I visited each website from the list of Demo finalists.
Boy, do they suck. Really, really suck.
An anonymous (cowardly) post on Valleywag pokes fun at Marc Benioff, CEO of Salesforce, for talking about his philanthropic works at his annual Dreamforce conference.
He is called a “buffoon” because of his “phony philanthropy” and other terrible things, like “lip-service to women.”
Idle hands and idle brain cells make a John McAfee. Here’s a thankfully short documentary about a rich 67 year old bored man. He’s one of the reasons we have lots of serial entrepreneurs in Silicon Valley. From Journeyman Pictures:
The Homebrew Club in the mid-1970s Silicon Valley was the place to be. It’s where Steve Jobs, Bill Gates, Steve Wozniak, and many other well known tech pioneers, were all just nobodies, meeting every other Wednesday evening to share their fascination with early microprocessors and build primitive microcomputers.
Monday evening the Computer History Museum hosted a reunion of this iconic organization, thanks to generous funding from Kickstarter. Harry McCracken from Time was there (above photo credit) and so was Daniel Terdiman from CNET News:
Maximillian Potter's "Letter from Silicon Valley" in the December issue of Vanity Fair examines the career of Mike Arrington, founder of the news site TechCrunch and the accusations of rape made by his former girlfriend Jenn Allen.
There's not much new information about the case even though Mr. Potter door-steps Ms. Allen's apartment and her parents' home. However, the long article tries desperately -- and bizarrely -- to link the rape accusation to the lack of women in Silicon Valley startups, and that this case demonstrates "the dark side of the Information Age."
Here’s a fabulous initiative led by New York city’s most successful VC, Fred Wilson of Union Square Ventures:
My colleagues at The NYC Foundation For Computer Science Education and I are raising a $5mm seed fund to invest in computer science education in the NYC public school system… and now we are now opening it up to others who want to participate alongside of us.
Twitter’s shareholders will be worth at least $11 billion when the company completes its IPO next week. At a per share price of between $17 to $20 $TWTR is priced on the low side at a substantial discount — a far different strategy to that of Google and Facebook IPOs, which were priced high. Priced to move fast doesn’t seem attractive long term.
San Francisco Chronicle reports that Twitter’s sweet tax deal with the city of San Francisco, in which it agreed to “gentrify” mid-Market street — one of the poorest city neighborhoods — will likely result in about $55m in tax savings. This is more than double the $22m estimate.
James Temple reports:
In 2006 Google set up a free WiFi network in Mountain View, where it is headquartered. But constant problems with connectivity have forced the local government to decide to pay for a reliable WiFi connection for its City Hall, library, and other buildings.
Daniel DeBolt reporting for The Mountain View Voice: City Hall to switch off Google WiFi
I had a great conversation with photographer Charles DiLisio (above), who is a man with a mission: photographing, and tracking down old photos of some of Silicon Valley's most important historical buildings for a project he calls, "Silent Icons of Silicon Valley."
He was recently featured in the San Jose Mercury by veteran columnist Mike Cassidy:
On a recent visit to Silicon Valley, Dan Primack, senior editor at Fortune was asked, "why so many outside Silicon Valley vilify those within it." He replied:
The Valley's public figures often seem to exude a particularly insular narcissism – that so long as the tech biz is thriving then everything else is largely irrelevant…
It also probably doesn't help that so much of the local tech press is personally friendly with industry insiders — thus prompting outside media to be particularly harsh (as a counter-example, not as much NYC financial press spends its free time with bankers or PE execs — there's much more of a separation).
He asked readers for their thoughts. I left the following comment:
Bloomberg reporters Takashi Amano & Brian Womack: Applied Materials to Buy Tokyo Electron for $9.39 Billion - Bloomberg
Applied Materials Inc., the largest chipmaking-equipment supplier, agreed to acquire Tokyo Electron Ltd. for $9.39 billion in stock in the largest deal for a Japanese company from outside the country in six years.
Gary Dickerson, who was promoted to chief executive officer of Applied Materials this month, will be CEO of the combined manufacturer… Applied Materials shareholders will own 68 percent of the new entity. The consolidation among chip-equipment makers mirrors the increasing concentration within their customer base.
Vanity Fair struggled to come up with ten examples of stylish Silicon Valley executives for its slideshow: The Top 10 Best-Dressed Execs in Silicon Valley | Vanity Fair
In fact, a couple of them aren't really Silicon Valley based, and spend more time in New York, such as Twitter co-founder Jack Dorsey (above) and Pete Cashmore, founder of Mashable. And there's several on the list that you've probably never heard about - the result of desperate Googling in researching this topic.
Here's an interesting infographic from Intuit showing the world's top 20 startup centers. The West coast of North America has four: 1 - Silicon Valley; 3 - Los Angeles; 4 - Seattle; and 9 - Vancouver. Interesting why there is no listing for Portland given the large high tech community there.
I've written about the connection between centers of innovation and the disruptive reality of living on a major earthquake fault-line — is there a connection?
Here's the infographic: (Hat tip Heidi Groshelle.)
Jessica Guynn, at the LA Times covers some familiar ground in her report: San Francisco split by Silicon Valley's wealth - latimes.com
This part was interesting:
Cool infographic from the editors at BestScienceDegrees.com with some interesting factual nuggets:
Alexis Madrigal, senior editor at The Atlantic, tried to find the center of Silicon Valley and compare it to what was there before. It starts off as a whimsical tour of Silicon Valley's strip malls, and strip clubs, but then turns up a nastier side of Silicon Valley.
I want to highlight this fact:
Last week at a Commonwealth Club event, Todd Carlisle, Director of Staffing at Google said that lavish work perks such as free food, and services such as apartment cleaning, were not a factor in recruiting top talent.
He said that no one had refused a job offer from Google based on available perks, or asked about them.
So why does Google continue to provide free food and other services when it knows it is harming local businesses? The problem will only get worse as Google plans huge new office developments in Mountain View, and Palo Alto.
Daniel Debolt at the Mountain View Voice has been on top of this story: Can't compete with free eats: Facing closure, Shoreline restaurant owners try to negotiate with Google.
Google is in the midst of a large expansion in Mountain View and much of North Bayshore – east of highway 101 is becoming one giant campus. It's developing a 1.1 million square foot campus at NASA Ames; and another site at Charleston East. And west of 101, it recently purchased about 15 acres in Palo Alto.
Google clearly is not a proponent of work at home. With all the thousands of current and future Googlers local businesses should be happy -- but they aren't.
The Commonwealth Club's Inforum hosted an interesting event Tuesday evening in San Francisco, focused on the strategies local tech companies use to attract top talent.
Representatives from Google, Twitter, and Cisco Systems spoke about their recruitment tactics and the perks and other incentives they use to get, and retain, the talent they need.
(Above from left) Doug MacMillan, reporter for Bloomberg BusinessWeek moderated: Melissa Daimler, Head of Organizational Effectiveness and Learning, at Twitter; Rowan Trollope, Senior VP and GM of Collaboration Technology Group, at Cisco Systems; and Todd Carlisle, Director of Staffing at Google.
Here are my notes [with my comments in brackets]:
Y Combinator founder Paul Graham is a deity in Silicon Valley's startup communities and whenever and whatever he writes on his blog is closely scrutinized.
His latest post: Do Things that Don't Scale.
The word "scale" is code for software automation. His post is about startups that believe that all they need to do is launch their web service with sufficient attention and users will sign up and the business will grow (like a hockey stick).
Google's PR machine will let you know about all its wonderful "Green" projects and the $1 billion it's invested in energy from wind and sun: Google makes $1 billion investment in renewable energy - SFGate
But you'll have to go elsewhere to hear about its support for Senator James Inhofe, described by a San Francisco Chronicle columnist as "the delusional or dishonest Oklahoma Republican" who has called global warming the "greatest hoax."
Daniela Hernandez at Wired, interviewed the founders of DropCam, which uses cheap webcams for remote monitoring systems. For some reason, and a very wrong reason, Wired's editors decided on this headline:
It's so very wrong and I'll explain why, as the chip industry's largest trade show, Semicon West opens this week in San Francisco.
Tributes to the genius of computer pioneer Doug Engelbart are flooding the web following the announcement of his death at the age of 88. Yet in the final four decades of his life no one would fund him and he felt he had wasted the last years of his life.
His work transformed the way people use computers today by making them accessible and "personal." His seminal demo of computer graphical user interfaces using a mouse and keyboard transformed people's careers and changed the course of their lives -- even for those that weren't there but heard about it from others! [Doug Engelbart 1968 Demo]
However, despite all the accolades and testaments to his genius, Silicon Valley largely ignored him and he spent decades trying to find funding for his ideas, and even someone just to listen to him.
Our Silicon Valley techie visionaries are so busy changing the world that they draw the line at drawing-down their wealth. Not everyone is that short-sighted or greedy:
One of my high points of the year is attending the SVForum Visionary Awards because it's a chance to spend time with some of Silicon Valley's aristocracy in a relaxed summer party setting that brings out some great stories.
This year's winners represent some of the leading US tech-optimists but are not necessarily Silicon Valley's own. There was a strong showing of Singularitans, including their leader Ray Kurzweil, who recently moved here from Boston, taking a job at Google to be closer to his son who works as a VC.
Here's Andrew Keen's synopsis on the latest from George Packer, a former New York Times journalist:
… there appears to be more and more criticism of Big Tech from mainstream, heavyweight American journalists like Nicholas Thompson and Paul Krugman. And leading the charge in this Silicon Valley bashing is the New Yorker staff writer and award-winning author George Packer.
In both his new book, The Unwinding, and particularly in his recent New Yorker story “Change The World”, Packer warns that the love affair is over and Silicon Valley has lost its resonance with the rest of America… the “massive wealth” in Mountain View and the rest of Silicon Valley makes it “as far from North Carolina as Burma."
Albert Hoffman, the discoverer of LSD died at the age of 102 on this day five years ago. LSD has been more influential in Silicon Valley than Ayn Rand.
Coming up on Thursday April 11, "The Second Annual Great Silicon Valley Oxford Union Debate" co-hosted by Santa Clara University and the Churchill Club.
Motion: "This House believes that Silicon Valley innovation will solve the healthcare crisis."
Alan Kay is one of Silicon Valley's top computer pioneers due to his work with colleagues at Xerox Palo Alto Research Center (PARC) on a broad range of technologies in the early 1970s that directly led to the creation of the PC industry -- a $35 trillion global business.
In the short video clip (above) he speaks about Silicon Valley's current boom being based on innovation that was funded by the government and by private companies such as Xerox, over a span of more than 13 years beginning in the early 1960s, which helped create the Internet and modern computing.
The British Serious Fraud Office is investigating the claims of Hewlett-Packard that it was deliberately misled in its acquisition of Autonomy, the British software firm it acquired for $10 billion in 2010.
HP revealed the inquiry in a regulatory filing Monday, reported on NYTimes.com.
The PC maker reported an $8.8 billion write-off in the value of Autonomy last year.
There's been much written lately about Yahoo! CEO Marissa Mayer pulling back workers from their home offices as if it's an attack on telecommuting and the productivity of home-based workers.
It's neither, it's Yahoo! trying to reboot its company culture, which has been kindly described by one observer as, "notoriously dysfunctional and disorganized." It's been going on for years and it's time to press the reboot button.
1 Hacker Way, Facebook HQ - It acquired 16 startups in 2012.
Silicon Valley reported 226 private company acquisitions in 2012, well ahead of New York with 100 deals, and leagues ahead of any other US tech hub, reports PrivCo, which tracks such deals.
The Los Angeles based Esotouric podcast has a interesting interview with Brian Kaiser, who salvaged rare tile from The Jackling House, a two-storey 18,000 square foot Mansion in Woodside.
He tells a fascinating story (around 28.30 mark) of Steve Jobs determined to demolish the house even though he is terminally ill. There were thousands of very rare Islamic tiles in addition to other unique architectural features.
Steve Jobs had owned the property since 1984. He couldn't get the demolition permit unless he could get the valuable tiles out following a 12 year legal battle trying to prevent the destruction of the historic house.
The #1 environmental history book in the country shows "Daniel Jackling was the man who wired America" and thus Jobs' direct indebtedness to Jackling, compared in the book to Henry Ford and Thomas Edison.
the #1 environmental history book in the country shows "Daniel Jackling was the man who wired America" and thus Jobs' direct indebtedness to Jackling, compared in the book to Henry Ford and Thomas Edison.
The Psychedelic Society of San Francisco and Bay Area Software Engineers (BASE) hosted a talk earlier this week by John Markoff (above), Senior Science reporter at the New York Times, that discussed the influence of 1960s counter culture on the development of the computer industry.
Danuta Pisarenko tells me there's a bunch of Ukrainian startups in town:
I’m very excited to introduce Happy Farm, the only Ukrainian tech incubator where entrepreneurs live and work 24/7, that brings Eastern European startups to live and learn in the Bay Area for one month (Jan 28 – Feb 28), with an American board of directors from Google, eBags, Time Warner, Fotki.com, and top-notch mentors, many from the heart of Silicon Valley.
Umix.tv - social TV.
Beondesk - personal virtual desktop.
Advice Wallet - referral marketing platform.
YourSize - biometric e-passports database.
SvitStyle - women clothes aggregator.
Ugift - gift certificates service.
My TeamVoice – free professional group voice service for gamers.
Here's where you can meet them:
February 14: Falling in Love with Ukrainian Startups nestGSV 5:00 p.m.
February 18: Start Ukraine Up Runway Incubator 6:00 p.m.
The superb American Experience documentary series on PBS finally cast its focus on Silicon Valley yesterday evening in an 82 minute program largely focused on the founders of Fairchild Semiconductor and Intel.
The heroes of the story are eight scientists, in mechanical, electrical, metallurgical, and optical engineering, and a chemist.
It's a story that takes place more than half-a-century ago, when the "traitorous eight" left their employer Shockley Semiconductor Laboratory en masse because their boss, William Shockley, had become grossly egotistical and a horror to work with. He sounded like an early version of Steve Jobs, the Apple co-founder.
It was shocking to leave an employer, which is why they were called traitors. In those days loyalty was expected, as were the lifelong careers that companies provided. And it's this "traitorous" culture that continues to grow Silicon Valley, as people continually leave to create new startups.
American Experience also showed the close connection to the US Department of Defense and how military spending was the prime source of money for new ventures for a very long time.
Apple versus Virgin Megastore, San Francisco 2009.
Michael Moritz is chairman of Sequoia Capital, one of Silicon Valley's oldest and most successful VC firms. He's also a former journalist and he revisits those skills in an article written for the Financial Times Opinion section:
It's a well argued piece that,
is difficult to think of a company of the past 50 years whose influence and ingenuity have been as profound or widespread as the one formerly known as Apple Computer, Inc.
I attended the Aaron Swartz memorial Thursday evening at the Internet Archive building (above) in San Francisco where several hundred people gathered to mourn his passing.
It was an excellent turnout organized by Internet Archive founder Brewster Kahle and supporters. And it was a perfect setting, in a wonderful former Christian Science church (see below).
The Silicon Valley Historical Association has created a one hour documentary focused on Steve Jobs and features a 1994 unscripted interview with the Apple co-founder. It includes commentary from:
John Warnock (founder, Adobe)
Chuck Geschke (founder, Adobe)
Larry Ellison (founder, Oracle)
Mike Markkula (founder, Apple)
Steve Wozniak (founder, Apple)
Nolan Bushnell (founder, Atari)
Scott McNealy (founder, Sun Microsystems)
Vinod Khosla (founder, Sun Microsystems)
Scott Cook, (founder, Intuit)
Jim Clark (founder, Silicon Graphics, Netscape & Healtheon)
Kevin Surace (founder, Serious Energy)
The trailer for "Steve Jobs: Visionary Entrepreneur" is above, it's available for purchase here: Steve Jobs: Visionary Entrepreneur
This enlightening one-hour program stars Steve Jobs from an exclusive 1994, unscripted interview by the Silicon Valley Historical Association where he gives advice to potential entrepreneurs. Jobs discusses risk, failure, his own experiences, and learning the value of creating your own environment.
A stuffed squirrel sits on the wall behind Delphix founder and CEO Jedidiah Yueh.
I meet with huge numbers of companies every year but it's rare for me to come across a company that excites me as much as Delphix - easily my choice for Silicon Valley Watcher's 2012 Startup of the Year.
Delphix founder Jed Yueh is just 37 years old and will undoubtably become one of Silicon Valley's next generation of leaders and success stories. His focus, his discipline, and his intellect are striking -- and it's these qualities of leadership that sets Delphix apart from the many thousands of startups in the extraordinary global innovation engine that is Silicon Valley.
I visited the company earlier this year shortly after it had raised $25 million in an over-subscribed C-round led by Jafco Ventures, with Battery Ventures joining existing investors Greylock Partners and Lightspeed Venture Partners.
I was impressed by the company's technologies and its business strategy. Mr Yueh is determined to build, rather than sell, one of the next great tech companies of Silicon Valley.
General Electric has seen the future and it's called the "Industrial Internet" a vast high speed network linking the world's manufacturing systems and industrial machines, and it wants Silicon Valley to help build it.
TOTVS said it has established TOTVS Labs, A Silicon Valley based research and development facility that will be used to create new software and spearhead an expansion into North American markets.
TOTVS is the largest enterprise software company in Latin America with more than 10,000 staff. I spoke with Vicente Goetten, executive director of TOTVS Labs. Here are some of my notes from our conversation:
Steve Blank does a fabulous job in this interview in defining what makes Silicon Valley unique as a global engine of innovation. It's about culture and culture cannot be easily copied or exported.
Thursdays at The Rosewood Sand Hill Hotel are well known for being full of VCs and hot women looking to startup a love connection but lately attendance has fallen.
Peter Delevett at The San jose Mercury News reports that it's because of a rumored vice bust by police.
It was interesting to see Margit Wennmachers, co-founder of Outcast PR, and now working at VC firm Andreesen Horowitz, so prominently quoted in the New York Times today:
She has done very well in getting a lot of ink for her employers, both the paper and electronic kind, in barrels and terabits. She's made them into the most visible VC firm in Silicon Valley.
Here's Roger McNamee on BloombergTV hyping his unfortunately named "The Hypernet," and blaming NASDAQ and Wall Street greed on the botched Facebook [$FB] IPO.
It's worth a watch:
Foremski's Take: Roger McNamee's claims of a corrupted process for the Facebook IPO, involving NASDAQ and Wall Street firms, seems too perfect an explanation for the flop. The real reason the Facebook IPO failed is much simpler: the "smart money" couldn't convince the "dumb" money to buy.
(Above, is a brief extract of Salman Khan's speech at SVForum 2012 Visionary Awards.)
I had the enormous privilege of shaking the hand of Salman Khan, at the SVForum Visionary Awards earlier this week.
I thanked him for showing the world that public education can be enormously boosted through simple means.
For years I've railed at the poor state of Silicon Valley's public schools. For years I've reminded this community that we can't tell the world we are inventing the future if our public infrastructure, our schools, are in such a poor state.
Silicon Valley and Las Vegas are similar - both thrive on failure. The difference is that if you fail in Las Vegas you have to leave town. If you fail in Silicon Valley, you can stay and play again -- and with other people's money.
Every country wants to copy Silicon Valley but no one wants to copy its chief characteristic - failure. Massive amounts of it.
Above is an extract of a speech by Jim Breyer from Accel Partners, at the SVForum Visionary Awards, in which he thanks all the failed entrepreneurs. And urges them to come back and try again. And again.
The SVForum Visionary Awards were excellent, as usual. Here are some photos in a slideshow format of Silicon Valley's top innovators and investors celebrating this year's winners. I will be posting videos of the speeches and other photos as I process them, so please check back.
Jim Breyer, Partner and President, Accel Partners
In April 2011, Forbes published its Midas List of top technology investors and ranked Jim Breyer #1.
Salman Khan, Educator
Salman Khan (Sal) founded the Khan Academy as a nonprofit with the mission of providing free, high-quality education for "anyone, anywhere" in the world.
David Kirkpatrick, Journalist and Author
Author and journalist David Kirkpatrick is founder and CEO of Techonomy Media. Kirkpatrick was for many years senior editor at Fortune Magazine.
Elon Musk, Chairman, Product Architect and CEO
Elon Musk is CEO and Product Architect of Tesla Motors and CEO/CTO of Space Exploration Technologies (SpaceX), where he is the chief designer, overseeing development of rockets and spacecraft. Elon co-founded PayPal.
Om Malik from GigaOm writes:
The present isn't as interesting to most of us who live here, mostly because that would mean accepting the status quo. Instead, guys like Mark Zuckerberg and Jack Dorsey want to rearrange the world to fit the future they want to live in.
I think Om is stating the obvious. To be innovative you have to search out the cracks, challenge the way things are accepted in the present. It's a task that's often done best by outsiders.
For example, journalists would have never invented blogging, "What, republish other people's news stories and give them links and credit?" Never.
Next week SVForum will honor four extraordinary people with its 2012 Visionary Awards, a celebration of innovation and entrepreneurship that is in its 15th year.
The awards go to:
(Lucas Buick co-founded Synaptic, a company that brought retro looking photography to smartphones with its popular Hipstamatic app for the iPhone.) (Flickr photo)
By Intel Free Press
Lucas Buick is the CEO and co-founder of Synthetic, a company best known for bringing the washed-out and color-saturated look of retro analog photography to the digital world. The company's photo app, Hipstamatic, the Apple iTunes Store's 2010 App of the Year, sparked a frenzy of photo special effects and social sharing apps for smartphones. It sold nearly 1.5 million downloads in its first year and the $1.99 app remains one of the top 100 most popular paid apps with more than 5 million sold.
In 2006, Buick and his friend Ryan Dorshorst founded Synthetic, a small design consultancy. Three years later, they moved the bootstrap startup to San Francisco and shifted focus to the mobile software.
Today, Synthetic has a series of Hipstamatic apps, including Swankolab, Incredibooth and an online store called Hipstamart, where people can order prints, posters, T-shirts and items using digital photos. There's even an iPad magazine of curated content called Smack.
"What I love about magazines is larger trends being featured rather than the hourly trending topic on Twitter," Buick said in an interview with the San Francisco Chronicle.
Buick sat down recently to talk about how he sees mobile technologies changing people's lives.
Ernst & Young is on the search again, for the 26th year, looking for the world's top entrepreneur, a journey that involves thousands of the world's top business leaders and their advisors, judging panels, and a lot of galas and other networking events.
This Saturday, Ernst & Young will announce the winners of its N. America competition at a dinner event at the Fairmont Hotel on Nob Hill, in San Francisco. Winners in eight categories will be chosen from 26 regional finalists, out of group of 135 companies chosen from 1,700 entries.
Last year, Andrew Mason, CEO of Groupon, and Reid Hoffman, founder of Linked-In, were among the winners. [US Ernst & Young Entrepreneur Of The Year 2011 winners]
(Jill Tarter ponders the uncertain future for Alien search project SETI.)
Wednesday evening I was at a great local salon organized by Taylor Milsal and Christine Mason McCaull, which featured Jill Tarter, Director of the Center for SETI Research for 35 years.
Last week, Ms Tarter announced her retirement from SETI, but that was not by choice. She resigned so that SETI could continue with its work amidst big cuts that threaten to shutter the project. Her former salary will be used for operations while she tries to raise funds large enough to plug large losses in funding due to the state of California's budget cuts, and from other sources.
She gave a great talk and I spoke with her afterwards. Here are some of my notes:
There's a lot of anger around the botched IPO of Facebook but much of that is from the "smart money" that wasn't able to convince retail investors, the regular people who invest in stocks, to take their shares.
The point of a "pop" in an IPO is to provide an incentive for retail investors to acquire the risk -- the shares from investors and insiders -- and then to continue holding that stock and limit volatility.
But the smart money had already decided what the stock was valued at because of trading activity in secondary markets, which was in a range of $38 to $42 and only wanted to price a 10% pop, which is why the $38 price was chosen. That's not much of an incentive to take on a very risky investment.
The fact that retail investors disagreed with the valuation and largely stayed away is a very good sign because it shows that they are far more sophisticated than the Wall Street bankers and their clients.
So let's not shed tears for the "smart money" they were the ones that literally bought the hype about Facebook's future prospects. The SEC isn't going to help them because they are considered to be sophisticated investors that know the risks.
The good news is that few small investors bought shares; the bad news is that few small investors bought shares.
This means that the smart money, in its zeal to leave as little money on the table in the IPO (it's called fair pricing), has messed things up for future tech IPOs and prospects for getting their money out of their other positions. Greed has its consequences.
The Facebook fiasco also puts the spotlight on secondary markets and the role they play in helping private companies raise capital and for early investors to find an exit.
It should be good news for private stock markets such as Sharespost and Second Market because tech IPOs will be cutback leaving these markets in a great position as the only alternative to being acquired.
The problem for the smart money is that these private markets have little liquidity and share prices are far more susceptible to hype and manipulation than in public markets. It could quickly become be a dumb investment.
Facebook's IPO is considered a failure in that the share price was too high to attract retail investors.
There's more bad news. More than 1.7 billion shares owned by insiders, such as employees, etc, will be "unlocked' over the next six months and will be eligible for trading. That's a huge overhang considering that Facebook floated 421 million shares in its IPO. It's equivalent to an additional four Facebook IPOs.
The largest block of shares, about 1.3 billion, unlocks in six months time.
(The Facebook Campus: One, Hacker Way. Photo by Tom Foremski.)
Lucy Marcus, a leading advocate for reform of boardrooms, is highly critical of Facebook's corporate structure, following a "Shareholder Spring" where the boards of many large companies faced angry shareholders.
In annual meeting after annual meeting around the world, boards have been taken to task by investors and other stakeholders on a wide range of issues: remuneration, board composition, competence, diversity, voting control, dual stock, and more... No sector has been immune; no director has been untouchable.
Yet Facebook has adopted a structure that enables co-founder Mark Zuckerberg to retain complete control following the IPO, it's as if it were a private, and not a public corporation. [I would not be surprised if he tries to take the company private again, once he's paid-off his largest investors.]
Facebook swims against the tide of a global movement toward transparency, engagement, and checks and balances.
Please go to Reuters and read:
Foremski's Take: Facebook was not interested in reforming Wall Street with its IPO, as Google tried to do with its dutch auction process and snubbing the big investment firms. So it's not surprising that Facebook isn't interested in adopting a more open company governance structure.
In fact, Facebook [$FB] has copied Google's [$GOOG] corporate structure as closely as it could, and even improved on it. The two-tier shares where insider's shares have ten times the voting power is common to both companies. Mark Zuckerberg figured out an additional way of keeping control that Google's founders missed: he managed to retain the voting rights of shares he had sold in secondary markets.
ZERO1 Executive Director Joel Slayton and Jaime Austin - Curator and Director of Programs for ZERO1
ZERO1, the biennial arts and technology festival, announced a massive expansion in its program this year, with more than 100 arts installations Bay Area wide and 40 arts museums, galleries, and studios taking part. The theme this year is "Searching for Silicon Valley."
The announcement of this year's program was made at SFMOMA, which is one of many arts organizations that will take part in this year's festival.
Jaime Austin, Curator and Director of Programs for ZERO1, said that the idea for the theme "Seeking Silicon Valley" came from her experiences from meeting visiting artists at the airport and their wish to see Silicon Valley.
(Photos by Tom Foremski)
JapanTown's four-day Cherry Blossom finished Sunday with a parade and a prize ceremony for best Manga costume.
It was a lot of fun, and multi-ethnic in procession and in audience, reflecting the diversity of the Fillmore neighborhood.
My Highlight app barely blipped the whole time I was there, which means it was largely geek-free, there were very few starters among the thousands of people. You'd think startups would be interested in the varied culture that's around them, after all, every business is a cultural artifact.
Here are more photos:
(The spectacular Oracle Arena.)
It was a dark and stormy evening but it was also Bollywood Night at the Oracle Arena in Oakland and I had two tickets to see the Golden State Warriors play the Dallas Mavericks -- thanks to Tibco Software.
[Vivek Ranadivé, CEO of Tibco, is one of the owners of the Warriors, and the first Indian-American NBA team owner. The scrappy kid from Mumbai has done very well, arriving as a teenager in Silicon Valley many years before the recent waves of Indian engineers.
Vivek Ranadivé is also one of the most interesting personalities in Silicon Valley. I knew him when I worked at the Financial Times and he became one of my most important contacts because of his long history and extensive contacts within the valley. When I left the Financial Times he took a keen interest in my publishing venture. Tibco became a founding sponsor of Silicon Valley Watcher in 2005, and has remained our most loyal supporter. I hope my readers appreciate Tibco's important contribution to SVW.]
I'd never been to an NBA game and was looking forward to it immensely. I set off with my son Matt, and we braved the nasty cats and dogs weather, driving across the bridge to Oakland. And I'm glad we did because we had a brilliant time. Here's a taste of the event:
The Warrior Girls, the Golden State Warriors' cheerleaders got into the Bollywood spirit with colorful costumes.
Sport is theater...
The first person we ran into was Cory (Scoop) Johnson (above with Tim Draper) CNBC's original Silicon Valley reporter. He now works for Bloomberg TV.
Tim Draper, founder of venture capital firm Draper Fisher Jurvetson, is as well known for his eccentric personality as he is for his VC prowess.
Al Seracevic, sports editor for the San Francisco Chronicle, quickly took Matt and I under his wing and gave us for a whirlwind tour of the benches and the media balcony. It great catching up with Al, I hadn't seen him since a very late and very liquid North Beach adventure about a year ago.
Zach Nelson, CEO of Netsuite, who had a great seat down on the court.
Vivek Ranadivé's daughter Anjali (on screen above) sang the national anthem.
The Dallas bench...
Here's where the sports hacks perch.
Elevator to the Grandview Suites.
A very spirited crowd.
The always hardworking Tibco Comms team.
A rainy treck home.
Richard Waters, West Coast Managing Editor for the Financial Times, analyzes news that Google has hired Apple executive Simon Prakash, senior director of product integrity.
The same media frenzy of interest that we see today in the Facebook IPO we saw with Google in 2004...
I remember vividly the day Google filed its "red herring" with the SEC in preparation for its IPO. I was out at lunch when our bureau chief Richard Waters, called me, "They've filed."
(Photo:By Joi Ito.)
Marc Andreessen and Ben Horowitz made their reputation as savvy investors by making lots of small seed investments of up to $100,000. This then helped them raise billions of dollars, $2.7 billion so far, with the latest $1.5 billion fund announced today.
A group of Indian students at Velammal Engineering College are putting together a book: "500 Definitions Of Entrepreneurship" and they asked me for my definition. Here's what I sent:
There is a widespread perception that Hollywood's media industries have friends in high places because they have spent money buying influence compared with the poor tech industry. But Reuters reports that the tech industry has outspent the entertainment industries.
Paul Graham, a partner at Y Combinator a successful Silicon Valley incubator, writes that he has found a key sign of future success among the startups that are recruited into YC's twice-yearly mentoring programs.
What is this indicator?
Don Reisinger over at CNET reports:
For the second year in a row, AT&T was ranked last in Consumer Reports' annual customer satisfaction survey. The company was hit especially hard by complaints over poor voice service and phone-based customer care. Even worse for AT&T, the company's 2011 rating is slightly lower than last year's.
The full rankings will be released in January 2012.
Facebook is preparing a new campus, once occupied by Sun Microsystems. And it will have a smart-ass new address.
I get lots of news releases about office openings that I ignore but if I Robert Scoble and Rocky Barbanica send an invite, I'm there.
Here's a few shots from an excellent evening at Rackspace's new San Francisco offices, (which a realtor source told me is a very expensive space).
(From the PBS documentary, "Steve Jobs: One last thing.")
I watched the PBS documentary on Steve Jobs last night,"One last thing" and it was well done, mixing a fair bit of the good, the bad, and the ugly about the life of the man.
And there was a lot of praise for the "marketing genius" of Steve Jobs.
Then it struck me: If Steve Jobs were starting out today in Silicon Valley, he would have trouble getting funding because he's a marketeer — not an engineer. VCs generally won't fund startups without a tech lead.
Thursday I spent a very pleasurable day with a great group of people, many of whom I've known for years, such as: Jeremiah Owyang, Kristie Wells, Shel Holtz, Ross Mayfield, Ben Metcalfe, and Chris Saad.
We were part of a larger group of geeks, bloggers, and marketers helping Airship Ventures come up with a marketing plan in exchange for a ride in one of its $16 million airships built by Zeppelin Luftschifftechnik in Germany. (Photo above shows us brainstorming - (I hate the word "ideating" and "ideation."))
I used to meet with Steve jobs in the 1980s, when he was lauded as a visionary. To be honest I wasn't that impressed with him at the time.
Sure, he deserved credit for the Apple I and then Lisa, which turned into the Macintosh but it was too early to tell what he was capable of doing. Lots of people are successful in Silicon Valley and he was among them but you never know how much luck is involved.
There has been a lot of discussion lately about US jobs and Silicon Valley's role in helping to rebuild the US workforce. US government officials, and many others believe that Silicon Valley is key to reviving US jobs growth. But is this really true?
It's worth revisiting an article in Bloomberg Businessweek from last year, written by Andy Grove, a veteran Silicon Valley executive who helped build one of its most successful companies: Intel.
Nate Richardson is President of Gilt City and the former long-time GM of Yahoo Finance. He's got some great suggestions for "What Yahoo Should Do."
He worked at Yahoo from 2000 to 2005.
Silicon Valley veteran Steve Blank writing in Xconomy, does a great job in describing six types of startups and how a clear understanding of the needs of each is necessary by national and local governments seeking to foster more innovation.
Chris O'Brien, a columnist at the San Jose Mercury News asked: Who will be Silicon Valley's next Steve Jobs?
He picked out five possible contenders and rejected a sixth.
Bloomberg Television's Emily Chang has a great interview with Apple co-founders Steve Wozniak and Ron Wayne on Steve Jobs:
Rivera Partners put together salary data on software engineers:
Turmoil in global financial markets and economies is never good for Silicon Valley despite the fact that the regional economy has its own boom and boost cycles that operate on a different timetable.
Currently, Silicon Valley has been booming, recapturing p the trend that was in place in the second half of 2008 before the financial meltdown, of growing VC investments and jobs. But like that recovery in 2008 which ran smack into an economic crisis, will this recovery again be nipped in the bud?
I have a serious problem: my GMail contacts won't load. That means GMail is almost unusable because it won't autocomplete my email addresses. I have to go search and paste email addresses, it's too many clicks
For the past two months I get this message on GMail:
Plug and Play has managed to build a very good brand associated with SIlicon Valley innovation. Today, a high profile delegation from Luxembourg visited to conduct a ceremony of signing a Memorandum of Understanding.
Signing ceremonies are very important to dignitaries. In the delegation:
(Photo credit: www.anthony.com)
By Michelle Atagana, Memeburn
Named as one of the 25 most influential people on the web, Matt Mullenweg founded and runs an open source web platform that has revolutionized website publishing. WordPress began its life as free, open-source blogging software which quickly evolved into a general-purpose CMS used by millions of sites on the web. The success of WordPress speaks for itself -- and it is one of the most popular content management system engines around today, also used by many Fortune 500 companies.
Mullenweg at only 27 also runs the commercial arm of WordPress, Automattic, which is the company behind WordPress and a handful of other software projects. WordPress is used by more than 14% of the one million biggest websites including those of The New York Times.
Leaving Silicon Valley -- I highly recommend it.
I just got back from a week in London, speaking at an Omnicom conference and then a week in Warsaw (which was excellent). And I'm finding it difficult to get back into the swing of things.
The problem is that every time I leave Silicon Valley for a decent length of time, I wake up and realize that there's a whole huge world out there that doesn't care a jot about the things that we care about here, such as:
Vanessa Camones is a veteran PR professional. She is the founder of theMIX agency and today she did a very bold thing: she outed one of Silicon Valley's leading personalities, Mike Arrington, the editor of Techcrunch as a bully.
In her post titled: DIGIDAY:DAILY - Entrepreneurs Should Say No to Silicon Valley's Bully, she writes that many startups would love to have coverage by Techcrunch.
Congratulations to IBM and its 100 years in business - from making cheese graters to supercomputers, and much, much more.
IBM is seen as very much an East Coast company yet its history shows a strong and long connection with the Silicon Valley area, way before it was even called Silicon Valley.
Innovation is key to the IBM brand yet it does very little to promote that connection and its continued large presence in Silicon Valley. IBM has employed as many as 25,000 workers here, larger than Google (until fairly recently).
This region has become the global icon for innovation, every week I meet companies that are moving their headquarters here from all parts of the country and world, because they want to be where the action is.
It seems strange that IBM doesn't associate itself more strongly with this important center of innovation. Is it a cultural artifact?
Silicon Valley looks pretty much the same today as it did when I first arrived in 1984 - it looks like a business park. Except for the names of the companies it looks like any business park in the world.
There is no "culture" as you see in cities in the form of architecture and cultural institutions. The Computer History Museum, for example, is a relatively new institution.
Sramana Mitra writing in Silicon Valley: The Next Decade (Part 1) makes a good case for Silicon Valley adopting a "Renaissance Mind" and drawing inspiration from 14th century Florence. The wealthy merchants spent fortunes on the arts, becoming patrons to the most famous artists and architects of their age.
I just saw "MoFo Tech" (above) an edgy-designed newsletter from Morrison & Foerster LLP, a top Silicon Valley law firm.
It's certainly an attention getting title and look. And here's their web site, great design:
That old Steve Jobs magic is not reserved just for the Apple faithful. He recently took a break from his medical leave to present at Apple's developer conference earlier this week. Now, he's also turned up at a Cupertino City Council hearing to use his star power to persuade officials to green-light a massive new Apple campus.
Matthew Wilson reports in the San Jose Mercury News:
I use GMail all the time and its spell checker is usually pretty good. But the other day I noticed it can't spell "Facebook."
I tried some other computer company names but only Facebook was flagged:
Are we in a bubble? is a common question as I chat with people at various events around Silicon Valley.
The concern is that if it's a bubble then a crash is not far off. But I'm far more worried that the economy will crash long before Silicon Valley's boom has had a chance to bubble and burst.
I say Silicon Valley is in a boom period rather than a bubble. Others might disagree but everyone has some kind of warning sign to look for.
For example: Mike Butcher, from Techcrunch Europe, Tweeted earlier today:
Tucked away in a quiet, tree lined residential neighborhood of Menlo Park, SRI International runs a massive 1 million square foot research lab in the heart of Silicon Valley, where many of its 2100 staff toil on secret projects for the US Dept. of Defense (DoD).
SRI's work might be top secret but it's not hiding. This 65 year old organization is hugely influential within Silicon Valley, with close ties with leading VC firms, and within the largest companies.
LinkedIn [$LNKD] doubled in its opening of public trading from its offer price of $45 giving hope to many other tech IPOs waiting in the wings.
Private investors in LinkedIn, the social network for business professionals, stand to make a hefty 46% profit in just two months, following the company's IPO this week.
The underwriters for LinkedIn increased the initial price by 30 percent, which would value the company at more than $4 billion. But if they price the deal too high it could dampen the crucial first day pop in share price and affect other IPOs.
Broadband availability and speeds are notoriously bad in the US and now with the imposition of monthly caps on usage there is little incentive for cable and Telco companies to improve the situation.
Hewlett-Packard lovingly maintains the garage of a modest family home on a leafy street in Palo Alto, because it's the birthplace of itself, but is it also where Silicon Valley was born?
Wednesday afternoon was one of those rare San Francisco days where it was too hot to stay working indoors, so I popped over to an event that Peter Hirshberg, a local entrepreneur, had told me about: a chance to meet Joanna Rees, a candidate for mayor of San Francisco, and hear about her "innovation" platform.
Media coverage is very important for startups. It is how they gain respect in their community, it is how they can win investors, and it is invaluable in helping to recruit staff.
Positive media coverage will also help gain users of their products and services, providing valuable marketing services that could cost tens of thousands of dollars.
But the only reason media coverage of a startup and their product is valuable is that the media coverage is seen as a neutral third party -- it has no financial bias in its reporting.
The only acceptable bias is a thirst for a great story and selecting the best startups to write about.
More good news for Silicon Valley as Intel [INTC] reported a record quarter beating Wall Street estimates and its own prior guidance by about $800 million. Intel shares jumped 6% in extended-hours trading.
Sales were boosted by a return of IT spending as enterprises upgraded data centers and replaced older equipment.
The film "The Social Network" has helped to make startups popular among young people the world over. It's just one factor inspiring new generations of entrepreneurs hoping to succeed through innovation and hard work.
But are they learning ethical ways of doing business?
The more we find out about Mark Zuckerberg and his behavior during the early days of Facebook, the more he reveals a cavalier attitude to ethics.
It's taken a decade but Silicon Valley companies have climbed out of dotcom dotbomb recession and reported their most profitable year in history.
The San Jose Mercury News reports that 2010 was a banner year for the 150 largest Silicon Valley companies.
Dell plans to employ as many as 1500 people at a new Dell Silicon Valley Research and Development Center and consolidate its N. California operations.
The company also wants to use the facility to tap into local talent, adding to already high local demand for engineers and other specialists.
Here's an interesting analysis of the advertising industry and Silicon Valley's growing bubble in new media by Rick Webb.
He argues that Silicon Valley is heading for a cliff in funding too many startups to provide new media channels for advertisers.
He writes that there seems to be a perception that there will be far more money in online advertising than there really is.
The Computer History Museum this morning launched "Revolution" an online exhibit featuring images, video, and stories chronicling the development of key computer technologies.
More than 4500 pages are avialable online on a diverse number of topics, from punched cards to the first computer games, such as the "Naughts-and-Crosses machine" (above).
Last week I was in Palo Alto, drenched by torrential rains but happy to catchup with serial entrepreneur Bill Nguyen and hear about his remarkable new startup Color, which today launched its iPhone and Android based mobile app.
Color has raised $41 million from a stellar group of investors. This is a huge amount of capital for a seed/Series A round and it shows how much confidence there is in Mr Nguyen and his team.
But this is no ordinary startup. Mr Nguyen is a serial entrepreneur, his most recent venture was LaLa, the cloud-based music service that he sold to Apple for about $80 million.
Foremski's Take: The potential acquisition of T-Mobile by AT&T [T] is bad news for Silicon Valley with its strong focus on the consumer: search, social networks, and a spectrum of cloud based services.
The reason is that the distributors of all that wonderful Silicon Valley content and services, from Google, Facebook, Twitter, and a myriad other companies, will have to travel through fewer owners of the distribution networks.
And if those distribution networks fail as a level playing field for all -- then innovation in Silicon Valley by both large and small will be drastically curtailed. Startups will have to pay for access to consumers and that will raise costs and the amount of startup capital needed -- it's at an all time low currently.
I'm surprised that Google didn't make a bid for T-Mobile. Here is why:
Plaxo is announcing a major relaunch today that moves its focus back to management of user address books across all of their devices and is pulling out of social networking.
The company announced new services such as Plaxo Personal Assistant, which automatically maintains user address books and tracks updates across the web.
I recently met with Justin Miller, CEO of Plaxo to talk about the changes. Here are some notes from our meeting:
These it's difficult to go anywhere without hearing about startups and their apps. That's natural in my job but when you start hearing "normal" people talking about apps all of a sudden then that's an interesting trend to watch.
For example, my 23 year old son Matt tells me he hears people talking about their apps and startups nearly everywhere he goes in San Francisco. He says it is a result of the Facebook movie.
His friends, and friends of friends, seem to be all working on some idea, mostly in the mobile apps space. Matt is working on several apps too, a mobile business app for local businesses is one promising project.
This is an interesting trend to watch because it is not limited to San Francisco and its Silicon Valley neighborhood. You see a big interest in startups and innovation occurring in many countries
Ted Nelson is a computer pioneer and industry veteran. His work in the early 1960s led to hypertext -- the ubiquitous technology that literally links all online documents.
Mr Nelson is also the author of one of my favorite quotes: "As fish live in water we live in media."
Back in the early 1960s, Mr Nelson was one of the first to recognize that the computer is a media machine. That was an impressive achievement because computers in those days were not the multi-media systems of today. Input was through stacks of punched cards or punched tape; output was mostly numbers and monospaced text with no fancy graphics.
Many of Mr Nelson's ideas when he was 23 years old in 1960 are now being rediscovered in a similar way to Marshal McLuhan and his ideas about media have now found new audiences. And as Silicon Valley becomes a Media Valley -- Facebook, Twitter, Google etc, are all media companies -- Mr Nelson's ideas will become more important.
Mr Nelson's current focus is on making it easy for people to republish content on the Internet. His proposal is to charge readers and publishers, based on how much content they read or re-publish. He presented his ideas on syndication at the "Future of Money" conference on Monday.
Readers would pay for content based on how much they had consumed. For example, if you read only one-half of an article, you only pay for one-half. The same for republishing content, you only pay for what you use.
"Computers are very good at floating point so we can keep track of minuscule amounts of payments, and publishers get an additional revenue stream."
Because the content comes from the original source, computers could keep track of which "splinter" of content people own throughout their life. Once you have paid for something you don't pay for it again.
Although Mr Nelson invented the concept of hypertext he is not a fan of the way it was implemented in the world wide web. He says that the web is held hostage to prior file structures which limits its usefulness.
"The computer is a wonderful media machine, we shouldn't use it to produce imitations of printed materials. We should think of all the new things we can do with it."
Mr Nelson said he "dislikes very much" the world wide web and the way its technologies have been implemented.
Some of Mr Nelson's syndication ideas will be used on the Internet Archive and he hopes others will take up his ideas too. It's a similar approach that is taken by Repost.Us, which launched its syndication service today. (Repost.us: Syndicate Content And Get Paid - SVW)
The Launch conference, Jason Calacanis's response to the Techcrunch Disrupt conference, turned out well despite all the rain and a boycott by TechCrunch publisher Mike Arrington.
I caught part of it and I was impressed by the companies I saw and the judging panel. I spoke to many that were there for all of the conference and heard good reports:
Don Dodge, one of the judges: "I go to a lot of these conferences and this one was good, the content was great and the sessions focused on the startups, there wasn't any broad industry discussions. The quality of the companies as good too -- there were many in the startup pit that should have been on the stage."
Stowe Boyd: "I was really impressed and I'm not one that's easily impressed -- and I go to a lot of conferences."
Ken Yeung: "I took some vacation days to come to the conference and it was good. There were a lot of great companies and the quality was very good."
Doug Mason: "The quality of the companies was good and I managed to make some good contacts and also put some of my friends in contact with people here."
Jason Calacanis said he was very happy with the conference and said that it had "broken even."
Here is a list of winners:
From the 1.0 competition:
Best OVERALL: Room77 -- http://room77.com
Best Tech: NeuAer for Toothtag http://www.neuaer.com/
Best Design: Cabana (App Design) http://cabanaapp.com
Best Business Model: Volta http://getvolta.com
Best Product: (Phone Products) Lifeproof http://lifeproof.com
The 2.0 Competition
Best 2.0 Technology: Disconnect -- http://disconnecter.com
Best 2.0 Design: -- http://hipmunk.com
Best Overall: -- Careers.Stackoverflow.com
From the LAUNCHPAD
BEST OVERALL: http://greengoose.com
($500,000 Angel funding round closed by Friday -- Investors include @Jason, Bill Warner, Jay Levy & @Shervin)
Most Likely to be Acquired: Shoefitr http://shoefitr.com
Best Design: http://pen.io
Best Technology: http://fluidinfo.com
Best Business: http://nandimobile.com
TechCrunch provided no coverage of the conference, something that wasn't surprising and something which is bound to occur to a greater, or lesser extent, now that industry publications are hosting their own, competitive conferences. There was plenty of coverage by VentureBeat and by ReadWriteWeb. There was no coverage I could find by GigaOm even though Om Malik was at the conference.
It was good to see Dave Mathews and his new company win an award for best technology: NeuAer for Toothtag. It's a neat Android application that interacts with your immediate environment. "We're doing proximity search for you," said Mr Mathews. An iPhone app is on its way.
Here is more coverage:
Therese Poletti, over at MarketWatch reports that this year's Tech IPOs have done well:
Tech IPOs gaining some momentum Therese Poletti's Tech Tales - MarketWatch
Already this year, there have been seven tech IPOs, which have raised $700 million in total, with an average return of 26.5%, according to Renaissance Capital, an IPO research firm which also manages an IPO fund and an IPO index. Kathy Smith, principal at Renaissance, is more cautious, and notes that there have also been two tech IPO withdrawals this year.
She makes a good point in where the "bubble" is:
"It's not a bubble," Smith said of tech IPOs. "Where the bubble is happening is in Silicon Valley in pre-IPO valuations."
If the bubble is in pre-IPO valuations then the danger for upcoming IPOs is that they have to be priced very high. Pricing IPOs is a balancing act because you need to set expectations just right and make sure the pricing provides some momentum for the stock going forward.
With high valuations for Facebook, Zynga, and others, when those companies prepare for their IPOs 00 expected in 2012 -- there has to be a good enough story to justify their upside to the next wave of investors. What is going to be the Facebook story next year?
Then there is the issue of an "overhang" in that early investors will be looking to cash-out after the IPO, putting downward pressure on the stock price. This will be something IPO investors will have to consider.
While it is nice to raise capital in secondary markets, the problem for Facebook, Zynga, and others that follow this route, is how do you keep your story fresh, and growing, so that the next set of investors, the public has confidence in your future?
After all, a lot can change in a year -- maybe that's why Facebook, Zynga, etc, are trying to cash-in now rather than later.
The San Francisco Bay Guardian (SFBG), a local newspaper, has published an editorial that recommends the city government not give tax breaks to Twitter.
The SFBG reports that Twitter "is threatening to leave San Francisco and take 350 employees to a new headquarters in Brisbane."
The move might be avoided if city officials come up with a favorable tax plan:
"The latest plans call for a payroll tax exemption that would cap the company's future tax bills at $250,000."
The SFBG calls it "corporate blackmail."
This is all a bit much.
When I went to see Ev Williams and Biz Stone at the Inforum Club in October, they spoke a lot about how social responsibility is very important to Twitter. It felt disingenuous, it felt as if it was "bolted on" for PR value.
It seems my instincts weren't wrong.
How does Twitter square away its PR about it being a socially responsible company yet threaten to leave San Francisco unless it gets a tax break?
Those taxes are part of its social responsibility to the local community.
Clearly at Twitter, chatter about social responsibility is more important than actual social responsibility.
Social responsibility can't be tweeted. Let's see it in action. Pay your local taxes Twitter.
San Francisco should call Twitter's bluff and let it move to Brisbane, to a site shared with Wal-Mart. It'll have a big problem trying to recruit engineers to work in Brisbane. And that will cost it far more than its savings on taxes.
It was a sold out event: Peter Thiel and Max Levchin at the Inforum Club SF - the club for under 36 year old members of the Commonwealth Club.
Mr Thiel and Mr Levchin are two prominent members of what some call the "PayPal Mafia." This is a large number of unbelievably successful entrepreneurs; the Paypal alumni have gone on to help found an extraordinary number of successful startups.
(IBM's Silicon Valley Lab - photo by Andrew Nordley.)
As IBM celebrates its centennial this year it is interesting to look at its association with the Silicon Valley area. Although IBM is considered an East Coast computer company it has a long history with this region, long before there was a Silicon Valley.
DLA Piper is merging with Australian partner DLA Phillips, which adds 600 lawyers and creates the world's largest law firm, which will total more than 4,000 lawyers.
The merger strengthens the formidable Silicon Valley presence of DLA Piper with a focus on M&A -- a hot area. [Please see WSJ blogs: DLA Piper: Soon to be the Largest Law Firm in the World - Law Blog]
The firm already has more than 300 lawyers on the West Coast and more than 150 lawyers in Silicon Valley and Bay Area.
DLA Piper was formed in 2005 with the merger of Silicon Valley\CA-based Gray Cary Ware & Freidenrich LLP with Chicago based Piper Rudnick LLP and London-based DLA LLP.
DLA Piper is #1 for M&A deals with more than 500 deals in 2010.
Therese Poletti over at MarketWatch writes about Hewlett-Packard's new board of directors. She notices that many of the new directors were pushed out of their former jobs or left under a cloud:
I'm constantly meeting companies that have moved part of their operations to San Francisco/Silicon Valley. Usually it is the CEO and/or the marketing and sales group that moves home.
Loic Le Meur, a serial entrepreneur, founder of Seesmic, did the same several years ago, moving to San Francisco from Paris. In a guest column in the UK Daily Telegraph newspaper, Mr Le Meur explains why he moved.
In the Valley, the best companies, entrepreneurs and investors are all in one place. It feels like a campus. Everything you do, from the morning run to the coffee run, is a networking opportunity.Compare this to the fragmentation in Europe, where the next meeting is always a flight away, and you can see why things simply happen more slowly over there. Thirty languages and insufficiently fluent English slow things down even further.
In the Valley, the best companies, entrepreneurs and investors are all in one place. It feels like a campus. Everything you do, from the morning run to the coffee run, is a networking opportunity.
Compare this to the fragmentation in Europe, where the next meeting is always a flight away, and you can see why things simply happen more slowly over there. Thirty languages and insufficiently fluent English slow things down even further.
He lists other advantages:
- the ability to easily higher and fire.
- investors make sure entrepreneurs still have enough shares. In Europe, Angel investors are notorious for taking too large an ownership, which limits incentives.
- the chance to build a global success rather than a "local leader."
His advice to European entrepreneurs: "find your niche and set your heart on being the world leader."
David Laws writes at the Examiner:
January 11, 2011 marks the 40th anniversary of the first appearance of the name Silicon Valley in print.
Under the headline SILICON VALLEY USA, journalist Don C. Hoefler wrote the first of a three-part series on the history of the semiconductor industry in the Bay Area. His behind the "scenes report of the men, money, and litigation which spawned" the industry appeared on page one of the industry tabloid Electronic News on Monday January 11, 1971.
He points out that there is anecdotal evidence of the use of the name "Silicon Valley" prior to this date but that, "Author Michael S. Malone suggests that Hoefler's pioneering coverage of the Silicon Valley community as a collection of characters, dreamers, and eccentrics made him "the one that put the whole idea in our minds".
There are some similarities between Google's IPO (Initial Public Offering) and Facebook's attempts at an Initial Private Offering with its recent Goldman deal.
The similarity is that Google didn't want too much oversight or influence on its management by outsiders, and clearly, Facebook wants the same deal.
When Google filed for its IPO in 2004 it raised $1.67 billion, not far off the $1.5 billion Facebook could raise through the Goldman deal.
From the beginning it was clear that Google wanted the money but it didn't want the oversight that comes with being a public company and the influence on management.
The high valuation of Facebook on secondary share markets might be out of line with its revenues but it does show one thing: a large investor appetite for investing in leading Silicon Valley companies.
The fact that the investors are making large bets without having access to the underlying financial information is similar to the wild days of the dotcom boom, when companies were able to IPO on the basis of very little proven financial information. Investors were happy to pay high multiples for a stake in a business that might have a bright future.
The comparison between now and the dotcom boom has been noticed by others.
Alexia Tsotsis at Techcrunch and Liz Gannes at AllThingsD are reporting that Yahoo is shutting down several services:
Former Yahoo employee and Upcoming founder Andy Baio has tweeted out . . . that Yahoo! is either closing or merging the social bookmarking service as well as Upcoming, Fire Eagle, MyBlogLog and others.
Products on a list to be shut down include MyBlogLog, Yahoo! Picks, AltaVista, Yahoo! Bookmarks, Yahoo! Buzz and Delicious. Some of those properties came from acquisitions and others were internally generated.
It's sad that a service such as Delicious, which was one of the early success stories of Web 2.0 is likely being closed.
Delicious provides a bookmarking service that allows people to organize web sites and tag them with specific labels. Others can then use those tags to find web sites.
Delicious and Flickr were two of the poster children of the first flush of Web 2.0 services; their acquisitions by Yahoo in 2005 were among the first signs of an upturn in tech markets following a long recession.
The deals motivated many entrepreneurs to build many new startups focused on the emerging Web 2.0 market.
Doubly sad is that Delicious is a curation service and curation is becoming a very hot topic and one that will dominate much of the discussions about the web in 2011. Many people use and rely on Delicious bookmarks and it's not clear if or how the service will survive.
AllThingsD received the following response from Yahoo regarding Delicious:
"We continue to operate Delicious today, and will communicate specific details when appropriate."
I'm spending much of December away from Silicon Valley in Paris and in London. I recently returned from the Le Web conference in Paris and am catching up with family and friends in London.
I find it is always useful in escaping Silicon Valley for a good period of time because it reminds me that we are not all obsessed with the constant discussions abut Facebook, Twitter, Android, and all things Apple.
In the outside world people find such subjects interesting but not to the same extent as people seem to do in Silicon Valley. There is a binary mentality to such topics in SIlicon Valley -- everything is couched as one versus the other, as one killing the other.
It's a binary attitude popular in the geek engineering culture yet we know the reality of the world at large is that many things can co-exist without one necessarily "killing" the other.
The real world is not a black and white world it's a spectrum of many things. It's an "and" world: iPhone and Android; Apple and Microsoft; Dell and HP, etc. One can exist and so can the other, and create economies of scale and profit for many developers and value for many users.
When you leave the echo chamber of Silicon Valley you get a glimpse of the reality of the wider world but you can't do this on a flying visit, you need to dig in for a couple of weeks or more, imho.
I'll be posting more on my trip...
There's lots of competition for top engineers in SIlicon Valley fueled by the giants such as Google, Facebook, Zynga, etc.
Connie Loizos at PEHUB reports:
"Right now, startups are either having to pay more, relocate people [to work for them], or go the [H-1B] visa route [allowing companies to temporarily employ foreign workers]," says Chuck McLoughlin, who heads up the tech practice at SVS Group, a 14-year-old recruitment firm based in Emeryville, Calif.
The salary increase for software engineers is still quite modest: an average of about 10% but its on an upward trend.
So what should startups do? This increases startup costs and that can be tough because most startups want to bootstrap themselves before they take on investors so that they can raise their valuation. Less capital means a shorter runway.
I recently met with Andrew Volk, an ex-Yahoo product manager who has been consulting and working on his own startup ideas. He says he spent about 6 months teaching himself basic coding in Java and how to use various online development platforms.
"I kept meeting entrepreneurs who spent many months revising their business models when they could have used that time to learn some coding and pull together a prototype of their service. That's what I do. I'm not the best programmer but I've learned enough to be able to do quite a lot."
That's great advice. I've taught myself a variety of different coding skills, I'm not an expert but at least I know what I'm talking about.
This also helps in terms of talking with developers and specifying the work you want done. It stops them from pulling the wool over your eyes with technical jargon or stretching out development times. When you know how things are done it puts you in a much better position in regard to effectively working with your team, in-house or out sourced.
Knowing what the various technologies can and cannot do also means you are better able at creating new services and figuring out new types of applications.
This all made a lot easier today because development languages and tools are increasingly sophisticated, which means they are easier to use by people who don't have formal training. In the same way small business groups within an organization can now pay for cloud based IT services out of their budgets without waiting for the IT department, they can also develop the basic skills to prototype app development.
The beauty of cloud computing is that there are many aspects of development and deployment that can now be done without the need for an IT department.
[Please see my interview with John Dillon CEO of Engine Yard.]
Coming up next week, the Saїd Business School, University of Oxford is hosting its annual "Silicon Valley comes to Oxford" (SVCO) event and presenting some of Silicon Valley's top entrepreneurs.
The focus this year is to: "explore the disruptive technologies and business innovations of the past 10 years, and the demise of incumbent industries, standard economic and social models and familiar perspectives, and predict the discontinuities of the next decade."
Panels will also discuss Silicon Valley's DNA and why other countries have been unable to replicate it.
Here is a partial list of speakers:
· Mark Cummins, Co-Founder & CEO at Plink
· Anil Hansjee, Head of Corporate Development, Google EMEA
· Tom Hayes, Vice President, Corporate Marketing, Marvell
· Brent Hoberman, Co-Founder, Lastminute.com
· Reid Hoffman, Executive Chairman and Co-Founder, LinkedIn
· Ian Howlett - CEO, Publisha
· Joichi Ito, General Partner, Neoteny Labs and Chairman and CEO, Creative Commons
· Saul Klein, Partner, Index Ventures
· Jorn Lyseggen, Founder and CEO, Meltwater Group
· Monique Maddy, Founder and CEO at eZuZa
· Mike Malone, Columnist, ABCNews.com
· Raymond Nasr, Advisor, Twitter and former Director of Executive Communications, Google
· Kim Polese, Entrepreneur, Co-Founder, Marimba Inc, Director, Silicon Valley Leadership
· Megan Smith, Vice President, New Business Development and General Manager Google.org, Google
· Biz Stone, Co-Founder, Twitter
· Elizabeth Varley, CEO, TechHub
Here's one very happy participant an a former SVCO event:
'SVCO gave me a push', says alumnus Kulveer Taggar, now part of an influential Oxford alumni network in the Valley. 'Six months after meeting them at SVCO, I flew to the US to meet Evan Williams and Max Levchin (PayPal) to ask for advice. I returned with Evan becoming an advisor to the company, which was really useful.' Taggar sold his company Auctomatic eighteen months later for $5m, after investment from Google's Chris Sacca - a SVCO regular.
About Saïd Business School
Established in 1996 the Saïd Business School is one of Europe's youngest and most entrepreneurial business schools with a reputation for innovative business education. An integral part of Oxford University, the School has an established reputation for research in a wide range of areas, including finance and accounting, organizational analysis, international management, strategy and operations management.
For more information, see www.sbs.ox.ac.uk/
Nair & Co has built a thriving business in offering services that handle the incredible complexities of employing staff in different countries. This Silicon Valley headquartered company works with local tech companies to manage the HR functions, and the many tax and regulatory issues governing employees abroad.
I met with founder Shan Nair. Here are some notes from our conversation:
- We make it possible for companies to focus on their core business rather than having to deal with the myriad details you have to know about before employing people in other countries.
- There is an incredible amount of work that has to be done before you employ anyone. Each country has different payroll taxes, employment laws, and other regulations.
- We provide the HR and accounting functions so you don't have to. Employees overseas feel better taken care of, and we answer any questions they have in their time zone. Also, we know how best to terminate employment, how to transfer employees between overseas offices, and all the other HR issues.
- We have an R&D team that constantly checks into changes in employment laws, taxes, etc. For example, did you know that the Chinese government made a change earlier this year that if you are doing R&D in China, unless you have a specific agreement, your employee owns the R&D work. Also, the UK has made changes in its laws that provide a tax incentive if you base your Asia-Pac holding company in the UK because of tax agreements the UK has with Asia-Pac countries.
I'm a fan of Max Levchin and his fellow Paypal alumni because this group has spent the past five years creating many of the more interesting Silicon Valley startups.
Mr Levchin writes on his blog, but only very occasionally. One such occasion was fairly recently, his first since mid-2008, a critique of Silicon Valley's angel community.
Angels have done very well for themselves over the past few years and this includes many of his former Paypal colleagues.
In his latest post: On ambition « You've gotta be kidding me he writes that the Angel method of investing in startups is considered a better method, "an antidote" to traditional VC investing.
Silicon Valley Angels have done well by choosing companies that can exit (sell themselves) fairly quickly, at fairly low values, $10 million to $20 million. While this approach makes money for the angels and their investments, it tends to discourage building breakthrough companies.
Angels advise startups to take smaller and earlier exits, which minimizes Angel risk but does little to develop startups with big dreams.
It's an astute observation and it is something that I've been thinking about over the past couple of years. I meet with a lot of startups and I remember meeting with Mr Levchin when I was at the Financial Times, and he was at Paypal; and hearing about Paypal's ambitions. Similarly with the founders of Yahoo, Salesforce, Google, Facebook and other groundbreaking companies.
Today, it is rare to find startups that think beyond being lucky to survive two years and be sold.
Yet even a few years ago we did have startups with grand designs. For example, I was an early admirer of Ribbit, a plucky startup that had the potential to disrupt the Telco industry.
Yet in mid-2008 it agreed to be bought by BT, the British Telecom giant. I was very disappointed: Are we seeing a disturbing trend in "blackmail" innovation...? | ZDNet
Since that acquisition Ribbit has launched a cool iPhone app but not much else. It has been dead quiet under the ownership of BT -- yet at one time this was an ambitious team taking on the world.
Mr Levchin sees the rise of the Angel and "Super Angel" investors as the key factor in the lack of "significant innovation" today.
At the moment, what amounts to lack of visible significant innovation seems to correlate with abundance of angel-funded startups shooting to get picked up for a fistful of dollars.
We should aim higher.
It's easy to understand why Mr Levchin takes this position. He and his team built Paypal into a formidable company that eBay was happy to acquire for $1.5 billion. That's a hundred times more money than the $10 million to $20 million exit rounds of Angel investors.
Because Angel investors are investing smaller sums of money there is little incentive for them to take larger risks. However, traditional VC firms will invest at higher valuations and therefore will be less willing to sell for a "fistful of dollars."
The VC firms require a larger exit, and that's why they set a greater goal for their startups: to own markets of $1 billion and more -- this creates startups with far higher expectations. And that's what Silicon Valley needs if it is to produce the next Paypal, Google, Salesforce...
Mr Levchin makes an important point in correlating the rise of the Angel investors, with the fall in innovative startups.
If you missed Twitter co-founders Ev Williams and Biz Stone interviewed by Brad Stone from BusinessWeek, Monday evening -- you were fortunate.
The two executives spoke at a meeting of Inforum, which is part of the Commonwealth Club, focused on fostering discussion among people in their 20s and 30s.
The location was the stunning Julia Morgan Ballroom at The Merchants Exchange in downtown San Francisco, (a building owned by Clint Reilly, one of California's top political power brokers). And there was a huge fireplace, as advertised for the "Fireside chat" but little fire in the conversation.
Brad Stone was introduced as "known for asking the tough questions" but if the answers aren't forthcoming it takes probing -- which Mr. Stone was reluctant to do, preferring to move on to the next question on his list.
Overall, I did learn something: about a "social mission" at Twitter which was a surprise; and that Ev Williams isn't all that engaged with Twitter or knows much about his users. Biz Stone came across as much more tuned into Twitter.
Here are some notes from the evening:
- Is Twitter mainstream? Ev Williams came back with "what does mainstream mean?" Twitter has gone beyond pundits.
- How's the new site going? Ev Williams said it was a great success, not even a single protest group. We expected pitchforks. Even Biz liked it.
(I have heard from many people complaining about the new site and loss of some features. It was a little shocking that the Twitter co-founders were so self-congratulatory on not being able to find critics. Scratch a little deeper...)
- Ev Williams said he goes to Twitter for news and Tweets maybe just once or twice a day. (Wow! That's very low engagement.)
- Ev Williams dropped Conan O'Brien's name, said he was talking to him and his writers and they like the 140 character constraint because it produces better jokes.
- Malcolm Gladwell's recent post "Why the revolution will not be Tweeted" was politely received at first but then both founders laid into him. Mr. Williams said, "it was laughable" and that he confused Twitter with Wikipedia when he (Gladwell) complained about a lack of editorial control.
Biz Stone said that no one had claimed that the revolution would be Tweeted in the first place. And that the Iranian political protests weren't technically a revolution.
- They were asked about ads and they said all ads would be properly marked. They also mentioned a "resonance" algorithm so that if a major brand is Tweeting ads, and it doesn't resonate with Twitter users, they will pull the ads and not charge for the ads.
(Will they use re-tweets to measure "resonance?" What else do they have to measure and why do they need an algorithm for that? How many people will gladly re-tweet an ad? Only if bribed.)
- They will analyze users and who they follow so for example, someone following lots of video game related people will be offered to Xbox if it wants to gain more readers for its Tweets, for a price.
- Asked about censorship they said they don't want to moderate Tweets and that they have three simple rules, they will ban Tweets that have specific violent threats; links to child pornography; and links to copyrighted content specified by takedown orders.
Biz Stone said it would take considerable creativity to be "super porny" in 140 characters, therefore it's not a problem. They support free speech.
(If they had to moderate tens of millions of Tweets daily they would soon be out of business. It has nothing to do with standing up for free speech.)
- Twitter has a division that seeks to work with newspapers and other media organizations to see how "both can succeed." (Good luck getting money out of hard hit media groups.)
- Asked about not having a business model Ev WIlliams said he didn't like all the talk that they didn't have a business model because they hadn't been working on a business model in the first place(!) They wanted to take their time to eventually get to a point where they had a business model and try out different things that weren't obvious, like using Google AdSense.
- They said Twitter would get to a billion users, just like Facebook but it would be a different billion users.
- The failure of Odeo was brought up, a search engine for podcasts that both were involved in. They said they weren't emotionally connected with Odeo, and that they didn't produce or listen to podcasts, which didn't help. But it was easy to raise money for the venture.
(Ev Williams is not that engaged with Twitter, I wonder if that will be a problem down the line.)
- Not much interest in expanding into China, especially since Twitter is blocked. There are several thousand users in China using VPNs.
- They want Twitter to be relevant to users and connect with their information, they don't have to Tweet much if at all (a la Ev Williams).
- They have a big design and engineering team working on new products.
(Look out Twitter ecosystem!)
- Both, especially Biz Stone, spoke about a social mission for Twitter and that connecting people around the world would make people empathize more with one another and people would realize they are citizens of the world.
(The "Social Mission" aspect of Twitter sounded contrived especially since we are just hearing about it now... Why not earlier? Sounds like it was bolted-on.)
- Biz Stone spoke about some educational philanthropic projects. "If you can't read - you can't Tweet."
Q&A was lackluster.
I found just 1 Tweet about the content of the Inforum presentation:
UPDATED: There were more Tweets under the hashtag #InforumSF that I missed, my apologies, it was late at night... Thanks to Sean Garrett (@SG) for pointing that out.
Foremski's Take: Twitter is a "force of nature." It became successful despite its founders knowing much about what was happening. To hear the founders try to explain Twitter as a type of fait accomplis from the start was entertaining and ludicrous.
I would have preferred a more honest approach, something along the lines of:
"We tried Twitter as a side project, but we had no idea what it would do, or turn into... We thought about closing it down several times because people were Tweeting pathetic stuff and it was starting to cost a fortune in SMS charges ... but then it took off.
Now, we are scrambling just to keep up with our users, and we are trying to make money copying the best ideas in our ecosystem of app developers. We have a kick ass team to do that.
Plus, we don't really know what the heck is going on inside Twitter, we're just trying to ride it and not get thrown off. It's not like we spend that much time on Twitter anyway ... we're busy having a real life ; )"
Sadly, we didn't get that. It would have been far closer to the truth if we had, and far more authentic.
Google's most important launch this year was its recent debut of Google Instant search which cuts user search time by as much as 40%. Google users are collectively saving 11 hours per second. That means 11 hours per second being spent away from Google search.
Google is betting it that if its users spend less time on search then it will make more money.
This is a far different strategy from that of Facebook which wants to be the stickiest place on the Internet.
Nielsen estimates that each month, an average US internet user spends around 2 hours on Google, and more than 7 hours on Facebook.
It'll be interesting to see the latest Nielsen numbers following the launch of Google Instant Search. What's certain is that the disparity in user hours will widen, and so will the disparity in their respective business strategies.
How is less time on your sites better than more?
It seems very counter-intuitive. Shorter visits means less time that users spend potentially looking and clicking on advertising -- which can't be good. Yet Google is staking a multi-billion dollar a year business on the bet that fast is better than sticky.
And it seems to be working.
Facebook is very sticky yet its revenues are a fraction of Google's (as far as we can estimate since Facebook is a private company).
The Facebook strategy favors a more-closed-than-open platform approach that seeks to provide a semi-porous walled garden -- a type of post Internet-modern AOL strategy.
Google's strategy firmly supports an open web. It sees the Internet as its platform, it is Google's Internet. It is the by far most successful company at monetizing the scale of the Internet and also in promoting web standards.
Big "I" versus little "i"
Facebook has created a simulacrum of the Internet -- a mini-Internet.
Each Facebook user is essentially a single web site, each profile page is a home page for a personal web site.
Facebook makes it easy for each user to update and maintain their personal "web sites" and it helps promote and distribute that content through automatic feeds.
Which company has the larger business opportunity?
Which is a larger market, the Internet as a whole, or a subset of the Internet as represented by Facebook?
Clearly, Google has the greater business opportunity because it isn't as restricted as Facebook.
Clearly, there is more to be gained in trying to monetize the entire Internet rather than a subset of the Internet.
Sticky money ratios...
Google's efficiency in monetizing its users is truly impressive when compared with Facebook.
Google generated nearly $7 billion in revenues in its most recent quarter.
Since an average U.S. Google user spends 2 hours per month with Google, that represents about: $600 million per average user month per hour (in the U.S.).
This stickiness-to-revenue ratio, or what might be better called the "sticky money ratio" is an interesting benchmark.
If Google can get its users to spend less time through Google Instant Search, say 1.5 hours per month and raise revenues it could boost its sticky money ratio to $750 million per average user/month per hour. That's a tough act to follow.
Facebook's sticky and closed strategy is generating a fraction of Google's revenues. And it is Google's sticky money ratio that Facebook will be judged by investors -- like it or not.
Sticky and closed is a safer, if less profitable strategy.
By keeping a mostly closed environment, Facebook gains a large measure of protection against Google's great ability to use its scale to monetize large numbers of Internet users.
Google can only access relatively small parts of Facebook.
By keeping control over its mini-internet, Facebook has more time to figure out business models without any danger from competitors. After all, Facebook controls the entire economy within its walls. That's a very good position to have.
However, it is worth pointing out that if Google had users spending 7 hours a month -- as they do on Facebook -- at its current sticky money ratio, it would have reported almost $25 billion in revenues instead of the $6.8 billion in its most recent quarter. A potential $100 billion company.
Facebook has a long way to go to match Google's monetization efficiencies but that also shows off the huge business opportunity it has. And possibly, sticky money ratios will be a good way to measure the competitive performance of each company.
- - -
Analysis: Google Sets Major Relaunch Of Search - SVW
Tuesday evening I attended a media roundtable at Boulevard in San Francisco with top executives from BitTorrent, which invented the popular file sharing technology that has about 80 million monthly users.
Here are some notes from my evening:
- BitTorrent has been working on a live streaming technology for two years and now it is almost ready to be rolled out. The company expects to launch it by the end of this year. It is described as very robust. [I wonder if it could cut down on the practice of sharing illegally copied music or movies if you can watch content through live streaming. Also, you could effectively host your own YouTube, you wouldn't need to upload video to a hosting site.]
- The company is trying to distance itself from the use of BitTorrent by those sharing files of illegally copied music and movies and show the commercial sector that it can be used to solve significant issues around distribution of large files across the entire Internet. It did consider changing its name.
- BitTorrent doesn't know very much about how people use its technology. It says it doesn't want to collect too much information because it doesn't want to encroach on user's privacy.
- It is looking into launching a service that helps connect like minded BitTorrent users. It has the capability to message each user.
- The BitTorrent technology is not very privacy-friendly because of the peer-to-peer connections it is easy for anyone to find out the IP addresses of people sharing a specific file. But using BitTorrent through a VPN connection does improve user privacy.
- BitTorrent this week launched an App platform and it is also working with artists to power a shared film festival, and also with TED to distribute videos.
- The company changed its protocol earlier this year to avert a problem in which ISPs were blocking BitTorrent file sharing because it was taking up too much bandwidth. The new protocol automatically detects if bandwidth is in short supply and slows down the transfer until more bandwidth is available. This can speed up file sharing because there is no blocking.
- The number of users has jumped from 20 million monthly two years ago to as much as 100 million during some months. Much of this growth has come from emerging economies, such as Russia, where more than 50% of Russian males between the age 18 to 34 years use BitTorrent.
- BitTorrent "democratizes the Internet and brings the 'cloud' to the edge."
Foremski's Take: I was impressed with the BitTorrent team and I see the technology as almost a fundamental part of the Internet infrastructure. It solves many key problems in terms of moving large data files, such as high res video, between Internet users. There are many legitimate uses -- not the piracy that some BitTorrent users are involved in.
The clever approach to making sure that BitTorrent files do not tie up vast amounts of Internet bandwidth shows that the company is striving hard to be a good citizen and improve the usefulness of its technology.
- - -
I met with Eric Klinker, CEO
Bram Cohen, Chief Scientist and Co-Founder
Simon Morris, VP of Marketing and Product.
Here is a short video of Steve Wozniak, co-founder of Apple being interviewed at the reception for the opening of the Hult Business School San Francisco campus.
San Jose's fabulous Zero1 (SJ01) Biennial festival starts on Thursday running for four days. The organization's theme is "Build your own world" with a focus on "The future is what matters, not what's next."
There are hundreds of artworks, films, outdoor exhibits, parades, performances and a host of interactive arts projects. I visited the preview for some of the projects in the cavernous South Hall (above).
The future is not just about what's next. It's also about what we can build to ensure that what's next matters. How can we, as resourceful, innovative, and knowledgeable local and global citizens build and participate in a desirable future in the face of global climate change, economic meltdown, political instability, and cultural divisiveness?
ZER01 invites public participation in the Green Prix Parade. The Green Prix parade will be an eclectic, artistic eco-motion procession beginning in the South Hall (San Jose Convention Center) parking lot and proceeding down South 1st Street through the SoFA district. A parade of human-powered, electric, solar and many other sustainable locomotive projects will cascade down the street displaying an array of artistic mobility.
Green Prix Festival
Following the Parade, there will be an all day festival on South 1st Street where parade entries will be on display and available for visitors to interact with and possibly even test out. The Festival will be filled with "green" creations, parade projects, family oriented do-it-yourself workshops, demonstrations, local galleries and music performances.
- Survival Research Labs will be at the festival with its signature fire spewing robots.
- Retro Tech
San Jose Museum of Art
Tuesday-Sunday, 11:00 am-5:00 pm
Extended hours on September 16, 2010
The artists represented in this exhibition grapple with the potential of technology as they "build their own world." They re-purpose and manipulate technologies of the past and present in ways that range from playful to ironic to analytical. As these artists explore the 'craft' of technology, they often investigate the very notion of obsolescence. Here, with the benefit of our 21st-century hindsight, the historical course of technology becomes a vehicle for understanding both our present context and our visions for an augmented future.
If you're headed to the 01SJ Biennial, and I know you are, you MUST participate in Blast Theory's A Machine To See With, a work for pedestrians and their mobile phones placing participants inside a movie as they walk through the city streets of downtown San Jose.
Internationally renowned artists who brought Ulrike and Eamon Compliant to the 53rd Venice Biennale are here in San Jose mixing documentary material and stolen thriller cliches inviting you to become someone else in this once in a lifetime cinematic experience.
MISSION ETERNITY is a metaphysical adventure: an arcane network of computers, mortal remains, emotions, cargo containers, scientists, artists and hackers - a technical as well as a legal, an organizational and an economic night mare. MISSION ETERNITY is as much about loss than it is about conservation of information. MISSION ETERNITY is hybrid art. read more »»
- The Empire Drive-In. Watch movies sitting inside junked cars.
- Artist talks:
Sunday, 9/19/10, 2:30-3:30pm:
See you there...
I popped into the DEMO Fall conference in Santa Clara. DEMO is in SIlicon Valley for the first time as it celebrates its 20th anniversary. More than 800 people turned up, about 300 more than last year.
The turnout was good and the content was top notch. VentureBeat is co-producing the show and also all the media coverage. It's interesting to see a publication also reporting on its own show. The coverage is excellent but it doesn't leave much for other media organizations, and looking at Google news, it is all dominated by VentureBeat - the organizer of the show.
Here is my report on DEMO Fall in Pearltrees format. It includes the following stories:
(Pearltrees is an SVW consulting client.)
Hewlett-Packard has been on a huge acquisition spree, spending almost $5 billion on companies such asArcsight, Palm, Fortify and 3Par. It's difficult to see any rhyme or reason to the collection of new assets. ButPhil McKinney, vice president and chief technology officer for HP's Personal Systems Group, said today at the DEMO Fall 2010 conference that the aim is to create a one-stop shop for customers to buy complete systems that are already integrated and working together.
"You integrate them and take the burden off the customers of doing that," he said in a conversation with VentureBeat Editor-in-Chief and DEMO emcee Matt Marshall. "I understand what it takes to take disparate parts and stitch them together. It's hard. We can reduce the total cost in their spend. That's value for everyone."
..."We have scale in size, supply chain, procurement, and distribution," McKinney said. "We are seeing a shift in the market where customers are picking the best two or three products they want to carry."
As for research and development budgets at HP, McKinney said he was happy with the funding and the payoff from R&D. He said that Wall Street's measure of using R&D expenditures as a percentage of revenue as a benchmark for a company's commitment to R&D is a "bogus" benchmark. HP is such a large company in revenues, he said, that its percentage spending looks small even though its absolute dollars dwarf many other companies. He said that the past five years of improving financial results have shown that R&D at HP is paying off, as "inventing a better mousetrap" allows you to charge a premium for products and improve your bottom line.
... As for futuristic cool stuff, HP is also working on things like huge displays that let people see an entire basketball court at the same time.
Last week I attended Intuit's "Innovation Walk" a collection of Intuit business groups and partners offering a range of services and products such as Mint's personal finance, mobile payment services, and much more.
Intuit is in a unique position. As the tax preparation service for tens of millions of individuals and small businesses, it has access to a lot of data -- data that can help its users.
I spoke with Tayloe Stansbury, Chief Technology Officer, and Kris Halvorsen, Chief Innovation Officer about some of Intuit's initiatives and plans for the future.
One of the new services Intuit offers its customers is the ability to benchmark their business against other similar businesses. The data is collected and shared in such a way as to prevent it being identified with any specific business. It allows companies to check that they are in-line with expectations for their category and that their operation is being managed well.
I pointed out that this type of data could also be very useful for people starting a business. With high levels of unemployment there are many that would like to start their own business and if they could do that with realistic expectations of expenses, payroll and profit margins, it would go a long way in helping small businesses become successful.
Small businesses are the largest employer in the US and thus such innovative use of business data could help improve employment numbers in the US.
Irving Wladawsky-Berger, a former senior executive at IBM and its chief strategist, writes that unemployment levels are the largest since the Great Depression. He writes that there is an urgent need for innovation in job creation.
He points out that: "Joblessness is more devastating to families and communities than poverty. Many of the social ills in inner cities can be attributed to their loss of jobs in the 1970s."
The same technologies that have enabled companies to shed jobs should also be used to help create new jobs.
We are living in a time of great innovations, as we are leveraging our sophisticated, new technologies to develop new products and services, transform just about every industry and achieve major productivity growth in the economy. We need to focus at least a portion of our innovation efforts to explore how these same great new technologies can be used to help us create new jobs, both in the short and long terms.
For example, we should explore how to better leverage social networks and collaborative platforms for training and education, to help teach new skills to job seekers that better match current business requirements.
Maybe here is a direction for Intuit to take with its focus on innovation, helping not only to distribute data on businesses but also take a role in the vital education process that a new workforce needs.
I was impressed with Intuit team and executives I met. Also, it was good to see an old friend, Annie Kim, now working at Intuit in a key role.
The value of Linden Lab, which operates the virtual world Second Life, has plunged by more than 21%, according to SharesPost, which tracks the private secondary market.
In late June, Linden Lab brought back founder Philip Rosedale as interim CEO, after CEO Mark Kingdon stepped down.
The current value of Linden Lab is estimated by SharesPost to be about $271 million or about $100 million less than a year ago.
The plunge in value appears related to today's news that the company is closing the five year old "Teen Second Life" virtual world at the end of this year.
The company said:
"...supporting and developing for two separate grids has been a challenge for us, and has slowed progress on improvements that benefit all Residents. To help us focus our resources and development on the Main Grid, we have made the difficult decision to close Teen Second Life."
Linden Lab has lowered the age for Second Life membership to 16 years and is evaluating lowering it further to 13 years -- but only if it can develop ways to provide safe access for younger teens.
SharesPost estimates the value of private firms based on shares bought and sold in private markets.
- Facebook has a value of about $25.5 billion;
- Zynga is valued at $4.9 billion;
- Twitter at $2.2 billion;
- LinkedIn at about $2 billion.
Who will replace Mark Hurd as CEO of Hewlett-Packard?
UPDATE: I'm adding Ed Zander to this list. He would be very good for HP-- he would bring some of that Sun uppity spirit, which HP needs.
Here is a Pearltree that you can quickly browse to see the latest Mark Hurd news:
As Silicon Valley's population gets older, age discrimination in the workplace is a very real issue for many people.
Earlier today the California Supreme Court addressed two issues related to an age discrimination suit filed against Google.
Ivan Alexander, representing Eric Steinert, an employment partner at law firm Seyfarth Shaw in San Francisco, explains the ruling:
In the case Reid v. Google, plaintiff Brian Reid, a director of operations and engineering at Google, was 54 years old when fired by the company in 2004. Reid's age discrimination lawsuit was based in part on negative age-related comments made by employees (other than his supervisor) in the workplace; the plaintiff alleged that his co-workers often referred to him as an "old fuddy-duddy" and used other similar derogatory appellations.
The trial court granted Google's motion for summary judgment, and the appellate court reversed.
The California Supreme Court addressed two issues:
-first, whether evidentiary objections are waived on appeal if the trial court does not rule on them;
-second, whether California should follow the federal "stray remarks" line of cases.
The federal "stray remarks" doctrine holds that statements made by employees who are not involved in the challenged employment decision cannot be considered in support of a discrimination claim.
Stray remarks cases are frequently used to support employer motions for summary judgments where the discrimination claim lacks direct evidence of discrimination, but is rather based on negative comments in the workplace regarding the protected status made by employees other than the direct supervisor.
The California Supreme Court decided that waiver does not depend on whether a trial court rules expressly on evidentiary objections and that Google's filing of written evidentiary objections before the summary judgment hearing preserved them on appeal.
The Court also held that application of the stray remarks doctrine is unnecessary and its categorical exclusion of evidence might lead to unfair results.
Mr. Steinert, who has represented employers in disputes involving issues of wrongful discharge and age discrimination, noted that the stray remarks portion of the decision is very unfavorable to employers.
Mr. Steinert observed that the Reid decision is reminiscent of the California Supreme Court's rejection of the federal Ellerth/Faragherdefense in the 2003 McGinnis decision.
"In McGuiness, the Court rejected the more robust Ellerth/Faragher defense, which raised a complete defense to liability if the employee did not initially pursue harassment claims internally before filing suit," Mr. Steinert said. "The court rejected the defense in favor of an 'avoidable consequences' doctrine with may reduce damages based on the employee's pre-litigation conduct -- but does not act as a complete defense to employer liability."
In both cases, Mr. Steinert noted, the California Supreme Court rejected more robust employer defenses under federal law in favor of jurisprudence more favorable to employees.
"As a practical result, employers will win fewer age cases on summary judgment," Mr. Steinert said. "More cases will go to trial and presumably more evidence will come in at trial regarding general workplace comments not made by direct supervisors or decision makers."
Sarah Lacy reports:
... Google has agreed to buy Slide for $182 million, in a deal to be announced Friday. And sources also tell us that this is not the last move Google is going to be making to cobble together a serious social gaming and apps strategy to counter Facebook.
... No word on whether Slide founder Max Levchin will be joining Google or what his continuing role will be. $182 million is a nice exit no doubt, but it’s a come down from Slide’s $500 million valuation in 2008. And Levchin has said many times that success to him was Slide becoming bigger than PayPal.
In the comments of Sarah Lacy's story there is much discussion whether Slide is a failure for Max Levchin, the founder.
I'm sure he made money. But Slide is just one small part of Max Levchin's story. He's had many failures. He was in 6 startups before he struck it rich with PayPal. It's the life of an entrepreneur.
He still has Yelp and other companies such as Adroll. And he is young -- just 35. He has plenty of years to make more PayPals.
I'm a fan of Max Levchin and his colleagues. He and the rest of the "PayPal Mafia" made a ton of money when EBay bought PayPal for $1.5 billion. And they've been ploughing much of that money back into Silicon Valley, founding and financing dozens of new companies.
They have used their experience and money to Angel fund and lead many successful companies: YouTube, FaceBook, LinkedIn, Tesla, Zynga...are just a few examples.
And they are all still relatively young, and in the peak of the their form. I expect a lot more of the same from all of them.
Here is a partial list of the PayPal alumni and some of their achievements:
- Reid Hoffman, founder of LinkedIn and a very successful angel investor: Facebook, Ironport, Digg, Flickr, Ping.fm, Last.fm, Zynga.
- Peter Thiel and his hedge fund Clarium Capital. Not all of his bets have paid off but he is investing and funding some interesting organizations.
- Elon Musk - Head rocket designer at SpaceX and CEO of Tesla.
- Steve Chen - Youtube co-founder.
- Chad Hurley - Youtube co-founder.
- Premal Shah - founding president of Kiva.org.
- Jeremy Stoppelman - co-founder and CEO of Yelp.
- And there are plenty more in this group: Dave McClure, Jared Kopf, Eric Jackson, Kieth Rabois, Ken Howery...
I created a Pearltree that has more info and lists more people:
The last couple of months I've been working with a very cool French startup called Pearltrees in an advisory capacity. It's part of my nascent consulting services business which helps me continue publishing and funding Silicon Valley Watcher.
I'm a big fan of Pearltrees because it is a fascinating media technology. It allows anyone to curate their own section of the web by using a visual metaphor that looks very much like mind maps: users create a Pearltree and attach pearls to it; each pearl represents a web page or site, a video, image, or even a Tweet.
With so much content on the Internet it is becoming very important to identify trusted sources of information and to have people curate sections of the Internet. Google tries to do it by looking at trusted sites and who links to who but it is constantly fighting spammers trying to game the sysem -- the Pearltrees approach is spam-proof.
Pearltrees are also very social, they are extremely easy to create and share. They can be Tweeted, emailed, or embedded in any web page or web document, creating a live window (see below).
One of my goals is to build a Pearltree about Silicon Valley so that people can quickly find the best information about this region. As part of that project I have put together a Pearltree that acts as a directory of Silicon Valley PR firms.
People looking for a PR firm can browse my Pearltree and hopefully find a compatible business partner. In the short space of time since I created the Silicon Valley PR firms Pearltree it has had nearly 2300 views.
But I'd like to improve it. I'd like each PR firm that does business in the Silicon Valley/Bay Area to create a Pearltree about their business and send it to me.
If you are in PR here are some reasons why you should make a Pearltree about your company:
- It puts you, rather than me, in control of the information about your firm.
- You are the one that receives notifications on who has shared it or picked it for their collection of Pearltrees.
- You can see and respond to comments on your Pearltree.
- You can be creative about how you build your Pearltree.
- By creating your own Pearltree it shows you as the author rather than me.
- You can use your Pearltree for communications with clients. Again, being in control of the information in your Pearltree is key.
- This is the important part: each Pearltree is dynamic. Any changes are updated in real-time everywhere that Pearltree is used. You won't have to wait for me, or rely on me, to update a Pearltree about your company.
Here are two examples:
I created a Pearltree for the Horn Group:
It shows clients, newsroom, blog, contact info etc.
Because each Pearltree is controlled by the author, each firm can be creative about how it organizes their Pearltree. For example, in this Pearltree about The Hoffman Agency, there are links to client web sites that Hoffman might like to highlight, rather than just a simple client list.
So please send me your Pearltree. It's the simplest way to get into my Silicon Valley PR directory. And also, send me the categories that you would like to be included in. Email foremski at Gmail or send it to me through Pearltrees.
And if you are an independent PR professional/consultant, send me your Pearltree too.
You can show who you work with, your past and current clients, and whatever else you'd like to include, such as your LinkedIn profile, portfolio, etc.
- - -
It's a very flexible technology and I can think of a variety of ways of using it.
For example, using Pearltrees as a media kit. Here is a Pearltree about an Intel press event, containing links to media assets such as video, and also the resulting press coverage.
And Pearltrees has lots of great new features coming very soon, including a private version that controls who can view it; and a community version that enables teams to collaborate on a Pearltree.
It's also great as an organizational/research tool. I've used it for a book project, and I'm exploring other uses, including an online store.
I use it for business and for recreation, such as this Pearltree about the upcoming Outside Lands music festival in Golden Gate Park so I can get to know some of the acts before the event.
So please send me your Pearltrees so I can include them in my PR firms Pearltree directory. And send me examples of any new uses you come up with.
Just click here to start: http://www.pearltrees.com/
[This guest post is extracted from a longer article: Saving Silicon Valley.]
Georges van Hoegaerden was born in The Netherlands and came to Silicon Valley to work at Oracle. He soon jumped head first into the startup life and became a serial entrepreneur. But he quickly became disillusioned with VCs and a VC industry that lacks proper governance and consistent execution. He is passionate about reinventing the entire VC industry.
In this post he warns that Silicon Valley is on the brink of a serious "implosion" because 95% of VC firms are not making money for their investors. Many VCs are risk averse, they don't have the business experience needed for the job, and they are happy living off of generous management fees rather than working hard to build successful startups.
He points out that there are tremendous business opportunities ahead. We are still at the very early stages of a massive technology boom with just 20% of the world's population having access to any meaningful technologies. The VC industry should be expanding rather than contracting.
By Georges van Hoegaerden, Managing Director, The Venture Company
Some people do not understand why I do what I do and why I bother, and underestimate my determination to fix Venture Capital. Certainly there are much easier ways to make money than to pursue the obliteration of an investment cartel, in which seemingly everyone belongs to the club.
I came to the U.S. on my own with some hard earned chunk of change in my pocket, invited by Marc Benioff (now Salesforce.com CEO, then Oracle VP) and Larry Ellison (Oracle's CEO) who wondered why I was able to sell their (then) emerging products while they couldn't.
I left Oracle with fond memories as soon as my green-card was approved and jumped in Silicon Valley hoping to find more intelligence there.
My first startup was a group of consultants with a horrible business plan, and I told them about my opinions in a way only I can. Instead of fleeing, they came back and asked for guidance (management incubation). We turned the company into a product company and raised a double digit series-A post 9/11. The company was sold in 2006 for triple digits.
Google, Facebook, Twitter, even Yahoo are all hiring at a rapid rate. The following chart form Indeed shows a hockey stick hiring binge. Are they making it difficult for thousands of Silicon Valley startups to find the engineers and other talent they need to grow? Let me know: foremski at gmail.com.
A trade mission from the Gdansk region of Poland, birthplace of Solidarity (and the end of the Cold War), will be in Palo Alto this evening. It will feature five Polish tech companies.
"Come and meet with Polish technology companies and entrepreneurs, winners of a European Union-funded business and technology innovation program, representatives from the the City of Gdansk, InvestGDA, and Pomeranian Special Economic Zone, to learn more about this exciting region in northern Poland and get familiar with Poland's vibrant economy, get familiar with Poland's vibrant economy, the only one among the EU countries that grew in 2009."
"Panelists will present the opportunities for the Polish - American cooperation, Polish achievements in IT sector, and will share experience from already existing cooperation."
AZO Digital Sp. z.o.o
GZT Telkom Telmor Sp. z.o.o
Fido Intelligence Sp. z.o.o
Master Telecom Inc.
Speednet Sp. z.o.o
The event is hosted at:
Trader Vic's and Dinah's Garden Hotel
4261 El Camino Real, Palo Alto, CA
Beginning at 6:00pm on Tuesday, June 29th, 2010.
The event is co-organized with the Eurocal Group.
Eurocal Group LLC provides comprehensive business services to European technology companies, entrepreneurs and investors establishing a presence in Silicon Valley, California.
I first came to San Francisco/Silicon Valley in 1984 and over the years I've marveled at how behind the times this high tech region of the world truly is when it comes to broadband access and cell phone networks.
You would think that the world's capital of high tech would be well served with great broadband and also great cell phone connectivity. Yet it's not.
The same cell phone black spots are still in the same spots year after year; we have the same lack of broadband access in most areas of the Silicon Valley region.
And even though there are many vocal complainers nothing much changes. For example, because there are now so many iPhone users in this region you get to see a lot of chatter and complaints about AT&T's network. Yet AT&T could avoid all this negative publicity if it simply invested more in its network here, and elsewhere such as New York and LA, where the chattering classes of the digerati Tweet and blog.
A relative small investment in key regions and much of AT&Ts negative publicity would pretty much disappear, even if the problems were shifted to other parts of AT&T's network. The digerati don't really care about the the middle states, for instance, AT&T could pull some money from there and invest it in the places where people have the loudest complaints - here. But it doesn't.
For years people living in Silicon Valley have complained about the lack of broadband, and how they can't get decent cell phone coverage in their homes, or have to stand in the street to get a signal.
This all has to be deliberate - how else to explain ignoring such an influential region. There has to be a systematic policy by the Telcos to make sure that Silicon Valley has some of the worst connectivity in the US and that this poor state of connectivity is maintained year after year.
It's statement by the Telcos that says, "We are in control, you can't disrupt us Silicon Valley, with your fancy shmancy technology, and your startups. Try calling your Congressional representative on your cell phone."
I've often said that the Telcos are modern Luddites, interested in keeping us a decade or three behind the rest of the world because it's profitable. The US Telcos charge some of the highest rates in the world for phone, mobile, and cable TV (France Telecom for example, charges just 30 Euros ($37) for all three, I can't get one service for that price.)
The Telcos hate Silicon Valley because it wouldn't take that much extra investment to make sure it's wired right.
How else can it be explained?
The SDForum Awards marked the launch of my first book: "In My Humble Opinion - Notes From A Silicon Valley Watcher." Here is Susan Lucas-Conwell, CEO of SDForum, (and its heart and soul) introducing my book!
The book was commissioned by FastPencil.com, a fast growing online book publisher in Silicon Valley, which has some great social media collaboration tools.
I'd like to thank Steve Wilson, CEO of FastPencil, and Ms. Lucas-Conwell from SDForum, for their generous support, and especially: Seana Norvell from FastPencil, whose patient persistence made this project a reality.
I'll be publishing extracts from the book next week.
Ram Varadarajan from Arcot Systems introduces Arthur Patterson, one of Silicon Valley's top venture capitalists.
Brent Schlender, a former journalist, was introduced by Bill Gates and Dan'l Lewin at the SDForum Visionary Awards. Mr Schlender spoke about the unique attributes of Silicon Valley pioneers.
Coming up: Arthur C. Patterson - Accel Partners.
Wendy Lea from Get Satisfaction, introduces Chris Shipley, CEO of Guidewire Group. Ms. Shipley is very humble and says she is so short-sighted that it's ironic that she is a Visionary Award winner :)
The introductions at this year's SDForum Awards were so over the top with long lists of incredible virtues that I fully expected Mahatma Ghandi or St. Francis of Assisi to mount the podium and collect an award. I preferred the traditional SDForum approach of a gentle roasting of the award winner.
Here is Reid Hoffman talking about a subject dear to my heart, creating sustainable social enterprises. It's not a "non-profit" approach but what Muhammad Yunus, the Nobel Peace prize winner, would call a "not-for-loss" venture.
Coming up: Arthur C. Patterson - Accel Partners; Chris Shipley, CEO Guidewire Group; Brent Schlender, Executive Director Techonomy.
(In the front row Michael Arrington next to past Visionary Award winner Steve Kirsh.)
I was at the excellent SDForum 2010 Visionary Awards Thursday evening, at Stonebrook Court, the palatial mock-Tudor home of Kelly Porter.
I was very excitied because I was sitting right behind Doug Engelbart, one of Silicon Valley's legends. [Please see: What if Buckminster Fuller were still alive and looking for funding? I'm still in shock at Silicon Valley's blindness regarding Doug Engelbart - SVW]
The evening started with a short address by Bart van Bolhuis, General Consul of Holland, which has established an incubator in Silicon Valley with the SDForum.
Coming up: Reid Hoffman - LinkedIn Co-Founder; Arthur C. Patterson - Accel Partners; Chris Shipley, CEO Guidewire Group; Brent Schlender, Executive Director Techonomy.
Mark Zuckerberg, CEO of Facebook, is just 26 and has done very well but his young age does often show itself in various ways. He's put his foot in his mouth several times over privacy and has had mixed reviews on his performance in high profile interviews.
Here is Chris Pirillo:
Things didn't go well for Mark Zuckerberg when he appeared on the D8 stage two days ago. From all angles, he appeared to be fumbling his way through the answers he was giving. He broke out into a cold sweat and had to remove his trademark hoodie. Bloggers around the globe took stabs at Zuck and his team based on his performance.
Today, I have seen several posts where people are beginning to wonder whether or not Zuckerberg should continue in his current role with the company he founded as a college student. Likely the most prolific comes from Shel Israel.
Does Mr Zuckerberg need "adult supervision?"
Google's founders, Sergey Brin and Larry Page were at about that same age when Google's investors, John Doerr and Michael Moritz decided that they needed adult supervision. Eric Schmidt was brought in as co-CEO in 2001.
Every day brings Facebook closer to its eventual IPO. Its top investors might be wondering if Mr Zuckerberg needs someone to be his Eric Schmidt. Mr Schmidt did a great job in preparing Google for a stellar IPO.
And adult supervision isn't such a bad thing, Messrs Brin and Page still have theirs and they are now 36 years old.
Who would make a good Eric Schmidt to Mark Zuckerberg?
How about Scott McNealy the former head of Sun Microsystems?
I saw him recently at Verisign's celebration of 25 years of making loads of money from its dotcom registry services, in San Francisco's city hall. He's out of work following the Oracle acquisition so he has the time. He seemed a bit bored and listless but a new challenge might perk him up.
Mr McNealy isn't the most tactful person and he never outgrew his fratboy sensibilities -- he'd probably get along really well with Mr Zuckerberg.
He could become the lightning rod for Facebook in a similar way that Mr Schmidt is for Google. And he knows how to run a very large publicly traded company. They would be a great match, imho.
(Mr Schmidt is also from Sun.)
President Dmitry Medvedev on Thursday announced that Russia would build a high-tech hub near Moscow to spur modernization of the economy and reduce its dependence on oil and gas.
The center, designed to develop five priority sectors -- energy, IT, telecommunications, bio-medical and atomic technologies -- will be built near Skolkovo, a new private-sector business school in the Moscow region.
(It would be tempting to call it "Silicon Steppes" if it were in Asiatic Russia...)
I had a very small part to play in this story. In late 2007 I met with a large Russian delegation that had come over to Silicon Valley to learn some of its lessons. Their goal was to use Russian oil money to establish several Silicon Valley-like regions.
They asked me lots of good questions. They made it clear that they did not want to replicate Silicon Valley, they wanted just the best bits.
I told them I would tell them the secret of Silicon Valley's success. They went silent, and leaned in closer to hear what I had to say. "Failure."
(This was before the EPIC Fail craze of recent times...)
Silicon Valley tolerates, and funds, massive amounts of failure. Only about one out of twenty startups succeed.
Probably no other culture allows people to fail as many times as Silicon Valley. Inside every successful Silicon Valley entrepreneur is a failed entrepreneur.
No other culture in the world, (except for maybe Las Vegas), tolerates and celebrates as much failure as Silicon Valley. This is the "best bit" of Silicon Valley, and its also the part that can't be exported.
They nodded. And they made some notes.
I asked them about how they would structure their VC funds, and about the Russian entrepreneurs that they hoped to attract.
One of them, the head of a quasi public/private VC fund, said that they had a problem finding and funding startups. It was an exasperating problem. The Russian entrepreneurs won't tell them about their business ideas.
They don't trust them. "I'm running a VC fund, I'm not going to run off with their business idea!"
- - -
By the way, did you know that Tim Draper, one of our most successful VCs, penned a song called "RiskMaster" to welcome the Russian delegation?
I have no idea what the tune is, obviously something stirring, I can imagine something between Red Army choir and Welsh choir:
Hey! You want to start a business?
Russia seems to show some promise
While weighing all your choices
"Go to Moscow!" you hear voices
Google founder came from Russia
Parametric? - Not from Prussia!
Genesis and PayPal too
SVOD and what is new?
With luck you'll become a
From Soviet biology
Comes really cool technology
From Nukes we get ecology
Ukraine's Orange Revolution
Good for all-freedom solution
And then political pollution
Now it's all in execution
With luck you'll become a
All you need is a faster chip
A million rubles
A couple of engineers
- - -
I recently wrote about Twitter's business model as ultimately enveloping ever greater parts of its developer community. [Twitter Is The Black Hole Of The Twitterverse...]
After all, why leave money on the table? Why not produce the best desktop client, or mobile client? Why let others build lucrative businesses out of your community?
That seemed to be the way things were moving for Twitter after one of its engineers Tweeted:
"If you had some of the nifty site features that we Twitter employees have, you might not want to use a desktop client. (You will soon.)"
Khris Loux, co-founder of JS-Kit Echo, a commenting service, writes that Twitter has a choice of being a tyrant, or a benevolent king.
Twitter has an opportunity to create either value or angst for the developer community. The Twitter platform has led to countless third-party innovations, resulting in a rich set of applications that enhances the core platform. And Twitter has publicly encouraged these developers to join in the "gold rush" of opportunity and build businesses on its platform.
Indeed, the staggering growth of the service and a healthy ecosystem of complimentary applications have made Twitter a sort of benevolent king.
Now the hard part: building a business without becoming a tyrant.
Twitter's recent release of Twitter Lists, for example, undercuts the work of partners like TLists and shows the tightrope that Twitter (indeed all proprietary platforms) must walk to both grow their core platforms while also making sure that developers have an incentive to build on top of those platforms. Twitter's failure to strike that balance could alienate a prime engine of its long-term value and growth.
Well put. But where is that balance?
How does it balance making money and letting others make money too?
How much money is it appropriate to let others make from your platform?
A young company such as Twitter, doesn't have the time to exploit all the business opportunities. That's why third-party developers have moved quickly to generate a plethora of Twitter apps: desktop clients such as Seesmic and Tweetdeck are two top examples.
But why let others profit from your community?
Twitter has investors, its management has a duty to maximize shareholder profits. And with each new round of investors, Twitter has to be able to promise new revenue growth.
Where's that going to come from?
It will come from looking at its developer community and seeing where the low hanging fruit is, where maximum bucks can be made from minimum development costs.
Twitter can decide to buy a business or develop a look-a-like. That's a simple decision: cost to buy the business versus development costs and time-to-market.
This is the way the way the world works, and it has nothing to do with being a tyrant or a benevolent king.
If you have a profitable business you will attract competitors. If you have a successful Twitter apps business, if it's not Twitter coming after you, it will be other developers.
If your business is small enough, it's probably not worth the development costs for Twitter to replicate it.
So the message to developers is: don't make too much money from your Twitter apps otherwise your star will be sucked in and extinguished by the black hole at the center of the Twitterverse.
I'm a fan of the work of SDForum, which organizes conferences and events related to SIlicon Valley innovation. The organization also has a Global Gateways initiative that seeks to build connections with technology centers around the world.
As part of that initiative, SDFroum has teamed up with the Dutch government to host an incubator for Dutch companies. I spoke with Susan Lucas-Conwell, CEO of SDForum.
"This is a first for us and also the Dutch government. We have room for about ten companies in the incubator with each one staying for between 3 and 6 months. The companies will have office space and a services package that gives them access to our events and to service providers."
SDForum runs about 20 events per month and has about 12,000 members in SIlicon Valley.
The first Dutch companies are getting ready, sorting out last minute visa details. Each company is expected to send one or more people. Any type of technology company is qualified including cleantech.
The Dutch government is helping to cover some of the costs. Individual companies will pay between $250 to $450 monthly.
In a statement, Bart van Bolhuis, Consul General of the Netherlands for 13 Western States in the U.S. said: "The opportunity for Dutch companies to expand into the U.S. market is huge, but success will often hinge on understanding local business and legal processes, culture and marketing."
Increasing numbers of companies are traveling to Silicon Valley from abroad to try to learn about Silicon Valley's success, said Ms Lucas-Conwell. Next Monday, SDForum is hosting the Prime Minister of Ireland, Brian Cowen.
Google [GOOG] today said that it had received a notice from the European Commission that it had received complaints from three European companies about its business practices.
Julia Holtz, Senior Competition Counsel at Google, wrote: Google Public Policy Blog: Committed to competing fairly
Foundem - a member of an organisation called ICOMPwhich is funded partly by Microsoft - argues that our algorithms demote their site in our results because they are a vertical search engine and so a direct competitor to Google. ejustice.fr's complaint seems to echo these concerns.
...Regarding Ciao!, they were a long-time AdSense partner of Google's, with whom we always had a good relationship. However, after Microsoft acquired Ciao! in 2008 (renaming it Ciao! from Bing) we started receiving complaints about our standard terms and conditions. They initially took their case to the German competition authority, but it now has been transferred to Brussels.
She added that Google is not "doing anything to choke off competition or hurt our users and partners."
Google is clearly keen to play up the Microsoft connection. This can be viewed as payback by Microsoft for Google's prior anti-trust complaints about Microsoft.
But if Google and Microsoft move to escalate their competitive battles by using using anti-trust complaints against each other, Microsoft has a massive advantage. It is well versed in anti-trust laws here in the US, and also in the European Union, because it has had to defend itself against such complaints for many years.
Microsoft knows the anti-trust legal landscape very well, while Google does not.
Here's a couple of tongue-in cheek posts about how few women there are in Silicon Valley. (Hat tip Jeremiah Owyang)
The lack of single women in the Silicon Valley has a huge effect on what men do in the free time. Going to bars and picking up women is much harder in the Valley than in New York. Rather than going out, men stay in and do other more "nerdy" activities such as work, networking, programming, writing or engineering. These nerdy activities lead to innovation and technological process. The Valley would probably be much less successful if there were more women.
You can read the rest here: A Sexual Explanation for the Success of Silicon Valley
Countless VCs, pundits, founder helpers, xfounder VCs and most anybody else involved in the Valley/SF startup scene will ask you "when are you moving out here? This is where it is happening."
. . . what they don't tell you is that you will have nothing else to occupy your attention and keep you from working 80 hours a week cranking code with your nose in a computer screen. Why, because there are no women to distract you from your tasks.
Companies and their ratio:
Median Age 27 years Gender Male 68% Female 32%
City of San Francisco:
Median Age 32 years Gender Male 62% Female 38%
You can read the rest here: The Real Reason You're Wanted in Silicon Valley/SF « BUZZ in theHUB: Genotrope's Startup Watch
I think it comes down to location, location, location. Meeting women down in Silicon Valley is tough, meeting anyone down there is tough. It's the suburbs. If you are single you have to live in the city. Not because there are more bars, but there are more things to do, more chances to meet anyone.
What's interesting about the statistics regarding San Francisco, is that it doesn't take into account the gay population. I know plenty of women that complain they can't meet any guys. For geeks seeking gals or guys, come up to the city, I'll make some introductions :)
Late last year, Rey Ramsey was appointed head of TechNet, the lobbying group established by John Doerr, which has support from a large number of US tech companies.
I had a chance to speak with Mr Ramsey earlier this week. He is in town to meet with some of his council members, such as Eric Schmidt from Google, and Paul Otellini, head of Intel.
Here are some notes from our conversation.
- Innovation is important to our economy but we need to get the involvement of many different groups and communities.
- I'd like to bring Silicon Valley to Alabama, to Arkansas, to many communities to show the benefits. (I pointed out that Silicon Valley cannot bring benefits to Silicon Valley.) [Silicon Valley Schools Should Be Showcases Not Basket Cases]
- We have to be inclusive. So that we can show the government that innovation is good for the country and show them what this means.
- We will be funding key research that shows the effect of innovation on communities.
- We need partnerships and allies if we are going to win.
- Education, immigration, and broadband are key issues.
- All sectors of industry are affected by technology and innovation.
- I've worked with lots of different groups and communities, I will be looking for common ground, how we can all work together. How we can all win.
Here is an interview with Mr Ramsey by Kara Swicher from AllThingsD:
Today's Silicon Valley Index report was very harsh on the state of education in Silicon Valley.
The New York Times reported:
California must do a better job educating local students, said Stephen Levy, director and senior economist of the Center for Continuing Study of the California Economy, who has served as an adviser to the annual study. "We're not going to be able to live on global talent forever," Mr. Levy said.
However, 5 percent fewer high school graduates are meeting requirements for entrance to state universities, the number of science and engineering degrees has leveled off and state general fund spending on higher education dropped 17 percent last year, according to the report.
It's a disgrace. I've raised this topic before. I've even raised it with John Chambers, the CEO of Cisco Systems, one of our best business leaders. He told me: "Tom, we've tried, and the educational system here can't be fixed."
I don't believe it. And I'm surprised that Mr Chambers would give up so easily. Surely, Silicon Valley is in the business of solving tough problems?
Silicon Valley's schools should be showcases and not basket cases.
How can Silicon Valley say to the world 'we are inventing the future' when its own neighborhoods cannot benefit from all that innovation?
Within a five minute walk of every Silicon Valley school there are enormous resources that could be used to raise educational standards.
Our Silicon Valley CEOs will fly to Washington D.C to complain about the state of US education, yet they won't walk down the street and address a local high school. That would be inspiring. Instead, It's embarrassing.
The annual Silicon Valley Index, produced by Venture Silicon Valley Network and Silicon Valley Community Foundation, says there is no recovery in Silicon Valley economy.
The groups said the valley's long road to recovery from the recession is complicated by state budget gridlock, decreased education funding and competition from other regions. There are "clear warning signs" that the valley has entered "a new phase of uncertainty" in which its standing as a tech center is at risk, the report said.
There are big problems with the education system:
Total state funding for higher education declined 17 percent last year, even as the cost of education continued to rise, the index noted. Yet the valley will be increasingly dependent on homegrown talent for future innovation.
Kim Walesh, chief strategist in San Jose's Office of Economic Development, said the report "really nailed" the valley's increasing need for a healthy educational system. Because of post-9/11 restrictions on immigration and increased opportunities in India and China, the valley can't rely on foreign talent as it has in the past 25 years.
The region, the center of the global technology industry, lost 90,000 jobs between the second quarter of 2008 and the same quarter in 2009. Unemployment is higher than national levels and the worst in the region since 2005, when technology companies were still recovering from the dot-com implosion.
Venture capital funding of new start-ups sank 37 percent between 2008 and 2009. And vacancies in commercial real estate jumped 33 percent.
Other economic indicators are also gloomy, the report found. "We show no evidence that the recovery has arrived," said Russell Hancock, chief executive of Joint Venture.
Bad news indeed. And this is likely not a cyclical issue related to the broader economy. There have been fundamental changes in the ways companies employ people.
Collaborative technologies produced in Silicon Valley now enable Silicon Valley companies to more easily make use of independent contractors rather than employees.
Judy Estrin, former CTO at Cisco:
"Silicon Valley is both a barometer of the rest of the country and a spark for the rest of the country, and if we don't protect that innovation culture here, it's going to be hard to sustain an innovation culture in the country," she said.
It's nearly ten years since the dotcom bubble became a dotbomb, leading to tens of thousands of lost jobs, lost wealth, and lost dreams.
It's been a long, slow recovery. Which is probably good compared to the volatility of the late 1990s. But wages still haven't recovered.
The San Jose Mercury reports on the latest Bureau of Labor Statistics numbers. Silicon Valley tech workers had rough decade
Wages in 11 high-tech industries averaged $120,000 in 2000, when investors' money was raining on the valley and competition for workers was fierce. By 2002, in the depths of the crash, average wages sank to $87,300, but by mid-2009, they had recovered to $105,500.
The Merc always puts together some great graphics:
I had an interesting conversation about iPhone and iPad apps development with Marine Leroux, the CEO of San Francisco based Bamboudesign.
Ms Leroux is a French entrepreneur. She worked on desktop application user interface design in France before founding her company here in 2008 to focus just on mobile applications, or specifically, the user interface design of mobile apps, mostly iPhone apps.
Bamboudesign works with large companies on projects where there are resources to finely craft the user interface design of apps in brand building projects.
Here are some notes from our conversation:
- When I was working in France people would tell me I should also work on mobile apps but the tiny screens of Nokia and other handsets didn't interest me much. When the iPhone was introduced I remember seeing the demos, that was when I realized that this was a great mobile platform. There was a large screen and I realized that this was what I wanted to do: design user interfaces for iPhone apps.
- We're very excited abut the iPad because of the larger screen and that means we can build much richer user experiences.
- There are some issues about running iPhone apps on the iPad. Running an existing app on a larger screen could cause problems because the resolution of the graphics may look pixelated. Lots of iPhone apps will have to be redone to look good on the iPad.
- Another issue is the approval process. We don't know if Apple will require a new approval process for iPad versions of existing apps. If that's the case, that will create a very large bottleneck. There are more than 140,000 iPhone apps currently. That's a good reason to have your iPad app ready sooner, to try and get ahead of the queue in the approval process.
- Clearly, not all iPhone apps can be ported to iPad, such as camera or phone based. But it should appeal to publishers of newspapers and books, etc, because it will be a much richer user experience.
- Unlike many other developers, we pay a lot of attention to the user interface design and we have a rigorous methodology to make sure the user has a great experience.
- We are big fans of the Corona software development kit. This is much better than Apple's iPhone SDK. You can write one-tenth of the code, and it has Flash-like features -- useful because Apple does not support Flash and we're not sure if there will be HTML5 support.
- We started a networking community group last July 2009 called "The iPhone Network Lounge" (www.iphonenetworklounge.com) and host monthly events in San Francisco. The community targets iPhone professionals and invites guest speakers in the iPhone industry to talk about iPhone technology, innovation, marketing, design, monetization models, and more.
These events are designed to share industry knowledge and help the developer and design community to better cater to market needs.
The iPhone Network Lounge has over 210 members and is now the leading iPhone networking group in San Francisco. I will be the guest speaker at the next event, this Thursday, February 4, and will present "Design iPhone Apps with Photoshop". 185 people are registered to attend the talk which will take place at the Adobe office in San Francisco.
I'm a huge fan of Doug Engelbart. When I first met him in 2005 I was astounded that this original thinker was still around -- but shocked that he was unable to secure funding for his work.
Here is a series of articles I wrote about Mr Engelbart.
The San Jose Mercury wrote about a tribute to Mr Engelbart at the Computer History Museum on Saturday:
"If all the leaders of the world -- the presidents of all the countries, the CEOs of all the companies -- were here in this room, you'd be my hero," [Steve] Wozniak, who co-founded Apple Computer and helped create some of the first commercially successful personal computers in the 1970s, told Engelbart. "You'd be the one I would gravitate to."
People still talk about the 1968 lecture that Mr Engelbart gave.
"The ideas were so fresh and resonated so powerfully with people who would go on to shape Silicon Valley that it "was the pivotal moment in computer history," said Bernt Wahl, an industry fellow at the Center for Entrepreneurship & Technology at the University of California-Berkeley.
Logitech has done the decent thing and provides Mr Engelbart with an office but he is still looking for funding for his ideas. And it's shameful that 20 'me-too' startups for each idea get funding but he doesn't have an Apple, or a Google, or a Kleiner Perkins funding his work.
As Google faces increased scrutiny by the Department of Justice for possible antitrust violations it has increased its lobbying efforts.
The Center for Responsive Politics (Opensecrets.org) has collected information on how much corporate America spends to influence the US government. In 2009, more than 15,600 companies spent at least $3.2 billion.
In Silicon Valley, Oracle spent the most: $5.1 million, followed by Google with $4 million. However, in Q4 2009, Google outspent Oracle. Since 2005, Google has increased its spend on lobbyists by nearly 16 times, from $260,000 to $4.03 million in 2009.
It's interesting to note that Oracle has had to fight antirust issues too, because of its acquisitions. In that regard, it has done better than Google. In 2008, Google had to abandon a search advertising agreement with Yahoo because the DOJ said it would file suit to block it.
Oracle has managed to overcome many antitrust investigations of its acquisitions.
Silicon Valley spending...
The San Jose Mercury has put together a great graphic on how much, and who, has spent the most in Washington:
Chris O'Brien at the San Jose Mercury News spoke with Alan Davidson, Head of US Public Policy at Google. [O'Brien: Google joins the titans of Silicon Valley lobbying]
Davidson said Google's efforts are benign, aimed at educating politicians and making sure its users' interests are being heard.
"We started this office with the same philosophy as we did the business," he said. "If you start with the user and focus on that, everything else will follow. If what we're doing is good for our users and the Internet community, then it will be good for us in the long term."
The problem is that the company often seems so certain of its mission that it can't believe anyone would question its motives.
It's the American Way for US companies to use their money to influence politicians and each one believes it is doing it for a common good.
Here are the top five industries lobbying Washington in 2009 from data compiled by Opensecrets.org.
Pharmaceuticals/Health Products $1,788,456,774
Electric Utilities $1,221,825,728
Business Associations $935,616,339
Oil & Gas $901,093,876
Bruce Eric Anderson shared this link from Statesman.com: Austin church mobilizes volunteers, planes and medical supplies en route to Haiti in four days.
In just four days this community mobilized to fly aid to Haiti. Wow.
It's an inspirational story. But they ran into a problem, they ran out of planes and fuel.
That got me thinking... why not use the Silicon Valley corporate jet fleet to help speed relief supplies to Haiti? Even if they all did just one trip, that would be a huge help.
All the big companies have their own corporate fleets, and many individuals own large jets.
Intel has its own internal airline that employees use daily to link its Portland, Oregon campus with Silicon Valley.
Google has lots of large jets. It has a Jumbo Jet - 767-20. Think how much aid you could cram into that?
The New York Times wrote about the Google fleet:
The company had just added a Boeing 757 to a fleet that already included a refurbished Boeing 767 and two Gulfstream V's. All four planes had landing rights at Moffett Field, the NASA operated airfield that is a stone's throw from the Google campus.
And a fighter jet, a Dornier Alpha Jet.
OK, they can leave the fighter jet in the hangar because it's too small, but the rest of the Goggle fleet would be able to carry a massive amount of aid.
Come on Google, 'Do no evil' is great but "Do some good" is so much better.
Who else has jets? Oracle does, or at least Larry Ellison, the founder. But he has fighter jets, which aren't much use.
Hewlett-Packard has a jet, and so does Cisco CEO John Chambers.
There are many individuals in Silicon Valley that own, or lease, or own side businesses that lease jets to their own companies. Why not use them for Haiti aid?
Silicon Valley could rustle up a massive fleet in four days.
Silicon Valley can show how rich it is, how cool it is to be Silicon Valley - the global engine of innovation. (And we've got tons of jets...the fruits of our cool labors... You should join...)
And it shows that the tech industry does make a difference.
That would be a great message. And it would be great for Haiti.
Join this Facebook group if you agree. You don't have to live here to join. Maybe at least one company will notice and volunteer a jet.
If you have any pictures or info on Silicon Valley jets, please share them on the Facebook group. It would be great to know how large the Silicon Valley jet fleet really is.
I will post updates here and also on Twitter(@tomforemski)
UPDATE: Sergey Brin has been to Haiti - He volunteered to join a group bringing aid. You can read his account here.
Oracle president Charles Philips has been embarrassed by his ex-girlfriend who put up billboards of them together.
The New York Post reported:
The spurned squeeze, YaVaughnie Wilkins, went nuclear after she learned that Charles E. Phillips -- president of tech conglomerate Oracle and a member of Obama's Economic Recovery Advisory Board -- reconciled with his wife despite his lengthy affair with Wilkins.
Billboards appeared in San Francisco, New York, and Atlanta.
To some long-time Oracle watchers, and ex-Oracle staff, the fact that Oracle execs have an exuberant enthusiasm for the opposite sex isn't surprising.
Co-founder Larry Ellison set the pace with a bachelor billionaire lifestyle that made him the envy of many men half-his age. Leadership comes from the top.
One ex-Oracler told me, "One of my friends at Oracle was asked by one of the VPs if she would like to be his 'Tuesday girl.'' Apparently he had a vacancy."
Another ex-staff member told me: "Larry would sometimes date employees. You knew when the relationship was over because they would show up with a brand new Mercedes in the parking lot. That was his parting gift, he was a real gentleman. He owns a Mercedes dealership, or at least he used to. I guess he could get them at dealer cost."
I've no idea if the stories are true because I can't verify them. I'm only reporting them. For entertainment purposes only!
"Navigation has become a commodity, it's become the platform for innovative applications," said Christof Hellmis, Director of Navigation at Nokia.
This morning I made my way through torrential rain showers to a Nokia event in San Francisco, announcing that its Ovi Maps service is now free.
In one fell swoop Nokia said it had doubled the size of the world's mobile navigation market -- that's the kind of power Nokia has because of its status as the world's largest mobile phone maker.
Instead of paying $70 a year plus extra for services such as its traffic congestion navigator, all Nokia smartphone users are now able to download its Ovi Maps service for free.
"We intend to monetize the service through advertising and new apps that overlay hyper-local information about events and local businesses," said Christof Hellmis, Director of Navigation at Nokia.
Nokia is leveraging its acquisition of NAVTEQ in a bid to dominate the mobile maps market in a similar way that Google and Yahoo have done with their web browser based map services. Although Ovi Maps can be accessed through a web browser it works best on a Nokia smartphone.
Unlike Google maps, Ovi Maps works without the need for a data connection. The map is downloaded and it uses vector based imaging instead of bit-mapped images to reduce the size of the map data. This saves money on wireless data plans.
Nokia says that there are now a potential 50 million users of Ovi Maps.
Mr Hellmis believes that Ovi Maps will help Nokia sell more phones. "We could offer it on non-Nokia phones but we don't have plans for that yet."
The success of Ovi Maps as a platform for commerce will depend on how many innovative applications are developed. There are several thousand developers enrolled in a private beta of the Ovi Maps API.
Future apps might include versions of a research project in the Bay area between the Nokia Research Center in Silicon Valley, and the University of California at Berkeley. The Mobile Millennium project tracked the GPS locations of 5,000 Nokia phone users as they travelled on local highways and streets over a 12 month period.
This revealed traffic patterns and related data that could reduce traffic congestion by rerouting or delaying travel times.
"You might wait 15 minutes to take a trip because you'll avoid a long wait in traffic," said Mr Hellmis. The data collected from the project has also helped to improve the accuracy of predicting traffic congestion.
He said that the project revealed that there are three types of drivers: one type doesn't change routes no matter how bad the traffic congestion; a second type immediately tries to reroute around bottlenecks; while a third type will only seek an alternate route if there is a major problem.
Interestingly, there is an equal distribution of all three types of drivers.
Future Nokia maps apps might make use of location data collected from large numbers of Nokia phone users.
"The data would be collected anonymously since it's the statistical data of large numbers of Nokia travelers that we are interested in."
Peer-to- peer apps...
"Google has its data centers but we have the largest distributed computer system in the world -- the processing power in Nokia smartphones," said Mr Hellmis.
Peer-to-peer applications could take advantage of the ubiquity of Nokia phones. In the near future, your Nokia phone might be helping to provide computational services to another Nokia phone user nearby -- and vice versa.
CrowdFlower, based in San Francisco, has been in the news today because it raised $5m [CrowdFlower Raises $5 Million to Boost Crowdsourcing - Bits Blog - NYTimes.com]
I met CrowdFlower CEO Lukas Biewald in November and chatted with him about his company and about his iPhone app that lets people employ an African refugee, to do real work for them.
The refugees are given work assignments that can be done over the Internet. It's very mundane work of the kind that you might farm out to Amazon's Mechanical Turk, and the refugee earns points -- a type of virtual currency that can be traded in for food and services.
Here's the rate card:
Right now, CrowdFlower works with Dadaab, in Kenya, which is the world's largest refugee camp.
Maybe this can work in Haiti too? After all, humanitarian aid only goes so far, and runs out at some point. Teach a person to fish, or in this case, sort through databases of addresses looking for matching solar panel customers, and they can put those skills to good use in many other work assignments. It's not the most exciting work but it is work.
CrowdFlower and iPhone users could make a difference in the world. We just need a few computers, and an Internet connection in refugee camps. Maybe the one-laptop-per-child organization can get involved. We might need some guidelines regarding child labor.
There is more info here.
I must admit to mixed feelings with CrowdFlower. On the one hand, I don't like the way it can allow people to use the Internet to exploit others already in desperate situations. A refugee camp is not a leisure center.
On the other hand, it is bringing work to people in a desperate situation and potentially save lives. A refugee camp is not a leisure center.
By Rob Lemos and Erdin Beshimov
Last week, a class of 90 MIT MBA students traveled to Silicon Valley as part of the annual MIT Sloan Entrepreneurship & Innovation Class Trek. Our purpose was to cast a deeper glance at the entrepreneurial ecosystem on the West Coast by engaging entrepreneurs and venture capitalists in the Valley. We met with successful companies such as Genentech and LinkedIn, hot startups such as Aardvark and Yammer, and premier VCs from Sequoia, Kleiner Perkins, Accel, and more.
As co-founders of the MIT Entrepreneurship Review (think Harvard Law Review but from and for MIT; set to launch in February-March), we were keenly interested in entrepreneurial and industry trends, local investment perspective, and the Silicon Valley culture.
Here are our top 5 observations:
5) Be wary of hardware.
VCs in the West are big on capital efficient start-ups. The mentality that start-ups should stay agile and respond quickly to the market, a carryover from the days of the Internet bubble, continues to permeate the atmosphere. Interestingly, we found, at least anecdotally, that cleantech start-ups don't seem to be as hot in the West as here in the East - a) they typically require large infusions of initial investment and b) returns usually take several years. Hardware bets certainly can be very successful, but the feeling in the Valley is that it's important to choose wisely.
In a similar vein, consumer web is generally more preferable to enterprise software. Typically, consumer web startups are able to launch quickly and learn, iterate, and adapt based on user feedback, which is more difficult to do with enterprise software applications. As founder and CEO of Aardvark, Max Ventilla, aptly pointed out, the only real risk in consumer web is product fit.
4) The pathway to success is paved with failure.
Fail often but fail quickly - this is, perhaps, the most reiterated message from the Valley. It appears as though trial-and-error is an evolutionary process in the West where failures are seen as creating opportunities for better innovations to take root. Failure is encouraged and rarely punished. The spirit of the American West! And it's not that this message isn't well known, most of us have heard it multiple times before. It's that hearing this message live being continuously stressed by some very successful people brought it to life that much more.
At the same time, we heard from Doug Leone, Sequoia Capital partner and MIT Sloan alum, that successes and failures should be balanced. If you haven't failed, you haven't tried; but if you've only failed, you don't know how to do things right.
3) Social Media will reshape the world.
It's not just that the icons of Web2.0 such as Facebook and Twitter are all based in Silicon Valley, but that startups out West are responding quicker than anyone to the burgeoning business ecosystem around Facebook and Twitter. There was a big surprise in store for those students who visited Zynga, a rapidly growing (an understatement) social gaming startup, and expected to see a small, plucky, garage-based outfit. We found instead a huge (yet superbly funky) office and seven hundred employees - while the company was founded only two years ago! Absolutely impressive.
2) The people make the culture.
Silicon Valley has a culture characterized as fast-moving, encouraging of failure, and wary of prolonged investments. Add to that list a spirit of experimentation that is rampant and reinforced by the individuals who embody it. The environment is flat and welcoming; a nice change from the entrenched and often bureaucratic culture in the East. It was amazing that on our trip we were able to schedule meetings with some very busy and accomplished people at just a couple of days' notice. This is much less likely to happen in Boston.
Entrepreneurs cannot predict how their businesses are going to go. Business plans are only worth as much as the paper they are written upon. Therefore, an entrepreneur has to pivot upon his/her business plan according to the customer. Be careful not to let your customer rule the roost, but pay special attention to what the customer wants.
After our trip, the top question we are left wondering is this:
Is Silicon Valley going to host the next decade of Malcolm Gladwell's "outliers"? If not, where will they come from...?
At the MIT Entrepreneurship Review, we hope to continuously explore this question and many more by examining the interplay between science, technology, and entrepreneurship. If you want to be on the cutting-edge of thought-leadership in entrepreneurship, follow us on Twitter @MITEReview for updates and news about our upcoming launch.
Rob Lemos and Erdin Beshimov are MIT Sloan MBA students Class of 2011. To see the MIT Entrepreneurship Review's "About Us" video, go to http://entrepreneurship.mit.edu/MITER.
Mike Arrington has hit back at Fred Wilson, New York city's leading VC, over allegations that he ignored facts in a news story about online scams that included Zynga, a top gaming company.
Zynga is one of a just few tech startups that is likely to have a successful IPO in 2010 -- at least that seems to be the consensus among its latest investors who piled into a recent $180 million funding round.
It hosts online games that are promoted on social networks, such as Facebook. However, it has been linked to scammy business practices in a series of articles published on TechCrunch late last year.
VentureBeat has a video of Zynga CEO Mark Pincus publicly admitting "I did every horrible thing in the book just to get revenues."
Mike Arrington criticized Zynga, as well as other companies, for knowingly benefiting from scams that bilked people out of millions of dollars through sham sales of services.
At the time, I wondered about the reaction of Zynga's A-list investors to the scandal, especially since CEO Mark Pincus had failed to stop scam ads appearing:
Zynga Credibility Evaporating - What's The Effect On Its Super Star VC Investors?
Fred Wilson, one of New York's top VCs at Union Square Ventures is also a lead investor in Zynga and although he replied to my post, he wouldn't say anything about the controversy -- until now.
Business Insider found an interesting exchange of comments on Mr Wilson's blog in which he defends Zynga and its CEO and says Mike Arrington did not look at the facts and that quotes were taken out of context.
- "nobody who got involved in that shitstorm took the time to really do the work and look at what Zynga did and did not do. or compare it to Google and everyone else who does way worse on a daily basis. the whole thing totally annoys me. it's not fair."
- "the 'scammy ads' thing is total red herring that everyone got excited about but is almost entirely irrelevant.
You can read more here:
TechCrunch's ScamVille "S---storm" Was "Unfair," Says Zynga Investor
Mike Arrington responded with:
...to deny that there was ever a problem is irresponsible. And to suggest that we didn't take the time to understand the facts is outrageous. In addition to the 22 posts where we spoke to dozens of sources on and off the record, I asked Pincus to go on video with me to tell his side of the story without editing. He declined.
Mr Wilson is probably wishing that he had remained silent. This whole issue of scam ads has now resurfaced and it can drag in more companies than just Zynga.
Mike Arrington has named Facebook as an accomplice to Zynga, and even Fred Wilson has fingered Google, writing, "...Google and everyone else who does way worse [than Zynga] on a daily basis."
It's very bad timing because Zynga is being dressed for a possible IPO later this year. Questions over the source and quality of its revenues will spook potential shareholders.
I think this is an excellent subject and one of Mike Arrington's best stories and I hope that other news organizations take an interest, such as the New York Times, and take the story further. If I had the resources I would launch a series of investigations because if you follow the money, this story touches many large companies.
I'm glad that Fred Wilson has re-opened this story because it could become one of the best of 2010.
- - -
Do we really live in an open web or is it only open until some companies say it's not?
Is the web truly open when companies such as Twitter, Facebook, MySpace, etc, can close the door to their data, or prop it slightly ajar?
With so many social networks and Web 2.0 applications it helps if third-party applications and services can access each other's data streams, especially if it is users wanting to aggregate their own media activities.
This is done through publishing an application programming interface (API) that specifies how other programs access your data.
But what is to be gained by doing this? Well, lots of pats on the back from the influential geekerati on Techmeme, who love open APIs because they look at the world from a user's point of view.
And there are other advantages, especially in the beginning because APIs allow many other services and applications to flourish, which helps spread your own service.
But open APIs can become closed or restricted at anytime.
For example, Friendfeed aggregates people's blog posts, Facebook activity, Youtube videos, Twitter posts, comments, etc. It does that because it has been granted permission to access user data from all those sites.
Steve Gillmor over at TechcrunchIT reports that Twitter has begun restricting its feed to Friendfeed (recently acquired by Facebook). He says Twitter is trying to "kill" Friendfeed.
Competitors will always seek to restrict their competition.
Of course Twitter turned them off. Facebook is Twitter's self-declared number one competitor. When you own the platform and the protocol you have every right to protect your own arse. In fact they have an obligation to their shareholders and investors.
Open APIs are a key foundation of Web 2.0. Yet this whole industry is being built on a very shaky foundation, one that can be closed at any moment.
If the world of open APIs is temporary then the open APIs are useless.
Why would anyone attempt to build a new service or product that relies on open APIs when that access can be restricted or closed at anytime?
Why would it the web become closed?
Because there's money in proprietary systems. Closed systems make money. It's much more difficult to make money in an open industry standards world.
Look at the PC industry with its razor-thin margins on PCs, while Intel and Microsoft make 60% plus margins on their proprietary PC technologies.
Look at Apple Computer and the fortunes it makes through its closed systems.
It's the traditional way money is made in the computer industry.
Open systems are anomalies.
I remember when email was first out, I started using MCI mail. But I also had to have a CompuServe, and an AOL account because there were no gateways between the systems. It took years before you could send an email seamlessly between systems.
It wasn't because the technology wasn't available, it was. It was because you could make more money by not having a gateway.
There are very few open industry standards that arose because companies agreed, and then only after many years of slogging through a tedious standards process.
The Internet is a collection of open industry standards that succeeded only because the US government financed and supported it. And it still took years to become well established.
But we've always had industry de facto standards. That's because one company eventually won out over all the others, and that's what we all began to use, their standard.
Is the X86 microprocessor architecture an open industry standard? No, it's a de facto industry standard developed by Intel. That's why Intel can maintain 60% plus profit margins.
Why should Facebook, Twitter, Yahoo, Microsoft, Salesforce, Google, or any other company with a valuable data stream, promise to give open access, to anyone, at anytime?
It would be opening itself up to competition. It would be giving up a key competitive advantage and a key competitive differentiator.
Where's the monetary value in doing that?
If open APIs can be changed at any time then they are not open, but ajar. This threatens the entire Web 2.0 sector. This is a very serious issue.
Chris Saad writes:
He is right.
But open standards will be years in the making, and in adoption. In the meantime, it looks like we will be heading into a closed web of the like that we haven't seen since before the Internet.
That's going to restrict innovation to a tremendous degree.
UPDATE: Craigslist blocks its data from Yahoo Pipes.
Indian entrepreneurs are everywhere in Silicon Valley. And a new report on the Bay Area Indian community measures the ties between Silicon Valley and India.
Here are some facts from the report, "Global Reach," by the Bay Area Council Economic Institute:
- Indian entrepreneurs helped found many Silicon Valley companies such as Sun Microsystems, Tibco Software, Brocade, Cerent and Hotmail.
- As a measure of its success, the median income in the Bay Area's Indian community is more than $107,000.
- 75% of adults have at least a bachelors degree.
- 70% are in management or professional positions.
- More than 40 Bay Area venture firms have Indian leadership and/or activity in India.
Silicon Valley/Bay Area has very close ties to India:
- Visa has issued more than 30 million debit cards and 32 million credit cards to Indian consumers.
- India hosts Symantec's largest engineering si.te outside the US, and works on more than 80% of its products.
- India accounts for one third of Adobe's global engineering workforce.
- Hewlett Packard is the largest player in India's IT market.
- Levi Strauss has 450 exclusive outlets in 80 Indian cities.
- Cisco second global headquarters is in Bangalore.
The report states: "The combination of Bay Area innovation and capital with India's engineering talent, it finds, can be a formidable one in global markets."
The report says that there are issues such as immigration reform:
"An Indian with an advanced degree can wait as long as five years before his or her application for a green card (permanent residence) is even considered. This makes no sense when opportunities in India are beckoning and other countries are aggressively competing for the same talent."
Please see: BayAreaEconomy.org
I was looking at a survey of small businesses and whether they would cancel their healthcare plans if public healthcare were available.
VerticalResponse, which offers surveys and email marketing services, polled 831 small US businesses about the effect of public healthcare on their business.
Theron Kabrich the CEO of The San Francisco Art Exchange, was one of the small businesses surveyed. He made an interesting comment and it is one that is very applicable to Silicon Valley.
"A public offering of healthcare unburdens small businesses and entrepreneurs alike, as it allows them to focus on core parts of their business such as innovations and new products. It also removes an unfair competitive advantage for small businesses when trying to attract the best employees, and levels the playing field."
Will Silicon Valley startups cut their current healthcare plans? They might.
High healthcare costs are a large burden for Silicon Valley startups. The availability of public healthcare should lead to lower costs for startup companies and make more capital available for investment in development.
VCs might demand a provision that their startups not offer healthcare plans. Would this harm recruitment?
Probably not because startups have fairly young staff and the attraction is not getting a safe job with benefits, but a chance to build a valuable business.
It'll be interesting to see how the availability of public healthcare affects Silicon Valley businesses.
- - -
The VerticalResponse survey found that one quarter wouldn't cancel their healthcare policies.
There were considerable disparities between different sized businesses. Of those with less than 10 employees, 72% offered no healthcare compared with 24% of businesses with 11 to 100 staff that offered no healthcare.
Here are some more findings:
- 40.9% of businesses with 11-100 employees wouldn't cancel their employer-provided coverage if there was a public offering and the largest portion of businesses with 1-10 employees also wouldn't.
- Of all small businesses an average of 16% of businesses would cancel their employer-provided coverage if there was a public offering.
- 71.8% of businesses with 1-10 employees do not offer healthcare to employees--versus the 69.4% of businesses with 11-100 employees who do offer healthcare to employees.
Electronic Arts, the Silicon Valley based video game company, yesterday said it plans to cut about 1500 workers or 17% of its total staff.
UPDATE: Adobe is cutting 680 jobs: Adobe To Cut 9 Percent Of Workforce
The job losses will add to already high levels of unemployment in the region. And they come at a very bad time - right before the holiday season. This will spread anxiety among all Silicon Valley workers, even at healthy firms -- EA and Adobe aren't in trouble.
Tamara Carleton, writing at New Geography reports "A slow job recovery in Silicon Valley."
Over the last year, California lost 732,700 jobs, the worst hit of all U.S. states, according to the U.S. Bureau of Labor Statistics.
The job situation in Silicon Valley has not rebounded as quickly as hoped. The area's jobless rate is nearly double what it was a year ago, according to the state's Employment Development Department. Nearly three times as many people are actively looking for work, versus during the dot-com bust, when the jobless rate peaked at 9.2 percent in early 2003. The recent number of unemployed is 110,900, representing an 87 percent increase from the prior year, according to the EDD.
The technology industry has continued to take a beating in the past six months. Cisco cut 700 local jobs in July, and Lockheed Martin slashed nearly 500 local jobs in August, based on state filings. Most recently in October, Sun Microsystems Inc. announced that it would eliminate up to 3,000 jobs across all sites, or 10 percent of its worldwide work force through the new year, due to the takeover by Oracle Corp.
While there are local business leaders such as Eric Schmidt, CEO of Google saying that the economy is improving, it might not mean much for Silicon Valley.
Tamara Carleton points out:
Job growth in the Valley has not been creating net jobs for over a decade...overall employment has actually dropped by 6 percent over the last 12 years, according to data from the U.S. Bureau of Labor Statistics.
These are very discouraging statistics especially since the past 12 years includes the boom years of the dotcom expansion.
The sobering fact is that a tech led recovery will likely be a slow jobs recovery. If you add into the mix other trends that are impacting the workforce such as greater outsourcing; more use of independent contractors; and greater productivity from investments in new business processes, a jobs recovery could become even slower.
The lack of IPOs is harming the cycle of innovation in Silicon Valley but if you look beyond our region, it's effect is much larger.
Grant Thornton, a large accounting firm, has published a study that shows the connection between IPOs and the health of the US economy.
And it shows how new listings in Asia are helping to shift wealth and competitiveness outside of the US.
Here are some of the findings:
The scale of the decline in IPOs:
- Just 12 companies went public in the US in the first half of 2009 - 4 were non-US.
- 1997 was a peak year for IPOs, since then it has declined 39% (55% decline if adjusted for GDP growth.)
- Asian growth in new listings is far higher than its GDP growth.
- Hong Kong new listings have doubled since 1997, tripled since 1991.
The US is losing the number of listed companies:
- Just to maintain US listings at the current level would require 360 new listings a year - a level not reached since 2000. There were only 54 in 2008 and an average of 166 a year since 2001.
- The US would require 520 new listings a year to keep pace with GDP growth of 3%.
The study claims the US has lost 22 million jobs because of the lack of new listings.
Pascal Levensohn, Board Member of the National Venture Capital Association (NVCA):
"The inability for emerging growth companies to access U.S. public equity capital by completing IPOs below $50 million inhibits job creation and hurts American entrepreneurs more than any other group. Starved for long-term risk capital in the U.S., the next generation of innovative private enterprises will continue to move to non-U.S. emerging innovation hotspots, where startups are nurtured through attractive capital incentives, if we can't repair the bridge into public markets."
The study offers a long list of possible solutions. Here are some:
- Create an alternative public market segment
A public market solution that provides an economic model that supports the "value components" (research, sales and capital commitment) in the marketplace. It requires a parallel market segment that leverages a fixed spread and commission structure.
- Make enhancements to the private market
A private market solution that enables the creation of a qualified investor marketplace - consisting of both institutional investors and large accredited investors.
- Free companies to market their securities more broadly
Eliminate SEC or statutory restrictions on "general solicitation" or "general advertising," provided the ultimate purchasers are "qualified" investors. Permit companies and analysts to have media discussions of company performance and news...allow investment companies and ERISA accounts to invest a larger portion of their assets in unregistered securities.
- Overhaul verification of QIBs and accredited investors
Rather than requiring the company or private placement agent to verify, shift the burden to the investor to self-qualify (subject to liability for misstatements) for the new private placement market.
- Exempt companies from SEC registration
Permit holding of companies' shares by an unlimited number of qualified shareholders (eliminating the 500-shareholder and the 100-accredited-investor limitations).
- Self-regulate trading spreads
To attract capital and promote liquidity, this new market must create and preserve economic incentive for its constituents. Allow the market to set minimum quoted spreads and commissions.
- Exempt market participants from holding period
Exempt new market participants from holding period restrictions, and remove the obstacle requiring market participants to purchase unregistered securities with "investment intent." The "investment intent" requirement hinders the development of private markets, and is unclear and at odds with the very notion of what a market participant is supposed to do.
- Encourage centralized information, control and custody systems Companies should seek out marketplaces that provide systems to support the management and delivery of appropriate disclosure information, and that facilitate the tracking and delivery of shares.
-Research permitted to work with banking
As a market for "qualified investors," research analysts would be permitted to work with investment banking and be compensated on investment banking business, rather than be barred by FINRA Rule 2711 and the Global Research Settlement.
There is no doubt that the lack of IPOs is harming the economy. However, this study appears to be an excuse to drive large changes in regulations governing the stock market and investments.
This will be difficult to do given the current lack of trust in Wall Street and its enthusiasm to exploit any arbitrage opportunity no matter the cost to society.
There would be plenty of new loopholes for Wall Street to discover with such a large number of new rules.
Also, there is nothing said about changing Sarbanes-Oxley. This is a huge burden on young companies and it is one of the largest obstacles to an IPO.
It would be far better to leave the stock market and investor regulations in place and to focus on reforming Sarbanes-Oxley.
This would be a much faster strategy in opening the door to new IPOs than persuading Congress to pass the many changes in stock market regulations that the study's sponsors have requested. There's little chance of that happening.
You can see the whole study here.
Guest Post by Sue Lebeck, Program Director of the "Silicon Valley Letters to Washington" initiative from the Silicon Valley Innovation Society.
We are facing an interesting time here in Silicon Valley, and in the entrepreneurial community at large. Just as innovation has been re-confirmed as a critical element of our national success, our once potent "innovation engine" is sputtering and may soon stall.
Our nation, and the world at large, faces an unprecedented array of challenges today. These challenges come in all flavors -- economic, social and environmental. New solutions to old problems are needed now, more than ever. As President Obama recently declared and we believe, we must "innovate our way out of this recession."
Moreover, we must innovate our way out of the constraints of our outmoded ways - whether in the fields of healthcare, finance, transportation, construction, manufacturing, energy, water, or the information systems that control them - the systems which drive our economy need to evolve. But first, the innovation-related structures which drive or impede that process need themselves to evolve.
"Innovation engine" is a potent metaphor for our innovation-driving structures. It reminds us of what is needed, and it underscores what is often missing in our innovation environment today. An engine needs fuel and air to run. The "fuel", if you will, is money: first, "seed" capital for an entrepreneur to investigate a solution; then "venture" capital to launch and grow a company; and finally a "liquidity event", such as an Initial Public Offering (IPO) of stock or an acquisition by another company, that frees the entrepreneur to repeat the cycle. All three types of funding have contracted significantly. Early-stage companies, more than ever, are choking. Many others are DOA.
Equally important to the operation of our engine is "air", the environment in which innovation operates. Laws and regulations, including tax policy, accounting rules and intellectual property rights are critical to support an innovation-friendly environment. Government policies have not kept up with the realities of innovating in a global economy; often they actively, if unintentionally, work against our ability to compete.
The Silicon Valley Innovation Leaders group, an informal collaborative convened through the Silicon Valley Innovation Institute (SVII)in late Spring of 2009, decided to launch an initiative to address the critical issues faced by the entrepreneurial innovation community. We've dubbed this initiative "Silicon Valley Letters to Washington".
This all-volunteer initiative was executed this autumn. Three working sessions over the space of two months produced a collaboratively written letter, viewable in detail at www.svletterstowashington.org. Its authors and contributors seek to share with our policy leaders the financial and environmental reality currently experienced by Silicon Valley entrepreneurs and, we imagine, entrepreneurs everywhere. We are outreaching to those in Washington who direct innovation policy, with a focus on the offices which manage Science and Technology and related policy.
Many additional issues are on our minds, but we wish to focus on these structural fundamentals. Our goal is not to speak just for ourselves, nor for any particular field of innovation, but for entrepreneurial innovators everywhere. Our hope: to engage in a dialogue that will inform and influence future innovation-related policy. For details on this letter, its recommendations, its authors and its audience, go to www.svletterstowashington.org. We hope you will review our point of view. Then, if you are an advocate of innovative entrepreneurship, we hope you will add your name to our cause.
Because, at the risk of being cliché, an innovation engine is a terrible thing to waste.
I recently blogged about an article focused on Silicon Valley's workforce and how the author, Tamara Carleton, believes that Boomers, Gen Xers, and Millennials can form a potent team.
In the innovation lifecycle, if Boomers serve as advisors and Gen Xers as the entrepreneurs, then the Millennials could provide potent networkers.
A reader writes:
As a member of the Boomer Generation and a longtime Silicon Valley worker, I can only hope that it happens that Boomers become trusted and knowledgeable advisers to Gen X'ers while Millennials do the work. My suspicion is that many, if not the majority, of those laid off in the last 2 years here in SV are actually Boomers who became "too expensive" for the tech companies here and thus were sacrificed.
I am one of them and I have been to many interviews but not offered jobs that I am very well-qualified to do. I guarantee you that age discrimination is running rampant in this so-called Valley of Heart's Delight.
Only when this ceases will companies be available to consider the vast storehouse of knowledge that Boomers could provide.
Is he right? I certainly know many people in that same situation, people with masses of experience and talent yet they are in their 40s and 50s and unable to find work.
Is there discrimination against older people? If Silicon Valley cannot tap into all of its resources it won't stand a chance in the global marketplace.
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Plato said necessity is the mother of invention. Robert Goldman, a successful software engineer, didn't need to know anything about Plato, he knew that he needed to help his sister, diagnosed with terminal cancer.
In the process, he invented a breakthrough medical device that has the potential of saving the lives of tens of thousands of people. It's an inspirational story that movies are made from and Oscars awarded.
But that's far from Mr Goldman's mind. He's just happy that after more than 7 years, the FDA has given approval for a medical device that has the potential to shrink or kill tumors in people diagnosed with terminal cancer.
But let's start at the beginning. Let's start with Mr Goldman, who was happily retired.
Mr Goldman had made a fortune through his company GetMedia, which had developed a number of breakthrough technologies in the 1990s, that made possible things like the digital download. He sold his intellectual property to Nathan Myhrvold, the former Microsoft CTO, founder of Intellectual Ventures, an IP licensing company.
He now had plenty of money and no longer needed to work. But early retirement was marred by news that his sister had been diagnosed with cancer and the prognosis was terminal.
Here are some notes from our conversation:
- I wanted to help my sister as much as I could. I went to Medline, where there are hundreds of thousands of documents describing clinical studies, to see what I could find.
- There are billions of dollars spent every year on clinical studies. I was surprised to discover that there were sometimes clinical studies of treatments for which there were no clinical applications. The trials would show successful results but no clinical applications.
- I found a 1987 Italian funded set of clinical studies that showed successful treatment of tumors by the application of chemotherapy directly into the tumors. But I could find nothing since then.
- Tumors develop a feeder vessel that provides them with blood. I came up with an idea that if you could make a catheter small enough, you could thread it through a patient's blood vessels and directly into the tumor's feeder. You would then be able to direct chemotherapy straight into the tumor.
- I decided to design and make the device. I founded Vascular Designs in 2001.
- Medical device startup companies generally take a lot of money, around $25 million is a fairly typical first round capital requirement.
- I had absolutely no idea what I was doing, or what it would take. But I wanted to make sure I wasn't completely delusional. I thought I would start at Stanford and met with Dr. Michael Dake, professor of cardiothoracic surgery at Stanford University School of Medicine. He told that me if I could produce the device it might very well work.
- But there were many people who told me it couldn't be done, or that the materials wouldn't work, or that I would never get it through the FDA process. I would ask them if this is because they had done the research? They said no, they hadn't, but it wouldn't work anyway.
- I ignored their advice. I was determined to go ahead with it because I wanted to help my sister as much as possible, even though I had absolutely no idea what I was doing.
- I managed to outsource a lot of the work. I found a company in Santa Cruz, through the Internet, that could help me with the design.
- The first catheter we produced we were told it was too big. There was no easy way to scale it down. We had to start again.
- It took us two years to do the engineering. And it has taken the FDA seven years and two months to approve the product for sale. We were able to shorten the FDA process a little by saying that it was similar to other devices that had already been approved.
-Because the FDA is so strict it will be very easy to get approval in other countries.
- We are now just 2 months away from using it in cancer treatments.
- It cost just $1.8 million to develop. I did raise some funding only because some good people I knew wanted to be a part of this and this was how they could participate. They will make a lot of money from this, which is good because they can put it towards the development of other life saving products.
- I'm hoping that if people read about this device they will bring it to the attention of their doctors despite some medical practitioners not believing that it can be done. When you have terminal cancer and you have exhausted all other treatments why wouldn't you want to try this?
- There was no prior intellectual property around this device, we own the IP. The market for this runs into the billions of dollars.
- I'm not interested in the money, I already have enough money. I just want to help people. We want to make sure that this is available to people who can't afford the treatment. Why should this be only for the rich?
- It's too late for my sister. She died and suffered terribly. I can't wait to meet the first person and their family that will benefit from this. I've found my agenda in life and it's about helping people.
- - -
Mr Goldman showed me the catheter, a long very thin teal colored tube that is attached to three plungers. When Inserted into a blood vessel (a clear plastic tube for the demo) the plungers inflate two balloons that produce a tight fit. This blocks blood flow to the tumor. A separate plunger can then deliver chemotherapy directly into the tumor. The device can be used to treat any solid tumor, breast cancer, brain cancer, pancreatic, etc.
Here is a video of how it works:
Here is today's announcement of FDA approval:
Potential Breakthrough Cancer Treatment Now Available from Vascular Designs - The Company Announces FDA 510(k) Marketing Clearance for IsoFlow™ Infusion Catheter, Making Possible the Direct Delivery of Chemotherapy to Cancerous Tumors
It's always interesting to meet with outsiders and to hear their view of Silicon Valley, just as it is to leave the valley and notice that there's a whole world outside of our echo chamber (that doesn't care about our little world and its spats and spittle.)
Last week I was on a panel with Carolyn Pritchard, from GigaOm, speaking about the future of journalism. As always, it's the people that turn up to such events that interest me the most.
One of the people I met was Jose A. Del Moral, A Spanish entrepreneur. He was visiting for a few weeks and popping into various events around Silicon Valley. He said he was shocked about how positive everyone is in Silicon Valley.
Mr Del Moral wrote a blog post: There is a lot of bullshit in Silicon Valley.
Everybody is so nice! You have to be really careful, as people are not so honest with how they really feel. There is a lot of bullshit in Silicon Valley! If you come here with white shoes, they will get brown so fast...
Jim Clark, co-founder of Silicon Graphics and Netscape was one of four winners of the SDForum 2009 Visionary Awards. He spoke about his earlier life and how he was thrown out of school, then trying to get out of Texas, then trying to get out of the navy. It seems his instincts for an exit strategy have served him well as a Silicon Valley entrepreneur...
He also spoke about the importance of Stanford university and its encouragement of entrepreneurs. Other universities look down upon business people.
Judy Estrin, one of Silicon Valley's top entrepreneurs, continues to sound warnings that innovation is in danger because of fundamental structural problems.
Ms Estrin again voiced her concerns during her speech at the SDForum Visionary Awards 2009. She was one of four recepients of the annual awards.
She said that Silicon Valley has been living off the innovative work that has been created over the past 30 years but that there needs to be new work done to support future startups.
"What I've been struck by, and concerned by, is that although everybody seems to understand that we have significant structural problems, few are willing to acknowledge their role in the solution. Each group tends to point to someone else that needs to change. The VCs need to take more risk, Wall Street needs to be less short-term focused, government is too involved, government is not involved enough... This is natural because change is hard. But isn't innovation and change what this valley is all about?"
She said that there is a need for "sustainable innovation" so that our future generations, our children, can experience a quality of life at least as good as we have had.
Here is her speech:http://www.youtube.com/watch?v=MmNOEZM6kpk
The SDForum Visionary Awards are my favorite event of the year because there are tons of great stories and contacts to make. It was good to see BusinessWeek's bureau chief Rob Hof, and also Rebecca Buckman from Forbes, but apart from them, there was very little media there -- which was great for me because it gives me more chance to get exclusive stories, which I did. I'll be publishing more stories and video over the next few days.
Here is a taste of what's to come and also some notes from the evening:
[SDForum visionary awards are later this week. Here is a series SVW is plublishing this week on Silicon Valley stories from previous SDForum awards events.]
Scott McNealy, Sun's CEO, introduced Carol Bartz, CEO of Autodesk.
Mr McNealy was in classic form, dressed in his signature jeans, white shirt ,and navy blue blazer, and he shared a couple of anecdotes about Ms. Bartz, who used to work at Sun.
He recalls that Ms Bartz stomped into his office and resigned because of a generous job offer from a rival firm. Mr McNealy acted swiftly: He walked down the corridor and into the office of his VP of Marketing and said "You're fired."
He walked back over to Ms Bartz and said "You can't resign, you're VP of Marketing." What happened to Lloyd? Ms Bartz asked.
"Lloyd is no longer with us," deadpanned Mr McNealy. Lots of laughter.
The event is held in Woodside, in the back yard of Heidi Rozen, herself an accomplished entrepreneur. It's one of my favorite Silicon Valley events because it is relaxed and full of the many personalities, and stories, that have made this region into a global powerhouse of innovation.
To celebrate the Visionary Awards I'll be publishing some videos and stories from past events.
Here is Kara Swisher (All Things D) from last year, introducing her colleague Walt Mossberg, telling stories about Walt's enjoyment of drugs, and that as a journalist she would never let the facts stand in the way of a good story. All tongue-in-cheek of course...
Check back later today and this week for more video and Silicon Valley stories from past SDForum awards events.
Silicon Valley's startup world operates in its own future bubble of possible exits but it does depend on today's financial markets for drawing investments. Over the six months there has been a lot of concern about inflation but inflation can be good because it encourages investments today. Today's assets are worth more tomorrow.
With deflation, it is wiser to hold-off investments because tomorrow brings a lower price.
The massive injection of money into economies by the US government, and other governments, has brought the fear of hyper-inflation. But it now looks like the problem is hyper-deflation.
The Chinese government is blocking access to various services and web sites such as Twitter, Flickr, Bing because of the anniversary of the Tiananmen Square protests. This peaceful demonstration, which would have been allowed by our democracies, turned into a massacre as the Chinese government ordered the army to crush it.
The most powerful image of that time, if not the century, is the lone protestor, calmly walking out in front of a column of tanks and stopping them with a shopping bag in each hand. The column tried to go around him, each time he moved to step in front.
Please take 1.12 minutes to view this:
The phenomenal courage of this unknown protestor is incredible. Contrast it to the gutless behavior of Silicon Valley companies towards the Chinese government.
The BBC's Maggie Shiels finds one source: Tom Siebel, the retired founder of Siebel Systems, to come up with a long story and an eye catching headline: Silicon Valley crown up for grabs
"I think Silicon Valley has been toppled from its pedestal," he told BBC News. "I think information technology is much less important in the global picture today than it was even 10-20 years ago."
We've heard this one many times before, that innovation can now be done anywhere, and that Silicon Valley is going to be far less important. It's an old argument that has been used each time Silicon Valley goes through a downturn.
Yet each time Silicon Valley goes through a bust cycle it comes back stronger than before. I've seen several boom and bust cycles since 1984, such as the PC bubble bust; the CD-ROM multimedia bust, the dotcom bust, and the four-year bust cycles of the entire chip industry, plus periodic busts in IT, data storage, and biotech. Each time Silicon Valley rebuilds and becomes larger and more important.
Silicon Valley's success as a global engine of innovation takes nothing away from growth in other regional centers of innovation. It is not a win/lose equation, all centers can grow -- yet journalists continue to poke for holes in Silicon Valley's prospects.
Silicon Valley has its challenges but there's no place that comes close to rivaling this region. I'm constantly hearing of companies moving their HQs to Silicon Valley from all over the world. For example, at a recent SF New Tech event I met the CEO of French firm blueKiwi Software, Carlos Diaz. He was in the middle of moving himself and family to Silicon Valley.
Here is an excellent view on Silicon Valley from Bill Coleman, a Silicon Valley veteran. He recently sold BEA Systems, which he co-founded, to Oracle for $8.5 billion. We met earlier this year, here is part of our conversation:
"I have a basic theory that Silicon Valley reinvents itself by inventing a new platform layer every 10 years." Bill Coleman says that Silicon Valley was lucky to develop information technology (IT), a technology that is now becoming cloud computing, a new platform. Information technology is also vital in driving the development of two additional disruptive technologies: nanotech and biotech. And fortunately, Silicon Valley leads in all three industries.
Silicon Valley also leads in green technology, a large and growing market. But green technology is different -- it isn't a disruptive technology. He says that a disruptive technology has to have a characteristic of the Peter Drucker rule in that it provides ten times the value of what it's displacing.
Cloud computing doesn't need government incentives because it is a disruptive technology, says Mr Coleman, especially the next stage, beyond what he terms "Cloud 1.0." As the cloud computing platform becomes more sophisticated, he predicts that there will be an acceleration in the use of the cloud driven by a "quadruple conversion." Video, audio, and IT data all become IP based, and productivity applications become integrated with social networks.
About 18 months ago I met with a large Russian delegation on a trip to Silicon Valley to learn some of its lessons. They have plans to establish multi-billion VC funds around several innovation centers across Russia.
They asked lots of questions about how things worked around here but they told me that they didn't want to copy Silicon Valley.
"We don't want to build a clone of Silicon Valley, we know that wouldn't work. But we believe we can learn how to avoid some of Silicon Valley's problems and eliminate its bottlenecks," said Yuri Ammosov, a senior policy officer in the Russian Ministry of Economic Development and Trade.
They also didn't want any regulations such as Sarbanes-Oxely, which they clearly saw as a very heavy load on startups.
I told them I would tell them Silicon Valley's biggest secret. I paused for dramatic effect. As if on a cue, they all leaned in a little closer.
I I told them that Silicon Valley's biggest secret is: "Failure. Silicon Valley tolerates massive amounts of failure." Less than one in ten startups succeeds.
I felt at ease sharing this vital secret because it's something that can't be stolen. Who would want to steal the idea of tolerating massive amounts of failure?!
Yet it is this tolerance of failure is what allows Silicon Valley entrepreneurs a second and seventh chance to fail again and again and eventually succeed. In other cultures, failure is often punished, you rarely get another chance. Here, failure is an important part of our culture of entrepreneurism.
Innovation centers can be built anywhere there are good universities; and small amounts of seed investment can startup a lot of companies these days because capital costs are very low. But a culture of entrepreneurism is something that can't be bought -- and it's not easily developed or transplanted.
For example, the Russian delegates said that they have a big problem: Russian startups won't disclose their business ideas because they don't trust the Russian VC funds and think the officials will run off with their ideas.
The Russians have a lot of work to do in building up their local culture of entrepreneurism. And that's also true everyplace else that's not Silicon Valley.
Silicon Valley's crown is not up for grabs. No one comes close.
- - -
The panel is part of a pilot program called "Fridays with Foremski" that follows me around Silicon Valley as I speak with local entrepreneurs, thought leaders, report on conferences, etc. Silicon Valley is an unique place and we want to produce a professional program that captures some of the essence of this amazing community.
We'd like to attract a couple of large underwriters for the series, we're talking with one large company, if you know of another, let me know. That way you might see a second episode . . . coming to a Friday near you :)
Please see a Silicon Valley sampler:
Sramana Mitra sent me an email:
As our industry works to reinvent itself, here are some thoughts on the Future of Innovation. I am fully aware of the issues around the need to conserve cash and limiting capital calls for the venture business for the moment.
However, there are also other issues that need to be addressed. Companies that ought to be funded are struggling. Where are the big ideas?
As always, I am happy to you hear your thoughts.
Here is an excerpt from her latest Forbes column, which less about the Future of Innovation, and more about describing the current state of innovation: barriers.
. . .While scientists are experiencing strong support, the entrepreneurs trying to work at the cusp of different industries seem to still be having a difficult time. It is worth exploring why.
. . .Yes, you do find some technologists who grasp the cusp. But then you also need business people and investors to play their parts for an innovation to successfully make it to the market.
But many more entrepreneurs and venture capitalists get excited about Web 2.0 than about the cusp of design and manufacturing of semiconductors. Why? Because these two fields are extremely complex, requiring a level of technical depth, intellectual horsepower, business savvy and appetite for risk that is rare in today's technology industry. Spreadsheet jockeying by some MBAs with little real instinct for innovation is not enough.
I totally agree.
Please read the entire column here: Barriers To Innovation - Forbes.com
This is a great time to invest in innovation:
- The next big thing always comes out of downturns.
- It is easier to find great people.
- Salaries are lower.
- Office space and other resources are more plentiful and less expensive.
- Capital startup costs are lower.
- IT costs are lower thanks to cloud computing and web services.
- Programming languages and development tools of various kinds are simpler and more powerful.
- Marketing costs are lower (if done right).
- Work can be virtualized across time zones and regions.
- Most importantly: As bad as this recession will get, the upturn that follows will be even larger.
The next upturn will be led by what I call New Rules Enterprises, these are organizations that are highly efficient and have made the most of the economies of Internet 2.0. More on this in future posts.
The global economic crisis doesn't seem to be showing any rays of light, which is quite worrying. But at least there is some good green news from the economic slowdown:
- Factories around the world have scaled back production and are not polluting air and groundwater as much as before.
- We have fewer trucks and ships polluting the atmosphere.
- We have a much smaller carbon footprint worldwide because there is far less use of fossil fuels in manufacture and transportation.
- We are buying fewer replacements for goods we own and making them last longer, lightening the load on landfills.
- We are using less of the earth's limited resources in manufacturing goods and providing various services.
- Fewer of us are traveling to jobs which reduces carbon footprint and pollution.
- Less pollution improves people's health and saves lives.
- More importantly: We are more likely to develop and adopt technologies that are more cost efficient, which means saving resources and energy. And this is where Silicon Valley's companies have a key role, developing disruptive technologies that replace the more wasteful processes that are currently used in many industries. It will lead to the creation of new rules enterprises--businesses that are greener and more profitable.
- - -
Tough times call for tough measures and we can see that in the increasing numbers of layoffs among large tech companies.
It must be particularly tough on staff being cut from companies with large amounts of cash in the bank. They worked hard to help their companies create large cash reserves during the good times but they aren't able to benefit from those nest eggs when times turn bad. Too bad.
Here is a look at the cash (and debt) of some top tech companies:
Microsoft (MSFT) $19.71 billion ($1.98 billion debt)
Google (GOOG) $14.41 billion (no debt)
Intel (INTC) $11.84 billion ($1.99 billion debt)
eBay (EBAY) $3.64 billion (no debt)
Apple (AAPL) $24.49 billion (no debt)
Here is an excerpt from an editorial by John Dalziel at Flash Magazine on Adobe's recent 600 job cuts:
. . . It is interesting to see a company that makes almost a billion quarterly, thinking that a possible loss in revenue of 2-4% is a great reason to fire more than 8% of their staff?
. . . Let's hope that the Adobe executives remember that they're primarily in the knowledge business. It's really their employees that makes a difference, not layoffs that are staged to impress shareholders. After all - a company that earns $130.000 per employee per quarter (!) shouldn't really be considered so unprofitable it has to fire people? In our books, that's a decent profit so the layoffs seems more like a play for the shareholders than actually making a difference. Eventually this will hurt Adobe's innovation as employees feel it's an unsafe place to work.
The same argument could be easily applied to almost any large tech company.
Sarah Lacy over at Business Week writes:
Big companies could lose valuable employees to rival startups if they abandon their traditional lure: job security
In December, IAC Interactive (IACI) CEO Barry Diller said the unthinkable—at least for a corporate executive amid a recession. "The idea of a company that's earning money…to have cutbacks just so they can earn another $12 million or $20 million or $40 million in a year when no one's counting is really a horrible act when you think about it on every level," Diller told the crowd at the Reuters Media Summit. In other words, if you're making money, you shouldn't be laying off huge numbers of employees to please an investor base that's unlikely to be appeased in any case.
President Barack Obama has promised to appoint a Chief Technology Officer for the US. I've heard some great suggestions from readers and I'm sure they would do a great job. My top choice would be Judy Estrin because of these qualities:
- she is a successful serial Silicon Valley entrepreneur.
- she is a former CTO of Cisco Systems.
- she has studied the subject of innovation in great detail with the recent publication of her book: Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy
- she is one our top thought leaders.
- she sits on the boards of some of the world's largest companies: The Walt Disney Company, Federal Express, and is a former director at Sun Microsystems.
Here is my interview with Ms Estrin from last year in which we talk about her recently published book:
- - -
I think President Obama's CTO should be from Silicon Valley because we have some very capable people here, but more importantly, it would serve as a fantastic recognition that we have a national treasure here: an incredible engine of innovation that continues to produce in good times and not.
In fact, Silicon Valley produces its best work during its down times. It is during its periodic recessions that "next big thing" always gets developed. So this is a great time for Silicon Valley and it would be great if President Obama chose someone that comes from this area and understands the dynamics of innovation, imho.
- - -
President Barack Obama's administration comes to power with a large number of expectations from many sectors of society and industries. It is a testament to his victory that he has been able to become a beacon of change to so many.
One key industry expecting change is Silicon Valley and the business of technology and innovation. There is a lot that President Obama's administration could do to for this sector and it is a sector that could potentially help lift this economy out of the doldrums: innovation has always been an engine of change.
Silicon Valley and the Bay Area has an incredibly diverse economy and it has a major role to play in the future of this country and beyond. It has a unique combination of two great universities, a massive venture capital pool, and a workforce drawn from the world's best. And SIlicon Valley does its best work during times of downturn, all of its "next big things" emerge from its bust cycles.
Silicon Valley and its industries of technology and innovation haven't asked for a bailout, but they could benefit from the right policies and initiatives.
President Obama has promised to appoint the nation's first CTO. What should be top of their agenda?
Promoting WiMAX would please Intel and a few others. Or should tech policies focus on educating a 21st century entrerpreneurial workforce?
What do you think?
I'm going to be asking this question as I go around the valley and I will continue writing about this subject. If you have suggestions please tell me. I'd love to hear them.
- - -
I come across a lot of travel sites or travel related startups. Here is an interesting one: Offbeat Guides from serial entrepreneur David Sifry.
I'm a big fan of Mr Sifry (Technorati founder, etc...) and very interested in his ventures because he tends to be on the leading edge on many trends.
Here is a 9 minute video of Mr Sifry describing his latest venture at the recent monthly meeting of SF New Tech. (I had to shoot in night-mode because it was very dark.)
I just came across this video of Morten Lund, a Danish VC speaking at the recent Le Web conference. In this brief presentation Mr Lund talks about how these tough economic times are great for being an entrepreneur, and he gives some great advice for startups.
Mr Lund's advice is all the more interesting because he recently lost all his money, some 30 million Euros, on a media venture in Denmark.
I love Morten Lund's attitude. His advice is spot on. And like Loic Le Meur says, this is rare in an European VC/entreprenuer. But that goes to show that some of Silicon Valley's culture is escaping beyond Northern California.
Despite being penniless (Euro-less) you and I know that Mr Lund will be back in the lolly. Because it's not about the money - that's the secret (...that everyone knows but few have the courage to grasp).
Here is one of the best scenarios I've seen for what to expect in 2009. This essay, for the ATCA Open, is written by journalist and author Niall Ferguson who is also a contributor to the Financial Times.
I was especially struck by this passage:
Obama had set out to construct an administration in which his rivals and allies were equally represented. But his rivals were a good deal more experienced than his allies. The result was an administration that talked like Barack Obama but thought like Bill Clinton. The Clinton-era veterans, not least Secretary of State Hillary Clinton, had vivid memories of the bond-market volatility that had plagued them in 1993 (prompting campaign manager James Carville to say that, if there was such a thing as reincarnation, he wanted to come back as the bond market). Terrified at the swelling size of the deficit, they urged Obama to defer any expenditure that was not specifically targeted on ending the financial crisis.
After a whirlwind trip to New York and a visit with the Wall Street Journal I popped back to San Francisco for a couple of days before heading back out again to London.
Party season . . .
I came back so I could catch a couple of key events such as Vivek Ranadive's Christmas party at his newly built Atherton home. This is a phenomenal bachelor mansion for the CEO of Tibco, and it took about four years to build. I had fun checking it out its vastness in the company of Forbes reporter Kym McNicholas [Please see Kym's excellent "How to Obamafy your business."] It was also great to see reporter Carolyne Zinko from the San Francisco Chronicle.
I was thinking that the mansion might make for a great reality TV show if it were filled with five Silicon Valley CEOs!
The next day M.R. Rangaswami was hosting the annual Sandhill.com Christmas party. M.R. told me that he was considering canceling the party because of the poor economy but decided against it because he'd had a good year and it was creating jobs for waiters, kitchen staff, and hotel employees at the Intercontinental Hotel in San Francisco. Part of the evening entertainment was a marvelous performance by Mrs Rangaswami and her colleague Sarah Holzman performing a classical piece. They are both members of the very talented The Laurel Ensemble.
The trouble with compelling content . . .
The next day I was off to London. My 21 year old son Matt was over and gave me a ride to the airport. There was a little bit of drama because his BMW's radiator cracked wide open just before we got to the airport. When we stopped at the passenger drop-off clouds of coolant were billowing out from under the hood. Fortunately AAA was soon on the scene, and two airport employees, both BMW aficionados, stopped by and gave Matt recommendations to an excellent BMW mechanic nearby in San Bruno.
The Virgin flight was quite packed and my hopes for empty seats beside me were dashed. Never mind, the in-flight entertainment was very good. Unfortunately, it was so good that I neglected trying to take a nap, and before I knew it we were landing. That's the problem with compelling content it distracts you from what you should be doing.
Cheshire Cheese lesson for the media . . .
My trip to London is to catch up with my family and friends. It's also a chance to catch up with some of my journalist colleagues. One of the best opportunities is the annual Christmas party at Ye Olde Cheshire Cheese, a pub in Fleet Street. The party is organized by PR firm SourceWire and it usually pulls in a lot of journalists. But this year, although there were many familiar faces, there many more that didn't turn up. I don't know if this was because of the continued problems that the UK media industry.
Fleet Street is where much of the UK newspaper industry was once collected, but many of the newspaper companies moved to less expensive quarters in London's docklands.
There might be a lesson to be learned from Ye Olde Cheshire Cheese. The pub's structure dates back to 1667, rebuilt after the massive fire of London in 1666. If the pub can be restored from its ashes, then the UK newspaper industry can probably do the same.
I heard that The Independent, one of the large national UK newspapers, is considering moving to an Internet only edition. That must mean that the financial pressures on the other newspapers must also be heavy. I wish The Independent good luck with the move, it is going to be very challenging to build a business from online revenues. Figuring out a way to support quality media through online revenues is one of the most important challenges on the Internet. If The Independent, or for that matter, any other newspaper can figure it out then we all benefit.
High Street casualty . . .
The economy in Britain is very bad even though the London bars and restaurants are heaving with people. It is difficult to see the effects of a recent massive jump in job losses and predictions for more job losses in 2009.
There are many business bankruptcies but none more shocking than the closure of Woolworths. These are the original "dollar" stores, selling everything from household goods, to toys, to birthday cards, and more, and they hold a special place in most people's memories.
As a child I was always thrilled to visit these emporiums of many things at prices that my pocket money could afford. There is/was a "Woolies" in the middle of nearly every high street in Britain. For my family and friends, the demise of Woolies has brought home the meaning of the economic crisis far more than the closure of banks and financial institutions.
The cure for excessive spend and borrow is . . .
As in the US, there are many attempts to boost the UK economy with bail outs, cuts in sales taxes, etc. But there is also plenty of irony that abounds as economists berate the British for borrowing too much, and spending too much, yet the government policy is to borrow and spend its way out of the recession.
Britain is under the same deflationary pressures in assets that are affecting the US. One way to counter deflation is to print money and to create inflation. That's because deflation is incredibly damaging to an economy. Things costs less tomorrow so why buy today? With inflation it is potentially an economic stimulus because it is better to buy today than tomorrow. Here is a quick explanation from 1933 (Hat tip DK Matai and ACTA Open.)
Avoiding this tipping point . . .
The problem with trying to head off deflation by printing money, also known as quantitive easing, is that inflation can quickly get out of control and create a situation known as hyperinflation. There are accounts of hyperinflation during the German Weimar republic in the 1930s when people used wheelbarrows full of money to go shopping for groceries. A current example is Zimbabwe, which has an incredible 2.4 billion per cent per month hyperinflation. The tipping point into hyperinflation can happen very quickly.
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Ye Olde Cheshire Cheese is one of the few pubs in London that can justify the 'Ye Olde' in its name. It was well known in the 17th century and many pubs have previously occupied this site, one of them, the Horn Tavern is recorded in 1538. The earliest incarnation was a guest house belonging to a 13th century Carmelite Monastery, the pub's vaulted cellars are thought to belong to that building. The pub was destroyed in the Great Fire of 1666 and rebuilt the following year.
The original American F.W. Woolworth Company and related businesses:
F. W. Woolworth Company was the original USA-based chain of five and dime stores.
Foot Locker, the current name of the company after its change in focus to athletic clothing.
Woolworths Group PLC is the owner of the Woolworths chain of high street shops in the UK (originally part of the F.W. Woolworth company, but separate since 1982).The UK stores went into administration in November 2008.
Central banks may soon resort to their most powerful weapons against deflation: the printing press and the “helicopter drop” of money. It is a time for which Ben Bernanke, chairman of the Federal Reserve, has long prepared. Will this weaponry work? Unquestionably, yes: used ruthlessly, it will eliminate deflation. But returning to normality thereafter will prove far more elusive.
How to avoid the horrors of 'stag- deflation' By Nouriel Roubini
As inflation soars, the state keeps issuing bigger notes -- Z$10 quintillion, anyone? -- but even then, with bizarre exchange rules, it's hard to figure out what, if anything, they're actually worth. By Robyn Dixon December 20, 2008
You might have heard of Doug Engelbart, and you might know him as the inventor of the computer mouse. But you probably don't know that he is one of the most influential computer visionaries of all time.
In the 1960s he and his colleagues were playing with concepts and designing systems that today we take for granted: visual interfaces, spreadsheets, email, and much, much more.
I had the great privilege of interviewing Mr Engelbart more than 3 years ago. I was at an event at Xerox PARC, a promotion for a book by New York Times journalist John Markoff "What the Dormouse Said: How the Sixties Counterculture Shaped the Personal Computer Industry."
The event featured a lot of early computer pioneers and many of them spoke about how they got inspired to work on computer design and systems development. Each one spoke about seeing a seminal demo by Doug Engelbart and how it changed their lives!
Some hadn't been at the demo but heard about it from others, and it still changed their lives! I was amazed at these stories, amazed that a demo could change people's lives, and amazed at the man behind the stories.
I didn't realize at the time that Doug Engelbart is still alive and was sitting just behind me.
After the event I was invited to a local restaurant where there were a few dozen people celebrating the publication of Mr Markoff's book. I was a little late in arriving and most people were crowded around Mr Markoff's table. Amazingly, the table with Mr Engelbart was half empty. I couldn't believe my luck and soon was sitting right next to him, and had an amazing conversation.
You can read the rest here...
On Monday and Tuesday there is a celebration of Mr Engelbart's ground breaking "mother of all demos" at the Program for the Future Conference
It will feature:
- Professor Thomas Malone, Founding Director, MIT Center for Collective Intelligence
- Professor Hiroshi Ishii, Associate Director, MIT Media Laboratory
- Peter Norvig, Director of Research, Google
- Andries van Dam, Professor, Brown University
- Alan Kay, President, Viewpoints Research Institute
- Steve Wozniak, co-founder, Apple Computer, Inc.
December 8 - Speakers and Workshops on collective intelligence at The Tech Museum of Innovation,
201 South Market Street, San José (map). In keeping with Engelbart's vision of mass collaboration, this event brings together many communities -- education, business, nonprofit, social, political and technology. The day will end with a special tour, led by Peter Friess, President of The Tech Museum, through Leonardo: 500 Years into the Future, the largest exhibition of da Vinci's engineering, anatomical studies and art ever to visit the United States.
December 9- The morning program at Stanford University's Wallenberg Hall (map) is a Call to Action to organize ourselves to move forward to harness the collective intelligence of our community.
Here is the demo!
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We will be focusing on the big issue of 'collective intelligence'. This is a core issue for Doug Engelbart. He believes that humanity needs to develop its collective intelligence in order to solve the increasingly complex threats against it, such as environmental catastrophes, nuclear wars and pandemics. The combination of information technology and human society can bootstrap the collective IQ we need to encounter these threats.
Ramu Yalamanchi, CEO of Hi5 isn't worried about the recession. "We started in a recession so we know what to do. Plus, recessions make available some great resources."
Hi5, headquartered in San Francisco, is much better known outside of the region, and the US. It is larger than MySpace or Facebook, in 30 countries especially Spanish-speaking such as Mexico, and in developing countries--and it is growing faster than both.
"When we started in 2003, we saw that the US market was getting crowded so we looked at emerging markets, that's how we got popular outside of the US," says Mr Yalamanchi.
Hi5 has great momentum and it is looking for new markets. It thinks that virtual worlds is a potentially large opportunity. Earlier this year Hi5 acquired Pixverse, a small company that makes virtual products for virtual worlds. Gaia Online, for example, makes a lot of money from its virtual world economy.
"Our users like to express themselves creatively and we think that virtual worlds will allow them to do more of that. Also, mobile is very important for us, because in a lot of countries people have mobile phones but they don't have PCs."
Hi5 hopes that virtual worlds and mobile will help it continue growing at a very fast pace. In the first six months of this year comScore reported Hi5 visitors increased 79 per cent to 56.4 million per month from 31.4 million per month.
And although Hi5 is big elsewhere, it is not giving up on the US, it hopes to capitalize on its large Spanish speaking user base. "We think we can do very well among Hispanic users in the US," says Mr Yalamanchi.
Hi5 has also cultivated the application developer community by being a big supporter of the OpenSocial standard. This helps developers easily port their applications across different social network platforms.
Hi5 is a privately held company and has about $20m in cash. Mr Yalamanchi notes that economic downturns make resources less expensive such as office space, and also make it easier to find great software engineers, which will help Hi5 in this next phase of its expansion.
Monetization of social networks continues to be a challenge for all social networks because the environment is different to search advertising. It is especially challenging for Hi5 because of its diverse geographic spread. Advertisers continue buy space on a regional basis rather than on a global scale and that won't change for a good while.
Also, ads on social networks are considered very low quality and they don't have the same conversion rates as on other sites. However, that means that there is an excellent arbitrage opportunity for those advertising agencies that can craft the right type of commercial message. Hi5 is working with various agencies to create interactive ads that engage users. And Hi5 has done well with partners in various local markets.
Hi5 is well positioned for growth. We are still in the early stages of social networks, and this is even truer in developing countries where many people are getting online for the first time, and that's where Hi5 has brand leadership. On the Internet being number 1 means being far ahead of number two, or three, and that's a great advantage for Hi5. Especially in markets that are growing far faster than the US.
Recessions might slow spending, but they don't slow Moore's Law, which means the Internet becomes more accessible every day to millions more people overseas, and that's where Hi5 is strong.
I'm not washing my right hand for a while because I used it to shake the hand of Muhammad Yunus, 2006 Nobel Peace Prize recipient and a person that I've held in the highest regard for many years.
Mr Yunus gave the keynote speech at the Tech Museum's Tech Awards 2008 which gives five $50K cash prizes to people and organizations using technology to make a difference in the world. Applied Materials has been the founding sponsor for these excellent awards for the past eight years through good times and not.
I got the chance to thank Mike Splinter, the CEO of Applied Materials, for the company's stalwart support of The Tech Museum of Innovation and the Tech Awards for Humanity.
"It's really great to see the support here tonight, this event gets larger every year," said Mr Splinter.
Microsoft, Accenture, Intel, and other companies sponsored the five $50k cash awards. And the turnout was huge this year which is why the event had to be moved to the cavernous trade show space of the San Jose Convention Center.
A challenge to Silicon Valley . . .
The Tech Awards was the place to be Wednesday evening as Silicon Valley's elite gathered in black-tie and glamorous gowns to show their support.
Mr Yunus gave an inspiring speech and issued a challenge to Silicon Valley and the world, to erase poverty. "Let's put poverty into a museum so that we can take our children and show them how billions of people used to live."
Mr Yunus is one of the world's top innovators. He founded the Grameen Bank with a $27 investment. It was the first micro-loan, a novel approach to banking that has helped to pull millions of people out of poverty.
His actions and those of his organizations have helped to create a tremendous amount of value in the world. It is a story that resonates in Silicon Valley where thousands of startups hope to make a big difference in the world.
A triple A rating for the poorest of the poor
Grameen Bank has made billions of dollars in loans and 97 per cent of all loans have been repaid with interest. Grameen Bank has also made home loans averaging $300 with similar repayment rates. "We haven't had to worry about the sub prime crisis," said Mr Yunus.
The Grameen loans are made to the poorest of the poor largely in Bangladesh, one of the poorest countries in the world. It is a fitting tribute to Mr Yunus and his organizations that they recognized that poorest of the poor are a better credit risk than borrowers in the developing world where mortgage defaults have far exceed the Grameen Bank's default rate by several degrees of magnitude.
Unlocking unlimited potential
Mr Yunus believes that every person has unlimited potential. "Our work has clearly shown that the poor do not create poverty, it is the system that creates poverty."
He invited Silicon Valley to join him in erasing poverty forever and making it a part of history, putting it into a museum. He said that he was honored to be in SIlicon Valley because the technologies produced here can make a big difference in the world.
He received two standing ovations from the audience.
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Here is more info:
Global Humanitarian Recipient 2008Dr. Muhammad Yunus For more information Global Humanitarian View 2008 Global Humanitarian Press Release
Professor Muhammad Yunus, pioneer of microcredit and founder of Grameen Bank, is the recipient of the 2008 James C. Morgan Global Humanitarian Award. Dr. Yunus will accept this distinguished honor during The Tech Awards Gala on November 12, 2008 where he and 25 innovators from around the world will be celebrated for applying technology to solve the most urgent issues facing humanity.
"For more than three decades, Muhammad Yunus' broad vision, creativity and leadership have improved the lives of millions through innovative, micro-financing practices," said Mike Splinter, president and chief executive officer of Applied Materials. "We are pleased to honor Muhammad Yunus, whose selfless mission and ability to inspire others to take action exemplifies the spirit of The Tech Awards."
Often referred to as "the world's banker to the poor," Yunus developed a benchmark microcredit application through his Grameen Bank which allows the rural poor access to micro-loans for entrepreneurial enterprises such as purchasing livestock and procuring weaving materials. Yunus' vision of a world without poverty has been the inspiration for his life's work. Yunus and Grameen Bank were awarded the 2006 Nobel Peace Prize for their significant contributions in the field of microcredit.
In 1976, Yunus determined that a mere $27 loan could transform the lives of many of the poorest villagers in Chittagong, Bangladesh. Since then, under Yunus' leadership his bank has provided more than $6.8 billion in small loans to would-be entrepreneurs who conventionally would not qualify for such loans from traditional banks, the majority of whom are women in businesses such as street vending and farming. Today, Grameen Bank operates 2,499 branches in more than 81,000 villages throughout rural Bangladesh.
2008 Prize Laureates
Intel Environment Award
Accenture Economic Development Award
Microsoft Education Award
Katherine M. Swanson Equality Award
Fogarty Institute for Innovation Health Award
Intel Environment Award Laureates
Accenture Economic Development Award Laureates
Microsoft Education Award Laureates
Katherine M. Swanson Award Laureates
The Health Award Laureates
I'm looking forward to tonight's 2008 Tech Awards: Technology Benefiting Humanity in San Jose. The event is organized by The Tech Museum and it is one of my favorite events of the year.
I'm particularly looking forward to meeting Muhammad Yunus. I'm a huge fan of Mr Yunus, the 2006 Nobel Peace Prize winner and the founder of the Grameen Bank. The efforts of his organization through micro-loans have pulled millions of people out of poverty and inspired many other similar lending programs. He is also an excellent speaker.
You can watch the awards live here:
Here is additional info:
Earlier this year Intel (an SVW sponsor) launched a joint venture with the Grameen Trust:
Intel, Grameen Announce Joint Business Venture to Fuel Social and Economic Development Opportunities Empowered by Technology
Citing Public-Private Collaborations as Crucial to Achieving Scalable Impact in Developing Countries, Intel Chairman Unveils Collaboration with NetHope during WCIT 2008 Keynote
KUALA LUMPUR, Malaysia, May 19, 2008 Addressing the World Congress on Information Technology (WCIT) 2008, Intel Corporation Chairman Craig Barrett announced that Intel Capital and Grameen Trust will form a business venture dedicated to social and economic development. Also during his opening-day keynote, Barrett announced collaboration with NetHope and demonstrated a new Aid Station device designed to support non-governmental organizations (NGOs) in their health care, disaster relief and economic growth efforts.You can read more here:Intel, Grameen Announce Joint Business Venture to Fuel Social and Economic Development Opportunities Empowered by Technology
It's lonely at the top and that's why ExpertCEO was created, a place where CEOs can help each other succeed.
Founded in late 2007 by Ken Ross, a former venture capitalist, it recently emerged from private beta in October with 600 members and growth of 30 per cent per month.
"It is tough at the top. CEOs want to be able to interact with their peers," says Ken Ross. "That's why we vet every applicant to make sure that they are who they say they are."
About 50 percent of applicants don't get in. The rejects are primarily people trying to join so that they can market their services to the CEOs--keeping the site spam-free is very important, says Mr Ross.
While ExpertCEO was inspired by Facebook don't call it a social network. You cannot become someone's "friend" and there are many features of Facebook and other social networks that won't ever be a part of ExpertCEO. The goal is to become an important resource for CEOs and to build up a large repository of knowledge.
Members tend to check in about once or twice per week and most subscribe to a weekly digest email that keeps them current on topics such as the future of SAAS; and effective communication with offshore development teams.
A question about creative ways to hire software developers yielded answers such as partnering with local universities:
At any given time we have 4 to 6 college students here for 3 months on 3 months off (at school). They become productive amazingly fast. It is a great way to:
- find talent before competitors do
- really "try before you buy"
- lower the cost of recruiting
- lower the average overall salary
- get good developers before they develop bad habits elsewhere.
If you can get to the profs, that is preferable over just the career office. The career office will try to limit your access.
"Some questions get a lot more attention than you would think," says Mr Ross. "For example, one CEO asked about taking business cards with him and that brought up a lot of issues around intellectual property."
Many of the questions and answers are placed anonymously in order to encourage discussion and to make sure a potentially embarrassing question won't come back to haunt the member.
The only persons that aren't CEOs are members of panels of experts, which include venture capitalists, accountants, lawyers, and academics. "We've found that is good to have many different points of view," says Mr Ross. "And those experts have to use their real names."
The only place where members have to use their names is in comments in the resource directory. "We'd like this to become a Yelp-type resource where members can evaluate professional services. If you have something bad to say it is only fair that you should use your real name. And if it is a really horrible experience then you should pick up the phone."
About 60 percent of members are in tech and 50 percent are in Northern California. And so far, everyone has been well behaved. "We haven't had to bar anyone."
What's next? Mr Ross says that his team might launch similar sites for CFOs and other C-level executives. And also host offline events. "We have a long list of things we'd like to do."
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Please see Ken Ross blog: The Expert CEO
Recent post: What Keeps CEOs Awake at Night? « The Expert CEO
I've been covering the venture capital community for many years and I'm always mystified why they all act like sheep yet think they are wolves.
Why is the VC community running around like Chicken Little saying the sky is falling when their horizons aren't in the now, they are in the future?
If I'm a startup, what do I care about what the economy is like today? I care about what the economy is going to be two to five years out.
If the sky is falling today it likely isn't falling one or two years out, paradoxically these are good times.
As a startup you should be investing for that future and working to line your ducks up instead of cutting valuable people and cutting back on outside services such as PR and social media relations.
The savviest Silicon Valley companies know that you double up your investments in down times because business cycles are cycles: you want to be ready when the upturn comes.
Since you can't time market swings you are better off building a company in down economic cycles because you know there is going to be an upside.
That's why the Sequoia RIP presentation is puzzling. Why are these VC veterans reacting to what has been happening now rather than positioning for what's coming next?
Could it be a that Sequoia is hoping that it can scare competitors to its portfolio companies into cutting back, pull their foot off the pedal? And that that would give their companies a fighting chance? Is it a setup? That's what I would do, but I don't think Sequoia is quite so Machiavellian.
Sequoia has been a huge influence on the VC community. I've come across many people telling me that their VCs are all the same, telling their startups to cut, cut, and cut some more. One of my contacts says: "It's interesting, all the VCs are using exactly the same language." These are the Stepford Wives of Sand Hill Road.
But there are VCs and plenty of others, prepared to call BS when they see BS, and they don't act like sheep, and they are continuing to fund.
This is a good time to invest, this is a good time to startup, imho.
The morning traffic does seem a little lighter going into the valley but the restaurants, especially in San Francisco, are still buzzing. Clearly, we haven't yet been hit by the effects of the financial crisis, or the wider global economic recession.
But it does feel as if our version of Hurricane Katrina is building up energy, just off the coast of Silicon Valley. There is a definite feeling of something huge and nasty lurking just over the horizon. It's an ominous feeling highlighted by the fact that we are enjoying a gorgeous Indian summer.
Shelter from the storm . . .
It is only about three years since things started to get better from the dotcom dotbomb fallout. And now Silicon Valley is headed into yet another bust cycle.
Will we be somewhat sheltered from the storm? Will our version of the economic hurricane Katrina come smashing into us with a bulls eye hit? Or will it be a glancing blow?
In my travels I've been asking about how the economy and the financial crisis is affecting people and their companies. In the PR industry, companies tell me they continue to close big deals, and while there has been some churn, it is nothing out of the ordinary.
Among startups and VCs, people seem to be tightening their belts, but then again, most startups already operate lean and mean, there isn't a whole lot more tightening to be done. Capital efficiency has been drummed into startups by the VCs, who have forced them to outsource as much development as they can to India, China, and dozens of other countries.
This means that startups will likely cut outside services, such as PR, and cut back on conferences and trade shows, as they turn to social media to home grow their PR activities.
Out PR the recession . . .
Every PR blogger out there continues to write about the need to invest more in PR during tough times. While I agree with many of their arguments, it is always easier to cut outside services than it is to cut the jobs of your colleagues--people who have been in the trenches with you through many a long night.
PR agency retainers start at about $20K per month and can run typically at $40K and above. Those are large numbers and ones that can be cut more easily than others.
The chips are in . . .
Another bleak sector is in the semiconductor equipment markets. The financial crisis and recession coincides with over-production in memory chips and the natural boom and bust cycles of the chip industry. Mark Osborne, editor in chief of Fabtech, a large UK based magazine covering the chip production industry, tells me he is hearing of huge cuts in capital expenditure by chip makers.
Also, with tough capital markets, it is going to be difficult for chipmakers to raise the capital to build multi-billion dollar fabs. Mark Osborne says that most will try to refit their existing fabs--if they have the money.
In Web 2.0 sectors, times will be tough. A lot of the web 2.0 companies have business models based on advertising. Online advertising is going to be hit hard by the recession. A weeding out of the many similar Web 2.0 companies is an easy prediction to make. Again, PR companies will feel the hits here.
Accelerating media death spiral . . .
Media companies are already fighting the massive disruption caused by Internet 2.0 and the fragmentation of the industry. With advertising being hit, this disruption will be accelerated.
Newer media companies are in a better position because of lower costs of operation but even they will be affected. Online advertising was already a poor source of revenues, so many have moved to hosting conferences and mini-trade shows. Conferences and trade shows will be affected as companies reduce spending on outside services and events.
Things look bleak but things won't be as bleak in Silicon Valley as they will elsewhere. Here is why:
- Silicon Valley lives in the future not in the now. The economy of Silicon Valley is based on big bets made on the future not on the present. While what happens today does have an effect on investment psychology, it is the future expected returns that rule the roost.
- There is still a lot of money in VC funds. Raising new funds is a problem but Elke Heiss, over at Sterling Communications points out that there is still a lot of money waiting to be put to good use, her VC contacts say they are continuing to invest in good ideas and good teams. The Sequoia RIP powerpoint presentation is considered overkill in some VC circles.
- Startups have time horizons of two to five years out--the economy will be completely different by then. It's the same as hunting for ducks, you shoot ahead of the ducks not where they are now. You want to be ready to go when the economy gets better and that means that VC investments will continue as before, with the same goals.
- Micro-capital. It takes less capital than ever to fund a startup.
- Smart people. Silicon Valley has access to the best public university, Berkeley, and the best private university, Stanford.
- Downturns birth innovation. Innovation is about many things but its core quality is about creating technologies that are far better and far cheaper than doing things the old way. In tough economies tough decisions are made and changing to more efficient and productive technologies has a greater urgency.
- Diversity. San Jose has the most diverse population in the US. And Silicon Valley has the most diverse economy in the US. It is more than tech, it is bio-tech, green technologies, and clean energy industries. Diversity is the best protection to any economic recession.
Silicon Valley knows how to deal with downturns. And it knows how to profit from upturns, we've been here many times before.
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Here is a short movie I shot with my colleagues in the SF Media Collective, a group of Bay Area based video producers. I'm one of the co-founders of the collective.
This is part of a series sponsored by SanDisk, which sells flash memory cards used in still and movie cameras This 2 minute movie features Allison Lovejoy, Sol Crawford from Amnesia and the organizer of the Hornucopia festival, and the gypsy jazz of local band The Gauchos.
It was produced by SF Media Collective: Tom Foremski, Aron Pruiett, Celso Dulay.
If you need any type of video production services please contact Tom(at)SFMediaCollective.com
Tuesday I spent much of the day at the Cloud Summit conference at the Computer History Museum. The sessions I saw were interesting and highlighted the fact that there is still a tremendous amount of services and products that need to be developed in order to make cloud computing a viable technology for many companies.
There were VCs talking about investment opportunities, there were users from various sized companies in private and public sectors, and cloud computing services vendors.
I pulled out some of the highlights from the sessions I attended to give you a flavor of the conference and also some of the more interesting points. I've boiled down several hours of presentations into less than 18 minutes.
Overall the sessions were good although there were some complaints from people I spoke with about some of the presentations being outright "commercials." Opsource was one of those that people complained about.
Presenters that use up people's time in such a manner will be outed and ostracized by the very community they are trying to impress, imho.
I also have an interview with M.R. Rangaswami, the organizer of the conference in the next post.
When I met with Sabrina Horn, the head of Horn Group a couple of weeks ago, she had just gotten out of a meeting with her staff. She discussed the financial crisis with her teams and told them this wasn't the first time her company had faced a downturn and she knew what needed to be done, she finished by saying "Sell like hell!"
I thought that this was a great move because otherwise staff will trade rumors and potential misinformation and lack of real information can be damaging to any enterprise. A new survey shows that not all bosses are the same.
Rick Popko at Weber Shandwick points me to his firm's just released survey:
71% of U.S. Employees Want More Leadership Communications;
54% Have Heard Nothing from the Top
NEW YORK – October 13, 2008 - Working Americans are not hearing from senior leaders in their companies about the implications of the global financial crisis, according to new research released today by global public relations firm Weber Shandwick.
The survey of 514 employed Americans shows that 70% expect the current economic and financial problems in the U.S. will have a negative impact on the company they work for over the course of the next year. Of those, 26% believe their company will have to lay off employees and 62% said that their company would have trouble meeting its goals.
The research highlights a clear deficit in the workplace between employee appetite for more communication on the impact of the economic crisis and the levels at which company leadership is providing information. The research shows that 71% of people felt that their company's leadership should be communicating more about current economic problems, and 54% have not heard from company leaders at all on the impact of the financial crisis on their company. By comparison, 74% said that they had heard colleagues and co-workers talking about the issue.
Of those who had discussed the financial crisis at work, 86% say that senior executives or management were seen as “believable” and “trustworthy” sources on the topic.
. . . "In an age of greater transparency where employees play a vitally important role in shaping a company's reputation both in good times and in bad, their views have an impact that goes far beyond the office or shop floor," said Micho Spring, Chairperson of Weber Shandwick’s U.S. Corporate Practice. "Many companies have highlighted the need to invest in employee communications, and the questions raised by the financial crisis confirm how now, more than ever, employees need to be equipped with information from senior voices in their companies."
I arrived in Silicon Valley in 1984 just after the PC bubble had popped. It was all doom and gloom at the time, there were stories about how Silicon Valley was washed up, and that innovation would move elsewhere. There have been many boom and busts in Silicon Valley since 1984 and similar stories about Silicon Valley all washed up and that innovation was moving elsewhere.
Silicon Valley didn't go anywhere, it got bigger and more influential. Many companies are moving to Silicon Valley because of the perfect storm of innovation that you can't get anywhere else: capital, people, and media.
You have to be here to be part of the conversation, to be part of the community otherwise you can't hire the smartest people, and you won't have access to smart capital, or the smart media.
Sure, innovation is being done in other parts of the world, but not on the same scale as it is being done here. And it's not just computer technologies, it is clean energy, and biotech too. Economic crisis is part of the landscape of being here.
Seasoned Silicon Valley entrepreneurs know all about boom and bust cycles and what needs to be done. Dave McClure, a serial entrepreneur has written a very good post giving advice to entrepreneurs:
What's the effect on startups? The VCs want to extend the runway for their portfoilio companies. GigaOm provides the presentation that Sequoia Capital gave to its startups:
twenty years ago, i moved out to Silicon Valley after graduating from college. i did not do so with the intent to get rich quick, but neither to live among . i came here for geeks & technology, ultimate frisbee, and a free-wheeling, entrepreneurial spirit that has electrified the valley since walked out of Shockley Semiconductor over 50 years ago and started a .
Mike Mortiz kicked off the proceedings by saying that these are drastic times and that means drastic measures must be taken to survive. His message to companies was don’t worry about getting ahead, instead, “We’re talking survive. Get this point into your heads.” He warned that companies need to be cash-flow positive, and if they are not, then they need to get there now, because raising capital without being cash-flow positive is going to be tough. He was warning that there will be a price to pay for those who hesitate to act.
We’ve been here before. We’ve seen the bloodletting. We’ve seen corporations slash marketing budgets at the exact moment when theyshould be pushing more of their chips into outbound efforts.Similar advice can be seen from Brian Solis at FutureWorks:
Any company that intentionally pulls itself from the radar screen of their customers will be absent from customer decisions and referrals. In the process, you create a frictionless opportunity for your competitors to swoop in and fill the void.
Marketing, PR, service, and product development are now more important than ever. They will not only help you stay alive, but also fuel growth – even in a down economy.
Entrepreneurs aren't very good at cutting jobs. It is very difficult to cut staff that has been in the trenches with you, stayed up for days meeting deadlines and milestones. They will rather cut outside services, and those include PR and marketing. After all, they can save a couple or more jobs by cutting their PR firms.
This is why things are going to get tough in the PR world. Social media is very effective however it means doing more, more media relations, more content creation, etc. And there aren't going to be the budgets to pay for more services.
Media companies are in trouble too. This is going to accelerate the downward spiral of "oldstream" media. Newstream media is also suffering. Gawker Media announced layoffs and other media companies are following.
Newstream media companies such as GigaOm should be better able to handle a downturn because they started life with low operating costs but they face challenges in growing during a tough time for advertising of all kinds.
This could be a good time for a rollup strategy in media, if someone has the cash.
I'm hearing VCs telling portfolio companies to cut their spending significantly, by at least 25 per cent, because of the financial crisis and its impact on the economy.
The goal is to extend a startup's "runway" its time between financing events. Most of those cuts will come from payroll by eliminating jobs and in cutting outside services such as marketing and PR.
"I wouldn't want to be in the position of raising money for a startup venture right now," said Gregg Brockway, a serial entrepreneur and President of Tripit, a startup based in San Francisco. Mr Brockway said Tripit is well financed and doesn't need to raise money. "We raised $6m and we still have most of it in the bank."
Om Malik at GigaOm yesterday reported that Sequoia, one of Silicon Valley's leading VC firm, held a meeting Tuesday with its portfolio companies.
. . . The gathering was addressed by at least four speakers, including a brief introduction by Mike Moritiz. Doug Leone was another speaker. I am still trying to nail down more details of the two other speakers. A person who handles Sequoia’s public market investments is said to have talked to the startups. The message delivered to those in attendance was that things could get a lot worse than people think, and it will be a more protracted downturn.
. . . They want the companies to cut costs, to figure out way to survive and emerge at the other end of this downturn, which could last years. The speakers went through each functional area of the business and told the companies how to cut costs. By holding this special meeting, Sequoia is telling its companies to put survival strategies in place and figure out ways to outlast the broader market troubles.
. . . Sequoia isn’t the only one advising its startups to tighten their fiscal belts and prepare for a gut-wrenching ride. Ron Conway, a well-known angel investor in the Valley who has invested in companies like Google, offered very sobering advice to his companies via an email earlier today.
Raising capital will be much more difficult now. You should lower your “burn rate” to raise at least 3-6 months or more of funding via cost reductions, even if it means staff reductions and reduced marketing and G&A expenses. This is the equivalent to “raising an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible.
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Intel (an SVW sponsor) said that AMD's plans to spin-off its fabs could violate cross-licensing agreements between the two companies:
Reuters reported: Intel says to defend patents against AMD
Please see: Advanced Micro Devices Spins Off Chip Plants as a Foundry Joint Venture
Intel spokesman Chuck Mulloy said that AMD and Intel have a patent cross-licensing agreement under which AMD pays royalties to Intel.
"Intel has serious questions about this transaction as it relates to the license and will vigorously protect Intel's intellectual property rights," Mulloy said of AMD's announcement.
Tuesday AMD said it had entered into an agreement with Abu Dhabi to establish a joint venture company that would own its chip fabs.
Foremski's Take: Advanced Micro Devices is legally protected in its manufacture of Intel compatible microprocessors by a long standing cross-technology licensing agreement. At this point it is unclear what Intel's complaint is about. It could be related to two points:
1) By spinning off its chip fab and turning it into a foundry, it's possible that the new foundry company might be able to manufacture Intel-compatible microprocessors for third-parties.
Intel has a long history of preventing others from manufacturing compatible microprocessors unless the compatibility was developed under stringent "clean room" conditions in which the developers had never seen any related microcode.
2) The joint venture foundry company might not have the rights to manufacture AMD's Intel compatible microprocessors because of the change in ownership.
If Intel is successful in blocking AMD's plans it will be a serious blow to the company because AMD will lose a $700m cash infusion and it will be unable to move towards a fabless business model. Running its own fabs is a costly business for AMD and carries substantial business risks. The company is already struggling in its competitive battle with Intel, and challenges with its acquisition of ATI Technologies, the Canadian graphics chip maker.
Advanced Micro Devices, Intel's main competitor in microprocessors, Tuesday said it plans to spin-off its chip plants into a jointly owned venture with Abu Dhabi.
Reuters reports: AMD spins off plants into venture with Abu Dhabi
The new venture, temporarily called Foundry Company, will assume all $1.2 billion of AMD's manufacturing operations debt so the remaining company can compete hard against Intel, which sells about 80 percent of the central processing units at the heart of the world's 1 billion PCs. AMD makes the rest.
. . . Advanced Technology Investment Company (ATIC), an Abu Dhabi state-owned venture capital company, will invest at least $5.7 billion, getting a 55 percent stake and half the board seats. AMD will own the rest.
Another Abu Dhabi government company, Mubadala Development Co, will spend $314 million to increase its stake in AMD to 19.3 percent from 8.1 percent and gain a seat on AMD's board
. . .The 3,000-person Foundry Company will make all of AMD's central processing units as well as chips for other companies. It plans to break ground next year for a factory in upstate New York, employing 1,400 people, if New York state will transfer financial incentives to the new company.
The chief executive will be Doug Grose, senior vice president of technology at AMD, and its new chairman will be Hector Ruiz, now chairman of AMD.
The joint venture will upgrade an existing AMD plant in Dresden, Germany, and build the plant in New York to the latest technology standards, AMD said. It said the Foundry Company, which will be on AMD's balance sheet, may ultimately build a fab in Abu Dhabi.
ATIC will invest an initial $2.1 billion, paying $700 million directly to AMD. After that, it will invest an additional $3.6 billion to $6 billion over five years.
Foremski's Take: AMD has been hampered by owning its chip fabs, which are a quick way to lose money if they cannot be run at nearly full capacity 24 hours a day. By spinning off its fabs and turning them into a foundry, it still has access to its finely tuned production lines and excess production capacity can be sold to other chip makers.
Over the past two decades the chip industry has moved to a fabless business model where the chip design companies use third party foundries to manufacture their chips. This has led to an explosion of new chip designs that have made electronic devices cheaper and more powerful because companies don't need to own their fabs, which now cost $3 billion and more.
There are only a few companies such as Intel (an SVW sponsor) large enough that can afford to build and run fabs for their own products. Because of the high cost and high productive capacities of today's chip fabs, they must be run at 90 per cent plus capacity to offset their high costs of operation.
Also, high productive yields are necessary, which is a major challenge with today's tiny chip geometries. The slightest contamination in a several hundred step manufacturing process can destroy large batches of chips.
AMD has a long history of difficulties in producing its own chips at high enough yields. This has made its competition with Intel extra challenging. With this deal and its $700m cash infusion, AMD will be in a better position to compete against Intel.
Here is a short video clip of Steve Ballmer, CEO of Microsoft [MSFT], fighting back the tears as he asks employees to thank Bill Gates for the opportunity to work at Microsoft and for being responsible for its culture of "tenacity."http://www.hulu.com/watch/24726/cnet-news-ballmers-tearful-good-bye
Hundreds of new startups are likely as a result of the economic crisis and a rise in unemployment among software engineers. The simple reason is that unemployed software engineers will have the time to band together to work on new projects.
That's exactly where blogging software such as Six Apart's Movable Type came from, Flickr, Delicious, and many other successful startups. They were all born in economically bleak times.
Today it doesn't take any capital to launch a "Web 2.0" startup. You don't need to own a server, you just need a couple or four developers, a good idea, and a friendly local coffee shop with free wifi.
People's layoff packages can easily support a six month development runway, and by the end of six months, the economic conditions will have likely improved. In six months time it will also be easier to get financing from angel investors to expand a promising startup.
It's worth the risk. In Silicon Valley the largest risk you take is by taking no risk at all.
Governor Arnold Schwarzenegger came to the heart of Silicon Valley Thursday morning to the headquarters of Intel, the world's largest chipmaker, to encourage Silicon Valley companies to represent themselves at Europe's giant trade show Cebit, in Hanover, Germany in early March 2009. (California state travel funds are available for first time Cebit attendees.)
It is the first time that Europe's largest business-to-business technology fair has chosen a state rather than a country as a partner.
Governor Schwarzenegger said that Cebit could help generate new revenues for California's high tech companies.
Here is a quick video of the event:
It was a poor turnout by Silicon Valley companies at a Wednesday event for California governor Arnold Schwarzenegger's alliance with Germany's Cebit trade show as a key partner.
Wednesday evening I was on the top floor of the Bank of America building in downtown San Francisco to celebrate the partnership between California and Germany's massive Cebit trade show.
This California-goes-to-Germany dinner was heavily populated by German and Californian government officials with very little private industry representation--except for Drew Clark, head of IBM's Venture Capital Group. That doesn't bode well for the California+Cebit push... but this might change if Governor Schwarzenegger gets involved, which has been up in the air. The organizers of the event didn't know if he would turn up until 24 hours before the start.
Thursday morning Governor Schwarzenegger will be in the heart of Silicon Valley at the headquarters of Intel, the world's largest chipmaker, hoping to encourage Silicon Valley companies to represent themselves at Europe's giant trade show Cebit, in Hanover, Germany. (California state travel funds are available for first time Cebit attendees.)
Earlier this year Cebit chose California as a partner. It is the first time that Europe's largest business-to-business technology fair has chosen a state rather than a country.
In 2008, France was Cebit's partner and Nicolas Sarkozy, the French president took part in opening ceremonies. (BTW California's economy is larger than that of France.) Last year Vladimir Putin, then president of Russia, Cebit's partner, took part in the trade fair. Cebit hopes that California governor Arnold Schwarzenegger will take part in its opening ceremonies during the first week of March 2009.
Here is a quick video of that event:
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This evening I met with:
Michael Bowman Deputy Secretary for Communications bth.ca.gov
Conyers Davis Assistant Secretary for International Trade, Business, Transportation, and Housing Agency bth.ca.gov
Jose Juarez International Trade Specialist Peralta Community College District Eastbaycitd.org
Hartwig von Sab, Deutsche Messe AG Messe.de
Jim Charos, vice president Hannover Fairs USAhfusa.com
Bill Maile Director Communications Office of the State Chief Information Officer cio.ca.gov
CeBIT and State of California to Announce Joint Program Promoting US Innovations and Opportunities in EU Market
CeBIT to Unveil ``Webciety'' and Green IT Initiatives
WHO: -- Gov. Arnold Schwarzenegger, State of California
-- The Honorable Walter Hirche, Deputy Prime Minister and
Minister for Economics, Labor and Transport - Federal
State of Lower Saxony
-- Prof. Dr. August-Wilhelm Scheer, President - BITKOM
-- Ms. Deborah Conrad, VP and GM, Corporate Marketing Group - Intel Corporation
-- Mr. Ernst Raue, Member of the Board - Deutsche Messe
-- Mr. Dale Bonner, Secretary, Business, Transportation and
Housing Agency - State of California
WHEN: Thursday, October 2
WHERE: Intel Corporation
Robert Noyce Building's Executive Briefing Center
2200 Mission College Blvd.
Santa Clara, CA 95052
WHY: Following on the announcement of California as the official
partner state, CeBIT 2009 will unveil Webciety, a showcase
for ideas, innovations, and business models that will allow
integration of the social and technological advances of web
2.0 into business and company processes.
California’s Selection Marks First Time a State, Not a Country, Will Serve as Partner
CeBIT, the world’s leading trade fair for digital business solutions and information and communications technology (ICT), has announced that the State of California has been selected the Partner State for next year’s event, which will run 3–8 March 2009 at the Hannover Fairgrounds in Hannover, Germany. The invitation to participate as partner was issued by CeBIT organizer Deutsche Messe AG and BITKOM (German Association for Information Technology, Telecommunications and New Media); and accepted by California Governor Arnold Schwarzenegger.
This financial crisis is fascinating to watch especially if you have no skin in the game. Last week I wrote about some of the implications: Silicon Valley and Wall Street: We're Not Immune - Here's Why
I wrote about the fall in enterprise software and hardware sales as the financial services sectors combine operations; and the potentiall fall in investment capital in startups; and the problems with selling companies as the investment banking sector collapses.
There is also another aspect: IT jobs. Financial services is a massive employer of programmers and systems analysts of all types. Silicon Valley always needs smart programmers and systems analysts of all types. Will those tens of thousands of IT workers now come flooding over to the West Coast? Will it be a modern equivalent of the advice given in 1851 by Indiana journalist John Soule "Go West Young Man."
Potentially, there are 90,000 jobs which will be lost between Lehman and Merrill. Soon, they will start to flood the tech sector seeking employment. The labor pool for tech workers will increase and put downward pressure on wages.
Foremski's Take: I don't think we will see many East Coast IT workers coming over to Silicon Valley because of two reasons: culture and skills set.
East Coast IT people chose the safe confines of a large organization, the relative job security and a regular work week. There isn't much of that around here. Startup life is your life and that's it. If they had wanted to work over here they would have already moved over here.
The skills need by a large financial services company are different to that of a startup. Companies here want skill sets that include PHP, Ruby, Flash, MySQL etc. There's not that many overalapping skills within financial services.
The largest threat from the pool of highly talented East Coast IT people is going to be to the large IT outsourcing companies in India, China and the rest of the world. Outsourcing IT to India and other regions, is becoming more and more expensive and the staff turnover rates can be as high as 100 per cent annually.
The dollar is cheap and US IT staff are highly trained in the latest IT enterprise technologies. This could lead to a reversal of the IT outsourcing trend of recent years in the US.
A description of Twitter: being able to send a text message of no more than 140 characters to a self-selected group of subscribers via a cell phone or computer.
That doesn't seem very exciting. Yet there continues to be a lot of chatter about Twitter and it is well deserved because this simple application has become tremendously useful to growing numbers of people.
But communicating why Twitter is so interesting is one that cannot be conveyed unless you are in it. This is one of the hallmarks of many important applications such as blogging, Facebook, etc. You can't and won't be able "get it" unless you are in it.
Twitter is simple--another hallmark of powerful applications. Blogging is simple. RSS is simple. These are all important technologies that characterize this second major phase of the Internet--but you wouldn't know that unless you use them, unless you are involved with them.
Twitter has spawned a growing number of applications that sit on top of this simple platform and extend its usefulness. Twhirl is one of those Twitter applications--it helps organize your "tweets" with a simple user interface. Twhirl was acquired earlier this year by Seesmic, the "video conversation" site.
I've been using Twhirl but recently shifted to TweetDeck, which does a much better job of presenting "tweets" than Twhirl. (Look for some interesting acquisition news on TweetDeck very soon.)
What will be interesting is how Twitter will survive. It hasn't yet figured out a business model and its infrastructure is weak and doesn't appear to be very scalable.
No matter, if Twitter doesn't make it long term the concept will certainly survive and others will provide the platform. And someone will likely eventually roll up all the Twitter apps, or at least their functionality, and own the entire stack--maybe that will be Twitter.
Life in Silicon Valley usually chugs along despite wider economic turmoils and seems to exist in its own bubble/cocoon, buoyed by large amounts of venture capital investments. This makes sense because VC investments are typically targeted to coincide with returns based on the economy one to five years out.
Foremski's Take: This time things are different and here are a few reasons why Silicon Valley's large and small companies won't be insulated from the financial crisis in the US and beyond:
-- Wall Street firms are massive buyers of all types of IT equipment.
The financial services sector is typically the largest customer for all types of IT equipment. Wall Street spends billions of dollars on servers, software and specialist systems used for esoteric and highly compute intensive tasks.
Clearly, the news is not good and it must negatively affect sales at Silicon Valley's top companies such as Sun Microsystems (JAVA), Hewlett-Packard, Cisco, and Oracle. What will happen to the IT assets of Lehman, etc? Will all that equipment be dumped into the market and suppress sales of new equipment? That's what happened when the dotcom bubble burst--a massive amount of nearly new servers and network equipment found its way back into markets and hurt sales for several quarters.
The slight silver lining is that the six thousand or so SIlicon Valley startup companies are unlikely be directly affected by IT spending and will benefit through cheaper equipment.
-- Analyst coverage of Silicon Valley Companies and Growth Sectors.
There are a lot of questions that Wall Street analysts should be asking the large IT companies, that is, the few analysts that are left. Fewer analysts means less coverage of Silicon Valley's public companies, and that means fewer "market makers" out there, and that won't help to boost stock prices. That will likely lead to more volatility as the quantity and quality of analyst information declines, and the available stock market information becomes more heavily influenced by bulletin boards and less reliable sources.
-- Raising VC Funds
Investment capital is the lifeblood of Silicon Valley. Will the pension funds now become less tolerant of risk and less willing to fund Silicon Valley startups? That's a very real possibility.
-- IPOs and Exist Strategies
Cashing out startup investments through initial public offerings or through acquisition by another company provides the exit strategies that help create new investment cycles. Current events have put a huge damper on IPOs and on M&A.
With the fall of investment banks, who will package up and market Silicon Valley's IPOs? This will further shrink the tiny IPO market forcing exit strategies to concentrate on acquisitions. But even here, Wall Street investment banks have played a crucial role in structuring and helping to finance acquisitions.
- Angel Investors
Angel investors have become crucial within the SIlicon Valley ecosystem as VC firms have largely moved out of seed-level investing and into later stage deals. The personal wealth of angel investors has been hurt by exposure to hedge funds and also to property markets. This means there will be less capital available to seed the next generations of startups.
-- Foreign Acquisitions
Will better financed overseas corporations feast on US opportunities? A weak dollar and the lack of any other exit strategies will create a bonanza of bargain priced acquisitions of US tech companies.
-- Less VC Money
If we have less VC money that means startups won't have the expansion capital they need. They will fold or have to settle for being acquired at a lower value. Less VC money also means less money for the PR industry, which has been thriving, thanks to Silicon Valley's thousands of startups trying to rise above the noise of each other.
By Eric AuchardTue Sep 16, 3:34 PM ET
SAN FRANCISCO (Reuters) - Hewlett-Packard Co (.N) is "very confident" it can hit its current quarter profit target, despite currency headwinds and ongoing weakness in its printer business, a top executive said on Tuesday.
I ran into James Hong, one of the founders of Hot or Not, a tremendously successful web site. Hot or Not was sold in February to private equity firm Avid Life Media, for a reported $20m. He said fears of the recession were the prime reason Hot or Not was sold. "I'm telling all my friends to either get out now or buckle up for the long term."
"I'm not going to plan my next venture until it is clear what is going on with the economy," he said.
John Fisher, a Silicon Valley entrepreneur who sold his company Bharosa to Oracle last year, says the chilling effect from the fallout from the investment banking sector will severely impact many startups.
"The investment banks broker huge numbers of M&A deals. This crisis means that over the next few quarters there will be many companies caught in the middle, unable to complete M&A deals," says John Fisher.
Jajah is a Silicon Valley company that is trying to overcome the high cost of telephone calls with a free service. I first met with Jajah December 2006. [Please see: Jajah is innovating the phone call]
I recently met with Frederik Hermann, director of global marketing at Jajah, and we spoke about some new developments including a collaboration with Intel that lets users receive VOIP telephone calls even if their computer is asleep. We also talked about Silicon Valley and the benefits of being located here instead of Europe.
I popped in to see Pat Phelan and pals on Sunday evening because of the Techcrunch50 (TC50) conference this week. Pat is one of Ireland's top entrepreneurs and CEO of Cubic Telecom and the MaxRoam service, a disruptive mobile company (new info tomorrow). Pat and a few others have rented a house in San Francisco for the week and had a bit of a house warming with a few dozen people.
In addition to TC50, the DEMO conference also starts start this week. And although DEMO is in San Diego and TC50 is in San Francisco, there are a lot of people in town because of these events, and a lot of chatter about the merits of the two conferences.
Some people say that it's not right that DEMO, which selects presenting companies, as does TechCrunch50, charges $18,000 per company for the opportunity. But if you factor in travel costs, accomodation, and tickets to the conferences for your teams, there is probably little difference between the two when each company's costs are summed up at the end of the week.
My opinion is that there is room for both conferences and this rivalry is just plain old link baiting and tiresome.
Also tiresome is Robert Scoble's attack on the web sites of nearly all the companies presenting at DEMO. He criticized their web site design and thus their marketing.
I visited each website from the list of Demo finalists.
Boy, do they suck. Really, really suck.
This is just Robert trying to be controversial and it seems to be backfiring badly. The people I met with yesterday and today were universally disdainful of his approach. He spent much of the weekend trying to put out the fires online.
Moving to San Francisco: Gabe Rivera who runs the popular Techmeme news aggregator is now living in San Francisco in the "Dog Patch" neighborhood in the south of the city. He moved up from Menlo Park about three weeks ago. I'm trying to persuade Gabe to host a loft-warming party.
Also new to San Francisco is Bobbie Johnson, from the UK newspaper The Guardian. He is living South of Market and trying to decide on which neighborhood to live in. "Our closest correspondent is in Los Angeles, which is not close enough for covering Silicon Valley," he said.
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I recently interviewed Judy Estrin, one of Silicon Valley's top entrepreneurs, and asked her about the gender gap in the valley and why there aren't more women in senior executive ranks.
Here is her reply:
Also, here is my recent interview with Ms Estrin about her new book:
We spoke for about 90 minutes, here is a highly edited version of that conversation.
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I put together a fun promo reel for "Fridays with Foremski" a weekly video show launching in September that chronicles my travels around Silicon Valley. I'll be interviewing top CEOs, thought leaders, profiling startups, and covering major events and conferences. The focus will be the business and culture of Silicon Valley.
Plus, I'll have my own gang of pundits, similar to Steve Gillmor's excellent Gillmor Gang, with a discussion on the week's events. I'll be working with Alex Ross, my new VP of business development and the publisher of "Friday's with Foremski."
We are just beginning to pull together the sponsorships so if you'd like to find out more, please contact Alex Ross [alex(at)siliconvalleywatcher.com].
I'm out of town until the end of this week but when I return I'll tell you more about the series--and I'll be looking for suggestions from my readers about topics and people that they'd like to see on "Fridays with Foremski."
Here is a flavor of what you'll see, compiled from my work over the past year.
I just got back from a very inspiring conversation with Judy Estrin, a serial entrepreneur, former CTO at Cisco, and one of Silicon Valley's top thought leaders.
I first met Ms Estrin about 7 years ago when I profiled her achievements in the Financial Times. What makes Ms Estrin interesting is that she is a dyed-in-the-wool Silicon Valley entrepeneur spanning several decades and she is not afraid to speak her mind.
Over the past few years she has been sounding the alarm about the lack of innovation in Silicon Valley, and in the US. We are living off of investments in innovation made many years ago and we are not creating the conditions for a new crop of innovation. And we need to harvest a bumper crop of innovation if we are to solve four major crises: energy, climate change, healthcare, and security.
Her work has led to a new book - Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy
Her research includes many interviews with corporate leaders and many others around the US.
"It was wonderful to get out of Silicon Valley and talk to people about what is happening to innovation," Ms Estrin said. "Too often we get caught up in our own little world in the valley, and we don't see what is happening elsewhere." She discovered that we are running a national innovation deficit, and that we need to act now to avoid serious consequences. She describes the problems and offers solutions.
I will have a video and podcast audio of my interview with Ms. Estrin coming up on SVW.
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There is a fundamental problem in Silicon Valley - creating custom silicon has become very expensive because of the complexity in designing and producing chips. Yet custom chips are the way all types of digital products, from iPods to routers--differentiate themselves and delay commoditization.
The high cost, as much as $65m, has led to fewer and fewer custom chips, and greater reliance on standard chips customized with software. The goal of eASIC is to bring down custom chip costs to just a few hundred thousand dollars through the use of a unique design and production approach.
The company today announced a new family of devices called Nextreme-2 that can be built using 45 nm technology--these chips are tinier than the company's 90 nm family, and by shrinking designs by one-half, the chips use less power and they run faster.
The new family also provides faster design time in as little as six weeks for the first silicon devices compared with a couple of years for conventional custom chip designs. And there is no minimum order quantity--which further reduces the cost of custom chips.
"We are hoping to bring silicon back to Silicon Valley," said Ronnie Vashishta, CEO of eASIC. "Because design costs have been so high, most companies have been trying to differentiate their products in software but doing it in hardware is far more efficient."
Chartered Semiconductor is eASICs manufacturing partner for the 45 nm family.raised $48 million for a total of $80 million.
eASIC is in a very good position to capture a significant share of the $80 billion custom logic market. And its success will lead to faster development of innovative hardware by hundreds of other companies. eASIC could become a potent accelerant for innovation in silicon, and in Silicon Valley.
The financing round was lead by Advanced Equities Incorporated. Also participating in the round were previous investors Khosla Ventures, Kleiner Perkins Caufield and Byers, Crescendo Ventures and Evergreen Venture Partners. The eASIC Chief Financial Officer, Craig Klosterman, also invested in this round.
Semicon West, the massive chip manufacturing show is in town this week. Applied Materials [AMAT], the world's largest chip equipment company, has chosen this week to highlight its solar electronics. It is using its chip manufacturing expertise to build very large solar electric panels.
I met with Michael Splinter, CEO and key members of his team at a small media lunch at the Sony Metreon. Applied also showed off its panel (see picture) which is designed to be put on warehouse roofs, car parks and in other large installations.
Manufacturing solar panels is very similar to making chips. Both use silicon but solar cells only require a handful of process steps compared with many hundreds in making chips--and there is no need for expensive cleanrooms.
For about $100m Applied Materials will build you an automated factory that produces large solar panels for solar farms. So far, it hasn't sold any factories in the US. Applied says it hopes the US government will pass legislation that offers incentives to companies that want to manufacture solar panels here -- it doesn't make sense to ship them from thousands of miles away.
Here is a video of an Applied Materials solar panel factory:
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You need video services! Creation, Distribution, Attention. Contact Aron Pruiett at SF Media Collective- 415 533 4487 - Here is a demo reel.
Silicon Valley Watcher Consulting services - call Tom at 415 336 7547
Silicon Valley and beyond . . .
WSJ: VMware CEO Resigns
News links for Silicon Valley and beyond . . .
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SDForum Visionary Awards are my favorite event of the year. It's full of insiders and Silicon Valley tales. And the setting is Heidi Roizen's backyard in Woodside which provides for a relaxed atmosphere that generates some great stories.
Here are a few snippets and photos from the evening:
[Photos: SDForum CEO Susan Lucas-Conwell in light-grey with Heidi Roizen and Dan'l Lewin. The backyard view of the visionary awards.]
At the champagne reception before the main event I met Steve Kirsch who had a badge that identified him as a "past visionary" (2000). That seemed like an unfortunate title. I joked that he maybe could tell us what happened in the future.
Diane Greene, CEO of the extremely successful VMware was one of the visionaries celebrated that evening. She got a great introduction from Mendel Rosenblum, also from VMware about how you can succeed in business and still treat people fairly. "You can build a multi-billion software business and not be a jerk about it," he said. I wonder if Larry was listening?
Diane Greene was very gracious, she spoke about how she approached several people, some in the audience, for seed money and how they turned her down for various reasons (sound of people smacking their heads in the audience and kicking themselves in the shins.)
VMware never did spend its seed money and it never took VC money.
Another 2008 visionary, Reed Hastings, founder of Netflix was great. He gave out some advice to other companies, "Don't limit your employees in any way." He said that one of his staff said "You don't keep track of the hours I work why do you count my vacation days?"
So after several months Netflix did away with its vacation policy. Take as much as you need. Mr Hastings said it was tough to get that one through but he said "We don't have a dress policy but people don't turn up naked."
Mr Hastings couldn't resist recommending three great movies: Just Another Love Story; American Teen; Phoebe in Wonderland. I'm sticking those in my Netflix queue.
I had an interesting chat with Richard Atkinson, president emeritus of the University of California. He is based in San Diego but spent 20 years at Stanford University. He said that the area is very crowded these days. When he lived in these parts highway 101 was still being built!
Mr Atkinson introduced Irwin Jacobs, the founder of Qualcomm, one of the world's top communications firms--and which has helped create a very large economy for San Diego. I had the pleasure of interviewing Mr Jacobs a few years back when I was working for the Financial Times.
Qualcomm has made a fortune from its intellectual property portfolio and continues to hold a dominant position despite some large challenges. Mr Atkinson revealed some interesting facts about Mr Jacobs. For example, when he was at university, Mr Jacobs was advised to qualify in hotel administration. Also, he and his wife have quietly made several very large gifts in the $100m plus range. Mr Atkinson estimates that the Jacobs have given away more than $1 billion.
More recently, SDForum Visionary awards have featured writers and this year Steven Levy was honored. He was introduced by John Markoff who mentioned Mr Levy's book "Hackers" as a must read. I agree but the title is a bit misleading today - it refers to the original meaning and captures the essence of the life of programmers.
Please also see:
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I'm off to Heidi Roizen's backyard in Woodside for one of my favorite events of the year: The SDForum Visionary Awards.
This year's winners are writer Steven Levy; Diane Greene from VMware, Reed Hastings of Netflix, and Irwin Jacobs of Qualcomm.
More details and bios here:
Lots of high tech companies are trying to reduce their carbon footprint and there are mounting claims by each one over how green they are, how little they litter our landfills, and how much energy their products save. It's all about preventing the release of carbon in the form of carbon dioxide.
It was interesting to see the latest column by Dave Douglas, Chief Sustainability Officer at Sun Microsystems (NASDAQ: JAVA), in "Environmental Reader" on the subject of "peak carbon."
Mr Douglas writes:
Peak Carbon is the point in time after which GHG emissions shrink each year, until the future point in time when we deem our emissions levels to be safe.
He makes a prediction: that the US reached peak carbon production in 2007 and now the US is adding less and less carbon dioxide to the atmosphere every year.
How did Mr Douglas come up with such a specific claim?
Do I have charts and graphs and sources for all of this? Nope, just an educated guess based on everything I’ve seen and read the last few years. So feel free to knock it around and let me know what you think.
See: Peak Carbon column
If educated guesses lead to a specific claim on peak carbon then what types of guesses is Sun Microsystems using in current or future specific claims on its green quotient? My guess is that others will take such claims with a pinch of salt.UPDATE: Here are Sun's carbon footprint calculations. I'm sure that it is all kosher. It's just that the column's fuzzy math made me a little concerned about Sun's other math. http://www.sun.com/aboutsun/csr/report2007/eco/carbon_manage.jsp - - -
[Interview with Paul Krutko - San Jose's Chief Development Officer.)
When the dotcom dotbomb burst in 2001, San Jose lost 225,000 jobs over a two year period--it was a disaster, it was a larger loss of jobs than for any other US metropolitan area since the Great Depression.
Now as the economy recovers, the city of San Jose is being proactive in helping its businesses succeed in the global economy, and also to create a diversity of economies to balance out boom and bust cycles in different markets.
Paul Krutko is the architect of San Jose's strategy, working with mayor Chuck Reed to implement a broad number of changes: in how permits are granted, to building incubators for green technologies, and helping San Jose become the "greenest city" in the US through innovative housing and transportation policies.
So far so good . . .
I spoke with Mr Krutko earlier this week and asked him about the Silicon Valley economy and if there were any signs of a recession.
"San Jose represents about 60 per cent of all Silicon Valley jobs so we see trends first. So far, we don't seem to be impacted by the recession, our unemployment rate is low, 5.2 per cent, a full point below the California average," said Mr Krutko.
Since 2003, San Jose has steadily been gaining jobs, about 55 thousand, and 11,700 in 2007. Although the number is still well below the number of lost jobs, "the graph shows a steady and consistent increase which is what we like to see."
A key focus for San Jose is to make sure that its largest companies are well supported and that the smallest companies have a place to grow such as in one of San Jose's incubators.
To help growing companies, San Jose has made it easier to gather the permits for expansion. Instead of running around to several different agencies to get the permits needed, San Jose has instituted a program where in just one meeting, companies can meet with representatives of all the agencies and get permit approval in as little as a few hours.
This program has helped speed approval of about 9.1m square feet of office space, representing 15 thousand jobs, and equivalent to twenty seven 17 storey buildings (San Jose's height limit).
Similar speedy permit pre-approval has been applied to production equipment from which the city earns a property tax.
Shortening the commute . . .
With higher gas prices local businesses have sought to bring down the long commutes for their staff. San Jose has now changed some of the zoning restrictions for property that is close to the light rail corridor.
Businesses were only allowed to build on 35 per cent of their acreage."We now allow businesses to build as much as 135 per cent of their acreage, so we have a taller and denser footprint along the light rail corridor. We also have approved 32,000 residential units so that people can live closer to work," said Mr Krutko. About 3 million square feet of 29m square feet of new office space has been built, and 8 thousand residentail units have been built so far.
Eggs in many baskets . . .
Earlier this year I met with Guillaume Cohen, CEO and founder of Veodia, one of the more interesting companies in the enterprise video sector. Today Veodia said it had raised $8.3m in Series A funding from:
Clearstone Venture Partners, the D. E. Shaw group, and an angel group led by iParadigms chairman Steven Berger. The new financing will be used to support product development and add more talent to the team.
Veodia just added a heavyweight from the enterprise IT space:
Etay Gafni, who comes from SAP and joins the company as VP Products. Mr. Gafni brings more than 13 years of experience in product development, user-experience, community development and global management. He was one of the founders of the SAP Developer Network and worked closely with the office of the CTO.
Veodia is interesting because of its focus on the IT enterprise space rather than on the consumer video space, where many companies have had to abandon some of their user generated video strategies.
Veodia operates its own infrastructure and it optimizes the load on the network to ensure a high quality video product. Veodia describes itself as "The Live TV Studio In Your Browser" and that's a very accurate description. Using nothing more than your computer and an inexpensive camcorder, it is really easy to create a video presentation on-the-fly. Veodia takes the video and converts it into the MPEG-4/h.264 format, which has quickly become the standard for video because of its small file size and high quality resolution.
The Veodia setup doesn't require any knowledge of video formats, video editing software, conversion into different formats, etc. These are often obstacles to users generating video presentations. Veodia handles all of that in the background and the result is a high quality video in a format that can be broadcast live or re-broadcast as part of an archive.
Veodia's focus on the enterprise space is smart because there is money in the enterprise and its no-fuss approach means that users can be productive instantly.
Here is a Silicon Valley Minute from Guillaume Cohen:
I'm having fun using Powerset's semantic search technology on Wikipedia and Freebase. I used it to find out what semantic results it produced for the term "Silicon Valley."
That's how I came across an early newsletter from journalist Don Hoefler, who first used the term "Silicon Valley."
In one early issue of his newsletter from 1975 he cites a medical study that shows that Silicon Valley managers have a 75 per cent rate of thyroid problems compared with the overall population of 12 per cent -- all caused by work related stress!
The symptoms include: inability to translate thoughts into actions; rambling writing; inability to get ideas across; and "a tendency to sweep problems under the rug."
A psychologist is quoted: "A superior under stress will tend to feel more comfortable with weaker and less capable suboridnates. A subrdinate under stress will tend to feel that his boss is over-demanding and 'out to get him."
Anybody you know?
I also came across the Silicon Valley Tarot deck and an online reading. My question was: what should I do? In the context of Life, the Universe, and Everything.
I drew the cards: Salesman of Disks, Venture Capital, and Double Latte.The meaning of this reading:
"You know, you should pay more attention to those ambulatory hallucinations you're having. Oh, sure: they'll say you're psychotic if you talk about them, but if you act on them, they'll think you're brilliant."
Two senior sources tell me it is Informatica [INFA].
More details here on ZDNet: Informatica is on the block say senior sources | Tom Foremski: IMHO | ZDNet.com
[I'm a bit behind on my coverage due to a recent bug.]
- Four engineers for the price of one:
I had an interesting chat with Tom Laffey, Executive VP of products and technology at Tibco Software (Tibco is a founding sponsor of SVW). Tibco, like most US software companies, has been building development teams in India and China. I asked Mr Laffey about reports I'd heard that Indian software development teams were getting more expensive and the teams suffered from very high turnover. He said that Tibco had decided to avoid Bangalore and instead based its Indian development center in Pune, a similar high tech region but one with less competition from surrounding firms. He also said that Tibco offered programmers interesting and cutting edge projects which further reduced turnover. He admitted that employment costs had risen significantly in India. "But I can still get four Indian software engineers for the price of one in Silicon Valley."
Tibco has also been employing software engineers in China. "They speak English surprisingly well." Mr Laffey said that it is important to keep a lot of development in the US because it is closer to its customers and there are cultural differences in developing software that cannot be exported. The main problem with outsourcing development is the brutal travel time. "It can take about 34 hours from door to door to travel to India. I try to break it up with a stop in Europe to visit customers," he said.
- TIE reaches out to San Francisco:
I stopped in on an event in San Francisco organized by TiE, Silicon Valley's largest group of entrepreneurs. The organization's annual conference is coming up May 16 to 17 at the Santa Clara Convention Center and it has an excellent list of speakers and panels (and the best Indian food in the valley:). I said to the organizers that I was surprised to see a TiE event in San Francisco, I always think of the organization as very "deep" valley, almost San Jose, 60 miles from San Francisco. I was told that TiE is trying to reach out to San Francisco's high tech community. Peter Thiel (right) is one of the many top speakers at TiECon this year. Mr Thiel and he is one of the leaders of the SF high tech community, a former CEO of PayPal and a leading investor in startups. Here is this year's agenda.
- PaySimple looks to small business market:
I recently met with Eric Remer, CEO of PaySimple, an online service that lets small businesses accept electronic payments and credit cards while at the same time providing basic invoicing and financial reporting.
"I think that innovation can be incremental," said Mr Remer, referring to a recent post of mine. And I agree, as long as it is a combination of incremental improvements that add up to a lot more. That's what PaySimple has done, combining several financial services into one package that solves a problem for small businesses such as day care centers, dog walkers etc. Customers can pay electronically and the business gets its money sooner.
PaySimple is white labeling the service to smaller banks. It is also developing a way to automatically approve small businesses. It can take about a week to approve a merchant account at a bank. PaySimple says it will be able to do it all automatically -- the first such service of its kind. PaySimple plans to outsource this service to other companies.
VentureBeat threw a great party to celebrate... something?! [Matt Marshall announced something from the balcony at the Ambassador but I couldn't hear much because I was behind him and I was distracted because it reminded me of Mussolini for some strange reason but without quite as much gesticulation :-)
I'm a big fan of VentureBeat and its journalists. It is run by Matt Marshall, the former VC beat reporter at the San Jose Mercury. Dean Takahashi is a recent recruit and also a former San Jose Mercury reporter. All the top media digerati were there. I asked Mike Arrington how his roll-up strategy was coming along but he just glared at me and said "I thought you said it wouldn't work." I said that his math was spot-on but I couldn't see how all the egos could be rolled up into the same company. [Actually, the VentureBeat party showed you could get almost all of the top media celebs/bloggers into the same room but it required a lot of alcohol.]
Here is some of the coverage:
The Irish Technology Leaders Group, a semi-private group representing Silicon Valley's Irish entrepneurs and the Irish government, held an awards ceremony at Stanford University. Michael Martin, Irish Minister for Enterprise, Trade & Employment, read out a letter from the Irish president and praised Mr Barrett for helping to create Ireland's booming economy - the Celtic Tiger.
Intel was one of the first US companies to invest heavily in Ireland, 15 years ago, building several multibillion dollar chip fabs. The Irish government estimates that Intel has invested more than $7bn in Ireland and paid more than $2bn in healthcare and social services. In addition to thousands of Intel jobs, Intel created about 9,000 jobs in support services.
Intel's lead was followed by many other US tech firms. The attraction was Irelands' entry into the European Union providing European market access for US companies for lower costs. Ireland's highly educated workforce, common language, a low cost of living, combined with a low flat tax rate--made Ireland hard to resist for many US companies.
A tide of Irish tech...
Ireland has now transitioned from poorest to second richest (after Luxembourg) in European wages. Mr Barrett commented that Dublin, the Irish capital, now has higher real estate prices than Palo Alto.
Now it is Irish companies that are coming to the US. More than 80 Irish companies have opened operations in the US, many in Silicon Valley in tech and in pharma. 2007 marked the first time Irish companies created more jobs in the US than US companies created in Ireland.
More details and information here:
The ITLG is a group of Irish and Irish American senior executives based in Silicon Valley, active in the global technology industry, committed to ensuring that Ireland remains a strategic area of investment and opportunity for US technology companies, and who are keen to support the growth and development of Irish based technology companies.
Heritage Foundation: How Ireland Became the Celtic Tiger
As a result of sustained efforts over many years, the past of declining population, poor living standards, and economic stagnation has been left behind. Ireland now has the second highest gross domestic product (GDP) per capita within the European Union (after Luxembourg), one-third higher than the EU-25 average, and has achieved exceptional growth.
...One of the biggest successes of the Irish economy has been new job creation. From 1990 to 2005, employment soared from 1.1 million to 1.9 million. Economic growth, more jobs, and rising living standards meant the resolution of the emigration problem, which had bedeviled Ireland for generations.
The population increased by almost 15 percent from 1996 to 2005 in a striking reversal of previous trends. In one year alone (July 2004–June 2005), employment increased by 5 percent. Ireland is now seen as the land of opportunity by many workers from the 10 newest EU member states. Its unemployment rate of 4.4 percent is less than half the EU average. Public budgets are in balance, and foreign investment was equivalent to 17 percent of GDP in 2003.
We know what the Irish drink here is what they eat...
Get in a Stew and Make it Irish by Sheila Flynn at AP
Meat, potatoes and vegetables. It's the quintessential trio for the quintessential Irish dish - Irish stew. But don't be fooled by the one-pot simplicity; this hearty stew can pack astounding depth of flavor.
For the best flavor, the meat should be browned in lamb fat before stewing, which Allen says imparts more flavor than cooking oil. The easiest way to get this fat is to trim it from the meat and render it in the pan.
For additional flavor, the vegetables also do best when quickly browned in the lamb fat before stewing.
While the browning is done on the stove, most of the cooking is done in the oven, which allows for a slower cooking over about 1 1/2 hours, leaving the meat "virtually falling off the bone."
Bear Stearns woes represent a large crisis within the investment banking sector and that means a massive impact on large numbers of M&A deals affecting startups and large companies in Silicon Valley.
John Fisher, a Silicon Valley entrepreneur who sold his company Bharosa to Oracle last year, says the chilling effect from the fallout from the investment banking sector will severely impact many startups.
"The investment banks broker huge numbers of M&A deals. This crisis means that over the next few quarters there will be many companies caught in the middle, unable to complete M&A deals," says John Fisher.
Acquisitions take between 3 months to a year to complete. Startups caught in the middle of the investment bank crisis will be highly vulnerable because they would then need to scramble to raise capital.
"You'll find many startups that won't be able to raise capital and they'll go out of business. It could be as bad as the dotcom crash for a while," Mr Fisher warns.
He estimates that as many as 1,000 M&A deals of all types of companies, not just in the tech sector, will be affected over the next two quarters.
Such a scenario will hurt the VC funds because exit opportunities will be dramatically reduced for much of this year. The IPO market has been constrained for several years and M&A has taken over as the best way to recover and profit from startup investments.
VC firms will have to scramble to raise capital for their portfolio companies to keep them going and this could lead to less favorable terms for founders and other investors.
This could be a good time to fire up a roll up strategy to acquire startups caught up in the investment banking squeeze at fire sale prices.
More predictions of gloom at Jon Fisher Blog
Jon B. Fisher served as Bharosa, Inc’s CEO until its successful acquisition by Oracle Corporation in July, 2007. Jon was named Ernst & Young's 2007 Entrepreneur Of The Year in Northern California and served as CEO of three software companies in the last 15 years.
Tuesday I had dinner with Sophie Vandebroek, CTO of Xerox and Scott Elrod, who heads up the hardware laboratory at the Palo Alto Research Center (PARC.)
PARC is famous for developing many of the personal computer technologies we take for granted such as the graphical user interface, laser printer, ethernet networking, object-oriented computer languages, and many other advances.
PARC is also infamously known for an inability to commercialize its technologies, allowing Apple, and others, to build large businesses based on its computer technologies.
PARC spun out...
In 2002 Xerox spun out PARC as a wholly owned subsidiary. "PARC was spun out so that we could harness the entrepreneurial spirit of our staff. When you hire exceptional people you don't want to narrow their focus on technologies that are just useful for Xerox," says Sophie Vandebroek, CTO of Xerox. "You want to be able to allow them to find commercial opportunities in adjacent sectors."
PARC has been inviting VCs to learn about its technologies and it has also been bringing in visiting experts in areas such as solar cells, and manufacturing, to help its researchers create commercially viable products.
"The visiting experts program has been very good for us. They work with us for about 6 months and it is a short cut for us." says Mr Elrod. Xerox continues to be PARC's largest customer but about 50 per cent of its revenues now come from other customers.
PARC has about 170 researchers and is almost profitable, says Scott Elrod, who heads the hardware labs, one of four laboratories at PARC. One of the recent innovations from PARC is an ability to increase the efficiency of solar cells by printing fine wire connectors.
"In solar cells the electrical wires that connect the cells prevent sunlight reaching part of the cell. By printing finer wires we can increase the efficiency of solar cells by as much as 8 per cent," says Mr Elrod. "We are also incubating several startups at PARC and have one successful startup, SolFocus that has already raised $80m in funding."
Cleantech is a big driver for innovation at PARC. For example, it has technology for producing clean water, and for managing and coordinating the production of large print jobs. This technology is now being applied to IT data centers to power up and power down systems as needed.
PARC also has 1800 patents and is planning to go after companies that are using its intellectual property. It is targeting companies in the laser and electronics manufacturing industries, preparing patent infringement actions against them.
Xerox has gone through a major restructuring of its business groups over the past few years. But it has sought to maintain its research centers in Rochester, in Toronto and in Grenoble, France.
Xerox has also been acquiring companies for their technologies, such as Amici, Global Imaging Systems, and Advectis. "We have been using some of these technologies in-house. For example, the Amici technology is used in e-discovery for legal documents, it can understand the content. We use this to help our researchers find relevant documents and comments within our organization," says Ms. Vandebroek.
She says that Xerox strives for two types of innovation: sustained innovation that improves the performance of its products and services; and disruptive innovation that changes the landscape of industries.
HP Labs announced a major reorganization on Thursday. It is shifting its focus onto about 20 key key research areas instead of 120.
For about three years now I've been talking about how Silicon Valley is transforming into "Media Valley" because our brightest, and our fastest growing companies are, according to my metrics, media companies.
Companies such as Google, Yahoo, eBay, Facebook, Digg are all media companies. They publish pages of content with advertising around it.
These are not technology companies but rather technology-enabled media companies. And this is a key distinction.
I've been writing about this change for about three years, and how the center of the media industry is shifting from New York city to Silicon Valley.
Our media industry is thriving and expanding, their (NYC) media industry is shrinking (as one example New York Times last week announced 100 newsroom job cuts).
Initially, only a couple of people picked up on my Media Valley concept, a couple of journalism professors at NYU. But gradually, over the past couple of years, more and more people have grown to understand this perspective.
This has been especially evident within the Japanese media community. Last year, I was featured in Nikkei business magazine, Japan's largest business magazine. And today (Wednesday), a four-person TV crew flew in from one of Japan's largest TV channels and interviewed me for three hours on this topic.
[I took some video that I will post very shortly, of them interviewing me, about the media industry. I love talking to the media about the media industry, but it always feels a little (sometimes a lot) Alice-in-Wonderland-ish, a hall of mirrors effect.]
In my world, I see everything as a media technology, and as a media strategy. I've said this before many times: Every company is now a media company to a greater degree than ever before. Even if a company makes steel, or napkins. Every company publishes to its customers, staff, partners, neighbors, to itself. It had better master the two-way media technologies that we now have or it will not survive.
Three years ago, when I would write about this, few people understood. Now, this is becoming better understood. But only slightly, which means there is still a lot of work to be done to help organizations understand this fundamental sea change.
And we, in Silicon (Media) Valley, are best positioned to help educate others about what is going on. It is happening not because we say it is but because it just is.
Genietown is the latest in a series of web sites that seeks to tap into local services. The Palo Alto based company announced the launch of a public beta focused on the San Francisco/Bay Area region.
GenieTown enables thriving niche service markets by facilitating opportunities for people to demonstrate their capabilities and passions and connect them with those looking for their help. Customers in need of specific services can create a project and service providers (Genies) can then respond directly and tailor their offer based on the opportunity.
Services that define the GenieTown community include everything from home improvement and personal chefs, to music lessons and help with computer networks. Genies could be inspired by earning extra money or simply because they want to help others within their community.
In addition to completed transactions, Genies are encouraged to build their online reputation to gain exposure within the community and earn credibility and trust by contributing articles, sharing tips and tricks, and answering questions. Genies earn a rating based on the value of information they contribute within the community as well as the overall quality of services provided to customers. Customers, in turn, also earn ratings too, which keeps the community engaged, accountable and interactive.
...Swift or slow initially it won't matter
Tuesday evening in San Francisco, MySpace unveiled a unique plan to win developers of social network apps. It said it would seek to eliminate some competitive advantages between large and small developers by holding back all application launches to the same day--one month from today.
"We want a level playing field and we think this will encourage quality over quantity," said Kyle Brinkman, GM of the MySpace Developer Platform. He wants small developers to have equal opportunities for success as the larger developers, which have the resources to quickly produce and distribute apps. Or maybe it is the small, nimble developers that will lose out to the larger, slower moving competitors?
Over on ZDNet, I asked if this "socialist-like" strategy would succeed. Does this Southern California based firm understand the developer culture here. Because the MySpace policy clearly clashes against the hard core, deeply embedded code of Silicon Valley's startup culture: speed to market brings massive rewards and creates formidable barriers to competition.
Silicon Valley developers have a deep understanding of the importance of first mover advantage. Startups know that being swift leads to long term success and shorter lives for competitors.
The MySpace plan is to curtail the rewards that first-to-market developers would capture. In the first month, Swift or slow it won't matter, all apps become available at the same time.
Mr Brinkman believes that this will create a democracy and a meritocracy in the MySpace developer community, where apps will succeed based on quality and usefulness.
Quick and dirty apps...
MySpace also said it will scrutinize each app before release to make sure it meets stringent privacy and decency standards. I asked Mr Brinkman about revisions to apps since developers are constantly tweaking their software. Every change will require re-examination.
I understand MySpace's concern about privacy and decency but this process of re-examining tens of thousands of apps creates a potential bottleneck. And paradoxically, it threatens the quality of MySpace apps.
Quick and dirty apps with few revisions will be seen as the most effective strategy. Constant improvement of apps is punished by delays due to re-examination of the code. Again, this is counter-culture to Silicon Valley's best practices in developing best applications.
There is also another interesting move: MySpace has weakened the viral distribution capabilities of social apps on its platform. On Facebook, some app developers have seen huge viral uptakes, hitting a million users within a week and tens of millions within a month.
These huge numbers, however, often have more to do with questionable distribution methods that exploit the Facebook communications infrastructure, The growth in users is certainly viral but not necessarily virtuous. MySpace is seeking to reward quality apps. But again, it runs against the grain of Silicon Valley's developer culture, which seeks to maximize and amplify any and all viral distribution opportunities.
It'll be interesting to see how this approach will work out. It is worth remembering that counter culture and counter-intuitive business strategies have succeeded many times in Silicon Valley.
Some excerpts from ZDNet and my conversations at the MySpace developer party:
MySpace will not seek to discourage copycat application developers. Popular Facebook apps such as Zombies, and others, can be cloned with impunity. I asked MySpace CTO Aber Whitcomb about this issue. “We don’t want to get involved in any copycat disputes, we will leave that up to the developers to figure out.”
...Michael Cerda, CEO of Jangl, an SMS and telephony application developer, said, “We have negotiated deals with the major carriers, it won’t be easy for others to do the same. We also have negotiated deals with major advertisers, we already have revenues. And we have core patents.”
. . .
Jared Kopf from Slide and Adroll said he wasn’t worried about copycat competitors. “We will have the best Super Poke app on MySpace,” he predicted. Slide is one of the top Facebook app developers and raised a stunning $50m in January 2008, giving it a valuation of more than half-a-billion dollars ($550m.) [Slide Slides Into Some Cash - Brad Stone, New York Times]
. . .
Bill Cromie, co-founder and CTO of New York based Nabbr, a distributor of media widgets loaded with premium content, had an interesting perspective on the differences between the SoCal culture of MySpace, New York, and Silicon Valley/San Francisco. “New York and San Francisco startup cultures are more similar to each other than they are to Southern California. The difference is that people talk in big pictures in Silicon Valley while New York is more focused on show me the money.”
In Silicon Valley we spend too much time in our "echo chamber" and we don't notice other tech communities.
Yet other tech communities have qualities that foster innovation and create successful companies. I've met several entrepreneurs from Portland. More recently, I met Hideshi Hamaguchi and his business partner Toru Takasuka, founders of one of the most interesting companies I've seen in a long time. Both of them are among Japan's leading class of entrepreneurs.
Their company Lunarr, has a produced a unique collaborative tool that combines a wiki with email with culture. I recommend that you check it out and I have some invites for the alpha if you contact me (tom at siliconvalleywatcher.com.)
I'm looking forward to their visit in early February for an update on Lunarr's alpha.
A place with space to think...
When I met with them four months ago, I asked why did they choose Portland as the home base for Lunarr, why not Silicon Valley? After all, there are many companies moving to Silicon Valley every day/week to become part of the great conversation that goes on here.
They said that Portland allowed them to think.
That's a great answer because here in SIlicon Valley it is often difficult to think. Our Internet based communications technologies allow us to have simulataneous conversations with many people.
When I publish an article, I inform my Facebook, Twitter, SiliconValleyWatcher and ZDNet communities. And I get to engage in many conversations....
I've noticed is that because we are in so many conversations all the time it can be difficult to do original thinking. It is difficult to avoid being influenced by the many influencers we have here.
Yet my job is to come up with original thinking, unique story angles, and ideas you might only find here. My job is to provide you with content you can't get anywhere else. And that's tough. I don't want to add to the white-noise of the bloggo/mediasphere.
To try and achieve those goals I have to deliberately withdraw from conversations. I won't check my email for hours, sometimes days. I switch off TV and radio, and I limit how much I read online and offline.
My best ideas come to me when I am alone and quiet, when I'm walking down the street, when I'm not in conversation with anyone. That's when I can notice my inner voice and that's when tons of great ideas come bubbling up.
I've realized that our brain works on complicated tasks and problems quite happily in the background. When it is done processing, it looks for a lull in our day, an opportunity to throw the result into our consciousness.
And that's why I carry my super slim moleskin notebook with me at all times, to write them down, to catch those ideas.
The trick to having great ideas is...
My favorite quote comes from Linus Pauling, the US two-time Nobel prize winner, for Chemistry and Peace (he refused to work on the Manhattan Project unlike other self-proclaimed pacifists: Einstein, Fermi, and Oppenheimer.) He is considered one of the world's 20 top scientists with an incredible body of work produced during his 93 years.
How did he do it, how did he come up with so many great ideas? He said that the trick to having great ideas is to have lots of ideas.
It's true. A lot of the ideas that I write down, I throw away later, but there are enough left behind that make it through to the next stage. (But you have to write them down otherwise they disappear as quickly as the most vivid morning dream.)
As I researched Linus Pauling for this article, it turns out that he is from Portland(!) (He clearly had time to think :-)
Portland on fire...
Hideshi told me that there is a great new site launched in Portland just this year, that helps introduce the entrepreneurial community to each other. The site is called "Portland On Fire - A daily discovery of PDX people."
Interestingly, there is another serendipitous Linus Pauling conection: Hideshi has a degree in Physical Chemistry, (I have a degree in Chemistry too, and so does Om Malik.)
Here is an extract from Hideshi's profile on Portland on Fire:
What do you like most about Portland?
- Rain, Shower, Mist, which covers Portland one third of the year.
- Human Chemistry, which covers Portland half of the year. (in daytime)
- Serendipity, which covers Portland all of the year.
I like something that covers the all thing constantly without anyone’s permission.
Serendipity requires three essential elements:
(1) Prepared minds, (2) the bucket for those minds w/ the appropriate size, and (3) some catalyst to start the reaction.
Portland has them all.
I am sure more and more interesting things will happen here. But we have to be careful so that we should not lose any single element.
Could you describe your secret process to come up with unique concept / strategies for variety of businesses?
Step 1: Get information - as minimal as possible
Step 2: Draw and play with lots of diagrams
Step 3: Touch, think, talk, and thank.
Step 4: Take a walk
Step 5: Shake head, squash hair, hit the wall
Step 6: Take a shower
Step 7: Enjoy the moment of “what if…!?” and “a-ha!”
What is your creative process?
Fabrik, the online and offline data storage company, Tuesday said it acquired G-Technology as part of a strategy to expand into numerous vertical markets. The financial terms of the cash and stock deal were not disclosed.
G-Tech produces high-end hard drives and the acquisition takes Fabrik into the video production and editing community, specifically producers using Apple Computer's Final Cut editing suite. G-Tech drives can cost twice as much as those for consumer markets but come with higher reliability and also data recovery services.
The G-Tech drives are specifically designed to work with Final Cut editing and production processes and support high data streaming speeds.
Mike Cordano, the CEO of Fabrik said that the G-Tech brand will be maintained and that this premium line of hard drives should generate between $50m to $100m in revenue annually.
"G-Tech is a very strong brand and in a key vertical. We now have brands in the consumer and SMB sectors. Our plan is to expand into other vertical," said Mr Cordano.
Another key vertical in Fabrik's sights is drives for high-definition digital movie production which requires massive amounts of digital storage for the raw digital footage.
At Macworld in San Francisco, G-Tech announced a 1TB G-Raid and 500GB G-drive mini for mobile video production.
In February 2007 Fabrik acquired SimpleTech, a consumer hard drive company for $43m.
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Tuesday evening I'm in the swank surroundings of the Asian Art museum in San Francisco at a private event, listening to a presentation by Samsung Group about its technologies and its business groups. And that it is seeking to connect with Silicon Valley's influencers.
Samsung's executives said they wanted to take part in the conversations in Silicon Valley because the people here help shape the future.
[I offered to publish some columns from Samsung executives, and other ways to get involved in local conversations--but it wasn't clear which specific topics of conversation it wants to join.]
Samsung's outreach to Silicon Valley comes at a very bad time. Here is the New York Times, Dec 4:
This scandal is unlike any Samsung has faced because it involves a whistle-blower, a rare species in South Korea.
Over the last month, Kim Yong-chul, Samsung’s former chief in-house lawyer and a prosecutor before that, has contended that Samsung stashed away a gigantic slush fund. He said it was created with company money, hidden in dummy stock and bank accounts in the names of executives, including his own, and used to bribe politicians, prosecutors and journalists, and even to finance an art collection for the chairman’s family.
Tired of Corruption but Afraid of the Crackdown - New York Times
Samsung is a $160bn revenue company. It alone, accounts for 15% of South Korea's GDP. Which means it won't go the way of Enron and disappear.
But it does have its hands full right now, and it is trying to reassure its shareholders, especially foreign investors, that the scandal won't affect the management of its huge business groups.
It is easy to see why investors would be concerned. In an article in today's The Korea Herald:
Possibly related to the alleged discovery of secret accounts for stashing slush funds, the Seoul prosecution prohibited 10 more executives of Samsung subsidiaries from leaving the country; this in addition to the earlier overseas travel ban on 15 Samsung officials.
I've met senior Samsung executives many times and I've always been impressed. They are in many tough businesses and have been able to stay ahead and do it consistently. This means having to meet very tight product cycles, some as short as six months, plus there is new competition coming from China and elsewhere. A distracted management would be very risky to the company.
Samsung's event at the Asian Art museum could be seen as a way to show that its management isn't distracted, and that it is focused on its business and its future through closer ties with Silicon Valley. Over the next few months it'll be interesting to see what that means.
Technorati Tags: Samsung
Wednesday evening I'm at the Computer History Museum for the first annual Silicon Valley PRSA Gala dinner, sponsored by Microsoft and Yahoo and featuring a panel of local journalists.
I'm there as a guest of MSFT sitting with Doug Free, Dan'l Lewin and Michael Celiceo. It's a well attended event and I bump into lots of people (Brian Solis, Lish Woodgate, Matthew Podboy, Lisa Croel, Mimi Harris, Tony Obregon, Elke Heiss, and many more...)
On stage Sam Whitmore is the emcee, and sporting a new and very distinguished salt and pepper beard. Ann Winblad then takes over as an excellent moderator of a panel consisting of some of our top local journalists: Jim Goldman, CNBC; Don Clark, WSJ; Victoria Murphy Barret, Forbes; Rob Hof, Businessweek; Robert Scoble, Podtech and Scobeleizer; and the ubiquitous Kara Swisher, All Things Digital.
On the subject of Facebook and being reunited with old friends, Jim Goldman says:"There is usually a good reason I lost touch with friends 10, 15 years ago."
Kara Swisher likened Google to "the Pablo Escobar" of the tech world. Not sure what she meant by that. She also said she would like to drive a Hummer through the bicycle parking lot at Google. Not sure what she meant by that either, except maybe expressing a backlash to GOOG and All Things Green (as opposed to Digital:-)
Don Clark said he is very skeptical about Silicon Valley being able to save the world through its green tech efforts.
Victoria Murphy said that enterprise IT is back.
Rob Hof wondered about the effect of a consumer downturn on Silicon Valley.
Robert Scoble said that the large Silicon Valley companies are far less interesting than many startups, such as Zoho. He also said it was surprising that Amazon.com has emerged as a leading infrastructure company and that he is meeting many startups that use Amazon's services and don't own a single server.
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Podtech.net will be posting a video of the event.
Monday, Saïd Business School, University of Oxford hosted the seventh "Silicon Valley Comes to Oxford" event with speakers:
* Reid Hoffman (founder of Linkedin),
* Chris Sacca (Head of Special Initiatives, Google)
* Biz Stone (co-Founder Twitter)
* Bill Byun, MD, Samsung Ventures
* Bob Goodson (CEO, YouNoodle)
* Paul Graham and Jessica Livingston (Y Combinator)
* Allen Morgan,( MD Mayfield)
* Kim Polese, (CEO SpikeSource)
* Jerry Sanders (San Francisco Science)
* Maria Sendra (Partner Baker & McKenzie)
* Mike Malone (President, Malone-Grove Productions)
The organizers described the event as:
A vibrant and fast-paced mix of masterclasses from leading Valley figures, panel debates focusing on the big issues around innovation and exploring future directions, innovation workshops where ideas could be developed, and one-to-one clinics for aspiring entrepreneurs.
Here are audio links to the panel sessions:
[Thanks to Clare Fisher, Head of Public Relations, Saïd Business School]
Silicon Valley's booming business cycle has driven up competition for engineers. Last week, Ann Winblad, of the Hummer Winblad venture capital firm complained about VMware trying to hire all the engineers in the valley.
Recently, I moderated an interesting panel held at Stanford university at the Hoover Insititution, on the subject of Poland's growing role in the global tech community. Over the past few years Dell, Google, Hewlett-Packard, Intel, IBM, Motorola, Siemens, and others have opened engineering offices in Poland.
GOOG's three development centers
Lydia Mazzie, Google's Head of Central and Eastern European Operations, said:"In our coding competitions we have more Polish winners than any other nationality. That's why we now have three offices in Poland, that's a lot for us, in any country."
Deborah Magid, from IBM said that the US computer giant has a very successful development center in Poland and is expanding its operations. Seweryn Krajewski, a director at Siemens, said his company has had a lot of success with its large development center in Poland.
Poland's highly educated workforce is the draw for the tech giants. Plus it has a very strong math tradition which helped Poland crack the German military's Enigma code machines.
Low staff turnover
Another important draw, is the low staff turnover. George Slawek, president of San Francisco based Market Street Associates, which helps US companies work with Polish engineering teams, says that staff turnover rates are in the 4 to 5 percent range.
In India, staff turnover has reached ridiculous levels. I recently had dinner with Bob Tait, from Silicon and Software Systems (S3), an Irish based tech design firm. He said S3 has abut a hundred engineers in Poland. But some of S3's design partners have engineering operations in India, and he has heard of engineering teams being completely refreshed after six months. With such high turnover rates of 200 percent it must be nearly impossible to finish any project on time.
Common cultural ties
Polish engineers are also very familiar with Western culture. Common cultural understanding is very important for any company. Poland is now part of the European Union, which gives US firms great access to huge markets, and rapidly developing markets in Poland and in Eastern Europe.
Quality not price
Mr Slawek pointed out that Polish engineers are not chosen because they are cheaper, companies choose them because of the quality of their work. And Polish teams are very good at thinking on their feet, as is shown by their numerous accomplishments in programming competitions, which are won by quickly finding solutions to complex problems.
Poland is graduating about 40,000 people per year in Information and Communications Technologies, about the same as Russia, said Steve Mezak, CEO of Accelerance, which helps US companies with Polish outsourcing projects.
Poland is in the top ten most attractive countries for foreign investment in the world according to the recent Ernst&Young “European Attractiveness Survey 2007”.
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[On my recent visit to the Hoover Institution I amused myself with a fantasy motto for this venerable think-tank: "Nature abhors a vacuum." And if the institution were founded by the Hover vacuum cleaner compay, instead of US president Herbert Hoover, the motto might be "Nature abhors a Dyson.":-)]
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Tuesday evening I was at law firm Fenwick & West on a panel with Ann Winblad, one of Silicon Valley's top VCs, and Barry Kramer, a veteran Silicon Valley lawyer, on the topic of venture capital investment trends. It was organized by Bill Lazar.
As always, Ann Winblad was very impressive. During the evening she mentioned VMware, "As much as we all love Dianne Green (CEO of VMware) we have to figure out a way of stopping VMware from hiring all the engineers in the valley."
This is something I have heard from others too over the past few weeks. VMware's thirst for engineering talent seems to be unlimited as it continues development of its hugely successful virtualization software.
Ms Winblad mentioned that her VC firm, Hummer Winblad recently made an investment in a startup partly because it was based in Philadelphia, where the competition for engineering talent is not quite as severe as it is here.
This brings up the question of prospects for Silicon Valley's startups. If VMware, Google, Yahoo and other big companies are competing for engineers, what's left for everyone else? Startups can offer more favorable stock options than the big players but a generous cash salary is always a popular choice.
It's not just engineers that are in demand, Ms Winblad said:"Competition for all types of skills across the board is intense in Silicon Valley."
Mr Kramer noted that because of the fall in the value of the dollar, "Outsourcing development to India or other countries is not as attractive as it once used to be."
Technorati Tags: Silicon Valley Skills Crisis
This year produced an excellent crop of winners, much better quality than a few years back when it seemed more like a high school science fair. I didn't have high expectations about the event but this time I was impressed.
Cold outside, warm inside
I still have a fundamental issue with the fact that this $2m party celebrates $250,000 in prizes, it seems there is a disconnect here. Is this Silicon Valley's warm and fuzzies night on the cheap?
I think it used to be, but it is changing, and I like the direction it is taking.
Peter Friess, who took over as President of The Tech Museum 18 months ago, has an energetic team of people such as Lisa Croel, Marketing Director, and a stellar board that includes Microsoft's Dan'l Lewin.
There are firms such as Ogilvy PR that contribute pro bono services, plus hundreds of local volunteers working behind the scenes. They have all helped transform the museum from an organization struggling with large debts, and into a Silicon Valley gem (firmly in the black).
The Tech Museum is heavily involved with local schools and clearly is hitting its mark with visiting students. I know because my 13 year old daughter Sarah loves the Tech Museum and so wanted to join me on Wednesday night.
I congratulated Mr Friess on a successful event but wondered why it wasn't being used to raise more money out of this extremely monied audience. It could be a glittering fund raising event as well as a glittering celebration of tech for humanity.
Mr Friess said he was happy with how this "modest" event was developing. Modest is good, but this crowd also responds to bold challenges, and the bigger the better, imho. Shake some money out of them...
[There were so many whales at the event that I'm surprised Greenpeace wasn't there hauling them back into the water.]
I got to chat with Frank Quattrone, chairman of the Tech Museum. He said that the Tech Museum needed to get more media coverage for its activities. Robert Scoble and myself told Mr Quattrone that as representatives of the new media we would be honored to volunteer our services for the next one.
Standing small and standing out
It was a stylish, good looking crowd, with many rich and famous. But the person that stood out the most and stole the entire evening was someone hardly known by anyone: Dr Helen Lee, head of the Diagnostics Development Unit based in the UK at Cambridge University.
Dr. Lee is small in stature, yet casts a giant presence. I'm hoping to catch up with her on Thursday for a video interview - please stay tuned.
A Sixth Award?
I have one final suggestion: Let's have a sixth award that celebrates using tech for humanity in Silicon Valley.
It is wonderful seeing award winners from developing nations but Silicon Valley needs to show that its own communities are thriving - yet they are not. Silicon Valley tells the world its technologies have the power to transform, yet many in its own communities are struggling.
The public school system, for example, is a joke. Public schools here are basket cases instead of showcases.
A $50k cash prize will make a difference in a developing region of the world--tech or no tech. That's easy. Let's find out how can tech make a difference in this community. [Will anyone step up to fund such a prize? You'll get your name next to the likes of Intel (an SVW sponsor), Applied Materials, Accenture, Microsoft, SanDisk and others...]
Technorati Tags: techawards2007
Comcast's blocking of large file transfers is just the tip of the iceberg. And it is only a matter of time before other cable and telco companies will follow suit.
This is the start of a battle for bandwidth that has been caused by enormous amounts of digital media hitting the Internet and the private networks of the cable and telco companies. It is a battle that nearly all Silicon Valley companies are unprepared for and won't be able to win.
Comcast and the others can legitimately limit third party services because they have a contract with their customers to deliver a slew of digital services from digital phone calls, digital music, and high definition TV. They don't have a contract to deliver the digital services of others.
How long before they kill the video stars? For example, YouTube relies on file uploads up to 100 MB in size, other video hosting platforms take larger files.
How long before they kill most of the Web 2.0 companies? They all seek to share files and information between groups, including video and audio. FaceBook, for example, lets users upload 300 MB video files.
What about new services such as Fabrik's Ultimate Backup Service, which offers unlimited backups for $5 a month. Will Fabrik and others be able to build such businesses?
Why should they provide quality access to digital services (YouTube, BitTorrent, etc) if they don't have a contractual obligation? Access to those services comes second or third to their own services and those of partners.
The cable and telco companies are the most powerful Luddite organizations in the US. They hold a duopoly control over the lines that connect consumers with digital services.
The cable and telco companies are slow in bringing in new technologies, and their wireless operations turn off many technologies, such as wi-fi in cell phones. They have slowed technological progress in the US in so many ways. For example, We have some of the lowest adoption rates and the slowest broadband in the world. We have a huge digital divide.
They will protect themselves from technologies that would disrupt them in the same way early 19th century English Luddites broke industrial machines to save their livelihoods.
The English dealt with their anti-technologists in this way: "Machine breaking" (industrial sabotage) was made a capital crime." (Wikipedia.)
No such luck here. These Luddites have the government on their side, they have among the strongest lobbying groups in Washington, built up over a period of more than 100 years.
The cable and telco companies are anti-competitive and their actions will make sure that the US becomes uncompetitive.
Silicon Valley hasn't been a good curator of its history. It generally keeps its head down trying to exploit the next disruptive technology cycle. It is only fairly recently that there was even a Computer History Museum.
This is changing and there is a growing recognition that we have some giants among us. Tuesday the Computer History Museum hosted the 2007 Fellow Awards in a sold out event that was also a fund raiser.
The awards were presented to: Morris Chang, John Hennessy, David A. Patterson and Charles Thacker. All of them helped create massive amounts of innovation.
The awards also recognize the contributions to Silicon Valley of Stanford University and University of California at Berkeley, arguably the best private university and the best public university in the US.
Morris Chang helped create the fabless chip industry. And in doing so, he created a massive innovation platform by enabling small bands of chip designers to buy production time as they needed it. Chip companies no longer needed to own and maintain hugely expensive chip fabs. Without the fabless chip industry we would not have had the incredible advances in consumer electronics and in the PC industry.
John Hennessy helped develop the RISC microprocessor, whose features are found in all modern microprocessors. As President of Stanford University, he has made huge contributions to education, and the creation of a student body that has gone on to found many of Silicon Valley's largest companies. And his work has helped generate huge licensing revenue for the university.
David Patterson made important contributions to microprocessor design and RAID data storage technologies. As head of Computer Science at the University of California at Berkeley, he has helped educate generations of computer engineers.
Charles Thacker helped create the personal computer. His work at Xerox Palo Alto Research Center led to the Alto, the machine that inspired Apple Computer and featured a windows graphical user interface. He co-developed Ethernet and also the laser printer. His wife Karen coined the term "what you see is what you get" to describe the ability of laser printers to print an accurate display of a computer screen.
I will have video of the event from TechOne published shortly.
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It would have been great if there had been a table or two set aside for local high school kids at the event. Computer history has to connect with our younger generations. The Tech Museum of Innovation, just a few miles away, does a tremendous amount of work with local schools.
. . .
About the Computer History Museum
Technorati Tags: 2007 Fellow Awards
The Geek Life is tough. The startup regime is brutal. You are here because you are the best of your class, your group, your country. You sleep whenever you can, you live and breathe what you do...
And despite that, you will likely fail because only 1 out of 20 startups will amount to anything.
These days there are no weekends anymore. For example, on Saturday and Sunday we had BarCamp--hordes of developers roaming the streets of Palo Alto.
The pace of life in Silicon Valley is always accelerating. We are always on.
Where does Silicon Valley blow off steam? Clearly not at weekend geekfests.
It is at Burning Man. From the boardrooms to the trenches, that's where you'll find a key strata of Silicon Valley this coming week.
Burning Man rises up out of the desert and for one week becomes one of Nevada's largest cities, as glittering as its others, and then it disappears. Burning Man teaches people how to work together to create amazing things without any commercial return to the participants. And then those amazing things are gone.
In many respects it mirrors Silicon Valley, its thousands of startups that arise out of nothing and then disappear, usually without any commercial return. But their ideas and culture radiate into our modern world, around the world--as does the culture of Burning Man.
The point of it all, in both arenas, is the involvement in an extraordinary creative process. Totally unique and so swiftly transitory.
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Dionysus or Dionysos, the Greek god of wine, represents not only the intoxicating power of wine, but also its social and beneficial influences. He was also known as Bacchus.
He is viewed as the promoter of civilization, a lawgiver, and lover of peace — as well as the patron deity of agriculture and the theatre. He was also known as the Liberator (Eleutherios), freeing one from one's normal self, by madness, ecstasy, or wine.
Silicon Valley is rapidly transforming into media valley because our top companies are publishing pages of content with advertising around it: GOOG, YHOO, EBAY and a host of Web 2.0 companies such as FaceBook, are all media companies harvesting content as inexpensively as possible. . . and selling it with advertising draped around it.
Silicon Valley produces media technologies
Nearly all of the emerging technologies that now emerge out of Silicon Valley are media technologies, they enable the two way publishing of data and information, such as RSS, (which should stand for Relationships Simply Syndicated).
Every company is a media company
The interesting point, in this Internet 2.0 phase, is that now: every company is a media company, even if it produces steel or teddy bears. This is something which I've written about for nearly three years. Because every company publishes all the time, to its customers, to its staff, to its markets, to its future hires.
If a company cannot efficiently use these two-way media technologies it will not survive.
Where was the Internet 1.0 disruption?
Here is my math: Internet 1.0 was a very disruptive technology. But we didn't realize that it was a media technology and that is where we saw the disruption, in the media sector, in my industry.
Newspapers such as the Financial Times, Wall Street Journal, San Francisco Chronicle, San Jose Mercury... saw multiple years of declining revenues, and layoffs. That's because the Internet is a disruptive media technology and so that is precisely where we saw the disruption, in the media sector not the broad technology sector.
A Media Hammer...
Now, as we move into Internet 2.0 (...not Web 2.0... that is so 1.5), every company is a media company, even if it makes steel or teddy bears.
Now, every company faces the same disruptive forces that are decimating the media industries because every company has to publish to its many different communities. Every company is a media company.
This means that the disruptive forces of technology are broader now than ever before.
Like many others, I've lately been spending time on FaceBook, lots of time. And I'm amazed that FaceBook has managed to make social networking fresh and exciting--no mean achievement given the multitude of similar sites out there.
FaceBook has done an extraordinary job of being able to roll-up separate services into one simple user interface. It potentially replaces Linked-In, Flickr, Blogger, Twitter, Gmail, Ning and many other sites. Plus its platform approach means that it can integrate virtually any web service.
It will be interesting to see if FaceBook's value to myself and others can continue to grow. Or if it will collapse under the weight of too many services, too much spam, too much complexity.
Silicon Valley Watchers
In the meantime, I'm enjoying FaceBook and exploring its many features. One of these features is the ability to set up a group/network. I've set one up called Silicon Valley Watchers, please check it out and please join.
I've asked a question on Silicon Valley Watchers: What makes Silicon Valley unique?
I'd love to know your answer, either here on SVW, or on FaceBook.
By Tom Foremski
My favorite event of the summer is the SDForum Visionary Awards celebration at Heidi Roizen and Dave Mohler's home in Woodside.
This invitation-only event is one of a kind, it is where you will hear stories you never heard before as Silicon Valley's aristocracy relaxes and celebrates itself. It is a garden party without comparison.
This year I was pleased to run into Irving Wladawsky-Berger, one of IBM's top strategists. Now that he is semi-retired I'm hoping he will turn up to more Silicon Valley events such as this one.
This year there were four visionary awards. The first went to Trip Hawkins, introduced by Dave Evans, a former colleague.
Visionary: Trip Hawkins
Trip Hawkins is one of those legendary Silicon Valley characters, probably best known for his time at 3DO, which was once touted as the next generation in gaming systems. Delays meant that the company ended up a half-a-step ahead of the competition rather than several strides but Mr Hawkins managed to turn the company around and reposition it as a successful game software company.
Mr Hawkins recalled a time when he was working with Steve Jobs. His boss came by his desk one day and said:" Trip, you've never taken LSD before have you? No, I didn't think so..." And he walked away.
Visionary: Craig McCaw
Next up for an award was Craig McCaw, the only Telco mogul to be awarded an SDForum Visionary Award. He was introduced by his wife, Susan. She did a good job but it was a shame that SDForum chickened out of roasting him, which is the typical format for those that introduce a Visionary Awards winner. Doesn't the valley have the chutzpah to do it? [It's understandable, the Telcos do have us in the palm of their hands...]
Mrs McCaw is a formidable person in her own right,she is US ambassador to Austria.
Mr McCaw talked about the spirit of entrepreneurism, of being a "serial maniac" and the adrenaline rush he gets from new ventures...which in his case involve billions of dollars not the tens of millions most of the garden party visitors deal with.
Visionary: Mike Moritz
[Here is an alternate career path that might serve to inspire journalists currently leaving the SF Chronicle and SJ Merc...]
Mr Lewin apologized for being "nice" in his introduction but said it was a habit, part of working for Microsoft, he tries to be nice to everyone in Silicon Valley. BTW, Mr Lewin is another former colleague of Steve Jobs'.
Mr Moritz gave a short acceptance speech, making a reference to Walt Mossberg (next up) about not upsetting a man who buys ink by the barrel. It was a little mangled in delivery and fell flat.
Visionary: Walt Mossberg
Kara Swisher from the Wall Street Journal introduced Mr Mossberg and she quickly had the audience smiling and laughing. Earlier in the evening, Ms Swisher looked very rock star, arriving in black shades and jeans, in a rebellious disregard for the smart attire suggested for the event.
She paid homage to the humility of Mr Mossberg, in one of the longest introductions of the evening. She also mentioned she was gay and that Mr Mossberg was definitely not a misogynist. (It all flowed together and made sense, you had to be there...)
Mr Mossberg revealed that he was once a programmer, he had written a program for the Sinclair Timex computer (that was my first computer) that asked people to think of a number between one and ten.
He had many anecdotes about switching from his former beat at WSJ covering Washington politics to covering the world of gizmos and gadgets.
Who could have guessed which career path would prove to become more influential?
Special Award: Heidi Roizen
The standout characteristic of the SDForum Awards is that there are more women entrepreneurs and women VCs represented and celebrated than at any other event in Silicon Valley. It is this element that makes the event seem more relevant.
This year Ann Winblad, one of the valley's top VCs introduced her long-time friend Heidi Roizen, the host of the awards, and a fellow VC and also a key player in the creation of many Silicon Valley companies (and marriages.)
More SDForum Awards coverage is on its way...
Here are some of my prior SDForum Award articles:
Posted by Tom Foremski on June 21, 2005 3:03 AM
. . .McNealy silenced by Redmond gold? And who else? By Tom Foremski for SiliconValleyWatcher Ray Ozzie, creator of Lotus Notes, head of Groove Networks, and now CTO of Microsoft, won the last of the 2005 SDForum visionary awards. Although...
Posted by Tom Foremski on June 17, 2005 4:15 AM
. . . too little, a bit late By Tom Foremski for SiliconValleyWatcher Larry Sonsini, Silicon Valley's uber-uber lawyer, introduced Carly Fiorina. He said lots and lots of nice things. He noted Ms Fiorina had helped spin-out Lucent Technologies, the...
Posted by Tom Foremski on June 17, 2005 12:32 AM
Posted by Tom Foremski on June 16, 2005 3:46 AM
By Tom Foremski for SiliconValleyWatcher Part 2 of our tales from the annual SDForum Visionary Awards garden party in Woodside, at which the Valley aristocracy let their hair down and tell stories about each other. Scott McNealy, Sun's CEO, introduced...
Posted by Tom Foremski on June 16, 2005 3:36 AM
...Can Silicon Valley Companies succeed in Europe?
Anastasia Marin writes:
A friend of mine is putting together a technology conference called the California Technology Showcase (www.californiatechshowcase.com) which takes place on June 28-29 in France.
This is a very high-profile event which will allow 40 California-based private technology companies to meet 1-on-1 with CEOs, CIOs, and CTOs from 200-300 of Europe’s largest companies.
Also important, the CTS is being held in conjunction with the World Investment Conference http://www.labaulewic.org/, also June 28-29 at the same hotel.
This is a mini-Davos economic forum with attendance from prime ministers (5 confirmed so far ), the president of the EU, and hundreds ministers of trade, commerce, foreign affairs, and CxOs.
How can California companies succeed in Europe? It would be great to get some input on this topic from readers. Send them in...! editors (at) siliconvalleywatcher.com.
I've been thinking a lot about innovation and what it means the past couple of weeks. It's a topic I've delved into before too, with Geoffrey Moore (see posts at end).
My complaint is that "innovation" is used too broadly these days, its meaning is being diluted, it is being used to describe incremental improvements in business process rather than disruptive, which is its more traditional use.
Here is how I can prove it:
-The term "innovation" is being used by a lot of people and companies these days. They would only use the term if it held a special significance in our culture--and it clearly does. But it is appended to things that offer "incremental" improvements and thus they are made to sound better than they would be.
-Our history books are full of innovations--none of them are "incremental" they are all game changing, disruptive technologies. Show me one that is incremental.
I can't fight the broad trend to dilute the meaning of innovation. IBM, Geoffrey Moore, et al, have a lot more resources to call upon and can make changes in meaning over time. Therefore, I will give up using innovation in my tag line..."reporting on the business and culture of innovation."
Instead, I'll use this:
"Silicon Valley Watcher: Reporting on the business and culture of disruption."
I think it is a more powerful way of saying "innovation."
- - -
Additional Info:Innovation inflation - innovation is everywhere, even on business cards
By Tom Foremski for SiliconValleyWatcher.
Geoffrey Moore, one of Silicon Valley's top IT consultants has published a column disrupting the notion of ...
This blog entry is in reply to Tom Foremski's challenge to one of the points ... Geoffrey Moore’s blogging dialogue with Tom Foremski highlighted to me my ...
I can't tell you how many of Silicon Valley's top executives of top companies have told me over the past three years: "Tom, all these regulations are killing us."
Here is an excerpt from Eric Auchard's Reuters story via Yahoo News:
Sarbox (Sarbanes-Oxley) dictates that I not chair any committee due to the size of my holdings, not be on the compensation committee because of the loan I once made to the company, not be on the governance committee," Clark wrote.
"It even dictates that some other board member must carry out the perfunctory duties of the chairman," he wrote in a letter dated January 1. "What's left is liability and constraints on stock transactions, neither of which excite me."
. . .
Clark, a veteran founder of Silicon Valley start-ups for 25 years, is the father-in-law of Chad Hurley, the co-founder and chief executive of video-sharing sensation YouTube, which late last year was acquired by Google Inc. (Nasdaq:GOOG - news).
"As a technologist, I feel there is little that I can offer to guide what has become a manufacturing company," he wrote.
"It seems pretty clear to me that lawmakers have gone too far in considering a large shareholder to be inappropriate in the roles, but it is equally clear that I have no ability to change this in the near term," Clark's letter stated.
It was a very dull 60th anniversary celebration for SRI International, one of the world's largest contract research institutes.
Spun out of Stanford University, it lives in the heart of Silicon Valley and started a long time before there was a Silicon Valley. It has contributed a massive amount of ideas and technologies, so it was disappointing that the event was such a dull dud.
I turned up with my 18 year old son Matt, we were primarily interested in Doug Engelbart, the legendary inventor and the most innovative thinker in the computer industry. He was on a panel with other SRI luminaries (scientists but mostly administrators.)
As we walked into the auditorium at the Computer History Museum, Curt Carlson, SRI director (see SVW interview here) was finishing his welcome keynote. The place was full, but it wasn't that full, which surprised me.
Soon, Paul Saffo, professional futurist, was up on the stage and introducing the four panelists which he would be moderating. They included Paul Cook, Phil Green, and Donald Nielson.
Mr Saffo tried to raise the level of energy in the large room but it wasn't working and what followed was a fairly slowly paced session. Things did start to get going about 35 minutes into the panel, but Mr Saffo, saying he would "honor" the schedule cut things off right on time at 45 minutes.
This puzzled me because how often do you get a panel together such as this one? Let it run longer would have been my choice and I'm sure no one in the audience would have minded.
At one point, the panel was asked about what problems needed to be solved. Mr Engelbart said that humanity faces a serious problem in being able to collectively make intelligent decisions. Unless this is addressed, we will face big problems.
This strikes at the heart of Mr Engelbart's work for more than 45 years: creating tools for a collective approach to solving big problems through the use of technology as a tool to augment human qualities and abilities.
By the way, Me Engelbart is still looking for funding to continue his work.
The best part of the evening was when Doug Engelbart spoke about how he decided on his career path. He was a second world war veteran and ex-Navy technician. He decided it would be a good idea to combine his professional work with something that would produce a big benefit to humanity. It was as simple as that!
And so he embarked on a career path that has influenced an incredible number of people and led to much of the technology we use everyday.
Here is my short video of Doug Engelbart explaining his career choice:
. . .
Also Please see my interview with Doug Engelbart and essays on his contributions:
Ross Mayfield, CEO of SocialText, points me to his post on Doug Engelbart, and it's an excellent piece of work. June 14, 2005 11:10 AM
Part 2 in our series: How the 1960s counterculture of individual expression nourished the birth of the PC - and smashed the work of leading computer researchers whose ideas didn't fit the paradigm. June 10, 2005 03:41 AM
It is a busy week in San Francisco with the Intel Developer Forum (Intel is a sponsor of SVW), the Clean Tech California Awards, the software as a service conference, and in San Diego DEMO is happening.
I stayed close to home this week. Monday, I managed to miss a lunch time media roundtable about software on demand because I was trying to catch up with tons of stories, and trying to tweek my CSS style sheet on SVW.
. . . Cisco rolls its own instead of buying
I did speak with Cisco about their Digital Media Systems business, which they say could become a $1bn business group. It is being launched by an internal venture group.
This is a sharp departure from Cisco's normal way of growing business, which is to seek out companies for acquisition once the market horizon reaches that magic $1bn level. Internal development versus acquisitions? Does this mean acquisitions of private companies are getting a bit too richly valued for Cisco?
. . . enterprise software is turning into one big mashup
In the evening I ran over to the WebEx event at the W Hotel and spoke with David Knight, VP pf product Management at WebEx. This was the launch of the WebEx collaborative application platform.
I said to Mr Knight that every enterprise application seems to be turning into the same thing: collaborative apps linked into CRM, ERP and legacy systems. In a year or two, how will I tell the difference in features and capabilities between services from WebEx, Salesforce, RightNow Technologies, Siebel, SAP, Microsoft, and many other enterprise applications; all vying to be enterprise platforms built around collaboration tools.
Mr Knight said there will be a difference and I agree. The winner will be the one that can capture the most vital segment within a company and I think that segment is the salesforce. And do it with a killer user interface. WebEx has 2m users, that's a significant base to sell into.
. . . hunting stories from Greg Gianforte RightNow Technologies
I ran into Greg Gianforte, CEO of RightNow Technologies, one of my favorite executives in the enterprise software sector. I asked Mr Gianforte how his book "Bootstrapping Your Business: Start and Grow a Successful Company With Almost No Money" was doing.
He said it was doing well and he was enjoying letters and emails from readers who had taken his advice to heart, which is to raise money from your customers and not from VCs. [I'm republishing Mr Gianforte's column from last summer in SVW at the end of this post--it is worth reading many times.]
Go out and sell something encapsulates a lot of Mr Gianforte's advice, and it is true, many people find it hard to sell. But if you have a service or a product that can make someone's life better, then you have a responsibility to offer it to that person or company.
Mr Gianforte lives in Montana and he always has some good hunting stories to tell, and as he likes to remind me, he always eats what he kills. He is down in Silicon Valley a lot, but his Montana HQ provides a fresh perspective on our localized thinking.
Silicon Valley is a great place to be, it exposes everyone to cutting edge conversations and concepts. But sometimes we get too intoxicated by our own hot air, and get a bit ahead of ourselves. So it is always good to hear a fresh perspective from outside of the local echo chamber, and that's what a conversation with Mr Gianforte often provides.
. . . Soonr is better than later
I ran into the Soonr management team, also their very able representative Anastasia Marin from Connecting Point Communications.
I had a very interesting chat with Cindy Gordon, CEO of Helix, an e-commerce consultancy group based in Toronto, Canada. She introduced me to Mark Organ. CEO of Eloqua, also in Toronto. And Raghu Raghavan, CEO of Act On Software, based in Portland, Oregon.
. . . Back stabbing or back scratching?
I chatted with a lot of other people too, a lot of WebEx partners. And there are many of these platform + partner roll out events these days.
Everyone supports everyone's platform and turns up for each other's events but it seems there is little love lost between the partners and the platform providers. It may look like scratch my back and I'll scratch yours, but that's just on the surface ... :-)
. . .
Here is the excellent advice column from Greg Gianforte, CEO of RightNow Technologies. You should print it out and stick it on your bathroom mirror:
Reasons not to take venture capital
- If you start by selling your concept to potential prospects (rather than stock to VCs), you will either end up with initial customers or a conviction that your idea won't work. Why raise money and then find out which one it will be?
- Raising money takes time away from understanding your market and potential customers. Often more time than it would take to just go sell something to a customer. Let your customers fund your business through product orders.
- Adding VCs to the mix early gives you an additional set of masters you must serve in addition to your customers. It is always hard to serve two masters, especially in a startup.
-With no money you can't make a fatal mistake. This is a blessing. Without VC money, you are forced to figure out how to extract funds from your customers for value you deliver. Ultimately that is the only thing that really matters.
-Money removes spending discipline. If you have the money you will spend it - whether you have figured out your business model and market or not.
-Raising VC money determines your exit strategy. You will either sell the business or take it public. What if you end up with a very profitable, modest sized business that you want to just run? That is no longer an option once you raise VC money.
-You sell your precious equity very dearly before you have a proven business model. This is the worst time to raise money from a valuation perspective.
Don't forget Dell, HP, Microsoft all originally started without VC funding; you can build a big business with bootstrapping and without VC money.
At RightNow, we doubled our revenue and employees every 90 days for two years before we took any outside money, and even then the employees retained more than 75% ownership after raising $32m.
- - - Greg Gianforte : "Bootstrapping Your Business: Start and Grow a Successful Company With Almost No Money."
SVW affiliate link:
And he welcomes questions from SiliconValleyWatcher readers.
[diggrz: a tag for arts and culture trends and events - in and around Silicon Valley - a new feature from Silicon Valley Watcher]
Lately, I've been deleting music podcasts because I'm tired of hearing a DJ's voice, even for the track listing.
If I wanted to know the track info, I'd look it up on the chapter list in iTunes or read the playlist. Save the chatter for the new Skype wi-fi cellie and let the music of the podcast speak for itself, dig?
BetterPropoganda is an established digital music portal and Memekast features guest DJs doing live mixes. Both are electronic/breakbeat/dance focused, and even if you're only dancing in your chair, they're still hot.These two podcasts have taken over my iPod by giving me 30-40 minute sessions that are mixed live and uninterrupted... perfect for repeat play.
Not enough video sharing sites . . . Dabble lets you search, collect and organize your favorite web videos. What's different about Dabble and other video sharing sites? Hmmm ... the UI?
Dave.tv, another video sharing beta. The difference with Dave.tv is that you can create an entire broadcasting channel to put it anywhere on the web.
. . .
Come back to Silicon Valley Watcher for more diggrz: arts and culture and events posts throughout the week.
[diggrz refers to the nomadic lifestyle offered by mobile digital technologies and gadgets - creating a "nomadig" culture. The diggrz name is also a tip-of-the-hat to some of the ideas of the Diggers, a democratic group that arose in 1649, out of the English revolution .
The Diggers were a radical group that cultivated and protected common lands, and sought to create egalitarian, self-sustaining communities. The Diggers would have found kindred spirits in today's software engineer culture, and the focus on creating commonly owned technologies through egalitarian open source community projects. - Tom Foremski]
The UK ban on laptops in planes leaving the UK or transferring through, is going to be a big blow to productivity for business travellers. Flights to the West Coast of California can take 12 hours or more, (equal to one and a half UK business days or one US business day.)
The UK is a major destination for many Silicon Valley executives. And London has been making a big push in Silicon Valley and in southern California to position itself as an ideal place to site European headquarters. Could the laptop ban hurt London's ambitions to attract more companies?
The ban comes in the wake of the discovery by British police of a plot to blow up an airplane.
The laptop ban, however, might enable airlines to offer travellers in-flight rentals of laptops. Users could bring their data and applications on USB flash drives.
[I've caught one of those stomach bugs and am a bit low to the ground at the moment, but the blog must be fed(!)]
Last week I was with Chris Heueur over at the de Young, we were trying to do a podcast but it was surprisingly busy and this was a mid-week afternoon. So we popped back to his place in Duboce Triangle and recorded the podcast there on his deck in the gorgeous sunshine, in between pauses in his neighbor's lawn mowing activities.
It was a great conversation and Chris is using some of it for an event in Washington.D.C. called "Beyond Blogging 2006: The future of communications." (I didn't realises there was anything beyond blogging :-)
. . .
You can take the man out of Manhattan...and put him in Mountain View. That's what I learned last week when I met with Joshua Schachter, the founder of del.icio.us, the social bookmarking site. It explained why he had that New Yorker's expression on his face which can be summed up as slightly horrified.
On learning Mr Schachter's plight, I offered my condolences. He said he was still looking for decent restaurants in Mountain View, and he had heard that some places might even be open until midnight.
He told me he had spent 10 years in Manhattan and loved the place. After Yahoo acquired his company, he moved to Silicon Valley. "At least people here have heard of del.icio.us."
He says that Yahoo people ask a lot of questions but let him run the business group as he pleases. Yahoo provides the technical infrastructure, which is a big help. I couldn't get too much out of Mr Schachter on the record, but he says to look out for an interesting announcement this summer.
. . .
I recently spoke with Andy Plesser, from New York based Plesser Holland Associates and he tells me his video blogging venture over at Beet TV is doing well. One of his latest posts features Silicon Valley's most famous publisher, Tony Perkins, now at AlwaysOn.
And you might even see myself on Beet.TV very soon...
. . .
The Outcast CEO dinner last week is always an event worth attending. It didn't have quite the same energy as last year, but a lot interesting people showed up. I got to catch up with one of my favs, Satish Dharmaraj from Zimbra.
And the dinner-time show was provided byPeter Hirshberg from Technorati. Mr Hirshberg's presentation was funny and very insightful. I particularly loved his "Who wants to be a VC" a video that featured a group of 11 year old girls presenting business ideas to each other and deciding on who would get funding. I have an 11 year old daughter, Sarah, so I can relate very well. BTW, I recommend VC firms hiring a few 11 year old girls as consultants--they asked better questions than some of the real VCs :-)
. . .
The future of PR is in the hands of Blake's generation and often it is these younger people in the PR agencies that know more about this emerging world of new media/new communications than their older colleagues. They haven't yet been taught what can and cannot be done, and they often have unique insights on PR and some of its ludicrous and wasteful practices.
. . .
I was thinking about how everybody seems to have a different way of communicating with the world. Some prefer email, others swear by instant messaging. I think we should all publish our own API to the world.
In the same way that an API (Application Programming Interface) tells software developers how an application or web service interacts with other software/services, a personal API would do the same.
I'm not sure what the right format to express a personal API would be but mine would be something like this:
Tom Foremski API
Email: Good but because of volume I sometimes miss emails and other times it can take days to answer. You can resend to make sure I saw it but please no phone calls. I have to impose daily email blackout periods of several hours at a time because I need uninterrupted time to write.
IM: Don't use it.
Cell phone: Good, please use especially when urgent or time related. It's okay to call anytime, I will answer if I can.
Desk phone: I don't give out this number.
Meetings: I like meetings and prefer them instead of email or phone in establishing relationships.
FAX: I don't use it.
Mail: Only for checks.
. . .
The Other Cinema recently released "The Net: The Unabomber, LSD and the Internet." It's an interesting documentary by a German team and it's fascinating to see how our tech culture in Silicon Valley/Bay Area became intertwined with that of a serial killer.
There are some great interviews in the DVD extra section. Stewart Brand and John Brockman offer several interesting stories on how part of the the computer industry became affected by the counter-culture movement in the early 1960s and the connection to the Beat writers.
For a really unique insight into the Internet, its creation and organization, the interview with Paul Garrin is fascinating and well worth buying the DVD to see. Mr Garrin has a truly unique perspective and his insights certainly set me thinking about things Internet-related in new ways.
From the description of "The Net."
This exquisitely crafted inquiry into the rationale of this mythic
figure situates him within a late 20th Century web of technology – a
system that he grew to oppose. A marvelously subversive approach to the
history of the Internet, this insightful documentary combines
speculative travelogue and investigative journalism to trace
contrasting counter cultural responses to the cybernetic revolution.
Soonr, a startup that gives you access to your PC applications from any cell phone, recently introduced a cool way to use Skype to make extremely cheap international calls on your cell phone, and also very cheap domestic calls--if you have the right calling plan.
I got a briefing on it last week from Soonr CEO Martin Frid-Nielsen: you download a little app onto your PC then using your cell phone you use Skype on your PC to place a telephone call. Within a few seconds, you get a Skype incoming call to your cell phone connecting you and your target phone number. In this way, you can make international calls on your cell phone for pennies instead of the 40 cents and above rates your cell phone network charges.
In my case, it is even cheaper because I get free incoming minutes on my Sprint calling plan, which means I'm not using up my monthly minutes.
But won't the cell phone companies get a bit upset with this, I asked? "Most people will be using up their monthly minutes, so it helps to drive their revenues," says Mr Frid-Nielsen. Check it out here, it's free. http://www.soonr.com/
More from Soonr release:
SoonR Talk works with a person’s PC like a switchboard to set up their calls. Users simply click on the buddy they wish to talk with and SoonR Talk tells their PC to call their mobile phone using SkypeOut, then instructs Skype to call the buddy and places the user into a conference. SoonR Talk can even create calls with multiple users from the mobile phone. Just like on the PC, SoonR Talk shows which buddies are online and if they are not there, a user can IM them so they can see the message the next time they are using Skype. SoonR Talk fully supports Skype chat.
SoonR Talk is the latest offering in SoonR’s line of services that delivers the power of a person’s PC to their mobile phone. Other SoonR service features include SoonR Desktop, that lets people search and access the files on their PC desktop and SoonR Organizer, that lets people check their Outlook email, calendar and contacts – on any mobile phone with a browser, without the need for synchronization or installing software on the phone.
Mark Coker reports from Startup School at Stanford university where 600 people from around the world listened to some of Silicon Valley's top entrepeneurs give out their best advice.
Palo Alto - Launch fast, keep it simple, update frequently. That was the message hammered home this Saturday to 600 wide-eyed entrepreneurs packed into Stanford University’s Kresge Auditorium for Startup School 2006.
Attendees at the invitation-only event, who came from as far away as Europe, South America and Asia, were there to learn startup business advice from over a dozen tech industry movers and shakers. The crowd, mostly men in their early twenties, sat in rapt attention as they heard war stories of tech business success and failure from men and women not much older than themselves.
The event was co-sponsored by seed venture firm Y Combinator and Stanford’s BASES organization, and featured presentations covering fundamental topics such as funding, hiring, marketing, operations, and legal planning.
Joe Kraus: I'm a startup addict
Joe Kraus, the former co-founder of the Excite search engine that sold for $6.7 billion in 1999, kicked off the conference by confessing to the audience that he was a startup addict. The crowd laughed, probably wishing the same affliction upon themselves.
Palo Alto - 600 people from countries as far away as Brazil and Japan will converge at Stanford University Saturday for Startup School 2006, a conference featuring a dozen tech industry movers and shakers such as Caterina Fake of Flickr fame and Joshua Schachter of social bookmarking site, del.icio.us.
No, attendees won’t learn how to build next generation Web 2.0 websites with PHP, Python or Ruby on Rails. Instead, they’re coming to receive a one-day crash course in how to build a successful technology business.
For those lucky enough to nab a ticket to the invitation-only conference, Startup School 2006 will offer attendees a rare chance to hear first-hand war stories from the successful pioneers behind some of the biggest technology trends shaping the industry today.
I had to take a break from interviewing and writing all day long so I popped down to the Ad:Tech conference downtown. But it was 7pm so all that was going on were the evening events.
I had some invites and it was a gorgeous evening in San Francisco and so I just wandered in and out of various places, content to observe and amble around.
And this is the point of this post: I can walk into any room and talk with anybody and I will walk away with a story. I like to joke with people that there are so many stories here, that I can kick over an empty soda can in the street and find a story. And it's true, and I do it time and time again.
So this evening I met the very excellent Chris Heuer, and his delightful entourage. And the wonderful thing about all of this is that there are so few people that speak this freakish pig-latin that people in the bloggerhood speak.
I certainly didn't speak it until I became a journalist blogger about a year or so ago. And at the time, I would estimate there were maybe 150 people that understood this special language...
Now, there is at least a 200 percent jump in that number. There might even be as many as 500 people that speak this language, worldwide (most are here).
And that number will not hockey stick, it will jump onto a logarithmic scale very, very soon. But in the meantime it's great to find like minded souls.
And it is so wonderful to be here, in Silicon Valley, the birth place (again!) of the next big thing. I've spent more than 20 years here, covering Silicon Valley as a reporter, looking over other people's shoulders with my notebook in hand, saying "Wow, that looks really interesting, tell me what you are doing."
Now, my colleagues in the mainstream media call me up and say "Wow, that looks really interesting, tell me what you are doing." It doesn't get any sweeter than that.
There is a new trend emerging, but it is not where you might expect it. Silicon Valley is buzzing, there is a new energy in the air, but it is not where most people think it is.
The next big thing is ... [I'll tell you if you ask me :-)
- - -
BTW, Chris Heuer and his buddies are heading over to New Orleans next week to bring the new social/media technologies to the neighborhoods and the small businesses that anchor the city's communities. It's a real test of our collaborative media technologies; if we say these technologies are powerful change-agents then let's put them to use in the most needed areas of our society!
My focus is schools, but there are many other places that we can put these powerful and very inexpensive technologies to great use. I support what Chris and his group are doing and you can too. You can contact Chris here on his web page if you'd like to help.
Scott McNealy's departure from Sun Microsystems has been on the cards for more than a year. It will likely be just one of many departures by veteran Silicon Valley and other captains of the tech industry over the next year or two, as that generation moves into the grey zone of life.
Mr McNealy has a superb track record, and his executive team over the years has gone on to lead many other companies. But it is hard to preside over a company that is not growing as Sun used to grow: explosively.
I remember chatting with Ed Zander, about a year after he left Sun and he spoke about how tough it was to downsize a workforce, and the many difficult decisions that Sun would have to make to survive the longest downturn in Silicon Valley's history. When you've spent most of your time hiring like mad, and focused on staff loyalty, downsizing is an anathema.
Managing a company that is growing very quickly is a very different challenge from managing a company in today's very tough markets. It is a very different culture and it requires a cultural change that not every company can manage well.
Sun has a huge market and has large opportunities, it won't go away anytime soon, but it does need a boost in the arm. I've often said that a Sun and Hewlett-Packard merger looks good to me, with some very good synergies. And it would be an interesting play against IBM, a West Coast v East Coast rivalry that could play well.
Is Mr McNealy's departure and the subsequent head count reduction, estimated at 5,000 by financial analysts, a way to dress up Sun for an acquisition or merger?
And who else will depart for the green pastures of the golf course? Steve Ballmer over at MSFT has been a bit quiet, Ray Ozzie is on the ascendent, there might need to be some room made at the top...
Who will be next to go is less interesting than who will be in the ranks of the new leaders of Silicon Valley and the tech industry. To be honest, I don't see much of a leadership emerging yet; maybe it is under the radar, maybe the new leadership will be apparent when the new upstart companies emerge?
But will we have new upstart companies that can survive beyond five years before they are acquired? Is the game these days a case of scale? In which case, the giant sucking sound of GOOG, YHOO, ORCL, SAP, INTC, EBAY, etc will dominate the technology/media world. And thousands of startups will compete to get sucked into those gargantuan organisations and we won't get the same crop of dynamic and colorful business leaders that used to characterize Silicon Valley.
That is one, very obvious scenario. However, the expected scenarios often don't come through quite as expected so I'm looking forward to picking out the new leaders. Let me know if you have any suggestions on who might be in the ranks of the new Silicon Valley/tech leadership.
[There has been a lot written recently that Silicon Valley is back--here is part of a post I wrote in mid-November 2004.]
I've had lots of chats about Silicon Valley lately and I’m of the Bachman Turner opinion that you ain’t seen nothing yet.
When I arrived here November 8, 1984, Silicon Valley was going through the down cycle following the PC boom. A hundred PC companies wanted just 10 per cent of the market, wanting to strike it rich, as rich as the Apple IPO—the Google celebrity IPO of its day.
Hundreds of Apple staff became millionaires, including secretaries and the guy that ran the parking lot. The media coverage was massive. VCs rushed in like a herd and funded a huge number of PC companies and when the bubble popped, the down cycle was harsh. Stories about Silicon Valley’s death were constant and grinding for several years. I’ve seen several business cycles and the same thing happens in each down cycle, endless speculation about Silicon Valley’s future. What future does Silicon Valley have?
I think I can answer that question very easily—and I’ll accept any size bet on this call: when Silicon Valley comes back, it will be bigger than before. (Actually, it’s been back for a while--hence this venture.)
[I was chatting with Ron Piovesan, from Cisco on this topic recently, and he says has also seen signs of improvement. He laughed when I said I own the dotcom name: SiliconValleyIsBack.com. I said I’m serious, I do own it!]
Silicon Valley is very much like a fairground slurpy -- big chunks of ice with most of the juice at the bottom.
And there is a lot of juice accumulating, the laptops are discretely reappearing in bars and restraunts, and there are many signs of bubbly behavior.
Silicon Valley is going to have a larger impact than before. I’ve been through several business cycles and each time Silicon Valley has come back stronger.
In the center of Silicon Valley, just across the highway, and just minutes from the pristine streets and academic blissfulness of Palo Alto, is East Palo Alto. It is a ghetto in the traditional sense--poor, urban, mostly African American, and unsafe.
Plugged In, a charity that taught East Palo Alto children computer literacy, has had to lay off its entire staff. Here is more on this situation from my pals at IDBNetwork:
Plugged In was forced to lay off all six full-time staff members -- two of whom have kept working without pay. Losing Plugged In would be a terrible blow to East Palo Alto and to Silicon Valley as a whole.
The organization needs $27,000 by December 31 to keep operating into next year, and $108,000 for the entire year.
There's something seriously wrong with our priorities if non-profits like Plugged In that focus on bringing technology into the community -- right here in Silicon Valley, the center of technology innovation -- aren't being supported by the technology giants that live next door. Plugged In needs and deserves our immediate help.
We encourage you to help them in any way you can. Potential donors can contact Michael Levin at 650.322.1134 ext. 13 or at firstname.lastname@example.org.
Donations may also be sent to EPA.net, c/o Plugged In, 1836B Bay Road, East Palo Alto, CA 94303.
To learn more about Plugged In visit:
. . . is BFG seeking love in all the wrong places?
I went to a garden party in the backyard of Heidi Roizen's house in Woodside. The event was the annual SDForum Visionary Awards.
This is a great event, because much of the Silicon Valley aristocracy turns out for it. It is small and comfortable; and people let their hair down and tell funny stories about each other.
The winners this year were:
It was a great evening and here is the rest of it. . .
Garden party part two: McNealy's tips for creating room at the top
Garden party part three: Bill Draper, the godfather of Silicon Valley's oldest VC dynasty
Garden party part 4: Larry Sonsini leads valley lovefest for Carly Fiorina . . .
Garden party part 5: SVW uncovers backyard plot by Microsoft loyalists
. . .McNealy silenced by Redmond gold? And who else?
Ray Ozzie, creator of Lotus Notes, head of Groove Networks, and now CTO of Microsoft, won the last of the 2005 SDForum visionary awards. Although he deserves such an award for his body of work, I couldn't quite rid my mind of thoughts of Microsoft, and its hand at work.
It's not unnatural that the world's most innovative software company would seek to ally itself with the world's most innovative region bar none.
After all, being stuck up there in the soggy northwest, in the Fortress of Solitude, the cabin fever must be terrible. Here, in Silicon Valley, companies are challenged moment by moment. You get up and say one thing, and ten others will tell you you are a fool - and they'll prove it. That's what makes it good. That's why the innovation is here.
Looking back on the evening, there was clearly an attempt at some rapprochement between the world's capital of innovation, and the world's largest most-found-guilty-of-crushing-innovation-through-illegal practices computer company.
Part 2 of our tales from the annual SDForum Visionary Awards garden party in Woodside, at which the Valley aristocracy let their hair down and tell stories about each other.
Scott McNealy, Sun's CEO, introduced Carol Bartz, CEO of Autodesk and a former Sun VP. Mr McNealy played the familiar role of that irascible character we all know and love from many performances.
Mr McNealy was in classic form Wednesday evening, dressed in his signature jeans, light shirt and navy blue blazer, and sharing a vignette or two about Ms. Bartz, who used to work at Sun.
He recalls that Ms Bartz stomped into his office and resigned because of a generous rival job offer. Mr McNealy acted swiftly: He walked down the corridor and into the office of his VP of Marketing and said "You're fired." He walked back over to Ms Bartz and said "You can't resign, you're VP of Marketing!" What happened to Lloyd, Ms Bartz asked? "Lloyd is no longer with us," deadpanned Mr McNealy. Lots of laughter.
Over the past few days readers may have noticed that I've been writing (ranting too) a lot about Doug Engelbart, popularly known as the inventor of the computer mouse, but also the source of many fundamental computational models and applications that we take for granted today.
Some have likened him to a Buckminster Fuller. Tony Christopher from Digital Places tells me that one of the people on the board of Bootstrap.org, the Mr Engelbart-focused organization, once said "this is like having the chance to videotape/capture Leonardo DaVinci."
...and how the Sixties counterculture smashed the work of leading computer researchers.
"How do you deal with society when its paradigm of what is right is so dominant?" Doug Engelbart, the 1960s computer visionary asked me recently.
It's a question he has pondered many times over the past 20 years, ever since his research funding was taken away.
Mr Engelbart and his teams of researchers at the Stanford Research Institute (SRI) shaped the look and feel of the PC, as John Markoff chronicles in his latest book What the Dormouse Said: How the Sixties Counterculture Shaped the Personal Computer Industry.
Mr Markoff's book raises the profile of Mr Engelbart, well known as the inventor of the computer mouse, and less well known for his seminal work in creating many of the concepts later found in the personal computer. Mr Markoff returns credit to where it is due.
What the book does not chronicle is how the rise of the PC killed funding for Mr Engelbart's work.
The place to be Wednesday evening was at Xerox PARC, for a reunion of the seminal Homebrew Computer Club and a tribute to a man that history has tried to forget, or at least relegate to a minor role: Doug Engelbart.
Mr Engelbart is usually remembered simply as the inventor of the computer mouse. But dozens of computer pioneers stood up Wednesday to acknowledge his much larger role, as one of the most profound and influential thinkers of their time.
The tributes to Mr Engelbart went on and on, long after the allotted time for the event, with many stories told publicly for the first time. It was priceless material for future archaeologists exploring this fascinating spot on earth.
I try to visit my founding sponsors on a regular basis to catch up with what's going on, and to chat about the industry. So recently I went down to Palo Alto for a meeting with Tibco CEO Vivek Ranadive and his right hand man Ram Menon, senior vice president, Worldwide Marketing. Tibco has been a stalwart supporter of SiliconValleyWatcher from the beginning.
I like this company - and there's nothing in our contract that forces me to say that. I like the culture, and I like the people. Tibco is very much old school Silicon Valley, calm, collegiate, an engineering culture.
This time, we're talking about Vivek's book project on the "Predictive Enterprise" a concept that describes Tibco's approach, and technologies that allow large companies to foresee business swings and take appropriate action.
The remains of Silicon Valley’s wet winter refused to budge Wednesday as a large storm dumped cold rain all day long, and then at times it dumped it three times harder. I wasn’t going to let that stop me from heading into the depths of Silicon Valley and to a conference that promised to be a top summit (one day it’ll be a Yalta ;-) of the web services/software-on-demand community.
The new old guard of the software industry was assembling: Salesforce.com, RightNow Technologies, NetSuite, Webex, Qualys, Grand Central, Concur. And all the Venetian princes were there too: Marc Benioff, Halsey Minor, Greg Gianforte, and a senior representative of the Vatican -— IBM’s emerging technologies strategist Gerry Mooney.
Louise’s guestblog on Steve Job’s return to Apple made me wonder if Gil Amelio knew the likely outcome of bringing back Steve Jobs? Did he stand any chance at all against Jobs, a veteran of many, many, gruesome political battles?
I have an image of a praying mantis Steve Jobs holding a still, rigid Gil Amelio, and calmly and coldly munching him head first. A victim of Silicon Valley's Machiavelli. Or was the acquisition of Next a reverse takeover of sorts, engineered by Jobs but with the cooperation of Gil Amelio, happy to get out of a rapidly failing company?
Jobs’ wasn’t doing that great at the time. Next had been struggling for 11 years and Jobs had been forced to ditch the workstation hardware business and regroup as a software company. It had some good software technology and enterprise software development tools but it was trying to compete in the Fortune 100 enterprise software market. You need to have a ton of money over a long period to market your software in that space. I’d run home too . . .
Gil was a man in trouble too, Apple was sinking fast and it had a dire need for operating system technology.