In the past year, a crop of business best sellers has offered harsh critiques of Silicon Valley startup culture. The best known, Disrupted by former journalist Dan Lyons, follows Dan as he recounts a jarring experience in a self-serving, dysfunctional organization staffed with greedy, self-serving employees.
It seems that Silicon Valley’s once heroic startup culture has eroded, and the impact of that erosion can be seen at the source, venture capital. The warning signs from venture capital firms are numerous: fewer startups are able to raise outside financing, cash burn rates are too high, investments are abandoned with increasing frequency, most funds struggle to return capital to investors, and successful exits are rare. Most damning of all, breakout ideas emanating from Silicon Valley startups are exceedingly scarce.
To better understand how startup culture can evolve, I spoke with John Battelle, one of the men leading the charge. After a long list of publishing successes, John is now using his journalist background to put the mission back into startup culture. We discussed how his latest endeavor, NewCo, is working within and beyond Silicon Valley to make startups a force for positive change in the world.
MARK GAUGER: What is a NewCo company? What does it mean to be a NewCo leader?
JOHN BATTELLE: We use NewCo as both an adjective and a noun. Meaning if you’re a manager who has a NewCo philosophy, you share a set of values and approach to company creation, to company management, to employees, and to the role of your company in the world at large.
Those values include adding more than you take. You see your company as an actor not only to create profit for your shareholders and your management team, but also as an actor in a larger world. You try to always increase the value in the ecosystem as opposed to only take from it.
MG: Why is NewCo so relevant now?
JB: The more companies that are mission-driven, the happier and more engaged the workforce will be and the better the returns to society. I think there’s a movement afoot to make businesses a force for positive change in the world, as opposed to simply economic engines that sort of strip-mine society for dollars. I think being mission-driven is at the core of differentiating a company to have more than its own self-interest at heart.
MG: How can companies help drive social and cultural change?
JB: If we’re going to solve some of the biggest problems — income inequality, climate change and racial intolerance — our most distributed and bottoms-up engine to drive these changes are companies. It’s where people come together to execute a mission. And by companies, I mean to include any group of people working toward a collective vision: nonprofits, public/private partnerships, arts organizations and government. NewCo isn’t only working with for-profit companies; we believe that these values apply to all organizations.
MG: Is this just the latest Silicon Valley fad, or can a NewCo culture take root anywhere?
JB: When we at NewCo talk about place, we mean any critical mass of human beings who have the luxury to start something new (a relatively recent luxury in history). In most cases, that luxury comes only when you’ve had access to three things: high-quality education, capital, and the tools needed to create a company. Over the last three decades the tools for people to self-organize toward something new have been steadily democratized. You can use Google Apps for five dollars a month. You can use Amazon Web Services for $15 to $15,000 a month, depending on needs.
MG: With this democratization, can capital be more adventurous?
JB: Absolutely. Say you want to start a company in Cincinnati or Austin. Your average costs are going to be 40 percent less than starting it in San Francisco or London, and you have access to equivalent talent and tools. What would hold you back? Nothing. You see it happening in Mexico City, Shanghai, Toronto and Montreal. The supposed “Silicon Valley culture” we thought was unique to us is not. It just developed there first.
MG: Will the spread of NewCo culture lead to a shift in the overall tech culture?
JB: You need access to a critical mass of good people. I’m sitting here in Boulder and there’s a great university here. It just cranks out tens of thousands of graduates every year, and they’re looking around and saying, “I love this place. I want to stay here. And now I can start a company here and there’s capital here, and there are people I can hire.” All these things come together at a place, and that place is usually a city.
Should we worry about Silicon Valley? Probably not, but there are signs that Silicon Valley is losing its perceived superiority in tech innovation and capital, and that may be a good thing. China is the place to go for cutting-edge mobile. My business,argodesign, chose Austin as the home for our product design firm because we get better design talent and can support a more cohesive studio culture here. All this tells me that startup culture is ripe for revival.