While responsible people work to stave off humanity’s ecological suicide, many young nerds write unimportant apps to do “things their mothers used to do for them.” The Elon Musks of the world – those who prepare for the long game while financing it with innovative products for today’s market – are so rare as to be anomalies. 

Today’s entrepreneurial scene suffers from a sick venture capital industry, a number of imponderable illogics, and, maybe, misplaced adulation from students and the public. Symptoms include: 
  • “Frat-boy” start-up cultures that waste money and denigrate women and minorities (Wadwha, 2014).   
  • Venture capital investors (VCs) with no management experience, attempting to micro-manage the companies they invest in.    
  • VCs who prefer to invest in – and then manipulate and bully – young entrepreneurs, when in fact more successful new firms are started by older entrepreneurs with corporate experience (Kauffman Foundation, 2017).    
  • Engineer-entrepreneurs with no knowledge of humanities or liberal arts – i.e., with no idea of what products society needs, or how their development projects will fit into societies and markets.   
  • Insufficient attention to data security. E.g., Snapchat (Ribeiro 2014) and MongoHQ (TrendMicro 2013).    
  • In many states and countries, government startup funding going to politically favored but unqualified entrepreneurs.   
  • Outright frauds like Theranos and Pathway Genomics (Duhaime-Ross 2015).    
At present, 30% of all entrepreneurs in the U.S. are foreign-born and nearly 80% of all the intellectual property in the U.S. in the high-tech sector – telecomm, semiconductors, and life sciences – has its origins in foreign-born entrepreneurs (Angelos Angelou, quoted in Newlands, 2017). America is, at present, the world’s font of innovation. As Bernie Sanders and Michio Kaku have both noted on YouTube, this flow of innovation depends on immigrant brains and initiative. Headlines like “Is Brand America Tanking?” in the Forbes business magazine anticipate an America that is less attractive to entrepreneurial migrants, and thus a less vibrant innovator. 

New ventures seem focused on growth, not on delivering superior customer value. Luckily, worthless online advice to startups like “Put your resources into customer acquisition over product” (Prajapati 2017) is balanced by more sensible pundits. Anand Sanwal of CBInsights, for example, calls out the “bullshit culture” of catering to investors rather than to customers. 

Venture capital 
Lazy VCs insist staying where they are despite the need to tap the innovation potential of smart people living elsewhere. Opportunities are lost. Civic-minded entrepreneurs are out of luck if their hometowns are far away from the industrial innovation centers. Despite a flowering of innovation in Asia, few US VCs are willing to invest in overseas startups. 

The unregulated US VC industry attracts people who are attracted to unregulated financial markets, with all that that implies. Their culture of morphing failure into virtue (“I’d invest in him again because now he’s experienced; he knows how the game is played”), possibly justified in the past, has metastasized. Now no one is responsible for anything. Fisher (2017) calls Silicon Valley the “land of no consequences”: 
VCs… will cash out, leaving others—your mom and dad’s pension fund—to deal with the fallout. Where is the [institutional investor] who is coming forward and actually withdrawing money from a sketchy VC? 
VCs exert unreasonable pressure on their startups. “Stratospheric expectations are killing fledgling startups,” says Wickre (2017). More than one successful entrepreneur has told me, “I will never start a VC-backed company again.” I must add that I am acquainted with a few highly intelligent VCs who are members of a very small minority. 

Strange contradictions 
One of the contradictions of today’s entrepreneurship scene is that failure is simultaneously glamorized and forced. If an investor said to you, “You’re not going to be a unicorn, we are withdrawing our money and shutting your company, sorry, come back again with your next idea,” would you not recognize the con? 
VCs perform financially no better than stock index funds, but with higher risk (Mulcahy et al. 2012). Chamath Palihapitiya, the founder of VC firm Social Capital, goes so far as to call VCs “worthless” (CBInsights 2017). He claims VCs are motivated “to get credit, [to get] a TechCrunch article, to get a press release.” People are rewarded for “making good [Powerpoint] decks… not creating value.” 

Nonetheless – in another strange contradiction – the city of Albuquerque dangled a $15 million lure to bring a California VC firm to New Mexico. 

A third contradiction: With its $93 billion Vision Fund, SoftBank has become a leading power in VC investment. Although IPOs have tended to benefit VCs more than ordinary investors, “the big fear voiced by some analysts is that SoftBank’s large checkbook will help firms stay private longer, which would be bad for the IPO market” (Popper and Lopatto, 2015). This fear is groundless, for the sad reason that other VCs have already made it happen. 

Moreover, the publically touted valuations of unicorns and near-unicorns are at odds with these companies’ “true” valuations after preferred stockholder perquisites are accounted for. The level of small print in which these perks are hidden smells of potential financial fraud. 

A unicorn’s value may still be high, if sub-billion. Nonetheless, there ensues a fourth contradiction: The unicorns are not unicorns because of their intrinsically high value. Low interest rates, according to the editors of Verge, have given us an “ever-expanding bubble in startup valuations, fueled by an ever-expanding pool of increasingly less qualified investors…. [Due to] pitiful or negative interest rates… people with a lot of capital will pay almost any price for the chance to earn a meaningful return” (Popper and Lopatto, 2015). Indeed, “From Dropbox to Square to Snapchat, a lot of ‘unicorns’ failed to live up to their sky-high valuations.” Softbank’s huge investments may create another bubble. Nikkei Asia fears that Asia’s exchanges will lower their quality standards in order to attract more tech IPOs. 

Healthcare: Botching the opportunity 
My students in healthcare management refused to sit in the same classroom with students from high-tech. “We are in a caring profession,” they said, “The tech guys are looking only for profit. Talking with them is thankless.” For their part, VCs early in this century shied away from healthcare because of the delays attached to FDA approvals. The culture gap has not narrowed in the ensuing twelve years. Again from the dialog of Popper and Lopatto (2015): 
[Healthcare and life sciences are] undeniably a slower, riskier investment than the next photo-sharing app…. Disruption is more dangerous when it comes to medicine; "disrupting" patients’ lives can lead to death. 
What should educators do? 
  1. Before students are admitted. Campaign to improve pre-college education, including science curriculum. Join scientific or concerned organizations to push for public and governmental respect for the scientific method and its conclusions. Ally with high school educators, so that students will be exposed to these concepts for more than just four campus years. Admit only students whose application essays show concern for people, planet, and profit.   
  2. While students are enrolled. Emphasize responsible innovation in the university curriculum. Teach the ethical, legal, and technical aspects of data security. Include more liberal arts courses in business and engineering curricula. Do not allow students to participate in venture competitions unless their business plans show concern for people, planet, and profit.   
  3. Alumni and executive education. Celebrate not just alumni who have made bundles of money but also those who have shown responsibility in their careers. Offer executive education to VCs. Make sure they are informed of the consequences of their actions.   
In the late 1970s a researcher noticed that most job growth came from newer and smaller companies, not from the giant conglomerates. As job growth is a prime objective of almost every city, state, and nation, it seemed obvious that entrepreneurship should be encouraged. Then the glamor took over, and the sudden vast riches. We began to idolize tech entrepreneurship for its own sake. 

Are new and small companies still the font of job creation? The Kauffman Foundation (Casselman 2017) and the Verge editors (Popper and Lopatto, 2015) still think so. Yet it is our job as academics and policy makers to check that this remains true. 

VCs invest to make money, not to create jobs. On the contrary, they enjoin their entrepreneurs to minimize headcount. As robots and artificial intelligence become better substitutes for human heads, it becomes all the more important to continually re-check the role of startups in job creation. 

Closing remarks 
The US Federal Reserve appears to be ready to raise interest rates. This should help stanch the flow of “dumb money” into tech, life sciences, and healthcare. 

The Sasin Graduate Institute of Business Administration of Chulalongkorn University now sponsors a venture competition purposed to “bring sustainability concerns to mainstream commercial venture[s].” An acceptable entry must be a “business plan that is proactive in sustainable development and innovation.” 

The proportion of USA companies less than a year old has dropped from 15% in 1980 to 8% in 2017, according to the US Census (Casselman 2017). Casselman also attributes the decline to a deteriorating relationship between big companies and startups – a problem that, with Korean companies, has been recognized for years, but to date has remained under the radar as regards US companies. Fortunately, Deloitte is taking steps to attempt improvement in these relationships. 

We have the rich who are afraid to die, funding startups researching human longevity and even immortality. This may be useful if we ever attempt interstellar travel, but isn’t it too soon to worry about it? There is an easy way to extend average human life expectancy: Make sure underserved populations get adequate diet, sanitation, and healthcare. Again, Popper and Lopatto (2015) state the matter well: 
“None of this [reducing privilege gaps] is quite as sexy as living forever.… How do you monetize serving the poor? These companies grow rapidly at the expense of the overall health of the nation.” 
Fighting these dangerous trends is a formidable task for educators, but we must try.


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