Power shift in America as Wall Street bows to Silicon Valley Will Hutton Will Hutton

[malaise]

http://www.theguardian.com/commentisfree/2015/apr/19/wall-street-courting-silicon-valley-new-shift-in-power
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American capitalism is in the midst of a remarkable transformation. For decades, Wall Street has been the beating heart of the American system. Its great investment banks have driven the financialisation of the globe. It has become a byword for extravagant salaries, amoral deal-making and, infamously, nearly precipitating its own collapse.

The financial “masters of the universe” have made money from money on a scale never before witnessed, their values and priorities cascading over the US and the west. The ambitious graduates from the great American law and business schools have unquestioningly put a Wall Street career as their number one objective. US finance rules, or ruled, supreme. But the rise and rise of Silicon Valley and the second industrial revolution it represents has launched a challenge to the old order. It is becoming ever more obvious that digitisation, the internet and the supercomputer are reinventing the entire industrial, financial and business landscape in a process that is only just beginning.

Fortunes can be made not only from the fees and charges of buying and selling financial assets. They can also be made from building companies that, by deploying these new technologies, turn the world on its head – often for the better – and do some real good. Better Facebook, Apple and Microsoft than Goldman Sachs.

Silicon Valley entrepreneurs have never trusted or liked Wall Street and its values very much. They always knew they needed its money. But from the beginning they have been anxious not to cede control of their precious startups too soon – if ever. They don’t want to become pawns in Wall Street deals, enriching east coast bankers and relegating their passion for innovation to the priority to hit absurdly demanding short-term financial targets. Almost all the great west coast hi-tech giants – from Google to Linked In – have ensured that, while Wall Street can buy their shares, it can’t buy the accompanying controlling votes. Control stays with the founders, whose privileged shares often have 10 times the voting rights of the ordinary shares offered to Wall Street.