The Future, Now and Then

Two of them are real. The third, not so much.

There’s the actual business, which brings a product to market and monitors success by comparing revenues and expenditures. Actual businesses are generally evaluated based on their capacity to bring in more revenue than they spend in a given year.

Then there’s the imaginary business of building the future. Imaginary businesses aren’t evaluated on their profitability. They are judged on growth, on their ability to convince investors that today’s pricy growth will unlock unlimited future profits.

The imaginary business determines the company’s stock valuation.

I still think this is basically right, but the more I have examined the history of Silicon Valley, the more it seems incomplete.

The amendment I would offer is that there are effectively three distinct types of money that have fueled Silicon Valley’s rise to dominance. There’s (1) government contracts, (2) direct product revenues, and (3) there’s investments and financial speculation.