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196 AMERICAN AFFAIRS
The Crisis of Venture Capital:
Fixing America’s Broken Start-up
System
by Jeffrey Funk
D
espite all the attention and investment that Silicon Valley’s most
recent start-ups have received, they have done little but lose
money: Uber, Lyft, WeWork, Pinterest, and Snapchat have consist-
ently failed to turn profits, with Uber’s cumulative losses approaching
$25 billion. Perhaps even more notorious are bankrupt and discredit-
ed start-ups such as Theranos, Luckin Coffee, and Wirecard, which
were plagued with management failures, technical problems, or even
outright fraud that auditors failed to notice.1
What’s going on? There is no immediately obvious reason why
this generation of start-ups should be so financially disastrous. After
all, Amazon incurred losses for many years, but eventually grew to
become one of the most profitable companies in the world, even as
Enron and WorldCom were mired in accounting scandals. So why
can’t today’s start-ups also succeed? Are they exceptions, or part of a
larger, more systemic problem?
Today’s big losses are not what Silicon Valley founders and futur-
ists predicted. Artificial intelligence, driverless vehicles, ride sharing,
blockchain, virtual reality, augmented reality, and the Internet of
Things were supposed to change the world, enabling a dramatic in-
crease in productivity growth. The resulting wealth was expected to
be so huge that we would be able to support the unemployed with a
universal basic income (UBI). Indeed, Andrew Yang, a successful
entrepreneur, ran for president in 2020 on a platform whose most
notable feature was a UBI pledge.
Jeffrey Funk is a consultant on business models and the economics of new
technologies. Previously, he was a professor at the National University of
Singapore, Hitotsubashi University, Kobe University, and Pennsylvania State
University.
Spring 2021 197
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
Furthermore, all these developments were supposed to be part of a
larger technological revolution: according to many leading commen-
tators and entrepreneurs, we are purportedly living in the most inno-
vative time ever. And venture capitalists seem to agree: their funding
set a five-year record between 2015 and 2019, with investments in a
wide variety of industries, and 2020 set a new single-year record.2
My analysis of start-ups, however, shows that the big losses suf-
fered by Uber, Lyft, WeWork, Pinterest, and Snapchat—greater than
50 percent of revenues annually—are just the tip of the iceberg. More
than 90 percent of America’s “unicorns”—start-ups valued at $1 bil-
lion or more while privately-held (before IPOs)—lost money in 2019
or 2020, even though more than half of them were founded over ten
years ago. And a similar trend of losses holds for European, Indian,
and Chinese start-ups. Of similar importance, recent analyses of
venture capital (VC) firms show that returns on investments in VCs
have barely exceeded those of public stock markets over the past
twenty-five years, and their current losses suggest that returns will fall
even further. In other words, the low profitability of start-ups is a
reflection of broader trends in the economy: the slowing productivity
growth documented by Robert Gordon; stagnating innovation ob-
served by Tyler Cowen; falling research productivity discussed by
Anne Marie Knott, Nicholas Bloom, and others; and the declining
impact of Nobel Prize research recently noted by Patrick Collinson
and Michael Nielsen.3
In this article, I first discuss the abundant evidence for low returns
from VC funding in the contemporary market. Second, I summarize
the performance of start-ups founded twenty to fifty years ago, in an
era when most start-ups quickly became profitable, and the most
successful ones rapidly achieved top 100 market capitalization. Third,
I contrast these earlier, more successful start-ups with Silicon Valley’s
current set of “unicorns,” the most successful of today’s start-ups.
Fourth, I discuss why today’s start-ups are doing worse than those of
previous generations and explore the reasons that technological inno-
vation has slowed in recent years. Fifth, I offer some brief proposals
about what can be done to fix our broken start-up system. Systemic
problems will require systemic solutions, and thus major changes are
needed not just on the part of venture capitalists but also in our
universities and business schools.
198 AMERICAN AFFAIRS
Jeffrey Funk
AMERICA’S FAILING VENTURE CAPITAL SYSTEM
A 2020 report by Morgan Stanley4 documents several key trends in
venture capital, particularly the falling rate of returns over the last
forty years (these findings are summarized in figure 1). Investments in
VC funds by individuals and institutions have risen over the last
twenty years, as have VC investments in start-ups, the latter reaching
a record high over the five-year span from 2015 to 2019, and 2020 will
likely extend this to six years. Yet, returns on VC investment fell dra-
matically in the mid- to late 1990s and have stayed low ever since,
now barely higher than those of major stock market indices, an aston-
ishing change when one considers the far higher risks associated with
funding start-ups.
Within this twenty-year period, several major changes occurred in
our start-up system that have contributed to these low returns.5 First,
investor exits for most start-ups, at least until 2020, are now largely
accomplished by acquisition, rather than by taking companies public
through an initial public offering (IPO) on the stock market. The
problem here is that the returns on investment from an acquisition are
typically much smaller than those from an IPO, and thus the trend
towards acquisitions is probably one reason for the falling returns for
VC over the last twenty-five years. Second, among those start-ups
that do go public, the percent that are unprofitable at the time of their
IPO has increased dramatically over the last few decades, exceeding
FIGURE 1. KEY TRENDS IN AMERICA’S VC SYSTEM
Source: Morgan Stanley.
Spring 2021 199
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
80 percent in recent years, according to analysis by Jay Ritter of the
University of Florida.6 This increase has continued despite the falling
overall percent of IPOs, a change that should have caused the percent
of unprofitable start-ups at IPO time to fall.
These two trends together form a vicious circle. Lower profitabil-
ity at the time of IPO naturally leads to smaller share price increases
and thus to lower returns for start-up IPOs. These lower IPO returns
in turn discourage start-ups from going public and thus drive the
trend toward acquisition. But without profitability, incumbents will
be unwilling to pay high prices for the start-ups that they acquire, and
so returns on acquisitions will also fall. Lower acquisition valuations
in turn affect IPO valuations. Poor IPO performance and low acqui-
sition prices thus reinforce each other, and jointly lead to poor
returns for the original investors in VC funds.
This reduction in returns for venture capital is a serious problem
for the U.S. economy, not only because it suggests that innovation is
less profitable than in the past, but also because it significantly affects
the investments of major American institutions such as pension funds
and university endowments. As shown in the previously cited Mor-
gan Stanley report,7 these institutions have steadily increased their
investments in VC funds since 1970. These institutions also invest in
start-up IPOs, and the data discussed in the next section demonstrate
that pre-pandemic returns for investors in unicorn IPOs were nega-
tive.
Venture capitalists will of course disagree with this analysis. They
will emphasize that some VC funds are actually making money be-
cause returns are heavily skewed, and thus, overall, the system is
working. This objection is partly correct: as shown in the Morgan
Stanley report,8 a small percentage of investments does provide high
returns, and these high returns for top-performing VC funds persist
over subsequent quarters. Although this data does not demonstrate
that select VCs consistently earn solid profits over decades, it does
suggest that these VCs are achieving good returns on their invest-
ments. Therefore, such funds might still be considered good invest-
ments, despite broader trends.
From a public policy standpoint, however, market averages are
more important than the individual returns of a few successful VCs,
because most investors cannot reliably distinguish between high- and
low-return funds. After all, the notion that high risk requires higher
200 AMERICAN AFFAIRS
Jeffrey Funk
returns is an old one, taught in every introductory finance course, yet
the VC system is not providing this risk premium. Thus, the VC
system bears a closer resemblance to another form of risk taking:
gambling. Gambling also consistently offers low average returns but
occasionally produces large payouts that are heavily skewed to a few
big winners. And gamblers, like VC funds, tend to place their bets in
the expectation that they will win one of these rare jackpots. But
policy makers and the public should realize that average returns
ought to be higher for risky investments than less risky ones. If they
are not, it is time to rethink the value of VC.
A glance at the rest of the developed world suggests that these
problems of VC-funded start-ups are not exclusively American. The
rest of the world got a late start with venture capital, but by the end
of the 2010s other nations were also setting new records in VC invest-
ments, particularly China and India. By June 2020, the number of
unicorn start-ups in China (227) had nearly equaled the number in
America (233). And global unicorns have now reached an enormous
$1.9 trillion in total value.9 But, as I shall discuss below, the lack of
VC profitability is a global problem, with Chinese funds earning only
slightly better returns than American ones.10
THE START-UP SUCCESSES OF THE LATE TWENTIETH CENTURY
There was a time when venture capital generated big returns for
investors, employees, and customers alike, both because more start-
ups were profitable from the beginning and because some start-ups
achieved high market capitalization relatively quickly. Profits are an
important indicator of economic and technological growth, because
they signal that a company is providing more value to its customers
than the costs it is incurring. Early profitability will thus lead to good
returns and rising market capitalization.
A number of start-ups founded in the late twentieth century have
had an enormous impact on the global economy, quickly reaching
both profitability and top-100 market capitalization. Among these are
the so-called FAAMNG (Facebook, Amazon, Apple, Microsoft, Net-
flix, and Google), which represented more than 25 percent of the
S&P’s total market capitalization and more than 80 percent of the
2020 increase in the S&P’s total value at one moment during that
year—in other words, the most valuable and fastest-growing compa-
nies in America in recent years.
Spring 2021 201
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
Rapidly growing start-ups of this type merit attention both
because they are arguably the main factor driving returns to venture
capital—rather than the average profitability of all start-ups—and
because they are the principal cause of the “creative destruction”
celebrated by Joseph Schumpeter11 and many other economists.
As can be seen in figure 2, these giants reached profitability and
top 100 market capitalization relatively quickly: Thirteen were
profitable by year five, and another nine by year ten. Ten achieved
top 100 market capitalization by year ten, and sixteen by year fifteen.
Only one took longer than ten years to become profitable. Amazon
and Qualcomm became profitable in year ten, a relatively long time
within this group but far outpacing contemporary unicorns such as
Uber, WeWork, Snapchat, and Pinterest, which still suffer losses
greater than 50 percent of revenues at year ten or later.
Startup Founded
Years to
Profitability
Years to Top
100 Market
Capitalization
Microsoft 1975 112
Apple 1976 428
Genentech 1976 827
Oracle 1977 319
Home Depot 1978 317
EMC 1979 617
Amgen 1980 919
Adobe 1982 135
Sun Microsys tems 1982 615
Cisco 1984 511
Dell 1984 613
Compaq 1984 413
Qualcomm 1985 10 14
Gilead Sciences 1987 15 21
Nvidia 1993 624
Amazon 1994 10 16
Yahoo! 1994 4 5
eBay 1995 410
Netflix 1997 521
Google 1998 5 8
PayPal 1998 421
Salesforce 1999 419
Facebook 2004 610
FIGURE 2. YEARS TO PROFITABILITY AND TOP 100 MARKET
CAPITALIZATION FOR LATE-TWENTIETH-CENTURY START-UPS
202 AMERICAN AFFAIRS
Jeffrey Funk
Many of the successful start-ups of the late twentieth century
created value for workers as well as investors. In addition to high-
paying jobs for semiconductor engineers, software engineers, labor-
atory scientists, and other white-collar workers, many of them also
created well-paying blue-collar jobs—particularly the semiconductor
manufacturers and other hardware companies that once employed
thousands of workers in their production facilities. In this respect,
also, they outshine the unicorns of more recent years, none of which
employs production workers, and few—if any— pay adequate wages
to their blue-collar employees. Uber, Lyft, and other gig-work start-
ups are major contributors to income inequality and thus have drawn
significant political backlash—a reaction resulting in regulations that
may bring about their ultimate collapse.
A CORNIBUS UNICORNIUM
In the contemporary start-up economy, “unicorns” are purportedly
“disrupting” almost every industry from transportation to real estate,
with new business software, mobile apps, consumer hardware, inter-
net services, biotech, and AI products and services.12 But the actual
performance of these unicorns both before and after the VC exit stage
contrasts sharply with the financial successes of the previous genera-
tion of start-ups, and suggests that they are dramatically overvalued.
Figure 3 shows the distribution of revenues to losses of seventy-
three unicorns and ex-unicorns that were founded after 2013 and have
released net income and revenue figures for 2019 and/or 2020.13 In
2019, only six of the seventy-three unicorns included in figure 3 were
profitable, while for 2020, seven of seventy were. The six profitable
start-ups in 2019 included three financial technology (fintech) firms
(GreenSky, Oportun, and Square) and one company each in e-
commerce (Etsy), video communications (Zoom), and solar energy
services (Sunrun). In 2020, three of these firms became unprofitable
(Oportun, Square, and Sunrun), and four others became profitable:
three e-commerce companies (Peloton, Purple Innovation, and Way-
fair) and one cloud storage service (Dropbox). Thus, a remarkably
small fraction of start-up unicorns have achieved profitability, despite
the fact that forty-five of the seventy-three analyzed here were found-
ed over ten years ago. By contrast, twenty-two of the twenty-four
start-ups listed above in figure 2—including Amazon and Qualcomm,
Spring 2021 203
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
which lagged in achieving profitability—were earning profits already
by year ten.
Furthermore, there seems to be little reason to hope that these
unprofitable unicorn start-ups will ever be able to grow out of their
losses, as can be seen in the ratio of losses to revenues in 2019 versus
the founding year. Aside from a tiny number of statistical outliers—
two recent start-ups with huge losses and a third founded in 2010,
which has a ratio of 8.6 (not shown here)—there seems to be little
relationship between the time since a start-up’s founding and its ratio
of losses to revenues. In other words, age is not correlated with
profits for this cohort.
Many of the start-up unicorns included in figure 3 had losses that
were a significant fraction of revenues. In 2019, twenty-one of sev-
enty-three had losses greater than 50 percent of revenues, and another
thirteen (including Uber, Lyft, Pinterest, and Snapchat) had losses
greater than 30 percent (not counting liquidations). In 2020, nineteen
of seventy had losses greater than 50 percent of revenues, and another
eleven had losses greater than 30 percent. Furthermore, given the
large number of unicorns that provide cloud computing, video con-
ferencing, and other services that were increasingly necessary during
the Covid-19 lockdowns, it is surprising that the ratios of losses to
revenue did not improve more than they did, and that there was not a
higher fraction of profitable unicorns in 2020. These facts suggest that
many unicorns have little chance of ever achieving profitability, and
0
2
4
6
8
10
12
14
Number of Start-Ups
Profit Margin
2019: 73 Start-Ups
2020: 70 Start-Ups
FIGURE 3. PROFITABILITY OF RECENT UNICORN START-UPS
204 AMERICAN AFFAIRS
Jeffrey Funk
even if some do, they already have large cumulative losses (more than
$25 billion for Uber) that will have to be covered by future profits.
When compared with profitability data from decades past, recent
start-ups look even worse than already noted. About 10 percent of
the start-ups included in figure 3 were profitable, much lower than
the 80 percent of start-ups founded in the 1980s that were profitable,
according to Jay Ritter’s analysis. Thus, not only has profitability
dramatically dropped over the last forty years among those start-ups
that went public, but today’s most valuable start-ups—those valued at
$1 billion or more before IPO—are in fact less profitable than start-
ups that did not reach such lofty pre-IPO valuations.
The heavy losses experienced by many unicorns have also impact-
ed their performance in the stock market. A comparison of unicorns’
stock performance with overall market changes through March 9,
2020 (chosen to avoid the increased market volatility resulting from
the Covid-19 pandemic) shows that many unicorns have seen changes
in their share prices smaller than those of the overall NASDAQ (the
most relevant market index for start-ups). Of the forty-five ex-uni-
corns that were taken public before 2019, only fourteen saw price
increases larger than those of the NASDAQ, and only a few of these
were profitable in 2019 (Etsy, Square, Zoom) and 2020 (Etsy, Zoom).14
Likewise, their relatively small market capitalizations also show
the poor performance of the unicorn start-ups. None of the publicly
traded ex-unicorns had the $98 billion market capitalization required
to be among the top 100 companies in 2019 or the $109 billion
required for top 100 status in the first half of 2020.15 A remarkably
small number were even a fraction of the way toward top 100 status
by early 2019: Uber had a market capitalization of $60 billion at that
time; only two others, Square and Zoom, had greater than $20 billion;
and ten had between $10 and $20 billion. There is clearly still a long
road ahead for even the most valuable ex-unicorns.
Those unicorns that are still privately held do not look any more
promising. Of the start-ups shown in figure 3, twenty-eight released
their first net income figures after March 2020; none of these had
profits in 2019—suggesting that few or none of the remaining private-
ly held unicorns are profitable.
The general trend among foreign start-ups matches that seen in
America: a few European unicorns are profitable (e.g., TransferWise),
but none are in India, South Korea, or Singapore. The biggest
Spring 2021 205
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
exception to this trend is China, where about 60 percent of unicorns
are unprofitable—a high figure, but not as high as the 90 percent seen
in the United States. But significant differences exist in the Chinese
and U.S. start-up systems that likely account for China’s superior
performance: Notably, many Chinese unicorns or ex-unicorns are
either spinoffs of, or were founded by, large incumbents, a factor that
likely increases the chances of profitability and that is not typical for
American unicorns. And most importantly, China’s rapid rate of
economic growth in the twenty-first century means that its start-ups
were competing with much weaker incumbents at their founding than
were America’s start-ups. For instance, a Chinese start-up founded in
2009 entered a domestic economy that was about 40 percent its
current size and thus had much weaker competitors than an American
unicorn founded at the same time. Therefore, contrary to initial
appearances, China’s unicorns are not performing significantly better
than those of other nations (relative to their respective domestic
economies). When analysis corrects for these differences, the percent-
age of unprofitable start-ups in China is quite similar.
Finally, overall profitability in China, the United States, and else-
where may actually get worse due to the easy availability of capital,
thus enabling more startups to be formed and go public. One signifi-
cant driver of this trend is the increasing presence of special-purpose
acquisition companies (SPACs), informally known as “blank-check
companies,” which make it easier for start-ups to go public while still
suffering losses or even making little or no revenue. Blank-check
companies are publicly traded shell companies that merge with pri-
vate companies, enabling the private firms to sidestep the reporting
requirements of an IPO. Mergers with blank-check companies have
contributed to a record number of start-ups going public at aggressive
valuations in 2020, despite earning little or no revenue. For instance,
driven by easy money and the rapid rise of Tesla’s stock, a group of
electric vehicle and battery suppliers—Canoo, Fisker Automotive,
Hyliion, Lordstown Motors, Nikola, and QuantumScape—were val-
ued, combined, at more than $100 billion at their listing.16 Likewise,
dozens of biotech firms have also achieved billions of dollars in mar-
ket capitalizations at their listings. In total, 2020 set a new record for
the number of companies going public with little to no revenue, easily
eclipsing the height of the dot-com boom of telecom companies in
2000.
206 AMERICAN AFFAIRS
Jeffrey Funk
THE CAUSES OF POOR START-UP PERFORMANCE
There are many reasons for both the lower profitability of start-ups
and the lower returns for VC funds since the mid- to late 1990s. The
most straightforward of these is simply diminishing returns: as the
amount of VC investment in the start-up market has increased, a larg-
er proportion of this funding has necessarily gone to weaker opportu-
nities, and thus the average profitability of these investments has de-
clined.
The problem with the contemporary start-up system, however,
extends beyond the average return on investment; it also includes the
decrease in the number of start-ups founded since 2004 that have
achieved top market capitalization. If we set aside the unique social
and economic conditions of 2020, not a single start-up founded since
2004 is among the top 100 most valuable companies of 2019. Even if
we include companies founded up to a decade earlier in our analysis
and count figures through 2020, there is only one exception to the
trend: Tesla, founded in 2003. But this is a company that had less than
2 percent of the U.S. auto market in 2019 and did not achieve its first
annual profit until that year. Further, it would not have achieved this
profit if it had not enjoyed substantial tax and regulatory credits or if
it had been obliged to split revenues with dealers or pay typical
advertising costs as incumbents do.17 Thus, if we can ignore the hype
around Tesla (a difficult thing to do in our hype-heavy media
environment), it is clear that the start-ups founded during the last
fifteen years have been far less successful than those of the preceding
fifteen to thirty years.
A more plausible explanation for the relative lack of start-up suc-
cesses in recent years is that new start-ups tend to be acquired by
large incumbents such as the FAAMNG companies before they have a
chance to achieve top 100 market capitalization. For instance, You-
Tube was founded in 2004 and Instagram in 2010; some claim they
would be valued at more than $150 billion each (pre-lockdown
estimates) if they were independent companies, but instead they were
acquired by Google and Facebook, respectively.18 In this sense, they
are typical of the recent trend: many less valuable start-ups founded
since 2000 were subsequently acquired by FAAMNG, including new
social media companies such as GitHub, LinkedIn, and WhatsApp.
Likewise, a number of money-losing start-ups have been acquired in
Spring 2021 207
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
recent years, most notably DeepMind and Nest, which were bought
by Google.
There are several potential objections that might be raised against
this argument. First, all the successful start-ups of the late twentieth
century listed in figure 2 also made acquisitions—in some cases more
than fifty—that helped them increase their market capitalization. Cis-
co pioneered this strategy in the 1990s and was able to become the
most valuable company in the world for a short time during the dot-
com bubble.19 Similarly, Microsoft obtained PowerPoint through the
acquisition of Forethought in 1987; PowerPoint went on to become
an important part of its Windows suite of products, the success of
which is a significant reason why Microsoft itself has not been dis-
rupted by more recently founded start-ups.
An even stronger objection to the acquisition argument is that it
assumes new start-ups must challenge industries dominated by strong
incumbents such as FAAMNG—for instance, social media. But most of
the successful start-ups listed in figure 2 also faced potential threats
from strong incumbents; they avoided these threats, however, by
initially commercializing new technologies that did not directly chal-
lenge the incumbents’ interests, a tendency that was supported by the
rapid evolution of Silicon Valley’s technologies. Silicon Valley was
given its name because of the large number of semiconductor compa-
nies established there between the 1950s and 1980s. But it soon diver-
sified into disk drives, networking equipment, personal computers,
workstations, and a wide variety of software products before the shift
toward internet companies in the 1990s. Each of these technologies
was commercialized by new start-ups partly because they involved
genuinely new concepts, customers, and applications. By contrast,
more recent start-ups that have been acquired by Silicon Valley in-
cumbents—such as LinkedIn, Instagram, WhatsApp, YouTube, and
even GitHub—mostly involve some form of a single technology:
social media.
Overall, the most significant problem for today’s start-ups is that
there have been few if any new technologies to exploit. The internet,
which was a breakthrough technology thirty years ago, has matured.
As a result, many of today’s start-up unicorns are comparatively low-
tech, even with the advent of the smartphone—perhaps the biggest
technological breakthrough of the twenty-first century—fourteen
years ago. Ridesharing and food delivery use the same vehicles, driv-
208 AMERICAN AFFAIRS
Jeffrey Funk
ers, and roads as previous taxi and delivery services; the only major
change is the replacement of dispatchers with smartphones. Online
sales of juicers, furniture, mattresses, and exercise bikes may have
been revolutionary twenty years ago, but they are sold in the same
way that Amazon currently sells almost everything. New business
software operates from the cloud rather than onsite computers, but
pre-2000 start-ups such as Amazon, Google, and Oracle were already
pursuing cloud computing before most of the unicorns were founded.
Fintech start-ups use algorithms to find low-risk borrowers or insur-
ance subscribers, but economic contraction has shown how sensitive
these algorithms are to changes in the overall economy; hence their
technology cannot be considered revolutionary.
Other than artificial intelligence and data analytics, none of the
technologies being developed by unicorns is a breakthrough compa-
rable to those seen by previous generations of start-ups. But here, too,
the large losses taken by ex-unicorns developing AI technology, the
exponentially rising costs of achieving increases in accuracy, and the
small market for AI in 2020 ($17 billion) suggest that AI and data
analytics are still a long way from being truly revolutionary.20
This lack of revolutionary technology has made it hard for uni-
corns to create value at a scale necessary to be profitable. Intel and
Microsoft created value for personal computer manufacturers and
final users by capitalizing on the rapid improvements in microproces-
sors, memory, and hard disks that occurred over the last sixty years.
But rapid improvements of this sort are actually very rare.21 Many of
the other late-twentieth-century start-ups shown in figure 2 directly
benefited from the increase in memory described by Moore’s Law,
notably computer manufacturers such as Compaq, Dell, and Sun, and
integrated circuit suppliers such as NVIDIA and Qualcomm. And most
of the others, specializing in internet content and services, benefited
indirectly from Moore’s Law and from rapid improvements in fiber-
optic speeds and bandwidth.22
The huge amount of value that was created by the exponential
growth of computing technology in the late twentieth century ena-
bled start-ups of that era to set high prices and thus secure high
profits; today’s start-ups, however, cannot rely on such favorable
technological circumstances, partly because cost per transistor has not
declined since 2014.23 For instance, as noted above, rideshare services
are only marginally more convenient than traditional taxi services,
Spring 2021 209
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
because they use the same vehicles, drivers, and roads as taxi services,
so Uber and Lyft cannot transport more people per unit of time than
do taxi companies.24 Without such productivity advantages and the
additional value they create, it is all but impossible for contemporary
start-ups to generate profits on the scale of Google or Amazon. This
problem will only get worse as cities force Uber and other “gig
economy” start-ups to pay higher wages to their workers. The late-
twentieth-century start-ups listed in figure 2 were able to pay higher
wages because they had much higher productivity than established
firms in the industries they disrupted; lacking this advantage and the
increased revenue that it brings, today’s start-ups will be unable to
meet this standard.
In addition, some contemporary start-ups have also entered indus-
tries that have traditionally been subject to significant state regulation
and therefore face challenges much greater than those seen by the
start-ups of previous decades. Taxi services, for instance, are regulated
by city governments out of concern for congestion and other issues;
these concerns and contests over city regulations continue to plague
rideshare companies and also present an obstacle to new scooter- and
bicycle-rental services. Fintech start-ups are trying to challenge tradi-
tional banks, a class of firms that has been heavily regulated since the
Great Depression. Education start-ups are fighting to enter an even
more highly regulated industry and risk being caught up in political
clashes over public and private schools.
In short, today’s start-ups have targeted low-tech, highly regulated
industries with a business strategy that is ultimately self-defeating:
raising capital to subsidize rapid growth and securing a competitive
position in the market by undercharging consumers. This strategy has
locked start-ups into early designs and customer pools and prevented
the experimentation that is vital to all start-ups, including today’s
unicorns. Uber, Lyft, DoorDash, and GrubHub are just a few of the
well-known start-ups that have pursued this strategy, one that is used
by almost every start-up today, partly in response to the demands of
VC investors. It is also highly likely that without the steady influx of
capital that subsidizes below-market prices, demand for these start-
ups’ services would plummet, and thus their chances of profitability
would fall even further. In retrospect, it would have been better if
start-ups had taken more time to find good, high-tech business
opportunities, had worked with regulators to define appropriate
210 AMERICAN AFFAIRS
Jeffrey Funk
behavior, and had experimented with various technologies, designs,
and markets, making a profit along the way.
RESTARTING THE START-UP SYSTEM
Our current start-up system is clearly unable to produce or capitalize
on revolutionary technologies, to generate significant profits or long-
term growth, or to provide well-paying jobs for employees. The last
of these deficiencies is the most immediately visible and politically
compelling. The easy and, arguably, most popular thing to do would
be to blame Uber and its fellow unicorns, require them to pay work-
ers higher wages—and then watch them go bankrupt. But workers
choose to work for Uber and other gig start-ups not because low
wages are themselves appealing but because these are the best em-
ployment opportunities that they can find. Thus, the employment
practices of companies like Uber are not the ultimate problem, and
simply legislating that they pay higher wages will not fix our broken
start-up system. Rather, we need venture capitalists and start-ups to
create new products and new businesses that have higher productivity
than do existing firms; the increased revenue that follows will then
enable these start-ups to pay higher wages. The large productivity
advantages needed can only be achieved by developing breakthrough
technologies, like the integrated circuits, lasers, magnetic storage, and
fiber-optics of previous eras. And different players—VCs, start-ups,
incumbents, universities—will need to play different roles in each in-
dustry. Unfortunately, none of these players is currently doing the
jobs required for our start-up economy to function properly.
Venture capitalists have shown themselves to be far less capable of
commercializing breakthrough technologies than they once were. In-
stead, as recently outlined in the New Yorker, they often seem to be
superficial trend-chasers, all going after the same ideas and often the
same entrepreneurs. One managing partner at SoftBank summarized
the problem faced by VC firms in a marketplace full of copycat start-
ups: “Once Uber is founded, within a year you suddenly have three
hundred copycats. The only way to protect your company is to get
big fast by investing hundreds of millions.” The article goes on to
express skepticism of VCs in general:
For decades, venture capitalists have succeeded in defining
themselves as judicious meritocrats who direct money to those
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The Crisis of Venture Capital: Fixing America’s Broken Start-up System
who will use it best. But examples like WeWork make it harder
to believe that V.C.s help balance greedy impulses with enlight-
ened innovation. Rather, V.C.s seem to embody the cynical
shape of modern capitalism, which too often rewards crafty
middlemen and bombastic charlatans rather than hardworking
employees and creative businesspeople.25
The poor performance of VCs and start-ups and the corresponding
sense that they are mostly trend-chasing copycats are both indirect
results of superficial training, and so part of the blame for these prob-
lems must fall on business schools and universities. In recent decades,
business schools have dramatically increased the number of entrepre-
neurship programs—from about sixteen in 1970 to more than two
thousand in 201425—and have often marketed these programs with
vacuous hype about “entrepreneurship” and “technology.”26 A recent
Stanford research paper argues that such hype about entrepreneurship
has encouraged students to become entrepreneurs for the wrong rea-
sons and without proper preparation, with universities often present-
ing entrepreneurship as a fun and cool lifestyle that will enable them
to meet new people and do interesting things, while ignoring the
reality of hard and demanding work necessary for success.27
Even worse, academics have at times compromised their role as
researchers, partnering with corporations to publish scholarship that
functions more as public relations material than critical analysis. For
instance, leading scholars have recently published distorted articles
about Uber in top economics journals, thus helping the company
mislead the world about both its technological and economic value
and its treatment of employees.28 Not only have these economists not
acknowledged their mistakes, few business schools have publicly
addressed the declining performance of start-ups. For instance, Har-
vard Business School’s online technology entrepreneurship course,
which began in April 2020, does not mention losses, production
slowdowns, or other problems experienced by recent start-ups,
instead regurgitating platitudes like “innovation is a burgeoning part
of the economy.”29
A big mistake business schools make is their unwavering focus on
business model over technology, thus deflecting any probing ques-
tions students and managers might have about what role technological
breakthroughs play and why so few are being commercialized. For
business schools, the heart of a business model is its ability to capture
212 AMERICAN AFFAIRS
Jeffrey Funk
value, not the more important ability to create value. This prioritiza-
tion of value capture is tied to an almost exclusive focus on revenue:
whether revenues come from product sales, advertising, subscriptions,
or referrals, and how to obtain these revenues from multiple custom-
ers on platforms. Value creation, however, is dependent on techno-
logical improvement, and the largest creation of value comes from
breakthrough technologies such as the automobile, microprocessor,
personal computer, and internet commerce.
Platform business models for value capture are among the most
discussed in our business schools and they are used by many of
today’s money-losing start-ups, many of which developed platforms
that match users and suppliers in different markets. This is what
Uber’s platform does for riders and drivers and what other start-ups
do in food delivery, peer-to-peer loans, used cars, business software,
and other areas of the sharing and gig economies. All these start-ups
have been quick to hype their platforms in their IPO filings and other
documents. Business schools have similarly promoted these platform-
based businesses in their strategy and entrepreneurship courses be-
cause of the past success of start-ups such as Microsoft, Intel, and
Google. But there have been significant technological changes over
the past thirty years: PCs once created vast amounts of value through
increases in processing power, which could then be shared among
many members of the platform. But the end of Moore’s Law is in
sight, and the successful platform-based businesses of the last genera-
tion may no longer provide a viable model for contemporary start-
ups.
The recent hype over Nikola, a problem-riddled vehicle start-up, is
a perfect example of the dangers of focusing excessively on platform
business models. According to JPMorgan, Nikola’s value lies in its big
idea: to lease zero-emission hydrogen-powered vehicles to fleet oper-
ators that can refuel at future Nikola hydrogen fueling stations for a
flat per-mile fee. A JPMorgan analyst in September 2020 cited the
lease model and Nikola’s partner-heavy approach as the company’s
most compelling aspects.30
This analysis might have come right out of a business school
textbook, but it ignores the relative challenges of producing, storing,
and distributing hydrogen and electricity, as well as the metrics of
energy density and efficiency—both important considerations in de-
termining how much value Nikola might actually create. For instance,
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The Crisis of Venture Capital: Fixing America’s Broken Start-up System
making hydrogen fuel from water uses electricity in a process called
electrolysis, a rather low-efficiency transformation, whereas electric
vehicles run directly on electricity; the extra steps mean that hydrogen
vehicles will always be less energy-efficient than electric vehicles.
Falling for a business model that completely ignores technical issues
and their role in value creation is the road to poverty, but it is the
road traveled by many business schools.
Innovation curricula need to be carefully rethought. Potential
innovators and entrepreneurs must learn about value creation if they
are to have the capability to introduce breakthrough technologies that
can increase productivity. This requires careful economic analysis that
will highlight where the greatest costs are found in an existing
industry and how a new technology might affect those costs.
Investors might have avoided a massive bubble in Nikola and
hydrogen vehicles, and start-ups might be able to generate better
designs for ride sharing, food delivery, business software, and other
platforms, if the economics of these technologies and their industries
were effectively taught.31 Furthermore, business school professors
and students alike must understand how rapid improvements in
integrated circuits, magnetic storage, and fiber optics enabled so many
of the breakthrough technologies of the late twentieth century—in
short, that technologies, not business models, enabled many of the
successful start-ups of the previous generation to succeed. Further
relaxing the stranglehold of business education on our venture capital
and start-up systems—for instance, by relocating innovation pro-
grams within the university to engineering schools, or by hiring fewer
business school graduates into VCs—is another way to address this
problem.
RESTRUCTURING RESEARCH
University engineering and science programs are also failing us,
because they are not creating the breakthrough technologies that
America and its start-ups need. Although some breakthrough tech-
nologies are assembled from existing components and thus are more
the responsibility of private companies—for instance, the iPhone32—
universities must take responsibility for science-based technologies
that depend on basic research, technologies that were once more
common than they are now.
214 AMERICAN AFFAIRS
Jeffrey Funk
New technologies such as semiconductors, lasers, LEDs, glass
fiber, and fiber-optics played a major role in the story of start-ups and
venture capital in the late twentieth century. Through their rapid
improvements, these technologies provided start-ups with profits,
VCs with great returns, and workers—including engineers and pro-
duction workers—with well-paying jobs, jobs that are not appearing
like they once did. In order to replicate that success now, some of
today’s start-ups should be commercializing nanotechnology, super-
conductors, quantum computers, and bio-electronics (Theranos tried
but failed), as well as new forms of solar cells, transistors, and com-
puters (e.g., neuromorphic computers), not just the low-end technol-
ogies of gig work, social media, and cloud computing. If these new
technologies were being developed, we would also expect a boost in
well-paying jobs for blue-collar workers.
This decline in technological breakthroughs cannot be attributed
to a lack of funding: governments have been funding university re-
search for more than half a century, yet research productivity has
declined overall, including research into semiconductors, agriculture,
and pharmaceuticals.33 Other than the internet being commercialized
in the 1990s—the technological foundations of which were created in
the 1960s and 1970s—few new science-based technologies have
emerged in the last thirty years.34 And the small number of successes
were mostly achieved by foreign competitors: lithium-ion batteries,
OLEDs, and solar cells, for instance, were commercialized by Japa-
nese, Korean, and Chinese companies.
Even Nobel Prize–winning research seems to lead to fewer techno-
logical breakthroughs than in the past, according to a survey of top
scientists. Asked to compare pairs of research projects that had won
the Nobel Prize, scientists judged that the most important research in
physics was done in the early part of the 1900s. Perhaps more
importantly, few awards have been given to scientists for research
done since 1990, not only in physics but also in chemistry and
medicine.35 Ye we would expect to see a rising importance ascribed to
later research in these fields, given the increase in university funding
and the associated increase in PhD students and publications in recent
decades. , a
Furthermore, looking at some of these prizes in more detail reveals
that much of the research work was done at corporate and not uni-
versity labs. For instance, among Nobel Prizes for physics and chem-
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The Crisis of Venture Capital: Fixing America’s Broken Start-up System
istry awarded since 2000 in Lithium-ion batteries, LEDs, charge-
coupled devices, lasers, integrated circuits, and optical fiber, nine of
the seventeen recipients did their work at corporate labs. The only
high-impact award that solely involved university research was gra-
phene.36
Many scientists point to the nature of the contemporary university
research system, which began to emerge over half a century ago, as
the problem. They argue that the major breakthroughs of the early
and mid-twentieth century, such as the discovery of the DNA double
helix, are no longer possible in today’s bureaucratic, grant-writing,
administration-burdened university. The idea of scientists following
their hunches to find better explanations and thus better products and
services has yielded to the reality of huge labs pursuing grants to keep
staff employed. Young scientists have become mere cogs in a grant-
seeking machine, forced to suppress their curiosity and do what they
are told by senior colleagues who are overwhelmed by administrative
work. Two-author papers, like the one describing the structure of
DNA, have been replaced by hundred-author papers. Scientific merit
is measured by citation counts and not by ideas or by the products
and services that come from those ideas. Thus, labs must push papers
through their research factories to secure funding, and issues of
scientific curiosity, downstream products and services, and beneficial
contributions to society are lost.37
Nobel laureates have similar criticisms of the contemporary cul-
ture of academic research. Various laureates in biochemistry, biology,
computer science, and physics have claimed that they would now be
denied funding for their prize-winning research because of grant-
issuing bodies’ preference for less-risky projects; one physicist even
claims he could not get a job today. In today’s climate every project
must succeed, and thus our scientists study only marginal, incremen-
tal topics where the path forward is clear and a positive result is
virtually guaranteed.38
A first step toward fixing our sclerotic university research system
is to change the way we do basic and applied research in order to
place more emphasis on projects that may be riskier but also have the
potential for greater breakthroughs. We can change the way proposals
are reviewed and evaluated. We can provide incentives to universities
that will encourage them to found more companies or to work more
with companies. But I think we should consider more radical changes,
216 AMERICAN AFFAIRS
Jeffrey Funk
including a return to the culture of research that flourished in an era
when more science-based technologies were being commercialized.
One option is to recreate the system that existed prior to the 1970s,
when most basic research was done by companies rather than uni-
versities. This was the system that gave us transistors, lasers, LEDs,
magnetic storage, nuclear power, radar, jet engines, and polymers
during the 1940s and 1950s. But apart from these past successes, there
are a number of structural reasons why conducting basic research at
corporate labs is likely to produce more useful results than in uni-
versities. First, corporate scientists are focused more on solving prob-
lems, whereas scientists in universities must also take on the adminis-
trative work of writing papers—often in collaboration with dozens of
coauthors—managing PhD students and postdocs, reading disserta-
tions and draft papers, writing letters of recommendation, and filing
grant proposals to keep themselves, their students, and their staff em-
ployed. Unlike their predecessors at Bell Labs, IBM, GE, Motorola,
DuPont, and Monsanto seventy years ago, top university scientists
are more administrators than scientists now—one of the greatest mis-
uses of talent the world has ever seen. Corporate labs have smaller
administrative workloads because funding and promotion depend on
informal discussions among scientists and not extensive paperwork.
Second, the informal discussions and collaboration characteristic
of corporate labs allows the scientists who work there to make better
decisions about both the merits of different designs in the short term
and problem-solving approaches for the long term. These informal
discussions can also focus on issues of cost and performance: how to
measure them and how to improve the technologies along these met-
rics.39 Such discussions rarely occur in universities because their goal
is the publication of research rather than the development of new
products and services.
Third, conducting basic research at corporate laboratories can help
avoid the problem of hyper-specialization in academia. Because
publications are the key output of university professors, there has
been a growing number of journals over the last fifty years to accom-
modate the growing number of university scientists, and these jour-
nals have become increasingly specialized. For example, Nature now
publishes more than 144 journals and the Institute of Electrical and
Electronic Engineers more than 200. This growing specialization
turns professors into narrowly focused researchers unable to under-
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The Crisis of Venture Capital: Fixing America’s Broken Start-up System
stand not only the needs of the marketplace but also the metrics of
cost and performance for a new technology, which should dictate
long-term goals.40 Relocating more basic research to corporate labs
can reduce this specialization by placing scientists in an organization
whose goal is to commercialize new technologies.
We can return basic research to corporate labs by providing much
stronger incentives for companies—or cooperative alliances of com-
panies—to do basic research. A scheme of substantial tax credits and
matching grants, for instance, would incentivize corporations to do
more research and would bypass the bureaucracy-laden federal grant
process. This would push the management of detailed technological
choices onto scientists and engineers, and promote the kind of in-
formal discussions that used to drive decisions about technological
research in the heyday of the early twentieth century. The challenge
will be to ensure these matching funds and tax credits are in fact used
for basic research and not for product development. Requiring multi-
ple companies to share research facilities might be one way to avoid
this danger, but more research on this issue is needed.
Restoring America’s venture capital and start-up system to its suc-
cessful past will require significant changes in how venture capitalists,
start-ups, business professors, and university scientists and engineers
do their work. We need less hype, more rational economic analysis,
and more breakthrough technologies. But achieving the latter will re-
quire us to rethink completely how basic and applied research are
conducted and commercialized.
NOTES
1 Jeffrey Funk, “Assessing Public Forecasts to Encourage Accountability: The
Case of MIT’s Technology Review,” PLoS ONE 12, no. 8 (August 2017).
2 Alex Wilhelm, “In 2020, VCs Invested $428M into US-Based Startups Every
Day,” TechCrunch, January 19, 2021.
3 Robert J. Gordon, The Rise and Fall of American Growth: The U.S. Standard
of Living Since the Civil War (Princeton: Princeton University Press, 2016);
Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging
Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New
York: Dutton, 2011); Anne Marie Knott, How Innovation Really Works: Using
the Trillion-Dollar R&D Fix to Drive Growth (New York: McGraw-Hill,
2017); Nicholas Bloom et al., “Are Ideas Getting Harder to Find?” American
Economic Review 110, no. 4 (April 2020): 1104–44; Patrick Collinson and
Michael Nielsen, “Science Is Getting Less Bang for Its Buck,” Atlantic,
November 16, 2018.
218 AMERICAN AFFAIRS
Jeffrey Funk
4 Michael J. Mauboussin and Dan Callahan, “Public to Private Equity in the
United States: A Long-Term Look,” Morgan Stanley, August 4, 2020. See
especially exhibits 6, 19, 35, 36, 38.
5 Mauboussin and Callahan.
6 Rani Molla, “Why Companies Like Lyft and Uber Are Going Public without
Having Profits,” Vox, March 6, 2019.
7 Mauboussin and Callahan, “Public to Private Equity,” exhibit 8.
8 Mauboussin and Callahan, “Public to Private Equity,” exhibit 42.
9 Hurun Research Institute, Hurun Global Unicorn Index 2020 (Shanghai:
Hurun Report, 2020).
10 Jeffrey Lee Funk, “Are There Any Industries in Which Ex-Unicorns Are
Profitable?” Medium, July 21, 2020; Jeffrey Lee Funk, “Most Chinese Ex-
Unicorns Are Unprofitable, but Fewer Than in America,” Medium, October
12, 2020.
11 Joseph Schumpteter, Capitalism, Socialism and Democracy (New York: Harper
& Brothers, 1942).
12 Aileen Lee, “Welcome to The Unicorn Club: Learning From Billion-Dollar
Startups,” TechCrunch, November 2, 2013.
13 Most of these start-ups have already gone public and thus release quarterly
financials; some are still privately held and thus have only released figures for
2019. Therefore, a smaller number of companies is included for 2020 here.
Further, some of the 2020 figures are for the first two quarters of 2020 only,
while others are for the first three quarters.
14 Jeffrey Lee Funk, “Unicorn IPOs Continue to Disappoint Investors,” Medium,
July 7, 2020.
15 Funk, “Unicorn IPOs”; “Global Top 100 Companies—June 2020 Update,”
PricewaterhouseCoopers, Pric, July 2020.
16 Eliot Brown, “Electric-Vehicle Startups Are Wall Street’s Hot New Thing. No
Revenue? No Problem,” Wall Street Journal, October 21, 2020.
17 Tesla buyers typically receive a $7,500 tax credit; Tesla itself received
regulatory credits from automakers who did not sell enough electric vehicles,
other automakers are required to maintain their existing dealer system (Tesla
was formed after dealers became unnecessary), and Elon Musk’s popularity
with the media and its small market share means it does not need to advertise to
its small but vocal market. See Tina Bellon and Akanksha Rana, “Tesla Sets
Revenue Record, Makes Profit Thanks to Pollution Credit Sales to Rivals,”
Reuters, October 21, 2020.
18 Paul Sawers, “YouTube Revenue Shows Its Potential As a Standalone
Company,” VentureBeat, February 4, 2020; Shobhit Seth, “Without Facebook,
Instagram Valued at $100 Billion,” Investopedia, June 26, 2018.
19 David Mayer and Martin Kenney, “Economic Action Does Not Take Place in a
Vacuum: Understanding Cisco’s Acquisition and Development Strategy,”
Industry and Innovation 11, no. 4 (July 2010): 299–325.
20 Nathan Benaich, “State of AI Report 2020,” Medium, October 1, 2020; Brian
Christian, The Alignment Problem: Machine Learning and Human Values
(New York: Norton, 2020); Jeffrey Funk, “AI and Economic Productivity:
Spring 2021 219
The Crisis of Venture Capital: Fixing America’s Broken Start-up System
Expect Evolution, Not Revolution,” IEEE Spectrum, March 2020; Gary
Marcus and Ernest Davis, Rebooting AI: Building Artificial Intelligence We
Can Trust (New York: Pantheon, 2019); Gary Smith, The AI Delusion
(Oxford: Oxford University Press, 2018); Andrew Bartels and Mike Gualtieri,
“Sizing the AI Software Market: Not as Big as Investors Expect but Still $37
Billion by 2025,” ZDNet, December 13, 2020.
21 Jeffrey L. Funk, “What Drives Exponential Improvements?” California
Management Review 55, no. 3 (May 2013): 134–52.
22 Jeffrey Funk, “Technology Change, Economic Feasibility, and Creative
Destruction: The Case of New Electronic Products and Services,” Industrial &
Corporate Change 27, no. 1 (February 2018): 65–82.
23 Jeffrey Lee Funk, “Deep Tech Unicorn Startups Are Unprofitable, Why?”
Medium, September 28, 2020.start-up
24 Hubert Horan, “The Uber Bubble: Why Is a Company That Lost $20 Billion
Claimed to Be Successful?” ProMarket, November 20, 2019.
25 Charles Duhigg, “How Venture Capitalists Are Deforming Capitalism,” New
Yorker, November 23, 2020.
26 “Infographic: The Growth of Entrepreneurship around the Globe,” Entrepre-
neur Middle East, January 26, 2017.
27 Jeffrey Funk, “What’s Behind Technological Hype?” Issues in Science and
Technology 36, no. 1 (Fall 2019): 36–42.
28 Rasmus Koss Hartmann, Anders D. Krabb, and André Spicer, “Towards an
Untrepreneurial Economy? The Entrepreneurship Industry and the Rise of the
Veblenian Entrepreneur,” SSRN, November 12, 2019; Jeffrey Funk,
“Entrepreneurship Is for Everyone according to This Full-Body Bus Stop
Display in Singapore. Key Talent: You Must Be a Dreamer Who Sees Things
Differently,” LinkedIn, October 2020.
29 Hubert Horan, “Uber’s ‘Academic Research’ Program: How to Use Famous
Economists to Spread Corporate Narratives,” ProMarket, December 5, 2019.
30 Jeffrey Lee Funk, “Should We Fail Fast, Hard, and Often? Or Think Carefully
About Investments?” Medium, August 12, 2019.
31 Ben Foldy, Mike Colias, and Nora Naughton, “Long before Nikola Trucks,
Trevor Milton Sold Investors on Startups That Faded,” Wall Street Journal,
October 1, 2020.
32 Funk, “What’s Behind Technological Hype?”
33 Funk, “Technology Change.”
34 Roger Pielke, Jr., “A ‘Sedative’ for Science Policy,” Issues in Science and
Technology 37, no. 1 (Fall 2020): 41–47; Bloom et al., “Ideas”; Knott, How
Innovation Really Works.
35 The material basics of the internet were created in the 1960s (glass fiber) and
1970s (lasers and packet switching).
36 Collinson and Nielsen, “Science Is Getting Less Bang for Its Buck.”
37 Jeffrey Funk, “Despite Extraordinary Growth in University Research over the
Last 70 Years, Corporate Researchers Have Received Many High-Impact
Nobel Prizes over Last 20 Years,” LinkedIn, September 2020.
220 AMERICAN AFFAIRS
Jeffrey Funk
38 Stephen P. Turner and Daryl E. Chubin, “The Changing Temptations of
Science,” Issues in Science and Technology 36, no. 3 (Spring 2020): 40–46.
39 Stuart Buck, “Escaping Science’s Paradox,” Works in Progress, October 19,
2020.
40 Jeffrey Funk and Chris Magee, “Rapid Improvements without Commercial
Production,” Research Policy 44, no. 3 (April 2015): 777–88.
41 Funk and Magee, “Rapid Improvements.”
