HBO’s Silicon Valley season 4 ended a few weeks ago. And there will be a season 5 in 2018. This was not the best one but I still like it. In the last episode, our heroes struggle and meditate…
Silicon Valley is talking these days a lot about sexism and harrassment. If you have nmot heard botu it yet, you may just want to read:
– Women in Tech Speak Frankly on Culture of Harassment from the New York Times, dated June 30, 2017.
– Uber’s Opportunistic Ouster in the New Yorker, dated July 10.
I have already mentioned here some dark features of Silicon Valley. For example:
– Is Silicon Valley crazy (again)? in January 2016,
– Something rotten in the Silicon Valley kingdom? in January 2014,
– Silicon Valley and (a)politics – Change the World in NOvember 2013,
There is no doubt Silicon Valley is not a paradise. But i had never seen it as a sexist place. At least not more sexist thn the rest of the planet. And yes, there has been terrible stories, such as rapes on the Stanford campus, but my recollection of the area is more of an asexual place, mostly of introvertite people, like you could see on HBO’s Silicon Valley (right from its 1st episode). Just read (again?) the funny and sad comment: “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.”
But if there is something ot be said about all this, is that hwoever complex a society is and it is never easy to explain human interactions without being simplistic, what some and maybe too many individuals are doing in Silicon Valley is unacceptable and should be fought so that it happens less and less often…
Rarely have I read two articles giving a vision as close apparently of the challenges and issues of the future of the planet as I’ll mention in a moment. I say apparently, because behind some consistencies about a confident vision of the future, lie fairly fundamental differences about the challenges.
But I will allow myself a digression before commenting these tow articles. A third article was published on a very different subject in the paper edition the New Yorker dated Oct. 10, 2016 – again apparently as it deals about the past and the present! It is entitled He’s Back. This article reminded me that my two most important readings in 2016 (and perhaps in the 21st century) are those that I mentioned in the post Has the world gone crazy? Maybe…, namely the tremendous Capital in the 21st Century by Thomas Piketty and the no less remarkable In the disruption – How not to go crazy? by Bernard Stiegler. I need to give the title of the digital edition that might hopefully inspire you to discover Karl Marx, Yesterday and Today – The nineteenth-century philosopher’s ideas may help us to understand the economic and political inequality of our time.
Back to the point that motivates this post. Barack Obama has just published in The Economist a short text in which he describes the challenges ahead. This is a brilliant article. It also creates a certain mystery for me around the American president. Is he very well surrounded by knowledgeable advisors and / or has he become interested so deeply in topics to the point of finding the time to write (I should say to describe) himself the world’s complexity. An absolute must-read: The Way Ahead.
In comparison, Adding a Zero in the same Oct. 10 New Yorker – entitled in the electronic version Sam Altman’s Manifest Destiny with however an identical subtitle Is the head of Y Combinator fixing the world, or try trying to take over Silicon Valley? This very long article describes perfectly the reasons why we can equally love and hate Silicon Valley. It is a Pharmakon (both a remedy and a poison according Stiegler’s words). I encourage you to read it too, but your priority should go to reading Barack Obama.
I’ll try to explain myself. Obama has tried a lot and has not been so successful, but there has a consistency in his acts, I think. In The Economist, he wrote: “Fully restoring faith in an economy where hardworking Americans can get ahead requires addressing four major structural challenges: boosting productivity growth, combating rising inequality, ensuring that everyone who wants a job can get one and building a resilient economy that’s primed for future growth.” Obama is an optimist and a moderate. All but a revolutionary. There is a beautiful sentence in the middle of the article: “The presidency is a relay race, requiring each of us to do our part to bring the country closer to its highest aspirations.” The highest aspirations. I sincerely believe that is why Obama deserved the Nobel Peace Prize despite all the difficulties of his task.
Silicon Valley has the same optimism and the same belief in technological progress and well-being that it brings (or may bring). Growth is a mantra. Sam Altman is no exception to the rule. Here are some examples: “We had limited our projected revenue to thirty million dollars,” Chesky [the founder and CEO of Airbnb] said. “Sam said, ‘Take all the “M”s and make them “B”s.’ ” Altman recalls telling them, “Either you don’t believe everything you said in the rest of the deck, or you’re ashamed, or I can’t do math.” [Page 71] then a little further “It is one of the rarer mistakes to make, trying to be too lean,” Altman said, “Don’t worry about a competitor until they’re beating you in the market,” … “Competitors are one of the last monsters that haunt your dreams.”… “Always think about adding one more zero to whatever you’re doing, but never think beyond that.” [Page 75]
Clearly risk taking steps accordingly: In a class that Altman taught at Stanford in 2014, he remarked that the formula for estimating a startup’s chance of success is “something like Idea times Product times Execution times Team times Luck, where Luck is a random number between zero and ten thousand.” [Page 70] The strategy of accelerators such as Y Combinator looks pretty simple: “What we ask of startups is very simple but very hard to do. One, make something people want”—a phrase of Graham’s, which is emblazoned on gray T-shirts for the founders—“and, two, all you should be doing is talking to your customers and building stuff.” [Page 73] The result of this strategy lies in the performance of these acceleration mechanisms: A 2012 study of North American accelerators found that almost half of them had failed to produce a single startup that went on to raise venture funding. While a few accelerators, such as Tech Stars and 500 Startups, have a handful of alumni worth hundreds of millions of dollars, Y Combinator has graduates worth at least a billion—and it has eleven of them. [Page 71] but Altman is dissatisfied: Venture capitalists believe that their returns follow a “power law,” by which ninety per cent of their profits come from one or two companies. This means that they secretly hope the other startups in their portfolio fail fast, rather than staggering onward as resource-consuming “zombies.” Altman pointed out that only a fifth of YC companies have failed, and said, “We should be taking crazier risks, so that our failure rate would be as high as ninety per cent. [Page 83]
“Under Sam, the level of YC’s ambition has gone up 10x.” Paul Graham, who was leaving soon after the dinner for a sabbatical year in England, told me that Altman, by precipitating progress in “curing cancer, fusion, supersonic airliners, A.I.,” was trying to comprehensively revise the way we live: “I think his goal is to make the whole future.” [Page 70] Recently, YC began planning a pilot project to test the feasibility of building its own experimental city. It would lie somewhere in America, or perhaps abroad, and would be optimized for technological solutions: it might, for instance, permit only self-driving cars. “It could be a college town built out of YC, the university of the future,” Altman said. “A hundred thousand acres, fifty to a hundred thousand residents. We crowdfund the infrastructure and establish a new and affordable way of living around concepts like ‘No one can ever make money off of real estate.’ ” He emphasized that it was just an idea—but he was already looking at potential sites. You could imagine this metropolis as an exemplary post-human city-state, run on A.I. — a twenty-first-century Athens — or as a gated community for the élite, a fortress against the coming chaos. [Page 83] YC’s optimism goes very far: “We’re good at screening out assholes,” Graham told me. “In fact, we’re better at screening out assholes than losers. […] Graham wrote an essay, “Mean People Fail,” in which—ignoring such possible counterexamples as Jeff Bezos and Larry Ellison—he declared that “being mean makes you stupid” and discourages good people from working for you. Thus, in startups, “people with a desire to improve the world have a natural advantage.” Win-win. [Page 73]
Altman is not devoid of social conscience, well not quite. “If you believe that all human lives are equally valuable, and you also believe that 99.5 per cent of lives will take place in the future, we should spend all our time thinking about the future.” [He looks at] the consequences of innovation as a systems question. The immediate challenge is that computers could put most of us out of work. Altman’s fix is YC Research’s Basic Income project, a five-year study, scheduled to begin in 2017, of an old idea that’s suddenly in vogue: giving everyone enough money to live on. … YC will give as many as a thousand people in Oakland an annual sum, probably between twelve thousand and twenty-four thousand dollars. [Page 81] But the conclusion of the article is perhaps the most important sentence of the whole article, which brings us back to Obama’s moderation. Comparing himself to another wildly ambitious project creator, Altman says, “At the end of his life, he did also say that it should all be sunk to the bottom of the ocean. There’s something worth thinking about in there.”
Ultimately, Obama, Altman, Marx, Piketty and Stiegler all have the same faith in the future and progress and the same concern about the growing inequalities. Altman seems to be the only one (together with many people in Silicon Valley) to believe that disruptions and revolutions will solve everything, while the others see their destructive features and prefer a moderate and progressive evolution. Over the years, I tend to prefer moderation too…
PS: if you would not have enough reading, then continue with the series of interviews President Obama gave to Wired: Now Is the Greatest Time to Be Alive.
Since I published my book in 2007, I have regularly been doing the exercise of comparing the largest US (former) start-ups and their European counterparts. In 2010, I had the following tables:
What I call former start-ups are public high-tech companies which did not exist 50 years ago. Of course Europe is struggling; this has been (and still is) my concern and the reason of my book. Now here is my latest exercise.
I will let you make your own opinion about how things have evolved. I see quite striking elements. The main one comes from a presentation I saw a few days ago about the evolution of the American biggest market capitalizations. Here it is… quite impressive…
Source: Visual Capitalist
What a pleasure to meet again the heroes of HBO’s Silicon Valley. Yet the first two episodes are quite caricatural. First all the hot technologies from the region are mentioned: robotics, virtual reality and artificial intelligence.
Failure is an important component, and does not have exactly the same consequences for everyone.
Of course, the episodes describe the extreme social situations: the problems of the wealthy (money) and the problems of the poor (money). Finally we also see the equally caricatureal opposition between engineers and sales people.
But all in all, the pleasure is there, and that’s what matters!… Even if the last sentence of Episode 2 is “Every day things are getting worse…”
I regularly go back to my “second home” trying to discover if Silicon Valley has to tell us anything new. This time, I came back a little more confused than after my previous journeys. The region remains the center of entrepreneurship and high-tech innovation, but it seems to touch the limits of madness. Everything goes too fast (except the automobile traffic which is nearly always congested), everything is too expensive, and many are hoping for a crisis to return to a normal situation. Certainly the craziest projects are funded and it is difficult to say what they will become (SpaceX and Tesla of course, but what about MagicLeap or explorations of Google and others in artificial intelligence and augmented human?)
But connoisseurs of Silicon Valley are worried too. So is Michael Malone in Of Microchips and Men: A Conversation About Intel, published in the New Yorker for his new book The Intel Trinity: “The most interesting phenomenon of the last three or four years is that big, successful Valley companies like Facebook and Google and Apple are so flush with cash that the game is now, you build yourself to a certain size and look to be bought. Look at Mark Zuckerberg. He buys Instagram and then he buys WhatsApp. He spends nineteen billion dollars for WhatsApp. That’s a mind-boggling number for a startup. For the first time, acquisitions are more appealing than I.P.O.s. So we are going into this interesting era where maybe companies will choose not to go public anymore, which was always the big-money exit strategy, and instead go do a fan dance in front of Mark Zuckerberg in hopes of getting these insane valuations. What’s your take on the worldly ambitions of the new tech companies? I’m a little bothered by the hypocrisy exhibited by the new generation of Silicon Valley leaders. They’re code writers, and software is different from hardware. With software people, there is this big, romantic philosophy—“Do no evil”—yet it’s always combined with a sort of duplicity. These guys who are running the social-networking era, they’re really behaving like oligarchs: “You know the reason we’re successful is that we’re special. We’re smarter than other people.” You didn’t see that in the early generation of Silicon Valley leaders. They were the children of blue-collar working families. They worked with their hands. So they didn’t try to be your whole world. They didn’t build a campus for you to live on twenty-four hours a day, like in a dorm. They expected you to go home to your family. They had an admiration for working people. You just don’t see that right now with the social-networking guys. Average folks in the Valley, especially poor people, have a really strong sense that these guys don’t care about them. And I think it manifests itself in all sorts of ways, like working with the N.S.A., and the perpetual effort to monetize our private information. It’s a very different world.”
There was also an interesting oral exchange between between George Packer and Ken Auletta, two other connoisseurs of Silicon Valley, although it’s been two years ago: George Packer and Ken Auletta on Silicon Valley.
At the anecdote level, I retained the following from my trip:
– Venture capital is changing due to the departure of former generations and they no longer fund the traditional areas of the semiconductor or hardware, too risky at the product level, nor even the cleantech / greentech (which were not just another bubble). Only corporations fund innovation in these sectors,
– Accelerators are primarily a source of new projects and talents for investors, not necessarily a better model for entrepreneurs,
– Entrepreneurs are stressed by costs and competition that leads to overbidding,
– As a result, the region is saturated, also because its center of gravity moved to San Francisco
– Therefore my belief (still strong) that we need to know the dynamics of this region to innovate and engage in high-tech is modulated by all these constraints and there is probably an opportunity to attract talent, projects and small and large high-tech companies in Europe …
So will there be a lot of damage as predicted by the Guardian in Silicon Valley braces it self for a fall ‘There’ll be a lot of blood.’? Or do we make the same mistake as AnnaLee Saexnian: “In 1979, I was a graduate student at Berkeley and I was one of the first scholars to study Silicon Valley. I culminated my master’s program by writing a thesis in which I confidently predicted that Silicon Valley would stop growing. I argued that housing and labor were too expensive and the roads were too congested, and while corporate headquarters and research might remain, I was convinced that the region had reached its physical limits and that innovation and job growth would occur elsewhere during the 1980s. As it turns out I was wrong.” (Source: A climate for Entrepreneurship – 1999)
PS: a shot addition (dated February 12, 2016) about the craziness of unicorns. Just have a look at the nice infographics below…
in a nutshell, the entrepreneurial ecosystems need 3 ingredients – I quote:
– capital: by definition, no new business can be launched without money and relevant infrastructures (which consist of capital tied up in tangible assets);
– know-how: you need engineers, developers, designers, salespeople: all those whose skills are necessary for launching and growing innovative businesses;
– rebellion: an entrepreneur always challenges the status quo. If they wanted to play by the book, they would innovate within big, established companies, where they would be better paid and would have access to more resources.
This reminds me of two “recipes” I often mention. First the “5 needed ingredients of tech. clusters”
1. Universities and research centers of a very high caliber;
2. An industry of venture capital (i.e. financial institutions and private investors);
3. Experienced professionals in high tech;
4. Service providers such as lawyers, head hunters, public relations and marketing specialists, auditors, etc.
5. Last but not least, an intangible yet critical component: a pioneering spirit which encourages an entrepreneurial culture.
in “Understanding Silicon Valley, the Anatomy of an Entrepreneurial Region”, by M. Kenney, more precisely in chapter: “A Flexible Recycling” by S. Evans and H. Bahrami
Second, Paul Graham in How to be Silicon Valley? “Few startups happen in Miami, for example, because although it’s full of rich people, it has few nerds. It’s not the kind of place nerds like. Whereas Pittsburgh has the opposite problem: plenty of nerds, but no rich people.” He also added about failed ecosystems: “I read occasionally about attempts to set up “technology parks” in other places, as if the active ingredient of Silicon Valley were the office space. An article about Sophia Antipolis bragged that companies there included Cisco, Compaq, IBM, NCR, and Nortel. Don’t the French realize these aren’t startups?”
Many toxic friends of entrepreneurial ecosystems have not understood this. But for those who have understood, building lively ecosystems remains a real challenge: bringing the rebellion, the culture, diminishing the fear of risk taking without stigmatizing (not rewarding– here I disagree with Colin) failure remains highly challenging whereas finding know-how and capital is not easy but feasible with some hard work…
Finally, I copy his diagrams which show ideal and less ideal combinations of capital, know-how and rebellion, adding my exercise for Switzerland.
Switzerland is probably 80% Germany and 20% France…
(A short addition on Oct 29, 2015) – The best description of Switzerland was given by Orson Welles. It explains a lot of things…
“In Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce? The cuckoo clock.” in The Third Man, said by Holly Martins to Harry Lime.
In his introductory article about the course he is giving at Stanford, Reid Hoffman convincingly explains why Silicon Valley still leads in high-tech innovation: Silicon Valley is no longer unique in its ability to launch startups. Today, many parts of the world are rich in all of the necessary ingredients. There are bright young technical graduates from universities around the world. Venture capital has gone global. And, technology companies have R&D centers in many areas of the world. There has even been a global expansion of some of the more subtle elements such as a culture acceptance of the potential failure of bold ventures. And, the belief in entrepreneurship is spreading everywhere in the world — creating a receptive culture in many cities. So, why does Silicon Valley continue to produce so many industry-transforming companies? The secret has moved past startups to scaleups.
The full article is CS183C: Technology-enabled Blitzscaling: The Visible Secret of Silicon Valley’s Success. I have watched the 1st class. Here it is with the slides:
And here are a few things I liked:
How does innovation work
It’s really a fascinating book and obviously Elon Musk is too. A really unique and tough character. And obviosuly, very much criticized and hated too. One such harsh critics comes from the MIT Technology Review with Tech’s Enduring Great-Man Myth by Amanda Schaffer. You should read it. I just extract two sentences:
– “To put it another way, do we really think that if Jobs and Musk had never come along, there would have been no smartphone revolution, no surge of interest in electric vehicles?” Well, this is a critical question about the source of innovation. Society or individuals. The question is relevant for science too.
– “It’s precisely because we admire Musk and think his contributions are important that we need to get real about where his success actually comes from.” This is a quote from Mariana Mazzucato whom I have often quoted here. her book The Entrepreneurial State is a Must Read. It deals with the role of government in innovation. my stronger and stronger belief with years is that the governement makes things possible (science, technology and invention, innovation) but without exceptional individuals – often geniuses, sometimes to the border of insanity – I am not sure so much happens.
Now let me quote more Ashley Vance because the final chapters are as great as the first ones. These quotes show that despite the high role of the governement, it’s not sufficient to explain how innovation works.
As Tesla turned into a star in modern American industry, its closest rivals were obliterated. Fisker Automotive filed for bankruptcy and was bought by a Chinese auto parts company in 2014. One of its main investors was Ray Lane, a venture capitalist at Kleiner Perkins Caufield & Byers. Lane had cost Kleiner Perkins a chance to invest in Tesla and then backed Fisker – a disastrous move that tarnished the firm’s brand and Lane’s reputation. Better Place was another start-up that enjoyed more hype than Fisker and Tesla put together and raised close to $1 billion to build electric cars and battery-swapping stations. The company never produced much of anything and declared bankruptcy in 2013.
The guys like Straubel who had been at Tesla since the beginning are quick to remind people that the chance to build an awesome electric car had been there all along. “It’s not really like there was a rush to this idea, and we got there first,” Straubel said. “It’s frequently forgotten in hindsight that people thought this was the shittiest business opportunity on the planet. The venture capitalists were all running for the hills.” What separated Tesla from the competition was the willingness to charge after its vision without compromise, a complete commitment to execute to Musks’s standards.
During the entire period of SolarCity’s growth, Silicon Valley had dumped huge amounts of money into green technology companies with mostly disastrous results. There was the automotive flubs like Fisker and Better Place, and Solyndra, the solar cell maker that conservatives loved to hold up as a cautionary tale of government spending and cronyism run amok. Some of the most famous venture capitalists in history, like John Doerr and Vinod Khosla, were ripped apart by the local and national press for their failed green investments. The story was almost always the same. People had thrown money at green technology because it seemed like the right thing to do, not because it made business sense. From new kinds of energy storage systems to electric cars and solar panels, the technology never quite lived up to its billing and required too much government funding and too many incentives to create a viable market. Much of this criticism was fair. It’s just that there was this Elon Musk guy hanging around who seemed to have figured something out that everyone else had missed. “We had a blanket rule against investing in clean-tech companies for about a decade,” said Peter Thiel, the PayPal cofounder and venture capitalist and Founders Fund. “On the macro level, we were right because clean tech as a sector was quite bad. But on the micro level, it looks like Elon has the two most successful clean-tech companies in the US. We would rather explain his success as being a fluke. There’s the whole Iron Man thing in which he’s presented as a cartoonish businessman – this very unusual animal at the zoo. But there is now a degree to which you have to ask whether his success is an indictment on the rest of us who have been working on much more incremental things. To the extent that the world still doubts Elon, I think it’s a reflection on the insanity of the world and not on the supposed insanity of Elon.” [Pages 320-21]
Tony Fadell about Musk
Tony Fadell, the former Apple executive, credited with bringing the iPod ad iPhone to market, has characterized the smartphone as representative of a type of super-cycle in which hardware and software have reached a critical point of maturity. Electronics are good and cheap, while software is more reliable and sophisticated. […] Google has its self-driving cars and has acquired dozens of robotics companies as it looks to merge code and machine. […] And a host of start-ups have begun infusing medical devices with powerful software to help people monitor and analyze their bodies and diagnose conditions. […] Zee Aero, a start-up in Mountain View, has a couple of former SpaceX staffers on hand and is working on a secretive new type of transport. A flying car at last? Perhaps. […] For Fadell, Musk’s work sits at the highest of this trend. “Whether it’s Tesla or SpaceX, you are talking about combining the old-world science of manufacturing with low-cost, consumer-grade technology. You put these things together, and they morph into something we have never seen before. All of a sudden there is a wholesale change. It’s a step function.” [Pages 351-52] Doesn’t this remind you of Zero to One by peter thiel.
Larry Page about Musk
Google has invested more than just about any other technology company into’s Musk’s sort of moon-shot projects: self-driving cars, robots, and even a cash prize to get a machine onto the moon cheaply. The company, however, operates under a set of constraints and expectations that come with employing tens of thousands of people and being analyzed constantly by investors. It’s with this in mind that Page sometimes feels a bit envious of Musk, who has managed to make radical ideas the basis of his companies. “If you think about Silicon Valley or corporate leaders in general, they’re not usually lacking in money,” Page said. “If you have all this money, which presumably you’re going to give away and couldn’t even spend it all if you wanted to, why then are you devoting your time to a company that’s not really doing anything good? That’s why I find Elon to be an inspiring example. He said, ‘Well, what should I really do in this world? Solve cars, global warming, and make humans multiplanetary.’ I mean those are pretty compelling goals, and now he has businesses to do that.” [Page 353]
Larry Page about education
This is a very interesting piece [pages 355-56] not linked to Musk: “I don’t think we’re doing a good job as a society deciding what things are really important to do.” Page said. “I think like we’re just not educating people in this kind of general way. You should have a pretty broad engineering and scientific background. You have some leadership training and a bit of MBA training or knowledge of how to run things, organize stuff, and raise money. I don’t think most people are doing that, and it’s a big problem. Engineers are usually trained in a very fixed area. When you’re able to think about all of these disciplines together, you kind of think differently and can dream of much crazier things and how they might work. I think that’s really an important thing for the world. That’s how we make progress.” [Pages 355-56]
Some final words about Musk
It’s funny in a way that Musk spends so much time talking about man’s survival but isn’t willing to address the consequences of what his lifestyle does to his body. “Elon came to the conclusion early in his career that life is short,” Straubel said. “If you really embrace this, it leaves you with the obvious conclusion that you should be working as hard as you can”. Suffering though has always been Musk’s thing. The kids at school tortured him. His father played brutal mind games. Musk then abused himself by working inhumane hours and forever pushing his businesses to the edge. The idea of work-life balance seems meaningless in this context. […] He feels that the suffering helped to make him who he is and gave him extra reserves of strength and will. [Page 356]
As Thiel said, Musk may well have gone so far as to give people hope and to have renewed their faith in what technology can do for mankind. [Page 356]