To the uninitiated, Silicon Valley’s products keep coming and improving. It’s as if the congregation of tech brainpower is incapable of making a mistake. Everything they make turns to gold it seems.
Actually, that’s an illusion. Entrepreneurs pitch an endless stream of Ideas. Everyone argues over which can work. A few attract funding. Most fail.
“That’s the nature of Valley success, however,” writes Antonio García-Martinez, in his fascinating new book Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley. You try ten things, based mostly on random hunches, a few key product insights, and whatever internal mythologies your culture reveres.”
Martinez goes on to explain that seven of the ideas fail miserably, a couple do okay, “but they don’t blow the doors off your success metric. And one, for reasons you discover only after the fact, becomes a huge, transformational success.”
Such is the nature of spontaneous order. Entrepreneurship is trial and error. Unlike government, errors are punished while a tiny few successes transform, first of all, the lives of customers, and then the wealth and lifestyle of the creators.
“No politician, no bureaucrat, no central planner, no academic sat behind a desk before that happened, before Silicon Valley emerged and planned it,” FEE President Lawrence Reed has written. “It happened because of private entrepreneurs responding to market opportunities. And one of the great virtues of that is if they don’t get it right, they lose their shirts. The market sends a signal to do something else. When politicians get it wrong, you and I pay the price.”

Less Control, More Wonderfulness

Murray Rothbard explained that spontaneous order was first worked out by the great Taoist Chuang-Tzu, who pushed Lao-tzu’s “laissez-faire ideas to their logical conclusion: individualist anarchism.” Proudhon furthered the idea in the 19th century, and the idea that, “Good order results spontaneously when things are let alone,” was most recently illuminated by F.A. Hayek.
In techland, Chaos Monkey is software developed by Netflix engineers to test the resiliency and recoverability of their Amazon Web Services. García-Martinez uses the term as metaphor for disruptors that drive Silicon Valley.
After studying for a Ph.D. in physics at Berkeley, the author joined Goldman Sachs to model prices for credit derivatives. Silicon Valley beckoned, demanding the same skillset to value the attention of internet users. So the author put on a hoodie and jeans and went to work, and along the way tangled with lawyers, angel investors, and venture firms.
García-Martinez’s cynicism reeks throughout as he negotiates his career: first abandoning a company with two other key employees, then starting a new company with them, then selling that company and negotiating pay packages and stock options as he drops his partners at Twitter while he moves on to Facebook.
Chaos Monkeys sprints along at a furious pace and for readers interested in deal making and especially the arcania of social media monetization via advertising, the book doesn’t disappoint. There’s a reason it topped the New York Times bestseller list.

So Why Does this Guy Hate Capitalism?

But don’t think García-Martinez is writing a love letter to capitalism. “What’s my big beef with capitalism?” He writes. “That it desacralizes everything, robs the world of wonder, and leaves it as nothing more than a vulgar market.”  Anything with a price tag is cheapened, he whines.
The day Facebook went public at $38 per share, all the employees cheered, but not the author. “Now we’re driven to ecstasies of delirium because we have a price tag, and our life’s labors are validated by the fact it does.”
“Clap at the clever people getting rich, and hope you’re among them,” he seethes, and then goes on to explain that people attend Burning Man, not to do drugs and cavort with naked people, but because of “the utter bankruptcy of meaning in their corporatized culture.”
Poor guy. Seventy-five thousand shares of Facebook stock vesting over four years and $175,000 in salary. The math worked out to nearly a million dollars a year, but between the IRS, paying two kids worth of child support, and the cost of living in the Bay area, the author slept on his boat and bicycled into work.
However, he couldn’t stick it out. Office politics are a way of life and Facebook is now big and mature enough to have plenty. “Facebook was an empire Napoleonic in both tenor and flavor,” he writes, “and like any hive of palace politics, one’s proximity to the emperor around which the pageant swirled was a direct function of his or her institutional stature.”
When he isn’t describing Facebook as Napoleonic, García-Martinez uses religious metaphors or worse. Discussing Sheryl Sandberg, he writes, “she was the vicar of the social media Christ, the viceroy of the Zuckian throne.” More than once he compares the company to his native Cuba and writes, “Brownshirts became Blueshirts, and we were all part of the new social media Sturmabteilung.” He frequently mentions the walls at Facebook being adorned with company mantras such as, DONE IS BETTER THAN PERFECT and PERFECT IS THE ENEMY OF THE GOOD.

Never Good Enough

In the end, the author sails off into the sunset. But what of Facebook? Zuck’s growing bureaucracy isn’t standing still. It moves forward, defying every prediction of failure.
Meanwhile, García-Martinez guesses that someday eventually everyone will wonder “how such a confirmed genius could have possibly failed, and [will ruminate] on the transience of talent.”
Maybe, maybe not. The reason we have a market is precisely to find out.
The market is never constant. The Invisible Hand can be cruel to both the incredulous and the overconfident. It can also be surprisingly benevolent to those with the chutzpah to try something new.
This piece by Douglas French was originally published at the Foundation for Economic Education.