Why tech bros need to be less paranoid about debt
So, while it’s understandable that tech bros remain a little wary, perhaps it’s time to relax—at least a little
There’s something delightfully contradictory about tech bros—the testosterone-driven, alpha males who run Big Tech. On the one hand, they think up wild ideas, and do whatever it takes go on to create the most dominant companies in the space. Think Meta (earlier Facebook), Apple, Amazon, and Google of course. They see beauty in lines of code and work “to make the world a better place”. If it means pushing all boundaries to work on technologies that change how we live and work, so be it. One would expect such men to be equally daring in their financial strategies.
But Alok Sama, author of “The Money Trap” (2024) writes of how they become old-fashioned and turn into remarkably conservative people when it comes to money. Sama was Chief Financial Officer at SoftBank and has seen everyone who matters in business and technology from close quarters. And the pages of his book make it clear how most of them are downright allergic to debt. Then there is leverage, which in other industries is often a tool for growth. But tech bros view it with suspicion. In financial parlance, this is when you borrow money to amplify your investments, even if you have plenty of your own.
This fiscal conservatism manifests in a fascinating way. Take Apple, for example. The company practically swims in a Scrooge McDuck-esque vault of cash, enough to buy a small island nation (and probably have some left over for a yacht). Or consider Microsoft, a company so financially disciplined they make accountants weep with joy. They’ve built a business model so robust it practically prints money, generating enough cash flow to make Warren Buffett blush. Google’s parent company, Alphabet, pours billions into research and development, to explore everything from self-driving cars to extending human lifespans.
But this prudence isn’t just about hoarding wealth. It’s about strategic investment and long-term vision. They claim they’re not just building for today; they’re building for a future where they remain at the forefront of innovation. So, what explains the dichotomy between how aggressive they are about building technology and yet financially so conservative?
Over a call, Sama explains that tech bros are wired to be paranoid and are constantly on edge. They worry about the next Big Thing around the corner. It goes down to a deep-seated fear of getting disrupted, he says Once upon a time, all of them disrupted incumbents. This is why they swear by former Intel chairman Andy Grove’s dictum (and book as well) “Only the paranoid survive”. Sama’s point is you don’t need to be paranoid 24/7.
Ironically, it’s a senior executive at Meta who sees merit in this argument. He cannot come on the record for obvious reasons. The world has moved on since Andy Grove was in charge. Big Tech today has constructed moats that cannot be easily replicated. And if it is Artificial Intelligence (AI) they’re worried about, they needn’t be. “AI is not something you can build with a couple of laptops in a dorm room anymore. The moat Big Tech has built is real. It takes deep pockets and even deeper expertise to navigate curveballs AI will throw,” he says.
Simply put, the notion that the next world-changing technology will emerge from a scrappy garage is unfounded. So, even though we may dislike tech bros and their swag, they aren’t going anywhere soon.
But it will take a while for them to shake off their fiscal prudence. This has to do with their conservatism being rooted in past traumas. Most tech bros came of age during the dot-com bust or as witnesses to the 2008 financial crisis. These experiences shaped a belief that too much debt can bring even the mightiest of companies to their knees.
So, while it’s understandable that tech bros remain a little wary, perhaps it’s time to relax—at least a little. After all, if one has built an empire, it’s okay to stop worrying about someone sneaking up with a water pistol.