NB Financial Innovation
Curing Silicon Valley’s Myopia: Ross Baird, on How to Change the Narrative Around Investment and Innovation
As Silicon Valley has grown in influence in both the business world and the broader culture, a growing chorus of critics have leveled a similar critique: Why are some of the world’s most brilliant innovators and deep-pocketed investors focusing so much of their time and resources on solving petty problems, while ignoring countless more pressing concerns?
Ross Baird, executive director of Village Capital, tackled the topic in a viral Medium article earlier this year, and he expanded upon his thinking in an interview with NextBillion. As in his article (entitled “Silicon Valley’s Unchecked Arrogance”), he pulled no punches in his assessment of the tech sector’s short-sighted thinking.
“I think the basic idea of entrepreneurship – that anybody who has a great idea and works hard has a shot – is a myth for most people,” he says. “If you look at the numbers, 78 percent of startup investment in the U.S. and nearly 50 percent of startup investment in the world goes to just three U.S. states: New York, Massachusetts and California. About 5 percent of startup investment goes to women, and less than 1 percent of startup investment in the U.S. goes to people of color.” The result of this uniformity of backgrounds is “a system where billions of dollars are concentrated in a few cities, and go to a few people, who went to a few schools” – who then use it to solve problems their insular group understands, rather than those the majority of people in the world face.
But is this more the result of investors’ and entrepreneurs’ background, or of the fact that there’s more money to be made in designing a hot new app than in launching a social venture? “I actually don’t think there is as much money, in the long run, to be made in apps,” Baird says. “I think there’s much more money, in the long run, to be made building real businesses that have billion-person markets.” The problem is that investment is driven by short-term value capture: “If you build an app in Silicon Valley, the odds that it might be acquired by Facebook or Google in a two- to three-year period are higher than if you build a business in agriculture in sub-Saharan Africa, which is an industry that a billion people work in.”
So what’s the solution? Baird lays out three possible ways forward, addresses potential pitfalls that could complicate a shift toward social business and investing, and discusses ways the movement’s lofty goals can be made into mainstream reality in NextBillion’s most recent podcast, above.