While there has been much outrage among average investors over excesses of Wall Street, reaction to financial scandals and exorbitant paychecks of Silicon Valley CEOs such as WhatsApp CEO Jan Koum has been more muted, at present. Silicon Valley historically and accurately has been seen as the home of innovation and cradle of new industries. The very moniker “Silicon Valley” denotes this assessment.
But no one has ever referred to the financial center of New York City, Manhattan, as “Money Island.” While Wall Street serves a necessary function in gathering capital to fund new businesses, by itself it represents a profession as old as the New Testament of the Bible—fee-based fund exchangers.
Who can forget Jesus Christ’s righteous anger at the presence of moneychangers in the Temple on the Mount? The real source of average investors’ antipathy for Wall Street is a result of the bailout at the nadir of the Great Recession in 2008. Moreover, investors continue to see red vis-à-vis the blank check Wall Street got the U.S. Treasury Department to write to fund the bailout.
It smacked many of extortion, particularly those in the Tea Party, when Treasury Secretary Hank Paulson came to the American Congress with a 10-page memo that boiled down to “trust us” when asking for a trillion dollars, give or take a hundred billion. This is the real sore point for investors. Heaven help us if it should ever happen again. Then you could see something akin to the scenario retired venture capitalist Tom Perkins has outlined. Protesting commuter buses for Silicon Valley techies will seem quaint in comparison.
Backlash against the 1 percent
While Silicon Valley startup CEOs turned Internet giants have escaped the wrath of the financial public so far, others have not. Investors and other stakeholders continue to focus on the out-of-touch super-rich Wall Street financiers and venture capitalists. And not only crazed octogenarians, as in the case of Perkins. India’s own Vinod Khosla, co-founder of Sun Microsystems and later founder of the eponymous Vinod Khosla Ventures has been at the center of a statewide controversy in California concentrated on beach access. And as such, he has set himself apart as part of the richest 1 percent who have been the target of much protesting and venom since the Great Recession.
Khosla may be a billionaire and a famous entrepreneur but he has much work to do in order to become a great man. With his intransigence to opening the right of way to the California coastal beach for use by the public, he is flying in the face of more than three decades of state precedent that virtually guarantees free passage to the water’s edge.
Movement is afoot in the Golden State to call on the richest 1 percent, including Khosla, to make the sacrifices necessary for the commonweal. With the recent signing of a bill by Gov. Jerry Brown, Khosla will have to negotiate with the California State Lands Commission to allow access to his “private” beach or face a taking of his property by eminent domain after Jan. 1, 2016. Khosla should stop hiding behind so-called private property rights and join the rest of the human race. The right of property has historically been abused by the upper classes. The fact is there is not enough Earth left to divide between the haves and have-nots. Do not lose your touch with reality, Mr. Khosla, unlike your fellow veteran VCs Perkins and Tim Draper, who are comparing the working classes to fascists and want to split Silicon Valley from the most rural and poorest parts of the state, respectively. You may have heard that being super rich can cause a mental illness called Affluenza, the inability to understand the consequences of one’s actions because of financial privilege. Please do not succumb to this sickness. Of your own volition, let the common people in to use the water of the Pacific Ocean to heal their souls, not unlike all the castes use the Ganges River in your native India.
Not all VCs created equal
Fortunately, not all VCs are as self-centered, unrealistic or unbalanced as Khosla, Draper or Perkins. For example, Texas Pacific Group, better known as TPG, is a savvy VC firm that invests in Silicon Valley companies, though primarily in mature technological concerns that have lost their ways and need a refocusing. It is famous for investing in Seagate Technology, the largest maker of disk drives in the world at the time, and its associated owned company Veritas Software, a leader in software storage technology, in the early 2000s.
Now an affiliate of that VC, TPG Growth, has emerged to invest in startup companies with aspirations for Africa and Asia. With principals such as Richard Blum, husband of United States Senator Dianne Feinstein of California, there is little doubt that TPG will be able to make connections with powerbrokers in Washington, D.C., and Silicon Valley to do well by doing good. With a very shrewd investment of $100 million, it has set up a partnership with consumer Internet group Smile. Certainly, it can make this amount of capital go very far in the emerging markets for the categories of digital marketing and online classified advertising.
Craigslist is everyplace, but there is probably room for a secondary ad player in places such as South Africa, Nigeria and Kenya. However, if I were TPG, I would be careful about tieups with Russian-backed startups. With the Vladimir Putin misadventure underway in Ukraine, these arrangements could fall victim to US-EU economic sanctions or worse become subject to crony capitalism in service of dubious geopolitical goals.
Derek Handova is a freelance journalist, blogger and content marketer in the high-tech industry with an emphasis on social media and related channels. He received his masters in business administration (MBA) and bachelors in journalism from California State University, Long Beach (CSULB). The opinions expressed in this article are purely his and do not reflect the views of any of his past or present employers.