If the author wanted to be fair, the title should be "Why Silicon Valley funds SpaceXes and Teslas, and not Hyperloops." And then it would be clear that the answer is simply that Elon is working on SpaceX and Tesla, and not on the Hyperloop.
But anyway. I am going to say something VERY controversial. Think of it as Devil's Advocate, squared, on steroids. Here goes.
The article could be seen as a rebuke to the fundamental principles of capitalism. You could say capitalism doesn't scale - not to Hyperloop size anyway. Projects at this magnitude simply require that bigger powers get involved. E.g., the government. Sorry for using the G-word in such a refined milieu.
Quote from the article: "Unfortunately, the market does not reward cash flow because the market does not reward value and innovation. The market rewards exits." If that doesn't ring a bell, I don't know what does.
Another quote: "The next reason that we don’t have Hyperloop, but we do have Instagram, is that Fortune 100 companies have notoriously bad in-house R&D. Therefore, acquisitions are driving most of the innovation. " Again, this could be seen as further proof that profit-driven endeavors only innovate small-scale and short-term. Larger leaps are driven by different incentives (I could go on a ramble about the joy of making, but that would be preaching to the choir round these parts of town). And when it comes to truly fundamental research - well, that field is simply allergic to what they call "the industry" (a slightly derisive term, when used in this context); spend some time among theoretical physicists and you'll see what I mean.
When I was young, I've read an essay by a Russian scientist, who was arguing that the centrally planned economy allows for high-magnitude projects, precisely because large financial forces can be easily engaged at this scale. I can't say I entirely agreed with the article back then (a kid growing up in the Eastern Bloc, not really liking the system), and I would not support it indiscriminately now either.
But then there's the Hyperloop. Or any other large scale project like this. Does capitalism scale at this level? Seems like it doesn't - at least not the capitalism of the smartphone app ecosystem. Are there any built-in limits to capitalism? Looks like there are - the limits are the power and wealth of a single individual, whereas some things are too big for any given person (and yes, I am aware that multiple investors could get involved to fund this project, which merely makes the problem slightly less bad, but still leaves it laying in the gutter).
Bear in mind, as someone who grew up behind the Iron Curtain, I definitely do not advocate for the Five Year Plan economy. But I think these concerns are legitimate. And I don't have any answers. Maybe someone here does. Or someone "out there".
Anyway, that's all I had to say.
"From 1850-1871, the railroads received more than 175 million acres (71 million ha) of public land - an area more than one tenth of the whole United States and larger in area than Texas."
Your example doesn't contradict the author's point, it supports it.
So here I have a "theory 10" -
THE PEOPLE go "meh" when faced with something like Hyperloop, but are excited to tell their 500 friends what they had for lunch at the push of a button. Hence the investors go "who cares?" and hence the "entrepreneurs" go "hmm, I better think about more efficient lunch sharing".
People need to be told something like "folks we're going to throw $60B of your tax money (an amount that would rid the hungry part of the planet for 2 years) at a transport system that you won't even be proud of, won't be that much faster or safer than air travel" to get a non-meh reaction to hyperloop. Even then, fast travel between SF and LA is, perhaps, a solved problem according to common folks - just fly already. Heck, you don't even have an interesting view during the trip according to the proposed designs.
On the other hand, post after post on HN talks about cool materials, 3D printing, maker culture, break through science, etc. So funded innovation is happening, it would seem. Just not in the main news very much perhaps.
And here is a "theory 11" - the common folk may actually <shock!> be satisfied with the status quo? Innovators often talk about a persistent dissatisfaction with the status quo as motivation for their work. On the "eastern" side of the planet, this dissatisfaction itself would seem to be the one that needs addressing .. i.e. being happy and contented is not the problem, but the lack of them is.
I meant "rid the planet of hunger for 2 years"! What a typo!
VC/Angel in SV has made enormous strides in working out how to reduce risk in entrepreneurship and is, to be honest, fairly incredible at selecting the companies that are going to work. YC is even better than most. The problem the author is talking about is that we (well, you) have become so good at selecting the winning companies that we're possibly throwing away the real risky bets that could be even bigger wins simply because an MVP and traction can't be found before lots of cash is on the table.
Of course, the exception to the author's point is, I believe, Planetary Resources.
And because of significant advantages and opportunities. Tesla, for example, benefits from the department of energy loan program as well as other tax incentives (like ZEV credits, which comprised most of their revenue thusfar)
There's nowhere near enough money in the VC world to justify the kind of investment it would require. As it happens the biggest VC rounds in recent history have gone to transportation companies like Fisker and Better Place, but even those are in the hundreds of millions rather than the billions something like Hyperloop would require.
And Tesla might have been cheaper at first, but Musk led the A round and participated in every funding until the F round (!).
Without a deep pocketed founder willing to absorb years of losses, what are the chances Tesla ever makes it to market? Even so they nearly died before they shipped the roadster.
So it isn't fair to say that SV's venture capitalists were lining up to fund these types of companies, and it remains to be seen whether they will do so in the future.
It's probably because there's very little money in it from the short term... but there just isn't a whole lot of money going towards radical start ups trying to go to space or build a hyperloop.
Silicon Valley is kicking in a few bucks at the end. (And guess who keeps all the profits.)