Too Many Start-ups to Survive?

You probably won’t find the American Dream in Silicon Valley anymore, says Geoff Lewis, a Principal at Founders Fund, the San Francisco-based venture capital firm created by Peter Thiel in 2005.

“I don't think the American Dream is dead, but I certainly don't think the new American Dream is in Silicon Valley,” Lewis said on Squawk BoxThursday morning. “I think the new American gold rush is what's happening in Silicon Valley right now.”

That sounds like an unusual stance for Lewis, whose firm is well-known for betting on glitzy start-ups such as Facebook and Spotify.

But Lewis contends that “the region is being flooded with people, with new entrepreneurs starting mostly crap companies and VCs playing the momentum game, hoping that the greater fool theory will end up playing out,” Lewis said.

Founders Fund is trying to be “responsible amidst the insanity,” he added.

Sorkin asked Lewis if it’s “all going to end badly” in Silicon Valley, particularly since the stock of Internet darlings Facebook, Zynga, and Groupon are all struggling.

[MORE ON CNBC.COM: 10 Notable Google Acquisitions]

“It’s had no impact for us because we’re not playing the momentum game,” Lewis said. “What we’re looking for is companies where there is a fundamental technological and business model innovation that is enduring. We take a 10-plus year time horizon.”

Still, despite Facebook’s recent struggles, “we are looking at social (companies) occasionally….for us, it’s really about ‘is there something fundamentally different, that if it works, can it unlock a huge market?’ There are probably opportunities in social.”

Email us at and follow us on Twitter@SmallBizCNBC.