A Tale of Two Cities


The West Coast’s Snap Inc (parent of Snapchat) announced it had lost more than $2 billion about the time I came home from Hannover Messe, a huge industrial trade show in Germany.

The contrast between the two “cities” couldn’t be more stark.

Hannover Messe featured the world’s leading companies that do all the heavy lifting, literally, that makes the world work. Factories. Transportation. Energy. Stuff that consumers take for granted.

An endless array of exhibit halls were filled with robots and other technology innovations; since it’s a trade show, much (if not most of it) was ready for purchase and use, if not already working somewhere. I was struck by how little attention it got from mainstream media, since it was clear to me that these brands were not just promising the future, but delivering it.

Then, when Snap announced its 1Q loss, a not-so small detail jumped out at me: It had spent most of that money paying off its investors.

It’s valued at something other then $0 because it promises it’ll make money selling advertising someday, even though there’s nothing particularly unique or protectable about the company’s tech, so it has no exclusive claim to its users’ attention (it’s a “camera company,” whatever that means).

The efficacy and future of advertising are by no means certain.

But, like other tech startups, it has a vocal lobby of investors and media that promotes its visions of grandeur, transforming the public markets into a mechanism that converts buzz into dollars. Earnings announcements are opportunities to promise future riches despite the lack of any semblance of a real business in the present.

It’s a massive wealth redistribution program.

It got me thinking about Hannover Messe again, only this time about all the startups I saw there.

They were everywhere, sprinkled on the edges of the high-priced showroom real estate, their tables and cheap backdrops in stark contrast to the plush backlit perfection of the bigger name brands.

A few buildings were dedicated to startups, many of which seemed to be from China (there were 1,200 companies of them). The products they offered were all things of industry: springs, magnets, clamps, meters, while the services were mostly installing and inspecting/maintaining them.

Their sales pitches were also very tangible, promising reliable and safe operation, mostly, and the people manning the tables seemed nervous and overworked (to my judgmental eyes).

It was the most unsexy wash of startups I could ever imagine. Not surprisingly, there was no investor or media lobby promoting them, no fawning analyst report or magazine cover explaining how some nano-engineered switch could transform the way billions of people turn water on and off (or whatever).

Yet that’s exactly what these startups are building, along with the larger exhibitors at the show. They’re probably valued for what they’re making and selling to those bigger customers — you know, those old-fashioned metrics of profitability — perhaps in do-or-die sales moments decided at the show.

These industrial startups are busy inventing future value.

And Snap takes $2 billion from the markets to enrich its investors for a promise that has little chance of ever coming true.

When Charles Dickens published A Tale of Two Cities in 1859, he intended to reveal truths about London by describing similar themes in a different city (Paris).

The “cities” I’m talking about couldn’t be more un-alike:

One demonstrates the immensely valuable hard work underway building the future, and about which we hear far too little.

The other promotes often valueless work exploiting the present, about which we are told far too much.