From Logic Magazine:
Ex nihilo is one of those concepts that makes you immediately suspicious. When someone claims to have made something out of nothing, there is almost always an inconvenient history that they intend to eclipse. The fantasy that before us there was nothing has a great deal of ideological power. The creator ex nihilo gets to claim some faint emanation of divine power—the wealth creator and the job creator are treated as distant cousins to the capital-C Creator.
The same is true for the idea of terra nullius. When tech came to a stretch of Northern California along the San Francisco Bay, it reframed the world it found as a bunch of apricot groves, a rail line, and not much else. This kind of pioneering story abounds in Silicon Valley. It’s not just the architecture, which seems to pretend that nothing was there before whatever spaceship of an office park landed in a given lot. Rather, it’s the environmentalist facade of an industry whose dirty beginnings—above all, in the known carcinogen, trichloroethylene, long used to clean semiconductors—have dotted Santa Clara County with a record number of Superfund sites. It’s the way, looking at the names of the wealthiest people in the Valley, you get the sense of wealth that’s been created by this generation rather than inherited from previous ones. Of course, the Zuckerberg-Chan dynasty may one day amuse the Bay Area’s society columnists with their coke-fueled antics at the annual Cotillion Debutante ball. Maybe X AE A-XII Musk will one day run for governor of California like so many scions before him who were born on third base and think they hit a triple.
But for now, this wealth feels new. And the newness is part of its allure, its legitimacy. Stories abound about how Silicon Valley’s newly rich don’t know how to spend their money, or how they spend it on absurd things. There is something reassuring about that framing, suggesting as it does that these protagonists are new to wealth and privilege, that wealth is foreign to them.
Years ago, I became fascinated with the question of how “new” the money invested and made in Silicon Valley really is. It has fascinated me in part because it is on some level an unanswerable question: how do you decide whether money is really “new”? Even asking the question, asking where money came from, teases out some inconvenient continuities, and a different understanding of how this industry and the place it has made its home came to be.
Supertankers of privilegeSilicon Valley is good at persuading people to accept its self-perception as fact—a useful tactic, since a lot rides on that perception. In 2014, Forbes ran an analysis showing that “the wealthiest people in the country are increasingly self-made, leaving behind an era when dynasties inherited and concentrated wealth.” The leading indicator, they pointed out, was tech, where “more than 94 percent of the tech billionaires created their fortunes themselves.” (The numbers were much lower for sectors such as manufacturing.)
How did Forbes determine tech wasn’t dynastic? The authors ranked Silicon Valley’s super-rich on a 1-10 scale. A “1” on their scale denoted “inherited fortune but not working to increase it”; a “4” meant “inherited fortune and increased it in a meaningful way”; a “7,” “self-made who got a head start from wealthy parents and moneyed background”; and an “8” was self-made but “came from a middle- or upper-middle-class background.” To rank a “10,” you basically had to be left in a basket on a river.
The results of the analysis aren’t particularly surprising. It turns out tech is mostly, by these calculations, “8s.” After all, that’s what the methodology was basically created to deliver. Anyone involved in tech in the last forty years who wound up as a billionaire likely grew their fortune significantly. You’d have to be an idiot, or actively trying, not to. But even beyond that, the methodology is profoundly telling. There is the unspoken assumption that growing one’s wealth was somehow the opposite of being dynastic. There is also the idea that money only grows due to some immense effort—in fact, their one example of a “1,” Laurene Powell Jobs, is evidence of how hard it is to avoid growing your wealth once it’s reached a certain level of absurdity. And the suggestion that anyone “6” and above “truly made it on their own” is staggering. When a certain “billionaire” ex-president ranks in the middle of your scale, the off-ness of the scale seems to be the point.
The most interesting questions about wealth transmission in America, however, happen within the “8s”—that is, among the twenty million millionaires as opposed to the 600 ro so billionaires in the US. Forbes set up their method around the idea that dynastic wealth and wealth multiplying from one generation to the next are mutually exclusive, as though taking an eighty million dollar fortune and turning it into a billion-dollar fortune is somehow the opposite of the dynastic transmission of capital. There’s one kind of story about capitalism being told when you highlight how Meg Whitman, former CEO of eBay and Hewlett Packard (and, um, Quibi), is a self-made billionaire who ran for governor of California as just “Meg.” And another when you think about the fact that she comes from two Boston Brahmin families, and one of her sons bears the almost comically dynastic name Griffith Rutherford Harsh V. (“Griff,” as he’s known, is the direct descendant of a revolutionary war general, so if anything the “V” is lowballing it.)
Rather than a story of disruption and discontinuity, the story of Silicon Valley can be told as one of family legacies. Rather than upjumped kids in hoodies upsetting the staid operations of capital, it’s wealth doing what it always does—attracting more wealth....
....MUCH MORE
As just one example, Marc Andreessen was pretty successful just based on the Netscape browser.
But marrying Laura Arrillaga, daughter of John Arrillaga Sr., who Fortune calls "The secretive billionaire who built Silicon Valley" took it to the next level.
- "Silicon Valley: A Region High on Historical Amnesia"
- Silicon Valley Freakshow: "Silicon Valley’s Long History of Government Codependence"
For more on A16Z see:
- "The Unauthorized Story of Andreessen Horowitz"
- Andreessen Horowitz and the Media Pt. II
Part I: "Andreessen Horowitz and the Media: Yikes! (COIN)"
And on inter-generational wealth transfer our most recent post was yesterday's "Not All Millennials | Generational Wealth and the New Inequality".
