There have been a lot of words spilled recently about a specific individual in Silicon Valley who appears to have fabricated data to appear well-connected and influential.
Since the discussion has descended into flame wars about that individual and the media outlets who covered the story, I’m deliberately not linking to any of that content.
What I am concerned about is the number of Hacker News commenters who simply spun some variation on “everyone in Silicon Valley is full of BS.” Ultimately, this kind of cynical and suspicious attitude harms the entire ecosystem, even when it is justified.
Andy Grove is famous for saying that “only the paranoid survive,” but it is probably also true to say that trust is the OS of Silicon Valley.
Back when I was in business school in Boston, I started my first company. I ended up raising capital and building the team in Silicon Valley, even though that meant weekly transcontinental redeye flights (I was still in school at the time, and my school had a no absence policy). The reason is that Silicon Valley is far more open to trying things. I believe that much of that openness comes from the underlying trust we extend here in the Valley.
In theory, investors ought to insist on a full due-diligence package that includes all corporate documents, copies of every contract ever signed, and the full HR files of every employee. But that kind of scrutiny would kill almost any startup with paperwork. Early-stage investing would grind to a halt.
In practice, guys like Andy Bechtolsheim write $100,000 checks to two brilliant guys with an cool prototype. Sometimes, the investors lose their shirts. But in Andy’s case, he backed Google–his third billion-dollar company.
Silicon Valley isn’t full of risk-takers because we’re insane (no matter what some other hubs might claim). It’s because we trust each other. Maybe not completely, but more than most other industries. Certainly more than Wall Street.
Classic management theory states that companies exist because of the overhead cost of arms-length transactions. With trust, you can move faster.
In some sense, all of Silicon Valley is like a single mega-firm, thanks to the level of (perhaps irrational) trust we feel.
That trust helps make us special. And it’s worth protecting.