Exploring the Rise of Startup Tech Mafias and the Potential for a Climate-tech Mafia

The Startup Mafia Playbook may extend to Climate-tech.

Frederick Terman, a Stanford Professor (touted as the father of Silicon Valley), suggested Hewlett and Packard start their electronics company near Stanford Campus. Soon after, more Stanford founders started up and created the Stanford Mafia.

Soon after, the Godfather of Tech Mafias, the PayPal Mafia, was formed. The network consisted of PayPal’s former employees who founded (and funded) more companies in Silicon Valley. Most of these founders attended the University of Illinois Urbana-Champaign or Stanford University.

Silicon Valley went on to produce more bigwigs because of the Y Combinator technology startup accelerator and venture capital firm (YC), which was established in 2005.

You’d see founders & investors of YouTube, Tesla, SpaceX, LinkedIn, Palantir Technologies, Affirm, Yammer, Slide, Kiva, Reddit, Meta, Twitch, Stripe, AWS, Dropbox, Coinbase, Sequoia Capital, Khosla Ventures, OpenAI, Heroku, Air BnB, Doordash, Crew etc. on the YC’sYC’s Hall of Fame interacting with each other with photos dated as early as 2005 and 2008.

Source: Fortune

Are there Women Startup Founders?

You’d find a woman entrepreneur here, and for 20 years since 2005, they di, YC has not had a founder. About 850 women founders have gone through the accelerator program, and YC is trying hard to diversify its founders and increase representation.

The 10-minute YC Process

But how did Silicon Valley become this supergroup of powerful tech and startup folks producing more unicorns than the rest?

YC Startup School decides whether you are in or out in 10 minutes. Are they overconfident and deciding in haste?

In an interview, Garry Tan, the CEO of YC, says that YC gets 4000 applications every year, and they pick about 250 people to give them half a million dollars. On demo days, year after year, 1000 investors return to YC because, he says, ‘You are never going to find a congregation of 100s of startups in which a dozen of them will probably go on to be worth a million dollars or more’.

There is a general perception that Silicon Valley is made up of elites. Many pieces on the internet discuss how the PayPal Mafia still controls Silicon Valley and has given rise to the Stripe Mafia, Instacart Mafia, and more.

The Rise of Cerebral Valley

While we obsess over Silicon Valley, a new place in San Francisco is seeing the rise of Cerebral Valley. It is ruled by tech oligarchs who are making giant strides in Artificial General Intelligence, Quantum Computing, Generative AI, Robotics, and more.

Here are a few examples:

The Google Mafia – Anthropic AI, Horizon Robotics, Nuro

The Apple Mafia – WhatsApp, LinkedIn, Salesforce

The Open AI Mafia – Anthropic, Perplexity AI

The eBay Mafia – YouTube, GrubMarket

The Microsoft Mafia – Airbnb, Glassdoor

The Amazon Mafia – InstaCart, Hulu, Flipkart

The Facebook Mafia – Open AI

Why are Startup Mafias Successful?

Back home, India is abuzz with mafias of InMobi, Zoho, Flipkart, Zomato, Paytm, Zynga IIT, IIM, Oyo, Ola, Udaan, Freshworks and more.

Startup mafias have historically been successful in producing so many good startups within shorter periods because the founders had extensive exposure to how businesses were run, could easily access insights from investors, and worked on their product-market fits, iterating their business models faster. Their contingency plans also depended on the hugeecosystem they had built themselves upon.

First, they have the ‘ex-employee of a famous startup’ name tag that brings credibility if they have to raise funds and secure trust with the investors. Next, they cross-invest or help each other out as vendors. Thirdly, the famous startup Mafias invests in their spawns. For instance, Flipkart and Zoho have invested in ex-employees who then went on to become successful startup founders. The entire Mafia network invests in itself to create a feedback loop to sustain the ecosystem.

If you put a group of highly motivated, enterprising, and intellectual folks in a concentrated, closed environment—basically a platform where they can collaborate and thrive—you will expect nothing short of magnificence.

Is that magnificence good or bad? Well, that is contextual and relative.

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Could a Climate-tech Mafia Rise?

Yes, I already see some patterns.

BlackRock Inc’s CEO Larry Fink claimed in 2021 that the world’s next 1000 unicorns will be involved in climate technology.

Climate-tech startups reach billion-dollar valuation status within just four years, compared to conventional ones, which take about seven years. The majority of these unicorns hail from the US and China.

Aiding them are accelerators and VCs, government policies like the Inflation Reduction Act and the European Green Deal, and market demands that consumers become more planet-conscious.

As of 2023, there were more than 83 unicorns, and the total enterprise value of climate-tech startups was about $2.5 trillion. About 45,000 early-stage climate-tech startups are rising globally.

I previously wrote about how the rise of AI will create an energy crisis and how tech giants are trying to combat that by heavily investing in nuclear and renewable energy technologies, which is causing geopolitical conflicts worldwide while mining for critical minerals and rare earth elements to power such alternative fuel sources.

On the nuclear energy front, Elon Musk is an investor in Open AI (founded by Sam Altman). Sam Altman’s Oklo Inc. has BlackRock as one of its investors (the world’s largest asset management firm). Helion Ic has Peter Theil as its investor (touted to be the Don of PayPal Mafia), and another investor is Capricorn Investment Group (owned by Jeffrey Skoll, who was the first president of Ebay).

Carbon Removal tech company Climeworks has Elon Musk and Bill Gates as investors, among others.

QuantumScape, which develops solid-state batteries, is invested in by Bill Gates, Vanguard Group (the largest provider of mutual funds), Capricorn Investment Group, and BlackRock Inc., among others.

Living Carbon sprouted from the OpenAI Mafia, while Swell Energy and Sila Nanotechnologies sprouted from the Tesla Mafia.

Are Mafias good or bad?

The crown council, the Committee of 300, The Roundtable, The Big Oil (also owned by the famous US Dynasties Rockafeller, Rothschild, Du Pont, Morgan, etc.), Knights Templar, Freemasons, Skull and Bones, Bilderberg, Illuminati, Wall Street Wolves etc.

What comes to your mind when you hear the above names?

I am not hinting at anything sinister, but humans are naturally social animals who tend to gravitate towards cliques, just like wolves run in packs. You may occasionally get a Sigma or an Omega.

That’s why congregations, closed-knit caste-based business communities, faith-based organisations and cults are famous in India and worldwide.

However, the nature of many of our societal ecosystems is just this: a concentrated amount of power in the hands of the few. What people can not do themselves in an individual capacity is look for collaborations to get a support system to amplify their impact. That’s human nature.

Even in community-based advocacies or movements, we follow this strategy a lot:

‘Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it is the only thing that ever has ‘.

This quote is by Margaret Mead, a renowned American anthropologist.

But, such cliques wield the power to reset world orders, whether negative or positive.

Then, it lies in our hands to be conscious of such social dynamics and structures. Armed with such informed choices, what could we do to shake up the status quo?

Credits

This article is written by Deepa Sai, the founder of ecoHQ

ecoHQ