[...] the last thing that mattered in Silicon Valley was technological innovation. Marketing came first and foremost. The actual products of the tech industry—computers and software—were less important than the techniques used to sell those products, and to sell shares in the companies that made them. The portfolios of venture capital firms were composed largely of go-nowhere companies built on bluster. There was a paucity of genuine innovation Ghazi shook his head. Neither was having revenue, or customers. In fact, the last thing that mattered in Silicon Valley was technological innovation. Marketing came first and foremost. The actual products of the tech industry—computers and software—were less important than the techniques used to sell those products, and to sell shares in the companies that made them. The portfolios of venture capital firms were composed largely of go-nowhere companies built on bluster. There was a paucity of genuine innovation among these companies, because incremental advances in technology were less reliable generators of profit than, say, finding clever ways to rip people off, or exploiting regulatory loopholes. The overwhelming majority of VC-backed startups were destined to flame out quickly—or, at best, to sputter along for a few years producing modest annual returns of, say, 1 percent. This was not necessarily a problem, at least from the investors’ point of view. Ghazi explained that 60 percent of a venture fund’s earnings typically come from 10 percent of its investments, and “everything else is crap.” Thus financiers were almost guaranteed to profit, eventually. The odds were much worse for entrepreneurs, who were almost certainly doomed even if they secured VC funding. A 2012 Harvard Business School study of two thousand venture-backed companies found that more than 95 percent failed. “You don’t hear a lot about the failures,” Ghazi said.

He was right. Techies only talked about their past failures as a necessary prelude to their present success. But most failures were permanent, and founders didn’t easily bounce back. I contemplated those numbers from the Harvard study. If 95 percent of startups failed, that meant 5 percent of startups received most of the attention from inside and outside the industry. Which meant that the mediated image of Silicon Valley bore little resemblance to the reality. I was living the reality. The reality was that almost everyone was a loser like me, trying to break through.

We were chum. Fodder. Marks. Ghazi shared with me his pity for “fresh-off-the-boat” entrepreneurs who lacked elite connections and still believed the hype about meritocracy, opportunity, collaboration, and geek camaraderie. As Ghazi saw it, one single factor determined who even got the chance to join the 5 percent of winners: “It’s about who you know,” he said. “Go to Stanford, and if you have a bad idea, it will get funded.”