FastCompany says the Internet wrecked the California economy

The article by Douglass Rushkoff, How the Tech Boom Terminated California’s Economy, blames the Internet for not only California’s current economic mess, but also for “undermining America’s biggest industry–finance.”

It’s an interesting, theory, that is probably worth a read. Personally I think the whole argument is flawed to the point of being silly, but judge for yourself and be sure to check the comments. But what really caught my eye in the piece is this gem:

“Anyone with a PC and bandwidth can program the next Twitter… the hundreds of millions that venture capitalists want to–need to–invest, simply aren’t required.”

What a crock. This myth has hurt a lot of people and it needs to end. There is a big difference between “a few thousand dollars” and “hundreds of millions” of dollars in investment.  Whether you call it “venture capital” or not, most startups need at least enough cash invested to pay a few people and their service providers until their exit or until they reach positive cash flow (which neither Twitter nor Facebook has done yet) – that’s going to take A LOT more than “a few thousand dollars.”

Rushkoff’s example of Twitter is hilarious because they’ve burned a large amount of cash and have huge operating expenses, independent of salaries, for their SMS telecoms bills, for example. “Anyone with a PC” might think up Twitter, and even code it, but as commentor @Bjorn said, they are not going to be able to operate it as a business.

PS: I tried to post this as a comment to the original article, but their site failed.