A Response To ‘Being The United States of Idiocracy’

I recently wrote an article titled Did We Just Become The United States of Idiocracy?, which was published both on this site as well as Business Insider.  It is a poignant piece, treading lightly but on a topic that should be worrisome to Americans- the private investment sector giving more attention and money to trivial products and companies while education and healthcare continue to wither on the vine.  Here is thought provoking comment from a Business Insider reader I felt would be great to share.

Interesting article. I also have marveled at the amount of talent and energy being thrown at really trivial things involving the Internet or mobile phones or other toys. I attribute this to the precarious imbalance between investors and producers. The investors have never held so much power and been so dominant in determining the economy. Yet, that is an unstable position, since it is producers that are the real source of power and activity. For example, young working people are producers – they don’t have money to invest. People on pensions are investors; they don’t produce anything but live off of the production of others. The people in the streets in the Arab countries and Greece are the producers of those countries, and the power they are fighting is the investors.

Investors add value to a capitalist economy by directing productive activity in an efficient manner. The current world imbalance consists of a very large amount of investment capital, which is remarkable already, but even more remarkable for the stupidity of that capital. Capital is managed for the good of society not by a dictator but by the risks of investment. But our Fed in its infinite corruption has decided on a new mandate that no investor should ever lose money, no matter how stupid or inappropriate their investment.

Thus the fools who lent Greece money, which is a purely absurd loan that deserves to lead to poverty for whoever approved that loan, these fools will be bailed out. This makes today’s investor class the stupidest of such that have existed in recent history. There is no possible penalty to risk; the Fed has stated a world-wide policy of Too Big To Fail which seems to include all investors and all investments in its complicated web. Thus the traditional positive contribution of the investor class has flown out the window. Rather than rational distribution of production, they now produce irrational and foolish distribution of production. There is no down-side to risk, all risk is good risk, all investors big enough always win as the Fed bails out the stock market, the sovereign debt, the big corporations that have failed such as GM.

Net result is an entire generation creates silly toys for mobile phones or new Facebook games rather than productive work that could be of benefit to the general public or mankind. The interesting byplay is that the producers of the world are going to war with the bloated investment system, and that is World War III. It is not between countries, but between the controllers and the controlled.

The world of VC and startup is sort of a place where producers are lulled into collaborating with the world’s enemy, or at least their own natural enemy. VC is evil. It isn’t shades of gray. There isn’t a compromise. There isn’t a way you can enjoy being productive and the fruits of your labor and still get along with an investment system gone pyscho. That’s what this generation will need to work out. There is no compromise with evil, one must oppose it.

Did We Just Become The United States of Idiocracy?

This post was originally published on BusinessInsider.com

Recently quitting my job and diving full time into entrepreneurship has allowed me time to step back and think about what is actually going on in the current tech space. It’s interesting times to say the least, but what I am about to say may not be what you expected.

A concerning trend is starting to bubble from within and I feel it is necessary to bring it to light. Reviewing the web’s latest news we see more companies going public, constant talk of Groupon’s massive growth and community destruction, Facebook tempting us (and current employees) with an inevitable IPO, Twitter’s ubiquity becoming every politicians nightmare and Google’s latest and always awkward attempt at the social web.  Seems like just another month in the frothy web market.

But take a close look at this infographic detailing Q1 investment dollars broken down into categories.  It is from an article a few weeks ago on GigaOm.  Click for a larger view.

So let me get this straight: If this information is correct, most of our capital resources and engineering talent are hard at work figuring out how to help people buy massages for 50% off?

Disclosure: my startup – Loyaltize Inc.- was initially focused on local commerce with our first version and it remains to be seen what we build out next but my mind is buzzing with new perspectives as of late. So I am also talking to myself here.

While trying to figure out what this infographic actually means let me just state the obvious – taken on the surface it tells a lot about what we value as a society.  Or what we don’t value.  Namely Health Care, Education, Security, and “all the others.”  This has massive future implications and should be a cause for worry – that is if you are American.

Social Commerce attracted 22% of all investment dollars so far in 2011. Advertising, sales and marketing took home another 14%. and social apps saw 7% of VC money. That is almost 1/2 of startup investment dollars focused on improving how we socialize and spend money! (note: take away the amount invested in the Groupon bubble and the picture changes a bit, but hyperbole is needed here to provoke some deeper thought.)  The amount of money invested in “all other areas” of technology equaled the amount invested in Groupon and the like-clones.  You have got to be kidding me.

No wonder the United States of Idiocracy America is at record levels of consumer and national debt. An old maxim comes to mind: show me where your money goes and I’ll show you what you value. I will also offer another maxim:  Show me today what you are investing in and your future I will show you.

The sad truth is we value selling products over our children’s future well being and education. We value buying stuff right now over investing in a better future. We value gluttony over governance. With this current trend in investments, these “American” values won’t be changing anytime soon. There is no fighting or arguing this statement. It’s all right there.

This whole Groupon thing has gotten out of control. We are falling farther behind the world in education, yet we seem to excel in creating new ways to spend money quicker and eat cupcakes faster. The biggest and most anticipated IPO this year is going to be a site where mass consumers can purchase things at mass discounts? Sometimes I think I am hallucinating that Groupon is the major story of innovation on the web in 2011.

Is this the best we can do Silicon Valley? Chicago? New York or Seattle? Or is this just what investors think will make them the fastest dollar? That is one part ridiculous and another part sad.

This baffles me: Why are the largest issues of the past 4 years and the focus of the current political landscape – things that are paramount to the future of our country – receiving almost no private investment attention?

What about using some brain power and engineering talent to rework the healthcare system, a system which is in more dire straights than our shopping experiences? How about transforming education so children understand the world is full of information and it’s all right at their finger tips? They just need the access, be taught how to use and deploy it to their advantage all the while learning how to critically think. And if I was sitting across from the table from you and asked what is more important: 1) buying something from your mobile phone or 2) your personal security, I think most of you would admittedly choose the latter.

Hundreds, maybe thousands of companies have determined the best use of their time and intelligence is to copy Groupon and put out another daily deals site. Numerous talented engineers are inventing new ways for us to share pictures from our iPhone and scores of startups have been working on new methods of messaging groups of people.

Although all those ideas are interesting in their own way, it is the equivalent of Barry Bonds stepping up to the plate and bunting. Wha? Yeah, I ask myself the same question every day as I read another $5 million was just invested in a Series A round for another picture sharing/messaging iPhone application.

You guys are the best of the best… remember?

The reason I wrote in-depth about technology cycles was because it became clear to me the web will very quickly infiltrate every part of our life.  I cannot wait till the internet of things starts to power everything we use, from our toothbrushes (transmit data to help us maintain our oral health) to our shoes (real time data about how many steps we have taken, informing us when we need new shoes or the current state of our metabolic systems, etc) to the lamp I am using right now (instantly search and learn the history of this exact product to know if it was created Carbon neutral).  I can’t wait for stuff like that.

I am not here to rant, I am here to inspire better.

Founders: odds are you went to Stanford, have an MBA, or you came from a benefited family – and your company slings mass discount group coupons online? Why are you wasting your talent and intelligence?  I believe you are better than this.

And VC’s: that $5 million could have helped an entrepreneur who has a vision to transform your children’s’ future education?  Or maybe help lower your monthly health care costs?  Doesn’t that sound like a better future?

I honestly think these are valid questions to ask in today’s investment and entrepreneurial communities.

I am not saying I disagree with venture capital and the inherent goal of “invest X and receive a 10X return“, I understand the system has to return something and feed itself. I just hope we don’t grind ourselves into the dumbest, fattest, most uneducated, quickest to buy a 50% off dinner using our mobile device from our couch society. Because the path we are currently heading down is indeed pointing us in that direction. I hope we (investors, entrepreneurs, consumers) can see there are a hell of a lot more important areas of our society that need fixing.

I believe true entrepreneurship is about changing the world, not taking advantage of the world.  We need more entrepreneurs like Dr. Samir Qamar.  Please someone… anyone… answer my call and help turn things around. You will be forever referred to as a hero by me down the road.

Image courtesy of Flickr user Roger Smith.