This blog contains original articles as well as articles from the book "Start-Up", by Hervé Lebret, which exists both in English and French. It is available on Amazon as well as in electronic versions. To buy it, click here.
Follow hlebret on Twitter rss_logo-st-book amazon-sq-logo-gb

HBO meets Silicon Valley – episode 1

April 20th, 2014 Comment »

I already posted about Silicon Valley’s trailer. Here are a few pictures and one quote… Enjoy!

SV1

SV3

SV2

- “That’s weird, they always travel in groups of 5, these programmers. There is always a tall skinny white guy, a short skinny asian guy, a fat guy with a ponny tail, some guy with crazy facial hair, and then an east indian guy. It’s as if they trade guys until they have the right group.
- You clearly have a great understanding of humanity.”

SV4-sma

A Look Back at the Swiss February 9 Votation

April 17th, 2014 Comment »

Here is my regular column in Entreprise Romade. This time, the impact of the vote on February 9…

ER-Avril2014-Lebret-72dpi

So much has has been said and written about the impact of the vote on Feb. 9 on academic research and education, that I have hesitated before writing this column. Freezing of the exchange of students through the Erasmus + program and the access to ERC grants for top researchers; degradation to the rank of third country in the Horizon 2020 research programs. All this was well explained and should be known to those who are or feel concerned. Foretold disaster or major constraint to which Switzerland will adapt through its own genius, the future only will tell. Finally, the people are sovereign and the concerns expressed trhough the vote are fairly shared, in Europe and even in the USA. Europe suffers probably more than Switzerland and our neighbors have shown their misunderstanding rather than frustration.

So I will just try to illustrate here the reasons for my sadness. A simple anecdote to start: I arrived at EPFL in 2004. The first file on which I worked was the project of a young Spanish student, Pedro Bados. He had just finished his master’s thesis as part of an exchange program and his work had produced some nice results. These results were patented, and the student turned into an entrepreneur when he founded NEXThink which today has about one hundred employees. The start-up, which is headquartered on the EPFL campus, is supported in part by foreign capital due to the weakness of the Swiss venture capital scene.

Mr. Blocher had told Radio Suisse Romande he did not believe in big European projects that do not work. It is true that innovation can not be planned and very clever is the one who can predict the future. But Pedro’s innovation is real however and simply would not have existed without Erasmus. NEXThink is not the only Swiss company founded by a migrant. Biocartis has raised over CHF 250 million and its founder Rudi Pauwels, is Belgian. He is a “serial entrepreneur” who had come to seek inspiration at EPFL after a first success. More than three quarters of the spin-off EPFL have foreign founders, and half are European.

Another anecdote: Switzerland is a model for its neighbors in academic matters and for its innovation performance. Many universities and representatives from European regions visit the EPFL campus. For six months, I have been working on a project with three other European technological universities on high-tech entrepreneurship. Without accepting the intiative on mass immigration, we would have been the project leader of an exchange program for entrepreneurs. We will not be better than a third country and I can not work with my Swiss colleagues from the private sector who have a good knowledge in the internationalization of entrepreneurship. We will adapt…

The problem is not so much economic as Switzerland contributed largely to the funding of these programs. It is human. In a recent debate in Neuchatel, Peter Brabeck, chairman of Nestlé, said: “75% of people working in Switzerland in our research and development teams are foreigners; this vote is creating a lot of uncertainty for them. But I can assure you of one thing: Nestlé will not lose a single one of its scientists. But Switzerland perhaps. Because if I do not have the right to employ them in Switzerland, so I will have them work elsewhere on their projects” [1]. Novartis had already made long ago the choice to open a research center in Boston. On a smaller scale, HouseTrip, a recent success story from the Lausanne Hospitality School, moved to London, because of the lack of local talents.

Last anecdote: I arrived in Switzerland in 1998 and the process of obtaining my work permit took more than six months…; it was not an easy arrival. The entry into force of the bilateral agreements, in 2002, certainly simplified the decision of Pedro Bados to create his start-up in Switzerland; no doubt. I have no idea how future young foreign entrepreneurs will experience our new situation. Switzerland will probably adapt here too! But I do not see who wins anything at complicating the arrival of talents whereas they leave very easily.

I finish on a more symbolic dimension by quoting a participant in another debate on the subject [2]: “And to return to the question of research, EPFL has not only research capacity, it has a serious mission in training. I’m an engineer and I am amazed to see that the very notion of engineer is disappearing when the EPFL is now staking everything on biotechnology. I’d like to see EPFL still train people how to build bridges.” If the academic world has been so little audible despite its attempts, it is perhaps because it is not as well liked as you might think. Switzerland does not like elitism. One prefers established SMEs to start-ups, which do not make people dream as in Silicon Valley and pension funds do not support the venture capital. When I attended a selection committee of promising young people, I heard the jury member smile while indicating that only 2-3% of Swiss students benefited from Erasmus and if it was for them to live what describes the movie “L’Auberge Espagnole” (The Spanish Inn), this may not be so bad. Yet high-tech entrepreneurship also concerns only 2-3% of our students. Scarcity and elitism, I think, are more important than you think.

EPFL did not stop training specialists of concrete or mechanical structures. Academic research has even improved the quality and cost of bridges. But the world is changing too. Bioengineering, computer science are promising and future innovations in these disciplines will be much larger than those that improve our bridges and tunnels. One does not need to be a genius to understand this. Except if we have lost faith in science and technology? I can tell you that Asia and America have not lost that confidence. Would Switzerland be like Europe?

I understand that the initiators of the referendum are sticking to their positions and consider that the country’s problems were more important than the consequences thereof. Expressing a frustration in front of a Europe in crisis or a concern for the future is one thing. Minimizing the impact this will have on Switzerland seems to be a risky bet. I respect the decision, but I regret it… badly.

[1] http://www.arcinfo.ch/fr/regions/canton-de-neuchatel/a-neuchatel-le-president-de-nestle-peter-brabeck-s-inquiete-des-consequences-du-vote-du-9-fevrier-556-1271025

[2] Florence Despot on the RTS: http://www.rts.ch/info/dossiers/2014/les-consequences-du-vote-anti-immigration/5619927-playlist-immigration-suites.html?id=5598709

Street Art @ EPFL – the end

April 11th, 2014 Comment »

I walked again on EPFL campus and after my first discoveries that can be seen on Street Art @ EPFL – or not Street Art? here are my final pictures. First the final result of two pieces (whch I had shown as work in progress).

- Edgar Mueller and his site Metanamorph

EPFL-StreetArt-EdgarMueller1

EPFL-StreetArt-EdgarMueller2

- Truly Design Studio and their site Truly Design

EPFL-StreetArt-TDS-6

EPFL-StreetArt-TDS-4

EPFL-StreetArt-TDS-3

EPFL-StreetArt-TDS-2

EPFL-StreetArt-TDS-5

EPFL-StreetArt-TDS-1

EPFL-StreetArt-TDS-7

finally three new works created near the new congress center:

- 3D Joe&Max and his site 3djoeandmax
EPFL-StreetArt-3DJoeandMax1

- Sylvain Meyer and his web pages on artnet.ch
EPFL-StreetArt-Meyer2

EPFL-StreetArt-Meyer1

- Daniel Schlaepfer and his site www.dschlaepfer.com
EPFL-StreetArt-Schlaepfer1

EPFL-StreetArt-Schlaepfer2

Dogfight: the dynamics of competition in fast-growth markets.

April 10th, 2014 Comment »

Following my previous post about Dogfight and the Apple vs. Google war in the mobile world, here is an excerpt I found interesting. You can also find it on Wired: Apple vs Google: Did Apple Learn Anything From Its War With Microsoft?

gorillagame

The reason why this is interesting is that it reminds me an old book I read in my Index years. The Gorilla Game by the famous Geoffrey Moore. Moore explains why in high-tech high-growth markets, there is usually space for only one major player. Apple and Google in the mobile world might be a historical aberration. Read why below…

DogFight

“Jobs said he never saw the similarity between his fight with Android and his fight with Bill Gates and Microsoft in the 1980s. But just about everyone else inside and out of Apple did. Android and iPhone were in a platform war, and platform wars tend to be winner-take-all contests. The winner ends up with more than 75 percent of the market share and profits — and the loser ends up scrambling to stay in business.

In the Microsoft/Apple fight, Microsoft won by more widely distributing its software, which created a bigger selection of applications to buy, which attracted more customers. Once customers had spent hundreds of dollars on applications that ran on only one platform, it was much harder to get them to switch. Ultimately, everyone started using computers running Microsoft DOS and then Windows because everyone else was doing it. This wasn’t lemming-like behavior, but completely rational. Computers were only useful if work performed on one machine could be used on another machine.

This was almost precisely the Android strategy. In 2010, the Android ecosystem was still far from robust. The Android app store was badly organized, and developers had a tough time making money there. Apple’s three-year head start had allowed it to sell nearly 60 million iPhones, create a store with more than 200,000 applications, and establish a developer ecosystem that had been paid more than $1 billion over two years. But because any phone manufacturer could make an Android phone, the size of the Android platform was exploding. By the end of 2010, it was as big as the iPhone’s. And it seemed like only a matter of time before Google fixed the problems with its app store.

More worrisome to Apple was that Rubin could succeed without having to convince many iPhone customers to switch. The number of people worldwide switching from cell phones to smartphones in the coming years was going to be so enormous that he just needed to focus on that group — not necessarily on iPhone customers — to get a dominant smartphone market share. It seemed unfathomable that Jobs would lose two battles the same way a generation apart. But with so many similarities between the two dogfights, it was hard not to think about it.

There have always been good reasons to believe that the Apple/Google fight might not play out like Apple versus Microsoft: Developers seem more capable of writing software for two platforms than they were in the 1980s. The platform-switching costs are much smaller, too. Back then, PCs cost more than $3,000 and each software title cost more than $50. Now the costs are less than a tenth of those. A new phone with a carrier subsidy costs $200, and each app costs less than $3 and is often free. Also, third parties — the carriers — continue to have a vested interest in making sure consumers have as many ways to connect to their network, and pay them money, as possible.

But what Google and Apple executives have always understood is that if the battle turns out that way — if somehow their mobile platforms can harmoniously coexist — it will be a historical aberration. Because of the press coverage surrounding the Microsoft antitrust trial 14 years ago, a huge amount of analysis has been devoted to how Microsoft built its Windows monopoly in the PC business: If you get enough people using your technology platform, eventually it creates a vortex that forces almost everyone to use it. But these economic forces have not been unique to Microsoft. Every major technology company since then has tried to create the same kind of vortex for its business.

It was how Jobs had dominated the music-player business with the iPod. It was also how Google in 2004 started to embarrass and challenge Microsoft for dominance in high tech and pushed Yahoo! to the brink of implosion. Google’s top-quality search secured the most search traffic. That gave it the best data about user interests. That data made its search advertisements appearing alongside the search results the most effective. That virtuous circle encouraged more search traffic, more data, and even better search ads. No matter how much Microsoft and Yahoo! tried to attract traffic with lower ad rates and improved search results, Google was always able to offer a better deal.

eBay did the same thing to the roughly two dozen other online auction companies, such as OnSale and uBid. By allowing buyers and sellers to easily communicate and rate one another, it built a self-policing community. That fueled a rapid growth in bidders. The more bidders eBay acquired, the more reliable its prices became. The more reliable eBay’s prices became, the more new bidders wanted to use it. The more bidders wanted to use eBay, the less they wanted to use competitors’ sites. Facebook’s social media platform is the most recent example of the power of platform economics. Its superior technology allowed it to offer users better features than competitor MySpace. Better features made Facebook more useful. The more useful it was, the more data users shared. The more data users shared, the more features Facebook could offer. Soon people were joining Facebook just because everyone else was joining Facebook.

As the mobile platform wars go forward, Google’s and Apple’s ecosystems might be able to coexist long term and generate big profits and innovation for both companies. But given recent history, they will have to fight it out as if it won’t happen that way. “It’s like the battle for the monopolies that the cable guys and the phone guys got 30 to 40 years ago,” said Jon Rubinstein, the longtime top Apple executive and former CEO of Palm. “This is the next generation of it all. Everyone — Apple, Google, Amazon, and Microsoft — is trying to build their walled garden and control access to content and all that. It’s a really big deal.” And it’s not the kind of thing Apple or Google can afford to be wrong about.” [Pages 142-145]

Silicon Valley: the HBO new series

April 8th, 2014 Comment »

I had dreamt about it, HBO has done it…HBO-Silicon Valley
More when available in Europe…
SiliconValley-HBO

Here is the trailer. Funny and … true!

Street Art @ EPFL – or not Street Art?

March 28th, 2014 Comment »

EPFL is organizing a really nice exhibition of Street Art on the occasion of the inauguration of its new convention center. If I ask “Street Art or Not Street Art?” it’s because in general Street Art is an unauthorized form of art. But that does not diminish the charm of the works and the quality of the artists. Readers of this blog may ask where is the connection with start-ups. There is none, but I love this topic as you can see by following the Street Art tag. All this may be ephemeral. It is a work in progress so enjoy the days to come… Here is the link of the exhibition Art On Science.

streetart-EPFL

- Leon Keer and his web site Streetpainting 3D

EPFL-StreetArt-LeonKeer1

EPFL-StreetArt-LeonKeer2

EPFL-StreetArt-LeonKeer-WiP
Work in Progress…

- Zebrating and his web site Zebrating-Art

EPFL-StreetArt-Zebrating1

EPFL-StreetArt-Zebrating2

EPFL-StreetArt-Zebrating-WiP
Work in Progress…

- Edgar Mueller and his web site Metanamorph
EPFL-StreetArt-EdgarMueller-WiP
Work in Progress…

- Truly Design Studio and their web site Truly Design
EPFL-StreetArt-TDS-WiP
Work in Progress…

Maybe more to come if more appears… I also noticed other icons in a similar style, but not belonging to the exhibition. Two invaders
EPFL-StreetArt-Invaders

My colleague Pascal who knows so much about EPFL explained me that these nice little invaders were created for a 2010 exhibition. Here is the link Objectif Science – 2010 and the full collection

epfl-invaders

and a few more.
EPFL-StreetArt-BC

Finally some real Street Art?
EPFL-StreetArt-graffiti

Dogfight: How Apple and Google Went to War and Started a Revolution

March 26th, 2014 Comment »

While reading Dogfight: How Apple and Google Went to War and Started a Revolution in the public transportation, this morning, I just took a short pause and looked at the two young people in front of me. They were both using their iPhone and I thought about the revolution which occurred in less than 10 years. Not many ebooks yet, no more newspapers and a few older guys like me still reading books. But most were using their smart phone…

DogFight

Dogfight describes the behind-the-scene history of a giant battle (I am not sure it is a war) between Google’s Android and Apple’s iPhone. No need to give a complete a account, but just a few points. For example Fred Vogelstein writes (page 13): “One of the things that I didn’t expect when I took on this project was how hard it is to conceive and build the products that Steve Jobs liked to casually pull out of his pocket onstage. Whether you are an Apple engineer, a Google engineer, or any engineer, building products that change the world isn’t just work. It’s a quest. It leaves its participants not only tired the way all jobs sometimes do but mentally and physically exhausted – even traumatized – at the end. Part of Jobs appeal as a leader and a celebrity was that he successfully hid all this from public view. He made innovation look easy. [...] Before there could be smartphones and tablets we all now buy and take for granted, there was yelling, screaming, backstabbing, dejection, panic, and fear over what it would take to get these projects off the ground.”

And Vogelstein shows also the dirty politics and huge internal fights such as the one between Tony Fadell and Scott Forstall.

feature_scottforstall43__02__768x415

On the shoulders of giants…

The politics also exist at Google and there was similar tension between the iPhone team led by Vic Gundotra and the Android team led by Andy Rubin. The fight was really at its highest between Apple and Google, between Jobs and the triumvirat Schmidt, Page & Brin.

Rubin-Gundotra-Pichai
Andy Rubin, head of Android, Vic Gundotra, head of social, Sundar Pichai, head of Chrome in 2011.

It seems Google was embarrased by Jobs’ attitude (page 102): “They believe that there are very few firsts in Silicon Valley – that all innovation are built on the shoulders of others [...] One piece of evidence the Googlers used to make their point in their negotiations with Jobs was a 1992 video of James Gosling, a famous Sun Microsystems engineer and inventor of the Java programming language, showing off the Star7. This crude-looking handheld device had a 200KB radio; a four-inch, LCD, color TV screen; and speakers from a Nintendo Game Boy. Even then, before anyone but the richest executives had a mobile phone or had seen a Newton handheld, Gosling was showing off a machine not only with a touchscreen but with inertial scrolling. The harder you flicked the screen, the faster it scrolled through items.”

… Jobs and God

Most Silicon Valley people were (and still are) fascinated by Jobs. Vic Gundotra belongs to that group (page 98): “One Sunday morning, January 6th, 2008 I was attending religious services when my cell phone vibrated. As discreetly as possible, I checked the phone and noticed that my phone said “Caller ID unknown”. I choose to ignore. After services, as I was walking to my car with my family, I checked my cell phone messages. The message left was from Steve Jobs. “Vic, can you call me at home? I have something urgent to discuss” it said. Before I even reached my car, I called Steve Jobs back. I was responsible for all mobile applications at Google, and in that role, had regular dealings with Steve. It was one of the perks of the job. “Hey Steve – this is Vic”, I said. “I’m sorry I didn’t answer your call earlier. I was in religious services, and the caller ID said unknown, so I didn’t pick up”. Steve laughed. He said, “Vic, unless the Caller ID said ‘GOD’, you should never pick up during services”. I laughed nervously. After all, while it was customary for Steve to call during the week upset about something, it was unusual for him to call me on Sunday and ask me to call his home. I wondered what was so important? “So Vic, we have an urgent issue, one that I need addressed right away. I’ve already assigned someone from my team to help you, and I hope you can fix this tomorrow” said Steve. “I’ve been looking at the Google logo on the iPhone and I’m not happy with the icon. The second O in Google doesn’t have the right yellow gradient. It’s just wrong and I’m going to have Greg fix it tomorrow. Is that okay with you?” Of course this was okay with me. A few minutes later on that Sunday I received an email from Steve with the subject “Icon Ambulance”. The email directed me to work with Greg Christie to fix the icon. Since I was 11 years old and fell in love with an Apple II, I have dozens of stories to tell about Apple products. They have been a part of my life for decades. Even when I worked for 15 years for Bill Gates at Microsoft, I had a huge admiration for Steve and what Apple had produced. But in the end, when I think about leadership, passion and attention to detail, I think back to the call I received from Steve Jobs on a Sunday morning in January. It was a lesson I’ll never forget. CEOs should care about details. Even shades of yellow. On a Sunday. To one of the greatest leaders I’ve ever met, my prayers and hopes are with you Steve.”

More to come maybe when I am finished with Dogfight…

When Peter Thiel talks about Start-ups – Final Thoughts: Human After All

March 21st, 2014 Comment »

As you noticed if you read my previous posts, I’ve been quite impressed by Peter Thiel’s notes about start-ups. I’ve written 7 long parts. I had been similarly impressed by Mariana Mazzucato’s The Entrepreneurial State even if with only 5 posts!

Thiel-Mazzucato

I said it already, I would have loved to attend their debate in a few days at the conference Human After All, Toronto 2014. But apparently they do not participate to the same roundtable anymore… (After reading what follows, I see that Taleb would have been a great addition).

- He will discuss “The Economics of Radical Uncertainty.”
How do human beings truly react when confronted with conditions of genuine “unknown unknowns”? According to Frank Knight, “Uncertainty must be taken in a sense radically distinct from the familiar notion of risk, from which it has never been properly separated…The essential fact is that ‘risk’ means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far – reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating… It will appear that a measurable uncertainty, or ‘risk’ proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all.” The economics literature from Knight onward is very good at laying out the propensity of markets to greatly overshoot and undershoot the fundamentals. However, economics does not adequately address the implications of “Knightean” uncertainty, because the discipline finds it hard to model this phenomenon. To get a full measure of this, one has to enter into the realm of psychology and neuroscience. That’s where the definition lies. Radical uncertainty, like so much else, is too important to be left to the realm of economics alone.

- She will be part of “Innovation: Do Private Returns Produce the Social Returns We Need?”
The machines of the first age replaced and multiplied the physical labour of humans and animals. The machines of the second age will replace and multiply our intelligence. The driving force behind this revolution will, argue the “techno-positivists,” exponentially increase the power (or exponentially reduce the cost) of computing. The celebrated example is Moore’s Law, named after Gordon Moore, a founder of Intel. For half a century, the number of transistors on a semiconductor chip has doubled at least every two years. But the information age has coincided with – and must, to some extent, have caused – adverse economic trends: stagnation of median real incomes; rising inequality of labour income and of the distribution of income between labour and capital; and growing long – term unemployment. Are the great gains in
wealth and material prosperity created by our entrepreneurs in and of themselves sufficient to produce desired social returns demanded in today’s world?

Start-ups are a great area to study the tension between individuals and society. A kind of chicken and egg situation… Indeed they might explain the growing gap between the USA and Europe in many dimensions. Mazzucato would be on the social side, Thiel closer to the individual. But do not see any provocative statement here. The thoughts of Thiel and Mazzucato are profound. I agree with most of what they say, disagree with smaller pieces, though most people could think their thinking can not be reconciled. I really think that combining their point of views is an interesting approach to what innovtaion really is…

When Peter Thiel talks about Start-ups – part 7: luck & uncertainty

March 19th, 2014 Comment »

This is my last post about Thiel’s class notes at Stanford and it is about Class 13 – Luck. Now I need to wait for his book to be published…

zerotoone

I love accidents. I mentioned it in a post which has nothing to do with start-ups (related to Street Art). The accident here is funny: I totally forgot to copy-paste Thiel’s class 13 and it is only when I began to read class 14 that I noticed my mistake. Now let me quote Thiel: “Note that this is class 13. We are not going to be like the people who build buildings without a 13th floor and superstitiously jump from class 12 to 14. Luck isn’t something to circumvent or be afraid of. So we have class 13. We’ll dominate luck.” Strange, right? I had to call this final part, part 7…

So what does Thiel say about luck? Well it is a debated topic, as I experienced in my activity at EPFL. Thiel feels the same. He begins with: “The biggest philosophical question underlying startups is how much luck is involved when they succeed. As important as the luck vs. skill question is, however, it’s very hard to get a good handle on. Statistical tools are meaningless if you have a sample size of one. It would be great if you could run experiments. Start Facebook 1,000 times under identical conditions. If it works 1,000 out of 1,000 times, you’d conclude it was skill. If it worked just 1 time, you’d conclude it was just luck. But obviously these experiments are impossible.” adding the famous Thomas Jefferson’s line: “I’m a great believer in luck, and I find the harder I work the more I have of it.”

Thiel is not so much interested in luck as in determinism vs. indeterminism. “If you believe that the future is fundamentally indeterminate, you would stress diversification. […]. If the future is determinate, it makes much more sense to have firm convictions. […] Overlay this diversification/conviction dynamic over the optimism/pessimism question and you get further refinement. Whether you look forward to the future or are afraid of it ends up making a big difference. And here is his vision of the world:

Thiel-World1

With an even more surprising and quite convincing:

Thiel-World2

“But the indeterminate future is somehow one in which probability and statistics are the dominant modality for making sense of the world. Bell curves and random walks define what the future is going to look like. The standard pedagogical argument is that high schools should get rid of calculus and replace it with statistics, which is really important and actually useful. There has been a powerful shift toward the idea that statistical ways of thinking are going to drive the future.”

But here I’d love to ask Peter Thiel what he makes of Black Swans if he believes in 0 to 1 more than in 1 to n. 1 to n belongs to statistics, not 0 to 1… (read again my part 1 if this is cryptic)

Thiel-World-SFBA

Thiel likes crazy ideas, like Reber’s project for the Bay Area in the 1940s above. He also still believes in finance despite its excesses: “In a future of definite optimism, you get underwater cities and cities in space. In a world of indefinite optimism, you get finance. The contrast couldn’t be starker. The big idea in finance is that the stock market is fundamentally random. It’s all Brownian motion. All you can know is that you can’t know anything. It’s all a matter of diversification. There are clever ways to combine various investments to get higher returns and lower risk, but you can only push out the efficient frontier a bit. You can’t know anything substantive about any specific business. But it’s still optimistic; finance doesn’t work if you’re pessimistic. You have to assume you’re going to make money. […] Indeterminacy has reoriented people’s ideas about investing. Whereas before investors actually had ideas, today they focus on managing risk. Venture capital has fallen victim to this too. Instead of being about well-formed ideas about future, the big question today is how can you get access to good deals. In theory at least, VC should have very little in common with such a statistical approach to the future.“

And he might agree with Mariana Mazzucato during his debate to come with her (at Human After All, Toronto 2014 – program in pdf) : “The size of government hasn’t changed all that much in the last 40-50 years. But what the government actually does has changed radically. In the past, the government would get behind specific ideas and execute them. Think the space program. Today, the government doesn’t do as many specific things. Mainly it just shifts money around from some people to other people. What do you do about poverty? Well, we don’t know. So let’s just give people money, hope it helps, and let them figure it out.”

Darwinism and design.

And all of a sudden, while reading this class 13, Thiel again surprises me! Obviously, the indeterminate optimism can be quite easily linked to Darwin’s theory of evolution. Accidents happen, but there is general positive evolution. And “Applied to start-ups, obsession with indeterminacy leads to the following phenomena:
• Darwinistic A/B testing
• Iterative processes
• Machine learning
• No thinking about the future
• Short time horizons”

Typical Blank’s messages! But Thiel envisages another possibility: “Apple is absolute antithesis of finance. It does deliberate design on every level. There is the obvious product design piece. The corporate strategy is well defined. There are definite, multi-year plans. Things are methodically rolled out.” (I do not think Thiel talks here about intelligent design which is opposed to Darwinian theory, but the coincidence is a little puzzling!

“On the heels of Apple has come the theme of well-designed products being really important. Airbnb, Pinterest, Dropbox, and Path all have a very anti-statistical feel. […] That link—great design—seems to work better and faster than Darwinistic A/B testing or iteratively searching through an incredibly large search space. The return of design is a large part of the countercurrent going against the dominating ethos of indeterminacy. Related to this is the observation that companies with really good plans typically do not sell. If your startup gets traction, people make offers to buy it. In an indefinite world, you will take the money and sell, because money is what you want. […] But when companies have definite plans, those plans tend to anchor decisions not to sell.[..] In an indefinite world, investors will value secret plans at zero. But in a determinate world, robustness of the secret plan is one of the most important metrics […] It’s important to note that you can always form a definite plan even in the most indefinite of worlds. […] We’re falling downwards towards pessimism. Can we shift instead to definite optimism?”

This is the end of my notes on Thiel’s great vision about start-ups.

When Peter Thiel talks about Start-ups – part 6: founder uniqueness, technology singularity

March 17th, 2014 Comment »

Thiel’s concludes his Class Notes Essays (CS183 —Stanford, Spring 2012) with philosophical considerations about the uniqueness of founders (class 18) and the singularity of technology (class 19). Founders are a topic I regularly covered, for example with European Founders at Work or Founders at Work.

Again Thiel presents unusual ideas about founders. He sees them as a combination of extreme outsiders and extreme insiders.
Thiel-extreme-in-out
which he reinforces with this virtuous/vicious circle:
Thiel-extreme-in-out-circle

If this is not clear, two examples may help:
- “All [these] questions apply to Gates. Was it nature or nurture? He was a Harvard insider but a dropout outsider. He wore big glasses. Did he become a nerd unwillingly? Did he prosper by accentuating his nerdiness? It’s hard to tell.”
- “And then there’s the Steve Jobs version. [...] He had all the classic extreme outsider and extreme insider traits. He dropped out of college. He was eccentric and had all these crazy diets. He started out phreaking phones with Steve Wozniak. He took LSD.”

Thiel is convincing when he explains that a start-up is not a democracy. Founders are Kings, and Thiel may have followed René Girard at Stanford since he then develops a theory of scapegoats. The god may become a victim.
Thiel-monarchy

Thiel is a little short about the dual-founder situation: “The dual founder thing is worth mentioning. Co-founders seem to get in a lot less trouble than more unbalanced single founders. Think Hewlett and Packard, Moore and Noyce, and Page and Brin. There are all sorts of theoretical benefits to having multiple founders such as more brainstorming power, collaboration, etc. But the really decisive difference between one founder and more is that with multiple founders, it’s much harder to isolate a scapegoat. Is it Larry Page? Or is it Sergey Brin? It is very hard for a mob-like board to unite against multiple people—and remember, the scapegoat must be singular. The more singular and isolated the founder, the more dangerous the scapegoating phenomenon. For the skeptic who is inclined to spot fiction masquerading as truth, this raises some interesting questions. Are Page and Brin, for instance, really as equal as advertised? Or was it a strategy for safety? We’ll leave those questions unanswered and hardly asked.”

Thiel-dual-founders

Thiel’s vision (as well as the visions of his guests – I mixed them here) of technology was mentioned in my previous post. Again quite fascinating. “People do tend have some view of the future. They usually project relative stagnation. People tend to believe that, not only will most things not change, but what will change won’t change very quickly.” But “there’s a compelling case that we’ll very likely see extraordinary or accelerated progress in the decades ahead.”

One guest: “My take is that innovation comes from two places: top-down and bottom-up. There’s a huge DIY community. These hobbyists are working in labs they set up in their kitchens and basements. On the other end of the spectrum you have DARPA spending tons of money. Scientists are talking to each other from different countries, collaborating. All this interconnectedness matters. All these interactions in the aggregate will bring the change.

Another guest: “I disagree. There are a very few visionary people who can make a real difference at the formative early stage. This is why mainstream opinion formers are absolutely pivotal. Perhaps no other subset of people could do more to further radical technology. By overpowering public reluctance and influencing the discourse, these people can enable everyone else to build the technology. If we change public thinking, the big benefactors can drive the gears.”

The third guest: “I do not think that progress will come from the top-down or from the bottom-up, really. Individual benefactors who focus on one thing, like Paul Allen, are certainly doing good. But they’re not really pushing on future; they’re more pushing on individual thread in homes that it will make the future come faster. The sense is that these people are not really coordinating with each other. Historically, the big top-down approaches haven’t worked. And the bottom-up approach doesn’t usually work either. It’s the middle that makes change—tribes like the Quakers, the Founding Fathers, or the Royal Society. These effective groups were dozens or small hundreds in size. It’s almost never lone geniuses working solo. And it’s almost never defense departments or big institutions. You need dependency and trust. Those traits cannot exist in one person or amongst thousands.”

Peter Thiel: “That’s three different opinions on who makes the future: a top-down bottom-up combo, social opinion molders, and tribes.”

To be honest, I was more convinced with his analysis of founders than of technologies. His conclusion is worth reading as inspiration: “This course has largely been about going from 0 to 1. We’ve talked a lot about how to create new technology, and how radically better technology may build toward singularity. But we can apply the 0 to 1 framework more broadly than that. There is something importantly singular about each new thing in the world. There is a mini singularity whenever you start a company or make a key life decision. In a very real sense, the life of every person is a singularity. The obvious question is what you should do with your singularity. The obvious answer, unfortunately, has been to follow the well-trodden path. You are constantly encouraged to play it safe and be conventional. The future, we are told, is just probabilities and statistics. You are a statistic. But the obvious answer is wrong. That is selling yourself short. Statistical processes, the law of large numbers, and globalization—these things are timeless, probabilistic, and maybe random. But, like technology, your life is a story of one-time events. By their nature, singular events are hard to teach or generalize about. But the big secret is that there are many secrets left to uncover. There are still many large white spaces on the map of human knowledge. You can go discover them. So do it. Get out there and fill in the blank spaces. Every single moment is a possibility to go to these new places and explore them. There is perhaps no specific time that is necessarily right to start your company or start your life. But some times and some moments seem more auspicious than others. Now is such a moment. If we don’t take charge and usher in the future—if you don’t take charge of your life—there is the sense that no one else will. So go find a frontier and go for it. Choose to do something important and different. Don’t be deterred by notions of luck, impossibility, or futility. Use your power to shape your own life and go and do new things.”

Reading these last lines, I remembered the conclusion of my book: “And I suddenly remembered an essay by Wilhelm Reich, the great psychoanalyst, which he wrote in 1945: “Listen, Little Man”. A small essay by the number of pages, a big one in the impact it creates. “I want to tell you something, Little Man; you lost the meaning of what is best inside yourself. You strangled it. You kill it wherever you find it inside others, inside your children, inside your wife, inside your husband, inside your father and inside your mother. You are little and you want to remain little.” The Little Man, it’s you, it’s me. The Little Man is afraid, he only dreams of normality; it is inside all of us. We hide under the umbrella of authority and do not see our freedom anymore. Nothing comes without effort, without risk, without failure sometimes. “You look for happiness, but you prefer security, even at the cost of your spinal cord, even at the cost of your life”.