Even those who have never heard of Thorsten Veblen or his Theory of the Leisure Class are familiar with his most famous idea: conspicuous consumption. It is familiar because it is everywhere. It is the reason that, even though a wedding ring is completely unnecessary for a happy marriage, a big diamond is still better than a small one. It is the reason why people buy hypercars that they never push above 65 mph. It is the reason influencers exist.

Any purchase that both exceeds the consumer’s basic needs and is highly visible counts as conspicuous consumption. People do it because so many of us equate wealth with worth, so proving our worth means that we must display our wealth. And we’ve been doing it for at least 5000 years — basically as long as we’ve had surplus time and resources to spend on showing off. Indeed, Veblen didn’t invent conspicuous consumption; he merely gave this ancient phenomenon a catchy name.

Even though conspicuous consumption is practically universal, its instantiation depends strongly on the cultural context. In some milieus, elaborate tattoos and grillz are surefire indicators of prestige. In others, employing an expensive paleo-diet chef to prepare dishes that — ironically — were once indicators of poverty and mere subsistence is a more “tasteful” sign of status.

Beauty is in the eye of the beholder. So are admiration, esteem, and distinction. The point here is not to criticize any individual consumption choices, nor to decry a widespread and ancient practice. Whatever floats your megayacht. My interest is, rather, to question how conspicuous consumption overlaps with investment, particularly in the VC scene in Silicon Valley.

Leave the Rolls in the Garage

Rather like high school, Silicon Valley is cliquey. Notoriously so. There’s even an app for it. For anyone who wonders whether they themselves are in the cool clique, who thinks that an app is the key to obtaining access to the cool clique, who hopes to buy or marry their way in, or who resents the whole system and thinks they’re all a bunch of phonies, I have some bad news. You’re not in the cool clique.

One widespread characteristic among those who are worth impressing is that they have real money. Buying a new, top-of-the-line Tesla won’t impress people who own the company. Fur coats, gold watches, and roaring engines are considered just plain crass. Marrying a “trophy wife” is not only a faux pas, but many will (understandably) balk at the very term. A certain level of wealth transcends consumption as a signifier. Status is demonstrated differently.

In short, conspicuous consumption doesn’t really apply as much in Silicon Valley due to the prevailing norms and the sheer wealth involved. No purchase is going to impress multi-billionaires. They can match any purchase, and they’ve probably accumulated their fortune by seeking recognition elsewhere.

How to Show Off Like a Pro

Just because members of Silicon Valley’s elite tend to avoid extravagant consumer purchases doesn’t mean they’re immune to the impulse. The cool kids in high school certainly care about being (perceived as) cool; it’s just that visibly fretting about and cultivating coolness is the least cool thing anyone can do.

Being cool in Silicon Valley requires a display, just like anywhere else, but it’s got to be the right kind of display. Those whose opinions matter are impressed by things like originality, acumen, and a career full of disruptive, momentous moves. A big score in Vegas is only impressive if it involved mentally counting cards or hacking the machines. A billion in utility profits earned through coal-fired plants is worth less than a billion earned through carbon-neutral bitcoin mining. That’s how the points are scored, and the game is entrepreneurship and investing.

For a given return, certain investments score more cachet than others. Someone with a history as a consistently successful angel can earn considerable prestige. Building cool, self-sustaining, profitable ventures from nothing is impressive. It shows cleverness, industriousness, and acuity. It also shows courage, because angels expose themselves to the greatest risk.

Another kind of prestigious investment is to acquire equity just before a big exit. This also displays good judgment and acuity, but it shows industriousness in a different way. Instead of having to nurture a tiny spark of a startup into a thriving business, the late-stage investor hitting just before the exit certainly had to hustle hard for that scarce stock. It also demonstrates an already-solid reputation in the clique. There are far more parties hungry for equity in such pre-exit ventures than there are shares to go around, so only those with the right connections and manner will obtain it.

Is the shortcut to being cool then simply investing in so many companies that at least one is guaranteed to win? That tactic might work if you only publicize the win and keep quiet about the duds. Otherwise it would betray an uncool desperation, like buying every fashion accessory you find on sale in a cool brand store.

So instead of consuming conspicuously, Silicon Valley’s VCs tend to invest ostentatiously. While it’s hard to rank cultural practices against each other, and it’s natural for everyone to prefer the norms and customs of their own group, some displays of status might be smarter than others. The ostentatious investors reap reputational benefits with money, but we’re making a profit in the process. It’s hard to make 10x on a back tattoo. Just sayin’.