Silicon Valley is being turned on its head
Silicon Valley is being turned on its head.
The model that's worked in Silicon Valley for decades is investing a little $$$ into lots of big ideas hoping 1 or 2 will 100x or 1,000x.
It's asymmetric investing!
Today, Silicon is betting massive amounts of money on equally risky bets that may only have 1x or 2x potential, at best.
AI startups are burning billions building models that only lead to more losses and there's a line of sight to AI models costing $100 billion+. Is there a $10 trillion or $100 trillion outcome? That's the entire global economy, so probably not.
$Meta Platforms, Inc.(META)$ has burned at least $60 billion on Reality Labs. Let's say half of that is leading to Orion AR glasses. Those glasses won't be a commercial product for ~5 years (another ~$50 billion) and they'll sell for ~$1,000. Meta would need to sell 160 million pairs of glasses at a 50% margin to break even.
These aren't asymmetric investments. They're utility-scale investments with VC-style risk.
I'm not sure if the expected value of the portfolio of massive bets is positive.
Silicon Valley has changed. Don't think the returns of the next generation will be the same as the last.
https://twitter.com/TravisHoium/status/1841077776054391157
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