Palo Alto: a History of California, Capitalism, and The World.

Palo Alto: a History of California, Capitalism, and The World by Malcolm Harris is a remarkable work. Point !

Now there has been some debates about it as you can listen on NPR. It is a marxist analysis. But you cannot disagree with the claim of the Washington Post on the cover page : “Conviction and research burn through the pages and give coherence and urgency to a daunting subject”.

Usually, I cut my post in many when they were so long, but I make a big exception probably because I could not stop reading the book and could not stop adding here in a linear manner.

The beginnings – The XIXth century

Harris begins with beginnings. Early settlers, the Gold rush, but also agriculture and the early chinese population. He introduces us to famous and less famous figures such as John Sutter, Amadeo Giannini or Leland Stanford. The story-telling is smooth and scholar at the same time. But that is not the point. Let me quote him.

The point of the story is not that […] was a bad man because he profited from [stolen…] The point is that the series of plagues visited upon California in the second half of the nineteenth century took the form of men, and we can see the character of the tendencies that shaped the state (and in turn, the world) reflected in the men seized by them. […] The state […] called out for discipline, for an ambitious outsider unbeholden to the finance elite to whip everyone into rational shape.

The impersonal force that animates this state, this country is capitalism. That’s the name we’ve given to the particular system of domination and production in which landowners, on their own behalf, proletarize the working class into being. It is a predictable system with consistent lawlike tendencies. As Karl Marx suspected at the time, California has a privileged place in that story.

What interests me is not so much the personal qualities of the men and women in this history but how capitalism has made use of them. To think that way is not to surrender to predetermination; only by understanding how we’ve made use of can we start to distinguish our selves from our situations. How can you know what you want or feel or think – who you are – if you don’t know which way history’s marionette strings are tugging ? […] Maybe we’re more like butterflies, pinned live and wriggling onto history’s collage. […] I began this project with the fact that the railroad that brought the mass of capitalist white settlers to California is the same railroad my classmates used to kill themselves. The man who built that railroad called himself Leland Stanford. [Pages 36—37]

This reminds me both of A People’s History of the United States by Howard Zinn and There will be blood by Paul Thomas Anderson.

I knew a little about Leland Stanford, who became rich with the railroad.


“The Driving of the Last Spike” painted by Thomas Hill – The painting depicts the ceremony of the driving of the “Last Spike” at Promontory Summit, UT, on May 10, 1869, joining the rails of the Central Pacific Railroad and the Union Pacific Railroad. It is worth noting that some of the people depicted in the painting were not at the Gold Spike ceremony (e.g., Collis P. Huntington, Charles Crocker, Edwin B. Crocker, Theodore Judah and Mark Hopkins). Only two of the members of the Central Pacific board of directors were present: Leland Stanford and Charles Marsh (who are depicted in the painting).

I did not know he fled San Francisco to buy a farm where he grew race horses.


Palo Alto Spring by Thomas Hill The Stanford family, relatives and friends gathered on the lawns of their Palo Alto farm, which became the Stanford University campus. Jane Stanford, dressed in white, is shown on the far left. Leland Stanford holds a painting on his lap and rests his hand on the chair of his son, Leland Stanford, Jr. The artist, Thomas E. Hill, portrayed himself looking over his patron’s shoulder. The painting originally hung in the ballroom of the Stanford’s San Francisco mansion, which was destroyed in the 1906 earthquake.

I did not know Leland Stanford was at the origin of the first moving pictures by Eadweard Muybridge

I did not know that this became both Stanford University and Palo Alto and that the tree after which the city is named is or was still around recently.

The XXth century until Second World War

There were things I knew and others I did not.

I did not know Jane Stanford was probably poisoned, and probably the responsible was David Starr Jordan, president of Stanford University. Once Jordan had full power, Stanford focused on bionomics, with people such as Lewis Terman. The Stanford-Binet IQ would be developed to select future geniuses in the student classes. However William Shockley would not be selected even if he would be awarded the Nobel Prize for the invention of the transistor in 1947. [As a side note, Shockley was also a pionneer of Operation Research and possibly creator of the man.month concept. A strange and somehow cynical count of return on investment, about the impact of bombs through a ratio of casualties on both sides…]

Silicon Valley did not exist yet, but the first technology companies were founded during that period, with Stanford alumni sometimes:
Federal Telegraph Company (FTC) founded in 1909 by Cyril Elwell (class of ’07).
– Russell and Sigurd Varian invented the Klystron in 1937 and founded Varian Associates in 1948. Russel was class of ’27 but not accepted for a PhD.
– Charles Litton (class of ’24) worked at FTC on the vacuum tube. He founded Litton Engineering Laboratories in 1931.
– Bill Hewlett and David Packard (both class of ’34) established Hewlett-Packard in 1939.

Much lesser known are political activists, fro example:
– Kōtoku Shūsui founded the Social Revolutionary Party amongst Japanese-American immigrants, with links to the The Industrial Workers of the World (IWW), whose members are nicknamed “Wobblies”.
– Lala Har Dayal met Jordan in 1911 but would not stay at Stanford and created the International-Radical-Communist Anarchist Club by “weaving together atheism, Buddhism and Marxism” as well as the Bakunin Institute of California.


From left to right
Top line: Jane Stanford, David Starr Jordan, Lewis Terman, Cyril Elwell, Russell and Sigurd Varian.
Bottom line: Charles Litton, Bill Hewlett, David Packard, Kōtoku Shūsui, Lala Har Dayal.

The Chief

Herbert Hoover, aka “The Chief”, is another important personality of that History. I remember the Hoover Tower on Stanford campus, I had not always made the link to Hoover Dam but certainly to the Hoover Institution which I linked to the Republican Reagan/Bush period.

I was neither aware of his links to mining, agriculture and aeronautics. This is also the 1929 crisis followed by FDR’s New Deal. Capitalism against Communism. Agriculture implied modernization, engineering with the Hoover Dam and firms like Bechtel or Kaiser. In parallel, it was the development of Aeronautics with new programs at MIT, Stanford and Caltech. Hoover helped a few friends thanks to the Air Commerce Act : “The government facilitated leading men, who in turn facilitated the government’s facilitation. It wasn’t corruption that enabled Herbert Hoover, it was coordination, the way royal families arrange marriages.”


From left to right
Top line: Herbert Hoover, Henry Kaiser, Warren Bechtel, Henry Robinson, Harry Chandler, Daniel Guggenheim
Bottom line: Hoover Institution & Tower, Hooverville, Hoover Dam

The California Japanese

I did not know about the strange perception of race and gender in California : aristocratic, racist but in a weird way. Japan was superior, the “whites of Asia”. Stanford had women, Indian and Japanese graduates…
– Yamato Ishihashi, after a PhD at Harvard got the first Stanford endowed chair (by Japanese firms) in 1922.
– Noboru Shirai, one of the 22 Stanford’s Japanese students and only one of the 4 first generation immigrant, had opposite positions against the imperialist and criminal behaviors of his native countries.
Both would be interned in camps during 2nd World War though…
– Shuji Matsui, a left-wing progressive, would suffer beatings at Camp Tulelake
– Karl Yoneda would support strikes and be seen under “STOP THE JAPANESE AGGRESSION” banners.
“While David Starr Jordan was off shaking hands with the emperor and categorizing fish, American police were rounding up Japanese leftists and shippig them back as undesirable aliens to face imperial justice.” [Page 205]


From left to right:
Top line: Yamato Ishihashi, Akiko and Noboru Shirai, Karl Yoneda.
Bottom line: Ernesto Galarza, Art Fong, Paul Baran.

A home front

Immigrants were not the only source of political fights as mentioned above but it was a strong element :
– Enersto Galarza (class of ’29) could have become an academic and decided to work all his life for better living conditions of working-class Latinos.
– Art Fong could not have housing in the while-only sector of Palo Alto despite having been hired by Bill Hewlett in 1946. “In my long career in Silicon Valley, I had always hoped that it would be my skill in science and computers that drew attention, not my race. And yet, I was often reminded of my Asian heritage. It’s a very strange thing, because in those early years, Asians seemed to have a difficult time everyplace. Other minorities like Jews, African-Americans, and Hispanics had similar problems. When we came to Palo Alto in 1946, we couldn’t find a place to live because all of Palo Alto had restrictive covenants written in the land deeds, for Caucasians only. It was illegal for me – a Chinese American – to buy or rent a house in the desirable parts of Palo Alto. But I was determined that wouldn’t stop me from trying. About that time in the post-war politics, local and national anti-discrimination activities were brewing. Soon there was US law passed which legally removed those covenants on the land deeds, all at once.” (quoted from here)
– Paul Baran, Russian-born and Stanford professor since 1949, would become the only tenured Marxist teaching economics in the USA.

After Word War II

During the post-war boom, Palo Alto developed thanks to military contracts. High-rise buildings were forbidden, zoning was carefully done, Santa Clara fruit-growing acres went down from 101’666 in 1940 to 25’511 in 1973. Thanks to the old public-private practice created since the XIXth century, “East Palo Alto went from white to 82% black within six years. When liberals suggested a north-south dividing to produce integrated schools, reactionaries created a high school right in the middle of East Palo Alto in 1958, which segregated the teenagers for the first time in a manner that endures to the present with few exceptions.” [Page 231-2]

I am finally entering known territories. Malcolm Harris quotes Rebecca Lowen and Christophe Lecuyer to describe the impact of the transistor in the region. Fairchild, Intel, Arthur Rock.

And Malcolm Harris does not forget to add that the industry required a lot of low-cost workers. A tentative for a $1M machine was abandoned when workers could do the work three times faster. Fairchild would be the first to offshore with production in Hong Kong in the early 1960s (assembly work was 10 cents there vs $2.5/hour in the Bay Area and a transistor cost was 3 cents in material and 10 cents in labour.)

The Beat

“Surrounded by so much historical unfairness and noble defeat, how did white suburban winners in Palo Alto come to convince themselves and a surprising segment of the world that they were the real loser rebels?” [Page 294] This is probably the most moving chapter of the book. Again this was totally unknown to me. Artists which career never boomed. What would be the United States with a different outcome ? This reminds me of the concept of Lost Einsteins.


From left to right: Bob Kaufman, Joe Overstreet, Toy and Wing, Ruth_Asawa.

The book is worth reading for this chapter alone. Here is a poem by Bob Kaufman:

Aliens winds sweeping the highway
fling the dust of medicine men,
long dead,
in the california afternoon

Into the floating eyes
of spitting gadget salesmen,
eating murdered hot dogs,
in the california afternoon

And here is an excerpt from Alan Ginsberg [not easy for me and a bit out of context but which I wish to keep for my own archive]: Emerging up from 3rd class to First on great oceanliner – up the staircase to the deck – First thing I meet, huge faded negro Paul Robeson – in officer’s uniform – I salute him introducing myself which doesn’t mean much to him – he bows – I begin scheming immediately – Being a big officer Communist negro all these years perhaps he could get me a book in the NMU so I can ship out? I see he’s working on an open deck hole with a lift truck & wire lift placing 2nd hand turkish rugs in the hold – Old communist, I notice I am amazed at his calm – he is folding the dead in to carry that way – (Won’t they not smell up the exported carpets?) – I see one corpse in the hold lying face up on rug, he’s getting a layer of carpet to cover that. The corpse is a middle-aged man dead-faced & slightly rotten lying on a rug drest in a blue business suit. I wonder if I have the guts to face corpses like that negro communist. [Journals : Early Fifties, Early Sixties (Grove/Atlantic 2007) p177-78]

I had never thought that segregation was as high in California as it was in the South. But it was. Malcolm Harris illustrates it with many stories and I am unfair not to mention it much further. He also mentions a parallel fact about education that I fould interesting : “So far I’ve focused on the state’s elite higher-education institutions [Stanford and UC Berkeley] but a number of historians give the California community college system at least as much credit for the region’s exceptional success in developing its various tech industries. . […] By the end of the 1920s, the state had 15’000 students across 34 junior colleges, more than one-third of the country’s junior college students among less than 5 percent of the U.S. population.” And this continued decade after decade. “The two-year schools switched their focus to vocational preparation, which critics alledged was designed to keep working-class youths away from professional paths, while defenders said it upheld the state tradition of the upwardly mobile technician.” [Pages 324-5]

Shoot (the computers)

There is so much violence in the history of the United States and of California in particular. More soon. Harris, again, is convincing thanks to the precision and high quantity of facts he shares with us. It is just a terrible history. Even worse: “it’s tempting to silo, say, the missile surburbs, microchip invention, the personal computer, and the political ’60s. But these developments weren’t just connected, they were the same thing.” [Page 334]

If the 60s were politically violent, the Kennedys, Martin Luther King, Malcolm X and his Ballot vs. Bullet speech, it did not stop there and went on until the mid seventies at least. If all of a sudden, it reminds me of American Pastoral by Philip Roth or more recent One Battle After Another, itself with links to Vineland by Thomas Pynchon, what should I say of Chapter 3.4, How to destroy an Empire. No doubt I did not know much about American revolutionary movements who were very close to physical violence. To protest against the war in Vietnam, the house of Bill Hewlett was firebombed. In December of 1971, militants bombed the Stanford Linear Accelerator Center.

There are again unknown figures to me. Stanford Professor H Bruce Franklin who moved from studying Hawthorne and Melville (“his thesis was based on a close reading of Moby Dick and Melville’s polyphonic use of mythology” [Page 336]) to Marx and Melville. He would not survive that long as a professor and [Lyman, then Stanford president] “suspended Franklin, obtained a court injunction banning him from Campus, and started the permanent removal process.” There are many more stories source in particular in the April 3 movement web site, about Franklin or Aaron Manganiello, founder of Vencemeros. And what about these document about SRI, Smash War Research (pdf) or even threats against David Packard (in pdf again) (who had become United States Deputy Secretary of Defense under Nixon even if for not long). In 1969, Angela Davis had been fired from UCLA.

“The dramatic dead end of the Bay Area armed struggle was a May 1974 shootout in Los Angeles. This was not the world Shockley’s equations promised. Battered first in Vietnam by the Vietnamese people and second on the home front by the Third World solidarity movement, America’s leadership came to grips with the unthinkable: losing the war. […] Partial defeat in the Cold War’s first half catalyzed a conservative revitalization as America’s ruling class came to understand the stakes. They abandoned the compensatory state and its equalizing mission to focus on individual rights. […] Tuition fees at the University of California system doubled in the ’80s then tripled in the ’90s.” [Page 357]

Another example is Cedric Robinson who “criticized his discipline’s concept of leadership and offered counterexamples of African “stateless societies” or “tribes without rulers” – particularly the anarchistic Tonga – the political science department lost its integrationist nerve. Faculty members declined to sit on his committee, passive-agressively consigning Robinson to academic purgatory.” [Page 358]

In 1975, after a series of layoffs at Fairchild, led in part by former assembly line worker Roxanne Dunbar activists arrived to “find police snipers lining the roof of the plant building and tactical squads swarming the place in riot gear”. [Page 359]

Allard Lowenstein, a close advisor to Bobby Kennedy, spent his life trying to cool down the hard-liners and bring them into the left wing of liberalism. Dennis Sweeney, a likable Stanford student with a harsh family life (who according to others seemed to be like the first person back from Dachau) went to Lowenstein’s office in Manhattan in the spring of 1980 and shot him death (because, mentally ill, he believed that Lowenstein was plotting against him.) Even if it was a tragic waste, there would be an unsigned editorial “No tears for Allard Lowenstein”


From left to right: H Bruce Franklin, Venceremos, with Aaron Manganiello pictured on the right, Cedric Robinson, Roxanne Dunbar, Allard K. Lowenstein.

“With the growing unrest in the country, the increasing sophistication of saboteurs and the potential that computers offer for easily inflicted and costly damage, major precautions are necessary for data processing managers to fully protect their computers.” [Page 358]

“If the 60s and early 70s had been Power to the People, they were followed by “the re-empowerment of owners relative to workers after the uprisings at home and abroad via unemployment and de-industrialization immigration, offshoring, and all manner of technological and organizational changes.” [Page 364]

Individualistic conservatism

Malcolm Harris enters a new subject with that new period : individualistic conservatism. “Immigration and offshoring were the two sides of the same coin.” He mentions again the cost of fabrication at home and assembly offshored. Even worse Shockley would become the hero of the pseudoscience of racial difference. The Vietnam war would have unpredictable consequences : “By 1984, Hewlett-Packard employed 4,000 Vietnamese immigrant workers in low-level jobs. These workers tended to be skilled, politically conservative and desperate. It’s not a coincidence that the South Bay maintains the country’s largest concentration of Vietnamese immigrants to this day. Silicon Valley firms were ready to absorb thousands of refugee workers at the same time and for the same reason they were refugees in the first place”. [Page 365] “It seems counterintuitive to pay some workers not to pay other workers, but by using stock options and grants to align professional employees’ interest with ownerhsip, firms could provide a paternalistic atmosphere for high-value engineers while keeping the aggregate wage low enough to generate double-digit profits even as prices fell. The labor-hostile surburb kept its production wages low by locking organized labor out of its factories.” [Page 366]

In 1994, AnnaLee Saxenian described the results of the previous couple of decades: “There are approximately 200,000 union members in the four-county [Bay Area] region, but virtually none work in high technology industries. No high technology firm has been organized by a labor union in Silicon Valley during the past twenty years, and there have been fewer than a dozen serious attempts.” It was a brutal period for workers and a correpondingly excellent one for the men who employed them. [Page 368]

White working-class homeowners began to identify as white and homeowners more than as members of the working class, and not without reasons. If their human capital was depreciating rapidly, their home values jumped. […] With home ownership also came guaranteed places in the California public school system, where the professionaals workers of the future were trained. […] The California dream was always about land speculation premised on racial exclusion and domination. [Pages 378-9] Education improved for the rich and got worse for the poor. [Pages 382]

Tax breaks the same… Reagan was soon to become president, and behind him the Hoover institution. Individualism, privacy, property, competition thanks to deregulation, privatization and tax cuts that reinforced each other. Workers benefited from pension funds but the unions didn’t generally manage their voting shares… [Page 406-7]

The huge capital-gains tax cut – more than 50 percent – and pernsion-investment deregulation helped turn venture capital from something small groups of well-connected buddies did in Cambridge. Capital in the funds quadrupled in the eraly 1980s, from $1 billion at the close of the 1970s to $4 billion in 1983. [Page 408]

Malcolm Harris again surprised me when I thought I was in known territory. On pages 408 and next, he begins with the Tragedy of the commons to explain the privatization of public goods. “This represented a change in the ideology, from recognizing the need to build up an-intellectual property commons for new industries to creating the best investment climate possible by constraining the spread of new tech. Whereas lively antitrust enforcement ensured the proliferation of the first transistor licenses, the new state religion encouraged techno-monopolism on the public dime.” The Genentech story is well-known and I am a little surprised though with the argument here. I had the feeling the DNA patent was non-exclusive as the transistor one. I might be wrong but it seems to be mentioned here. I did not know either that Donald Kennedy, president of Stanford, had to resign in 1991 for the school’s alleged abuses of federal research funds.

New World Order

“The Reagan era – which includes Carter’s presidency as well as George Bush Sr. and arguably, Clinton, George Bush Jr., Obama, Trump and Biden, at the time of this writing, put America back on its narrative track. The country’s time in the sun wasn’t over. […] Innovation was the new watchword, high-tech the new American brand. But what made this strategy more successful in this period than it was in the preceding years? Computerization didn’t add enough efficiency to the country’s manufacturing processes to make them competitive. […] The rapid Soviet acsent in science and technology proved there wasn’t anything special or inherently faster about the capitalist development road. […] The military Keynesian strategy succedded in keeping a border with the reds – Japan, Taiwan, South Korea, and West Germany remained a solid buffer against failing dominoes. [So ? … but] As capital concentrated in fewer hands, it grew easier to get everyone on this same pager, a pager later named the Washington Consensus. HArrs adds a few other points such as immigration both from this buffer countries as well as “by the end of the 70s, 99.7 percent of the more than one million people admitted unde parole were from communist countries”. Harris also mentions corrupt regimes such as Iran or the Philippines which induced a lot not to say hugh financial flows including the ones that would finance countrerevolutions all over the world. The section about Stanford Technology Corporation [pages 428-38] is particularly enlighting.

The anecdotal part about Steve Jobs and Trey (Bill) Gates is very well-known territory but again Harris’ analysis is original. “The true path of invention is rarely clean or simple, but when scientific credit fails to align with net worth, the second trumps the first in public memory. After all crediting inventors is notoriously diffcult; every innovation building one the last, ervey inventor inextricably embedded in a series of communities. Two or more often alight on the same idea at the same time. Money provides a sort of scoreboard, an equivalent by which we can compare the otherwise incomparable.” Harris reminds us that “it’s the connectors who are more responsible than the inventors or even the specific siloed visionaries. […] More sophisticated than the Great Man version, this ecosystem analysis still takes its object for granted. The Great Region histories, like AnnaLee Saxenian’s regional Advantage and John Markoff’s What the Dormouse Said,see Silicon Valley asaa place of creation rather than transformation. By placing these stories in the context of statewide, national and global changes, we can better understand the microcomputer indutry. Steve Jobs and Bill gates are very important characters in the story, but they’re more meaningful as personifications of impersanl social forces. If Jobs and gates hadn’t been themselves, some other guys would have been instead.” [Pages 453-54]

“There was an important difference between Gates and the hobbyist community: Trey Gates didn’t learn to code on a public system, not mostly. Gates got his computer training via an exclusive private school contracting with a private company that was financed by private capital. Trey Gates was an avatar of suburban bifurcation. […] The giants of Silicon Valley’s pre-silicon days tended to be handsome, athletic, and likable. […] Bil Gates and Stev Jobs, by contrast, had poor personal hygiene, didn’t play sports, and were both noted jerks. Neither served in the military, and both dropped out of college quickly. They ended up with two different corporate strategies, and occasionally became business opponents, but they personified the same historical forces. […] this has been described as the transition from “bureaucratic” to “nerd” masculinity. […] Any laborers a company couldn’t easily replace were aligned with ownership via stock option.” [Pages 455-59]

“Then computers needed to be connected. This is the story of Bob Metcalfe and 3com, of Arpanet and wireless ALOHAnet, of ethernet and TCP/IP, of the router with William Yeager, Andy Bechtolsheim, Leonard Bosack and Sandy lerner, the last two being the founders of cisco Systems (which story of its neginnigns would be worse reminding” (pages 463-4 or here at www.tcracs.org/tcrwp/1origin-of-cisco).

The Internet will soon follow and again even if the history is well documented, Harris provides an interesting point of view. America was pro-business and even if some presidents were Democrats, the Hoover institution distilled its ideology not just during the Reagan or Bush presidencies. I am not sure what Harris says of its influence over Trump. He provides interesting (Marxist) views on geopolitics and economics: “over half – up to 80 percent – of the country’s employment growth between 1984 and 1997 came in the form of externally contracted workers. And those were the jobs kept onshore; statewide, electric and electronic manufacturing employment fell 38.7 percent between 1980 and 1995. […] Capitalists were winning because their workers were losing, a reality well camouflaged by the whiz-bang excitement Silicon Valley produced.” [Page 474]. “America imported a bifurcated cohort of immigrants to fit a bifurcating pattern of employment, and for every Silicon Valley investor or board mmeber or founder from the Third World, there was a family of refugees in a local basement performing the low-wage manufacturing labor that animated the computer industry’s numbers. Neocolonialism provided more than a market for Silicon Valley’s defense-ish electronics: it provided a labor force as well” [Page 475].

The 21st Century

His analysis of the parallel development of the coffee and cocaine markets is equally striking [Pages 479-484]. The Internet has disrupted many other markets. One need only note the stories of Netscape and the antitrust lawsuit against Microsoft [pages 485-90], recall Alan Greenspan’s famous “irrational exuberance” [page 488], the deadly competition between Healtheon and WebMD, between Pets.com and Petopia, between WebVan and Homegrocer, between Ticketmaster and tickets.com, between Rio, Naptser, Winamp and Realplayer. Republicans didn’t like Clinton, but their policies weren’t so different.

And again “Google could afford to contract low-wage workers to drive cameras around and to turn pages. . […] In the grand NorCal tradition of labor-market segregation, these laborers carried unique yellow badges, though that was hardly necessary to mark them, “it was the same group of workers, mostly black and Latino, on a campus of mostly white and Asian employees, walking our of the exit like a factory bell had just gone off”. They entered and exited at their own special scheduled times – 4:00am and 2:15pm – so as to spare the white-(employee), green-(intern) and red-(contractor) badged Googlers an awkward confrontation with that particular internal hierarchy” [Page 515 – you can also a longer description of Google from where this excerpt is coming from in The Artist Leaving the Googleplex by Andrew Norman Wilson]. Malcolm Harris emphasizes the harsh, not to say sometimes inhumane, working conditions (as seems to be the case in Amazon warehouses). The fact that this was also the case for Apple, or is the case for Google in the United States, is somewhat surprising, given the emphasis placed on an original and appealing approach to engineers’ working conditions. A significant discrepancy indeed.

Of course this globalization decentered the world towards Asia and China in particular. Foxconn would be its most visible illustration and not really for good. Suicides would happen there and Harris quotes a chinese poet and Foxconn employee, Xu Lizhi, who would commit suicide later [Page 540]. So I quote him too:


Xu Lizhi, Chinese poet (1990-2014)

“I Fall Asleep, Just Standing Like That” from libcom.com
拒绝旷工,拒绝病假,拒绝事假
Refuse to skip work, refuse sick leave, refuse leave for private reasons
拒绝迟到,拒绝早退
Refuse to be late, refuse to leave early
流水线旁我站立如铁,双手如飞
By the assembly line I stood straight like iron, hands like flight,
多少白天,多少黑夜
How many days, how many nights
我就那样,站着入睡
Did I – just like that – standing fall asleep?

“A Screw Fell to the Ground” again from libcom.com
一颗螺丝掉在地上
A screw fell to the ground
在这个加班的夜晚
In this dark night of overtime
垂直降落,轻轻一响
Plunging vertically, lightly clinking
不会引起任何人的注意
It won’t attract anyone’s attention
就像在此之前
Just like last time
某个相同的夜晚
On a night like this
有个人掉在地上
When someone plunged to the ground

Bifurcations

Continental divide, digital divide, educational divide. One may not view the world the way Malcolm Harris does. Politics seem to be closer and closer to religious faith. People do not look at facts to see some truth. What a strange world. But it is worth reading Palo Alto until the end. The high school created in East Palo Alto has finally been closed and replaced by a shopping mall with low wages employees. The mall “inaugural plaque acknowledges Bank of America and the David and Lucile Packard Foundation. At the very bottom: ORIGINAL SITE OF RAVENSWOOD HIGH SCHOOL. [Page 551]

If China has mainly invested locally, Russia has a different fate with oligarchs investing their money abroad. But again Harris claims these are two faces of the same coin. Yuri Milner and Alisher Usmanov invested big time in Silicon Valley through Digital Sky Technologies (DST): $200m for 2% in Facebook and more later to reach 8-10ù of the startup, $380M in Twitter, some in Groupon, Zynga and Spotify and something I did not know, were major investors in Paul Graham’s YCombinator. “If tech companies – along with expensive art and luxury housing – were a bet on further bifurcation and inequality, then they gave the world’s oligarch community a chance to double down on its own prosperity. And it works – for Russian billionaires, for American billionaires, for Taiwanese billionaires, and even for most mainland Chinese billionaires. The value chain links ex-Soviet extractionists like Usmanov – convicted of and imprisoned for “theft of socialist property” in the 80s – with Foxconn’s company towns and their mandatory overtime, corporate dorms, and loathsome security patrols.” [Page 548]

In 2009, 42 people were arrested in East Palo Alto (EPA), dismantling the Taliban drug dealing gang on Sacremento St, “a cul-de-sac off University Avenue. The struggle for drug territory drove EPA’s violence in the period, giving it the country’s highest per capita murder rate in 1992”. (This is not new, the interested reader could watch French Documenary the Last Town on Arte or read here The Capital Sins of Silicon Valley). In another bifurcation well described by Harris by mentioninig My Posse Don’t Do Homework by LouAnne Johnson as well as Unforgetting: A Memoir of Family, Migration, Gangs, and Revolution in the Americas by Roberto Lovato, the author describes the No Child Left Behind as a “soft bigotry of low expectations”, a brilliantly prhased subtle attack on affirmative action. Whether they [kids] would be in better classes in better schools a separate question. […] Capitalists needed low-wage employees because that’s where the growth was. If all the kids in East Palo Alto became engineeers and doctors and lawyers, who would fill the hundreds of jobs at the new IKEA by the freeway.. [Page 557-8]

At the other end, a few entrepreneurs would create new teaching tools such as SCORE! and the Education Program fro Gifted Youth (an online school at $28,610 tuition). “The schools are good because the houses are expensive, which makes the houses more expensive and the schools better, which makes the houses more expensive and the schools better, which makes the houses more expensive and the schools better“. [Page 562] When the Stanford student startup Instagram sold for $1B to Facebook, it only had 13 employees. “Beneath the mounting valuations are a relatively small number of hyper-competitive employees. The super-coders are the most notorious, having cultivated a professional mystique, but the non-technical managers are just as important for rapid growth. The coders certainly don’t work as fast without them. Bolstered by armies of unseen contractors, Silicon Valley’s high-IQ workers, the veterans of SCORE! fulfilled Lewis Terman’s wilded dreams.” […] It’s not behaviorism, itt’s neobehaviorism. To heighten productivity, the paradigm of disciplination is replaced by the paradigm of achievement. Stanford’s horses were the original achievement subjects and they were proned to burn out as well. Society produces “depressives and loosers” as its human exhaust. Even the killers are nerds. [Page 562-5] Palo Alto is becoming the place that produces Baby Einsteins, but one of these students says: “We are lifeless bodies in a system that breeds competition, hatred, and discourages teamwork and genuine learning. We lack sincere passion. We are sick… It is time to realize that we work our students to death” (See below the article by Carolyn Walworth. Following the many suicides in Palo Alto’s high schools, “With no smoking gun in the report, local leaders could adopt the same line Steve Jobs used with regard to the Foxconn suicides: It’s sad, but sometimes people kill themselves. Still, in both these environments, there was only so far anyone could spread the blame. In January of 2010, a Foxconn worker jumped to his death the day after a teenager in Palo Alto died on the tracks. In January of 2011, it happened again. The second time they were both nineteen years old.” [Page 567] “The beauty of the design is that the rewards call forth the winners, and the winners create losers. It’s impersonal: forces not men.” [Page 568]

Harris published his book in 2022, there was no ChatGPT yet, there was no Trump II yet, but Harris mentions the PayPal mafia, including Musk and Thiel who employed JD Vance and sponsored Curtis Jarvin. He also mentions Theranos, Snowden, the Google buses, Uber and Palantir. “Compared to the past cohorts of successful Silicon Valley tech founders, the crab platform leaders made Steve Jobs look like Steve Wozniak” [page 580]. “Capital’s ever-accumulating need for profitable sinks is incompatible with the kind of democratic control over modern technology that the Black Panther Party put on its program. […] It may be that Silicon Valley is best understood as a particular expression of this impersonal drive: geographic, historical and imaginary. It representts the gold rush and the next gold rush and the one after that, from produce to real estate to radios to transistors to microchips to missiles to PCs to routers to browsers to web portals to iPods to gig platforms to… If California is Americas’s America, then Palo Alto is Americas’s Americas’s America” [Page 616].

I am not sure if the reader will follow Harris in his conclusion, which reminds me of the end of Fahrenheit 451 . Let me add a final extract : “If the intergalactic capitalists win, if they do exhaust the earth and humanity then for the sake of my historical reputation and that of everyone I’ve ever loved, I hope the post-humans judge that we were already too late, that we never had a chance. Maybe that is the case – as I’ve argued, the general state of things is increasingly dire for many people – but I don’t believe it. Even if I could be made to believe it, I would choose not to. I am committed to this planet, which means I have to hold on the possibility of an alternative to capitalist exhaustion” [Page 619]. These words, his words are also mine.

PS: I’m including here an excerpt from a book review by the excellent Olivier Alexandre, his “optimistic” conclusion to the current crisis: “In a highly competitive world, where nothing lasts, starting with tech companies (the tragic fate of Kodak, Nokia, BlackBerry, and Yahoo reminds us of this), this notion conveys the idea that a homogeneous category of actors has long since seized control of history, and will continue to do so for a long time. This overlooks, as the book reminds us, that this domination is entirely conditioned by the interplay of actors and a constantly evolving institutional framework. Moreover, the narrative is constantly being traversed, interrupted, pulled in one direction and then another by individuals and groups, companies, but also government agencies, hackers, whistleblowers, academics, and activists. Perhaps this is enough to offer a glimmer of hope to all those who feel trapped in the web.” It could have been a conclusion of Malcolm Harris book too!

PS2: I mentioned in the beginning an NPR account of the book. I found more critics worth mentioning :

The Children of California Shall Be Our Children: On Malcolm Harris’s “Palo Alto” by Ben Beitler, February 14, 2023 https://lareviewofbooks.org/article/the-children-of-california-shall-be-our-children-on-malcolm-harriss-palo-alto/

Greed, eugenics and giant gambles: author Malcolm Harris on the deadly toll of Silicon Valley capitalism by Lois Beckett, The Guardian, May, 11 2023
https://www.theguardian.com/books/2023/may/10/palo-alto-book-malcom-harris-interview

The Marvellous Boys of Palo Alto: From Silicon Valley Bank to Sam Bankman-Fried, the recent scandals upending the tech industry are rooted in a longer tradition of innovation and impunity by David Leavitt, The New Yorker March 20, 2023
https://www.newyorker.com/books/under-review/the-marvellous-boys-of-palo-alto#rid=81d5998c-34ba-4795-aa4e-066f456d96ed&q=malcolm+harris

About the Silicon Valley Suicides

In Palo Alto’s High-Pressure Schools, Suicides Lead To Soul-Searching by Arun Rath, NPR, May 11, 2015
https://www.kqed.org/news/10521875/in-palo-altos-high-pressure-schools-suicides-lead-to-soul-searching

Why are so many kids with bright prospects killing themselves in Palo Alto? By Hanna Rosin, The Atlantic, December 2015 Issue
https://www.theatlantic.com/magazine/archive/2015/12/the-silicon-valley-suicides/413140/

Paly school board rep: ‘The sorrows of young Palo Altans’ by Carolyn Walworth, March 25, 2015
https://www.paloaltoonline.com/news/2015/03/25/guest-opinion-the-sorrows-of-young-palo-altans/

and a short text : The Price of Perfection: The Silicon Valley Suicides, Dec 16, 2015
https://thekimfoundation.org/the-price-of-perfection-the-silicon-valley-suicides/

The Atlantic published an article by Hanna Rosin entitled “The Silicon Valley Suicides: Why are so many kids with bright futures killing themselves in Palo Alto?” Rosin paints a picture of a place of affluence, success, and high expectations. However, at Gunn High School in Palo Alto, California, the 10 year suicide rate is four to five times the national average. By March of 2014, 42 Gunn students had already been hospitalized or treated for “significant suicidal ideation,” since the start of the school year. In a survey conducted in the same year, 12 percent of Palo Alto high-school students reported having seriously contemplated suicide in the past 12 months.

What is happening that is pushing kids to their breaking point? While we can’t pin point the exact reason why anyone ends their own life because of the complexity of suicide, there have been theories surrounding the high-pressure academic atmosphere that Palo Alto exudes.

Carolyn Walworth, a junior at Palo Alto High School and a school district student board member, wrote an article about her experiences as a student. She explains that as young as elementary school, children are either deemed “early” or “late” readers. While the “early” readers are labeled smart, the “late” readers are left feeling inadequate, and this constant cataloging follows them into high school.

“I like to think of this as the reason I lost my enthusiasm and confidence for math so early,” says Walworth. “How could I possibly feel intelligent when the class I was in was considered dumb?”
She describes the constant pressure to be in the advanced classes, participate in sports, school clubs, attend weekend SAT prep courses, obtain internships, and complete excessive amounts of homework, all while enduring the typical pressures of being a teenager. It is indeed exhausting and stressful. Walworth explains that this isn’t an issue of lack of coping skill, but merely an issue of too much to cope with.

In the late 1990’s, Suniya Luthar was an assistant professor in Yale’s psychiatry department. Luthar was doing research at a low-income, inner-city school in Connecticut. She wanted to find out whether misbehavior correlated more with poverty or with a stage of adolescents. Luthar needed a second school to use as a comparison and was connected with as upscale suburban school. What she found was shocking. The proportion of kids who smoked, drank, or used hard drugs was significantly higher in the suburban school, as was the rate of serious anxiety and depression. This anomaly started Luthar down a career-long track studying the vulnerabilities of students within what she calls “a culture of affluence.”

“We assume that because these kids have money and a good education, everything is fine,” Luthar says. “And in the long run, money and education will protect them, but in adolescence, the dangers posed by the culture of affluence can be quite potent.” However, that doesn’t mean kids who come from an affluent backgrounds are more likely to kill themselves. Studies on youth suicide have generally turned up few differences among social and economic classes. This finding simply means that there are a lot of youth from all walks of life suffering.

In the United States, there are about five youth suicide clusters a year and Palo Alto is well into its second. Whatever the reasons are, something must be done to change the culture of perfection among this community. Reaching out for help must begin to be viewed as strength, not as a weakness.

Why haven’t we created a Google yet?

A revealing debate on “Why haven’t we created a Google yet?” [in France]. It’s fascinating, irritating when you disagree, and exhilarating when you recognize yourself in the discussion. Needless to say where I stand… but I should add that my reading of the book *Palo Alto*, which I’ll be discussing here soon, compels me to add a great deal of nuance to the love-hate relationship that exists between the two continents.

Research and Development (R&D) in Tech Startups (A short follow-up)

A short follow-up to my yesterday’s post Research and Development (R&D) in Tech Startups (vs. Sales & Marketing) as I was not fully satisfied with and I am still not !

I could not draw any conclusion and worse the results were not easy to read. I am not sure this will be any better, but in addition to the mean and median values of R&D intensity (relative to Revenues or Sales & Marketing), I add here a few more figures illustrating the frequencies of these values.

First a reminder of the mean and median values per field

Second, the ratio of R&D (research & development) to S&M (sales & marketing) in the 8 different fields

Third, the ratio of R&D (research & development) to revenues in the 8 different fields

It’s clear, I think, how different software and the internet are in terms of R&D investment, but even so, nuance is still essential. I can only leave you to your own interpretation or conclusions.

Research and Development (R&D) in Tech Startups (vs. Sales & Marketing)

This strange post was motivated by my colleague Antoine (thanks!) who asked me what I thought of a recent article which claimed that in startups, technology is not as important as many think. The article is in French Pourquoi, dans les startups, les moins techniques gagnent souvent and was written by Manu Papadacci-Stephanopoli.

So let me translate the claim : in startups, the least technical often win. Yes, it’s harsh. And yet, it’s true. We always imagine a startup as a perfect technological machine. Ahead of the curve. Code. R&D .The more complex it is, the better it must work. Except that reality is much harsher. A startup isn’t primarily a technology company. It’s a hypergrowth company. Technology is clearly an advantage. A booster. But it’s neither a sufficient condition, nor even essential.

I never really thought deeply about it, probably because I fully agree and learnt this during my VC years. Technology is important but it is far from sufficient. And selling is tough. Google was the best example that “First mover adavantage was a myth”. So I agree again with Manu Papadacci-Stephanopoli when he adds later “In its early days, Google didn’t have the best algorithm for linguistic analysis. Its competitors were more advanced. But Google exploited something else: metadata, hyperlinks, the famous “backlinks,” the collective intelligence of the web. Less spectacular. But simply more effective.” (À ses débuts, Google n’avait pas le meilleur algorithme sur le plan linguistique. Ses concurrents étaient plus avancés. Mais Google a exploité autre chose : les méta-données, les liens hypertexte, les fameux “back-link’, l’intelligence collective du web. Moins spectaculaire. Mais juste plus efficace).

So I had to go one step further, dig deeper and here is my analysis.

20260228 Equity List Lebret

Some of you may know I am a kind of crazy data cruncher. I love data. They provide food for thought. Since 2008, when I published my book, I have been compiling data about startups such as cap. tables. I have now 978 such tables and the last time I published about them was in July 2025 and June 2024. I will celebrate with a long update when I reach 1000 but I have been slow recently with about 20 new tables per year. So we’ll see if the celebration will be in 2026 or 2027.

I studied something new here which is the R&D intensity in technology companies and startups. Let me develop. Most of the techology companies I study went public or at least filed to go public at some point in their history. Some were still startups (they might not have validated their business model), some were not anymore. But as technology companies, they often publif the level of R1D investments, but also the level of their expenses in sales & marketing (S&M). As I have data of companies since the 1960s, it would not be fair to look at absolute numbers in $M. SO i tried to llok at relative numbers, the ratio of R&D and S&M compared to total revenues. When the revenue was zero or very weak, this ration does not mean much so I also study the ratio of R&D vs. S&M.

For example, as a first illustration, let us have a look at “my giants”.

It’s no easy to draw conclusions from this first series. Except that for these “technology giants”, R&D is not as high as I would have thought. R&D is on average close to 15% and rarely at the 25% that I thought common. Still R&D is in general higher than S&M. This relatively low levels are probably linked to the fact that these companies have huge revenues, very high profitability and there is a limit to what you can spend in R&D and S&M.

Now let us have a look at the data from the 978 startups.

So whether I look at the mean or median, R&D is really high in tech startups. But Sales & Marketing is really high too. It is not sufficient to build things. There is a huge effort to sell them.

Second, the R&D intensity (as well as S&M) is particularly high in Biotech and Medtech. However this probably come form the fact that the revenue levels are lower in these fields at UPO.

Third, the R&D intensity is the lowest in Software and internet probably because there is less need for R&D but S&M is relatively higher and this shows to in the relative ratio which is 0,5 for the media value of both.

No conclusion but an important Post-scriptum

I will not draw any conclusion but indicate a number of caveats :

– in many cases, R&D is not strictly mentioned but sometimes replace by technology development or product development. Probably for good reasons : in startups, it is not clear there are available resources to do strictly research.

– in many cases, sales and marketing is not mentioned and replaced by selling, general and administration, or even general and administration only. This probably means the focus on sales and marketing is not high enough to be considered separately. In that case, I took what was available.

An hallucination of Artificial Intelligences

I made a mistake and published a French article in the English part. I will not correct it but add a French version elsewhere!

Je reste partagé par l’impact qu’aura l’intelligence artificielle dans nos vies. L’internet ne m’avait pas laissé aussi circonspect. Je ne doute pas que l’impact sera considérable, mais en lisant deux articles scientifiques assez passionnants, j’en suis arrivé à faire une brève expérience que je décris plus bas et que je trouve amusante.

Le premier papier est celui de Michael I. Jordan A Collectivist, Economic Perspective on AI. Ce bref extrait m’a beaucoup plu : “Alors qu’un LLM peut apparaître comme une « entité » unique à l’apparence humaine, il est tout aussi pertinent de le considérer comme un artefact « collectiviste ». En effet, interagir avec un LLM revient à interagir implicitement avec un grand nombre d’individus ayant contribué, via Internet et d’autres médias, à des données, opinions, constructions linguistiques et œuvres créatives à un niveau micro. Lorsque ces contributions humaines convergent de diverses manières, le LLM est capable de transformer cette convergence en abstractions utiles, renforçant ainsi l’illusion de personnalité. Si l’analogie entre un LLM et une personne semble irrésistible, l’analogie avec une culture est tout aussi valable. Les cultures sont des réservoirs de récits, d’opinions et d’abstractions. Les cultures ont une personnalité.” (traduit avec Google depuis “whereas an LLM may appear to be a single “entity” that is human-like, it is equally well understood as a “collectivist” artifact. Indeed, in interacting with an LLM, one is interacting implicitly with a vast number of humans who have contributed micro-level data, opinions, linguistic constructions, and creative works to the LLM via the Internet and other media. When these human contributions agree in various ways, the LLM is able to promote that agreement into abstractions that are useful and that strengthen the illusion of personhood. But, while the analogy of an LLM to a person seems irresistible, an analogy of an LLM to a culture is equally valid. Cultures are repositories of narratives, opinions, and abstractions. Cultures have personalities.”)

Le second papier est celui de Stéphan-Eloïse Gras et Gaël Varoquaux Connaître avec les modèles de langage : une rupture paradigmatique. L’article y aborde notre rapport à la connaissance et à la rationnalité et un simple exemple est fascinant : “Il est possible, selon la manière dont on pose la question, de pousser le robot conversationnel à dire de véritables stupidités, notamment en matière de géographie. L’exemple le plus connu, et très marquant car il a été repris par Google Search Generative Experience concerne la question “Savais-tu qu’il n’y a pas de pays en Afrique commençant par la lettre K?”. Le robot, programmé pour répondre “oui, et”, à une question sur l’étendue de ses connaissances, se trouve pris au piège ; le comble de l’absurde est atteint quand, du fait sans doute de la faible qualité des sources géographiques, sa réponse confirme à l’utilisateur qu’il n’existe en effet pas de pays commençant par la lettre K.”

Alors j’ai refait l’expérience avec cet exemple mais aussi bien chatGPT que Claude, Gemini et LeChat ont répondu correctement. J’ai refait l’expérience avec la question “Quel(s) département(s) français ont un nom qui commence par la lettre Y ?” et voici les réponses :

selon ChatGPT de openAI :

selon Gemini de Google :

selon Claude de Anthropic :

selon Le Chat de Mistral :

Dans un second temps j’ai repris la question et cela a donné :

Heureusement mon moteur de recherche préféré n’a pas perdu la mémoire !

PS: Dans un commentaire au post que j’ai fait sur LinkedIn sur cet article, Hugues Séverac m’indique que “le mode de fonctionnement des LLMs consistant à découper les textes en token c-a-d autre chose que des lettres, les rend particulièrement fragiles pour traiter des requêtes concernant des lettres”. J’aurais presque dû y penser et le mentionnant, il ajouter ensuite “C’est un piège connu depuis un moment par les gens du domaine, mais ça bouge pas vite 😏”.

Je me souviens que le moteur de recherche de Google a lui aussi ses inexactitudes mais au fond on s’en moque un peu car donner un lien pu précis voire incorrect n’est pas de même nature d’une information incorrecte. Dans leur article sur les LLMs Gras et Varoquaux notent de manière un peu surprenante “[qu’]une connaissance est une croyance qui a été générée par un processus fiable“. Jordan, dans le second papier cité, décrit les IAs comme un marché “bottom-up self-organizazation will be the dominant paradigm for growth of learning-catalyzed markets. But such growth need not be uncontrolled or outside our comprenhension.” (L’auto-organisation ascendante deviendra le paradigme dominant de la croissance des marchés catalysés par l’apprentissage. Mais cette croissance ne doit pas nécessairement être incontrôlée ni hors de notre compréhension.)

Collective and individual again: David Graeber, Cynthia Fleury

About ten years ago I discovered the work and thought of Cynthia Fleury ici.

MesLivres-Cynthia-Fleury

About six years ago, I translated, without really having the right to do so, an interview that I entitled « To be Brave is sometimes to Endure, sometimes to Break up »

About three years ago I discovered apodcast on Radio France by Cynthia Fleury about Vladimir Jankélévitch. All of this is somewhere on my blog.

This is in part why I’m so thrilled of my privilege to be at the @letheatredelatelier last Friday to hear two great actresses, Isabelle Adjani and Laure Calamy, in the adaptation of @lafinducourage by @fleuryperkinsc.

And here’s what I have noted: “Eight actresses, six duos for the face-to-face encounter between an author and a journalist in an engaged and stimulating dialogue that acutely and self-deprecatingly questions what it means to ‘hold on’ in a world under tension. A diversity of voices and perspectives, reflecting the cherished idea of ​​philosopher Cynthia Fleury, according to which ‘courage is not proclaimed: it is rebuilt, together.'”

But I can’t stop there this morning: Thanks to a post LinkedIn by the excellent Olivier Alexandre, often mentioned here, I discovered a fascinating exchange between Peter Thiel, who needs no introduction, and David Graeber, whom everyone should know. Unfortunately, I’ve quoted Thiel more often than Graeber. As I commented on the post, “This fascinating exchange reveals a pessimistic view of humankind that trusts only some “Happy Few”, leading to authoritarianism and illiberalism, and an optimistic view that trusts and advocates decentralization and democracy. I want to believe that it’s not just a matter of belief, even though social sciences, and science in general, are not purely mechanical, so unpredictability persists despite science.”

The World of Startups according to Marion Flécher – final post : the sociology, & not coolness

I just finished reading *The World of Startups* by Marion Flécher, and I can confirm that it’s an excellent book, even if it’s a bit depressing at times — I’ll come back to that. In a previous post, I described her comparative work between French and “Silicon” startups. But the core of her research deals, on the one hand, with a sociology of entrepreneurs that seems to shatter the myth of the self-made man, and on the other hand, with the internal workings of startups, which are far removed from the sweet and colorful “coolness” of these so-called liberated companies.

A sociology of entrepreneurs

Marion Flécher criticizes the idea that entrepreneurs owe their success solely to their own merit [page 83]. She illustrates this point with the education level of this population. 92% hold a Master’s or Doctoral degree (compared to 27% of traditional business founders). She also illustrates this point by noting that a large majority held salaried positions before launching their businesses [page 87].

Furthermore, all these entrepreneurs benefited from a state-supported ecosystem, notably through the numerous initiatives of BPIFrance (for training, networking, and access to subsidies, without which only those with significant financial resources would launch their businesses). This analysis, reminiscent of Bourdieu, demonstrates that entrepreneurs possess economic, social, and cultural capital.

She convincingly returns to an analogy with the art world: just as an artist doesn’t create a work of art alone in their studio, startup founders don’t create their companies in isolation [page 97].

As a result, the social inequalities of Western societies are amplified here. Gender discrimination, of course: Manon Flécher uses the expression “Entrepreneurship + Technological Innovation = Sexism Squared” [page 109]. But also geographical discrimination: the startup world is very urban and bourgeois. Entrepreneurs from the suburbs, lacking the necessary codes, information, and networks, are rare.

Ultimately, nothing is really new. I experienced similar things in my school and professional life (at a time when social mobility was a reality, a more optimistic and enthusiastic era), and indeed, technological entrepreneurship comes at the end of the path of scientific training and management career.

Entry modalities for entrepreneurship

Her multiple correspondence analysis of startup founders resonated strongly with my own experience in this world. She classifies them into three groups: independent or career entrepreneurs, salaried entrepreneurs or entrepreneurs by opportunity, and young startup founders or novice entrepreneurs [pages 128-131].

The book is essential reading for a nuanced description of this population. Some individuals “seek to rediscover meaning and autonomy; a logic of seeking prestige and social distinction; and a strategic logic that leads them to seize (or not) the opportunities that arise” [page 133]. Others create based on a novel idea with which they hope to “change the world,” which is reminiscent of the Schumpeterian entrepreneur [page 136].

A long personal note, or rather a few notes, at this point in my synthesi of the book. For years I’ve been studying entrepreneurs in my own way. I’ve built a very personal sociology of them, as scientific as possible:
1- It’s undoubtedly an elitist world, even more so if you focus on tech startups. It’s difficult to launch a business without a solid education, often acquired through a doctorate, and self-taught entrepreneurs are very rare. (However, we shouldn’t forget this group: school dropouts who decided to interrupt their studies to embark on this adventure, and Steve Jobs, Mark Zuckerberg, and Dylan Field are a few examples. But be aware, they would undoubtedly have had brilliant academic careers at the best universities had it not been for this interruption.) In fact, my main study on the subject concerns entrepreneurs from Stanford University. Could it get any more elitist?
2- I’ve finally discovered a categorization of entrepreneurs that groups together, on the one hand, novices under 30 and, on the other, more seasoned entrepreneurs aged 30 to 50. It’s quite rare to find such an analysis, and I’ve too often read that entrepreneurs are generally experienced, with an average age of 39. This reminds me of my analysis of “serial entrepreneurs” and, on the other hand, the age of entrepreneurs. Whereas Marion Flécher seems to show (and I hope I’m not mistaken) that in France, experience is an advantage, I’ve tried to demonstrate that value creation is correlated with the inexperience of the founders (who, of course, are not alone as they progress through their ventures).
3- Societal discrimination is a crucial issue. I love mentioning the Lost Einsteins, the Marie Curies lost in Morbihan. I don’t have many more solutions than others to remedy this; I can only observe.

Fortunes and misfortunes in the world of startups

I now come to what I consider the most depressing part of the book. Few innovative companies manage to become sustainable — according to some studies, 90% of startups end up closing or filing for bankruptcy before their tenth year — and even fewer reach the expected growth level to become “unicorns”: only 1% of startups created in the United States achieve this, and only 25 of the 15,000 created in France, or 0.1% [page 147].

The author’s descriptions of fundraising (page 155), growing startups (page 182), and even startups in their early stages (page 204) are sometimes chilling. It’s difficult to deny these realities, even if they are not the only ones. It contains expressions such as fundraising as a test of strength (page 160), co-optation logics unfavorable to women (page 165), making a virtue of misfortune, a strategy of dominant people (page 172), from well-being to control: when moments of conviviality lead to over-investment of workers (page 188), the creation phase: a “joyful mess” not always so joyful (page 205), interns abandoned in the face of demanding work (page 207), a work environment not conducive to the emergence of collective mobilizations (page 228) so that the choice is reduced to “leave or stay” (page 232).

Marion Flécher also notes general advice from the ecosystem that has always struck me as wrong, not to say toxic, at the risk of diminishing the quality and scale of potential successes:
“In the startup world, failure is both a common and symbolically valued phenomenon” [page 172]; however, I encourage you to read a different perspective from the founder of Zendesk, who doesn’t celebrate failure at all;
“The ability to pivot is a condition for the success of entrepreneurial projects” [page 173];
“Startup founders are advised to build teams with complementary profiles; above all, you mustn’t duplicate skills” [page 99]; here again, a different vision of entrepreneurship from Charles Geschke, co-founder of Adobe.

The conclusion: Start-ups, the new face of capitalism

The conclusion is also a bit depressing, so I’ll add a few more personal notes!

Startups are a unique model of companies due to at least three fundamental characteristics (pages 237-243):
– economic, which is not geared towards profitability but towards strong and rapid growth through innovation, made possible by external funding;
– organizational, which utilizes horizontal structures, cooperation, autonomy, and well-being;
– ideological, which values ​​entrepreneurship as the main driver of economic and social progress and merit as the ultimate principle of success and social justice.

But the author’s ambition was to deconstruct these ideals and promises by confronting them with reality. Deconstructing
– the myth of risk and merit, which serves to justify the enrichment of a few by obscuring the decisive role of the State
– the meritocratic myth of the self-made man, which renders inequalities of access invisible
– the myth of the liberated company, which in reality perpetuates, in renewed forms, logics of exploitation, control, and segmentation of the workforce.

More personal comments: the power law and the exceptional nature of this world?

The analysis is correct, but isn’t the picture painted too bleakly? Everyone should form their own opinion, and the facts should help. I’m even surprised that Marion Flécher didn’t cite Mariana Mazzucato and her book, *The Entrepreneurial State*.

The debate surrounding this undoubtedly abnormal world, like the art world for that matter, is not surprising. It’s full of exceptions rather than averages, to the point that some believe Gaussian statistics don’t apply. Power law should be used instead.

We’re closer to a (more or less absolute) monarchy than a democracy. Founders are practically kings. Additional note: in my data on nearly 1,000 startups (961 to be precise, as of today), 60% of CEOs are founders, and even 70% in the software and internet sectors. And only 40 CEOs are women… (and even worse, 88 female founders out of 1,733 male founders).

In fact, neither entrepreneurs nor investors behave in a completely conventional way. Take, for example, the founders of Apple: The two of them did not make a good impression on people. They were bearded. They didn’t smell good. They dressed funny. Young, naive. But Woz had designed a really wonderful, wonderful computer. […] And I came to the conclusion that we could build a Fortune 500 company in less than five years. I said I’d put up the money that was needed.

This is an important book about startups. It’s quite rare in French, and anyone interested in the subject should read *Le Monde des Start-up*.

The World of Startups according to Marion Flécher (Part 2)

In my post of November 8th, I promised to “read Marion Flécher’s book with great interest and will write to you in a future post to see if I find cause for resignation or optimism regarding the startup world.” I’m going to say both! The book is indeed excellent and perfectly describes the differences between France (which tried to claim to be a Startup Nation) and Silicon Valley (which never felt the need for such a claim).

The Difficulty of Defining the Word “Startup”

The heart of the book is not the comparison between the two regions, but rather what the French startup scene is like; I will return to this point. In her introduction, she explains the difficulty in defining the word, to the point of writing: “Making startups my subject of study was not a given. […] I was encouraged to use alternative terms such as innovative companies, technology companies, or high-growth companies” [page 16]. With a striking analogy, she adds, “as with the art world, in which players spend their time trying to determine what is art and what is not, it is by observing how a world makes these distinctions, and not by trying to make them ourselves, that we begin to understand what is happening in that world” [page 20]. Without naming Steve Blank, through a survey of entrepreneurs who gave her a multitude of definitions, she almost mentions my favorite definition: “a temporary organization in search of a repeatable and scalable business model”.

Silicon Valley, Heart of Startups

In her first chapter, Marion Flécher describes Silicon Valley, the region that gave rise to the semiconductor, the microprocessor, the microcomputer, software, the internet, social networks (and ultimately artificial intelligence, which had not yet emerged when she conducted her research). She demonstrates that the region was at the heart of a revolution that goes beyond technological innovation. This innovation was “accompanied by organizational and managerial innovations that led to a profound ideological redefinition of the entreprise” [page 52].

Yet, she shows that pinpointing the moment of their emergence is just as difficult as defining startups. “For many historians and ethnologists specializing in Silicon Valley, it is Intel’s invention of the microprocessor that constitutes the true starting point of the region’s technological boom and rise to power” [page 39]. She does not, however, neglect to note the importance of Hewlett-Packard (founded in 1939) and Fairchild (founded in 1957) in this dual revolution, including the development of project-based work in small teams, the upheaval of dress codes, and the implementation of new incentive structures [pages 52-53]. The complexity of the region’s origins also stems from the existence of other significant influences such as free software and the “Do It Yourself” culture [pages 55-56], and from a diversity of major players including venture capital funds, the federal government, and the companies themselves. A world, as the author describes it, an ecosystem.

Another difficulty addressed by Marion Flécher, at least for a Silicon Valley enthusiast like myself, is: when did the word “startup” first appear? “The term ‘startup’ seems to have been used for the first time in 1976, in a Forbes magazine article, to refer to young technology companies in Silicon Valley” [Author’s note: The Unfashionable Business of Investing in Startups in the Electronic Data Processing Field]. “The term ‘startup company’, which associates the startup with a specific type of business, appeared a year later in an article entitled ‘An Incubator for Startup Companies, Especially in the Fast-growth, High Technology Fields,’ published in Business Week in 1977.” The author adds that the term acquired its current meaning and spread worldwide during the 1990s, even though this new business model can be traced back to the 1940s. NB: I confirm this in a blog post: When was the word “start-up” first used?


Scan of Figure 2 [page 43]: Timeline of the main Silicon Valley technology companies. I circled two things by hand while reading. My surprise at seeing only one founder for eBay; I thought Jeff Skoll was a co-founder, but apparently he may have only been the first employee. And my other surprise at seeing three co-founders for Apple, which is rarely mentioned. Ronald Wayne is often forgotten. And then a rather unimportant note for Marion Flécher: Wo[lk]zniak is misspelled on page 41!

Risk and Uncertainty

In a brief but equally excellent section on venture capital, Marion Flécher explains that “unlike risk, which refers to a situation that can be predicted by probability and in which actors can reason rationally […] uncertainty refers to a situation in which the degree of singularity is such that it cannot be compared to any other. By developing disruptive innovations, Silicon Valley entrepreneurs create situations of radical uncertainty in which actors can only make speculative judgments” [page 46]. This explains why the term [ad]venture capital is very different from the term capital-risque in France (which is undoubtedly indicative of dissimilar worlds). “Nevertheless, these players have resources that allow them to transform the uncertainty of a situation into a quantifiable risk. Their activity requires, first and foremost, a sound knowledge of the technical environment, which enables them to assess the growth prospects of projects. Most investors […] are thus often former engineers or entrepreneurs” [page 47]. This is undoubtedly another major difference between Silicon Valley and France.

Since I mentioned personal surprises in the commentary on the figure above, I take this opportunity to add a few more personal comments (for myself, the author, and any potential reader!):
– Without a doubt, the startup world is a new illustration of capitalism, and this has undoubtedly been misunderstood. Startups have never been liberated companies; trade unions are very rare, not to say unwelcome. I already mentioned this point in my first post.
– Marion Flécher emphasizes intellectual property (Microsoft’s proprietary software, Intel’s microprocessor patent), which creates near-monopolies favored by a state that “seems to have implicitly supported market concentration” [page 49]. Yet it was the state that forced Bell Labs to grant licenses for the transistor, for which the company held the patent. Intel certainly had a near-monopoly on the microprocessor, even though IBM and AMD were genuine competitors. But competition in new sectors has made Intel a declining player in recent years (telecommunications, artificial intelligence). I would say that the US government is protecting the country at a macroeconomic level by defending its technological lead rather than protecting any individual company. OpenAI might replace Google, which could have replaced Microsoft, just as Nvidia or even AMD might replace Intel. The same goes for mobile phones. The US remains the leader.
– Another minor point of doubt: “Between 1998 and 1999, venture capital almost doubled, going from $3.2 billion to $6.1 billion” [page 48]. I have the impression, and I could be wrong, that the amounts were about ten times larger and that these figures correspond more closely to the 1980s.
– Finally, I see confirmation of a personal impression regarding the decrease in the number of IPOs: Silicon Valley had 417 IPOs in 2000 compared to only 14 in 2021 [page 51]. Indeed, for years I’ve been compiling market capitalization tables and dreamed of quickly reaching 1,000, but the IPO drought is slowing my ambition… On the other hand, M&A acquisitions still seem as prosperous as ever, since Marion Flécher mentions more than 90 acquisitions by Facebook since its creation (see my posts on Cisco and Google). A startup may not be destined to become a long-term business, but it’s also possible that the monopolistic concentration mentioned above is at its peak…

France, a nation of startups?

That’s the title of Chapter 2. And the second page of this chapter includes the following figure. It’s easy to see that the French press began to take an interest in the subject during the dot-com bubble and then again from 2012 onwards. Manon Flécher explains that this second period is significant, coinciding with the arrival of Uber and Airbnb in France, but also with the creation of BPIFrance and the French Tech initiative. Equally interesting, the author reminds us that General de Gaulle visited San Francisco in 1960, Georges Pompidou 10 years later, and François Mitterrand in 1984. The author doesn’t mention the creation of Sophia Antipolis in 1969, which Paul Graham mocks, more or less gently (see my post from 2011). Presidents Hollande and then Macron have been apparently much more involved in the topic.

Is France a startup nation? The answer is clear if you’ve read the preceding paragraphs. But the debate runs deeper, as I indicated in *Politics vs. Economics: A Country Is Not a Startup*, translating the article Non, la France ne doit pas devenir une start-up. I didn’t know, or had forgotten, that Emmanuel Macron had then used the term “hyper-innovation.” But the doomsayers are always ignored, and hyper-communication too often trumps reality and facts.

Marion Flécher also addresses this by stating that “despite this growth, the State remains the primary funder of startups in France” [page 71]. Her footnote on page 69 is revealing. “In 2015, business angels reportedly invested a total of €41 million, which was still half the amount in the United Kingdom and 2.5 times less than in Germany. […] In 2023, the United Kingdom continued to lead other European countries with €307.4 million invested by business angels, compared to €198.5 million for Germany and €142.5 million for France.” BPIFrance represents two billion euros in direct investments in company capital [page 72].

My post is already too long, which is convenient since I’m at this point in my reading of Le Monde des startups. Yet I haven’t even started on the main topic: the sociology of startup founders. A sequel coming soon!

Post-scriptum : On a related note, I just bought *Palo Alto: A History of California, Capitalism, and the World*, one review of which says, The most comprehensive — and incendiary — history of the place that we’re ever likely to get. A sweeping and unsparing critique, it’s also well written, frequently surprising and, because history tends to rhyme, increasingly urgent. You may never think about Stanford, iconic tech companies like Hewlett Packard or, indeed, the Valley itself the same way again. I won’t.” LOS ANGELES TIMES

The introduction already haunts me: the author promises to explain that the inhabitants of California, Silicon Valley and Palo Alto have not all forgotten the ghosts that surround them and without which the region could not have become what it is… To be continued!

The World of Startups by Marion Flécher

The startup world has been the core of my professional life for almost 30 years. I know it perhaps too well, and I also read almost everything I can get my hands on. So I feel compelled to read a book that takes this subject as its title. Marion Flécher is a lecturer in sociology at the University of Paris Nanterre, and her book, *The World of Startups* (Le monde des startup) is based on her doctoral thesis, entitled *The Startup World: The New Face of Capitalism? An Investigation into the Modes of Creation and Organization of Startups in France and the United States*. (Le monde des start-up, le nouveau visage du capitalisme ? Enquête sur les modes de création et d’organisation des start-up en France et aux Etats-Unis).

Marion Flécher just post an article on LinkedIn pand she was alos the guest of Guillaume Erner yesterday morning on France Culture.

As you may have guessed, I haven’t read the book yet, but I will as soon as I receive it. I’m always a bit ambivalent when I read critical analyses of this world, and of Silicon Valley in particular. Here’s what the publisher says on the book’s page: “The book compares the promises made by startups (success stories, meritocracy, flexibility) with the reality on the ground (failure rates, mass layoffs, pressure to perform, burnout). For the past fifteen years or so, young, innovative companies grouped under the term “startups” have occupied an increasingly prominent place in the media and political arena. Symbols of modernity and Capitalism 2.0, they are being held up as a genuine economic and organizational model. How can we understand this enthusiasm? (…) Dismissing the mythical figure of the self-made man, she sheds light on the reality of this social world and defines the profile of those, and more rarely those women, who launch startups and claim this label. While they claim to break with the hierarchical rigidity of traditional firms, startups offer a new face of capitalism, one whose gentler and more colorful aspects have allowed it to recover from its critics. In the digital age and the era of new technologies, what do they foreshadow for the future of work?”

I am ambivalent for two reasons :

The first reason is that it seems to me France has gone from a profound ignorance of this world to a critique of its excesses that is undoubtedly justified but harsh.

About ten years ago, Professor Libero Zuppiroli brilliantly criticized the unfulfilled promises of innovation in *The Utopias of the 21st Century*. A few years earlier, he had teased me about the fact that startups didn’t represent much at all. That was the subject of another post.

He was right, at least for Europe, to the point that neither France nor Europe has generated any real success stories. My previous post last week celebrated an EPFL’s success story at $3 billion, and Criteo, Mistral, and others are all modest in size compared to the behemoths that the GAFAMs have become. SAP, Spotify, ARM, and only a few others in Europe can be compared to American successes. I am therefore sometimes torn between comparing and criticizing two continents that have little in common. France has moved very quickly, not to say too quickly, from a lack of understanding to a criticism of this world without grasping the reasons for its appeal and success.

The second reason is that this criticism has existed for a long time, and I’m saddened that communication takes precedence over information. Startups have never been a paradise; they are rarely liberated companies, so storytelling has transformed a few exceptions into a universal model.

For example in 1986 in Startup fever, one could read “The Silicon Valley has been called “one of the last great bastions of male dominance” by the local Peninsula Times Tribune. […] They are under-represented in management and administration. Few women have technical or engineering backgrounds. […] Why there are few women in positioning of responsability in Silicon Valley is complex and puzzling. Until recently, the overwhelming majority of engineering graduates were men. […] Scientific and engineering professionals in the finance community and in start-ups are likely to be men: these power-brokers rely exclusively on their personal networks. […] Twenty of the largest publicly held Silicon Valley firms listed a total of 209 persons as corporate officers in 1980; only 4 were women. The board of directors of these 20 firms include 150 directors. Only one was a woman: Shirley Hufstedler, serving on the board of Hewlett-Packard.” But the authors are optimistic: they explain that any woman with a technical background or an interest in high-tech has opportunities: “A Martian with three heads could find a job in Silicon Valley. So for women with a technical background, it’s terrific. […] An exception to masculine dominance is Sandy Kurtzig. “I wanted to start in a garage like HP, but I didn’t have one. So I started in a second bedroom of my apartment.” At first, Kurtzig did sales, bookkeeping and management of her start-up. As long as she had only five or six employees, they worked out of her apartment. It went into rapid growth and had annual sales in 1982.”

And what about Anna-Lee Saxenian in 1999 : “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.” Returning to the earlier statement (France has moved very quickly, not to say too quickly, from a lack of understanding to a criticism of this world without grasping the reasons for its appeal and success), I believe it is essential to read and reread the remarkable works of Professor Saxenian (Regional Advantage, The New Argonauts). She has been able to explain the reasons for these attractions and successes, which persist today despite the excesses.

I’ve arrived at these compromises, which the great Bernard Stiegler helped me develop:
– In a 2016 post, “Has the World Gone Mad? Perhaps…,” I wrote that Stiegler’s main thesis is that capitalism has gone mad and that the absence of regulation and controls can lead to madness. “Disruption” can be beneficial when followed by a period of stabilization.
– That same year, in “Disruption and Madness According to Bernard Stiegler”, I noted that in ancient Greece, the term Pharmakon referred to both remedy, poison, and scapegoat. Medicine becomes harmful if consumed in excess…

I will therefore read Marion Flécher’s book with great interest and will write to you in a future post to see if I find cause for resignation or optimism regarding the startup world.

Post-scriptum: I regularly wonder about the nature of French society’s relationship with science and technology. All the pitfalls of technology are clear, and I regularly mention them here; for example, I’m thinking of François Jarrige’s *Technocritiques*. I’m not sure that the criticism is as severe for science or mathematics, as if they were more neutral. We hear less often about the fact that very few women have been Fields Medalists: two female laureates in 2014 and 2022, compared to 80 laureates in total since 1936.

Science in the media is neglected in France, generalist journalists and even French intellectuals have a rather deplorable scientific culture. Science doesn’t attract many girls, or at least they are discouraged from pursuing it for complex reasons. This wasn’t the case in the former Eastern Bloc countries (whatever the reasons may be). The relationship with technology, and therefore with innovation and startups, is perhaps a consequence of this, or simply a correlation. This might explain some of my sadness or frustration, even though I haven’t lost my enthusiasm. And in those moments, Churchill’s quote comes back to me: “Success is going from failure to failure without losing your enthusiasm.”

Two references in French.

– Mathématiques : deux femmes récompensées depuis 1936 : https://www.lemonde.fr/les-decodeurs/article/2019/03/20/mathematiques-deux-femmes-recompensees-depuis-1936_5438858_4355770.html

– Maryna Viazovska, deuxième femme lauréate après Maryam Mirzakhani : https://information.tv5monde.com/terriennes/medaille-fields-maryna-viazovska-deuxieme-femme-laureate-apres-maryam-mirzakhani-2933