In Ghazi’s telling, each tech boom began with a constant and a variable. The constant was easy financing, whether from government-subsidized borrowing or unsophisticated investors. The variable was whatever Silicon Valley was trying to sell at the time. In the early nineties, the boom was about hardware. IBM and Apple had found a way to commercialize military-funded computer research by churning out personal desktop computers and accessories. “Back then, Silicon Valley was small,” Ghazi said. “It was focused almost exclusively on the technology with very little thought on how to market it.” Then, in the late nineties, came another commercial boom, also underwritten by government research: the internet. This time, something changed. Wall Street got involved.

“All of a sudden, Silicon Valley got the first taste of the big money,” Ghazi said. Certain venture capital funds, such as Kleiner Perkins and Sequoia, grew large and powerful—even more so after the bubble popped in 2000. The big crash cleared out the competition. While industry down cycles drove lots of people out of business, the surviving players claimed even more ground. This pattern went back a long way. In fact, as my subsequent research revealed, it went back to the beginning.

The privatization led by Clinton and Gore enabled the dot-com boom of the 1990s as well as the bust that followed. Once more, the best-connected insiders emerged from the chaos in an even stronger position. Ghazi was working as an investment analyst during the boom, but his former company promoted him to VC only after the bubble popped. This meant he missed his first chance at easy money. In 2005, there was another great inflation, this one fueled by social media companies like Facebook. The dot-com boom had lasted only five years. The social media boom—which was called, for a while, Web 2.0, and closely followed Google’s massive 2004 initial public stock offering—was going strong for more than a decade by the time I met Ghazi. Some things hadn’t changed since he first arrived in the Valley. It ran on the same old mix of government-subsidized research, cheap labor, and a regulatory outlook inherited from the Ronald Reagan era that permitted corporations to unload the costs of doing business on customers, employees, taxpayers, and the ecosystem.

[...] 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.”

One company, which the Wall Street Journal called “The Epitome of a Stanford-Fueled Startup,” encapsulated in every respect the sham of the Silicon Valley meritocracy, from its charmed beginnings to its ignominious downfall. This company, called Clinkle, secured investors before settling on a product. Clinkle was, in the words of its founder, Lucas Duplan, “a movement to push the human race forward,” but beyond that no one seemed quite sure what the company was all about. Duplan was a nineteen-year-old Stanford computer science major and an insufferable showboat. No need to dwell on Duplan’s shortcomings, however—the important thing is that his academic adviser was Stanford president and Google board member John Hennessy. Along with Hennessy, several professors backed Duplan’s charge into the private sector, endorsing what the Wall Street Journal called “one of the largest exoduses” in departmental history. More than a dozen students abandoned their studies to work for Duplan, who rented a house to serve as Clinkle’s headquarters-cum-dormitory with money invested by his parents and a VC firm, Highland Capital. One company, which the Wall Street Journal called “The Epitome of a Stanford-Fueled Startup,” encapsulated in every respect the sham of the Silicon Valley meritocracy, from its charmed beginnings to its ignominious downfall. This company, called Clinkle, secured investors before settling on a product. Clinkle was, in the words of its founder, Lucas Duplan, “a movement to push the human race forward,” but beyond that no one seemed quite sure what the company was all about. Duplan was a nineteen-year-old Stanford computer science major and an insufferable showboat. No need to dwell on Duplan’s shortcomings, however—the important thing is that his academic adviser was Stanford president and Google board member John Hennessy. Along with Hennessy, several professors backed Duplan’s charge into the private sector, endorsing what the Wall Street Journal called “one of the largest exoduses” in departmental history. More than a dozen students abandoned their studies to work for Duplan, who rented a house to serve as Clinkle’s headquarters-cum-dormitory with money invested by his parents and a VC firm, Highland Capital.

With the prestige and power of Stanford’s leadership behind it, and still without a solid business plan, Clinkle raised $25 million in seed money to develop some sort of app that would exist somewhere in the “mobile-payments space.” The predictable squandering of that impressive sum was chronicled with due skepticism and schadenfreude on Gawker’s Valleywag blog and elsewhere, though many a suck-up rose to Clinkle’s defense. Employees were resigning in frustration even before pictures emerged of Duplan posing like P. Diddy with handfuls of cash. Layoffs followed. Panicked investors called in a series of experienced managers as “adult supervision,” one of whom quit within twenty-four hours. Long overdue and well over budget, Clinkle eventually launched a digital payments service, and later pivoted to a digital twist on an old-fashioned lottery. Clinkle became a punch line and Duplan a pariah. But the real blame belonged to some members of the Stanford administration and the sheeplike VCs of the Valley. It seemed to me that they were the ones who were seeking to exploit the bountiful energy of relatively naïve tuition-paying kids to make a fast buck on pointless, unworkable, and otherwise dubious investment schemes. The dropout entrepreneurs were just eager saps who, when handed shovels, dug holes for themselves.