An era – a golden time when the boys of Silicon Valley could do whatever they wanted, whenever it suited them – is coming to an end. And the failing health of Apple CEO Steve Jobs is a poignant metaphor for its passing. That’s one reason why the conversations about his fate are so emotionally charged – even among strangers.
Jobs is clearly fighting a serious illness. Whether he is winning and will return to run the company he founded, saved and launched into an entirely new line of business is open to debate and speculation – and there’s been plenty of that. It seems unlikely not necessarily because Jobs is mortally ill but because his illness has sapped so very much of his raw physical presence. He may have to – belatedly it seems – face the fact that his life-saving surgery for some sort of pancreatic cancer, in fact, altered his life. Like all of us, he is mortal.
And, like all of us, he and the company he runs are being told they must obey the law. The Securities and Exchange Commission has expressed an interest in the timing of news and announcements about Jobs’ health and, like many inquiries the commission launches, it may mean nothing. Except that they’re paying attention.
And this, my friends, this is the end.
You see, Silicon Valley has skated along quite nicely, thank you, without a whole lot of regard for the government. This was in no small part because the government had little interest in Silicon Valley. Throughout the 1980s and 1990s, enormous fortunes were made by a small group of very well-connected insiders who invested in small start-ups, took those companies public and reaped the rewards. It was a glorious and wonderful time. It gave us The Internet. And the Internet has changed our lives. And yes, that accomplishment should be rewarded.
But there was a fair amount of cheating as you might expect when a small group of very smart people realize that they can game a complex and seemingly opaque system because the rules haven’t quite caught up them. The cheating and the attitude about cheating (“everybody does it”) was – and to some extent is still – the problem.
When I worked as a business columnist for one of the local papers here in Silicon Valley, it was understood that the SEC simply didn’t have the resources to evaluate, check or even investigation suspicions about public offerings made by tech companies. It was taken for granted that the cautionary statements included in the boilerplate in the SEC documents were sufficient to warn investors. After that, the market would measure whether a company was succeeding or failing and investors would react accordingly. You buy the stock, you take a risk. End of conversation.
The market, many said, was the ultimate arbitrator. Insiders – start-up CEOs, venture capitalists, seed investors – couldn’t help it if the market raised stocks to 10 or 20 times the pre-IPO value. They couldn’t restrain the public’s appetite for these shares; the market made their stock, purchased for pennies, worth dollars. That was just the way things were and everybody understood it. When the tech bubble had collapsed, a lot of people who had believe the promise of the Internet lost a lot of money but in the end, the SEC shrugged. The market had prevailed.
Well, a few million home foreclosures later (everybody, it seems, was also lying on their mortgage applications) and the government is not shrugging anymore. The days of regulatory oversight are coming to the valley. Which is why Jobs failing health is such an apt metaphor. I’m not predicting the death of innovation or the wholesale regulation of the venture capital business but I won’t be surprised at all to see the idea floated. Some venture funds hold hundreds of millions of dollars from their limited partners, unions, pension funds and public university endowments. Besides, it’s been clear for some time that the practices of the banks that the valley depends on for its paydays – those multi-million dollar trips to the stock market known as public offerings – are going to be tightly overseen, regulated and controlled.
Like it or not, like Apple’s ailing CEO, tech companies born and bred in Silicon Valley are going to have to answer a lot of tough questions. Their privacy – which is really nothing more than their sense that they and only they know what’s best – is going to have to become a bit less opaque. Their firms are going to have to run cleaner; their investors are going to have to disclose more. Total control – the ability to ignore or worse, bully, the government – is gone.
As painful as it is to see him so frail and ill, Steve Jobs, raised in the anything-goes atmosphere of the valley is in sickness, as he was in health, the embodiment of the place and it’s thinking. That’s one reason why so many are fixated on his health; why no one will let him alone. There is often no tangible reward for those who are smarter better or faster; for some things there is no inside track, and in the end, we all face the same fate.
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