I thought I’d write a political post that’s not about Trump. You’re welcome.
I saw on the Interblogs this morning that Giphy raised another $72 million in funding at a valuation of $600 million. Yes, that’s right, another $72 million… for a search engine… of animated GIFs.
The article goes on about the business: blah blah monetization blah blah. But it makes no effort to address the point that investing in the company is obviously a short-term bet, motivated by some low but apparently nonzero probability that people of the future will communicate only through two-second reaction shots of television characters.
The message this investment sends is ethically questionable. I don’t have a problem with entrepreneurship. I’m a startup guy. My livelihood depends to some extent on venture capital and [hopefully] occasional success. But my litmus test for any business model is simple: does it strive to create value as well as wealth? It’s a test that Giphy fails miserably (to say nothing about many arms of the financial industry that supports it).
So what. But I couldn’t help thinking about the guy who writes the $72 million check and addresses it to a repository of GIFs. What does that feel like? I wonder if he or she has read President Eisenhower’s famous “Chance for Peace” speech. Eisenhower was talking about the perils of Cold War defense spending, but it’s not a completely silly parallel to venture capital in 2016. He wrote, in 1953:
Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.
The speech (which you should read in its entirety), famously goes on to list a number of incredible, world-changing things one could buy for the price of a new bomber, fighter jet, or destroyer: schools, power plants, hospitals, food, and homes.
How far we have come in 63 years. Eisenhower was furious about ratcheting up the machines of war just a few years after World War II scarred the world. Today our country has enjoyed the longest period of relative peace and prosperity in its history, and venture capital is pumping out billions of dollars. But rather than invest in our future as a society, they have decided to double down on GIFs.