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We forget that for most of human history, innovation didn’t come from free markets, but from whatever was the closest largesse, whether it was for the glory of the Crown or Church, or sponsored by a local warlord or rich patron. The notion that there is some unannounced prize sitting on the marketplace that will magically draw, like an invisible hand, the great ideas from aspiring entrepreneurs, is a relatively new concept and should be treated as such.
Even looking at recent human history, we find shifting centers of gravity for innovation. The 1990s, for example, was the first era of big tech I.P.O.s. For instance, Netscape went public in 1995 and became worth three billion dollars at the end of its first day of trading. By the end of that year, it was worth nine billion. “Build a company and go public” quickly became the mantra for aspiring tech entrepreneurs like myself.
After the dot-com crash of 2001, the dream shifted to selling something to a big tech company. For example, in 2003, Jawed Karim offered me a choice between finishing college or taking a job as YouTube’s first employee. I stayed in school, but three years later, Google bought YouTube for $1.65 billion. Another Stanford colleague co-founded Siri, which Apple acquired for more than $200 million. And another friend worked with Kevin Systrom, who later founded…