[pron]

Well, I don't know. Suppose all those engineers were working for a company like IBM or Google, doing research. Much of their work would go to waste, too, as most research does not turn into successful products.

I think this is an interesting cultural change rather than a loss. Engineers are willing to sacrifice job security for a small chance for a big payoff. The winner-takes-all approach has long been part of the American ethos, only now its working its way down from the capitalists to the workers. I just think it's interesting.

You could say, though, and I think I've written it before, that its the workers (i.e., startup employees) that lose. If the theory is correct, then Big Tech is exploiting the workers' naive preference for promises of big rewards over regular, secure, pay. But, again, I don't know if that desire is naive; most startup folks understand the chances well, and still choose as they do. Maybe the excitement and perceived freedom are worth more than money to them. They sure are to me.

[jonnathanson]

I don't think there's anything wrong, per se, with engineers wanting to gamble on bigger, riskier projects. Nor do I necessarily see the "productive vs. hypey" dichotomy as a strict dichotomy between startups and the IBMs and Googles of the world.

But I do think that there's a major opportunity cost incurred when dollars and talent get shuttled into hypey, bullshit-driven companies instead of legitimate ones. Including legitimate startups.

Of all the risky startups who could potentially get funded and attract talent, it's better for the good ones to get the money and the talent if possible.

To put it another way: the VC system should be selecting for the next Google, not the next Color. But to whatever extent it's selecting for the next Color, it is sub-optimized. That degree of sub-optimization is the opportunity cost / inefficiency inherent to the system.

[pron]

Yeah, well, every investor would rather invest in a "legitimate" startup, and every engineer would rather work for one. But telling which is which is the tricky part, isn't it? Some things are only obvious in retrospect.

[jonnathanson]

While true, that's beside the point at hand. The author is suggesting that the VC system is consciously selecting for the Colors of the world -- or, at the very least, that it has created conditions conducive to the next Color.

In other words: it's not simply betting at the track and ending up with the wrong horse. It's actively betting on what it knows to be the wrong horse, because the wrong horse pays off in the short term.