First, I think VC makes up a tiny percentage of invested capital, so I'm not sure the intuition of "so much money is thrown at it" is right. There's far, far more capital and talent in e.g. traditional non-software businesses, finance, government, etc. Just look at places like Google, which has 180k employees. Not all are tech/innovation talent, necessarily, but that's probably more than most new startups combined.
In any case, I'm not sure I trust you, me or anyone to be smarter about how to get innovation than our current relatively-free-market capitalistic system, where there's actually pretty good incentives to pursue innovation. Look at how many things today that absolutely improve our world have been created through this messy process. It's apparently monetarily worth it to have 95 failed startups in order to get 5 ones that change the world, and that's probably a good thing for society, because the world is better than it war 20 years ago in terms of technology/innovation.
(The world is worse in other ways, and a different criticism of tech is that some of it can also be negative for society, but that's a separate concern than it being wasteful, which I just don't agree with.)
VC funded companies are into the trillions of total investment (100+B / year adds up). That’s a small but meaningful fraction of global wealth for such a tiny slice of companies. It’s not that these are necessarily bad investments, but growth at any cost tends to suck up a lot more talent than the business actually justifies.
Of course the industry is mostly dumb investments. Looking back Google+ was part of a wave of social websites that didn’t really go anywhere. Facebook was founded in 04, Twitter in 06, but in 2011 suddenly everyone wants in on the action… The wave of crypto was similarly almost pure waste but most VC firms aren’t really about wise investment. It’s about charging high fees for funds under managed, they succeed when someone invests not when companies become profitable.
Yeah, they're into trillions, but aren't they like 5% of most pension funds, which are the biggest stores of wealth?
Also, if you're looking at trillions invested, I'd hardly call them startups or speculative investments. It's certainly true that something like OpenAI or Uber spent (and still spend?) many years without making profit, but by the time they're raising rounds of billions, it's no longer anywhere near the same level of risk, and the statistic that "most fail" rings less true.
It's speculative until there's a steady stream of profits paid out to investors. I wouldn't say that the size of the investment or of the business makes any difference in that aspect.
In any case, I'm not sure I trust you, me or anyone to be smarter about how to get innovation than our current relatively-free-market capitalistic system, where there's actually pretty good incentives to pursue innovation. Look at how many things today that absolutely improve our world have been created through this messy process. It's apparently monetarily worth it to have 95 failed startups in order to get 5 ones that change the world, and that's probably a good thing for society, because the world is better than it war 20 years ago in terms of technology/innovation.
(The world is worse in other ways, and a different criticism of tech is that some of it can also be negative for society, but that's a separate concern than it being wasteful, which I just don't agree with.)