Where Money Is Untouched By Reality: Startup Cash In Candy Land

Daily Blog #69

What can I tell you about money? There are charts and graphs and concepts. There are changing, evolving models that represent sparkling rocks and found things that shine, and that demand sacrifice in blood and in flesh.

Those pretty things that we hold dear have a thousand different values and meanings.

To the politician, money is a piece of a puzzle that, when completed, shows points scored against the opposition, or re-election, or a lasting legacy.

To the economist, the academic, money is an ingredient in a formula through which life, the universe and everything may be — if not understood — interpreted.

To us and to the folk who work and sweat and pound the pavements of the city in search of a pay check, and tortuously push a mouse around an outdated edition of Microsoft Outlook, money is the estimation of the worth of all living things.

To the venture capitalist, to the startup founder, to the corporate fund, to the accelerator, money is a language. A language that is spoken in tongues incomprehensible to the outsider, a language that means validation and risk and purpose while occasionally meaning nothing at all.

In startups we see money as having little relation to reality.

We live in a world where the mythical money tree is closer to existence than anywhere else, and we are so far strayed from reality that when we talk about dollars and cents, we are occasionally talking about entirely empty numbers. WeWork may soon be valued at $40B, while losing $1B a year. Uber will raise and raise into oblivion, and never turn a profit, while we in turn never raise an eyebrow.

Because the money isn’t paper — it’s on paper, and it’s backed by bare and naked securities, debts, promises and thin air. The money is simply a loose concept, and we play hard and fast with it, all we want. There’s an attitude that suggests there are no consequences to the money. The billions of Theranos dollars, here today and vapour the next, mean zero in real-world terms.

The hundreds of thousands of dollars that young men who still live with their parents claim they’re worth exist in relation to a cap table and a cap table alone.

The money that Elon Musk, the twenty billion dollar man is worth means very little to the employees who have been laid off.

It is inconsequential to the workers in search of a way to keep food on the table and to keep the electric lights that represent their former leader’s dreams of the future from going out, and leaving them more in the dark than the rest of us, who stare at the disconnection between wealth and reality in mystified disbelief.

If I sound critical, I mean it in kindness.

This world is my world too, and venture capital makes sense, in its own terms and its own way. But my concern is this. We need to maintain at least a passing relationship with economic realities, or we stand the risk of losing touch all together with how the world works and how the wheels turn.

Ultimately, the world of customers and loss and gains and government bailouts runs on money that doesn’t exist with Buckaroo Banzai in the 8th dimension. And the consequences cannot be outrun forever.

We have to frame our discussions with a sense of the lives, livelihoods and worlds that we force to collide and fragment and fracture and continue. We have to remember that the startup cash isn’t completely detached from the economy that gave it life and sustenance in the first place. We may feel as though we’re in candy land, but we are still grounded on planet earth.

Whether we like it or not. Elizabeth Holmes may have successfully ignored what her billions meant to the tangible universe for a time, but her indictment tells us the ravenous raging reality will catch up with us all.