#Literature Review
This review will first present some central texts in the history of theories of entrepreneurship, and will consider the influence of this body of work both at the level of normative accounts of the figure of the entrepreneur and speculative investor and at the level of macroeconomic and historical analysis. Notably, the roots of the construction of the entrepreneur as unusually adept at making sense of the social world (in contrast, or at least in addition, to any exceptional technical ability) will be seen in the earliest accounts of capitalist innovation. This tradition is intertwined with a “process-and-emergence” view of economic activity in the work of Brian Arthur (1996, 2009), Carlota Perez (2003) and even Kevin Kelly (1995) – forming, it will be argued, a relatively consistent and distinct body of theoretical presuppositions which guide the thinking of entrepreneurs and venture capitalists in Silicon Valley today. Having considered both personal and structural theories of entrepreneurship, following the structure of the research questions presented above, the literature on role of ethnographic processes in the product design process will then be considered, along with recent work in material culture studies which perhaps offers a more constructive approach to the integration of questions of both iterative design methods and longue durée technological development. Finally, the somewhat limited prior work on Silicon Valley itself will be briefly reviewed.
###Entrepreneurship and (or against) speculative capital
The role of entrepreneurship in capitalism is a topic which has always operated as a “minor tradition” in relation to neoclassical economics and its focus on the impersonal mechanisms of “the market:” as we will see, the methodological emphasis on the personality of the entrepreneur and the differential ability of agents to fulfill the entrepreneurial function within the broader capitalist economy distinguishes this field of economics from the theoretical roots of financial capitalism and its essential depersonalization of the activity of economic agents. First used by Cantillon in 1755 to refer to “a specialist in taking on risk [who] ‘insures’ workers by buying their output for resale before consumers have indicated how much they are willing to pay for it” (Casson 2010: 7), the meaning of entrepreneurship which is current in the technology industry today is more or less equivalent to that proposed by Joseph Schumpeter. For Schumpeter,
the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on. (2003 [1943]: 132)
This “functional” definition of the entrepreneur in Schumpeter’s later work represents a shift from his earlier account, which placed greater emphasis on the personal qualities of the entrepreneur who must “foresee and estimate on the basis of his experience” (Schumpeter 1926: 64) – a shift which, for Campagnolo and Vivel (2012), is linked to his increasing focus on innovative activity in larger firms. Schumpeter nonetheless continued to place some stress on the role of the entrepreneur as an agent whose ability to act effectively in the radically unfamiliar conditions that characterize the development of a new technology “requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function” (2003 [1943]: 132, emphasis added). Thus, to an extent again apparently greater than that seen even in the case of the “discipline” of financial market traders, there is a normative expectation of a set of personal traits which, it is suggested, are common to successful entrepreneurs – and which, unsurprisingly, an entire industry is now devoted to identifying and fostering.
Schumpeter’s emphasis on the personality of the entrepreneur reflects the roots of his thinking in the thought of Wieser and Sombart: for the former, for instance, entrepreneurs are “bold technical innovators, organisers with a keen knowledge of human nature, far-sighted bankers, reckless speculators…” (Wieser 1914, cit. Campagnolo & Vivel 2012: 915-6). This characterization is still all too easily recognizable in the self-construction of Silicon Valley entrepreneurs today, and in the context of the present study, the identification of a need for a “keen knowledge of human nature” in this foundational account of entrepreneurship in economic theory obviously points to the roots of an ethnographic sensibility in the deep strata of an archeology of this term. In The Bourgeois (1920), Sombart carefully distinguishes the entrepreneur from other types of capitalist, emphasizing how their role, as Preda puts it, “implied selling (not always ripe) ideas to a broader public, a process in which the projector’s powers of persuasion played a crucial role” (Preda 2009: 46). Once again, we can see the origins of the figure of the “founder” today in the earliest roots of theories of entrepreneurship; indeed, it is hard to avoid a recurring sense that the normative construction of the effective startup founder found in business discourse today represents the form of capitalist activity closest to that described a century ago at, or even before the dawn of “entrepreneurship studies” proper. The “pitch,” the central performative demonstration of the entrepreneur’s idea to an audience of potential investors, is perhaps the moment in contemporary capitalist activity where, most directly, the entrepreneur’s “rhetorical power to convince and impress the public, to make promises and awaken hopes, mediates between markets and society and is essential with respect to the former’s legitimacy” (ibid.). The startup founder hoping to provoke a level of enthusiasm that leads to their funding round being over-subscribed is an all too recognizable iteration of Sombart’s “projector,” seeking speculators possessed of a “gambling fury” a century earlier.
It is, of course, notable that none of the historical definitions of entrepreneur or speculator describe a figure who can readily be equated with today’s venture capitalist. Sombart’s entrepreneur, in the lightly-governed capital markets of the first decades of the 20th century, had to persuade a substantially less informed public in his quest for investment than today’s startup founder. Indeed, with the exception of “crowdfunding” platforms, soliciting investment in early-stage firms from individuals who are not “qualified investors” in the Securities and Exchange Commission’s definition of the term, which excludes those who are not deemed sufficiently wealthy and, in legal terms, “sophisticated” to take on these kinds of risks, remains illegal – the regulatory consequence of the disruptive potential of entrepreneurial capital-raising that was demonstrated so dramatically in the 1930s. Even within the types of professional capitalist speculator discussed by Schumpeter, there is no term for investors who have developed the kind of specialist expertise and “hands on” approach to involvement in their selected firms which we see in VC firms specializing in early stage technology startups – less than surprisingly, given that the emergence of this model of development essentially dates from the decade after Schumpeter’s death (Kenney 2011). Indeed, if the entrepreneur is a figure who – as Schumpeter and his followers insist – must be distinguished in character as well as function from the “inventor” or “manager” (a distinction we can see today between those seen by investors and their peers as qualified for chief technology or operations officer roles, versus “CEO material” individuals), we should ask how clear a distinction needs to be drawn between this class of productive activity and the field of finance in anthropological terms. Moreover the close proximity between entrepreneurial activity proper and investment – particularly in very early-stage firms – by venture capitalists who are themselves former entrepreneurs has, arguably, contributed to the development of an easily recognizable VC “type” which can be rather easily distinguished from that of other capitalist investors – a figure which is now strongly shaped by the enthusiastic participation of a number of high-profile investors in discussions on Twitter and Medium, as well as personal blogs and other writings.
At the broadest level, it is clear that both entrepreneurial and more strictly financial capitalism operate as more or less, although far from entirely, distinct economic spheres today: while, as we will see, the operations of a venture capital firm are radically distinct from those of, for instance, a hedge fund or investment bank, there are obviously some both cultural and technical areas of overlap between “Wall Street capitalism” and “Silicon Valley capitalism.” Brouwer’s discussion of Weber’s entrepreneur, Schumpeter’s innovator and Knight’s risk financier is instructive on this point: she draws a distinction between the productive innovator and the financier, whose expertise lies in “investment as a discovery process [because] many new ventures will be launched, but only a few will survive and prosper” (2002: 92), a position in contrast to what she claims, problematically, is an implicit assumption of infallibility on the part of investors on Schumpeter’s part. While these three authors stand as genealogical points of origin in any historical analysis of the concepts of innovation and investment under capitalism, it is productive here to take up Appadurai’s critique of her comparison of these three theoretical stances, and, indeed, to point to the limits of critiques of financial capitalism when applied to entrepreneurial ventures. In the case of the venture capital sector, we find a mode of opportunity selection (and thus of profit-making) which does not depend on a particular strategy of “divination, of reading the signs, charts, trends, flows, patterns, and shifts in the market” (Appadurai 2011: 532) so much as on Sombart’s “keen knowledge of human nature” and knowledge of the social conditions of quite a different kind of “market” from the ones in which the elites of the financial markets ply their trade. The market which the VC needs to know is the market with which the startup’s product must find a fit if it is to survive.
This level of personal involvement between investor and the recipient of capital, evident from venture capitalists’ own admission of the importance of interpersonal factors in their investment decisions, is somewhat unusual, if not positively contrarian, in the context of modern bureaucratic capitalism. By contrast, the highly technical nature of the enterprises involved, and the wealth of quantitative data which they generate, if anything highlights the unusual role of social factors in this sector. Given the emphasis which has rightly been placed on the role of the materiality of financial markets in structuring both their activity and, in more phenomenological terms, the lifeworld of their participants (including, notably, Appadurai 2015; Cetina & Bruegger 2000; Hardie & MacKenzie 2007; Ho 2009; MacKenzie 2008a, 2008b; Riles 2004; Zaloom 2003, 2006, 2009), the differences between the practices by which technology entrepreneurs and investors in startup firms assess risk and uncertainty, and the methods used in the derivatives, currency and equity markets deserve to be taken seriously as a point of distinction between the financial capitalism which these authors have described and the object of the present study.
While clearly still present in some processes (such as the use of the Black-Scholes equations in the so-called “hybrid method” of early-stage firm valuation, in which a process known as “backsolving” is applied to derive the present value of a firm from past transactions using option pricing methods) the modes of calculative reasoning which dominate the activities of, say, a derivatives trading fund are, in the case of the venture capital firms and startups found in Silicon Valley, subordinate to a set of processes of social and even historical assessment. As Brouwer makes clear, in her discussion of venture capital in Silicon Valley in juxtaposition with Weber’s analysis of merchant capital in the commenda form of medieval Italy, “The venture capitalist fulfills the Knightian entrepreneurial function of selecting the venture. The founder is the entrepreneur in a Schumpeterian and Weberian sense, if he leads the new enterprise” (2008: 59; emphasis added). We might add that neither Schumpeter nor Weber, at least in Brouwer’s reading, seem to quite capture the orientation to the social at the heart of Sombart’s earlier definition and which, it is argued, dominates the investment selection process today. In Silicon Valley, the chief concern of investors (and wise founders) seems to lie not so much in the domain of Knightian uncertainty, but rather in the risk that a venture may be, in entrepreneur and investor Ash Maurya’s words, “building something that nobody wants.”
###Evolutionary economics: monopolies in the age of networked capitalism
Silicon Valley’s broadly Schumpeterian model of entrepreneurship as a function within capitalist development, and of the character of the entrepreneur themselves, is itself situated within a broader popular reading of Schumpeter’s economic history. In this evolutionary account of technological development the individual entrepreneur occupies a central, even heroic role; yet beyond the vicissitudes of individual innovators’ struggle for success, the onward force of technical evolution provides a grand narrative of progress in which technical rationality and market irrationality are interwoven to produce the ebbs and flows of historical market trends. For the Schumpeterians, as, tellingly, for Marx, the ultimate determinative factor in history is the state of technological development: today, the expectation of imminent radical shifts in human technological capability (most notably the development of artificially intelligent systems) exerts an apparently compelling influence on many of Silicon Valley’s most successful investors. This expectation is evident from initiatives like Sam Altman’s call for research into a “universal basic income” as a political response, on the part of technological innovators, to the disruption to the wage form which is predicted to arise from the widespread deployment of automated and autonomous industrial systems.
Just as the algorithms of derivative pricing have come to shape the behavior of the options market, so too a singular tradition of economic thinking has come to explicitly inform the discourse of leading participants in the Silicon Valley economy. Schumpeter and the so-called “neo-Schumpeterians,” most notably Carlota Perez (2002, 2009 and elsewhere), exert a highly visible presence in the public construction of venture capital as the driver of human development and, moreover, as a determinant of investment strategies. In this respect, the economic models which serve as the “engine,” in MacKenzie’s terms, of Silicon Valley are not the risk pricing models of the derivative markets or, even, the knowledge of the (consumer) market which can be derived from “big data” analytics. Rather, the dominant paradigm in Silicon Valley is closer to that of so-called “evolutionary economics,” the branch of economic theory which has most actively taken up Schumpeter’s ideas and which, moreover, has been most enthusiastic in adopting the ideas and methods of complexity theory – what economist and systems theorist Brian Arthur terms a “process-and-emergence perspective” on the economy (Arthur 2009: 91). As we will see, the confluence of a somewhat selective reading of Schumpeterian thinking on entrepreneurship, combined with a highly optimistic reading of evolutionary economics in the context of emerging technologies like “deep learning” and other forms of artificial intelligence, is determinative of the orientation of Silicon Valley market participants towards new venture opportunities in both explicit and, arguably, more subtle ways.
High-profile venture capitalist Marc Andreessen recently made the following observation that the technology sector will continue to experience exceptional rates of growth:
First the new technology is not taken seriously at all. Then it’s taken way too seriously way too quickly. Everybody gets too excited. Then there’s a gigantic catastrophe, and then stuff actually starts happening. (Mangalindan 2014)
As the author notes, Andreessen here explicitly made reference to Perez’ Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages (2002) – a work which is also “assigned” to the founders of startups receiving funding from New York’s Union Square Ventures, indicating the weight attached by influential investors to Perez’ thought. Thus, the significance of this strand of economic scholarship to the present study is not merely to establish the prior theoretical and conceptual ground of this inquiry in scholarly terms, but rather to situate this project within the prior texts of the elite participants in this social field, for whom theoretical constructs like Perez’ “long wave” constitute a vital element in the reflexive process of strategy formation and risk assessment (including, presumably, opportunity selection on the part of investors). Thus, for firms like USV and Andriessen-Horowitz, an investment opportunity needs to be considered not only in the context of its technical merits, but also as a historical process which intersects, for better or worse, with broader market conditions – leading, in some instances, to ostensibly sound businesses “failing” (whether literally or relative to expectations) because of their entanglement in speculative market processes driven by the irrational exuberance (or, conversely, equally irrational panic) of the equity markets. Perez’ work suggests that venture capitalists should treat the cyclical overvaluation of technology stocks as both inevitable and, as responses to the current market downturn indicate, as a form of risk which sophisticated, long-term oriented investors can mitigate, as Andreessen’s comments suggest, at least partly through a critical understanding of the nature of economic cycles which reflexively informs their investment activities.
In particular, Perez focusses on the nature of “bubbles,” moments in which enthusiasm for new technological developments as investment opportunities leads to a decoupling of share prices from “rational expectations” for the future value of the company in question, and on the shifting balance between what she terms “financial capital” and “production capital.” In her model, the emergence of periods of irrational exuberance, as part of the cyclical process of diffusion associated with a major new technology (like railroads or the telegraph), leads to “long-term pendular swings [which] are as much in the nature of the market economy as the fact that economic growth, as Schumpeter held, is driven by technical change” (Perez 2009: 780). Thus Andreessen, perhaps the most influential venture capital investor in Silicon Valley can be reported in the mainstream business press espousing, quite explicitly, a model of technological development which is essentially more narrative–historical than empirical–technical in character, not to mention emphasizing, as Marx did, the crucial role of technological development in economic change. No less significant in the reception of Perez’ theory is her implicit attribution of irrationality to profit-driven speculators rather than entrepreneurs – who, at least ideally, are enthused with the potential of their venture rather than merely the desire to profit from an undeservedly high market valuation. To a keen knowledge of human nature, then, we might say that the venture capital–entrepreneurial system of Silicon Valley now adds the requirement that its participants demonstrate their competence at understanding the present historical moment in a grand narrative of cyclical, but ultimately relentless technological evolution. The resemblance of this narrative to a certain tendency in Marxist thought is, as we will see, far from coincidental.
While the Schumpeterian arm of the rather loosely defined field of “evolutionary” economics exerts considerable influence in discussions of venture capital investment strategy, the sense of the term which refers to theoretical models of the economy as a complex evolving system is no less significant in its impact both on the concept of value in a networked business environment, and on the broad acceptance of expectations of a continuing exponential path of technological progress. Evolutionary economics, in this sense, forms a bridge between the “counterculture” and spiritually-infused theories of teleological development, such as the work of Pierre Teilhard de Chardin and Buckminster Fuller, and West Coast entrepreneurial capitalist culture at a deeper theoretical level than has been captured by analyses such as Turner’s influential (2010) discussion of the influence of Stewart Brand and the “New Left” on Silicon Valley. The positions developed by a range of thinkers both within academic research and on the boundary with popular discourses on technological development and academic computer science, economics and media studies – from Clay Shirky (2008) to Brian Arthur (1996, 2009, 2014), Nick Bostrom (2014) and Ray Kurzweil (2000, 2005, ) – which shape the thinking of a wide range of actors in Silicon Valley (up to and including their inclusion in VCs’ lists of influences on their investment strategies) can, it will be argued here, be linked via what Best and Kellner termed “Kevin Kelly’s complexity theory” (1999).
Compared to the neoclassical economic theorists who dominate both business schools and policy-making institutions, evolutionary economics remains somewhat marginal in its influence outside of Silicon Valley and other high technology investment centers. Most notably for many startup founders, this field has given rise to the recognition that product adoption does not take place on an agent-by-agent basis, but, in the case of networked services, exhibits emergent, metastable “network effects” which, it is now widely accepted (e.g. Farrell and Klemperer 2007), are the key to generating both value and competitive advantage in the internet age (Arthur 1996). The search for businesses which are predicted to exhibit network effects now dominates the investment strategies of many consumer-focussed venture capital firms. Indeed, the existence of or potential to create a business characterized by strong network effects, in which the usefulness of any given version of the product grows exponentially in relation to the size of its user base is probably the predominant criterion for assessing ventures as investment opportunities in a large segment of the technology industry today, particularly in the case of platforms in the so-called “sharing economy,” along with messaging and other social networking services. The emergence of these network effects is typically understood to imply that many, if not all potential markets will come to be dominated by one essentially monopolistic firm – as the natural consequence of the way in which systems like marketplaces or social networks are organized (Thiel 2014). At a much broader level, too, an evolutionary paradigm shapes investment and commercial strategies which depend on the acceleration of technological change as enabled by shifts such as the modularization of technologies (allowing new, more complex systems to be developed increasingly rapidly from a “library” of interoperable hardware and software elements), the exponentially increasing pace of data gathering and storage from all sources, and the development of “deep learning” algorithms which can exceed human performance in specific domains. Thus the valuation of a firm like Uber may encompass expectations that the firm’s efforts to develop and deploy revolutionary new technologies like autonomous vehicles are, within the bounds of venture capital’s speculative activity at least, credible enough.
Despite its significant cultural impact, complexity theory receives only a brief mention in Turner’s communications and media-focussed study of the influence of the counterculture on the Silicon Valley-centered “cyberculture,” and that in connection to the upheavals that network-based business models and practices wrought on established large firms. “The systems-oriented rhetoric of complexity theory,” he observes, “buttressed by the cultural legitimacy of Stewart Brand, offered a compelling framework within which to understand the topsy-turvy economy of the late 1980s and early 1990s” (Turner 2010: 193). Given the substantial practical implications of Arthur’s “systems-oriented rhetoric,” in particular the economic value attached to network effects, it might be questioned whether Turner has fully accounted for the importance of this mode of analysis in material terms. It might be argued, indeed, that a “process-and-emergence” model of the economy may in fact account for the “topsy-turvy” conditions of the emergence of networked capitalism rather more satisfactorily at an empirical level than previous modes of economic analysis; indeed, it is on precisely this assumption that neo-Schumpeterian investment strategies seem to proceed, consciously updating Schumpeter’s own theories of entrepreneurial development with a characteristic mode of evolutionary–emergentist thought.
This mode of “systems thinking” was, to hugely influential effect, espoused by Kevin Kelly, founding editor of Wired magazine (and long time associate of Stewart Brand). It has been described by Best and Kellner in terms which, it is argued, capture the breadth of the implications of this outlook as a set of ontological commitments rather more fully than Turner’s brief treatment:
Drawing on cybernetics, chaos and complexity theory, evolutionary theory, information theory, and discussions of new technologies, Kelly claims that we need fresh models of thought that articulate the parallels between the organization of nature, the novel environments of technology, and the dynamic human and social milieux. (1999: 142)
The acceptance of an “evolutionary” view of technological and economic development, which is essentially equivalent to Arthur’s “process-and-emergence” economy – a view which seems to owe as much to Bateson, Bergson or Whitehead as Mandelbrot and Dosi – is, it is proposed, so pervasive as to constitute the primary ontological ground of Silicon Valley as a cultural and economic system. The sense in which evolutionary economics deploys the term “evolution” is, it should be pointed out, somewhat distinct from the sense in which it is usually used to refer to biological systems: Arthur himself indicates that, in discussions of technological evolution, he means the sense in which “all objects of some class are related by ties of common descent from [a] collection of earlier objects” as well as “the gradual development of something” (2009: 7). Elsewhere, however, he states the definition in more cybernetic terms: describing an early computational simulation model of a biological system, he observes that “you could allow the system to start with not-so-good rules and replace these with better ones it discovered over time” (2014: xiii). This latter definition is, it is proposed, one which is both central to artificial intelligence research (where “self-improvement” by an intelligent system is the first step towards the Singularity, in Kurzweil’s influential (2000) account), and, far from coincidentally, best accounts for the sense in which the term is used by the technologists and pundits of Silicon Valley.
That Kelly’s assemblage of what might appear disparate themes retains its influence (or, at least, that the confluence of these themes in the discourse of the technology industry on which his work draws remains significant) is evident from the continued prevalence of far-reaching visions of human and technological development in Silicon Valley, many of which draw directly on the “articulation” which Kelly prescribes. The almost total overlap between devotees of Eliezer Yudkowsky’s “Applied Rationality” (which aims to reduce its followers’ susceptibility to cognitive biases by a process of “debugging” deliberately analogous to an AI reprogramming itself) and interest in computational AI and the philosophical and ethical problems it presents; the place of biomimicry, the design of technological artifacts and systems inspired by, and often modelling at a mathematical level, the organization of organic systems, as a common referent of both urban planners and nanotechnologists; and the entry of rhetoric, like that seen in the announcement of Uber’s new logo, that points to the dissolution of the distinction between digital–cybernetic systems and material infrastructures all arguably meet Kelly’s call for “fresh models of thought” derived from a complexity-centric view of the world.
While the “systems turn” is far from confined to Silicon Valley, the degree of influence over capitalist activity which is evident there is unique (in the sense that predictions of dramatic technological, cultural and environmental changes are now sufficiently proximate as to influence investment decisions). In contrast to the orientation of traders, on Wall Street or the other major centers of financial speculation, to a market which is unknowable and unpredictable in a strict mathematical sense, the activities of of Silicon Valley entrepreneurs and investors are focussed on an apparently inexorable evolutionary process of technological development – one in which failure is embraced as a positive element of the selection process, and testing and iteration guide the product development cycle, always with the implicit belief that an optimal solution exists. Indeed, the question for the entrepreneur is often not whether a problem can be solved, but whether an economic rationale exists for doing so: it is the temptation to solve a technical problem which is of no concern to the wider public which, in a sense, represents the technological entrepreneur’s greatest risk.
Thus we find the figure of the Silicon Valley entrepreneur, a personality distinguished by her ability not only to engage in exceptional flights of technical virtuosity or rhetorical brilliance, but primarily by their acute sense for the relationship between the social world and their emergent product, operating with an awareness not only of their status as a historical actor in the grand narrative of human technological development, but also as subject to the irrational whims of speculative capital. Moreover, as we will see, the most practical processes of product development are structured along evolutionary lines, with testing and iteration in many ways constituting the primary entrepreneurial responsibility in the early stages of the startup firm. The process by which a mobile app, the startup firm’s window to the consumer (and, of course, vice versa), is designed is exemplary in its reliance on a mode of evolutionary development – one which is entirely ontologically consistent with the process-oriented macroeconomics that has just been described.
###Iterative design, ethnography, and the new face of the commodity
What is at issue is “a particular mode of innovating . . . linked to constructions of the market framed by information about the consumer,” which, in turn, depends upon a reworking of what is meant by the commodity from simply the invention of new commodities to the capture or configuration of new worlds into which these commodities are inserted. (Thrift 2006: 288, citing Lury 2004: 62)
The development of high technology products by startup firms within the Silicon Valley ecosystem, particularly consumer-oriented mobile applications, takes place within a cultural–economic milieu which is predicated on the assumption that both technical excellence and, equally importantly, what Thrift terms “rightness” (and entrepreneurs refer to as “product-market fit” (Blank 2013)) can be achieved by an iterative process of experimentation and refinement – a model which closely conforms to the conception of evolution discussed above. Indeed, Steve Blank, one of the most influential authors and consultants in the “Lean Startup” movement, describes a startup as a “temporary organization formed to search for a repeatable and scalable business model” – that is to say, to identify a “market” for a given product, conduct a series of essentially ethnographic “customer development interviews,” and, starting with a “Minimum Viable Product,” iterate the design and presentation of the commodity until a functional “fit” between the product and the market is achieved.
The startup’s product, then, far from being centered on an “invention” in the traditional sense of the word, is implicitly understood as an emergent form shaped by a continuous iterative development process. Adopted by a multiplicity of startup firms and their backers, this process-driven view of entrepreneurship sees startups driving the “evolution” of technology both at the level of the individual firm’s product, and, furthermore, at the level of the economy as a whole. The Darwinian tone of economists like Perez evokes, sometimes explicitly, the image of a competitive ecosystem in which the “fittest” firms attract the most resources – that is to say, the highest valuations and largest slices of investment capital. Fitness here can be understood as a firm’s relative ability to reinvent itself in response to environmental, that is to say market conditions. The play between “fit” as a synonym of Thrift’s sense of rightness, and a more Darwinian notion of fittingness to an ecological niche is apt: the purportedly efficient distribution of resources which the competitive startup ecosystem promotes is seen as an impersonal yet infallible driver of technological development in a “free market” – an attitude which, needless to say, is highly sympathetic to the libertarian tendencies of many entrepreneurs, and which considerably extends the conventional idea of the “invisible hand of the market.” In principle at least, this mechanism distributes capital resources to those startups which provide the most valuable tools to their users, a usefulness which (in an ideal case at least) will be correctly perceived by investors, and translated by the entrepreneur into a “revenue model” which will generate optimal financial rewards for the company and its investors. How, then, can we start to conceptualize the relations between investors, entrepreneurs, users, and the distributed network that is made up of instances of software products that are, particularly in the case of mobile apps, designed to continually report details about their use?
Taking the influential construct of the firm as agencement (Deleuze & Guattari 2004; Callon & Muniesa 2003; Callon 2005, 2007 and elsewhere; Hardie & MacKenzie 2007) as no less applicable, at a structural level, to the startups and venture capital firms in question here than to the hedge funds and other capitalist organizational forms to which it has already so productively been applied, the question arises of how the design and production of the commodity can be integrated into this framework, absent as this topic is from earlier studies of speculative finance. Considering Callon’s definition of an agencement as an actor “made up of human bodies but also of prostheses, tools, equipment, technical devices, algorithms, etc.” (2005: 4-5, cit. MacKenzie 2009: 20), it easy to see how this definition can apply to an early-stage firm which consists of a founding team, the product’s first users, and a prototype product assembled from code which itself typically depends on an array of software development kits (SDKs) and application programming interfaces (APIs) made available by other firms, from Apple and Google to other nascent enterprises which have arisen to serve the technical needs of other startups. In the case of startups which primarily interact with their customers through a mobile app, however, the sense in which the firm’s agencement includes “tools...technical equipment [and] algorithms” is, it is proposed, somewhat different from that which MacKenzie and others have drawn from Callon’s work in their studies of financial traders. Rather than the significant non-human actors being the technological devices on which the firm’s workers (or founders) depend in the course of their business activities, it is the deployment of the app as a tool in the wider world (and as a piece of equipment which, in a sense, becomes incorporated into the agencement of the user) which is critical.
The “economy of qualities” described by Callon and his colleagues, consisting of “highly reflexive markets [which] are organized around two structuring mechanisms: the singularization of goods and the attachment of goods to (and detachment from) those who consume them” (2002: 202) might also serve as a basis for a discussion of the mobile app as a commodity which, unusually, remains so voluble an actor in the product design process after it has been distributed to the public. What might be termed “qualification in real time” is regarded as an essential practice for startups, but is generally impossible for most industrial products: even modern automobiles, while they may relay extensive technical data to their manufacturer during maintenance (or even through continuous data links), do not provide data on whether a given model’s controls are placed in a way that is pleasing to the driver. It is significant, too, that the economy which Callon refers to is one which is still recognizably divisible into “products” and “goods” (which are “temporarily stabilized products” (200)). In this framework, goods would be equivalent to a given “release” (or “version) for a software product, yet for our purposes, it is significant that (particularly in the cases of mobile applications and web-based services) the version of the product used by consumers can, more or less reliably, be updated to a presumably superior updated release at the firm’s behest, calling into question the usefulness of Callon’s product-good distinction. Additionally, the “same” product may even be distributed (“attached,” in Callon’s terms) to different groups of users in quite radically different design incarnations, and new features may initially be offered to only a small cohort of randomly selected test users, as part of the product development and testing process.
Moreover, the process of market testing (and various forms of consumer research which are conducted prior to the development of the first product) can, in some instances, lead to so-called “pivots” – the realization that a startup’s proposed product is radically less likely to succeed than an alternative proposition which has arisen from the firm’s exploratory activities (such as the transition from offering mobile games to delivering marketing infrastructure services, as in the cases of AppBoy and Branch). It is questionable whether Callon’s account of the qualification-requalification process is entirely adequate to the diversity of the activities which are part of the process of finding “product-market fit:” indeed, the claim of the “Lean” movement is that it represents a revolutionary shift in the relationship between the capitalist firm and the consumer and thus, in its own terms, the typical product development methodology of today’s startups is distinct from the industrial design processes that seem to be Callon’s main focus. The notion that the firm’s direction may be entirely altered by the results of early product tests is certainly foreign to Callon’s analysis of more traditional industrial design and commodity production processes, such as those seen in the automobile industry, where, say, Fiat cannot decide that they would have better prospects as an on-demand delivery service if they identify that picking up groceries is a major use of their cars: conversely, however, as Uber’s investment in autonomous vehicle development shows, a particularly ambitous and well-funded startup may decide to enter the auto industry as part of their grand strategy to reconfigure urban transportation infrastructure.
The relationship between product-market fit and the financial markets (including the relatively closed world of pre-IPO stock sales and VC funding) is, it is proposed, a critical point of distinction between venture and financial capitalist investors. The process by which the potential value of an early-stage firm is assessed by a VC is dependent on their judgement not only of the fit between the firm’s current offering and its market, but on the ability of the founders to (if necessary) execute a completely different business plan based on the eventual reception their initial idea receives. Indeed, there is a dialectical tension between investors’ intense concern with the product on one hand, and on the other their willingness to continue to fund entrepreneurs who have decided to “pivot” their company: Y Combinator even asks applicants to list ideas they have had other than the company they are submitting, and reports that around one in three “graduates” have completely changed their business plan in the course of their three month “accelerator” course. The Lean Startup approach is summarized by Blank as a “build–measure–learn” loop, constructing the startup as a cybernetic–autopoetic system in which the founders continually integrate feedback (from both direct interaction with customers and test users, and analytics data gathered during its use “in the wild”) into the product design and business model development process. It is the ability of the founders to learn effectively from the earliest iterations of their product that, rather than what has been “built” per se (as might be expected in a knowledge-intensive industry where intellectual property is typically assumed to be a prime source of an early stage firm’s value), is most attractive to sophisticated venture capitalists.
It is important, however, to distinguish between the process of entrepreneurial product development (as institutionalized in the Lean Startup movement), which I have argued relies on para-ethnographic processes, and the highly specialized process of user experience (UX) testing, within which the term “ethnography” is used in a highly particular sense. The precise definition of UX remains contested both within the profession and (as those working in the field often bemoan) among user interface designers, product managers and CEOs; in particular, UX researchers frequently seek to distance themselves from “mere” interaction designers. The term “user experience” was first used by Donald Norman in reference to his work at Apple (Norman 1995); more recently, Norman has indicated that he intended the term “to cover all aspects of the person’s experience with the system including industrial design, graphics, the interface, the physical interaction, and the manual” (Merholz 2007). Since its earliest days, the field of UX research has, not surprisingly given the phenomenological character of Norman’s expanded definition, relied heavily on conducting studies on the users (or potential users) of software systems in the context of their use; this method is, furthermore, refered to as “ethnography” by practitioners whose methods may have rather little to do with those of anthropology, sometimes to the confusion of those with disciplinary backgrounds in the social sciences (Prabhala et al 2011). Paradoxically, while the entry of a method literally termed ethnography to a scene which has already been characterized here as para-ethnographic might seem to confirm the anthropological sensibilities of the startup world, practitioners within UX research would likely be more self-consciously resistant to this characterization of their activities than VCs or entrepreneurs.
In this vein, we find that Paul Dourish, one of the most influential theorists of UX, while suggesting that “ethnographic approaches can be used to uncover requirements for a system design through the detailed observation of the working setting” (2001: 76), in fact points to ethnomethodology (rather than critical ethnography) as a source of “fundamental insights about the organization of action as being a moment-to-moment, naturally occurring, improvisational response to practical problems” (77). The Heideggerian tone of Dourish’s approach is clear, and he refers extensively to phenomenology (along with Giddens’ notion of “locales,” Garfinkel’s analysis of social action and other sociological theoretical material) in his action-oriented theory of interaction design. The highly bounded nature of this kind of “ethnographic” inquiry is clear. Moreover, Crabtree and his colleagues, in a remarkable moment of reflexive methodological commentary entitled Ethnography Considered Harmful, observe that, from the perspective of product design, “the very tradition that gave rise to ethnography’s utility…is one that relies upon a distinct analytic orientation to fieldwork, which seeks to uncover the locally organized character of action and interaction” (2009: 880) and that the potential harm of ethnography to design comes from an attempt to do the work of anthropology – producing “descriptions that offer up little more than ‘scenic features’ of action and interaction for consideration, thus sensitizing designers to little more than the grossly observable features of a setting or culture” (883). Thus the present study admittedly proceeds in some tension with the professional norms of “ethnographers” working in UX design: a tension which, perhaps, reflects an already uneasy relationship between design and business processes. Intriguingly, Prabhala and her colleagues suggest that
Although traditional ethnographic methods are proven to be effective in eliciting user requirements for product, service and system development, an effective inclusion and integration of user experience into requirements engineering processes [sic] demands complementary insights and strategies that come from design ethnography and human factors engineering. (Prabhala et al 2003: 103)
This points to the ethnographically “traditional” nature of the “Lean” research practices which aim to identify the “pain points” of users which a startup can address, as distinct from the action-oriented work of UX research. To situate the practice of “design ethnography” within its own anthropological context – that is to say, in its place in the history of the development of productive modes of relation between humans and the material world and the deep history of the interplay between tool and user – is, of course, a somewhat distinct project from any of the business-oriented questions asked by UX researchers themselves (and quite likely to be seen as unproductive, if not actually harmful, by at least some in the field). Despite the history of tension between the “three ethnographies” Prabhala describes, it is hoped even an ethnographic discourse which is overtly opposed to the work of anthropology can itself be situated within its anthropological context – ideally in a way which is ultimately productive for readers situated within the UX research field as well as anthropologists and media scholars.
The idea that the capitalist enterprise needs to be understood not only as a collective of humans and non-humans operating within the domain of production, speculation or other capitalist activity (as is the case with the industrial cases that most concern Callon himself, and the financial trading firms to which his ideas have been applied), but also as an extended agencement including each instance of the commodity and its user as an actor, one which returns data to the firm’s operators, does not appear to have been explored in the anthropological literature to date. Likewise, while questions of cultural evolution in general have preoccupied at least some anthropologists (and critical responses to evolutionary positions have similarly preoccupied their opponents), the significance of the idea of evolution as an ideological determinant of economic activity at the level of product development and design has not been explored. One potentially highly productive theoretical current, however, comes not from studies of finance or industrial organizations, but from the emergent field of material culture studies and, more generally, archeology’s engagement with the study of longue durée technological change. For the same reasons that evolutionist accounts of culture have (often rightly) proved controversial, the trajectory of human technological development at the broadest level is a topic which, for methodological and historical disciplinary reasons, has tended to prove problematic for ethnography. A number of recent theorists, representing the turn to “thing theory” in archeology and anthropology, may, however, offer a useful point of departure for a drawing together of strictly anthropological accounts of technological change and innovation, and the systems-oriented thinking of evolutionary economics and iterative approaches to design.
###Silicon Valley
In the opening remarks to his Understanding Silicon Valley, an appropriately optimistically-titled collection of essays on the Bay Area’s unique concentration of technology firms, economist and scholar of entrepreneurial business practices Martin Kenney observes that “Despite the impact of [the many important electronics and biomedical technologies developed there] Silicon Valley as a region or social system has received only sporadic scholarly attention” (2000: 19). Given that the substantial literature on this “region or social system” can still be surveyed in the space of a few pages, this observation appears to remain largely true today, despite the if anything more pervasive influence of the region – if anything, his remarks on the importance of the commercial activities of Silicon Valley in the 1990s based merely on “electronics and biomedical technologies” seems almost quaint when we consider the global influence of firms like Google, Apple and Facebook (combined, of course, with that of the “traditional” hardware and biosciences sectors) today.
The most influential account of Silicon Valley is, in many respects, Anna-Lee Saxenian’s Regional Advantage – a work which pre-dates even the major expansion (and subsequent contraction) of the area’s economy during the “dot com bubble” in the late 1990s. Saxenian’s account of a political economy of entrepreneurial development characterized by the emergence of “a more flexible industrial system, one organized around the region and its professional and technical networks rather than around the individual firm” (1996: 30) remains perhaps the most complete account of Silicon Valley as a economic and cultural system. She emphasizes the ideological primacy of technical, rather than financial motivations in this setting, suggesting that “Silicon Valley's engineers developed stronger commitments to one another and to the cause of advancing technology than to individual companies or industries” (1996: 36). While this is a characterization which has been challenged, in recent years, by the emergence both of extremely large, dominant firms which tend to demand, by more or less coercive means, extreme loyalty and secrecy (as in the case of Apple and Google) and, in another sense, by the establishment of high expectations for financial rewards on the part of privileged workers in a highly competitive labor market, this vsense of an orientation towards both the future and material technological development remains, arguably, a definitive characteristic of Silicon Valley business culture today.
English-Lueck’s Cultures@Silicon Valley (2002) is perhaps the most extensive ethnographic account of the region as a hub of entrepreneurial activity, and was produced as part of an ongoing project on Silicon Valley based at San Jose State University (which lies slightly to the south of the region’s major technology employers). This work’s focus remains, however, on the broad sociological features of life in the area, such as “technological saturation,” and discusses neither the specificities of extremely specialized technical labor nor the strategic activities of entrepreneurs and investors in any great detail. Despite presenting a substantial amount of observational detail, and arguing strongly for the uniqueness of Silicon Valley in social terms, she does not articulate these distinctions in terms which make clear the singular nature of this region in broader economic (or, for that matter, anthropological) terms. Similarly, and while unique in its focus on the material culture of the region, Christine Finn’s account of “an archeologist’s year in Silicon Valley” essentially presents a highly impressionistic series of vignettes which, despite their conversational mode and the largely narrative rather than critical or theoretical content of her text, nonetheless offer a descriptively rich (if theoretically thin) picture of the quality of lived experience in this setting. As an ethnography structured around the material practices of workers in the technology industry, Finn’s text combines evocative descriptions of the everyday life of Silicon Valley with provocative, sometimes simplistic assertions such as her claim that “a better climate, a more outdoors life, and more opportunities for social interaction” led to the region’s dominance over East Coast centers of high-technology manufacturing (2001: 18). It should be noted, in passing, that neither of these works addresses the recent expansion of the technology industry into the city of San Francisco, and the significant changes in the social and cultural life of many technology workers which this has brought about.
While Finn’s archeological roots are clear, Biradavolu’s ethnography of Indian entrepreneurs in Silicon Valley, which describes “The making of a transnational techno-capitalist class,” combines an anthropological perspective on the relationship between science and technology in India and the emergence of a highly skilled, mobile labor force with analytics which appear to be more closely derived from the fields of organizational studies and economics. Biradavolu’s discussion of the culture of immigrant entrepreneurship in the US – according to which, conventionally, “immigrants fill secondary sector positions, including entrepreneurial ventures, in niches rejected by natives” (2008: 28) – contrasts the experience of unskilled immigrants at the margins of the economy with that of highly qualified Indian immigrants in the more egalitarian and (she implies) meritocratic Silicon Valley, while stressing the role that support networks organized around ethnic lines are critical to the ability of the entrepreneurs she studied to launch their ventures.
Biradavolu seems largely to take her informants’ self-construction as economically rational (neo)liberal subjects essentially at face value, and reports that they founded ventures because this activity is not significantly riskier, in economic terms, than an employee position – an unusual take on the Knightian conception of entrepreneurial risk acceptance. In contrast, we find a more uneasy assumption of risk among the New York startup workers studied by Gina Neff, who find a place here thanks to the obvious similarities between firms in “Silicon Alley” and those in California, and the fact that “people in New York commonly made comparisons to what was happening in California and deliberately modeled behavior on what they perceived was the case” (2012: 118). Central to Neff’s argument and reading of her ethnographic material is the proposition that “the dot-com boom occurred at a moment of transition in U.S. economic history toward riskier work, and the entrepreneurial spirit that people enacted during the boom was a response to this economic transition” (6). For her, in contrast to Saxenian’s vision of an increasingly open and collaborative business environment giving rise to the “networked organization” and a solidarity between workers which transcends contractual ties to an individual firm, the emergence of “startup culture” in New York (and other areas which have sought to explicitly emulate the Silicon Valley model) is determined by a structural recomposition of the relation between high technology venture capital and employees who are, she proposes, increasingly willing to take on entrepreneurial risks because of the erosion of employment security in the economy as a whole.
Neff introduces the concept of “venture labor,” “a play on venture capital” (17) to account for this cultural shift in the relationship between worker and firm:
Venture labor is the investment of time, energy, human capital, and other personal resources that ordinary employees make in the companies where they work. Venture labor is the explicit expression of entrepreneurial values by nonentrepreneurs…When people think of their jobs as an investment or as having a future payoff other than regular wages, they embody venture labor. (16)
Thus the development of startup culture – at least, Neff argues, in New York – is dependent on the construction of a cultural frame in which the ontological category of risk, as developed in the technical discourse of financial capitalism, is in a sense popularized and valorized, while the neoliberal restructuring of the relation between investment capital, entrepreneurs and employees shifts this risk from the firm to the individual at a structural level. Neff does not, however, develop a critique of the dissemination of this entrepreneurial (in a more strictly Knightian sense) orientation to employment in relation to the theories of entrepreneurship which have been reviewed here, leaving the category of “entrepreneurial values” somewhat under-defined.
Finally, perhaps the most influential critical account of Silicon Valley, at least from a Marxist perspective, remains Richard Barbrook and Andy Hamilton’s Californian Ideology, which first appeared in . They identify this “ideology” as the fusion of neoliberalism with the counterculture (and, significantly, the radical Left) of the 1960s:
In this version of the Californian Ideology, each member of the virtual class is promised the opportunity to become a successful hi-tech entrepreneur. Information technologies, so the argument goes, empower the individual, enhance personal freedom, and radically reduce the power of the nation-state. Existing social, political and legal power structures will wither away to be replaced by unfettered interactions between autonomous individuals and their software. (2015: 17)
In a tradition which the authors trace to Saint-Simon, the entrepreneurs of Silicon Valley, Barbrook and Hamilton propose, inherit the rhetoric of Stalinism insofar as they insist that “the enlightened minority is leading the ignorant masses towards a utopian civilisation. Any suffering caused by the introduction of information technologies is justified by the promise of future liberation” (34). Of particular interest to Barbrook and Hamilton is the impact of “the Net” on relations of (commodity) production: indeed, as Barbrook acknowledges in the introduction to a recent reissue of this text, the then-new world of “digital peer production” described here looks quaint compared to the radical reconfigurations of labor relations associated with the “app economy” today. In many respects, though, this work retains an uncomfortable relevance to the discourse of Silicon Valley today, where, if anything, the increasing power of digital systems to move beyond the free sharing of information to produce previously unimaginable gains in material productivity is accompanied by a growing attention to political questions on the broadest scale, giving rise to a range of positions from “neo-feudalism” to visions of a world in which manual (and much cognitive) labor is replaced by machines, and a “post-work” society emerges. Barbrook, furthermore, identified this tendency for Silicon Valley’s brand of capitalism to “produce communism” as early as 1999, in an essay recently republished along with The Californian Ideology: just as Schumpeter himself anticipated the supersession of capitalism, today’s entrepreneurs and even investors, as Sam Altman and other venture capitalists’ noted interest in “left” agendas like universal basic income suggests, appear more than aware of the tensions which inevitably emerge between the capitalist status quo and their envisioned, technologically evolved futures.