Hi! I’m Glenn. I’m an unabashed nerd. I love all things science and technology. You know the guy that bores everyone by excitedly talking about the last book he read? Yeah…that’s me. To fund my reading habit, I’ve spent my career building technology companies.
Glenn Clayton
Karma: −3
Changed the title to reflect my lack of originality. :)
Thanks for the heads up.
Thanks for the feedback! I haven’t read Marooned in Real Time yet, but I’m looking forward to checking it out.
As for the critique, I’ve certainly heard that argument a lot. It tends to imply something along the lines of: “If there were more advanced civilizations, then they would want to maximize resource/energy exploitation...and we would see the signs of that exploitation” or something of that nature. Therefore we assume that the apparent lack of Dyson Spheres or comparable artifacts proves that other civilizations don’t exist.
However, I tried to present multiple reasons why I don’t believe we can extrapolate our current assumptions about the “signs of civilization” and apply them to a significantly more advanced civilization. That was really the main point of the article. I also tend to think if even contemporary humans can come up with rational arguments for conservationism ideals, then more advanced civilizations probably can too.
As Segan says, “the absence of evidence is not the evidence of absence.”
Quick Updates:
This article talks about the ramping up of the “startup extinction event”. https://www.businessinsider.com/late-stage-startups-vc-lack-funding-forced-shut-down-2023-10
Unemployment rate has increased from 3.5% in July to 3.9% in October.
Conversations with about a dozen VCs agree that most of the pain is still to come.
In short, I think we’re starting to see the beginning of what I predicted as a potential outcome in this article. We’ll see how things unfold over the next two to three quarters, but I am still of the opinion we’ll continue to see the unemployment rate increase at a rapid pace and tech will be a significant contributing factor.
I see. Yeah, I don’t disagree that inflation is better, but it is certainly not a non-issue. Imagine what happens if the Fed dropped interest rates (rather than simply pausing them at the current rate). The point I was making relative to inflation is that the traditional playbook for responding to a contraction is difficult to picture given the macro environment. My guess is that even Kevin Erdmann would agree with that.
I’d love to hear what specifically you disagree with. I don’t know of anyone who believes that inflation is back to normal. Can you cite anything to back that up? Also, I’d love to see any data supporting your contention that there is a wide spread labor shortage among the subset of the labor market I’m addressing. As an active VC, I haven’t seen evidence of that at all.
I attempted to address this in the article. As I mentioned: “The average startup employee earns around $95,000 a year, roughly 70% higher than the median wage in the US.”
So yes, a key part of my argument is that because of this higher average wage within this sub-section of the labor market, there are more significant “knock-on effects” if this portion of the labor market sees a sudden spike in unemployment. Those effects would likely impact:
consumer spending (higher disposable income)
consumer debt (I point out that they would be more likely to hold more consumer debt than the average due to higher discretionary income)
housing (being high-income earners but not wealthy, they are more likely to own a home and are likely to have a mortgage that is reliant on current income)
Also, projected VC funding in 2023 is less than $140B (over $200B less than 2021) and less than the total funding in 2020. VC funds themselves are also finding it MUCH more difficult to raise new capital and I believe that is going to continue to be the case for several years (that could be an entire other post as well).
This is certainly a possibility. I hope you’re right. Perhaps the impact of all those startups that raised capital in the bubble and won’t be able to raise again will not be as significant as I predict. However, my (admittedly simplistic) correlation analysis between historical funding and employment levels, and the extrapolation of that to today’s likely employment levels, would suggest a few million high-paying jobs are potentially at risk of being lost over the next 12-18 months. My argument is essentially: 1) that there is an underappreciated RISK (not a certainty) that those millions of additional jobs that were enabled through VC funding during its peak bubble could be lost as that runway runs out, and 2) that those workers might have a harder time than in the past finding a new job. If that does occur, then it would have a dramatic impact on the economy.
I try to explain the logic of this in the chart I shared comparing funding and employment levels. IF you accept the following logic, then the prospect of millions of job being at risk is pretty straightforward:
There is a direct correlation between the amount of annual VC investments in startups and the total employment of individuals by those startups.
VC funding more than doubled in 2021 compared to 2020.
Therefore, employment by those companies likely doubled.
VC funding for 2023 is projected to be less than 2020
Therefore employment by those companies is likely to drop and revert back to something closer to 2020 levels.
Fair point. Perhaps I should write a post just on the potential inability of the US government to effectively respond to any economic downturn (regardless of its causes).
Thanks for the comments! Really appreciate the feedback.
Yeah, I agree. It does seem like the economy is basically fine. But my argument is that the impact of the VC funding bubble has not actually manifested itself yet.
Consider this logic sequence:
The years leading up to 2022 saw interest rates near zero. This drove a massive increase in capital allocations to Private Equities (Specifically VC but all alternative asset classes benefited from it).
This increase in funding led VCs to make lots of bad investments. This is due to the way fund economics incentivize fund managers to deploy capital so as to realize management fees on them. That could be a post in itself, but suffice it to say the fee structure of VC incentivizes them to deploy capital quickly (this is supported by the data as well which shows fund allocation timelines contracted during the bubble).
These VCs, with much larger funds, made bad investment decisions in the years leading up to 2022 and culminating with a massive amount of capital outlay in 2021.
A lot of the startups that raised capital in 2021 should not, under normal economic conditions, have been able to raise the money they did. Many had unsustainable unit economics, etc. But the previously mentioned incentive structure within VC firms led to that available capital being deployed into less credit-worthy businesses.
When a startup raises VC, they typically raise enough for 24-36 months of runway. Meaning that a “bad business” that was able to raise capital in 2021 would not be expected to fail until 2023 or 2024. This is beginning to manifest itself in the VC community as many startups are beginning to find that they are unable to raise capital at any price. We’re literally at the beginning of the runway cliff.
Good point. Perhaps a better way to say this would be: I’m sure that my thoughts could be better and that there are gaps in my proposed plan based on my lack of expertise in relevant areas such as geopolitics, etc.
I think we’d likely be a strong society if more people openly confessed their intellectual shortcomings and asked more experienced experts to improve on their ideas. ;)
Thanks for the feedback!
Regarding whether more advanced civilizations “don’t care to help”… I’m not sure if I would frame my argument that way. I would rather say that it seems plausible that much more advanced civilizations might have divergent goal structures or priorities. It’s also entirely possible that their temporal experience of reality is very different if they have gone digital. So it’s less about being selfish and more about a lack of practicality for making contact. I tried to cover this point to a detailed degree in the post.
It also seems plausible to me that significantly more advanced civilizations might rationally conclude there is very little upside for them to contact less sophisticated societies and at least some potential downside. Not really dark forest theory, but more like a good Bayesian approach to risk management.
I’d also point out that the hypotheses out there offered as solutions to the FP are not mutually exclusive. It could be that intelligent civilizations are fairly rare, that quite a few self-destruct, and that quite a few just evolve quickly through a detection window. Reality is often messier than our theories.