The end of the “start-up” era

24 March, 2022

Scene from "Super Pumped". A sour tale about the start up world based on Uber's story.
Scene from "Super Pumped". A sour tale about the start up world based on Uber's story.

In TV series, Silicon Valley “entrepreneurs” and their startups are no longer heroes but villains. The same media that created the ideology of “changing the world” and the myth of “good” technology monopolies, now rebukes and satirizes it. Underneath the ideological turn is, unsurprisingly, the reorientation of capital towards militarism and the Green Deal.

Table of Contents

The audiovisual industry lashes out at Silicon Valley and the start-up model

Adam and Rebekah Neumann, founders of WeWork.
Adam and Rebekah Neumann, founders of WeWork.

In 2019, media platforms launched several “documentaries” beginning to address the Silicon Valley investment world in a seemingly critical way.

The most elaborate of these: “The inventor” (HBO) about Elizabeth Holmes and Theranos. The story was meant to set the stage for the entrepreneur’s trial. Its plot line: to present the usual Silicon Valley “fake it until you get it” as a form of scam against investors and, incidentally, customers. In 2021 and very significantly, the same platform included WeWork among the tech-linked scams in its “Generation Hustler” series even without really being relevant.

That same year Netflix launched a German series, “The Billion Dollar Code“, which directly accused Google of having stolen the concept and idea of Google maps from German hackers. It opened the fire of drama series. So far in 2022 there are already two blockbusters with millionaire casts: “Super Pumped” (Show Time), about the birth and rise of Uber, and “WeCrashed” (AppleTV) about Adam Neumann and WeWork.

Apparently there is little new in the plots. The brutality and immorality of business models based on making working conditions precarious is never called into question. The uberization of everything and anything seems the most natural thing in the world, it would be part of a “revolutionary vision” of business made possible by technology. The basis of it all, the need to create safe bets for massive volumes of capital without a destination, is taken for granted without the slightest hint of criticism.

Everything falls on the personality of some “entrepreneurs” more or less deified, more or less deceitful and more or less sociopathic. But some new elements already creep into the dialogues. In an episode of “Super Pumped” the main shareholder of the first Uber says that at the beginning he believed that the leaders of start-ups could be of two types: true prophets or a David Koresh imitation… but he realized that they were all David Koresh and that what the business was about was to let them build their Waco and take away their command the moment before the shooting started, triggering and precipitating the collapse.

Rise and reality of the start-up myth

Screenshots of different successful start ups, all in the "Corporate Memphis" style
Screenshots of different successful start ups, all in the “Corporate Memphis” style

Back in the 1990s, the first massive spread of the Internet was a radical example of how technological development was becoming less and less embedded in capitalist social relations. It was not only the technology itself that evidenced the material possibility of abundance in fields that had hitherto seemed utopian. Capital was repeatedly failing to “enclose the field” and turn it into a tool to place massive capital, create monopolies and consolidate a new branch of accumulation.

The first reaction was a regulatory wave focused on tightening intellectual property laws to the point of ridiculousness. It was not enough. The second – after the famous “dotcom crash” of 2001 – was the emergence and consolidation of a new type of capital-intensive business oriented to create global monopolies from day one, whose first leaders were Amazon and Google.

This new type of business and the capital placement party it opened, is what the ideology of “entrepreneurship” and the “start-up” obsessively celebrated and promoted. But the reality, of course, was far more precarious than the success stories of TechCrunch or Wired: Silicon Valley and its clones around the world quickly became a speculative business of would-be monopoly companies that, by their very nature, developed their own accelerated form of precarization.

So-called “entrepreneurs” create online services with relatively little seed capital, which usually allows them to launch an online business facade and sustain it for a year or a year and a half. With this minimal run, the owners can then develop and sell expectations by resorting to successive “financing rounds” of “venture capital” which, in the rare “success cases”, will end with an IPO.

Everything in these companies is temporary and precarious. If they do not meet the expectations of the speculative capital invested in them, they close down; they cannot remain as a small business because investors are not compensated for having their money tied up with the profitability of a “normal” business.

Their outlook is not commercial. In general, it does not matter much whether a start-up obtains much in sales, and if it does, it is because it is used to argue that it will have higher billings tomorrow, that there is a niche market on which it will establish a monopoly. That is why most of them gain users at a loss for an indefinite period and many others have a loss-making cost structure, i.e., the more they sell the more they lose. Whatever, the business is not in margins but in speculation.

In companies like these, which celebrate their losses and in which everything goes on account of financing, precariousness and all its scourges reign. The software is made in pieces, with a core developed with “frame works” and flashy languages but which will hardly be scalable later on without disproportionate investments in infrastructure. It doesn’t matter… that’s the goal, to find applications for as much capital as possible. The most common pieces of code will be plundered from open source repositories and many small specific things will be contracted online from one of the hundreds of “Uber for developers” available.

“Corporate Memphis”: why do all websites look the same?, 8/18/2021.

The startup model and imperialism

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But there’s something else. The whole start-up model of creating global monopolies was based on a certain balance of forces between imperialisms. A balance in which the “normal” thing was for new monopolies to be born in the USA. In fact, even the mythical Israeli “Start-up Nation” was designed from the beginning (ICQ and the birth of instant messaging) to sell companies and technologies to US capital.

Significantly, only Russia (with mail.ru and VKontakte), Korea (Kakao, Hancom) and China (Alibaba.com, Baidu, etc.), on the basis of state protections, created competitors in national and regional markets large enough to establish alternative environments and branches of accumulation besides the great Californian center.

This world of globalized capitals linked to the global hegemony of the USA began to acknowledge its own collapse openly in 2017 with the Brexit and the electoral triumph of Trumpism. It is no coincidence for the first questionings of the Valley’s “ecosystem” and flagship products to occur around that time in what became known as the “Cambridge Analytica scandal”.

Not long after that, the trade war’s shenanigans and boycotts would reach the capital markets and, unsurprisingly, the US would try to restrict access to US capital to Chinese tech. Underlying Trump’s “war on TikTok” was the same US-China economic war that would restrict aluminum and steel markets and then generate chip shortages.

The imaginary “flat world” of dotcoms, social networks and global monopolies was disappearing by leaps and bounds as a useful fiction. In the USA, where the development of imperialist competition with China has been accompanied by deep divisions within the ruling class and a resounding crisis of the political apparatus, the power – real or attributed – of “big tech” over political processes inside and outside the country became a growing cause for dispute and ended up bouncing back on the star companies themselves.

By no means are Facebook, Twitter or Google completely dispensable for capital or going to be shut down or called into question. But they are no longer untouchable. The future of capital is not at stake in them and the crisis of the political apparatus is often played against them.

The decline of Facebook, 5/10/2021

In China, stock market downturns have been delayed a little longer. Its Internet giants, much more diversified than the American ones and already dominant in financial sectors such as insurance, are only now beginning to feel a limit to their expansion horizon, which has to do with the borders of their geopolitical bloc.

Read also: The decline of Facebook, 5/10/2021

The post-startup era

Facial recognition and social credit complement each other in crowd control in China.
Facial recognition and social credit will complement crowd control.

What allows and encourages this apparent ideological “settling of scores” done by US TV platforms with the “unicorns”, the same ones they praised just a few years ago, is that the start-up model has become obsolete.

Outdated because the map of a world once again divided into blocs limits its globalization possibilities. But it is also obsolete because the technological needs of national capitals in the new era are clearly oriented towards militarism and all that goes with it.

We no longer live in the age of social networks, but in the age of massive mechanisms of social control and credit managed directly by states; it is no longer time to reinvent connectivity but to explore quantum cryptography for military use; the aim is not to create “networks” and “intelligent crowds” but AIs that control drones, nuclear submarines or snipers in terrorist operations.

Maybe the old unicorns like Amazon or Google will definitely enter that world of weapons state contracts. They may bring out “lite” versions of social control systems for use in workforce management and “preventive” repression of labor conflicts in companies. And of course, they and other large, highly capitalized companies will sell AI applications for all kinds of industrial and bureaucratic processes.

But they are not essential. And above all, there is no need for more of them. The “start-up era” has passed. The Internet, capitalized and increasingly renationalized, is no longer the gigantic incubator of monopolies that led to the effervescence of “accelerators” and “venture capital”.

The long-established military industry, the established techno-military industry and all the industries of the Green Deal offer and will offer even more space to big capital with state-guaranteed returns. Capital is oriented towards war and whatever is useful for war will permeate the new myths with which the dominant ideology will replace the “entrepreneur”.

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