A short history of Silicon Valley’s changing illusions
Silicon Valley did not begin as a place of disruption.
In the early Cold War years, innovation moved at the speed of government planning cycles and defense contracts. Labs were quiet, well-funded, and insulated from markets. Engineers were not chasing exits. They were chasing reliability, scale, and national objectives.
Time horizons were long. Failure was tolerated if it produced learning. The Valley’s original culture was shaped less by rebellion than by bureaucratic endurance, with the state acting as both patron and audience.
That gravity loosened when hardware got cheaper, and computers slipped out of locked rooms and into garages.
The hacker libertarian phase replaced institutional certainty with curiosity and play. Capital was small and personal. Hobbyists, early venture firms, and idealists fueled progress. The internet felt open and malleable. Code became a form of expression, not just infrastructure.
This was followed by dot-com utopianism, when access to public markets turned ideas into lottery tickets. Capital rushed ahead of clarity. Digital businesses were valued for growth alone, and belief substituted for earnings. It was chaotic, speculative, and sincere in its conviction that the internet would flatten power rather than concentrate it.
The crash rewired that innocence. In its place emerged the founder-hero era, often mythologized through figures tied to PayPal and its descendants.
Capital became more disciplined but also more concentrated. Platforms replaced products. Network effects became destiny. Low interest rates rewarded scale over experimentation, and the Valley learned that winning mattered more than being right early.
The Web 2.0 period softened the edges again, with social optimism layered atop advertising economics and cheap cloud computing. Products promised connection and empowerment, while revenue quietly flowed through attention and data. It felt communal, but the incentives were already narrowing.
Crypto maximalism was a brief rebellion against that narrowing.
Extreme liquidity and regulatory gaps created a sandbox where finance itself could be reinvented, or at least rehearsed as reinvention. The rhetoric was radical, but the capital dynamics were familiar. Fast money, rapid iteration, and an appetite for leverage. It was less a new system than a stress test of how far speculation could run without institutional anchors.
When the liquidity receded, what remained was a clearer picture of which structures were durable and which were costumes.
Today’s AI accelerationism feels different, and not in the way its advocates suggest.
Capital is massive, coordinated, and closely aligned with state priorities. Scale is no longer optional. Oligopoly is assumed. Venture capital behaves less like risk capital and more like industrial financing. The Valley has circled back to its origins, though with sharper tools and shorter feedback loops. Innovation is again embedded in national strategy, only now it wears the language of inevitability rather than defense.
The throughline across these eras is not ideology or talent, but capital. Silicon Valley changes its story every decade, but the conditions of funding quietly decide which stories get to become real.