Category Archives: Innovation

Marie Curie in Morbihan according to Xavier Jaravel

Leave a reply

Here is a short, dense and convincing essay that anyone interested in innovation should read. The subject is nevertheless complex, but the author gives a clear and argued vision of it. So here is my summary or rather selected extracts, because you have to go directly to the text which only takes an hour or two to read!

A diagnosis

Taxation?

In the top 1% of the income distribution, around 70% of taxpayers receive income from entrepreneurship, a figure which increases further for the richest, reaching 85% for the top 0.1%. [Page 21]

A list of individuals with the highest wealth is drawn up each year by Forbes magazine: less than 10% of the individuals appearing on the list in 1983 are still there in 2023. [Page 23]

The author is not convinced that taxing the rich is a solution to the inequalities created. Provided that the incentives and dynamics do not ultimately favor a tiny minority [but taxation in general remains a subject of fairness (see Piketty]. The tech giants, however, seem to have become dangerous monopolies because they are unregulated [page 24]

On the “Darwinian” dynamics of innovation, see also an older post, Silicon Valley will soon be 65 years old. Should she be retired?

Globalization ?

Companies that automate increase their employee workforce. [Page 28] Of course, this result only reflects average trends and does not mean that there are not negative effects on employment for certain technologies. For example, organizational innovations in logistics tend to reduce labor requirements. But it is very difficult to identify such cases with certainty; and, on average, the effect on employment is very positive. [Page 30]

Innovation for whom?

Due to the increase in inequality in the United States since the 1970s, the size of the market for products consumed by wealthy households is growing more quickly, and it is therefore on these markets that innovators are focusing their efforts. […] In an economy where the purchasing power of the most modest stagnates, which has been the case in the American economy for decades, the most modest never see the color of these innovations [Page 35]

The flow of innovations that generate purchasing power throughout society is not automatic: it depends on economic incentives. […] In the absence of a solvent market, there will be no innovation, so what can we do? [Page 37]

Some directions

Market size

It is estimated that a 10% increase in market size leads to a 3% drop in prices for consumers. [Page 42]

The sociology of innovators

The innovative or entrepreneurial idea is often born by directly experiencing a need or a problem to be solved. If those who innovate are not representative of society as a whole, innovations are biased in favor of a minority, those of the privileged who innovate. [Page 43] And the author mentions the examples of Louis Braille and Joséphine Cochrane.

In the United States, individuals whose parents are in the top 1% of the income distribution are ten times more likely to become innovators. […] There is no self-made innovator: the social environment plays a major role. […] Same thing in France for individuals who become doctor-engineers or doctor-researchers. [Page 44]

Innovators are turning to consumers who are like them. [Page 46]

When it comes to innovation, the scope for public action is immense. [Page 48] Innovation policy has given an emphasis to financing innovation, with tax credits and direct subsidies […] Conversely, investment in education and public research has had a tendency to decline. […] States spend relatively little on innovation. The innovation policy consists of around ten billion euros. Of these 10 billion annually, the most important system is by far the research tax credit (CIR), amounting to 7 billion. [Page 51] Despite numerous analyzes attesting of its low effectiveness, the CIR remains the main instrument today. [Page 52]

Note by the way that this process is not accompanied by a public debate. […] It is a process in small committees bringing together senior civil servants, a few politicians and a few captains of industry, whose sociology is just as selective as that of the innovators, that is to say not very representative of the population in its entirety. [Page 52]

Education

X. Jaravel devotes a long chapter to the importance of education in all its dimensions for the least privileged as well as for the highest potential, in the sciences as well as behavioral skills, to combat all the biases of the sociology of innovators who are basically middle-aged white men [page 47]

For example, those who excel in the International Mathematics Olympiads will not always have the opportunity to do a doctorate, due to lack of opportunities in their country. That’s so many researchers and innovators lost. [Page 53] With the reference “Invisible geniuses: could the knowledge frontier advance faster?”

Education produces its effects in the long term, which does not attract the attention of those in a hurry, obsessed with other, more short-term priorities. [Page 56]

In his chapter 4, the author explains his skepticism about the taxation of the rich, the establishment of a universal income, the taxation of robots, protectionism or planning, while qualifying his remarks, as he knows that acting on a complex system can have effects that are difficult to measure. Once again he expresses the blind spots of such decisions, due to very technocratic processes on the one hand, not very effective on the other hand, especially if they are not evaluated a posteriori and finally because too much of a role is given to innovative projects rather than education and training. [Pages 68-70]

In search of the lost Marie Curies

There are innovation clusters, not only from the point of view of the production of innovations, but also with regard to the origins of the new generation of innovators. [Page 74] Those who are most likely to become innovators in tech are those who have spent the most time in Silicon Valley, as if they were embedded in the environment and planned for these careers. [Page 76] Which makes me think of how many Robert Noyce, from a small town in the American Midwest, compared to Steve Jobs and Larry Page.

Achieving perfect parity between women and men to access innovation would increase the growth rate of labor productivity from 1% to 1.80%. [Page 78] We obtain equally important effects when we analyze a hypothetical situation in which individuals from disadvantaged backgrounds (rather than women) would no longer face any barriers in accessing professions in innovation and science. [Page 79]

It is also instructive to appreciate the effects of a very targeted policy which, by hypothesis, would achieve parity among the top 1% of individuals classified according to their aptitude for innovation. In the macroeconomic model, the most important innovations come from a small number of innovators (which is consistent with the data on the extreme concentration […] of start-up fundraising.) [Page 79]

The next pages are devoted to the impact of awareness raising in schools, an equally fascinating subject. Women are largely under-represented in scientific fields in France, which explains a third of the salary gap between women and men, which amounts to around 15% (for identical working hours). [Page 83]

X. Jaravel therefore insists on the importance of investment in education by emphasizing parity and territorial equality [Pages 85-6]. The author is concerned about the deterioration of education. Both in the basic “read, write and count” as well as on the best: In 2017, only 1% of students reached the level of the top 10% in 1987. [Page 91]

Three principles of action

– We know well that there is no single mechanism with a magical power, but that it is rather the conjunction of tools that makes it possible to change the situation.
– Under no circumstances should technical training be left aside.
– Several reforms could be specifically considered in their link with innovation and entrepreneurship. For example, introductory courses in entrepreneurship and innovation in high school, and strengthening teaching on the use of new technologies.

Democratizing innovation

At the end of his essay, X. Jaravel recalls two blind spots: a technocratic bias (leaving little room for citizens) and a limited use of evaluation. It is important to determine whether a scheme creates windfall effects or is truly effective. Thus an American study showed that certain subsidies constituted a pure and simple windfall effect when the subsidized technologies were already mature [while] conversely subsidies for start-ups at the very beginning of their life, in particular to realize prototypes had a strong ripple effect. [Page 110]

The author ends with three priorities:
– An educational policy that inspires vocations
– Do not give in to protectionist temptation
– Promote active participation of citizens

With the observation that innovation flows neither from the most brilliant entrepreneurs nor from the top of the State. Innovation is always collective, it infuses slowly, in the “rhizome” of innovation [Page 115]

I doubt that the reader in a hurry will understand much of these notes, and the author also indicates that this same reader could jump directly to the conclusion of his essay. You should read the full essay even if I doubt that the decision-makers often mentioned in Marie Curie habite dans le Morbihan – Démocratiser l’innovation will take the time to implement the recommendations, assuming they read them. But we must remain optimistic!

From Counterculture to Cyberculture by Fred Turner

Leave a reply

From Counterculture to Cyberculture is another recent reading of mine after Making Silicon Valley of a not so recent book. It is subtitled Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism.

Here is a short extract of why the book is important: By the end of the 1960s, some elements of the counterculture, and particularly that segment of it that headed back to the land, had begun to explicitly embrace the systems visions circulating in the research world of the cold war. But how did those two worlds together? How did a social movement devoting to critiquing the technological bureaucracy of the cold war come to celebrate the socio-technical visions that animated that bureaucracy? And how is it that the communitarian ideals of the counterculture should have become melded to computers and computer networks in such a way that thirty years later, the Internet could appear to so many as an emblem of a youthful revolution reborn? [Page 39]

The Whole Earth Catalog

One explanation of this strange phenomenon is Stewart Brand and the Whole Earth Catalog:

Here are some more extracts: “In late 1967 [Stewart Brand and Lois Jennings] moved to Menlo Park where Brand began working at his friend Dick Raymond’s nonprofit educational foundation, the Portola Institute. Founded a year earlier, the Portola Institute housed and helped a variety influential Bay area organizations, including the Briarpatch Society, the Ortega Park Teachers Laboratory, the Farallones Institute, the Urban House, the Simple Living Project, and Big Rock Candy Mountain publishers, as well as its most visible production, the Whole Earth Catalog. As Theodore Roszak has suggested, Portola’s efforts were all designed “to scale down, democratize and humanize our hypertrophic technological society.” When Stewart Brand joined, much of Portola’s energy was directed towards providing computer education in the schools and developing simulation games for the classroom.

[…]

The Portola Institute served as a meeting ground for counterculturalists, academics, and technologists in large part because of its location. Within four blocks of its offices, one could find the office of the Free University – a polyglot self-education project that offered all sorts of courses, ranging from mathematics to encounter groups, usually taught in neighboring homes – and two off-center bookstores (Kepler’s and East-West). A little farther away was the Stanford Research Institute, where Dirk Raymond had worked for a number of years, and not far beyond that, Stanford University. In addition, many of Portola’s members represented multiple communities. Albrecht had worked at Control Data Corporation and brought with him advanced programming skills and links to the corporate world of computing, along with a commitment to empowering schoolchildren. Brand and Raymond both had extensive experience in the Bay area psychedelic scene. And Portola’s various projects kept its members in circulation: teachers, communards, computer programmers – all came through the offices at one time or another.” [Page 70]

An additional note states: “For a fascinating account of the intermingling of countercultural and technological communities in this area see What the Dormouse Said. How the 60s Counterculture shaped the Personal Computer by John Markoff, Viking Penguin 2005.” Turner is convincing in the description of the society turbulence, with the New Left focusing on civil rights whereas the New Communalists in a less organized, more anarchist vision of the world, neither being opposed to technology, but trying to scale down the impact of capitalism and cold war, Norbert Wiener, Marshall McLuhan and Buckminster Fuller being influential thinkers.

Turner concludes his chapters with these quotes : “Once while working with him on the catalog, I asked Mr. Brand if he would not carry out any of a various number of politically oriented underground newspapers. Upon reply, he told me that three of the first restrictions he made for the catalog were no art, no religion, no politics.” … then pointed out that Catalog offered all three : the art was fined art or craft; the religion, Eastern; the politics; libertarian: “From all the 128 pages of the Whole Earth catalog there emerges an unmentioned political viewpoint, the whole feeling of escapism which the catalog conveys is to me unfortunate.”

Brand responded with a defense of local action and of his personal experience : The capitalism question is interesting: I’ve yet to figure out what capitalism is, but if it’s what we’re doing, I dig it. Oppressed peoples: all I know is that I’ve been radicalized by working on the Catalog into far more personal involvement with politics than I had as an artist. My background is pure WASP, wife is American Indian. Work I did a few years ago with Indians convinced me that any guilt-based action toward anyone (personal or institutional) can only make a situation worse. Furthermore the arrogance of Mr. Advantage telling Mr. Disadvantage what to do with his life is sufficient case for rage. I ain’t black, nor poor nor very native to anyplace, not eager any longer to pretend that I am – such identification is good education, but not particularly a good position for being useful to others. I am interested in the Catalog format being used for all manners of markets – a black catalog, a Third World one, whatever, but to succeed I believe it must be done vy people who live there, not well-meaning outsiders. I’m for power to the people and responsibility to the people: responsibility is individual stuff. [Page 99]

And a little further a tough comment by Turner : Like P. T. Barnum, he had gathered the performers of his day – the commune dwellers, the artists, the researchers, the dome builders – into a single circus. And he himself had become both master and emblem of its many linked rings. [Page 101]

Taking the Whole Earth Digital

The next chapters covers the influence of the Whole Earth Catalog, outside the more or less closed circles of the famous Augmented Research Center (ARC) of Douglas Engelbart at the Stanford Research Institute (SRI) and the Palo Also Reserach Center (PARC) of Xerox, undoubtedly materialized in the no less famous Homebrew Computer Club. The cross-influences are multiple and described in detail by Fred Turner, in his chapter Taking the Whole Earth Digital.

There is in particular the reference to an article that I did not know from Rolling Stone magazine written by Steward Brand with photographs by Annie Lebowitz: Spacewar: Fanatic Life and Symbolic Death among the Computer Bums.

1972-12-07 Rolling Stone (Excerpt) Spacewar Article V02 - lowres

Turner concludes his pages on the Rolling Stone article with this: In the pages of Rolling Stone, the local work of individual programmers and engineers became part of a global struggle for the transformation of the individual and the community. Here, as in the Whole Earth Catalog, small-scale information technologies promised to undermine bureaucracies and bring about both a more whole individual and a more flexible, playful social world. Even before minicomputers had become widely available, Steward brand had helped both their designers and their future users imagine them as “personal technologies”. [Page 118]

In the article, there is a mention of Hackers which ethics are described by Steven Levy, in his book Hackers, Heroes of the Computer Revolution (my next read ?). They include:
– All information should be free.
– Mistrust authority—promote decentralization.

Brand, not surprisingly, celebrates them : I think hackers… are the most interesting and body of intellectuals since the framers of the US constitution. No other group that I know of has set out to liberate a technology and succeeded. They nt only did so against the active disinterest of corporate America, their success forced corporate America to adopt their style in te end. In reorganizing the Information Age around the individual, via personal computers, the hackers may well have saved the Amerian economy. High tech is now something that mass consumers fo, rather than just have done to them… The quietest of the ’60s subcultures has emerged as the most innovative and most powerful – and most suspicious of power. [Page 138]

Turner does not hesitate to nuance Brand’s enthusiasm in the following lines, because once again the arrival of technology in everyday life has been a complex phenomenon in Silicon Valley. I am not even half way through Turner’s book. Maybe another post. Already a very intersting reading.

A glossary of the startup world

Leave a reply

When you come from the world of research or the “normal” world, that of startups can sometimes seem mysterious. Many acronyms and specific terms are used there which can make it difficult to understand this world, which is however not so complicated. So here are some explanations, they show probably my bias but hopefully they will be useful for the curious mind.

Startup: perhaps obvious as the term is used or even overused! A young innovative company? The best definition of a startup is undoubtedly that of Steve Blank: a temporary organization in search of a repeatable and scalable business model.

Spinoff: a company (a startup in particular) created out of another entity (a team leaving another company, an intellectual property from a research laboratory)

Business model and business plan: An enterprise has (often) the goal of making money, at least in the long or middle term. Its founders must have in mind how it will make money, what they sell, to whom and how the service or product is sold. We speak of a “business model” which has given rise to a rich literature, including the “business model canvas”, a tool for building this model.

The business plan is the structured writing, among other things, of this business model and more generally of all the components of a company allowing it to find stability and growth. We speak of a “roadmap” to describe this multi-annual plan, the path that leads to prosperity, or at least to finding the means to survive. Financial projections and finance is a whole science or art in itself. The “burn rate” is, for example, what a company spends each month or each year and must be well known to entrepreneurs who do not wish to go bankrupt (find themselves without resources).

The business plan is sometimes a difficult or premature exercise. The pitch is an oral or written presentation in the form of slides (the “pitch deck”) which can last one minute (“elevator pitch”), 5 or 10 minutes, rarely more than 20 minutes. It is an exercise that has become essential for any entrepreneur and its practice makes the exercise easier over time, in particular by using all the jargon in this glossary! The pitch deck is a summary of the Business Plan with a clever dose of storytelling. The reference is Guy Kawasaki’s book, Art of Start.

In this literature, we find the concepts of lean startup, agile startup, pivot, which describe flexible, fast and frugal ways of moving forward and changing direction when the path is blocked (the “pivot”).

The term “pricing” is one of the simplest to understand but most difficult to implement: at what price to sell your service or product? Certainly not at the production cost because you have to integrate all the indirect costs of a company (R&D, G&A, S&M) and in a capitalist world, even make a profit (we talk about margins).

– R&D: Research and Development,
– G&A: General and Administration (including accounting, finance, human resources – HR),
– S&M: Sales and marketing.
All these terms speak for themselves, except perhaps the word “Marketing”.

Marketing

Marketing is not advertising, but the analysis of a company’s market, as well as all the actions taken by a company relating to this market. But what is a market? A market is made up of consumers or customers who buy a product or service, with the price paid, its size is obtained by multiplying the number of customers by the price. We talk about TAM (“Total Available Market”), some talk about the size of the universe, because the TAM is rarely accessible to a single company. We are talking more about SAM (Served Available Market), which a company can realistically address. Finally, there is the SOM (“Serviceable Obtainable Market”), the market that can realistically be captured.

Marketing is a complex discipline with its vocabulary. Strategic marketing represents the overall analysis of a company of its market and its (hoped-for) place in this market, while operational marketing includes all the techniques that will allow it to exist in this market. We talk about segmentation, to define a homogeneous set of customers, we also talk about vertical market. The “go to market” is the market entry strategy. The landing beach (“beachhead”) is an entry into a small market (“niche”) which may or may not give access to a larger market.

Finally, there is also the concept of Minimum Viable Product (“MVP”), the version of a product that allows you to obtain maximum customer feedback with minimum effort. It is more a question of analyzing the viability of hypotheses than of selling anything.

Enough for marketing! The great marketing guru for high-tech startups is Geoffrey Moore, author of Crossing the Chasm and Inside the Tornado. We will talk little about sales here, except that prospective customers are called leads or prospects. We sell in B2C (“Business to Consumer”) to individual consumers or in B2B (“Business to Business”) to companies, but also in B2B2C…

The enterprise

An enterprise is therefore a complex and structured organization (while a startup is only a temporary and often chaotic organization). It often has its hierarchy with its officers (CxO for Chief “x” Officer) and Vice-Presidents (VP). At the very top the CEO or Chief Executive Officer (PDG or DG in France) then the CTO or Chief Technical Officer (Technical Director), CSO or Chief Scientific Officer (Scientific Director), COO or Chief Operating Officer (Director of Operations), CFO or Chief Financial Officer (DAF or Director of Administration and Financz). The list of CxOs is endless. Yahoo had its Chief Yahoos. The most common VP roles are Engineering, Sales, Marketing.

In a startup, it is advisable to forget the titles. The founders do not need to give themselves misleading titles of CEO or CTO (except when facing certain somewhat rigid investors) because all the founders are doing a little of everything (otherwise the risk is the absence of transparency, a miscommunication and loss of trust).

Above the CEO, there is the Board of Directors, headed by the Chairman (the CEO often combines the functions of CEO and Chairman of the Board, the DG becomes the PDG in France). Above the board are the shareholders who hold parts of the company, generally shares (indifferently in English, Share, Stock or Equity). There are different types of shares, preferred (with privileges) or ordinary (common). These shares have a price (the value of which fluctuates). The product of the price multiplied by the number of shares is the value of the company.

The founders create a company with an initial capital (the number of shares multiplied by the nominal price). Then the capital can be increased by fundraising from acquaintances (Friends & Family), individual investors (Business Angels) or institutional investors, such as Venture Capital or VC. The succession of such fundraising is called investment rounds (financing rounds) with series A, B, C… The first rounds are called Seed and even pre-seed. In recent years, this terminology has been linked to the size of the amounts, the series A or first round has a size of a few million ($ or €) while the Seed is a few hundred thousand and at most $1M or €1M. The pre-seed is a few tens of thousands of euros or dollars.

A company can also find funds by going public through an initial public offering (IPO). As long as it is not listed, a company is said to be private (we talk of Private Company and Private Equity). The IPO is quite rare and startups are often acquired by larger players or merge with other companies (we talk about Merger and Acquisitions or M&A).

The value of a company is increased by its fundraising, but sometimes also by the increase in the price per share. During such an event, it is calculated that post-money valuation = pre-money valuation + fundraising amount, each of the three terms being equal to the number of shares multiplied by the share price at the time of the fundraising. Investors expect a return on investment (ROI). This is calculated similarly to the return of a bank account, i.e. the annual percentage increase in the share price.

Employees are compensated in Stock Options (ESOP is the Employee Stock Option Plan), the right to acquire shares in the future at a favorable price. In France, the name is BSPCE for « Bons de Souscriptions de Part de Créateurs d’Entreprises »). Warrants (in France, BSA for “bons de souscriptions d’actions”) are reserved for entities external to the company (investors, consultants, technology or service providers). Stock options have their jargon: they are generally granted at monthly or quarterly dates over a period of 4 or 5 years (the “vesting”) and the option is exercised by paying a small sum (“exercise price”) allocating the shares to the holders. There is a period without vesting, generally the first year called “cliff”.

Many entrepreneurs dream of not going to investors, in particular by developing their business with the income and profits generated by sales. If these are convincing, the banks will agree to lend money. Financial objects that do not modify the capital of a company are said to be non-dilutive (loans, debt, non-convertible bonds and also subsidies). We speak in English of “bootstrapping”.

Birth and Death of Silicon Valley ?

Leave a reply

At a time when Silicon Valley seems more powerful than ever, with GAFAs and others reaching values difficult to imagine just a few years ago, at a time when Artificial Intelligence seems to scare many and fascinate others with huge fund raising for openAI ($10B) or Inflection AI ($1B) [not to forget smaller French Mistral AI ($100M)], why would I like to talk about the death of Silicon Valley ?

The Birth and Growth of Silicon Valley

Well before digging any further, you may want to watch the short video above. And by the way when was Silicon Valley born ? I always claim it was in 1957 with the foundation of Fairchild (The First Trillion-Dollar Start-up) and the industry of the semiconductor. This is probably a little more complex as you’ll see in the video.

Now the figure above does not contradict that Silicon Valley began around that year, but the region was strong with microwave and power tubes before, mostly for military applications, with companies such as Litton Engineering Labs (1932), Hewlett-Packard (1939) or Varian Associates (1948). I took the figure from a book I found in my archive (but have not read yet – will do with maybe another blog article) : Making Silicon Valley – Innovation and the Growth of High Tech, 1930-1970 by Christophe Lécuyer.

Enough with history and back to the present. If you are not convinced by how powerful Silicon Valley is, just have a look at the table below. Even if I am aware that Microsoft and Amazon, neither Tesla anymore, do not belong geographically to Silicon Valley, they certainly are part of it from a cultural standpoint. And this is why I talk about the death of Silicon Valley. From a cultural standpoint.

Death of Silicon Valley from a Cultural Standpoint

A few days ago, friends from IMF sent me articles about the retirement of Michael Moritz. I would not be surprised if you do not know him, even if I mentioned his name on this bog in the past. He was a venture capitalist and venture capitalists are not the heroes of Silicon Valley. Bob Noyce, Steve Jobs, Larry Page and Sergey Brin were. Elon Musk probably not any more. “Look around who the heroes are. They aren’t lawyers, nor are they even so much the financiers. They’re the guys who start companies” (see here).

His Wikipedia page mentions “In July 2023, Moritz stepped down from Sequoia after nearly four decades.” It also adds that “his internet company investments include Google, Yahoo!, […] PayPal, Webvan, YouTube, eToys, and Zappos.” One can read for example on Techcrunch, Michael Moritz moves on, book-ending a long chapter at Sequoia Capital.

Moritz is in a long list of investors who decided to retire. The first generation stopped being active a long time ago (Arthur Rock, Don Valentine, Tom Perkins and Eugene Kleiner belong to that list) and the second generation is disappearing too (John Doerr who co-invested with Moritz in Google and was on the board of the company with him, also retired). All these relatively unknown people contributed in building Silicon Valley by supporting financially the most famous entrepreneurs.

It is not the first time I expressed doubts about Silicon Valley:
– a series of 3 articles about Optimism and Disillusionment in Silicon Valley in January 2023,
– an article from September 2021, Silicon Valley will soon be 65. Should it be Retired ? with references to Silicon Valley 2018 : The Libertarians Have Replaced the Hippies,
– or even older ones (2013) The promise of technology. Disappointing? and The Capital Sins of Silicon Valley.

It is really strange that a region could keep being so innovative more now for more than 60 years. And it will probably continue to be for a while. What is less clear is the continuation of this unique culture that Olivier Alexandre has brilliantly explained in his recent book, La tech.

We shall see…

The myth of the entrepreneur – Undoing the imaginary of Silicon Valley

Leave a reply

A friend mentioned this new book about Silicon Valley to me a few days ago and I quote: “The author’s argument is wrong (but it’s pernicious). […] Indeed, entrepreneurship generates excellence and independent-minded people, while [another view – opposition to liberal capitalism] creates a population of people dependent upon the state.”

I’m not sure I agree with my friend: on the one hand, the relationship between collective and individual is a key topic around entrepreneurship. Does a company create value without “outstanding” individuals? The subject is as old as the world. On the other hand, the distribution of this value is a second subject which belongs among other things to the field of taxation and Piketty has clearly shown that, for several decades, the distribution gap has greatly increased in favor of the richest to the detriment of the poorest.

Marianna Mazzucato has shown this imbalance in The Entrepreneurial State, which she finds all the more unfair as she shows the primordial role of the State in upstream funding (education, research, public services in general) which provides a favorable context for the creation of wealth.

In the beginning of his book, Le mythe de l’entrepreneur – Défaire l’imaginaire de la Silicon Valley (The Myth of the Entrepreneur – Unraveling the Imaginary of Silicon Valley), Anthony Galluzzo explains similar things but it seems different to me. I am only at the beginning and I will see later how closely it joins the criticism introduced above. The author is a specialist in merchant imaginary and the subtitle is convincing, namely that it is necessary to deconstruct the imaginary of this region, based on story-telling around the stars of the region, such as Steve Jobs and Elon Musk (although Elon Musk has largely lost his aura). It shows us that Elisabeth Holmes tried the same approach but succeeded only very partially.

Joseph Schumpeter is quoted extensively in the book at the beginning, in particular it seems to me, for a critique of the role of the entrepreneur and of creative destruction. Galluzzo prefers to use destructive creation to show the chronology of actions. But I didn’t see in the beginning of the book, at least, that Schumpeter adds that capitalism cannot exist without advertising. So without story-telling and imaginary.

This imaginary of Silicon Valley is therefore, I believe, only what allows capitalism to self-develop, to survive, with all the current paradoxes of destructive waste. But behind this imaginary, what is the reality? Galluzzo refuses to oppose entrepreneurs and businessmen. I understand the argument. Creators, stars at least, can make a lot of money. But I don’t know if the main reason is their ability to do business or if they are simply at the origin of a creation that makes it possible to do business. I am neither an economist, nor a historian, nor a sociologist and I find it very difficult to make sense of things, all other things being equal.

Anatomy of the Myth – the Heroic Entrepreneur

So here are a few things that I found interesting in the beginning of the book:

1- The solitary entrepreneur

Steve Jobs was not alone and worse is perhaps not critical to the initial success. The story is indeed quite well known while Jobs is seen as the only genius of Apple.
– Steve Wozniak is the real genius (Galluzzo will not like the term) behind the first computers from Apple.
– Steve Jobs is said to have “stolen” [Page 35] many ideas from Xerox to build his machines. The story is known but the term “stealing” is too strong even if many Xerox employees were shocked. Xerox received Apple shares in exchange for this rather unique deal in history.
– “Mike Markkula can be considered the true founder of Apple, the one who transformed a small, insignificant hobbyist operation into a structured and solidly financed start-up. » [Pages 19-20]
– “Arthur Rock, meanwhile, is one of the most important figures in Silicon Valley, he contributed to the emergence of the largest companies in the region – Fairchild Semiconductor, Intel, then Apple. However, no biography has ever been devoted to him and his wikipedia page is starving”. [Page 20]

I will nuance Galluzzo’s remarks again. Certainly Wozniak, Markkula and Rock have not penetrated the imagination of the general public, but Silicon Valley connoisseurs are not unaware of them and the film Something Ventured (which Galluzzo does not seem to mention in his very rich bibliography) does not forget them at all. And what about this cover of Time Magazine.

2- The war for talent

“The functioning of the labor market in Silicon Valley, however, shows us a completely different dynamic. The industrial concentration in this region leads to significant personnel movements: an engineer can easily change company, without moving or changing his lifestyle. […] This high degree of labor mobility has been observed since the 1970s, when on average IT professionals only stayed in their jobs for two years [Cf AnnaLee Saxenian’s Regional Advantage]. When circulating like this, employees, even bound by non-disclosure agreements, take with them their experiences and knowledge. The propagation of this tacit knowledge is at the heart of the ecosystem, it allows permanent collective tacit learning. » [Page 45]

Galluzzo gets to the heart of the matter here, which makes Silicon Valley unique. Not so much the concentration of talent, which exists in all developed regions. But the circulation of talent. Almost everything is said!

However, Galluzzo adds a significant nuance that I was less familiar with: “Therefore, problems arise for entrepreneurs relating to what has been called in business jargon the “war for talents”. To carry out his projects, he must succeed in appropriating the most precious commodity there is, the work force of highly qualified engineers.” [Page 46]

Galluzzo then mentions the stock options, the aggressive recruitment but also this: “Another court case illustrates well the issues of employee retention. In the 2000s, several Silicon Valley giants, including Intel, Google and Apple, formed a “wage cartel”, mutually agreeing not to attempt to poach employees. This tacit agreement was intended to eliminate all competition for skilled workers and to limit wage increases.” [Page 47 & see Google, Apple, other tech firms to pay $415M in wage case]

3- The invisibilization of the State

The subject is also known and I mentioned it above. We too often forget the role of the collective in the possibility of favorable conditions and context. But Galluzzo shows that too often there is even a certain hatred of the collective, illustrated by the growing visibility of libertarians. It is also known, Silicon Valley is afraid of unions. Here’s another example I didn’t know:

“I want the people who teach my children to be good enough to be employed in the company I work for, and earn $100,000 a year. Why should they work in a school for $35-40,000 a year if they can get a job here at $100,000? We should hire them and pay them $100,000, but of course the problem is the unions. Unions are the worst thing that has happened to education. Because it is not a meritocracy, but a bureaucracy. »

You have to read the entire excerpt and maybe even the entire interview with Steve Jobs. Excerpts from an Oral History Interview with Steve Jobs. Interviewer: Daniel Morrow, April 20, 1995. Computerworld Smithsonian Awards. We are there in the core American culture and the importance given to competition between individuals rather than to the equality of the members of the collective.

So are there geniuses or not? Is there only Darwinian emergence of talents a posteriori among those who will have survived? I don’t know or I don’t know anymore. Probably something in between. Or maybe it is an act of faith, as long as sociology does not have elements that will allow me to have a more convincing opinion…

To be continued…

Optimism and Disillusionment in Silicon Valley. Part 3 : Goomics, the end of Googleyness?

Leave a reply

First, it’s important to remember that Aaron Swartz died 10 years ago. He was, maybe, the first casualty of the end of the Internet as we dreamed it, a free or at least easy access to the world information.

What is Googleyness? Laszlo Bock’s Definition of Googleyness is #1 Enjoying Fun, #2 Intellectual Humility, #3 Conscientiousness, #4 Comfort with ambiguity, #5 Evidence that you’ve taken some courageous or interesting paths in your life. In page 134 of Goomics, Manu Cornet mentions “Data-Driven and Transparent, Selfless and Humble, Proactive, with a Sense of Humour & Silghtly Irreverent, Respectful and Fair”.

So what happened between the Volume I of Goomics, (that I had 3 posts about here, there and there) and this second volume, with subtitle Disillusionment? Let us quote the author through a few of his drawings. First of all, Google is an innovative company, as Manu Cornet reminds us through the following and funny quiz, the answers to which you will find at the end of the article.

However, the author has lived his last years at Google with some difficulty. Here are some examples:

His feelings that Google is becoming a normal company with its bad habits of bureaucracy, lack of transparency and even worse bad treatment of harrassment are rather scary.

Let’s end on a refreshing note though, written by a true nerd!

Post-scriptum (before the anwsers to the quiz):

A post-scriptum to close the loop of these 3 articles about disillusionment in innovation. A recent scientific article seems to support some of Michael Gibson’s arguments in Paper Belt on Fire. France Culture in Les publications scientifiques deviennent de moins en moins “innovantes” (see the end of the page) quotes a publication by researchers from the University of Minnesota, Papers and patents are becoming less disruptive over time. An interesting read for those intrigued by the subject.

Answers to the quiz

Postscript (as of August 22, 2023): Page and Brin don’t give many interviews, the latest one I found is this one:

Optimism and Disillusionment in Silicon Valley. Part 2 : Steve Jobs in Playboy

1 Reply

It is the third time I can relate Playboy magazine to technology startups. Strange.

In 1971, Intel went public the same day as Playboy and its co-founder, Gordon Moore, funnily recounts in Something Ventured: And a few years later one of the analysts: “The market has spoken. It’s chips over chicks, 10-to-1.” He did not exactly say that but something similar. I will let you search if you wish…

In 2004, the playboy interview of the Google founders, The Google Guys, America’s newest billionaires, was very controversial. Not because of the publisher, but of the timing. You can read
Google says Playboy article could be costly.

Finally I recently discovered that in 1984 was published a lengthy 13-page interview of Silicon Valley’s newest star: Steven Jobs, a candid conversation about making computers, making mistakes and making millions with the young entrepreneur who sparked a business revolution. Here are some extracts.

About computers

We’re living in the wake of the petrochemical evolution of 100 years ago. The petrochemical revolution gave us free energy – free mechanical energy, in this case. It changed the textures of society in most ways. This revolution, the information revolution, is a revolution of free energy as well, but another kind: free intellectual energy. It’s very crude today, yet our Mackintosh computer takes less power than a 100-watt light bulb to run and it can save you hours a day. What will it be able to do ten or 20 years form now, or 50 years from now? This revolution will dwarf the petrochemical revolution. We’re on the forefront.

Computers will be essential in most homes. The most compelling reason to buy a computer for the home will be to link it into a nationwide communications network. We’re just in the beginning stages of what will be a truly remarkable breakthrough for most people – a remarkable as the telephone.

It’s often the same with any new revolutionary thing. People get stuck as they get older. Our minds are sort of electrochemical computers. Your thoughts construct patterns like scaffolding in your mind. You are really etching chemical patterns. In most cases, people get stuck un those patterns, just like grooves in a record, and they never out of them. It’s a rare person who etches grooves that are other than a specific way of looking at things, a specific way of questioning things. It’s rare that you see an artist in his 30s or 40s to really contribute something amazing. Of course, there are some people who are innately curious, forever little kids in their awe of life, but they’re rare.

About innovation

What happens in most companies is that you don’t keep great people under working environments where individual accomplishment is discouraged rather than encouraged. The great people leave and you end up with mediocrity. I know, because that’s how Apple was built. Apple is an Ellis island company. Apple is built on refugees from other companies. These are the extremely bright individual contributors who were troublemakers at other companies.

Polaroid did that for some years, but eventually Dr Land, one of these brilliant troublemakers, was asked to leave his own company – which is one f the dumbest things I’ve ever heard of.

About growing

Anyway, one of our biggest challenges and the one I think John Sculley and I should be judged on in five to ten years is making Apple an incredibly great ten- or 20-billion-dollar company. Will it still have the spirit it does today? We’re charting new territory. There are no models we can look to for our high growth, for some of the new management concepts we have. So we’ve to find our own way.

The way it’s going to work is that in our business, in order to continue to be one of the major contributors, we’re going to have to a ten-billion-dollar company. That growth is required for us to keep up with the competition. Our concern is how to become that, rather than the dollar goal, which is meaningless to us.

There may be some imitators left in the $100,000,000-to-$200-000-000 range, but being a -$200-000-000 company is going to mean you are struggling for your life, and that’s not a really a position from which to innovate. Not only do I think IBM will do away with its imitators by providing software they can’t provide, I think eventually it will come up with a new standard that won’t even be compatible with what it’s making now – because it is too limiting.

[Jobs was visionary but could be always right. Look at Dell, Compaq, Lenovo, HP and Intel/Microsoft…]

I used to think about selling 1,000,000 computers a year, but it was just a thought. When it actually happens, it’s a totally different thing. So it was. “Holy shit, it’s actually coming true!” But what’s hard to explain is that this does not feel like overnight. Next year will be my tenth year. I had never done anything longer than a year in my life. Six months for me, was a long time when we started Apple. So that has been my life since I’ve been sort of a free-willed adult. Each year has been so robust with problems and successes and learning experiences and human experiences that a year is a lifetime at Apple. So this has been ten lifetimes.

There’s an old Hindi saying that comes into my mind occasionally: “For the first 30 years of your life, you make your habits. For the last 30 years of your life, your habits make you.” As I’m going to be 30 in February, the thought has crossed my mind. And I’m not sure. I’ll always stay connected with Apple. I hope that throughout my life, I’ll sort of have the thread of my life and the thread of Apple weave in and out of each other, like a tapestry. There may be a few years when I am not there, but I’ll always come back.

About artificial intelligence

The original video games captured the principles of gravity. And what computer programming can do is to capture the underlying principles, the underlying essence, and then facilitate thousands of experiences based on that perception of the underlying principles. Now if we could capture Aristotle’s world view – the underlying principles of his world view? Then you could ask Aristotle a question. Ok you might say it would not be exactly what Aristotle was. It could all be wrong. But maybe not.

Part of the challenge, I think, is to get these tools to millions and tens of millions of people and to start to refine these tools so that someday we can crudely, and then in a more refined sense, capture an Aristotle or an Einstein or a Land while he’s alive.

That’s for someone else. It’s for the next generation. I think an interesting challenge in this area of intellectual inquiry is to grow obsolete gracefully, in the sense that things are changing so fast that certainly by the end of the Eighties, we really want to turn over the reins to the next generation, so that they can go on, stand on our shoulders and go much further. It’s a very interesting challenge, isn’t it? How to grow obsolete with grace.

Post-Scriptum: It is difficult to add anything to this beautiful conclusion and yet I wish to create a (quite artificial) link between these first two parts. I just discovered it while finishing this article and the coincidence is quite beautiful. I didn’t know about this Steve Jobs interview. Much better known, even famous, is the speech he gave in 2005 at Stanford University, for the graduation of students (the “commencement speech” – my first article in this blog)

Coincidentally, Michael Gibson ends his book, Paper Belt of Fire, by analyzing another commencement speech given in 2005 and considered by some to be one of the most beautiful with that of Jobs. This is “This is water” by David Foster Wallace, the entirety of which you will find in This Is Water: Some Thoughts, Delivered on a Significant Occasion, about Living a Compassionate Life.

Here is its conclusion:

The capital-T Truth is about life BEFORE death.

It is about the real value of a real education, which has almost nothing to do with knowledge, and everything to do with simple awareness; awareness of what is so real and essential, so hidden in plain sight all around us, all the time, that we have to keep reminding ourselves over and over:

“This is water.”

“This is water.”

It is unimaginably hard to do this, to stay conscious and alive in the adult world day in and day out. Which means yet another grand cliché turns out to be true: your education really IS the job of a lifetime. And it commences: now.

Optimism and Disillusionment in Silicon Valley. Part 1 : Paper Belt on Fire

Leave a reply

So I asked Gates: “What do you think of the idea that we’re not seeing as much innovation and scientific progress as we should? That the rate of progress has stalled?”
“Oh you guys are full of shit. Total shit…”

This is how Bill Gates reacts on page XI of Paper Belt on Fire, How Renegade Investors Sparked a Revolt against the University to author Michael Gibson’s ideas that he describes in detail in his recent book.

The book is both exciting and frustrating, convincing sometimes and unnerving at others. But let me mention what was questioning [to me].

The central thesis of the book has four parts. The first is that science, know-how, and wisdom are the source of almost all that is good: higher living standards; longer, healthier lives; thriving communities; dazzling cities; blue skies; profound philosophies; the flourishing of the arts; and all the rest of it.
The second is that the rate of progress in science, know-how, and wisdom, has flattened for far too long. We have not been making scientific, technological, or philosophical progress at anything close to the rate we’ve needed to since about 1971. (Computers and smart phones notwithstanding.)
The third claim is that the complete and utter failure of our education, from K-12 up through Harvard, is a case in point of this stagnation. We are not very good at educating people, and we have not improved student learning all that much in more than a generation, despite spending three to four times as much per student at any grade. Our lack of progress in knowing how to improve student outcomes has greatly contributed to the decline in creativity in just about every field.
The last, chief point is that the fate of our civilization depends upon replacing or reforming our unreliable and corrupted institutions, which include both the local public school and the entire Ivy League. My colleagues and I are trying to trailblaze one path in the field of education. We might be misguided in our methods, but our diagnosis is correct. [Pages XIX-XX]

What are the traits of great founders? [Pages 89-96]

Edge control, crawl-walk-run, hyperfluency, emotional depth & resilience, a sustaining motivation, the alpha-gamma tensive brilliance, egoless ambition, and Friday-night-Dyson-sphere.

Edge control: a willingness day after day, to defy the boundary between the known and the unknown, order and disorder, vision and hubris.

Crawl-walk-run: a founding team needs to have the smarts to build what they are going to build. […] The best way to screen for these traits is to see them at play in the wild. It takes some time to see their evolution.

Hyperfluency: the best founders have the charm of a huckster and the rigor of a physicist. […] They speak with fluent competence.

Emotional depth & resilience: the founders of a company have to have the social and emotional intelligence to make hires, work with customers, raise money from investors, and gel with co-founders. The complexity of this total effort is incredibly demanding and emotionally exhausting.

Tensive brilliance: what we’ve noticed is that creative people tend to have a unity born of variety. That unity may have a strong tension to it, as it tries to reconcile opposites. Insider yet outsider, familiar yet foreign, strange, but not a stranger, young in age but older in mind, a member of an institution but a social outcast – all kind of polarities lend themselves to dynamism. This is in part, I believe, why immigrants and first-generation citizens show a strong productivity for entrepreneurship. They are the same, but different.

Egoless ambition: on the one side there is an intense commitment to do great things. But on the other side is an element of detachment, a footloose, untroubled attitude that treats triumph and disaster just the same.

Friday-night-Dyson-sphere: the physicist Freeman Dyson once imagined a sphere of light-absorbing material surrounding our entire solar system on its periphery. One of the most electrifying moments for us is when a team convinces us, through a series of plausible steps backed by evidence, that they are capable of growing a lemonade stand into a company that builds Dyson Spheres. What’s more, it’s clear this is the thing they’d rather be tinkering on during a Friday night when all the cool kids are out partying.

The 1517 fund [1]

“We’re named after the year Martin Luther nailed his ninety-five theses to a church door in a tiny German town. That began a revolution, the Protestant Reformation. But it all started because he was protesting against the sale of a piece of paper called an indulgence. In 1517, the church was saying this expensive piece of paper could save your soul. In 2015, universities are selling another expensive piece of paper, the diploma, saying it’s the only way to save your soul. Well, it was bullshit then. And it’s bullshit now.” [Page 144]

For one thing, most venture capital funds fail. Blind folded monkeys throwing darts to pick stocks would perform better than the investor who picked the average venture capital fund. The median VC returns about 1.6 percent less than if someone just put their money in an index-tracking mutual fund. [Page 147]

To accelerate progress, we need young people working at the frontiers of knowledge sooner than they have in the past. They also need greater freedom. What that means is institutions that trust them to take risks and demonstrate some edge control with their research. We must hold it as a fairly predictable law of creativity that the unknown must always pass through the stranger before we can understand it.
Universities have served this research function in the past and will continue to do so. But they are plagued by four realities. The first is the slow speed of a formal, credential-based education. It takes four years to earn a bachelor’s degree and then another seven or eight to earn a PhD. Second, universities have become hives of groupthink. Third, grant-giving is driven by prestige, credibility, and a cover-your-ass mentality. Fourth, the incentives of academic institutions reward shrewd political calculation, incrementalism, short-term horizons, and a status hierarchy in which demonstrating loyalty earns more reward than advancing knowledge. [Page 261-2]

About education

The good news is that two cheap, relatively easy to use methods stand out as the most effective at boosting student performance: practice testing and distributed practice. Distributed practice is when students establish and stick to a consistent schedule of practice over time. (Its antithesis is cramming.) Practice is not mere repetition, but a deliberate effort to improve performance in the Goldilocks zone where success is neither too easily gained, nor the challenge too hard. Self-resting as a technique should not be confused with high stakes standardized testing but instead as a way of frequently probing the edge of knowledge in a field. […] Consistent self-testing and distributed practice are the most effective learning techniques, but they are also the most painful, as both of these strategies require discipline, energy, and individual effort.
Then there are the more intangible questions that require our attention. How can we encourage students to pursue the truth, independent of other people’s approval? How do we teach civil disobedience, training our young to fight for what’s right? Or how to practice delayed gratification for worthy long-term goals? Are these even possible to teach? No one has bothered to ask. [Pages 301-302]

If you are not unnerved and still intrigued, then you may read his final chapter around James Stockdale and David Foster Wallace.

Now what I found unnerving is the huge difference between exceptions, anecdotes in a system and a social statistical problem. I will only quote a great and rather unknown novel: Les Thibault by Roger Martin du Gard: « Je vous avoue que je ne sais plus très bien ce que je lui ai conseillé. J’ai dû – naturellement – l’engager à ne pas abandonner l’école. Pour des êtres de sa trempe, notre enseignement est, somme toute, inoffensif : ils savent choisir, d’instinct ; ils ont – comment dirais-je – une désinvolture de bonne race, qui ne se laisse pas mettre en lisière. L’Ecole n’est fatale qu’aux timides et aux scrupuleux. Au reste, il m’a paru qu’il venait me consulter pour la forme et que sa résolution était prise. C’est justement l’indice d’une vocation, qu’elle soit impérieuse. C’est bon signe qu’un adolescent soit en révolte, par nature, contre tout. Ceux de mes élèves, qui sont arrivés à quelque chose étaient tous de ces indociles. » [Page 754 of volume 1, collection folio and this gives in English “I confess to you that I no longer really know what I advised him. I had to – naturally – urge him not to drop out of the School. For beings of his caliber, our teaching is, after all, harmless: they know how to choose, instinctively; they have – how shall I put it – a good-natured casualness, which does not allow itself to be put on the edge. The School is fatal only to the timid and the scrupulous. Besides, it seemed to me that he came to consult me for the form and that his resolution was taken. It is precisely the sign of a vocation, that it be imperious. It is a good sign that a teenager is in revolt, by nature, against everything. Those of my students who achieved something were all of these rebellious ones.”]

[1] I did not mention until now and will in this footnote that Gibson, in a way, belongs to the PayPal mafia of anarcho-libertarians that include Peter Thiel and Elon Musk. Gibson co-managed the Thiel Fellowship and now the 1517 fund. There are notable Fellows as shown on Wikipedia. Now quoting Peter Thiel did the recipients did better than what he dreamed of: “We wanted flying cars, we got 140 characters instead” or did they really answer his famous question “What’s something you believe to be true that the rest of the world thinks is false?” [Page 60]

Technology Transfer according to EPFL and Rules for Startups

Leave a reply

Technology transfer has best practices but it is not so easy to read about them. The Technology Transfer Office (TTO) at Ecole Polytechnique de Lausanne (EPFL) had the great idea to publish how it manages the specific situation of startup creation. In March 2022, it published its New Guidelines for start-ups at EPFL. It is a very interesting document and I advise people curious about the topic to read it. “I wish I had it when I launched my start-up!” claims one of the EPFL entrepreneur. At the same time, the head of EPFL’S TTO was interviewed by Nature Communication and the document is worth reading too. Here is the link : A conversation on technology transfer. I will quote it at the end of the post.

Here are some data:

– For exclusive licenses, EPFL obtains either a number of shares equivalent to 10% of the start-up capital stock at incorporation, or a lower share of the capital stock that is undiluted until the start-up has received a certain amount of equity investment, e.g. 5% of capital share undiluted until the total accumulated investment reaches the amount of 5 MCHF, regardless of the value of the company.

– Royalties are applicable on sales and depend on the industry
Pharma 2–5%
Medtech 2–4%
Sensors, optics and robotics 1.5–3%
Environmental sciences & energy 1–3%
Computer and communication 1.5–3%
Semiconductors 1–3%
Software 1-25%
(this last % may be surprising and I assume it applies to licenses of fully usable software as a product)

– Exit : At the time of exit, EPFL will diligently consider any request of a start-up to transfer the licensed patents to an acquiring company that is committed and that has the capacity to further develop and commercialize the technology. The companies shall furnish the necessary business information to allow EPFL to understand the needs of such a transfer, and in the case of a royalty buyout to make a valuation of the licensed patents in terms of potential sales.

As promised some interesting elements from the interview. The words in bold are my choice.

“Contrary to what might be expected, the main factor is not necessarily the idea or technology itself, but people’s involvement. The actual and future commitment of the individuals involved in the commercialization of the technology is paramount, both on the academic and industrial sides. The commercialization of technologies is a long journey, from development, through de-risking, including prototyping and preliminary clinical validations, market analysis and industrialization, to the first sale. As no technology will find the path to commercialization by itself, long-term commitment is key.”

“Entrepreneurship is an effective way to increase the odds, by having a single actor transitioning and playing both roles. While this strategy requires a double commitment in terms of time and risk taking, it may lead to a higher potential reward for the researcher.”

“It’s certainly a positive development that PhD students and postdocs now have a third option to consider besides staying in academia or taking a job in industry — that of becoming an entrepreneur — and an increasing number of great examples of entrepreneurs and start-up role models exist.”

“If personal motivation and commitment to entrepreneurship are present, the start-up route is the way to go. It’s important to understand that many TTOs do not create start-ups. Researchers, as “founders”, do it.”

A big thank you to my dear former colleagues in Switzerland for mentioning this very much needed information.

Bill Campbell, the Trillion Dollar Coach (Part III)

Leave a reply

I very seldom read books twice, and had never done it with business books. This is the exception. I had blogged about this book here back in 2019. I remembered strong elements of good coaching but had not mentioned them. Here they finally come! Campbell does not talk much, does not give advice but asks questions… And he gives courage.

PRACTICE FREE-FORM LISTENING

In a coaching session with Bill, you could expect that he would listen intently. No checking his phone for texts or email, no glancing at his watch or out the window while his mind wandered. He was always right there. Today it is popu­lar to talk about “being present” or “in the moment.” We’re pretty sure those words never passed the coach’s lips, yet he was one of their great practitioners. Al Gore says he learned from Bill how “important it is to pay careful attention to the person you are dealing with… give them your full, undi­vided attention, really listening carefully. Only then do you go into the issue. There’s an order to it.”

Alan Eustace called Bill’s approach “free-form listening”­ – academics might call it “active listening,” a term first coined in 1957 – and in practicing it Bill was following the advice of the great UCLA basketball coach John Wooden, who felt that poor listening was a trait shared by many leaders: “We’d all be a lot wiser if we listened more,” Wooden said, “not just hearing the words, but listening and not thinking about what we’re going to say.”

Bill’s listening was usually accompanied by a lot of ques­tions, a Socratic approach. A 2016 Harvard Business Review article notes that this approach of asking questions is essen­tial to being a great listener: “People perceive the best listen­ers to be those who periodically ask questions that promote discovery and insight.”

“Bill would never tell me what to do,” says Ben Horowitz. “lnstead he’d ask more and more questions, to get to what the real issue was.” Ben found an important lesson in Bill’s technique that he applies today when working with his fund’s CEOs. Often, when people ask for advice, all they are really asking for is approval. “CEOs always feel like they need to know the answer,” Ben says. “So when they ask me for ad­vice, l’m always getting a prepared question. I never answer those.” Instead, like Bill, he asks more questions, trying to understand the multiple facets of a situation. This helps him get past the prepared question (and answer) and discover the heart of an issue.

[…]

When you listen to people, they feel valued. A 2003 study from Lund University in Sweden finds that “mundane, almost trivial” things like listening and chatting with employees are important aspects of successful leadership, because “people feel more respected, visible and less anonymous, and included in teamwork.” And a 2016 paper finds that this form of “re­spectful inquiry,” where the leader asks open questions and lis­tens attentively to the response, is effective because it heightens the “follower’s” feelings of competence (feeling challenged and experiencing mastery), relatedness (feeling of belonging), and autonomy (feeling in control and having options). Those three factors are sort of the holy trinity of the self-determination the­ory of human motivation, originally developed by Edward L. Deci and Richard M. Ryan.

As Salar Kamangar, an early Google executive, puts it, “Bill was uplifting. No matter what we discussed, I felt heard, understood, and supported.” [Pages 89-91]

DON’T STICK IT IN THEIR EAR

And when he was finished asking questions and listening, and busting your butt, he usually would not tell you what to do. He believed that managers should not walk in with an idea and “stick it in their ear.” Don’t tell people what to do, tell them stories about why they are doing it. “I used to describe success and prescribe to everyone how we were going to do it,” says Dan Rosensweig. “Bill coached me to tell stories. When people understand the story they can connect to it and figure out what to do. You need to get people to buy in. It’s like a running back in football. You don’t tell him exactly what route to run. You tell him where the hole is and what’s the blocking scheme and let him figure it out.”

Jonathan often experienced this as a sort of test: Bill would tell a story and let Jonathan go off and think about it until their next session to see if Jonathan could process and under­stand the lesson it contained and its implications. Chad Hur­ley, YouTube cofounder, had the same experience. “It was like sitting with a friend at the Old Pro [the Palo Alto sports bar],” Chad says. “He would talk about things that had hap­pened to him. He wasn’t trying to preach, just be present.”
Fortunately, Bill expected similar candor in return. Alan Gleicher, who worked with Bill as the head of sales and oper­ations at Intuit, had a simple way of summing up how to be successful with him. “Don’t dance. If Bill asks a question and you don’t know the answer, don’t dance around it. Tell him you don’t know!” For Bill, honesty and integrity weren’t just about keeping your word and telling the truth; they were also about being forthright. This is critical for effective coach­ing; a good coach doesn’t hide the stuff that’s hard to talk about – in fact, a good coach will draw this out. He or she gets at the hard stuff.

Scholars would describe Bill’s approach – listening, pro­viding honest feedback, demanding candor – as “relational transparency,” which is a core characteristic of “authentic leadership.” Wharton professor Adam Grant has another term for it: “disagreeable givers.” He notes in an email to us that “we often feel torn between supporting and challenging others. Social scientists reach the same conclusion for leader­ship as they do for parenting: it’s a false dichotomy. You want to be supportive and demanding, holding high standards and expectations but giving the encouragement necessary to reach them. Basically, it’s tough love. Disagreeable givers are gruff and tough on the surface, but underneath they have others’ best interests at heart. They give the critical feedback no one wants to hear but everyone needs to hear.”

Research on organizations shows what Bill seemed to know instinctively: that these leadership traits lead to bet­ter team performance. One study of a chain of retail stores found that when employees saw their managers as authentic (for example, agreeing that the manager “says exactly what he or she means”), the employees trusted the leaders more, and the stores had higher sales. [Pages 97-99]

BE THE EVANGELIST FOR COURAGE

Bill’s perspective was that it’s a manager’s job to push the team to be more courageous. Courage is hard. People are nat­urally afraid of taking risks for fear of failure. lt’s the man­ager’s job to push them past their reticence. Shona Brown, a longtime Google executive, calls it being an “evangelist for courage.” As a coach, Bill was a never-ending evangelist for courage. As Bill Gurley notes, he “blew confidence into people.” He believed you could do things, even when you yourself weren’t so sure, always pushing you to go beyond your self-imposed limits. Danny Shader, founder and CEO of PayNearMe, who worked with Bill at GO: “The thing I got the most out of meetings with Bill is courage. I always came away thinking, I can do this. He believed you could do stuff that you didn’t believe you could do.”

[…]

Conveying boldness was not blind cheerleading on Bill’s part. He had the mind-set that most people have value, and he had the experience and a good enough eye for talent that he generally knew what he was talking about. He had such credibility that if he said that you could do something, you believed him, not because he was a cheerleader but because he was a coach and experienced executive. He built his mes­sage on your capabilities and progress. This is a key aspect of delivering encouragement as a coach: it needs to be cred­ible.

And if you believed him, you started to believe in your­ self, which of course helped you achieve whatever daunting task lay before you. “He gave me permission to go forth,” Alphabet CFO Ruth Porat says. “To have confidence in my judgment.” [Pages 100-102]

These are the elements that formed the foundation of Bill’s success as an executive coach – and that those who benefited from his coaching took with them when they became coaches to their own colleagues and direct reports, too. He started by building trust, which only deepened over time. He was highly selective in choosing his coachees; he would only coach the coachable, the humble, hungry lifelong learners. He listened intently, without distraction. He usually didn’t tell you what to do; rather, he shared stories and let you draw conclusions. He gave, and demanded, complete candor. And he was an evangelist for courage, by showing inordinate confidence and setting aspirations high. [Page 105]