Founder of Primitive Ventures: In the Age of AI, Those Who 'Disappear' Are the Underclass

Author: Dovey, Founder of Primitive Ventures

The Permanent Underclass of Cerebral Valley

A dystopian term has begun to circulate in San Francisco's tech scene: "permanent underclass." This year, Silicon Valley has officially transformed into "Cerebral Valley" in the mouths of the younger generation.

160 Noe St in Duboce Triangle is not far from the core of Cerebral Valley. This house has just completed a two-year renovation: a six-person wide marble island, nine-foot high doors, and a loft staircase that can automatically fold into the ceiling. Young engineers visiting the house sigh, wishing it were six months later. The real estate agent relayed the seller's response, which essentially meant, "It's fine, I can accept equity in your company, as long as it's from OpenAI or Anthropic."

These two companies are expected to create at least 3,000 new millionaires with a net worth of over ten million dollars after their upcoming IPO, with 800 of them exceeding one hundred million dollars. According to Redfin's calculations, if these employees' post-tax equity values were realized, they could theoretically buy 29% of all residential properties in San Francisco's core area.

In the same city, amidst waves of AI-driven cost-cutting and efficiency improvements, nearly 50,000 tech jobs have disappeared. Job postings for tech positions are still about 40% lower than before the pandemic. Remaining big tech employees tread carefully, with Meta employees even willingly accepting the company's demand to install all-day keyboard/screen tracking technology, either distilling themselves or facing immediate layoffs. This is the plight of the permanent underclass.

The unabashed new class humiliation has transformed companies that once embodied the coolest geek culture of the previous internet generation into what people now refer to as "squid factories." It has only been 15 years since Facebook's world-renowned IPO.

Looking solely at consumption, Americans still have money to spend. However, breaking down the types of consumption reveals that the top 10% of households spend nearly as much on non-essentials as the bottom 70% combined. The bottom half of households own less than 3% of the wealth, while the top 10% hold 59%. Thus, the so-called resilient US consumer is actually an average of two different worlds represented in one line of macro data: one group travels, seeks healthcare, education, and entertainment based on asset appreciation; the other group is starting to need installment payments just to buy necessities.

During the pandemic, consumption supported by the government's balance sheet is slowly shifting to residents' balance sheets. Credit card balances have climbed from about $820 billion at the end of 2020 to $1.25 trillion, with average interest rates still above 20%. Nearly 10% of working-age adults have purchased daily necessities through buy-now-pay-later loan programs, with about one-third having missed payments in the past year. The real wages of the vast middle class have lagged far behind inflation, and the economic headlines touting America's "demand resilience" are actually reflecting the "resilience" of the private sector credit system.

The Equalization Card of the Post-90s Generation

In the past five years, China's real estate sector has issued an equalization card to all social classes. The collapse of real estate as the core anchor of household wealth has led to a reversal of the wealth effect and a decline in the private sector's balance sheet. This is the biggest difference from the US: in China's consumption function, the elasticity of the wealth effect is much higher than that of the income effect. This means that even if disposable income continues to grow (with a projected real growth of 5.0% in 2025), as long as asset prices continue to shrink, the willingness to consume will be hard to restore. When deflationary expectations become a social consensus, consumer behavior will self-reinforce this expectation— the less they consume, the more prices fall; the more prices fall, the less they consume. This downward spiral will become a self-fulfilling prophecy: in the third quarter of 2025, 63.8% of urban savers indicated a preference for "more savings," while only 19.2% preferred "more consumption." The core drive of households has shifted from profit maximization to debt minimization.

China's K-shaped divergence is primarily reflected in domestic demand vs. exports: in June, exports rose by 27% year-on-year, high-tech manufacturing increased by 13.3%, and integrated circuit manufacturing surged by 67.3%; however, fixed asset investment fell by 5.7%, real estate development investment dropped by 18%, and new housing sales decreased by 13.6%. The WAIC has allowed tech practitioners to feel the beauty of economic upturns again, but only a few employees from leading model companies and suppliers in the T-chain and D-chain are experiencing this upturn.

The Disappearing Underclass

Winners are naturally favored by algorithmic dissemination, while the suffering of ordinary people goes unnoticed. In a collective short attention span, everyone is busy watching the next winner. Losers have neither market value nor narrative. The underclass has simultaneously disappeared from narratives and each other's views, becoming a mere statistic.

For nearly fifty years, China's reform and opening up, combined with globalization, has seen the US continuously export capital, new assets, and inflation, while China exports manufacturing capabilities, scale effects, and speed. The path believed in by two generations in both China and the US has been: work hard, accumulate income, purchase assets, and achieve a leap. If future careers no longer provide stable income, and work no longer defines a person's value, then why cling to the identity, dignity, and meaning of life established around past work ethics? The collapse of the old value system also releases the possibility of redefining humanity.

Hannah Arendt clearly divides human active life (Vita activa) into three core activities: labor, work, and action. She believes that people should not only prove their existence through labor; we also need to create a meaningful world and be seen by others in public spaces.

Action, in this context, means choosing to enter the map without a script, adopting the mindset of a protagonist, and initiating something that previously did not exist. No model can decide for a person: what is worth loving, what is worth bearing, and with whom one is willing to level up and fight in this vast MMORPG game called the world. When established paths cannot answer "who are you," perhaps after pain and confusion, it is also a delayed form of freedom.

The disappearance of the underclass signifies that everyone is forced to truly own their lives for the first time.

"In case I don't see ya, good afternoon, good evening, and good night!"

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