I came across iFood earlier this year at the well-attended BayBrazil conference in Silicon Valley where Fabricio Bloisi founder and CEO of Movile (photo:below), a Brazilian mobile apps and investment firm, was the keynote speaker. Bloisi is a colorful personality and he’s funny and humble considering all the success he’s had in business. 

Bloisi spoke about coming to Silicon Valley many years ago and the lessons he learned and took back with him to use in his many investments — Movile is one of the biggest shareholders in iFood. He said there were just 30 employees at iFood when Movile first invested. And he helped iFood apply the chief lesson he learned from his time in Silicon Valley: think big and develop a mission to improve the lives of more than a billion people.

Armed with that philosophy iFood has become a giant and the clear market leader in Latin American food delivery with more than 21.5 million monthly orders processed and 116,200 restaurants registered in 822 cities. 

According to a September Frost & Sullivan report on the worldwide online food delivery market, iFood had 86 percent market share in Brazil last year. The global consulting firm forecasts that Brazil will surpass $1.5 billion in online food delivery sales in 2019 and the value of the global market will soon be $200 billion. 

Bloisi predicted that artificial intelligence (AI) technologies will eventually make it possible for iFood-delivered meals to be cheaper than buying and cooking food at home. That’s a great example of setting big ideas — and then developing the innovation needed to get there. 

AI is at the core of iFood but not just in an elite inner-circle group of AI developers — the company this week announced that all employees of iFood and Movile — more than 3,000 — will undergo mandatory training in AI during 2020 beginning with what is AI, how to use it, what to use it for, and progressing to more advanced training. 

“Everyone is either directly or indirectly affected by AI,” said Carlos Moyses, iFood CEO. "If you’re on the sales team, AI is helping direct you to the best prospects. If you’re a member of the customer experience team, AI helps further augment the customer experience.” 

Because of this fundamental reliance on AI, the executive team decided it was "absolutely critical to be the first Brazilian company to help educate all of its employees to be experts in AI."

A newly formed group within the company called the AI Academy (an R&D lab) that was launched in April is now staffed with about 100 data scientists and related experts to develop AI technologies and work closely with various business units to solve the biggest problems and drive more rapid growth and market share. . 

In addition to AI-trained staff, here are several other current and planned innovative initiatives at iFood such as:

— The use of autonomous robots to help with food deliveries within large buildings or large campus-like areas. It’s a partnership with Brazil-based Synkar that will kick off early next year. 

— iFood has created its own digital maps which it uses to determine food-preparation times to improve its delivery predictions and to map out more efficient routes for its delivery partners. .

— It is the first in Latin America to use Amazon’s Alexa to select from menus and order food.

— It is able to monitor delivery partners and reward those that keep to posted speed limits.

— It has plans to use drone delivery but not to displace delivery partners, but to move food from kitchen to iFood hubs that can cut up to 12 minutes off current delivery times.

— It has set up internal, cross-functional teams to quickly find solutions to work-process inefficiencies and to develop new services.

iFood thinks of itself as a tech company: Brazil’s first foodtech giant..

Fabricio Bloisi’s focus on food is a genius move in terms of thinking hugely big. Food is intensely important to every person alive and is needed several times a day.  Food is core to our health and to maintaining the civil functioning of society. And it includes a vast populace of producers and consumers. It’s an opportunity to make an enormous impact in what is the world’s largest target market — the entire population of the world.

Fast growing startups are found in many parts of the world but that doesn’t mean Silicon Valley is going away.. Silicon Valley is where innovation comes to be scaled. It has the capital and it has the people with the right expertise to build startups into global giants. Manny of Silicon Valley's lessons can be applied by anyone anywhere but it's hard to replicate the culture of its venture capital community and its high tolerance for risk.

The young Hertz Fellows will spend two summers working with top researchers in key programs identified by the Gates Foundation as critical to its mission of improving global health and development outcomes.

Robbee Baker Kosak, president of the Hertz Foundation, said she was delighted with the success of last year's fellows program with the Gates Foundation and that the relationship had expanded.

The young Hertz Fellows will spend two summers at least one summer working with top researchers in key programs identified by the Gates Foundation as critical to its mission of improving global health and development outcomes.

Robbee Baker Kosak, president of the Hertz Foundation said she was delighted that last year's fellows program with the Gates Foundation had been expanded.

"The partnership between our two foundations started due to a shared belief in the importance of bringing scientific and technological solutions to the wide range of health and development challenges faced by people around the world," said Kosak.

The Hertz Foundation is well known for its rigorous methods of surfacing the best of the best among thousands of young graduates through several levels of applications, recommendations and interviews by panels of top academics:

"Each submission requires four letters of reference and candidates are evaluated on creativity, drive, and innovation. Two personal interviews are required. Applicants that show entrepreneurial traits and own patents are favored in the selection process."

Also: Hertz Foundation: 60 years of finding and funding top scientists

Currently the Foundation selects 10 new Fellowship awardees, and the Gates supported Fellows are chosen among those 10.

Hertz Fellows receive five-years of funding at any one of the nation's top 49 research universities to work on any project without restrictions plus they have access to a mentorship program among the more than 1200 Hertz Fellows.

Hertz Fellows receive five years of funding at any university to work on any project without restrictions -- plus they have access to a mentorship program among the more than 1200 Hertz Fellows.

Many are successful Silicon Valley entrepreneurs such as TJ Rodgers, founder of Cypress Semiconductor, and Eric "Astro" Teller, head of Alphabet's ($GOOG) experimental "moonshots" lab.

Interestingly, Teller is the grandson of Edward Teller, the US physicist that inspired the mission of the Hertz Foundation to search for the best young graduates. Edward Teller is best known for his work on creating the H-bomb.

Teller was a close friend of John Hertz, the founder of the company that became the Hertz car rental business. Teller convinced him that progress in engineering and applied sciences is the "fuel that improves the human condition."

"Nearly two decades ago, the Foundation expanded the Fellowship to students in the biological sciences, and they've made extraordinary advances in their fields," said Kosak. "We're humbled that the Gates Foundation is now opening doors to these young researchers with a passion for global health and development."

Silicon Valley is very close to the Livermore-based organization. And five of the six Hertz Fellows chosen to work with the Gates Foundation scientists have local connections with Stanford, UCSF, and Berkeley universities.

THE 2018 GLOBAL HEALTH AND DEVELOPMENT FELLOWS ARE:

• Sarah Hooper, who is working with statistical approaches to improving malaria diagnosis
• Maxim Rabinovich, who is focusing on delivering malaria medication
• Reuben Saunders, who studies maternal and infant nutrition
• Judith Savitskaya, who works on plant-biomes
• Ravi Sheth, who works on gut health and infant mortality
• Alex Siegenfeld, who is looking at geospatial malaria data in Nigeria

They will join returning fellow Alex Ferris who has been studying the spread of cassava disease.

The Hertz Fellows supported by the Gates Foundation are just the tip of an immensely talented pool of young graduates. Kosak hopes that the partnership with the Gates Foundation will attract other organizations that could offer them funding opportunities or involve them in working on important projects.

• More information here: The Fannie and John Hertz Foundation

There are no unions in Silicon Valley but maybe they aren't needed if software engineers can self-organize at a moment's notice — using the same communications and collaborations tools they use at work and at leisure.

The recent victory by Google workers to stop a military AI project has given confidence to others at Salesforce, Microsoft and Amazon to challenge their management about business deals with government agencies involved in immigration control.

Will Silicon Valley's largest companies now have to clear all business deals with a workers' council of some sort? Will senior management need approval for their business strategies from their staff?

Will the US military or government agencies trust Silicon Valley engineers to not sabotage or delay what they might consider to be immoral projects?

Or will Silicon Valley companies use their own technologies to quickly sandbox and isolate internal protests before they spread?

Military AI

Google's management certainly tried hard to stop the internal protest to its Project Maven — a contract with the US military to use machine learning to improve target image recognition by drones.

Ben Tarnoff has written a fascinating account in Jacobin magazine on how the protest was organized.

A Google employee called "Kim" told Tarnoff that the initial September 2017 protests of Project Maven were small but really took off in early 2018 leading to Google senior management holding all-hands meetings to protect Project Maven.

Diane Greene, head of the Google Cloud business group, came across as ill-prepared for the questions she was asked.

An employee said, "Hey, I left the Defense Department so I wouldn't have to work on this kind of stuff. What kind of voice do we have besides this Q&A to explain why this project is not okay?"

Co-founder Sergey Brin told the employee, "Letting you ask that question is the voice that you have. Very few companies would allow you to do that."

Kim told Tarnoff: "His remark came across as tone deaf and out of touch to almost every Googler who heard it."

Thousands of employees who heard that remark signed onto the protest — leading to a stunning and historic victory which will have wide repercussions.

Letter to Benioff

Marc Benioff, CEO and founder of Salesforce, the largest tech company in San Francisco, had to answer a recent letter from 650 Salesforce staff protesting the business relationship with US Customs and Border Protection agency over its policy of separating immigrant families.

Benioff praised his workers for the letter of protest but said Salesforce won't stop doing business with the agency because its software is only being used for recruitment and communications.

Salesforce is well known for its social mission and employees volunteer at local schools and charities. Benioff built a $100 million children's hospital and tries to motivate Silicon Valley's successful entrepreneurs to donate more of their wealth to charities.

But how will Salesforce react to a growing power among its tech workers? How will Google react?

Google dropped "Don't be Evil" as a motto earlier this year — a phrase that was extremely important in 2004 when it filed its IPO papers. "Don't be Evil" was in a letter to shareholders from the founders — the first thing you read in the several hundred pages long SEC filing.

It was important for Google's founders Larry Page and Sergey Brin to cast the company as a force for good because it was really a letter addressed to future employees. They knew shareholders would not be the problem — they had to make sure software engineers wouldn't be turned-off by the naked greed that surrounded tech IPOs — and that they would feel excited at working for an online ad company.

It addressed the stock issue by choosing a "Dutch auction" model with mixed success — Wall Street firms still made a huge amount of money. And the letter stated its global social mission up front. It promised to establish Google Foundation as an institution eclipsing the corporate parent by solving the world's most pressing problems. It worked.

Foremski's Take:

Google managed to attract top engineers and business leader, but has it grown too far away from the founding principles that appealed to so many people?

Will Google's C-suite now share its executive powers with Googler representatives?

There's little chance of that happening beyond some token concessions. Google's founders don't share.

The same 2004 IPO document set out a dual shareholder structure where founders and other insiders have ten times the voting power. A small number of executives control every aspect of the company.

Google will seek to control and eliminate any future dissent so it doesn't spread. It has to do this because it has to diversify from near total reliance on advertising revenues. Competing for multi-billion dollar military government contracts is absolutely essential to those efforts.

But how will it package such deals to appeal to its workers while also assuring customers its people won't sabotage projects they don't agree with?

Silicon Valley will most certainly experience further resistance by tech workers beyond Google. It's not just because of the Project Maven victory but because there's a larger trend at work.

Several studies this year have found a rise in expectations by employees that their business leaders take public positions on important issues.

And if their CEOs won't take a position, Google and Salesforce workers have shown that they can force them to choose. Tech worker power has reached a tipping point in Silicon Valley.

This will force many Silicon Valley companies to add another chair to the boardroom. It will be empty—but everyone in the room will be reminded to ask, "Will our own workers accept our decision?"

Tech workers are a target of scorn but they have not been given any means of reply or even any identity. The rise of tech worker resistance signals a new voice in society — interested in freedom and justice not just free lunches.

. . .

A version of this article appears here: 

https://www.zdnet.com/article/the-rise-of-tech-worker-power-in-silicon-valley-self-organizing-and-winning/

The SEC usually focuses its resources on protecting retail investors -- the not-so knowledgeable and not-so smart investors -- from the darker corners of finance. Yet these investors made rookie mistakes.

Francine McKenna at Marketwatch reports:

Theranos and founder Elizabeth Holmes raised $700 million from mostly wealthy investors without ever having to provide financial statements audited by an independent public accounting firm.

Super smart investors plus an impeccable board of directors: Henry Kissinger and George Shultz, former Secretaries of State; William Perry, former Defense Secretary; Bill Frist and Sam Nunn, former US Senators; Jim Mattis, the current US Defense Secretary; and Richard Kovacevich, the former CEO of Wells Fargo Bank.

The investors and the board were all capable of asking for basic financial information and checking the blood-testing technology claims.

Instead, they rounded up other investors and raised even more money, and they used their contacts in government and industry to win large contracts for Theranos and for a technology that did not exist. Ouch! This is hugely embarrassing for these powerful people, but it has nothing to do with startups.

They were all suckered in by a Stanford dropout who convinced them she had the chemical engineering knowledge to lead the development and commercialization of a very complex technology: Multiple blood test results from a single drop of blood.

The SEC said:

“The Theranos story is an important lesson for Silicon Valley. Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”

Silicon Valley investors want their startups to think big. They want giant ambitions because if you promise the stars and you miss you might hit the moon and a moonshot is great.  

I heard Elizabeth Holmes speak in September 2015 (above), and she is incredibly impressive. She authentically believes in her mission and her talents. And she speaks passionately and directly to people's experiences. She can raise the hairs on the back of your neck. It's a valuable talent.

She lives simply and has not sought to cash out her stock or enrich herself in other ways. But knowing what we now know -- in those interviews from 2015 she appears to be as deluded about her own talents and the bright future for Theranos as her investors used to be yet she knew it to be fake. 

So far, the SEC has said nothing about the conduct of the board of directors or its responsibilities in this case. It would be a very brave SEC to question that board.

If there is a meaningful lesson for tech investors from the Theranos case it might be this:

A startup founder's passion cannot substitue for talent or ability - but you will fund it anyway.

Passion almost substitutes for talent and ability -- it can fill in the gaps. It's tremendously useful in leadership but it needs guidance and that's the missed opportunity for the Theranos board. 

Robin Li, an investor with the San Francisco venture capital firm GGV Capital, stood in the Madison building in downtown Detroit and said, "This is nicer than San Francisco."

Roose spent three days on a luxury bus with a few venture capitalists touring "rust belt" locations and discovered that there are startups everywhere. Which means one thing: the end of Silicon Valley.

Not one person in the article says, "Silicon Valley is over" so where does the headline come from? A desk editor or sub-editor penned that headline but why?

It's a headline that's not true and not supported by the article -- a strange editorial decision in this age of fighting fake news.

It's also strange why the rise of a regional innovation center in South Bend, Indiana; Flint, Michigan; or Youngstown, Ohio should always be reported as the end for Silicon Valley. Déjà vu all over again, and again and again.

There have been countless media stories over the years about the death of Silicon Valley amid the rise of innovation elsewhere.

We don't live in a binary world. Silicon Valley can continue to do well and other innovation centers can also succeed.

Yet there seems to be a constant desire to see Silicon Valley fail -- not realizing that's how it succeeds -- by funding so many failures.

Silicon Valley knows that the winners more than balance out the losers but that's the secret. Others love to laugh at Silicon Valley's failed startups as if that proves anything.

Silicon Valley Scales

Silicon Valley is not going anywhere and it's not dying. But it is changing.

Yes, you can innovate anywhere in the world -- potentially. But you will come to Silicon Valley to scale your business.

Silicon Valley capital is large and bold and ready to scale a promising startup. And it has the expertise -- both technical and managerial to scale businesses. And it has the connections to sell them.

Scale is the new business of Silicon Valley because scale wins. First to scale trumps first mover advantage and it establishes dominant businesses in each market and industry with little room for other companies.

Scale is not good for innovation because a startup cannot compete against scale -- it would take it years to build its business organically.

Large platform companies such as Google, Facebook, Microsoft, Amazon, IBM, SAP, Cisco Systems, Oracle, etc, can acquire startups and immediately scale those technologies across their entire platform. It would take years to do that organically. And all those former startup competitors are suddenly in the dumpster.

Hollywood movie production moved to Canada years ago but LA kept the glamour. The innovation might originate elsewhere but Silicon Valley will keep the innovation mantle even if the source is elsewhere.

Innovation is a brand

Silicon Valley is becoming like San Francisco's Union Square district with its flashy flagship stores for big brands -- designed more for public relations than profit.

Similarly Silicon Valley is where large companies are flocking to site their "Silicon Valley Research/Innovation Labs". A few that are already here: SAP, Baidu, Ford Motor Company, GE, Qualcomm, Samsung, Panasonic, Volkswagen, and there will be lots more joining them.

[Microsoft closed its Silicon Valley Research Lab in 2014 but it doesn't need to establish its innovation capabilities unlike many others.]

No research or innovation will come out of these corporate sites -- unless it's accidental. It is where the big companies can host their key customers and also provide job perks to their global engineers with three-month stints in Silicon Valley. It's for show and not for development.

Silicon Valley is not over -- it will co-exist with every other innovation center.

Lastly, people here aren't much affected by criticism of Silicon Valley because no one identifies with Silicon Valley -- the region only exists for outsiders.

Gordon Moore’s Law describes the economics of innovation

Demand for chips is huge with chip prices jumping higher every month and shortages of key components such as memory halting product manufacturing lines. The Semiconductor Industry Association this week reported a record $35 billion in August sales -- a jump of 24% -- the thirteenth consecutive monthly increase over the year ago period.

John Neuffer, head of the Semiconductor Industry Association, said:

"Sales in August increased across the board, with every major regional market and semiconductor product category posting gains... Memory products continue be a major driver of overall market growth, but sales were up even without memory in August."

A big jump in sales doesn't mean a big jump in units sold -- it means prices have risen sharply. It means higher prices for new servers, network equipment, consumer electronics, to put it simply: the entire digital fabric of our future -- including all of its promises of advanced AI, superior healthcare and a myriad other projects of technological progress -- will cost more; and there will be less of it. And there's no guarantee that prices will come down this time -- as they usually do.

This problem of chip shortages and higher prices is normally solved quite quickly by the chip industry.

Every boom spurs an over-investment of capital in new chip fabs and the resulting glut crashes prices and the bust cycle begins. But the availability of cheap chips creates new applications and new markets and new investments and new progress is made. This has been the economic cycle that underpins the innovative leaps and bounds of the technological miracles that enable our modern world.

Cheap chips...

The semiconductor industry does not get the recognition it deserves for its role as the foundational technology that has fueled the engines of innovation in every industry and in every market. Every two years the chips get twice as fast at half the cost. Sloppy software runs like a gazelle -- and faster chips makes for a a faster route to innovation of all types.

For more than 50 years the chip industry has been vital to our fast pace of innovation and in making technologies affordable on massive scales. But this time those cheap chips might be a memory and prices could remain high and shortages lengthy and even ruinous to some companies.

The chip industry is struggling with sub10 nanometer manufacturing and the challenges are becoming ever more expensive to overcome. The slowing of Moore's Law means stalled innovation: AI needs brute force computing power, so does scientific research such as drug discovery; and so do a trillion business processes. Computing costs are not zero even though programmers write code as if they were.

We don't have anything that can drive innovation at the same pace, and as broadly, as the chip industry. It means that the future will be delayed and the fruits of innovation will be far less affordable and shareable.

The SF/Bay Area based Hertz Foundation has found a way to surface the best young scientists and fund their work which accelerates the timeline for new breakthroughs. It’s attracted attention from the GatesFoundation with a $5m grant.

John Hertz is known as the eponymous founder of one of the largest car rental companies in the world; less well known is his foundation which in its 60 year history has discovered and funded hundreds of talented young scientists across applied disciplines in science, maths, engineering and biology.

Every year the Fannie and John Hertz Foundation chooses 12 to 15 Hertz Fellows from more than 750 merit-based graduate candidates.It is one of the most prestigious awards in academia and valued for its no-strings attached funding.

The selection process requires considerable time from the applicants with written submissions and interviews. And it requires considerable time from a large network of academics in top universities to select the best out of an already exceptional group of brilliant graduates.

Each submission requires four letters of reference and candidates are evaluated om creativity, drive, and innovation. Two personal interviews are required. Applicants that show entrepreneurial traits and own patents are favored in the selection process.

The Hertz Fellows receive five-year grants at any university they choose without any restrictions -- a rare feature with the majority grants tied to institutions or specific areas of research.

They also have access to and support from the community of all the other Fellows for mentoring and problem solving. The goal is to encourage a cross-discipline approach to new ideas.

Testimonials...

Here are some of the testimonials from Hertz Fellows about the importance of the grants and the value of the continuing programs and events.

Here are some of the testimonials from Hertz Fellows about the importance of the grants and the value of the continuing programs and events.

"This incredible academic freedom is only surpassed by the extraordinary students, entrepreneurs, and professors I have had the privilege of meeting through Hertz Foundation events, such as the Fellows retreats and the Hertz Symposium." Gleb Akselrod Massachusetts Institute of Technology Hertz Fellow 2012

T.J. Rodgers, founder of Cypress Semiconductor and Astro Teller, head of Google's "moonshots" lab are among Silicon Valley's better known Hertz Fellows.

A rising elite...

The Hertz selection process is very rigorous and meticulous and it works very well. The foundation has become so good at it that it has attracted notice from other organizations also interested in discovering and funding the best emerging science graduates.

The Bill and Melinda Gates Foundation recently announced a $5 million grant to fund two new Fellows in Global Health and Development. The new Fellows will spend two summers working with scientists as interns on projects funded by the Gates Foundation.

Robbee Baker Kosak, president of the Fannie and John Hertz Foundation, says that the partnership came about because of people working at the Gates Foundation who were familiar with the transformational impact of the organization's work.

Inspired by Teller...

Kosak says the Foundation represents the entrepreneurial spirit of its founder John Hertz, "One of the great immigrant stories." He arrived in Chicago from Austria-Hungary just five years old, worked as boxer, a newspaper reporter, then founded The Yellow Cab Company and then created the Hertz car rental company.

Kosak says that Hertz was inspired by his friend Edward Teller, the theoretical physicist, to focus his philanthropy on graduate scientists because "engineering and applied sciences are the fuel that improves the human condition."

Secret funder...

Kosak jokes that the Livermore, California based organization is one of the best kept secrets in the San Francisco Bay Area despite decades of important work investing more than $200 million in nearly 1200 Hertz Fellows.

It's time to tell that story more widely and try to scale the work of discovery and fund more Fellows.

By engaging early in the careers of elite researchers and innovators the Hertz organization helps to accelerate breakthroughs and development of foundational technologies that can support large industries.

"We have a proven track record of finding and investing in the best young talent. We are hoping that other philanthropists will choose to support our work because they also believe that funding science is important."

Landing support from the Gates Foundation is an important step in attracting other benefactors and scaling what has become a superb process of discovering the best fundable talent in applied physics, maths, engineering and the biological sciences.

Silicon Valley business innovation depends heavily on advances in applied sciences. The Hertz Foundation's work helps fuel this global engine of economic growth.

Additional information: http://hertzfoundation.org/about/history

We are in an era of “Hyperscale companies” such as Amazon, Facebook, Google, Microsoft and Apple that limit opportunities for startups warns Sam Altman, head of Y Combinator,  Silicon Valley’s influential investment group, accelerator and educator. 

The warning was part of a long 2017 YC Annual Letter:

Altman wrote: “We’re now in the era of hyperscale technology companies…
Companies like Amazon, Facebook, Google, Apple, and Microsoft have powerful advantages.”

“I expect that they will continue to do a lot of things well, have significant data and computation advantages, be able to attract a large percentage of the most talented engineers, and aggressively buy companies that get off to promising starts."

This situation “is unlikely to reverse without antitrust action.” 

His warning is carefully worded because Altman knows that advocating for government intervention is unpopular in Silicon Valley. He points to opportunities for startups where these hyperscale companies “are naturally weaker.”

The majority of startup founders and investors he says,  do not fully understand hyperscale’s “powerful advantage.”

Foremski’s Take: [I’m a big fan of Sam Altman, the 31-year old head of Y Combinator group after moderating his presentation at the excellent Startup Voodoo conference in St Louis.]

It’s good to see someone as influential as Sam Altman raising this issue because it is a topic I’ve been writing about for nearly three years:  Scale versus innovation: The peril to Silicon Valley’s future | ZDNet.

We see massive late stage VC deals where the race to scale fastest and become the largest is the primary goal over any consideration of other values.  

It’s because in digital economies the first company to scale has the potential to push nearly everyone else into the margins very quickly.

In traditional markets a company would expand by establishing offices or stores in new regions and countries — a slow multi-year process that gives competitors time to respond. But in digital markets a well-funded competitor can quickly scale to a dominant global position in weeks. 

Hyperscale AI wins…

Scale matters in the very hot world of AI and machine learning. Hyperscale companies have access to massive amounts of computation and massive data sets to educate their AI. 

David Galbraith, a systems architect notes the disparity in a recent piece: AI tl;dr – Medium

Given the hardware, employee and data costs, the forefront of AI is in large corporations rather than startups and universities.

He expects opportunities for startups in the form of agile partnerships between large corporations but the timeframe is narrow. Galbraith notes that the large Internet platforms

“have been earlier to open up software tools and labs, largely in order to acquire scarce talent and insights into use cases that could indicate where to build or acquire data assets."

Innovation derailed or delayed?

Fewer AI startups will mean less innovation in a very important area that Y Combinator has identified as revolutionary.  Altman said Y Combinator’s OpenAI project will reveal significant progress in 2017 “for the benefit of humanity.”  

Scale is not a very interesting story but it’s how you win in digital markets. Silicon Valley is where startups from elsewhere will come to scale their companies — it won’t be the birthplace of original ideas as it was in the past. 

Scale is not illegal and that also applies to “hyperscale” companies. Altman’s chosen remedy of antitrust action implies these giant tech companies have all crossed some legal lines. Government action of any kind especially with the Trump administration is highly unlikely and would be incredibly lengthy in execution.

Startups will have to learn to live in this new era of hyperscale technology companies. They will have to rein in their ambitions and investors will need to understand why and keep funding. 

There’s still a lot of opportunities ahead. Sam Altman reminds us we are in the early years of “the most significant technology revolution in human history.”  And there are massive benefits to humanity ahead of us.

“It’s an exciting time to do what we do.”  

2017 YC Annual Letter

Scale versus innovation: The peril to Silicon Valley's future | ZDNet

 AI tl;dr – Medium

- - -

According to the Chinese zodiac Google became a public company in the year of the Monkey, in August 2004.

In Western culture we are familiar with the story of the three monkeys who very wisely: see no evil, hear no evil, and speak no evil. In some Asian cultures there is a fourth monkey: Do no evil.

“Do no evil" is often misquoted as Google's famous motto, which is actually: "Don't be evil" but it's essentially the same. 

In 2015, Google had tired of its responsibilities as the fourth monkey reorganized its business operations; renamed itself Alphabet, and abandoned the problematic old motto and replaced it with the more modern: "Do the right thing."

[I predicted this in 2009: “Google quietly drops “Don’t be evil”motto”]

It’s close enough to the old one that it's unlikely to confuse the ethics of loyal staff; plus, the new motto is sufficiently vague with a phrasing that provides endless relativistic wiggle room in answer to any challenge.

An evil temptation...

I was never comfortable with Google's "Don't be evil" motto because of the company's strategic importance to the Internet and to the economies of entire countries.

As Google grew in size I grew more worried about its "Don't be evil" philosophy.

We have seen many times how the universe loves irony; and how it values thorny opportunities to pop our oversized hubris and sink blowhard ambitions -- the bigger the better.

With a motto like "Don't be evil" there was a nightmare risk that Google would somehow end up being responsible for many imaginable and unimaginable evils.

The hands of fate love such opportunities. Let us not lead them into temptation!

A less evil motto...

I once proposed a replacement motto for Google, with the aim of lowering the risks of attracting disastrous ironic consequences:

"Brush your teeth and get eight hours sleep."

If Google messes up what's the worst that can happen? It's a bit grumpy, falls asleep in meetings, and has to chew some minty gum. No harm done and it is temporary — there's always a new day.

But with “Don’t be Evil" there's no end to the potential horrors from a universe highly motivated by ironic intervention. Google did the right thing to be rid of it.

 The California Historical Society has opened a Summer of Love photo exhibit and is collecting people’s stories about this very important cultural event.

To riff on the famous call to action voiced by Timothy Leary at the Human Be-In "turn on, tune in, drop out", we invite you to "log on, tune in, and join us" in this journey. If you have something to share—your first hand experience of the Summer of Love, an event you are planning, a book or article you are writing, or your memories of the era— or if you are interested in supporting this effort, please contact us.

It’s not just in technology that this small little place in the world leads the world. 

Here’s more information from Anthea Hartig, Head of the California Historical Society:

 "Today, the San Francisco Arts Commission opens the exhibition Jim Marshall's 1967, showing more than 80 stunning images created by the legendary rock 'n' roll photographer Jim Marshall in 1967. The exhibition is now on view, for free, in the ground floor galleries of San Francisco City Hall. It is a must-see for anyone interested in music, the counterculture, and how San Francisco became a magnet for young dreamers across the country and around the world.”

"In honor of the opening of this exhibition, the California Historical Society (CHS) is launching a new major public history project focusing on the 50th Anniversary of the Summer of Love. We have created a new public history website featuring historical essays, first-person perspectives, and listings of numerous related events that will take place this year across California. CHS is proud to work in partnership with San Francisco Travel and more than 50 cultural and community organizations in San Francisco and across the state on this effort.”

"The Summer of Love was a historical moment that has had a lasting impact on music,art, and popular culture, as well as healthcare, technology, food, and politics. We invite you to join with us this year as we explore the layered and complicated history and legacy of the Summer of Love. Bookmark www.summerof.love and follow us on social media (Facebook, Twitter, and Instagram) for all of the latest news and information about this Anniversary. Our own exhibition, On the Road…”

“Yours in understanding that history truly matters,”

He makes a good case that over a ten-year period the founders and management teams have learned a lot and now can leverage that expertise very effectively by using new tools and resources that provide global business opportunities. 

This is why I believe scale up companies, who survive the 10 year horizon, can start to achieve something really special. Gradual progress that doesn’t seem to be too explosive on a day-to-day basis, when compounded over 10 years, can be transformative.

In Silicon Valley those ten-year experts tend to go somewhere else with a new venture but in places like Ireland there is a possibility of keeping teams together and it certainly makes sense that teams that do well together can continue to do well as we see time and again in Silicon Valley serial founders. 

McNamara’s company Creme Global, a successful data science business, is in its 12th year. He shares his top ten tips for success such as:

- Avoid investors if you can — or at least those who are in it for the short term…

- Build a strong team around you so that you can free up some of your time for exploratory work, vision and strategy development and blue-sky thinking…

- The core goal of the funds being generated by the company during scale-up should be to reinvest those funds in R&D until the company finds strong product-market fit with a truly scalable and global opportunity…

- A reproducible, scalable sales process needs to be created.

More here. 

Every day Facebook publishes millions of pages of content with advertising - what's "not a media company" about that?

Yet Facebook founder and CEO Mark Zuckerberg has lately been determined to identify Facebook as a tech company who's engineers are on a global mission of simply trying to connect people with each other.

Reuter's Giulia Segreti reported on Zuckerberg's recent comments in Rome, where he visited the Pope.

"No, we are a tech company, not a media company," said Zuckerberg, after a young Italian asked him whether Facebook intended to become a news editor.

"...we build the tools, we do not produce any content The world needs news companies, but also technology platforms, like what we do, and we take our role in this very seriously."

But Germany's Justice Minister Heiko Maas objects and wants Facebook to be treated as a media company "even if they do not correspond to the media concept of television or radio."

The European Union is concerned about hate speech on Facebook and if it were a media company it would be able to force it to act faster in removing it.

Media defines responsibility...

The battle over defining Facebook's business is not a semantic issue - it is much more serious. It could devastate Facebook's business model and that of many other "technology platform" companies.

The difference is in responsibility:

- Media companies are legally responsible for the nature of the content that they publish.

- Facebook has no legal responsibility for the content it publishes because it is a technology platform - it doesn't create the content.

However, Facebook does choose what to put into people's news feeds and it deletes content that violates the editorial policy of its terms of service. Some of this is done by automated tools but a lot of it is done by people.

This means that Facebook is making editorial choices of which content to publish. That sounds like a media company.

But if Facebook were defined as a media company it would have to employ thousands of staff to delete hate speech and keep other illegal content off the site. It would have to do this for every country and observe their media laws. It would be horribly expensive.

It's not just Europe: The recent presidential elections resurfaced this issue and now Facebook is facing mounting pressure in the US.

A Washington Post column by Hayley Tsukayama headlined: Facebook must confront the responsibilities of being a media company

If these companies continue to push their media efforts, they can't then shy away from the responsibilities that come with the business.

Foremski's Take: If Facebook loses its tech platform status then Google Search and Youtube won't be far behind, and the same for others. It would result in a massive redistribution of responsibility in our modern world.

Media companies daily shoulder the high costs of their responsibilities in publishing content. But Facebook, Google et al, argue that they have no such responsibilities to society - as is plainly seen in their aggressive tax payment strategies.

Given the rising importance of these companies to society, and the digital global economy, it is becoming an indefensible position.

As governments begin closing tax loopholes there is another loophole that will come under tighter focus: technology platform. Like taxes, it's about taking responsibility for being a part of society -- not standing apart. It's unavoidable.

- - -

Please see Ross Mayfield: Facebook Can Address Fake News and Raise Media Literacy

Vinay Pai leads Intuit's developer initiative.

Intuit is planning a major expansion of its online Quickbooks business group into a machine learning advice, data and services platform for creating, managing and operating all types of small businesses.

The expansion of the Quickbooks platform and new partners will be announced at Intuit's Quickbooks Connect conference in late October, in San Jose, California. The event will feature some of the top developers of apps for Quickbooks' users, such as payroll services. 

"We will showcase some of our most successful developers at the conference and introduce a very attractive revenue sharing model," said Vinay Pai, Vice President of Developer Group at Intuit. The goal is to attract the more developers to expand the Quickbooks platform into an essential partner for small business owners -- huge market. 

Business intelligence...

Starting or buying a small business is risky but there is less risk if Intuit can provide information on likely costs, profit margins, competitive factors, foot traffic. 

"We are using machine learning to help identify the types of data, services and tools that a small business needs. And we have lots of data about small businesses because of our many customers, this will be combined with external data sources." Pai says. 

The data will be regional and specific to each type of industry and market, and provide small business owners with information to aid management decisions such as expansion, new product lines, etc.

Pai says the Quickbooks platform will also help small businesses expand online sales. "Some of our clients are doing extremely well selling online and around the world."

Developers for the platform conform to the same graphical user interface of Quickbooks to deliver their services and software in a familiar format. There are currently about 2500 active developers out of 25,000 registered, a standard 10 to 1 ratio that's typical in the industry, says Pai. 

Intuit is sweetening the deal for new developers and says it will charge only a 20% lifetime revenue share on sales -- Apple's Appstore takes 30% -- a 50% higher fee. 

Pai says developers are very happy with the revenue sharing because of large boosts in sales. In trials with software partners Intuit has managed to more than double the sales of some of third-party developed software on the current Quickbooks platform. 

But not everyone will be able to partner with Quickbooks.  Only developers with a good customer rating and fast customer response times will be represented in its app store. A special machine learning program will continually monitor software sales and spot problems and rising stars.

Only a tiny percentage of Apple app store developers make money. Quickbooks intends to show that with its low revenue share model and a limited number of curated applications on sale -- good software will be profitable software. 

Accounting is cool...

The upcoming Intuit Connect conference will take a page out of conferences such as Salesforce's Dreamforce with a roster of top inspirational speakers (and maybe to make up for the San Jose location): Michael Phelps, Simone Biles, Tony Hawk, Shaquille O'Neil, Malcolm Gladwell and the ever active Jillian Michaels will be there. Also, Intuit Chairman and CEO Brad Smith.

US President George W. Bush is reported to have once said, "The problem with the French is that they have no word for 'entrepreneur.'"

The story about President Bush might not be true, but in many ways the story rings true because France certainly has developed an anti-entrepreneurial image abroad over the past few decades.

And maybe this is why I hear French spoken on the streets here all the time lately, far more than at any time prior, in my 30 years in San Francisco and Silicon Valley.

France’s anti-entrepreneurial attitude is not easy to shake. A French startup CEO once told me his mother is embarrassed to tell her friends that he runs a startup, she’d be happier if he had a steady government job because business men and their monetary ambitions are distrusted in French society.

So it is not surprising that French entrepreneurs are here and are building new companies because it is a far easier place to do that both culturally and technically: this is the place for the best investment capital, best engineers and the best specialist executives for scaling startups. 

I’ve heard estimates of more than 100,000 French people live and work in San Francisco and Silicon Valley.

I recently attended a gala dinner and awards event organized by the French American Business Association in San Francisco, and I was impressed by the large number of French founder startups that were being celebrated — far more than I remember seeing previously ( I helped judge the startup winners last year.) 

Interestingly, at the event there were also awards given to the best new French founded wineries in California. It’s great to see that California’s expertise in tech and in wine attracts the French!

But it is not only the French that are here,  pick almost any a country and you’ll find it is represented in some way by local entrepreneurs because here it is quicker, easier and simpler to both start —  and very importantly — to close down a business venture. It can take years of legal work to close a failed business in Germany, for example. Fail fast is key here because it means you can move on to the next idea.

John Hennessy, one of Silicon Valley’s most connected and successful businessmen, has ended his 16 years as President of Stanford University and nearly 40 years on the faculty.

He greatly expanded endowments and the university’s engineering school, which has spawned companies such as Google and Yahoo.

Marc Andreessen, the developer of one of the first web browsers and a top Silicon Valley investor has called Hennessy “Godfather of Silicon Valley.” He sits on the boards of Google, Cisco Systems, and Atheros Communications.

Hennessy joined the faculty in 1977 just as Silicon Valley was starting.  He co-founded MIPS Computer Systems in 1984, a maker of Reduced Instruction Set Computer (RISC) microprocessor chips and acquired for $333 million by Silicon Graphics in 1992. 

As President of Stanford University he has raised massive amounts of money, $1.6 billion in 2015 alone, allowing for the expansion of Stanford’s engineering school with a brand new quad, and many other buildings. 

His engineering credentials and high profile in Silicon Valley’s tech community have critics saying that Stanford is now seen as a tech-oriented school and it’s humanities schools have suffered.

Under Hennessy Stanford University became the most exclusive and expensive private university in the US. This year less than 5% of nearly 44,000 student applicants were accepted, and its endowment grew to $21.5 billion.

The explosive demand for computer science (CS) Engineers helped fuel a big expansion of the computer science school at Stanford but it won’t be enough to supply all the engineers needed by many industries. 

In a recent interview published in “The Communications of the ACM”  Hennessy warned,

We’re going to struggle to meet the [CS] demand. All institutions are facing this because CS graduates have lots of good opportunities, both within the academy as well as outside it. We're also going to see other fields begin to change, but change takes a long time. Universities change at a very slow pace getting new faculty.

However, I think we can already see the rise of quantitative empirical analytical approaches, for example take a discipline like political science. The action is in doing big data analysis of elections and surveys. It requires a different kind of expertise and background.

…We're going to see a rise of the influence of big data in the social sciences, and they're going to become more quantitative in how we formulate policy.

Please see:

Hennessy’s term as President comes to close | Stanford Daily

An Interview with Stanford University President John Hennessy | March 2016 | Communications of the ACM 

I was excited to be at The Crunchies Awards Monday evening. I was right behind two seats reserved for Mike Arrington (founder of TechCrunch) and my old buddy Om Malik founder of GigaOm.

Neither came to occupy their seats and neither did Silicon Valley's star CEOs and VCs as had been common in prior years. Arrington and Malik turned up on stage later to present an award for Angel of the year but there was no Silicon Valley royalty: no Zuckerberg, no Marissa Mayer, no Travis Kalanick, Elon Musk, Marc Benioff, Marc Andreessen...

This year the Crunchies billed itself as the Oscars for startups and tech. And unlike the real Oscars, the Crunchies was determined to load up on as much diversity and political correctness as it could fit on one stage.

The organizers had an another incentive to add an extra helping of diversity  because of last year's "Bitchgate" controversy.  TJ Miller from the HBO "Silicon Valley" sitcom called an audience member a "Bitch." She forgave him later in a Tweet, "Stay classy Silicon Valley..."  

[Please see: The Crunchies' Bitchgate: High Horses With Fake Unicorn Horns Ignore Decades Of Silicon Valley Misogyny.]

This year the MC was female standup comedian Chelsea Peretti from the Fox sitcom Brooklyn Nine-Nine. And the diversity level was off the charts. Looking at all the people presenting awards, and receiving awards you would be mistaken for thinking Silicon Valley were a golden city of the future where diversity and meritocracy are sacred principles and misogyny exists only in the history museum -- stuffed and mounted. 

Silicon Valley's approach to diversity is generally skin-tone distracted and gender confused and is measured as a low ratio. But the ratio on stage was far from being a true representation in reality. Every opportunity to show great diversity was pounced upon. Slack set the tone of the evening early on when it sent four of its African American female engineers on stage to collect the award for "Fastest Rising Startup." And other winners tried to do the same. 

Just in can we didn't notice all the diversity on display there was also a new Diversity Award with a diverse nominations group that was won by Code.org. While the stage was a colorful picture of diversity the audience was far less color balanced than the show and more realistic representation of Silicon Valley's diversity. 

Some grumbles: The audio was flaky; there was little energy in the room; and the media section was moved from the two front rows to the back of the theater (bad move);  and the promotion of Toyota cars inside and outside the venue made it feel like a car convention.

These things are easy to fix but if the Crunchies wants to become the Tech Oscars then it needs to pull in some of the local Silicon Valley star power. 

Here are the winners of the Crunchies.

Fastest Rising Startup

Winner: Slack

Also nominated were: Postmates (runner-up), TransferWise, YouNow, and Zenefits.

Founder Of The Year

Winner: Stewart Butterfield
Also nominated were: Jessica Livingston, Natalie Massenet, Tristan Walker (runner-up), and Anne Wojcicki.

Include Diversity Award

Winner: Kimberly Bryant, Black Girls Code

Also nominated were: Erica Baker; Joelle Emerson, Paradigm; Laura Weidman Powers (runner-up), Code2040; Kortney Ryan Ziegler, Trans*H4CK

Hardware Of The Year

Winner: Samsung Gear VR

Also nominated were: Apple Pencil, Devialet Phantom speaker, Parrot Bebop, Sphero BB-8 (runner-up).

VC Of The Year

Winner: Bill Gurley

Also nominated were: Marc Andreessen, Sonali De Rycker,, Mary Meeker, and Chamath Palihapitiya (runner-up).

Best New Startup

Winner: Honor

Also nominated were: Eaze, Jet, Operator, Robinhood (runner-up).

Biggest Social Impact

Winner: Code.org

Also nominated were: Google.org, Fast Forward, Thorn, and Frida Kapor Klein and Mitch Kapor (runners-up)

Best Angel Investor

Winner: Scott and Cyan Banister

Also nominated were: Naval Ravikant, Gil Penchina, Joanna Wilson, and Chris Sacca (runner-up)

Best Mobile App

Winner: Facebook Messenger

Also nominated were: Citymapper, Robinhood, Wish, and Periscope (runner-up)

Best Technology Achievement:

Winner: SpaceX Falcon 9

Also nominated were: Apple's 3D Touch, Microsoft's Hololens, Transatomic Power, and Tesla's Autopilot (runner-up)

CEO Of The Year

Winner: Mark Zuckerberg (Facebook)

Also nominated were: Tim Cook (Apple), Jack Dorsey (Twitter/Square), Susan Wojcicki (YouTube), Elon Musk (Tesla) (Runner-up)

Best Overall Startup

Winner: Uber
Also nominated were: Docker, Snapchat, Xiaomi, Slack (Runner-up)

Silicon Valley's pursuit of diversity is skin-tone distracted and gender confused. Diversity is more than a ratio...

Silicon Valley's leadership in sourcing innovative ideas is slipping and its feeble pursuit of diversity isn't helping.

Original ideas come from original experiences -- an environment that brims with a diversity of genders, skin colors, ages, economic backgrounds, national cultures, and artistic expression.

A tree grows in Brooklyn...

I recently returned from visiting my kids Matt and Sarah who share an apartment in Brooklyn. They are in their 20s and I can see why they moved from the San Francisco area and why I would have done the same at their age.

The district where they live is full of small artist spaces, tiny but great restaurants, small but affordable apartments, and great access to an astonishing number of events ranging from music to film to lectures to everything. You can take in as much as you want any day of the week.

And there's a tremendous amount of creativity everywhere from the graffiti on the walls, the quirky names on quirky stores, to the individual self-expression on the streets. It's a university without limits. It teems with young people mixing and talking with each other. It's a massive incubator of ideas. And it offers a stark contrast to Silicon Valley's homogeneous monoculture.

Frictionless and painless living...

New York city is a vast urban landscape with big problems and seemingly unsolvable challenges. But where there is pain there are opportunities to find solutions that solve and salve. Successful startups solve tough problems. And that's where New York city has the advantage.
Silicon Valley engineers get on the same bus everyday. Each morning they stand silently on the same San Francisco street corners waiting to be bused 40 miles to a business park campus.

Every day is predictable and indistinguishable...

Every day, Silicon Valley engineers are insulated from the everyday experience of everyone else. Their food is free, their haircuts are free, their snacks are free, their apartments are cleaned, their laundry is folded, and their commutes are always on time and the wifi is always fast. Life is made frictionless and painless.

Engineers solve problems -- but if they don't see any pain there is nothing to solve. This is why Silicon Valley is running out of original ideas. All the low-hanging fruit is long gone, the obvious ideas are already done and then done again.

How many varieties of email organizers, dating apps and to do lists do we need?

Original ideas require original experiences yet Silicon Valley employers have done their best to segregate and insulate their creatives from the diversity found in life's daily struggles.
In contrast, New York city overflows with original experiences and with a culture of diversity far more advanced than Silicon Valley's simplistic accounting of gender numbers and skin colors.

New York and other urban centers have an advantage...

Sean Coughlan at BBC News recently reported:

In a report on global trends shaping education, the OECD says cities could learn from each other's experiences...Andreas Schleicher, the OECD's education director: "When you talk about cities, we face very similar challenges."

All cities are similar to each other. Solve a problem in one and you've solved it in every city -- that's a massive potential market.

Silicon Valley won't go away -- it'll be where startups will go to scale their business. But don't expect many original startup ideas from this self-segregated business park monoculture.

Innovation is born from adversity and is driven by diversity. Silicon Valley lacks both.

Delphix this week named two key additions to its executive team as it prepares for an IPO.

- Stewart Grierson was named Chief Financial Officer. He rejoins former ArcSight colleague Rick Caccia, Chief Marketing Officer at Delphix.

Grierson was awarded "CFO of the Year" by the San Jose Business Journal in 2009: “Grierson helped lead ArcSight, valley's only IPO of 2008.” 

2008 was a tough year for Silicon Valley as harsh economic conditions forced the cancellation of many IPOs. ArcSight was the only Silicon Valley IPO of the entire year. Grierson also played a key role in the IPO of ONI Systems.

A strong CFO with an excellent reputation is a key asset for an IPO. A rising tide will lift all boats but rough waters will sink many enterprises that have no experience with the down cycles of the global economy.

- Delphix also announced Nick Fuentes as Head of Corporate Communications. He ran global PR for VCE, a joint venture between Cisco, EMC and VMware. He worked for eight years at VMware in a variety of PR roles, including driving PR during VMware's 2007 IPO, which raised $957 million and soared 76% to a valuation of $19 billion in its first day of trading.

Delphix is sending a clear message that, rain or shine, it's going public.

- - -

I'm excited about my new role at Delphix and the challenge of figuring out what does, "Every company is a media company," look like, what does it mean? How is it best expressed? It's easy writing about this subject from the outside.

Stay tuned. I'll be sharing some of the lessons learned, here on SVW, and in a Masterclass at PR Summit in San Francisco in mid-August. I'll also be at Startup Voodoo in St. Louis in mid-June. 

Please see: My 2014 reports on the St. Louis startup community.

A billboard at the construction site for the Salesforce Tower in San Francisco

Microsoft is evaluating a bid for Salesforce, reports Bloomberg, as a response to an acquisition offer from an unnamed company.

Foremski's Take: Salesforce has a market valuation of about $49 billion so it will be an integration challenge and a detachable jaw might be required to digest it. There's only a few possible suitors.

I'm hoping Salesforce stays independent because it is the largest tech company in San Francisco and Marc Benioff, CEO and Founder has a generous nature and an off-beat manner that is very much of this town, and of someone with five generations of local family history.

If Microsoft acquired Salesforce it would be just too strange, from a cultural point of view. Microsoft would become the largest tech company in San Francisco. It doesn't feel right. Microsoft is tightly associated with the Seattle region, up in the wet North-West. It's a different feel and a different culture.

Microsoft will literally tower over the San Francisco tech community. Salesforce is completing the building of an office tower in downtown San Francisco that will be the city's tallest. If it succeeds with a bid, the Microsoft Tower will dominate the San Francisco skyline. Like the all-seeing eye of Horus, Microsoft will be able to look down on all of San Francisco's tech companies and will be seen from much of Silicon Valley on a non-foggy day.

I have nothing against Microsoft but the cultural differences make it psychologically unsettling to have it towering over the city.

Benioff is the target...

My money is on Oracle. Anyone acquiring Salesforce would do it because they want Marc Benioff, one of the best software salesmen in the industry. He would be a perfect replacement for Larry Ellison, who is no longer CEO but still very active as Chairman. 

Benioff is cut from the same cloth as Ellison and he shares the Oracle culture. Benioff's bigger than life personality can't yet match Ellison's but it's far more appropriate to Oracle than it is to Microsoft. Oracle's current co-CEOs have very little charisma and that's a problem for a company who's culture needs flamboyant leadership.

Overlapping savings...

The two companies compete with each other to host the largest user conferences in San Francisco, closing off downtown blocks, and on putting on the best music shows. The savings on consolidating these two mammoth conferences would likely be way more than $100 million a year. That's great for them but it would create a huge hole in the city's economy. 

A sale of Salesforce would also hit local charities. Benioff and Salesforce employees, are well known for their philanthropy. Benioff spent more than $100 million on a Children's hospital. I'm sure that personal donations would continue but corporate donations would all be reevaluated and adjusted.   

My money is on Oracle as the mystery bidder. But the best outcome is for Salesforce to remain independent.

- - -

In early 2008 I published a story that Oracle was interested in acquiring Salesforce. It was from a very trusted source. 

I published the story Saturday evening because I wanted financial markets to have time to assess it rather than reacting to headlines and potentially rocking the whole sector. Monday saw Salesforce market value boosted by half-a-billion dollars as investors welcomed the idea.

It also highlighted the potential value of a news story during a time of questioning the value of media. 

A demo of the "Capabilities Wall" at Jabil's Blue Sky Center in San Jose.

Jabil, the nearly $20 billion manufacturer of a huge range of electronic gadgets, unveiled its Blue Sky Innovation Center in San Jose this week. I learned a lot about this outsourced electronics manufacturer and I was especially impressed by the sophisticated IT systems that it developed to manage incredibly complex supply chains and model the future performance of its global business operations.

Jabil makes products that you've probably used without knowing anything about its 90 locations around the world. It is similar to Foxconn in Taiwan, making a huge variety of electronics products for well known  brands.

The opening of the Blue Sky Center was an opportunity for Jabil to step out from the shadows and showcase its manufacturing prowess, and its new design and research services. Clients can hire Jabil to design the next generation of mass consumer electronics products. However, it says it won't create its own lines of products, it has no intention of competing with its clients.

The company was founded in Detroit, making spark plugs. It has been manufacturing high tech products in Silicon Valley since 1996. 

Jabil says design cycles are continually shrinking which means its design and manufacturing capabilities have to speed up, too. It has developed its own IT systems so that it can manage massively complex supply chains, with an ability to quickly reconfigure them if weather or geo-political problems disrupt any part of the logistics chain. The lack of just one component could hold up a production line and delay millions of dollars in revenues. 

Managing a supply chain for a client such as Hewlett-Packard's printer division involves as many as 3,000 suppliers. Sourcing, ordering, delivering this many components to production lines just in time is a daily challenge. Unexpected disruptions to the supply chain can come at any time and from a multitude of sources, such as severe weather or killer earthquakes in Nepal.

Jabil hides the complexity with a software dashboard it calls "Control Tower," from which clients can spot problems and reconfigure their entire supply chain, with new suppliers if neccessary. It's a type of resiliance in the supply chain that is mirrored by the Internet, which can find new routes if parts of the network are damaged. "Control Tower" can find new routes to deliver the parts it needs it needs to fulfill its manufacturing contracts.  

Jabil also has developed powerful risk analysis tools and the ability to continually model emerging risks and possible effects on its operations. It is constantly looking out for potential business risks, it even uses sentiment analysis to search Twitter and other social media channels for signs of possible future problems in the economy, and in consumer markets. 

"It is better to know the risks than to run a business without knowing because then you can do something about it and you worry less," said  Eric Hoch, EVP of Engineering and Technology Services.

The Blue Sky Center also showcased Jabil's in-house design tools and its industry experts, whose trouble-shooting services help clients solve technical design and manufacturing challenges.  

Foremski's Take: We take our digital gadgets for granted but if we knew how they come into creation,  if we knew about the incredible complexities of the supply chain, the design and manufacturing challenges, we'd be awestruck. I certainly was and I now have a new appreciation for the behind-the-scenes work that goes into maintaining our digital consumer lifestyle. There's a lot of moving parts. I was surprised that supply chains could be such an interesting subject.

[The analysts and media at the event were given a bag containing examples of the consumer products made by Jabil, a small Go video cam,  and a wireless mouse. There was also an umbrella.]

I recently met with Davis Smith, founder and CEO of Cotopaxi, an e-commerce startup that recently raised a $6.5 million Series A round, for a total of $9.5 million --the largest amount ever raised from institutional investors by a Benefit Corporation.

A "Benefit corp" or B Corp is a legal designation that differs from the normal "C corporation" whose fiduciary obligations are to maximize shareholder profits or risk lawsuits. B Corps have a legal duty to fund a humanitarian mission from their profits.

Cotopaxi does good from the profits in selling outdoor gear.  Each backpack, jacket, or water bottle is linked to a specific humanitarian project.

Smith grew up in a family that greatly valued service to the community and helping others. He realized at an early age that he wanted to make a big difference in the world but wasn't sure how to do it.

His inspiration for doing good was a Philippines incubator founded by a very successful entrepreneur, Steve Gibson. After idolizing him for years, Smith ran into him by chance in an elevator, and managed to sit down and speak with him. To do good, he was told, first become good at being an entrepreneur. 

This inspired him to start his first business with his cousin, building and then selling pool tables online. This grew into a thriving business and quickly became the largest US seller of pool tables. He sold that business in 2010 and returned to school to get an MBA.

Upon graduation from Wharton, Smith started another business, this time in Brazil, selling diapers and other products online for families with babies. It became the largest e-commerce site of its kind in Brazil.

"We grew very quickly because were lucky enough to catch the beginning of an online boom in Brazil." The rise of e-commerce mirrored the fast growing economy and the rise of a large middle-class and their new families. 

In 2014 he decided it was time to fulfill the commitment he'd made in talking to Steve Gibson, to use entrepreneurship to do good in the world. He left his business in Brazil, moved back to the US and founded Cotopaxi, which donates as much as 10 percent of its profits to projects across the developing world.

He was inspired to fund humanitarian projects in Latin America because of his travels. He speaks about an encounter with a street urchin, a young boy he met in Peru. The boy was terrified of returning home to an abusive father because he had had his shoe-shining kit stolen and that was his only means of income.

Smith helped the boy and the incident stayed with him. "I returned to Peru thirteen years later and managed to track down the boy. It has become a truly meaningful relationship to me and to him." 

Cotopaxi is different from Patagonia, which also sells outdoor gear and converted to a B Corp.

"Cotopaxi was founded as a B corporation from the very beginning. It is ingrained in our culture. Our mission is also humanitarian based vs. environmentally based."

Doing good is ingrained in Cotopaxi culture and its tag line: "Gear For Good" further underlines its social mission.

Having a social mission is great for recruitment. Smith says that millennials care more about working for a purpose than previous generations. A month after their launch, they had over 300 job applications. 

"B" for beware...

Smith was initially advised not to register Cotopaxi as a B Corp but to convert later because it would be hard to get investors. He's glad he ignored that advice because the B Corp. designation was authentic to his company's brand and mission and VC investors picked up on that authenticity, which helped attract rather than repel investors.

Cotopaxi is rapidly developing a cult following. The products are extremely well designed with an emphasis on high quality and durability. Every detail is thought-through and well executed.

For example, the polar-fleece lined jacket carries the label "Proudly made in Bangladesh." The standard label on machine washing ends with "Launder Garment Separately But, Whatever You Do...Have Fun And Do Good While Wearing This Garment."

Events drive sales...

Its approach to marketing is also well done and profitable! Cotopaxi organizes regional 24-hour "Questivals." These involve thousands of people racing to complete a range of tasks such as volunteering at a soup kitchen, and hiking a mountain, or other tasks from a list of more than 300 tasks. A $35 entry fee comes with a Cotopaxi back pack and a chance to win more products. 

Smith says this greatly helps raise awareness of company products because Questival competitors are asked to share photos of themselves online as they complete each task. And each Questival generates a small profit. Questivals have been held in San Francisco and more than 20 US locations.

Foremski's Take: Cotopaxi's success in raising money as a B corporation serves as an important signal that top Silicon Valley VCs see advantages in B Corp startups. Doing good and making money are not incompatible.

In fact, a self-sustaining business operation with a social mission has advantages over one that has none. Many surveys have shown that it's important to millennial consumers.

Cotopaxi will undoubtably help other B Corp startups raise funds. However, Smith is an exceptional entrepreneur with a fabulous track record of building companies. The problem VC investors face is finding experienced teams lead by people such as Smith. There's no shortage of capital but there is a shortage of Smiths in the world.

It will be interesting to see if his leadership can inspire Silicon Valley's serial entrepreneurs to start their next business as a B Corp from the beginning.

With competition for engineering staff at tremendously high levels, the prospects for working at a B Corp startup versus Google or Facebook could be significant for recruitment. Saving the world easily trumps the perks of a free lunch and a bus to the office.

The return of corporate social responsibility...

Ten years ago when Google went public, social corporate responsibility was the prime focus of its offering. The first thing you saw in its S1-filing was a letter to shareholders in which Google founders explained that their goal was not profits but to do good, to make a difference in the world. It was the reason why they created a share structure that gave them 10-times the voting rights, so that they could preserve their vision from future shareholders.

Google's pursuit of that vision has faded from public view. It's a mistake because the engineering community is still very much interested in doing good, and in working for an organization whose ambition is to make a big difference in the lives of as many people as possible. 

Cotopaxi's funding and its success is a sign that doing good is not a fad -- it is something that should be part of every startup's business model.

Humanitarianism as a Service...

But it's not easy to source and fund humanitarian projects. Smith might do well to consider developing a back-end "humanitarian" platform that other B Corps could plug into and offer as part of their e-commerce efforts.

Frictionless humanitarianism could be a killer business opportunity with a global impact given our addiction to an always-be-shopping consumer lifestyle.

Pat Gelsinger (left) greets SiliconValleyWatcher at a VMware event in February 2015, next to John Furrier of Silicon Angle.

The Silicon Valley/San Francisco region has one of the lowest church attendance populations in the US, 30% below the national average. 

Silicon Valley's culture is often described as Libertarian and heavily influenced by the thoughts of Ayn Rand, an outspoken atheist. But there is room for everyone and in 2015 we might begin to see some signs that Unicorns and a belief in God, are not mutually exclusive. 

Pat Gelsinger, CEO of VMware, a $6 billion IT giant is emerging as the most fearless and outspoken business leader on the subject of God and religion. He has written two books on the subject of balancing work, family and faith, and he looks upon his work as CEO of VMware as equivalent to that of a full-time minister with his church congregation.  

In 2013 Gelsinger founded an organization called "Transforming the Bay with Christ" (TBC), which has held several events. He recently spoke about his motivation for founding TBC: [From "Finding God in Silicon Valley."]

Gelsinger noted that the Bay Area is the richest region in the country and the most influential with its emphasis on innovation and high technology. At the same time, the Bay Area ... ranks near the bottom in the U.S. in per capita charitable giving. One of the reasons for the low charitable giving Gelsinger cited is the weakness of the church — often the center of charitable giving in many cultures.

Gelsinger noted that, “This area with all its wonderful things, still experiences brokenness.” He cited high crime rates, poor schools, and homelessness that are as bad as or worse than other areas in the country.

TBC aims to recruit Silicon Valley business leaders to start talking about religion and God and put aside religious differences to work with local communities in fixing some of the problems.

He proposes a three-pronged strategy:

Amplify — to encourage businesses to engage "in service to their communities" and to "see every school with a church-school partnership."

Multiply — To multiply the number of churches in Silicon Valley, "From house churches to mega-churches by helping to create a thriving church-planting ecosystem that encourages all types of churches to thrive."

Unify — To strengthen relationships between religious organizations and local businesses and civic organizations. 

Skip Vaccarello writes that Gelsinger and several others were profiled in a recent PBS report titled" Finding God in Silicon Valley."

Foremski's Take: Religion and God are subjects rarely discussed in Silicon Valley. Although I'm an atheist I applaud Pat Gelsinger's courage to stand up and try to address the problems the Silicon Valley region faces with its terrible public education and miserly philanthropy. 

But there are many ways to get to San Jose. Gelsinger's approach is one, but with the very small number of church goers in Silicon Valley there also needs to be a strong secular program aimed at attracting people to the goal of improving philanthropy and solving problems in education and helping improve the quality of life for all.

It is embarrassing and shocking that Silicon Valley communities face the same, and sometimes worse problems than in many other US towns and cities. Every country would love to have Silicon Valley's tech companies and our "visionary" CEOs. But if they can't change the very neighborhoods where they live and work, their claims of world changing achievements will be seen as nothing more than hot air — a stinking halitosis of hypocrisy. 

Where there's a will there's a way. Silicon Valley's problems can be solved without the need to invoke the aid of supernatural entities.

Meerkat, a live video streaming smartphone app, is the startup of the month judging by screen upon screen of media love for all things Meerkat. But Color, a very similar smartphone app, was ridiculed four years ago.

Color Labs, founded by serial entrepreneur Bill Nguyen (above), raised a $41 million round in March 2011— and triggered a cacophony of clueless criticism in the media.

For some reason, Color became a viral symbol for Silicon Valley's reckless funding, and it was used as a sign that a "bubble" was likely developing. For gleeful Silicon Valley outsiders, Color's funding was a heaven-sent example of how Silicon Valley's "smart money" VCs were as dumb as a dumbass.

Color was not any of those things. It was a bold attempt at creating a new type of shared social experience, it went far beyond Meerkat in capabilities and ambition.

Color Labs initially raised a $14m funding round but then Sequoia, the iconic Silicon Valley VC firm, wanted a slice, saying, "Not since Google have we seen this." Sequoia reversed the numbers on Color's round from $14m to $41m — and that's when a tidal wave of ridicule by the clueless media began.

Money too small to mention...

These days, $41m funding rounds are too small to mention and so are their novice startup teams. But investing in a Bill Nguyen venture is always going to be a smart move because of his excellent track record. 

He's founded several companies and sold two of them: Onebox for $850m and LaLa.com (my favorite music service) for $80m. 

Meerkat Love...

Meerkat recently raised $12 million.  Founder Ben Rubin has no track record, he is a former "fashion trends" importer based in Israel. And nobody laughed.

Instead, there has been a tidal wave of media love towards Meerkat and Rubin, from the very same news sites that ridiculed Color. 

The evolution of good ideas often follows a three-stage progression: first, everyone laughs at the idea; then they accept it and love it; then everyone considers the idea so blindingly obvious that it's not even worth mentioning.  

Was Color too early? Probably, but as Dan Scheinman, when he was head of M&A at Cisco once told me about startup failure: "You can be too early, too late . . . or right on time." It's tough building a successful startup — it's not just about the timing.

Color Labs failed but that's part of the Silicon Valley game: if you don't play you can't win. Bill Nguyen will be back and I'm looking forward to hearing about his next startup idea. 

- - -

Hat tip: Matt Foremski

Color: A $41m Bet On A Radical Social Mobile App -SVW

LaLa Launches Next Generation Music Web Service -SVW

Startup stories rarely focus on the product or service but on the valuation and funds raised, as if that's what's most important about a company.

Valuations are a trend story but on an individual basis, it says little about the viability of a startup business, or the innovations it is pioneering.

Many people get excited or upset about valuations of startups, even though it does not reflect any actual value — as in a public stock company — it simply reflects the views of a very small number of private investors in a private company.  

Startup valuations are manipulated in one way or another, and for a variety of reasons; some of those reasons are reported in this excellent Bloomberg Business story by Sarah Frier and Eric Newcomer: The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies

The numbers are sort of made-up. For the most mature startups, investors agree to grant higher valuations, which help the companies with recruitment and building credibility, in exchange for guarantees that they'll get their money back first if the company goes public or sells. They can also negotiate to receive additional free shares if a subsequent round's valuation is less favorable.

[It explains why late-stage funds are booming and why they don't mind high valuations, 

Billion-dollar companies join a club of "unicorns," a term used to explain how rare they are. But there are more than 50 of them now. There's a new buzzword, "decacorn," for those over $10 billion, which includes Airbnb, Dropbox, Pinterest, Snapchat, and Uber. It's a made-up word based on a creature that doesn't exist.

. . .

Here's where things start to get tricky: Buried in their corporate filings, startups tuck away all sorts of provisions that reward investors for accepting these mega-valuations. The practice is more regular and egregious in financing rounds for mature companies. Their capital requirements tend to be much larger, so they must turn to more sophisticated investment firms that demand these kinds of terms. Startups that are generous with these guarantees can garner much higher valuations.

. . .

There is, however, a further number that's grounded in reality. It's the valuation based on common stock, which is generally what employees receive, and it's calculated by professional auditors. That figure usually isn't anywhere close to the headline number. "It may be 30 percent less; it may be 50 percent less," Kramer says. "They don't necessarily disclose that to the public until the time of their IPO."

It doesn't seem fair that employees (after a typical four year vesting period plus risks) get about one-third to one-half less valuation than late-stage investors who can often cash out in six months or less. Employees often have to wait at least six months after an IPO to sell shares.

Read more:  The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies

CEO Richard Edelman (center) discusses "trust" at a Churchill Club event in 2013.

Public trust in business has plunged across the world and is harming consumer acceptance of innovation, according to a survey of 27,000 people in 27 countries by Edelman, the world's largest PR firm.

The 15th Annual Edelman Trust Barometer found levels of trust in business, government, media, and NGOs had sunk below 50% — a crucial marker — in the US, UK, Germany and Japan,  in two-thirds of countries surveyed. Public trust in business had been a rising trend in prior years and represented a recovery from the financial crisis of 2008/9.  

The release of the Trust Barometer report is timed to the same week as the World Economic Forum's Davos conference.  CEO Richard Edelman (above) is always very active at Davos as a speaker and presenter.

For the first time, the survey asked the public questions about their perception of innovation. Very few, (24%) accept the idea that innovation is making the world a better place. Arun Sudhaman at Holme's Report, called it a "blow to Silicon Valley."

A majority of respondents believe innovation is happening too quickly (51%) and that it is being driven by greed (67%) and business growth imperatives (66%). More than half (55%) feel business is not doing enough testing on new developments. Consumers also want stronger regulations of these innovations by a four-to-one margin, yet only 20% have confidence that government can do it effectively.

"The atmosphere of distrust is undermining innovation and the pace at which those innovations are moving to market is also confounding the level of trust in them," Edelman global corporate practice chair Ben Boyd told the Holmes Report. Boyd admitted the findings had "big implications for Silicon Valley."

- - -

Foremski's Take: I wouldn't be too concerned about the poor showing for "innovation" in the report. The tech industry continues to have the highest levels of trust, ahead of energy, food, and other industries. The continued popularity of the tech industry amongst the global public will make it easy for tech companies to raise trust in innovation

The Edelman Trust Barometer is always a fascinating read but also frustrating because the object of its study, "trust" is not easily defined, or definable in a standard way across cultures, and it certainly has no units of measurement. 

The Annual Edelman Trust Barometer is not a scientific instrument as a barometer is, but it does give us a rare glimpse into which way the global winds are blowing, and what that smell is. 

- - 

Please see:

CEOs at Davos less optimistic about global economy

2014 Edelman Trust Barometer: Tech Industry Risks Loss Of Trust As Government Trust Plunges To Record Levels -SVW

Reuters' Amrutha Gayathri reported:

Box expects to raise up to $162.5 million from the offering of 12.5 million class A common shares, according to a regulatory filing. (1.usa.gov/1xXTi1b)

Box's revenue rose 80 percent to $153.8 million in the nine months ended Oct. 31, while net loss narrowed to $121.5 million from $125.2 million, a year earlier. The Los Altos, California-based company has warned that it does not expect to be profitable in the foreseeable future.
Box, which rebuffed a takeover offer of over $500 million by Citrix Systems Inc (CTXS.O) in 2011, said it planned to use the proceeds of the offering for operating expenses.

Box received $150 million in funding in July from Coatue and private equity firm TPG. The deal valued Box at about $2.4 billion, the Wall Street Journal reported at the time.

Box's low price is designed to attract attention and boost demand for its shares, at which point it can raise the price to make sure its last investors aren't under water.

A strong IPO performance for Box will be welcome news for many other enterprise tech companies, including competitors such as Dropbox and Egnyte.

Vineet Jain, CEO of Egnyte, welcomed Box's IPO news. "Their delay ended up working to their benefit as it was prudent of Box to get their financials in order for a discerning investor market."

"There is still a massive opportunity in this enterprise market for multiple companies to succeed.  I see there being multiple winners here as Box will succeed on the low end of the market, Egnyte is positioned to succeed as the high end of the market, and of course Dropbox is poised to take on the consumer market."

Egnyte offers a hybrid data storage service set up on a corporation's own servers, and external services to better manage IT security.

Secondary Shares market SharesPost provides liquidity for private companies.

The secondary shares market continued to prosper in 2014, with SharePost 100, an index fund of top late-stage private companies, reporting 17 IPOs and five acquisitions.

Here's SharePost's top performers:

- Zendesk - A provider of cloud-based customer service platforms. Founded in 2007, the shares have appreciated 171% since listing 05/15/14 through 12/31/14.

- TRUECar - TRUEcar provides direct certified dealer prices designed to simplify the car purchasing process. The shares have appreciated 154% since listing 05/16/14 through 12/31/14.

-  LendingClub - One of the largest IPOs of the fall, the peer-to-peer lending company is already up 69% since listing 12/11/14 through 12/31/14.

Nine new companies have been added to the SharesPost 100 List this quarter: Yext, Zenefits, Flipkart, Coupang, Intarcia Therapeutics, The Honest Company, MINDBODY and Instacart.

Svem Weber, portfolio manager of the SharesPost 100 fund said:

"This is a testament to the continued strength of the private market, which contains many companies that are transforming industries and enhancing how we live. Private companies have emerged as the engine of entrepreneurship in the twenty-first century."

SharesPost announced a joint venture with NASDAQ in 2013 to create the Nasdaq Private Market.

Jamie Bezozo from New York based Sunshine Sachs writes that several San Francisco startups are at this week's Consumer Electronics Show. It's not just big brands.

Hello - reaching out to share news from about several SF-based startups competing tonight at CES at TechCrunch's Hardware Battlefield stage. The finalists are amongst 15 unique innovators, to be judged by some of the biggest names in tech. Startups include:

 

·         Current Labs - designs products that monitor and control aquatic systems, such as: tracking changes in tank's water, reviewing actionable insights, and taking preventative action, all from the consumer's smartphone.

 

·         LookSeeLabs - the next generation in fashion and technology with an always-on display wrapped around a modern design bracelet.

 

·         Sentri - a protective service with a complete home monitoring and automation solution, giving consumers the power to know and control their home from one single destination. 

 

·         Sutro - a water testing and data analytics company.  Their first product, the Sutro Pool, is a sensor-driven, connected, learning device to right-size the water chemistry.  

 

·         Switchmate Inc. - makes home automation simple, starting with smart lighting. The company's retro-fit design snaps onto existing light switches to make them smart-phone enabled in seconds, and uses Bluetooth Low Energy or existing WiFi networks.

 

 

A winner (and winner of $50,000) will be announced tonight so I'll be sure to circle back with that news. Thought, in the meantime, this might be a great local business story highlighting San Francisco's well-known, entrepreneurial spirit. 

 

Hello - reaching out to share news from about several SF-based startups competing tonight at CES at TechCrunch's Hardware Battlefield stage. The finalists are amongst 15 unique innovators, to be judged by some of the biggest names in tech. Startups include: ·         Current Labs - designs products that monitor and control aquatic systems, such as: tracking changes in tank's water, reviewing actionable insights, and taking preventative action, all from the consumer's smartphone. ·         LookSeeLabs - the next generation in fashion and technology with an always-on display wrapped around a modern design bracelet. ·         Sentri - a protective service with a complete home monitoring and automation solution, giving consumers the power to know and control their home from one single destination. ·         Sutro - a water testing and data analytics company.  Their first product, the Sutro Pool, is a sensor-driven, connected, learning device to right-size the water chemistry.  ·         Switchmate Inc. - makes home automation simple, starting with smart lighting. The company's retro-fit design snaps onto existing light switches to make them smart-phone enabled in seconds, and uses Bluetooth Low Energy or existing WiFi networks. Wanted to put this news on your radar and offer to send images and other assets on the company and how they're doing in the competition - if that's something you're interested in.  A winner (and winner of $50,000) will be announced tonight so I'll be sure to circle back with that news. Thought, in the meantime, this might be a great local business story highlighting San Francisco's well-known, entrepreneurial spirit.  

Foremski's Take: The acquisition of Tibco Software by Vista Equity Partners earlier this week, in a $4.3 billion deal, raises an important issue: can innovative companies survive long enough to become large companies? 

I meet very few startups that have the ambition to stay independent and challenge the dominant companies in their sector. (Delphix is the exception.) Is it a lack of ambition or simply a realistic assessment of their future? Tibco was certainly ambitious and innovative but it struggled for years to grow amid huge competitors.

Tibco was one of very few medium-sized tech companies left in Silicon Valley following a steady consolidation of IT software and hardware companies over the past two decades. Oracle, has been the most aggressive consolidator, acquiring Sun Microsystems, Peoplesoft, and many others.

Scale has become very important in the tech markets and competitors that have it, such as IBM have armies of consultants working on massive IT deployments and leaving little room for others. Tibco has been scrappy and has won customers against IBM and other giants, but scale wins most of the time and not innovation.

The Tibco deal highlights one of Silicon Valley's most important perils to its future as the world's engine of innovation: is it still possible to out-innovate competitors and build big companies? Or is a competitor's large scale the most important factor in success?

That seems to be the message in some of the monster VC rounds we see these days, such as with Uber, the car service app, which raised $1.2 billion in June, and there are many similar examples where the goal is to buy success through scale rather than innovative ideas.

If the winner is the first company to get to scale, then that will have a large dampening effect on Silicon Valley innovation, and we will see startups unable to grow beyond a mid-sized company.

What do we see today? Hardly any middle sized companies and critics saying Silicon Valley has run out of ideas. Scale and not ideas -- seems to have become the new currency of Silicon Valley, and it only comes in $100 million and $1 billion denominations. What's in your wallet?

Will Oremus, senior technology writer at Slate, reports that, "Silicon Valley Has Officially Run Out of Ideas." Because the recent TechCrunch Disrupt conference in San Francisco, awarded Alfred, the top prize in its competition for startups. 

Alfred, explains TechCrunch writer Sarah Perez, who must have drawn the short straw in the office pool, is “the first service layer on the shared economy that manages your routine across multiple on-demand and local services (like Handybook, Instacart, and the local dry cleaner).”

I was unable to find a precise English translation for that sentence, but I have to agree with ValleyWag’s Nitasha Tiku: It sounds an awful lot like a butler service.

Foremski's Take: Another pot shot at silly Silicon Valley but it scrapes the barrel in its attempts to lampoon the area. Firstly, Alfred is based in Boston.  Secondly, TC Disrupt, which is also held in New York, doesn't claim to represent Silicon Valley. Alfred probably won because Michael Arrington, the founder of TC Disrupt is also an investor in the startup (he wasn't on the judging panel but the judges know him well.)

However, I do agree that Silicon Valley seem to have run out of original ideas. How many To Do lists, email management, or calendar apps do we need? There's dozens of me-too startups in many categories.

Like early Bitcoins, the easy ideas have been mined and new ideas are becoming difficult to produce.

What doesn't help is that Silicon Valley techies are coddled and segregated by their employers. They get on the company bus in the morning and spend all day inside the company, eating for free at the company canteen, using free company services from the company store, plus a company haircut and company massage.

It never used to be cool to be a company man or woman but it is today and conformity is the company way. But it means they have very little experience of the world outside of their company. 

How will engineers come up with great business ideas that solve common problems that many people face every day if their every day is the same — a techie version of Groundhog Day?

If I ran Google, Facebook, etc, I'd make sure to garage the buses and shutter the canteens at least one day a week, to see if my staff can figure out how to get to work on time, how to feed themselves, and how to clean their own apartment. They might come up with some interesting  ideas.

Original ideas need original experiences and San Francisco has a treasure trove of experiences to offer. But tech workers need to get off the bus and think outside of the company. 

NTT Group senior strategist Tsunehisa Okuno outlines NTT's future.

NTT Group, Japan's $112 billion communications giant, unveiled ambitious plans for expansion by leveraging its strengths in global communications infrastructure, its aggressive investments in its IT services division, and in the rapid monetization of key technologies and services created by its new Silicon Valley based research center, NTT Innovation Institute.

I was the only journalist at a recent strategy briefing at NTT's research and development center in Palo Alto. The company's representatives laid out an ambitious plan to grow out its overseas business into a $20 billion annual revenues operation by the end of its 2016 fiscal year (March 2017), a 33% jump from this year's projected $15 billion.

Key to this growth will be integration of its US acquisitions in IT services, and new apps and technologies developed by its Silicon Valley research center.

A quiet giant...

NTT is huge. It employs 240,000 people in 79 countries, and offers communications services in 196 countries; it is #53 in the Fortune 500 and its customers include 80 of the top Fortune 100 corporations. It operates more than 50 data centers ranking it #2 in data centers, and #2 in global IP backbone, and it is in the top ten in marine cable.

Since 2008 NTT has made many key overseas acquisitions such as Dimension Data, Keane, and Solutionary. Now it intends to leverage those investments into a rapid expansion following several years of slow growth from $11.4 billion in fiscal 2011 to $12.2billion last year. 

Core to its growth strategy is the expected demand for global cloud services, and for IT services from large corporations struggling with the complexity of managing hybrid IT and cloud computing platforms, said NTT Group senior strategist Tsunehisa Okuno (above). 

NTT says it now has a full stack of communications infrastructure and data center services for any type of global business. And it has new technologies on the way that will essentially provide a full business operating system that can manage multiple data centers and communications networks, along with an agile software infrastructure to support e-commerce and business operations across a full catalog of data center, desktop and mobile applications. It's a very big picture.

It's not only a very ambitious plan but it also has an ambitious schedule of development. NTT wants to monetize its Silicon Valley research center's applied technologies in as little as 18 months, said Kazuhiro Gomi, CEO of NTT America (below). 

He said that cooperation between the various US business groups such as Data Dimension, and Keane, will be crucial to winning new business and to take advantage of $1 billion in cross-sales opportunities. "We now have the full IT stack for enterprises and we have a global footprint to help them expand. It's how we differentiate ourselves from anyone else."

IBM is NTT's largest competitor in IT services but NTT says it is ahead of Big Blue because it owns a global communications infrastructure and over 50 data centers while IBM is trying to fill those gaps in its offerings. IBM is also tied to sales of its own hardware and software products while NTT says it can offer and support a broad range of products, depending on customer needs rather than vendor needs.

Srini Koushik, CEO of the Silicon Valley based NTT Innovation Institute (above), knows IBM very well. He is a former senior IBM executive and IBM Fellow, and he also used to run Hewlett-Packard's Worldwide Strategic Services business. He's confident that his 100 researchers will be able to quickly monetize more than $2.5 billion of NTT's annual R&D spending and develop critical enterprise technologies.

"Every company is a now a digital company and that means they need scalable, secure, and flexible enterprise technologies and services," he said.

He is focusing his researchers on developing commercial applications in areas of security, scalable computing, and machine learning. He says that the enormous amount of data being generated by a large digital business, plus the future flood of sensor data and machine logs, will require systems that automatically can monitor and learn from this mass of data. 

Koushik plans to increase NTT's intellectual property by patenting current technologies, and new ones in development in its Silicon Valley center. One of those technologies is a washable shirt (demonstrated below) containing biometric sensors that could find widespread use in healthcare (or eldercare in underwear).

Foremski's Take:The next two years will be crucial in determining if NTT's aggressive investments in its overseas business group is a successful strategy and one that can dramatically boost revenues following several years of modest growth. 

Growth of an IT services business is people-constrained and customer acquisition takes a long time. NTT's challenge will be how to effectively coordinate the work of teams from different business groups in identifying customer opportunities and then fulfilling complex IT service obligations. 

The pace of commoditization of data center computing, storage and communications technologies is another challenge. The deflationary aspect of this downward trend in IT costs means that customers can defer some decisions because the enterprise stack will be so much cheaper tomorrow and the next day. Those economies, however, have to be weighed against business opportunity losses from inflexible IT systems and outdated processes.

NTT Group is using its IT services to integrate its business groups and acquisitions but a structural reorganization might be neccessary to speed up customer acquisition and services deployment — if it is to reach its aggressive revenue goals.

NTT needs to keep an eye on less traditional competitors such as Google, which has a small but expanding enterprise cloud business. Google has an extensive global communications and data center network and recently announced it was part of a consortium financing a marine Internet cable connecting the US and Asia. Its internal business "stack" is looking similar to NTT's.

But Google also has a large business: search-based advertising that acts as an important driver in the development and deployment of scalable computing technologies, which form the foundation of its commercial IT services. NTT lacks a single large business to drive similar economies of scale.

NTT is preparing a new five-year strategy as the current one ends next year. Will it seek a major Internet business acquisition to complete its business stack? 

The program has involved 7,000 students in Silicon Valley and in 10 additional US regions, a total of 35 school districts. Tata says that,

 70% of participants reported an increase of interest in STEM (science, technology, engineering and math), and goIT schools reported a 27% increase in high school students choosing STEM majors in college.

Students involved in the program participate in computer science career awareness workshops during the school year, as well as a hands-on technical summer camp aimed at developing students’ interest in technology.

The goIT program and summer camp concludes for the year with TCS’ student robotics competition and awards ceremony.

"We need to prepare underserved groups, at-risk youth, girls, and minorities for STEM careers, and this was a key design factor while expanding the goIT program to new markets, schools and students," said TCS' Balaji Ganapathy, Head of Workforce Effectiveness, who oversees the company's Corporate Social Responsibility programs. 

TCS Expands goIT Program to 10 North American Cities to Excite and Prepare Students for STEM Careers

Facebook HQ - Mark Zuckerberg refused to take part in illegal scheme against tech workers.

Some of Silicon Valley's largest and most profitable companies are facing a serious setback in their attempt to finally settle a hugely embarrassing class action lawsuit alleging a conspiring to cap salary levels and limit job prospects for more than 64,000 tech workers.

Late Friday in San Jose, US District Judge Lucy Koh said the $324.5m settlement was too low given that the case against the plaintiffs had strengthened and that it was less than a $20m settlement paid by Lucasfilm, Intuit, and Pixar who were also part of the collusion. It would need to increase by at least $55m to $380m. The original suit asked for $3 billion in damages rising to $9bn under antitrust penalty laws.

Dan Levine at Reuters reported:

The judge provided details in evidence of anecdotes involving Jobs and other Valley executives to show why she thought the workers deserved more. Representatives for Apple and Google Inc declined to comment. Intel spokesman Chuck Mulloy said the company is disappointed Koh rejected an agreement "that was negotiated at arm's length over many months," but appreciates that Koh provided additional information on her views.

The ruling affects Apple, Google, Intel, and Adobe. Apple is ranked #1 in Silicon Valley based on revenues and profit; Google is second most profitable; Intel is fourth largest; and Adobe is number 25 with $4 billion in revenues and $272m in 2013 profits. (Source: SV150 Rankings.)

Facebook refused to join in the conspiracy and that resulted in Google having to increase engineers' salaries by 10% to stop them leaving.

Foremski's Take: This is a shameful multi-year collusion from companies who are Silicon Valley's largest, and richest and who constantly declare their devotion to their engineers by providing them with free lunches and everything else they need. It's a halitosis of hypocrisy — it stinks. Clearly, there's no free lunch — the employers made out like bandits on savings from lower salaries, hiring costs, and staff turnover. 

A free lunch and a ride to work is cheap compared to the billions of dollars they saved by working against interests of their own people — more than 64,000 workers. It's understandable that they would prefer to quickly settle the case and put a lid on the public access to hugely embarrassing emails between top executives.

More damaging than the salary caps is the harm to employees' lifetime prospects by stopping them from moving to potentially career defining opportunities at other companies. 

A rusting legacy...

The Steve Jobs legacy is becoming quickly tarnished with an unflattering patina of flaking rust rather than a noble verdis gris. The judge identified Steve jobs as the "central figure in the alleged conspiracy."  His role was despicable but so was the enthusiastic agreement of the CEOs of major Silicon Valley tech companies, such as Google's CEO Eric Schmidt and the CEOs of Intel, Intuit, Adobe, and Lucasfilm. 

Steve Jobs was a bully and these CEOs paid him their lunch money. 

Facebook CEO Mark Zuckerberg deserves to be lauded for his refusal to take part in Jobs' scheme. 

The plaintiffs should pay the extra $55m and settle the case as quickly as possible and hope people will forget this disgraceful episode in Silicon Valley's timeline. 

Please see: 

Does Silicon Valley R-e-s-p-e-c-t Its Engineers? Top Firms Shun Engineering Legends -SVW

Anti-poaching suit involving Apple, Google, Intel and Adobe hits snag | ZDNet

Biz Break: Judge rejects settlement in Silicon Valley no-poaching case - San Jose Mercury News

Eric Schmidt, Google's former CEO and current chairman, is offering his time and a cup coffee to the winner of an auction organized by CharityBuzz, which will donate the proceeds to the Rush charity for disadvantaged youth.

Schmidt "is excited to show off the $2 billion digs in Chelsea. When asked about the auction, Schmidt said, "I look forward to hosting the auction winner at Google NYC!"" 

Last year, Tim Cook, CEO of Apple raised $610,000 for 30 minutes of his time. Warren Buffett cost the top bidder $156,000.

But his chosen charity might be a bit disappointed with Schmidt's auction. So far, he's raised only $10.5k from 6 bids, well below a target of $50K. But there's still a few days to go before the bidding ends August 14. 

His publicists are keen to point out his spontaneous generosity:

Schmidt is no stranger to giving back to great causes. Back in March he spontaneously selected 10 nonprofits to split a $1 million grant.

Forbes estimates his net worth at $9.1 billion.

1, Hacker Way, Facebook HQ - It refused to join the conspiracy.

I'm surprised there hasn't been more outrage at Silicon Valley's richest and most successful companies secretly conspiring against their own staff. Especially when they constantly talk about how they value their engineers(!)

It's a shame the class action settlement won't reveal the true nature of their duplicity. From today's New York Times, David Streitfeld reports: 

"There was such embarrassing evidence about the pacts being orchestrated from the very top, and there was such hubris from Jobs and the other chief executives," including Eric E. Schmidt of Google and Paul S. Otellini of Intel, said Orly Lobel, a professor of employment law at the University of San Diego. "It would have been very unpleasant for the companies to reopen all those emails in court."

. . .

Michael Devine, a 46-year-old freelance programmer who is one of the four plaintiffs named in the suit, thinks the companies are getting off far too lightly.

. . .

Apple has more than $150 billion in the bank, eclipsing the combined cash reserves of Israel and Britain. Google, Intel and Adobe have a total of about $80 billion stored up for a rainy day.

Against such tremendous cash hoards, $324 million is chump change. But that is what the four technology companies have agreed to pay to settle a class action brought by their own employees.

. . .

 "The tech industry is ethically challenged," Mr. Devine said. "Customers and the government don't fully understand technology and therefore don't know when the law is broken. I'm attracted to the industry for the opportunities for innovation but repulsed by the ease with which folks can cheat and get away with it."

Plaintiff in Silicon Valley Hiring Suit Maligns Deal - NYTimes.com

Open up those embarrassing emails. And how do we know that these long standing practices in hiring haven't become institutionalized over time?

A free lunch and a ride to work do not compensate for damaged careers because employers colluded to hold down their employees' potential. It's difficult to believe.

Here is an extract of Devine's letter opposing the class action settlement:

The evidence of the Defendants' illegal conspiracy, and its intended impact, is very strong. In fact, the Defendants' own actions reveal their valuation of the conspiracy. Just look at Google which, when Facebook rejected their illegal overture, felt compelled to raise annual compensation 10% companywide to stem the flow of employees to Facebook. This settlement, in contrast, will amount to less than 1% of compensation for each class member over the duration of the illegal agreements. That's one tenth of the experts' estimates of damages and is lacking in any penalty. There's no justice for the Class in that, nor is there any real deterrent to future wrongdoing. We want a chance at achieving real justice.

As an analogy, if a shoplifter is caught on video stealing a $400 iPad from the Apple Store, would a fair and just resolution be for the shoplifter to pay Apple $40, keep the iPad, and walk away with no record or admission of wrongdoing? Of course not, nor is such a resolution appropriate in our case. Perhaps, though, the prevalence of corporate crime is in part due to the absence of real justice for the victims in the courtroom? Why, with such uniquely compelling evidence in hand, would we short circuit this case? Please, Your Honor, allow us our day in court.

Tech Worker Justice

I recently met with Adiba Barney, the new head of Silicon Valley Forum (SVForum), a 30 year old association that is probably best known for its annual Visionary Awards, and by its former name, SDForum (Software Developer Forum).

The new organization is the result of a merger with the Silicon Valley Academy of Startup Entrepreneurs (SVASE) in January 2012. It holds more than 200 events every year focused on entrepreneurs and developers.

Adiba Barney, a Swedish national and a branding expert on innovation centers, was appointed CEO early this year. Here are some notes from our conversation:

- Barney arrived in early 2011 as part of a Swedish initiative showcasing Swedish innovation. She helped establish innovation centers in Sweden and promote them globally. She decided to stay in Silicon Valley and ran "Silicon Valley Vikings" a networking organization.

- SVForum has many new initiatives. One of these is a "World Cup" startup competition May 20. [Launch: Silicon Valley 2014 - The World Cup Tech Challenge | SVForum] It pits 30 startups against each other in five tech categories: enterprise, next generation technologies, digital media, educational technology, and health.

- The Visionary Awards are coming up in early June and this time it is an evening event, a type of "Oscars" for Silicon Valley. Usually it is a garden party at someone's mansion in Woodside. 

- This year's Visionary Award winners: Tim Draper, founding partner at Draper Fisher Jurvetson; Jessica Jackley a co-founder of Kiva; Tim O'Reilly, founder of tech press publisher O'Reilly Media; and educator Tina Seelig, a professor at Stanford university.

- SVForum is also building a large online community to try and make available the lessons of Silicon Valley to a global audience. It's more than a "bridge" to Silicon Valley.

- There are also plans for a series of smaller events, salons for entrepreneurs and investors.

- We spoke about how the culture of Silicon Valley is so much more welcoming than European culture. There is often much suspicion from Europeans towards entrepreneurs.

- SVForum has a lot of plans but Barney is one of just five full time people  — she and her team will be very busy.

Please see:

Techno-Optimists Celebrated In Silicon Valley Visionary Awards -SVW

SVForum Visionary Awards 2012 - Photos -SVW

More info:

SVForum has been the hub of the Silicon Valley software community since the Software Entrepreneurs Forum (SEF) was founded in 1983. Started as a volunteer group of software entrepreneurs and developers who wanted to help each other and advance the software industry, the organization grew to more than 1000 members, meeting regularly for monthly dinners and special interest groups...

SVForum History | SVForum

Poland has an excellent community of software and hardware engineers thanks to the country's long tradition of excellence in maths and encryption. Its developers think on their feet and they are very loyal workers. Google, Cisco, and many other US companies have opened development centers in Poland, especially in the south around Katowice and Krakow, where there are many colleges and universities. There are also European Union grants and subsidies for US companies.

Poland also has more than 100 computer gaming companies. I met a group of Polish games developers (below) last year in August when they were visiting Silicon Valley.

The headlines may obsess over the WhatsApps and Twitters of the world, but the reality is most venture-backed startup exits are smaller and far from being unicorns. According to CB Insights data, 2013 saw 67% of tech startups exit after either the seed or Series A stages. 

CB Insights says that, "A portion of those went to acqui-hires of startups hitting the Series A Crunch" but it also shows that the majority of startups didn't see a future for themselves as independent companies. Or, that they would be able to grow to a sufficient size that allows them to be sustainable businesses.

This is very bad news for Silicon Valley and the rest of the world because it implies that there is no way to get to sufficient scale for young companies. Innovation will be squandered and trampled by the incumbent scale players: Google, Facebook, Oracle, IBM, Microsoft, Amazon, etc.

That's why we see huge investments being made in startups that seem to be well positioned to be the giant in their field because it can kill competitors or funding for new competitors.

I often read articles about the fragility of Google, for example, to the next great search engine that comes from three people in a garage. But this is nonsense. It doesn't matter if a better search engine is developed because Google can monetize it far better than anyone else. It'll either buy it, or partner with it, or copy it.  Similar is true for the other giants in their sectors.

It means innovation cannot easily escape the process of acquisition, which is quite destructive and often results in the original business dying, or being closed; sometimes through design but more often through mismanagement.

It would seem a good strategy for entrepreneurs to immediately start a copy-cat startup when an acquisition is announced because it's unlikely that the acquirer will manage to keep the business going, and there's probably a large customer base that resents the acquirer and would gladly jump to an independent and more focused service.

If scale is the only factor for success then Silicon Valley innovation is in trouble. Scale doesn't require any smart business strategy it simply means that size matters when little else does.

Size is not a level playing field. How can competition arise and thrive?

John Helpern at Vanity Fair has lunch with Biz Stone, a co-founder of Twitter. They eat at one of my favorite spots: Liverpool Lil’s. 

Biz Stone speaks very humbly despite his hundreds of millions of dollars in wealth. He says he is too embarrassed to buy a new car but he did buy a house for his mom.

He likes opera, early nights, movie matinees with his wife, and P. D. Scotch. He is vegan.

Here is a sample:

“We have everything we could need. I’m very comfortable with my dented old Volkswagen Golf. I would feel embarrassed if I bought a fancy-looking car or a new home. It would just reflect poorly on me somehow.”

…The most important thing for me about having money is that it takes away most of the anxiety I’ve lived with my whole life.”

His childhood wasn’t easy. His mother struggled along on welfare in Wellesley, Massachusetts. (His father was mostly absent.) When he noticed that his socks and underwear were “Irregular,” he thought it was a brand name. For years of his working life, he struggled with serious credit-card debt. “It was like bone on bone,” he said. “You have no cushion, no resistance to anything.”

…“People might say you’re a naïve idealist about the helpfulness of mankind,” I said.

“Or a hallucinogenic optimist,” he replied.

Twitter Co-founder Biz Stone is Very Comfortable Driving A Dented Old Volkswagen | Vanity Fair

Biz Stone is way too humble. What’s the point in hitting the jackpot when you are too self conscious to use the money in a way that you weren’t able?

Time to grow up and grow into your money. You are forty years old. You can live well and do well too.

Money is more than philanthropy it is also a means of actively creating the future. Techno-optimists must also become techno-activists — to make sure we get the right future. It won’t come about by itself. We could easily end up in some nightmarish version of a tech-enabled North Korea.

The future of technology is easy to predict but predicting how we will live in that future is much harder to know. But this is the story in a post technology world where we have plenty of technologies, and where the tech disappears into the framework of our lives and our glasses.

The future is about how people and communities thrive on these technologies and how we remake our world culture and economy.

We’re heading for the end of materialism and the end of work. It’s going to have a massive effect on us all and we need to get ready or it'll be very painful. I will write more on this soon.

Fortune's JP Mangalindan interviewed eBay CEO John Donahue about Carl Icahn, board conflicts, and company strategy.

It's a hard hitting interview and there's some interesting replies:

On PayPal:

We have what others want: The only scale-payments platform in the digital area thus far. And one of the fundamental reasons PayPal has done what it's done is because it did it on top of eBay....

None of the other payments companies have had a flywheel to build on. Now, PayPal will be larger than the eBay Marketplace. PayPal has enormous potential....And that it'll be worth more three years from now together than by separating them today. I think the collective entity will be worth more together....Why would you divide up the data?! Everyone is paying millions to get to the data.

On board member conflicts such as with Marc Andreessen:

There are going to be conflicts, and when those happen, you recuse yourself. And if they're going to be material, you would step off the board.

On Carl Icahn.

We agreed to have ground rules. We agreed it would be off the record. This allowed an open conversation, and it was a good, mutually respectful dialogue that's different than all that stuff going on in the media. It was an intelligent, informed, mutual discussion.
Was there any gentleman's agreement to not criticize or "bad-mouth" each other publicly?
No! [laughs] But I'll say this about Carl. He said what he was going to do. We had different points of view.

On eBay share value:

The best way is to drive real, sustainable shareholder value. My goal is to have that $50 share value be $100, depending on a time frame....It's not a zero-sum game. I think Amazon can be a winner and Google can be a winner and eBay can be a winner.

 

Read more here: eBay's John Donahoe talks Icahn - Fortune Tech

Marissa Mayer - Yahoo CEO.

Josh Contine - Techcrunch.

Mike Butcher - Techcrunch Europe.

MC John Oliver.

Jolie O’Dell - VentureBeat.

Best new startup - Tinder. 

Lake Tahoe based investor Chris Sacca wins Angel of the year.

Best Design - Pencil by 53.

Cloudflare team.

Dave McClure tries to raise the audience to standing for Edward Snowden award.

Best CEO - Dick Costolo - Twitter. 

Duolingo.

Dave McClure’s 500 Startups team.

Heather Knight’s report on SFGate.com highlights the plight of local people forced off Mid-Market Street by police. 

Swept off Mid-Market, S.F.'s homeless cluster nearby - SFGate

Police Chief Greg Suhr said the influx of homeless people into neighborhoods around Market Street is to be expected - if they're moved off the main drag, they have to go somewhere.

"I get my marching orders from the mayor that Mid-Market is a priority," he said, noting that Lee stresses that point every time the two men talk. Suhr said he plans to double the number of beat officers patrolling Mid-Market in the next few months at the mayor's request.

Foremski’s Take: This looks like segregation to me and not gentrification. 

There are good lessons in gentrification to be had from San Francisco’s Gay population, which led the gentrification of the Castro and Haight Street neighborhoods.

Much of Haight Street area and parts of the Castro became very run-down and very dangerous in the 1970s, following the Summer of Love era in the late 1960s.

Gentrification took a long time but it worked because it put the community to work. People were hired for manual and skilled work. The gentrifiers went out to the local restaurants and bars, they made use of local small businesses  such as dry cleaning and hardware stores.

The Gay way is best…

I saw the  gentrification in progress when I arrived in SF in the mid-1980s and moved into an apartment on the corner of Haight-Ashbury.

Gradually, a whole community was built back up, and many new jobs were created. It was done through a process of integration and not segregation. 

That’s not what’s happening here in Mid-Market where Twitter keeps its people inside all day and competes against local businesses by providing thousands of its workers with free food, and a rainbow of free services such as laundry and apartment cleaning.

On the streets outside the golden doors of Twitter’s HQ,  hundreds of local residents line up for their free food and free services from the many charities operating in the Tenderloin, one of the poorest areas of the City.

Brisbane or bust…

Twitter won its demand for city tax relief, now valued at more than $56m, after it threatened to move its HQ to a strip mall in Brisbane.  

The city should have called its bluff – Twitter knew it would have struggled in its recruitment of top talent if it were in Brisbane, and it would have stayed in San Francisco and accepted less. Now it gets extra city services for free as police double up on their sweeps. 

Segregation should not be the new gentrification. The city should help integrate Twitter and the other tech companies. Sweep the homeless towards mid-Market Street and not away.

The tech startups are innovative, they’ll come up with an app for helping the helpless, and they’ll come up with other bright ideas.

But if the problems of the neighborhood are segregated away — they won’t see a problem that needs solving.

Integrate San Francisco’s startups and they’ll be part of the solution.

- - -

Please see: Segregation Of Tech Workers Leads To Mistrust And Conflict

Above, angry man about to hit me

I was punched by an angry man while I was walking home Wednesday evening around 11pm in San Francisco. He was on the other side of the street raving and hollering, and I tried to stay away but he came up to me. I snapped a photo from my hip because I knew what was coming.

My complaint is this:

My complaint is not the pain of the punch. He bounced off me like a ping-pong ball. I'm 6'2" and played rugby, and I grew up on the inner-city streets of East London.

My complaint is that I'm impatient for our local tech companies to show up and start making a difference. If you can't change the world here, on your street corner, (I'm looking at you Twitter) you should shut up about making a difference anywhere else.

I'm also calling out all the tech companies outside of San Francisco. What have you done in your neighborhoods that helps people like this poor man?

Silicon Valley's tech companies constantly talk about how they are changing the world for the better but there's a stink of halitosis wafting around, it's the nasty stink of hypocrisy. They should gargle or show up. 

Our communities don't work. Our schools have 50% drop out rates. Our cities suffer from the same problems as other cities that don't have, and never had: Steve Jobs, Mark Zuckerberg, Brin and Larry, Larry Ellison, Marc Benioff...

What continually amazes me is not the advanced technologies we create but that Silicon Valley has an urban ghetto smack dab in the middle of it.  East Palo Alto is an urban ghetto in every violent and cliched sense of the term.

Tonight, I met a couple from Atherton and they said they were continually disturbed by the sound of gun fire from East Palo Alto, when they were in their hot tub. They moved to San Francisco.

How is it possible that this divide continues? East Palo Alto is just a short walk from Stanford University, and it is right next to the beating heart of the world's engine of innovation, a mythical place called Silicon Valley. 

The indifference shown by so many of our tech companies "making a difference" is astounding.

Why are our cities suffering from the same problems that every other city faces?

Why are our public schools basket cases and not showcases?

What is the benefit of tech companies in our communities if they can't improve their own street corners?

Why did an angry man punch me?

Please view my photo essays: 

Christmas Day On Twitter's Street 

The Not So Sunny Side Of Twitter's Street...

Outside the golden doors of Twitter’s mid-Market Street HQ is a far different world from the thousands of coddled tech workers that live inside, with free food, free laundry, free apartment cleaning, and the freedom to come and go home.

Here’s a photo essay from a walk down the not-so-sunny-side of Twitter’s street I took on Christmas Day with Ann Garrison, a reporter for KPFA news. 

Twitter is bound by agreements with the city to help gentrify the neighborhood in exchange for more than $56m in tax savings. The company has done little beyond donating $60,000 in “sponsored Tweets” to local charity groups. 

By keeping workers indoors all day and offering services to their staff that compete with local businesses, there is little sign of anything changing in the Tenderloin, one of San Francisco’s poorest neighborhoods.

Not much has changed except evictions and small shops closing as developers speculate by building office space and luxury apartments, “in the heart of SF.”

It’s interesting that Twitter often boasts of its community-oriented corporate philosophy, yet through its demands for large tax savings and the resulting loss of millions of dollars for important city services, it chooses to be a burden on its neighbors rather than ease the daily burdens of the less fortunate.

Ann Garrison.

- - -

Please see:

Living In The Shadow Of The Googleplex: Communities Struggle To Keep Jobs

Segregation Of Tech Workers Leads To Mistrust And Conflict

The Not So Sunny Side Of Twitter's Street... 

Some of the organizers of the "Shame on Feinstein" coalition.

On the day celebrating the Bill of Rights, a coalition of San Francisco and Bay Area activists groups and lawyers, issued an open letter to Senator Dianne Feinstein, strongly rebuking her for not providing essential oversight over NSA spying, from her position as chair of the Senate Intelligence Committee, and demanding she resign.

Organizers of the coalition said that California's tech industry is vulnerable to the loss of large contracts and there's harm to the state's economy because of the NSA's unchecked operations.

Senator Dianne Feinstein has been very protective of NSA operations rather than chastising the agency for violating policies and laws protecting the privacy of US citizens. [Dianne Feinstein's Bragging About NSA Surveillance Program May Finally Result In It Being Declared Unconstitutional | Techdirt]

Silicon Valley's response to the NSA spying has lacked a united front and seems distracted by continual revelations of spying on "cloud" data centers, other governments, and foreign corporations.

Last week, Google, Facebook, Apple, Twitter, Yahoo, LinkedIn, AOL, and Microsoft signed a letter critical of the NSA and bulk data collection. [The Major Tech Companies Missing From the Surveillance Reform Letter | TIME.com]

Tech split on NSA...

It shows the divide in the US tech industry, missing are IBM, Cisco, Intel, Dell, Oracle, and many other tech giants. It's precisely these companies that have massive contracts with US government agencies. Criticism of the NSA is an understandable concern, it's not something that will help them win contracts. However, they will have to weigh their losses in overseas markets against their silence on this issue domestically.

The next earnings season for these tech giants will undoubtedly bring this issue to the fore as shareholders question performance in overseas markets, which represent more than half of revenues for most tech companies. There are already signs of slowing sales for IBM and Cisco.

Sign here...

The coalition is asking voters to sign their letter. I was told that there is a special encryption technology being used to mask the email address that digital signers have to provide for verification and that it is encrypted and then destroyed.

An Open Letter to Senator Feinstein

Here is an extract: 

We, the constituents of Senator Dianne Feinstein, are dismayed and embarrassed by her decision to defend unconstitutional surveillance. As chair of the Senate Intelligence Committee, she is required to oversee data surveillance to protect her constituents and all Americans. Instead, she has decided to use this moment of crisis to expand surveillance powers to include all bulk data collection. Feinstein has betrayed our trust and support that has sustained her for decades. To regain that trust, she must make amends by resigning as chair of the Senate Intelligence Committee and withdrawing her NSA legalization bill.

 Shame on Feinstein Coalition Signatories:

• Media Alliance


• Restore the Fourth SF Bay Area


• Open Media


• Project for Open Government


• Demand Progress


• Restore the Fourth San Diego


• EthicsInTech


• Solano Peace, Justice & Freedom Coalition


• Bill of Rights Defense Committee


• Restore the Fourth Los Angeles


• Bay Area Women in Black


• Libertarian Party of San Francisco


• Peace and Freedom Party of California


• Our City San Francisco


• Restore the Fourth Santa Cruz


• Stop LAPD Spying Coalition

An Open Letter to Senator Feinstein

Please see:  Daniel Ellsberg Speaks At "Restore the Fourth" in SF -SVW

San Francisco 'Restore The Fourth' Protest Draws More than 400 -SVW

Is Google Using NSA Spying As Excuse To Boost Ad Revenues? -SVW

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.”

How can his millions of dollars contributed to real causes such as building a children’s hospital, be “phony”? It’s real money. So he wants his name on the hospital, so what? It’s standard practice for hospitals, endowments to universities, etc. 

The author is concerned about the 135,000 people that, “paid good money” to come to Dreamforce conference last week to see a “a bloating faux-Buddhist billionaire."

He writes, “I had the bad luck to be sent here by my employer—but at least they paid for my pass, which would’ve cost between $800 and $1,200…”

He paid but he clearly didn’t know that most people didn’t pay because it was free registration for the keynotes and show floor, apart from the technical sessions. The 135,000 people who paid or not, clearly felt it was a good use of their time, and they knew what they were in for.

There’s a lot of good created by Salesforce. Benioff runs San Francisco’s largest and most valuable tech company, [$CRM] at $31.44 billion, with nearly $4 billion in annual revenues, and employing more than 10,000.

In addition, there’s tens of thousands of people employed in the massive ecosystem of consultants, developers, and vendors that rely on Salesforce — it feeds a lot of people.

There’s always an “I” in philanthropy…

This is nothing new at Dreamforce. Benioff loves to show off his philanthropy, and he does it every year, and has been doing it for more than a decade. And everyone loves it, everyone knows what Dreamforce is like, except for this shocked (cowardly) writer.

Dreamforce is embedded into the timeline of San Francisco's annual events. It’s a ritual gathering of sorts and has developed a very positive message in a consistent way. Dreamforce has become a very unique IT industry conference.

It's too bad Benioff has to slap himself on the back, when he should be getting broad recognition for his philanthropic works, and for which he well deserves. 

There’s legions of tech millionaires that don’t do any philanthropy and yet think themselves as god’s gifts to a changing universe. Which is Valleywag’s traditional beat: hypocrisy. And it’s a good beat with plenty of entertaining stuff, but this time, and on this post, it misses the mark by a wide margin. 

If some harmless ego stroking results in millions more for worthwhile charities then I say stroke-on and leave the man alone. 

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:

Harry McCracken writes:

By the time I got interested in PCs in 1978, it was already the stuff of legend. Newbies like me merely used mass-produced microcomputers; Homebrew members designed and built their own machines. I was in awe of their skills. I still am. And on Monday night, I got my chance to rub elbows with some of those members and experience, at long last, an approximation of the Homebrew experience.

. . . At the reunion, Processor Technology cofounder Bob Marsh said that Homebrew members invented software piracy by sharing unauthorized paper-tape copies of Altair BASIC, a practice he said was the BitTorrent of its time. (Bill Gates, co-creator of Altair BASIC and general partner in a startup called Micro-Soft, famously took out an ad in the Homebrew newsletter to complain about the theft.). . .The giants whose shoulders we all stand on are still very much with us — and that’s a fact worth cherishing.

Read more: For One Night Only, Silicon Valley’s Homebrew Computer Club Reconvenes | TIME.com  

Thirty-eight years after the first meeting of one of the most famous groups in the world of technology, nearly 100 of its original members got together to celebrate the club, themselves, and perhaps most important, the dawning of the personal computer revolution. 

"Everybody here is [among] the founding fathers of the home computer industry, the people who started the home computer industry," said John Draper, aka Captain Crunch. "This is amazing. Never have I seen so many prominent [technology] people together in my life."

. . . Original member Marty Spergel couldn't get himself physically to Silicon Valley but made sure he was still there via a telepresence robot, it was pretty important.

With the virtual Spergel rolling through the meeting, members would walk up and greet him almost as if it was actually him. As the robot came up to three members, Spergel asked how they were doing. One, Harry Saal, joked, "We're still vertical, so that's good."

Read more and lots more photos here: Homebrew Computer Club reunion lights up Silicon Valley | CNET News

Foremski’s Take: I wish I could have made the reunion because this is the group that was there at the very start of the PC industry, which grew into a massive market and created a collection of essential technologies that dominate todays’ world of computing.

We are still innovating on that basic platform. Some, like computer pioneer Alan Kay, say we are running out of steam and need to develop new sets of technologies, as we did in the 1970s, to fuel the next 20 years of tech innovation.

[Please see: Computer Pioneer Alan Kay Says Silicon Valley Is Running Out Of Innovation]

Background:

In March 1975, The Homebrew Computer Club held its first meeting in Gordon French’s Menlo Park garage. Made up of Silicon Valley computer hobbyists and DIY hackers, it would be hard to overstate the impact this group would have on the future of computing. In fact, if one had to pick the single most important moment in personal computing history, the first meeting of the Homebrew Computer Club in that dimly lit garage in Menlo Park might be at the top of the list. Homebrew members didn’t invent the computer, nor most of its discrete and necessary components, but as Sir Isaac Newton is quoted as saying, “If I have seen farther it is by standing on the shoulders of giants…”

The original Homebrew members stood on the shoulders of giants like Alan Turing and John Backus, who in turn stood upon the shoulders of pioneers like Pascal, Lovelace, Babbage and even those in the 17th century like Leibniz. From the invention of the wheel to the invention of the microprocessor, humanity has always built upon the greatness created by previous generations. The Homebrew meetings represent a moment in history when brilliant minds came together and were able to see further into the future than perhaps any single era in the history of human innovation. Please contribute to honor the original members of the Homebrew Computer Club and to attend their historic reunion, where the Silicon Valley community can stand upon the shoulders of these great innovators, and see further into the future than anyone else before them.

 Homebrew Computer Club Reunion by Joël Franusic

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."

He completely fails to prove that there is a wider meaning for the rape accusation, but that doesn't deter him at all and he ends up claiming that there is something wrong with Silicon Valley.

But there isn't a larger theme here --it's very specific to Mike Arrington -- the whole affair has nothing to do with the number of women in tech, or the "Information Age."

Potter also tries to portray Jenn Allen as a woman scorned. And he implies that Nick Denton, founder of Gawker Media has some kind of vendetta against Arrington, which has absolutely nothing to do with this case. His reporters have worked hard and gathered a lot of information on this story.

In a potty concluding paragraph Potter writes:

Regardless of the absolute truth of what Arrington did or did not do to Jenn Allen, the whole affair makes this much clear: while the Valley is busy incubating a lot of shiny new start-ups and promising innovations and social networks that generate all kinds of value propositions and tremendous revenue possibilities, behind the scenes of that eco-system there's another part of the culture, where someone is always trying to screw somebody over, where it's crunch or be crunched.

The big question the luminaries of the Valley might want to ask themselves is the question Arrington himself posed that day at Berkeley: Does the Valley want to solve the problem, or does it want to pick on Mike?

Michael Arrington, Jenn Allen, and the Dark Side of the Information Age

"Regardless of the absolute truth of what Arrington did or did not do to Jenn Allen..." Wow! He threw away core of the entire article to deliver a bland warning about Silicon Valley where "someone is always trying to screw somebody over." It's ridiculous.

Rape is not the same as a soured business deal. Rape has absolutely nothing to do with the lack of women in tech. And it's not about "picking on Mike." He picked this one himself. 

SF/Silicon Valley Public Schools should be showcases not basket cases.

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.

A VC: The Computer Science Education Fund

It’s a wonderful idea that needs to be replicated here in San Francisco and Silicon Valley public schools. Our public schools are broken but they should be showcases for Silicon Valley and not basket cases with nearly 50% dropout rates.

Fred Wilson writes:

I got to this place initially out of self interest (how to get more coders for our portfolio companies in NYC?), but it quickly became about way more than that. When you walk into a school and see kids from neighborhoods like Brownsville and the South Bronx sitting in front of laptops and making software using modern tools like Ruby On Rails, Github, and StackOverflow, you see a pathway for them and for our city and for our country to change what ails us.

Who will step up from our West Coast community and meet the challenge thrown down by Fred Wilson and his colleagues? Mark Zuckerberg I bet. But maybe the Life under Glass brigade will feel their smart watches buzzing that’s it’s time to pony up the money and the organization?

Go West…

Or maybe the cynical and insular VCs of Sand Hill Road will sit back and wait for the NYC kids to head west like the others have done? And thank the East Coast VCs for training up the next generation of foot soldiers for Silicon Valley’s startups.

But that trek west might not happen. Urban density means many new startup ideas will be born from experiences and problems New York city kids and their families face daily. Some of those ideas will be truly groundbreaking and Fred Wilson and his pals will be positioned at the head of a potential gold mine of deal flow.

Start local, go global. The next big ideas will come from dense urban centers where kids and their families are dealing with common problems. And by being able to code they’ll be able to quickly throw together some great ideas. 

Silicon Valley techies sit inside their gilded cages, being fed gourmet meals, and talking to themselves; they don’t interact much at all with the communities of regular people that live around them. Not many great ideas will emerge when they don’t emerge. That’s why there’s so many To Do lists and email management apps.

Ugly ducklings of NYC…

There's bound to be some wonderful Black Swan startups that'll grow from the ugly ducklings of New York's public schools... Again, Silicon Valley only funds a meritocracy of male Ivy Leaguers, all have the same experiences and think the same, which is not a formula for generating startups that make a difference, by being different.

A lot of the obvious low-hanging fruit has been exploited with software/web apps, and the next generation of opportunities will be more domain specific, and that means knowing your domain. Urban cultures have many domains and some are common to all other urban centers.

I wish the New York educational venture great success and I hope it inspires many copycats!

Silicon Valley VCs had better start pooling their money and set up a similar educational venture here in our public schools otherwise they’ll be missing out on the next blockbuster startups. It’s not a lot of money and our VCs could do with a better quality deal flow. Collectively, they aren’t doing that well.

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A VC: The Computer Science Education Fund

10-Year Study Erases VC 'Smart Money' Claims -SVW