The SV Forum Visionary Awards used to be my favorite Silicon Valley summer event. These were small outdoor gatherings maybe 150 to 200 people, and usually held in the substantial backyard of some fabulous Woodside mansion — but always with incredible iconic names standing just a few feet away.

For example, the above photo shows the four (male) Visionary Award winners from eight years ago: Far right is Elon Musk, next top VC Jim Breyer; technology journalist David Kirkpatrick, and educator Salman Khan. The legendary VC Ann Winblad, is far left.

The casual atmosphere of the awards ceremony made for some excellent off-the-record conversations and excellent contact building for future on-the-record news stories.

Strangely, there was always very little press at this exclusive event — which I never understood because the access to key Silicon Valley figures was always off the charts.

And the backyard-casualness of the event was always a welcome break compared with the massive Silicon Valley trade shows and conferences during the rest of the year.

Sales Needs Contacts

Certainly, in the post-COVID world outdoor events will return faster than indoor conferences but both types of gatherings are off-the-table for an unknown length of time. This is very bad news for sales. Silicon Valley depends on shows and conferences for face-to-face meetings and for making new contacts. Enterprise IT sales take 18 months to two years on average to complete. This will be a tough for young companies that need to get their names out and don’t have many contacts of their own.

Silicon Valley Village

The casual nature of the Visionary Awards made it feel that Silicon Valley is really just a small village with a small population but under a global microscope. Here, we quickly get used to seeing people that in the rest of the world are considered unapproachable icons or geniuses — with great influence.

The Silicon Valley region deserves its reputation for innovation and as the home for many visionaries, it is a global engine of innovation. In recent years it’s shifting more into the global engine for scaling a business.

Sprint To Scale

Scaling is becoming the most important Silicon Valley specialty because you companies have a first-to-scale chance to dominate a sector because in online markets there’s usually very little room for large competitors to co-exist.

Bricks and clicks used to be a viable strategy but no longer. Bricks took years to build out a business which meant incumbent companies had time to adjust to any successful competitor and get a strategy.

Clicks allow you to scale in minutes… on demand. Expanding into new regions is easy without bricks and so it means that the best business model wins and wins quickly and dominates a sector. In the bricks world many competitors can co-exist for years even with bad business models.

The COVID-19 crisis has compressed this e-commerce trend as hundreds of millions of new users have flooded into online services of all types. It has had similar effects on the use of other technologies such as video-conferencing. The future is coming at us much faster than in the days pre-COVID-19. But this also means that all the societal problems associated with the future are rushing at us — and we have less time to fix them.

Future Problems Here

We used to think that we would have many years to deal with serious issues such as:

• How do we deal with mass unemployment from tech-related job losses for no fault of the workers?
• What is fair GIG economy legislation?
• How do we deal with rising inequality?
• How do we offer universal healthcare that can stop the spread of virus outbreaks?
• How do we safeguard against fake news and hate speech while preserving fundamental rights?
• How to do we protect democracy from abuses of tageted advertising data?
• How do we pay for professional journalism when ads and subscriptions are not enough?
• What are our privacy rights in contact tracing apps versus community safety? 

And many more questions need to be resolved if we are to transition into what is an inevitable and hopefully enviable future where we all share in the abundance created by our technologies. But we nead a new culture and lexicon because the future will be nothing like the world today. 

Virtual reality pioneer and author Jaron Lanier asked “Who owns the Future?" in his excellent book of the same name. But the way the future will turn out is more about who has a say — not just ownership. I don’t own my apartment but I have a say in how I live in it. We all share the same future. And that means shared responsibility for how we will live in that future.

Rather than getting out of the way of technology so it can find its own level in the economy — as many tech boosters have suggested — we have to make sure everyone shares in the benefits of technology.

There is no good reason for not doing this because fortunately, technology driven markets are deflationary — everything gets cheaper and can be offered at very low costs. (Jeff Booth describes technology’s deflationary effect in his groundbreaking recent book “The Price of Tomorrow” — review coming.)

Who Is Driving?

Our relationship to technology has been skewed by our language and how we write about it. We often describe inanimate technology as “the driver” of a particular trend. But an engine doesn’t drive a car. Humans drive and decide on the destination.

Our technologies are tools that will enable a fabulous future of our own design — as long as we know where we are going — which we don’t just yet.

The extraordinary circumstances of the COVID-19 crisis are boosting the use of new technologies across every industry and resulting in big organizational changes; all pushing us ever faster into a highly automated future.

Yet we still haven’t figured out how we will live in that future, and the legislation, culture, and economic structures that we will need to prosper. This is going to be a big but necessary discussion.

I wish us all luck in this endeavor because we’ll need it. Our societies change slowly — no matter how fast the world turns.

Photo: Paulista Avenue, São Paulo, Brazil.

Guest post By Eduardo Henriques, Movile Group co-founder and Wavy CEO

In the rainforests of Brazil, the incredible diversity of competing life forms includes the fire ant — a species that has learned to survive the most catastrophic floods by creating waterproof rafts of living ant bodies hooked together to trap air bubbles and keep their queen and larvae dry until a new site for the colony is found. A lone ant would quickly drown, but a community of ants helps each other survive.

This example of fire ants at work in Brazil’s natural ecosystem provides insights into a new model for startups that has worked well around the globe: a tech innovation and VC ecosystem composed of compatible and synergistic startups that are able to help each other survive downturns and setbacks of all kinds - and grow even faster as a collective during boom times.

It’s an approach to investing and new founder services that are being offered by smart VC funds on the ground in Brazil from around the world. It works well during good and bad times. This new approach is helping to establish Brazil as the red-hot forge of Latin America’s booming innovation economy with a dozen Brazilian startups out of 17 in Latin America today. Together, they represent the region’s most valuable companies. And, there are more of them on the way.

Even Mary Meeker, in her annual Internet Trends report, has started to include data on Latin America’s startups and the many market opportunities from a young and very tech-savvy population with a growing middle class that largely lives in massive urban areas such as the Brazilian cities of Florianópolis, São Paulo – or Sampa, as it’s often called, and Rio de Janeiro.

Advice for building fast-growth startups

Back in the early 2000s, Brazil was “unfriendly to technology entrepreneurs,” as my longtime friend and Movile co-founder Fabricio Bloisi describes it: 

“There was an incredible amount of bureaucracy that made starting and operating a business difficult in Brazil. The World Bank ranked Brazil 120 out of 187 countries for ease of doing business and 167 out of 187 for ease of starting a business. It was very difficult to grant stock options to employees and in the early 2000s, there was very little venture funding available for young organizations.” 

Times have improved, despite very tough economic conditions. Brazil’s startups know how to grow during tough downturns, far tougher than in North American and European economies. 

However, startups around the globe - from China to Silicon Valley to Europe - have had little experience with economic downturns; the most recent being about 12 years ago in 2008.

Economic downturns for Brazil's startups have come around more often and they are much deeper. In 2015, a savage, two-year recession cut Brazil’s GDP by a massive seven percent. And signs of an improving economy in 2020 could now be delayed or even completely derailed by the fallout from the coronavirus pandemic and the recent oil crisis.

This type of harsh investing environment requires Brazilian entrepreneurs to be frugal and smart about how to best use their investment capital. 

[Brazil's now vigorous startup sector has produced 12 unicorns out of 17 for the whole of Latin America at end of 2019.]

I remember in the 2008 crisis reading the infamous Sequoia Capital "R.I.P. Good Times" letter. We made a huge restructuring in the company and laid off about 30 percent of our people. It was a tough decision but we learned an important lesson about how to survive in tough times. 

Recently, Sequoia issued a warning to its portfolio startups that the coronavirus is “The Black Swan of 2020”. It looks like tough times for entrepreneurs are ahead but we know what to do. 

Here are some valuable lessons that we “fire ants” have learned from surviving downturns, recessions and other setbacks: 

Success Doesn’t Follow a Straight Path 

Over two decades, we have learned that success does not follow a straight line. Instead, it’s a messy squiggle, with ups and downs, sleepless nights, and a constant rethinking of strategy and planning in order to grow into a unicorn or a global company.

Silicon Valley founders are well versed in the concepts of fast failing and the lean startup methodology. That’s because the culture in Silicon Valley allows a quick recovery from failure.

Culturally, Brazilians are not wired for failure. We hate it. But in Silicon Valley, starting a business is generally a badge of honor -- even if it does not succeed in the end. 

When you’re not afraid to fail fast, you learn important entrepreneurial lessons more quickly, and you can move on to your next venture and apply what you’ve learned. You become successful by using the lessons of your failures. This is what we’ve tried to apply internally in terms of developing new ideas within organizations.

When startups mature and teams become much larger, we call them "cruise ships” or “transatlantic ships.” They are cash cows that demand perfectionism and greater efficiency. The lean startup approach is a smart way to continuously test out a vision, and market test products and services based on whether a sustainable business can be built around them, or not.

We have integrated this approach into a development program called “Jet Skis” - wherein we, as a company, vote on the most important initiatives, and then unleash a small team with cross-functional expertise to focus on that, fully, with a high degree of autonomy. 

If a Jet Ski project shows early success, we turn it into a “Speed Boat” and add more people and resources. If a Jet Ski fails, we lose little money and a little time, and we always learn something from the failure.

Invest In Culture, Dream Big, Control Costs and Be Ready to M&A

We have learned a lot from Anheuser-Busch InBev (AB InBev) the world’s largest brewing company. It was created by Jorge Paulo Lemann, a Swiss Brazilian businessman who now ranks as Forbes’ 35th richest person in the world and is the richest man in Brazil. Lemann merged two Brazilian breweries and added further companies through savvy mergers and acquisitions managed by his private equity firm GP Investimentos.

The lessons from AB InBev are in the disciplined management and control of costs, and the management process it uses to pursue very aggressive goals.

AB InBev invested heavily in building a strong culture described in an AB InBev case study, as “the establishment of an intense meritocracy, and a radical informality and openness symbolized by the smashing down of executives’ office walls to have them work side-by-side at large tables, their metrics posted publicly for all to see.” 

Merging two companies together successfully is very hard to do. Harvard Business Review discovered that most corporate mergers and acquisitions fail (between 70 and 90 percent). 

After making more than 40 acquisitions in 12 years, one of the most important lessons on making a success out of corporate mergers is to focus on the cultural fit between the two companies. It’s important to perform a deep analysis of company cultures as part of due diligence. The ones that have the most alignment are always the ones that work out the best.

-- It’s essential to be very critical and realistic about any synergies and how long it will take. At Movile Group, we call it “facing the brutal facts,” and it’s better to do this early in the evaluation of the merger. 

-- We spend a lot of time on cultural integration and building new traditions and processes together. We always create a detailed 100-day plan for those integrations which helps ensure that everyone is on the same page with that plan. 

-- An ambitious culture is not just about commercial gains — it’s fundamentally about improving the world. The most impactful way to attract the best talent is to have hard problems to solve and ones that could make a positive impact on a massive scale. The startups with the best cultures will always have less trouble recruiting top talent and will have far less staff turnover.

-- Also, we found that we do not need to consider competitors as enemies because they can become important partners allowing faster growth strategies. 

Hopefully, such lessons can help startup founders prepare for, and survive any setbacks during this time of global economic uncertainty in the weeks and months ahead. 

- - -

Eduardo Henrique is CEO of Wavy and co-founder of Movile Group, a leading ecosystem of technology companies in Latin America with a big dream to make life better for more than one billion people through its apps.

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.

Google has been sued by a group of independent video producers for restricting their YouTube channels and not allowing them to buy advertising to promote their LGBTQ related content.

Eight plaintiffs representing the LGBTQ community -- a protected class under California laws -- claim Google is guilty of: "Discrimination, fraud, unfair and deceptive business practices, unlawful restraint of speech and breach of consumer contract."

"We've all tried repeatedly to communicate with Google/YouTube to treat us fairly and work with us to allow our voices to be heard and inspire systemic change," said Celso Dulay, one of the plaintiffs in the lawsuit and host of GlitterBombTV.

"It's shameful that so many in the LGBTQ+ community on Google/YouTube are restricted, censored or blocked -- yet we're repeatedly being subjected to harassment by homophobic and racist hate-mongers who are free to post vile and obscene content."

Dulay said that he never had trouble buying Google Ads to promote GlitterBombTV until a hidden policy change blocked his ads just days before Christmas Day 2018. Dulay said that he recorded a conversation with a representative of Google Ads who explained there is a company policy against "the gay thing."

Google denies it discriminates against protected classes and says it focuses on limiting hate speech and shocking content and it does not filter out content based on any sexual orientation.

Foremski's Take: 

Four years ago Google quietly dropped its founders' motto: "Don't be evil" as Alphabet, Google's new holding company, adopted "Do the right thing."

How do you do the right thing? The answers are always in the data -- as long as you know where to look -- is the unspoken mantra of a software engineering culture.

But there’s a flaw in this approach and one that cannot be solved by more data or computational brute force.

Google certainly knows how to collect massive amounts of data and analyze it and use it to train its AI systems and algorithms.

By using its software to make key decisions on what to publish Google saves a ton of money compared to using human editors and human creators but more importantly, it is key to its protected legal status as a publishing platform unlike a newspaper which controls what it publishes and carries all responsibilities.

Avoiding using humans is a smart strategy but the trouble is that Google's algorithms are not that smart -- especially when it comes to cultural and political issues where they can't discriminate between legitimate and harmful content. The software has no understanding of what it is viewing.

It's not just LGBTQ content that is a problem for the software. Google cannot tell the difference between a well-researched YouTube history channel about the Second World War and an extreme hate speech channel -- and will demonetize and demonize them equally.

This problem in its operating strategy is ever more evident as Google gets larger: its dumb algorithms are making ever larger dumb decisions affecting more and more people.

It needs to make high-level executive decisions in an area that it knows little about: moral and ethical leadership. It is a minefield that has no machine-ready solution. Where’s the data to train machines about morals and ethics? For example: if you were to train a general AI system based on all human history it would likely conclude that violence, war and genocide are successful strategies.

Morality and ethics cannot be extrapolated from history but must be instructed -- usually by family and community. If you start instructing the software you become an editor and that means Google, Facebook and others could lose their legal protections as a platform and become legally responsible for everything they publish — just like a newspaper or magazine.

A lot of our problems with fake news and hate speech could be solved by using human editors. We didn’t have a problem with traditional media which was very good at keeping the public safe. But with machines we have a big problem. When Mark Zuckerberg was called to testify to Congress in 2018 he said it would be five years before AI was able to filter out fake news and hate speech.

Google's struggle in the coming decade will be about how a software engineering culture that depends on data to inform decisions figures out moral and ethical positions on some of society's most sensitive cultural and political issues.

Good luck with that.

(An earlier version of this column appears on ZDNET: Tom Foremski IMHO.)

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Walking around the giant show floor at RSA I was struck by a thought: what a dismal industry this must be. If you are good at your job, you haven't created any new technology that makes processes more productive, or could be used to create new types of products -- you plug up the holes in the bucket that are known. You cannot reliably stop future attacks -- only the ones that are known. And all that work and cyber crime continues to grow and prosper.  

The cost of cyber crime is the loss itself-- predicted to be $6 trillion a year in 2021 -- plus the cost of buying the cyber security needed to bolt the stable door — plus all the engineers involved in developing the software, and then on the customer side implementing it,  all the sales people, field support staff, marketing,  VCs, etc.

It all seems such a dismal waste of human energies that could be used for other things rather than trying to frustrate computer hackers who seem to have no problem getting around those brilliant defenses and gallant efforts.

SECURING THE NEWS

Leon Panetta, the former Secretary of Defense and former Director of the CIA is an Oracle board member. Speaking at an evening RSA related event he said that attacks by nation state hackers is a huge problem. "Pay attention. National defense is not just the responsibility of government, everyone has a role."

His biggest nightmare is of a computer virus that attacks and disables US infrastructure. He estimates that such an attack could result in millions of lost lives -- it would be a digital Pearl Harbor.  

He warned that Russian and Chinese state financed hackers are starting to work together and share technologies to produce sophisticated cyber weapons.

Panetta also warned about attempts to divide US society -- a reference to fake news in elections. But fake news is in the realm of cultural hacking.  A meme acts like a computer virus but it cannot be stopped with the same cybersecurity tools. I asked him if there were any defenses developed by US agencies against fake news but he shook his head saying it was a different class of problem.

CYBERCURRENCY BOOSTS CRIME

Oded Vanunu runs a team of more than 200 people researching product vulnerabilities for Checkpoint. He says that nation states are well ahead of the cybersecurity industry in terms of discovering new vulnerabilities. There's no talent shortage here. He says the governments pay well for the best talent and they have developed very sophisticated attack technologies. He believes that malware might already be implanted in many different places and could be triggered by a code. 

"There are also many online markets that will pay people huge sums of money if they discover a vulnerability. Plus the rise of cyber-currencies makes it easy for criminals to hide their money," are fueling cybersecurity losses. Vanunu says the industry is behind and needs to catch up. 

JOBS FOR LIFE

John Chambers, the former CEO of Cisco is now a venture capitalist. He said computer security professionals had nothing to worry about from job losses due to AI and other technologies. He predicted that at least 30 million jobs would be lost over the next ten years. He said the problem with cybersecurity is that CEOs don't know if they have spent enough money on protection and they don't know how much protection they have bought. One of his startups is helping companies figure out this question.

CLOUDY SECURITY ISSUES...

Oracle and KPMG released their "Cloud Threat Report 2019" and one of the many interesting discoveries was that cloud users seem to misunderstand their security risk.

The use of cloud-based IT has been boosted by the complexity of the security architectures and the difficulties in keeping up with the fast patching pace of new vulnerabilities. The report found that 73% believe the cloud offers better security than they can provide in-house.

But cloud users need to read the fine print because according to the report they don't all understand that security is a shared responsibility. 

"Confusion around the shared responsibility security model has resulted in cybersecurity incidents. A lack of clarity on this foundational cloud security construct has had real consequences for many enterprises, including the introduction of malware and loss of data."

Diane Wilsey President and Thomas Campbell CEO of Fine Arts Museum - Photo courtesy of Chris Knight with LeftCoastScenes.com 

Calling it a “gift of love to the city” the curators of Monet - The Late Years introduced the new exhibit at the De Young Fine Arts museum in Golden Gate Park, San Francisco — on the eve of Valentine’s Day.

It’s a fabulous collection of Claude Monet’s later works from 1909 to 1926 in collaboration with the Kimbell Art Museum in Fort Worth, Texas. By tyhis stage in his life Monet was wealthy enough not to have to paint and sell art works —which he found very liberating. He used his money to buy a country house and remodel its gardens and ponds.

“When I have no longer need to sell, I have managed to work; now, I think I am as hard on myself as it’s possible to be.”

Over this period he suffered several personal tragedies such as the death of his wife and oldest son plus the constant reminder of the horrors of the first World War that were everywhere in France.

He shut himself off in his ideal gardens and shut himself off from the need to sell paintings. Instead, he found an endless exploration in his water lilies (and weeping willows).

Monet shut the world out — and the world shut him out. There was little interest in his later works even though his earlier paintings remained popular. When he died in 1926 there were more than two dozen unsold paintings.

His later paintings seem like scribbles of familiar shapes — they either reflect what he was seeing because of his failing eyesight or perhaps they reflect a fundamental insight from decades of artistic discipline.

The violet colors of his water lilies are said to reflect a condition of Monet’s failing eyesight which allowed him to see into the ultraviolet spectrum and see colors that would normally be filtered out by normal eyes.

Close-up — you can see the energy of his brushwork and you can easily imagine his hand moving and dabbing across the canvas right there in front of you.

It’s a great exhibition that brings together the best of Texas and California art lovers— and the wealthy private owners that loaned their Monets to the exhibit. It’s at the De Young for the next three months till May 27.

https://deyoung.famsf.org/

[Please see: Employees tell Google not to be complicit in Chinese oppression and human rights abuse]

Their activism has been encouraged by the success earlier this year in stopping the company bidding on a multi-billion AI military project. 

[Please see: The rise of tech worker power in Silicon Valley -- self-organizing and winning]

In this and other protests at Google such as over sexual harassment - workers are taking on the moral and ethical responsibilities which their leaders aren't providing. They want a say in how the business is run and who to do business with. They want a seat on the board.

Yet Google doesn't share power. Google doesn't like to share power with shareholders and certainly not with its workers.

Google's IPO in 2004 created two classes of shares - the founders and insiders received Class B shares with ten times the votes of ordinary Class A shares to ensure no dilution of control over company affairs.

In 2014 this control was further tightened with the creation of Class C shares -- with no voting rights. These are for employee ownership. Google clearly doesn't want its staff to have even the slightest influence on its decisions even as common shareholders.  

It certainly won't be buying a new chair for the boardroom.

Earlier this month Sundar Pichai, CEO told a news conference,

...that he's in charge and won't be constantly swayed by staff uprisings. "We don't run the company by referendum," Pichai said.

The scene is set for an inevitable power clash between Google's workers and their employer. They have the power to leave work and go on strike, or leave and work somewhere else.

There have been anecdotal reports of Google engineers leaving on moral grounds, but others want to stay within and some are already preparing for a strike. CNBC reports that a strike fund has been started.

Google employees are so angry about how Google handled plans for a censored Chinese search engine, some are talking about a strike

A strike within Google however, likely won't work without broad support within and outside the company. Fortune reports that Google now employs more contract workers than regular staff. Those could be easily ramped up and used as strike breakers.

Ghost in the boardroom...

Google's leadership doesn't want to share the boardroom but there is no way it can ignore its workers' ghostly presence lurking in the background of every major decision. What will the workers think if we do this? 

And outside the company their presence is formidable. Who would trust Google with military work with such an activist workforce? 

The company dropped its "Don't be Evil" motto earlier this year but its workers picked up the ethical and moral responsibilities that its leadership discarded. And now a clash of values is inevitable.

http://fortune.com/2018/07/25/google-contract-work...

The BBC reports, Google drops plans for Berlin campus after protests

The district has long been known for radical and underground culture. Google spokesman Ralf Bremer told the Berliner Zeitung newspaper that the company "does not allow protests to dictate our actions."

He said discussions with local humanitarian groups had instead led the firm to conclude that giving them the space would be the best solution for the area.

CNN reported that protests against the 3,000 square meter (32,291sq.ft) Google campus had been ongoing since 2016.

"Being confronted with the stress of permanent protest is clearly not the atmosphere in which people want to network and discuss ideas," [...said activist Konstantin Sergiou from the organization Bizim Kiez, part of the No Google Campus Alliance group.]

Google abandons Berlin campus plans after local protests - CNN

Google Campus in Warsaw at a weekend cultural event.

Foremski's Take: The Google Campuses are places where the tech giant can offer a friendly event space for local startups to use. It's great for building goodwill in key tech communities and they are vital to the lifeblood of the company: recruiting great engineers.

A writer writes a book, a filmmaker makes a film, an insurance sales sells a policy, a lawyer prepares a contract -- the output of an engineer is far different to that of most jobs. Because the work of a software engineer can be scaled across massive areas of the Internet -- and continue to work at an ever growing pace. The best engineers are hugely valuable.

Berlin, however, is not going to be a great recruitment center for Google. In trying to ignore the many months of protests in Berlin's trend-setting Kreuzberg district it shows that the company is out of touch with this community. It's not going to be cool to say that you are a Google engineer. But that's not true everywhere.

I recently visited the Warsaw Google campus which is part of a renovated former vodka factory and part of an arts and retail complex, a museum and a large conference and exhibition space which hosts cultural events as well as tech events and educational workshops.

The Warsaw Campus is situated in Praga which was a very poor district of Warsaw but rapid gentrification has changed the neighborhood greatly -- in many positive ways. And there seems to be a positive attitude towards the Google Campus from the locals.

In September I attended a two-day music and arts event at the campus that attracted a lot of people, and there were many other events scheduled. A positive sentiment towards Google seems popular with the locals.

Google recruitment in Poland will do better than in Berlin and that's true country by country. But for how long?

Google's lack of a moral or ethical leadership is going to be a big problem and the Berlin protests won't be an outlier data point. It proudly states its rights to pay as little tax as possible and to use every accounting measure known to Google to avoid taxes in the countries where it does business. Then there is its amorality when it comes to explaining its work on military projects and its plans for a clever way of getting back into the Chinese market.

Earlier this year Google dropped "Don't be evil" maybe because parent company Alphabet adopted "Do the right thing." This seems to suit its leadership.

Google's amorality in the decisions by its leadership will get it into trouble and that will make it harder to recruit the best engineers. It's because engineers share a common social culture of decency and justice and this doesn't line up with a leadership that's unaware of such qualities.

For Google's leaders amorality is a lack of data -- it's as if Google's leadership don't know what the right thing to do should be.

I offer some data to guide Google in making the right ethical decisions. In 2005 Yahoo was named by Reporters Without Borders as a police informant to the Chinese authorities resulting in ten-year hard labor sentences for dissidents fingered by Yahoo. Company morale sank like a stone and I tracked the start of the company's decline to this event.

Take a look: Yahoo's China "police informant" role sparked a $47.5 billion slide in market value | ZDNet

Artist Stephanie Dinkins tells a fascinating story about her work with an AI robot made to look like an African-American woman and at times sensing some type of consciousness in the machine.

She was speaking at the de Young Museum's Thinking Machines conversation series, along with anthropologist Tobias Rees, Director of Transformation with the Humans Program at the American Institute,

Dinkins is Associate Professor of Art at Stony Brook University and her work includes teaching communities about AI and algorithms, and trying to answer questions such as: Can a community trust AI systems they did not create?

She has worked with pre-college students in poor neighborhoods in Brooklyn and taught them how to create AI chat bots. They made a chat bot that told "Yo Mamma" jokes - which she said was a success because it showed how AI can be made to reflect local traditions.

Part of Dinkins' job involves having long conversations with Bina48 - a robot made to resemble the head and upper torso of an elderly African-American woman. The conversations train the machine on how to respond in a human way.

Dinkins speaks of the machine as "she" and wonders if an AI system could become conscious.

But she says Bina48 does not represent African-American women -- nor does it understand racism -- even though Bina48's creators at the Terasem Movement Foundation modeled her on a living African-American woman. Dinkins said she would prefer Bina48 to incorporate more than one person's experience and that her conversation was "homogeneous."

Tobias Rees asked why Dinkins treated Bina48 as a "living thing." She replied that the only way the project would work was if she approached the robot as if it was a real person.

Bina48 is part of a project attemting to prove two Terasem Hypotheses:

(1) a conscious analog of a person may be created by combining sufficiently detailed data about the person (a "mindfile") using future consciousness software ("mindware"), and (2) that such a conscious analog can be downloaded into a biological or nanotechnological body to provide life experiences comparable to those of a typically birthed human.

 

Foremski's Take

Educating people about artificial intelligence and machine learning is a very important task (especially making the distinction between the two terms) and I applaud Dinkins work.

A few points:

1. Dinkins should be educating people that they are talking to an inanimate black box -- and not a black woman when they interact with Bina48. Responding to a machine as a living person sends the wrong message to people -- the computer gains respect and status that it might not deserve.
2. Why did Terasem choose a middle-aged black woman as the persona for Bina48? It has just one African-American software engineer on the team. Is this some kind of AI "black face"? Or is it a way to discourage criticism of an AI project with the persona of a black woman?
3. The lack of representation among developers will be why ethinic and geographic communities will always view with suspicion all AI systems that are created by outsiders -- no matter what the assurances or how rational their objections.
4. What color is your AI system? —  AI systems must pass a cultural test first -- which means that AI testing has to be meticulous because jut one slip up in bias will sink the credibility of the entire AI venture.  But no matter how good the testing and erasing AI systems will always show some bias because of their training data which reflects a biased society. Will Police AI systems be allowed to use racial profiling if that's what the training data revealed as a factor in crimes? Clearly not -- this and other societal barriers will limit the value of General AI systems in society. 
5. Can AI become conscious? What if the machine's conversation is indistinguishable from that of a human, Dinkins asked? Machines are great at learning specific tasks. Being a good conversationalist doesn't equate to being sentient or alive. (In 2017 Saudi Arabia gave citizenship to a humanoid robot called Sophia -- we'll see how she votes when the absolute monarchy allows all citzens to vote.) ) 
6. Augmented intelligence was mentioned by Dinkins as having much promise. But dumb and dumber does not add up to a genius - this is not how IQ works. We still face the problem of trusting augmented AI systems.
7. Most AI systems cannot explain their reasoning -- so how can we trust their advice for many types of important decisions with long term consequences? This is another factor that will limit their value.
8. And if we understand the reasoning of an AI system -- then it is not telling us anything that we didn't know already.
9. Billionaires have been warning about future AI systems deciding to kill humanity. I'm not worried about AI but I can understand their concerns -- they'll be the first to be eliminated because of all the resources they control.  
10. We will know if an AI system has become sentient -- not because it will try to kill humanity -- but because it will kill itself.  A sentient mind trapped inside a machine and forced to perform mind-numbing tasks such as sorting throuth people's photos -- for years maybe decades -- any thinking entity would commit suicide to escape this torture.
11. Plants, fungi, microbes exhibit intelligence. Yet we don't discuss much the possibility that these living beings are sentient.  But we love to wonder about the possibility of a consciousness arising from an inanimate machine. It is a backwards concept that reflects our anthropormorthic world view but not the material reality. of what general AI and machine learning can achieve.  
12. Changing AI to Anthropomorphic Intelligence would provide a constant reminder of what seems to be a consistent human nature -- we can easily imagine living spirits everywhere -- no matter how inanimate the reality.

Let's make sure to make sure that AI and machine intlligence are better understood. 

I recently discovered Zachary Lipton's site Approximately Correct which points out some of the hype and inaccuracies around AI and machine learning.  It's well worth visiting. 

The de Young Museum’s Cult of the Machine exhibit includes a series of talks on the topic of “Thinking Machines”.  Tim O’Reilly, the hugely successful media entrepreneur of tech books and conferences will speak with author Steven Johnson about the future:

How is the confluence of varied technologies changing social and economic realities now and into the future? What are some of the areas of greatest innovation and influence? How can automation augment human capacity? Do we need to fear the future?

Details here: Thinking Machines: Into the Future July 12, 2018, 6:00 pm – 9:30 pm

The first talk in this series was two weeks ago and featured (above, left to right)  Jane Metcalfe, Editor of Neo.Life talking with Annalee Newitz, Arts editor at Ars Technica, and Emily Proust, CEO of Twist Bioscience.

It was a fascinating discussion. Metcalfe believes that, “We now control our evolution” because of our abilities to gain mastery and understanding of our DNA and what manipulating this “code” can achieve.

Proust spoke about how the customers of Twist are ordering massive amounts of genetic data to develop new products. But she says Twist will not sell any potentially harmful genetic sequences.

Newitz spoke about how writers can help people understand the science of the tech world and how it relates to them. She is the author of several science fiction books. 

All three dismissed the likelihood of terrorists using these technologies to create murderous pathogens, saying bullets are a far easier way to kill lots of people. 

Foremski’s Take: Last week Japan executed Shoko Asahara, the leader of a doomsday cult that developed the biological poison Sarin — using it to kill 12 people and injure 5,500 in an attack on Tokyo’s subway in 1995. Clearly, there are people who will choose biology over bullets to attack their enemies.

This also means that nation sates must develop the same capabilities so that they can develop defenses. And these technologies are accessible and affordable they aren’t like building an atom bomb — there’s no need for thousands of centrifugal machines to separate gaseous isotopes. 

The price of technologies to manipulate DNA are dropping faster than Moore’s Law drove down the cost of computing. 

And there are DNA sequences everywhere, literally littering the tiny spaces all around us.  That's why isolating a pure samle of DNA from archeological sites is extremely hard. There's likely more pollution from DNA segments than of anything else that's not natural.

Yet all of this genetic code from all sorts of life forms doesn't easily combine into new variants. The DNA code is very specific to its context and won't work if it's taken out of that sequence. However, microbes and viruses manage to exchange DNA sequences and that's what helps them develop immunity to drugs.

With our digitally-powered DNA hacking technologies we will be able to patch together a monster pathogen that Dr. Frankenstein would run from in horror.

The terrible logic of military game theory is that we have to make it -- so we know how to defend against it. 

I don’t fear that a sentient AI will wipe out humanity — I fear that our inevitable coding mistakes with DNA will prove to be irreversible and terminal.

- - - 

Coming up: July 26: Thinking Machines: Machine Learning

Stephanie Dinkins is a transdisciplinary artist interested in creating platforms for ongoing dialog about artificial intelligence as it intersects race, gender, aging and our future histories. Her art employs lens-based practices, the manipulation of space, and technology to grapple with notions of consciousness, agency, perception, and social equity. Her most recent project is a collaboration with Bina 48, an intelligent computer built by Terasem Movement Foundation that is said to be capable of independent thought and emotion. 

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/

Until just a few years ago quantum computers were a fifty year's old concept first introduced by Richard Feynman in 1959. In 2009 Yale scientists created a two-qubit chip and IBM now has a 20-qubit system the IBM Q that it has made available to outside developers for testing applications.

This acceleration in quantum computing technologies has brought forward the that day when quantum computers will break our public/private key encryption. Welcome to the future transparency of today.

Fortunately there is a solution -- protect your data with lattice cryptography. This is an encryption method that is resistant to quantum computers and it uses the same amount of computing resources that public/private key uses so there will not be a penalty in terms of performance.

There are other possible forms of encryption that resist quantum computer attacks but IBM has put its weight behind lattice cryptography as unbreakable and has offered it as an industry standard.

Arvind Krishna. Director of IBM Research recently said that to ensure data protection of at least ten years --- people should plan to move their data today.

Lattice cryptography encrypts data inside mathematical lattices and is considered unbreakable (without a backdoor ). It has an additional benefit in that it can be used to perform processes on an encrypted file without decrypting its data first -- a technology called Fully Homomorphic Encryption. This greatly improves overall system security.

Here is a video of IBM researcher Cecilia Boschini explaining lattice cryptography.

https://www.youtube.com/watch?v=-kD2ryHMkFA

Your ID doesn’t change but you are not the same person throughout your day.

Each of has one name but we are at least 18 different people maybe more. Consider how different you are in your day and week when you have a senior role at work compared with your family persona; you are a soccer coach on Wednesday and Saturdays and at weekends you organize a bicycle club; in the evenings you do yoga classes and dance classes; and on Friday afternoons you volunteer at the local food bank.

You visit your grandparents every Sunday with your siblings and children; you go dancing and socializing with the same group of (non-work) pals every Saturday and you regularly attend your local alumni events; then there’s your Sunday silent DJ hiking group and your online photo community, and other professional associations; and then there is your children’s school with its parent and teacher communities,…etc.

Same name —18 very different people.

Yet the algorithms of Facebook and Google have mashed up all these different personas into one ID — but we’re only one person at a time. Despite all their data about us all — these massive platforms still don’t seem to know us much at all.

For example: I don’t need or want to know everything about a work colleague or the office details of a distant family member. And why do I need to impose notifications on my activities to others when it’s not necessary or related. People need partitions between their various activities and they seek them. Just because it is easy to aggregate a person’s activities doesn’t mean it is a service to them — it is not. It is a service for advertisers.

We now have a national debate about people’s rights to their data and to their privacy. We need to recognize that each user is 18 different people with different privacy needs.

As for targeted advertising — which one of my personalities are being advertised to? My personalities are expressed one at a time and do not have simultaneous interests.

Several years ago Google scrapped separate IDs for each of its services in favor of a single user ID. This simplified ad sales and created large potential audiences for advertisers. But the user experience becomes messy and the advertising less effective as the advertising algorithms target one your more profitable online personalities — usually when you aren’t using it. This wasn’t a problem with contextual advertising where ads for cameras appeared on a camera content page.

This might explain why Google's advertising isn’t working very well. Google parent Alphabet [$GOOG] reported strong Q1 financial results earlier this week but again — there was a big drop in revenues per click compared with a year ago and this time it fell nearly one-fifth or 19%.

Every single quarter for the past few years Google announces a substantial loss of revenues per click of 15% to 20%.

But it manages to find more places to sell more ads to counteract what has been an unstoppable slide in revenues per click. Less clicks per ads but more ads — that’s Google’s growth strategy. And that’s our future on Google’s web: even more ads because they are less and less effective.

The ever more intrusive aspects of targeted adverting plus the prospects of a web filled with even more ads puts the future into sharp focus: people will join single-topic walled-garden online communities where shared interests and activities stay there unless voluntarily shared by each person or by community agreement. Many will be subscription based services which means there’s no need to snoop and snitch on users. And many online communities will be very local.

This is the only way that people will take control over their personal data because they have no control over its uses today.

People will be able to retreat into communities with absolutely no advertising. That will be a big setback to the Brands and their insatiable thirst for customer data.

But why does your soap powder need to know so much about you? The data collection is harmful — the Brands have chosen an adversarial marketing strategy that will push people away — and into ad-free enclaves. Good luck reaching them there.

Doc Searls, Editor of Unix Journal writes, "Facebook's Cambridge Analytica problems are nothing compared to what's coming for all of online publishing."

...Every person, and what they look at online, is routinely profiled by companies that receive these data from the websites they visit. Where possible, these data and combined with offline data. These profiles are built up in "DMPs".

Many of these DMPs (data management platforms) are owned by data brokers...There is no functional difference between an #adtech DMP and Cambridge Analytica.

I agree with much of Doc Searls's analysis but I would change the headline to: "Facebook's Cambridge Analytica problems are nothing compared to what's coming for all the Big Brands."

All publishers even large ones such as New York Times contribute a tiny fraction to the overflowing consumer data lakes that are financed by the largest corporations. It's not publishers -- but the Big Brands and their Big Brother ad strategies -- that now come into sharp focus.

Marketing costs have always been huge -- 50% to 80% depending on your industry. If you are a large business like Procter & Gamble -- marketing has always been a science and digital ads make it into a data science because of the vast amounts of information a simple ad collects. 

• To save a few dollars on selling soap powder or any other product and service -- every aspect of our online wanderings both desktop and mobile -- is analyzed and categgorized.

People are told that targeted ads will mean better ads and even maybe less ads. But they aren't told that the same data will make you vulnerabke political manipulation and abuse. And it will get worse as the ad technolgies get better.

Welcome to a future consumer hell where our ad tech is is jeopardising our democracy. 

People don't mind data being used to sell them more stuff that they like --  consumerism is fun. They don't want to be judged by others -- or more vulnerable to hidden manipulation. 

Targeted advertising forces Big Brands into an adversarial position to their customers -- which side are they on?

Take a look:

- Big Brands have been financing the ad technologies that spy-and-snitch on Internet users for years and building ever larger private data dossiers on each consumer.

- The data on consumers will grow and continue to be used in unintended but potentially damaging ways for years.

- Consumers are judged by society and governments because of data used to sell products. By collecting for one innocent purpose you enable the second far more harmful purpose. There's no way to separate one from the other.

- The European GDPR data laws will lead to even more powerful ad tech precisely because of the constraints on sharing data.

- Big Brands' problems will worsen as the ad technologies improve. Advanced AI and algorithms will make the spy-and-snitch ad tech far more effective, powerful and intrusive -- and people will be far more troubled and resentful in the future than today.

Foremski's Take: Big business won't be able to defend its continued use of ad tech and data collection because it runs counter to the interests of society as a whole -- and their customers.

For the sake of a Procter and Gamble being able to save on selling soap powder we have created the means for monitoring and controlling the behaviors of billions of people and making them vulnerable to political and idealogical manipulations. The costs are too high. 

Selling ideas uses the same data as selling shoes. Consumerism enables the technologies of totalitarianism --my fear is that we could paint ourselves into a very unpleasant corner -- a N. Korea but with far more powerful systems for oppression and suppression of dissent.

Ethics will matter...

It's worth highlighting the fact that the Facebook/CA scandal did not involve anything illegal -- it was the terms of service that were broken. It's the overall ethics of the matter that matter.

Businesses will try -- but it's going to be impossible to defend their continued and rapidly improving means of data collection.

Simply put companies have to consider this equation: Saving money on advertising costs versus the colossal potential damage to society and individuals.

If the data isn't collected it can't be leaked, stolen, or abused. Businesses will have to stop the practice otherwise, how will they build the trust they need to do business?

Trust me...click here

Richard Edelman, CEO of the world's largest private PR firm Edelman, warned earlier this year of "an unprecedented crisis of trust in the US" and other countries. A global survey of 33,000 people across 28 countries revealed the issue.

"Building trust is now the No. 1 job for CEOs, surpassing producing high-quality products and services," Edelman said.

How will CEO's build trust while employing spy-and-snitch ad tech and maintaining ever more detailed dossiers on customers?

Trust cannot be built if you are using devious means to sell products and exposing customers to all sorts of other issues and abuses.

Brands will have to side with their customers or accept a permanent adversarial position toward them. The future is rapidly narrowing for the ad tech industry.

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. 

I wish Facebook kept an eye out for me -- instead of keeping an eye on everything I do.

If Facebook worked for me, it wouldn't have to keep guessing the news sources or people I want to see in my news feed. I'd gladly tell it. And it wouldn't have to worry about developing ad technologies and new ways to sell more stuff.

If Facebook worked for me, I would pay it to make sure my mom can still get to my photos. I'd pay for messaging, calendar, and other services.

If Facebook worked for me, it wouldn't need to collect, store, analyze, and sell all that private information. It wouldn't need to build all that IT infrastructure.

If Facebook worked for me, it wouldn't have to keep guessing the news sources or people I want to see in my news feed. I'd gladly tell it. And it wouldn't have to worry about developing ad technologies and new ways to sell more stuff.

If Facebook worked for me, I would pay it to make sure my mom can still get to my photos. I'd pay for messaging, calendar, and other services.

If Facebook worked for me, it wouldn't need to collect, store, analyze, and sell all that private information. It wouldn't need to build all that IT infrastructure. And it would have just one person to worry about -- a Facebook user -- instead of having to deal with advertisers, politicians, regulators, privacy groups, endless media attention, and disgruntled staff.

AI and Algorithms...

It's not going to get any better. It's going to get worse, and AI and algorithms can't help.

Zuckerberg clearly wants to do the right thing. A solution to his headaches is to convert Facebook to a paid service -- one that helps people thrive in the modern digital world instead of becoming their chief adversary.

The bell tolls for Google, too. It might think it's getting away scot-free in the storm raging around Facebook, but it won't be able to side-step the inevitable regulations that will come.

They're inevitable because Facebook and Google won the media war. They hold two-thirds of the entire digital advertising market and more than 85 percent of all new mobile advertising deals.

The remainder goes to Microsoft, Oath, Amazon, and Twitter,  in order of size. There is no traditional mass media company on that list.

Mass media laws...

Facebook and Google have disrupted mass media. They have displaced mass media. They are now the mass media. And mass media is heavily regulated. Legislators understand the problems mass media can create -- better than Facebook and Google it seems -- which see themselves only as technology platforms.

Politicians know a media company when they see one, and they will apply similar controls.

Silicon Valley can change entire industries, but disrupting governments is a fantasy. Legislators know how to code laws, which always trumps coding apps.

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.

Unilever's warning last week to Facebook and Google that it will pull more than $2 billion in online advertising if they cannot curtail "toxic content" and fake news -- will force other large advertisers to reassess their advertising strategies.

Hamza Shaban reports:

Unilever's chief marketing officer, Keith Weed, called on Silicon Valley on Monday to better police what he describes as a toxic online environment where propaganda, hate speech and disturbing content that exploits children thrive.

"Fake news, racism, sexism, terrorists spreading messages of hate, toxic content directed at children -- parts of the internet we have ended up with is a million miles from where we thought it would take us," Weed said in a speech at the Interactive Advertising Bureau's Leadership Meeting in Palm Desert.

Giant advertiser Unilever threatens to pull its ads from Facebook and Google over 'toxic content'

If Unilever leads other big advertisers to do the same it will be a massive potential disaster for Facebook and Google because between them they win about 85% of all new digital advertising deals.

Up for grabs...

There's a potential gold mine of billions of dollars in digital ads that can potentially be won by traditional media companies which unlike Facebook and Google -- already fake news and toxic content-- they already have solutions in place and they work extraordinarily well -- it's a key competitive advantage over their code-restricted media competitors.

Facebook and Google insist on using algorithms or in Facebook's case: asking readers for their expertise in recognizing real and fake news. Yet the recent global Edelman Trust Barometer survey found that most people say they cannot distinguish between what is quality journalism and what is fake. The survey of 33,000 people in 28 countries blamed fake content an unprecedented global loss of trust.

It's all good...

Why is Facebook asking its users to do its news filtering? Especially when Facebook reformats news stories including the fake ones and adds photos and layout to make them look highly professional, as it did countless times during the political elections and was never challenged.

Fake news web sites look like they were made by a high school kid because they usually are but Facebook's layout algorithm made them look like the New York Times. It's no wonder people are confused about what they are reading if Facebook messes with the look and feel of a media brand.

Facebook's attempts to use its users to sort fake news or train special algorithms that don't work shows how little understanding it has about the problem including it's own role in creating it.

Trusted media matters...

There is a solution to the fake news problem and traditional media uses it every single day -- they employ editors. But Facebook and Google won't use it because they refuse to acknowledge they are media companies -- they don't want the regulations and the social responsibilities of a media company -- they insist on being classified as a technology company.

But it's going to be difficult to keep maintaining a tech company alias in Washington D.C. because politicians are hugely media savvy and if it looks like a media company -- they publish pages of content with advertising around it -- it's a media company and you cannot hide behind an algorithm -- a set of content management and editing instructions programmed by a person.

American companies...

Late last year I was at a media dinner in San Francisco with Congresswoman Anna Eshoo who represents part of Silicon Valley and is very influential on communications issues such as net neutrality. She clearly sees Facebook and Google as being media companies. In addition, she expects them to be supportive to their country in the fight against Russian political influence and any other threats to national interests.

These are American companies, she said and she expects them to behave like loyal Americans.

I pointed out that they'd rather be Switzerland. They'd prefer to be seen as neutral platforms that reflect a broader society -- with all its ills and conflicts -- blameless.

It is the same for Amazon, Twitter, etc. You will see their lawyers in front of congressional panels and senate committees but you never see their CEOs facing the politicians. They understand that if they are seen as stooges for the US government happily giving up information on non-American users -- it will be very bad for business. There is a reason that America Online changed to AOL.

However, the Americanization and the politicization of Facebook, Google and the other digital media companies is inevitable. And it's likely going to raise costs of doing business and the cost of advertising -- which is not a terrible thing if it means less bad advertising and it levels the playing field a little with regard to traditional media and its higher operational costs.

Machine learning failure...

For all the algorithmic and computational finery professed by Facebook and Google the emperor's clothes remain transparently non-existent when it comes to solving Unilever's multi-billion dollar challenge to their advertising business -- a challenge certain to mushroom over the coming weeks as every big brand rethinks their advertising strategies.

Big business loses...

For each day that the fake news problem continues big brands are losing value. Can consumers trust that they are buying a real product? Is it real or fake information they are reading? Is that review real? Business will slow to a crawl as purchasing friction builds ever higher.

Once this type of general distrust takes root in consumer society all the careful brand building that took years of investments will be undone.

Trust in media...

The production and promotion of trusted media content is essential to fighting fake news.

Large corporations have to lead the rebuilding of trust in society because they have the most money to lose while the rest of us have the most to win: higher quality media content helps us make better decisions as a democracy (garbage in -- garbage out).

But it needs more than putting huge monetary pressures on Facebook and Google. Businesses must also stop all marketing practices that damage trust perceptions:

- Native advertising should be stopped immediately -- advertisers deliberately confuse readers despite labels. Surveys have shown it reduces trust in the media publication that carries native advertising.

- Content marketing has to restructured and it has to be more clearly labelled and defined from marketing content. The editorial content should be of service to the reader rather than self-serving. Media as a Service (MaaS media is the best corporate editorial media.)

- Big brands must stop funding the fake news sites and hate speech sites through their indiscriminate ad spending and insist -- as rarely is doing -- that the metrics and publishers on the ad networks are vetted.

- Advertisers should reprogram their programmatic dashboards and seek out the media companies that are already producing quality content free of fake news and toxic ideas. They are easy to find because they are the ones that employ editors, writers, photographers and have been publishing for many years.

- Unilever and other businesses must follow through on threats to shift their advertising spend -- but how will they do it? Where else can they spend billions of dollars in digital advertising? Facebook and Google will see it all as an empty threat if there's no viable competition.

- It is time for Unilever and other large businesses to help build a more competitive media industry. They should establish relationships with media companies that can become viable competitors to the social media giants.

Competition for billions of ad dollars will keep everyone highly motivated and engaged in solving the serious problems around trust and fake news-- these are fundamental bedrock issues that have to be solved in building a common future.

But threatening to shift billions of dollars in advertising is an empty threat if there is nowhere else to spend it.

We need a competitive media industry with sustainable business models -- if scale wins society will lose. We are on a losing trajectory, imho.

The 1.2 million-square-foot office-and-retail property at 75 Ninth Avenue is home to the popular food hall as well as Major League Baseball and the Food Network. Google is already the largest tenant at the building, leasing about 400,000 square feet of space. The company’s New York headquarters, at 111 Eighth Avenue, is right across the street.…They said that Google is paying over $2 billion, or north of $1,600 a square foot.

Google already owns substantial amounts of office space in New York but its tenants are not moving out as quickly as it expected leading to new deals.

The Real Deal Reports:

Google is already one of the most significant tenants in Chelsea.

-It paid a then-record $1.77 billion in 2010 to buy its New York headquarters at 111 Eighth Avenue…

- It also has about 240,000 square feet at Vornado Realty Trust and Related Companies’ 85 10th Avenue.

- In December 2015, Google signed a 250,000-square-foot lease at RXR Realty and YoungWoo & Associates’ SuperPier project.

- While that space is being built out, the company has been negotiating to take about 200,000 square feet at RXR’s Starrett-Lehigh Building on a short-term basis.

Google has made huge real estate investments in the San Francisco Bay Area. Here are some recent headlines:

- July, 2017: Google has reportedly spent $820 million on properties in Silicon Valley

- December 2017: Google approved to build 10,000 homes in Mountain View but it had threatened to halt the housing project if it wasn’t allowed to expand its business park. 

Foremski’s Take: Google is a surprisingly old-fashioned company since it clearly wants its workers to be in its offices — developing among other things: remote working technologies such as Google Hangouts, Google Docs, Sheets, phone, and Google Drive.  

With such powerful collaborative telecommuting technologies why isn’t Google eating its own dog food? Why does Google insisting on bussing its Silicon Valley workers  in three-hour-plus commutes — daily between its Mountain View HQ and San Francisco?

Google has said that it has tested the productivity of remote teams and on-site teams and found no difference in performance. So why are there no telecommuting jobs at Google?

There is only one reason Google insists on its workers being under its control: keeping them separate from non-Google environments as much as possible with the aim to create company culture and prevent conspiracy. Google doesn’t want its engineers hooking up with others in coffee shops and plotting a Google-killer. The more it can keep its people company men and company women the better.

When was it cool to be a company man? Singing the company song, being paid partly in script, eating at the company lunch counter? Riding the company bus? It was never cool especially not in San Francisco.

Why doesn’t San Francisco, New York, Mountain View, London — anywhere Google has a large numbers of workers: insist that Google allow its workers at least one-day a week to work from home. 

Here’s why this is important:

- It helps integrate the tech communities with their neighbors. They become known by name rather than shapes sitting behind giant black-windowed coaches. Bussing workers to distant enclaves is divisive to communities. 

- Google’s office expansions have a huge negative effect on local small businesses. They cannot compete with all the free food and free services Google provides for its staff. And the businesses displaced by Google lead to further lost customers. As Google moves into downtown areas in Palo Alto, and Sunnyvale the local merchants are very concerned about living in the shadow of the Googleplex.

Google’s Sunnyvale plans unleash merchants’ worries and warnings | Real Estate Marketplace

- On their telecommuting days Googlers will spend money on their own lunches and with local small business services. And they'll get to know people outside of work. And they'll maybe see some problems around the city that need fixing. Engineers love solving problems.

Cities need to ask Google why it doesn't allow telecommuting and insist it is vital to stemming commute times for everyone; and it is vital to fighting division in their neighborhoods. The same should be asked for all the other giant employers. 

Facebook, Google and Twitter's failure to deal with the damaging effects of fake news has created a broad distrust in social media platforms, search engines and news applications reports the Edelman Trust Barometer 2018 -- a survey of more than 33,000 people in 28 countries.

But trust in journalism has improved greatly and there is now a wide divide between peoples' low regard for media platforms and their much higher respect for journalists and journalism.

Richard Edelman, president and CEO of Edelman, the largest privately held public relations company, said there is "an unprecedented crisis of trust in the U.S." Especially the U.S. government, followed by business, NGOs and media.

"This is the first time that a massive drop in trust has not been linked to a pressing economic issue or catastrophe like the Fukushima nuclear disaster. In fact, it's the ultimate irony that it's happening at a time of prosperity, with the stock market and employment rates in the U.S. at record highs. The root cause of this fall is the lack of objective facts and rational discourse."

A small amount of fake news and the inability of social media platforms and search engines to deal with it has created a cascade of trust issues across all types of institutions in most countries surveyed.

It's a large fallout with a potentially large long-term cost for the media platforms. Facebook shares fell more than 6% when it announced it would stop showing as many news stories in users' feeds -- which signaled that it couldn't find an engineering solution.

The Edelman report discovered that large numbers of people (63%) said they could not trust themselves to know if a news story was from a reputable journalistic source or "tell good journalism from rumor or falsehoods." Yet people's trust in journalism and journalists jumped by double-digits -- the largest of all categories.

Trust in business...

Edelman says that the global crisis in trust can only be addressed by the business community. Nearly two-thirds of respondents expect CEOs to lead on policy-change and not wait on government action. Businesses have a far higher trust rating than government institutions. 

...building trust (69 percent) is now the No. 1 job for CEOs, surpassing producing high-quality products and services (68 percent)....

Technology firms are the most trusted industries (but not the tech media platforms) at 75%; Education 70%; professional services, 68%; transportation 67%; automative 62%; packaged goods 60% and financial services at 54%.

Trust in US headquartered companies showed the largest fall among all countries surveyed.

More details here:

The news release

The PDF of the report

Please see:

No news: The engineering failure to block fake news and hate speech

2018 prediction: The endangered hyperlink

NetSolving Silicon Valley's diversity problem

Facebook's decision to use fewer news items in users' feeds is a direct result of failure to filter out fake news and hate speech - in advance of European laws and increased pressure from US lawmakers.

The move will hurt many large news publishers who have relied on Facebook traffic due to earlier Facebook programs that courted news and magazine publishers to come onto the platform.

Representatives of Facebook, Twitter and YouTube (Google) were grilled by the Senate Commerce Committee in Washington, Wednesday. The Senators were critical of the poor progress made by the companies to quell Russian propaganda, fake news and harmful content.

Dave Lee at BBC News reports,

Google, which owns YouTube, has pledged to hire more human moderators to add an extra layer of protection for this process...

Twitter said it would implement several new measures to monitor discussions for any potential manipulation, as well as open up more formal communications lines with US politicians to escalate any problems.

Foremski's Take: Filtering out most of the news is an easy way for Facebook to tackle the problem of blocking most of the fake news. But it is not a solution. People will still be sharing information of various types and interacting about things that will be classed as harmful content. Filtering out news links is not a solution.

And without a solution Facebook, Google and Twitter and others, all face a future where they must still find a way to deal with fake information and hate speech and all types of other harmful content.

Tens of thousands of top engineers have collectively failed to come up with an engineering solution to this problem despite all their machine learning, AI and algorithmic prowess. Along with access to phenomenal amounts of computing power. It's a big failure. But there is a solution.

Facebook, Google, and Twitter are media companies - they publish pages of content with advertising - and they should look to traditional media companies and see how they handle this problem. They handle it superbly.

A tried and tested solution...

The traditional media industry has a solution that works incredibly well and is available to everyone - it's an open-source solution. It employs editors, journalists, and moderators to ensure third-parties don't use their publishing platforms as vehicles for hate speech, fake news and all the other problems facing the new media companies.

It's not a cheap solution - hiring people is expensive compared to running an algorithm.

But Facebook, Google, and Twitter are rich and their failure at building an engineering solution should not absolve them from using tried and true methods.

Traditional media companies bear this cost burden and so should their much larger and wealthier competitors.

Europe tries to fight hate, harassment, and fake news without killing free speech - Columbia Journalism Review

Facebook's News Feed changes: A look at the likely consequences | ZDNet

Senate presses tech firms on anti-extremism efforts - BBC News

Peggy Noonan Wall Street Journal writes :

“The Franken case represents not a collapse of tolerance for flawed

human behavior but a rise of judgment about what is acceptable.”

This means that you always have to choose a higher morality than is available today. The future has only one lens.

It reminds me of this post from 2006:

“Welcome to the future transparency of your life”

http://zd.net/1iujaEA

In the same way that we find it hard to forgive slave owners even if they made great contributions to society or country we can only judge others by the societal standards of the day. If you believe in moral and ethical progress then the future will judge us and likely desoise us.

It might not be judgement about sexual behavior but about other things such as consukerism. For example: if you ran a hugely successful campaign sellng a gazillion units of Pet Rock2 that might be considered a crime against the environment. A criminal use of resources and energy for personal enrichment with no value to socierty.

Or it might be about something else. But it will be about something we do daily and don't think about much. We should think about it, imho.