turning into powerful new industries that will not be exceptions to this--and they shouldn't be. 

    Innovators and their investors push the boundaries and aim for total disruption of the status quo. It's admirable, and it's why we root for them. Rebellious teenagers do the same until they also grow up and are forced to face the challenges of operating in the real world. 

    Then, they might acknowledge that many of the rules they are being asked to follow really are in their best interests, or more importantly, in our society's best interests.  Disruption, like adulthood, comes with responsibility. 

    Once you accept these realities, you can proactively manage their impact so your startup can scale and prosper with fewer hurdles. Here are two steps you can take to begin your company's journey the right way:

    • Stop arguing that the government is irrelevant, and that new technologies should remain unregulated. It's naïve and disingenuous. Instead, spend some time with relevant stakeholders and work to understand their interests, seeking to mitigate their concerns through the same innovation that got you this far in the first place. 
    • Engage with lawmakers and constituent groups to help shape the regulatory environment in which you will inevitably operate. Proactive compromise and management is almost always more effective at preventing damage, and much less costly, than reactive defensive measures. 
    • The sooner you step up to the plate, the closer you are to hitting a home run.

      Published on: Apr 18, 2018