I agree with Stanford professor Steve Blank about the Facebook IPO (boldface mine):
THOMPSON: But you think Silicon Valley is screwed, whether Facebook lives up to that valuation or not. Why?
BLANK: I teach science and engineering. I see my students trying to commercialize really hard stuff. But the VCs are only going to be interested in chasing the billions on their smart phones. Thank God we have small business research grants from the federal government, otherwise the Chinese would just grab them.
THOMPSON: But there are some people doing interesting, daring things, like Vinod Khosla.
BLANK: He is. But think about this. The four most interesting projects in the last five years are Tesla, SpaceX, Google Driving, and Google Goggles. That is one individual, Elon Musk, and one company, Google, doing all four things that are truly Silicon Valley-class disruptive.
THOMPSON: Does this represent a large-scale failure among venture capitalists in the Valley?
BLANK: It’s not like anybody is doing evil or bad. It’s like what Willie Sutton said: Social media is just “where the money is.”
THOMPSON: What’s the fix?
BLANK: I don’t know what the fix is. Thank God for federal government grants, and the NIH, and Musk, and Google.
It’s often said that ‘government can’t pick winners.’ Well, who else is going to support innovation in areas other social media? Google and Elon Musk can’t bankroll everything.
Another 21st market failure.