It's not magic, it's an illusion: How Silicon Valley is getting investors to pay billions for the same old tricks

If you read between the PowerPoint slides, Silicon Valley increasingly looks like a bad magic show. The same old tricks are trotted out again and again, by presenters who keep signaling to the paying customers in the audience that what they are seeing is "amazing" and "revolutionary."

And investors look like the biggest mark in the room.

The New York Times reports that the makers of a corporate messaging service, Slack, recently raised hundreds of millions of dollars, pushing the valuation of their company to $2 billion. The Times naturally asked, "Is this a bubble?"

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Slack CEO Stewart Butterfield's answer was not exactly reassuring:

Well, that doesn't exactly scream efficient distribution of capital.

It's important to remember what Slack is. It is an application that allows users to create chatrooms, where they can exchange text or digital files. Let me say that in another way, in case it isn't clear: Slack is a piece of software that lets users type messages to each other and send each other files. Does that sound familiar?

Chatrooms, message boards, email, file exchange — this is exactly what the internet has always done. But Slack wraps these services in the snappiest, best-designed JavaScript frameworks that exist today. Slack may not be entirely secure, but it has a very small learning curve precisely because its features are totally familiar. An 80-year-old could use it.

Let me put my "to be sures" on the table. Slack is a good product. It is remarkably stable — it doesn't crash. It is superior to many of its competitors. I'm not a Luddite; I maintain custom software to run my little publishing side business. And I have no doubt that the communication revolution that has been enabled by network-connected computing devices will continue to change certain industries for the better, especially as it helps them more efficiently use and distribute resources.

But it does make you wonder if there is something broken about an economic model in which the cleverest engineers and investors are essentially reinventing AOL's best features.

In a much-discussed (and much hated) talk at the Y Combinator startup school in 2013, Balaji Srinivasan suggested that Silicon Valley's brand of disruptive innovation would inevitably be applied to the major industries and public sectors of the United States. Silicon Valley would reinvent entertainment, publishing, and education, as well as regulation itself.

He's right that Silicon Valley has found ways to deliver some products more efficiently through the network of electronic devices we all have. But the most valuable contributions to our quality of life are not coming out of the Valley. I like the idea of a slightly more efficient way of hailing taxi cabs, or outsourcing the sometimes ambiguous and unpleasant interactions that come with basic information-hunting. But these aren't revolutions. They're just interfaces.

For all the bold, nearly utopian proclamations of men like Srinivasan, Silicon Valley and the army of investors behind it are just moving around electrons. They're wrapping up old chat protocols in newer, more human-friendly skins. Silicon Valley is not building physical infrastructure, or making our environment more beautiful. It isn't making water potable. It isn't even really preparing itself for one of the Valley's biggest threats, a large earthquake.

Silicon Valley's bold attempts to push Leviathan out of the way are not producing much so far. Have you seen the computer systems used at your local hospital lately? The Apple Watch has health apps, but they are basically a way of automating the task of counting your pulse during workouts.

Even Elon Musk, one of the few Silicon Valley entrepreneurs with real "built it out" verve, relies on subsidies and permissions handed down from the loathed "paper-belt" in Washington, D.C.

Instead, Silicon Valley promises the young and the clever get-rich-quick stories: billion dollar valuations, scalable enterprises with little to no overhead, the dream of entire industries surrendering all their profits to a few kids typing Node.js into a text editor. These are the same old tricks. This is the same old magic show.