Just back from my summer break and thanks to the one who gave me the link of this brilliant (and scary) video. I doubt the future will be like this but who knows.
A Futuristic Short Film HD: by Sight Systems
Is this a strange time or am I growing old? The point is my recent readings were not optimistic views of high-tech entrepreneurship or of Silicon Valley. I just think of
– Horowitz’s The Hard Thing about hard Things,
– Morozov’s To Save Everything, Click Here (which is so negative, I have not written a post yet!)
– HBO’s Silicon Valley – nice & funny but slightly depressing.
In a way there’s always been creations which were not absolutely optimistic, but there was always some positive point. I think of
– Bronson’s The First $20 Million Is Always The Hardest,
– Edwards’ I’M Feeling Lucky – Falling On My Feet in Silicon Valley,
– the very good Harboe Schmidt’s The Ultimate Cure or
– even very short and funny The Anorexic Startup by Mike Frankel.
Now I just read No Exit, Struggling to Survive a Modern Gold Rush by Gideon Lewis-Kraus (thanks David!). The passion, the excitement have disappeared. The entrepreneurs are honest enough to show they are exhausted. And the gold rush again will have more casualties than winners.
I initially thought it was a fiction, but the author is a journalist for Wired. That’s why my initial reaction was it’s not a good work, I could not see the style, the rythm. After I understood it was not fiction, I was less negative, thought it’s not the best document I’ve read. But here are some interesting quotes/lessons.
“The Valley has successfully elaborated the fantasy that entrepreneurship – and, more broadly, creativity – can be systemized; this is the basic promises of accelerators (Ycombinator et al.) that success in the startup game can be not only taught but rationalized, made predictable.” (31/847 – Kindle reference) and later “Silicon Valley’s most bought book, Eric Ries’ The Lean Startup, is a spirited pamphlet of winning exhortations to hunger, speed, agility, and unsentimentality. Almost every founder in Silicon Valley has read the first 30 pages of that book.” (618/847) If you do not know the book, it’s about spending little and pivot fast and I agree there is something wrong about all these fantasies. Indeed even Steve Blank agrees now. Check Blank’s statement about learning entrepreneurship.
Even worse, “[…] the Series A crunch. Due in part to the rise of startup accelerators like Y Combinator, as well as to the surplus capital washing around the Valley from recent IPOs, it has never been easier to raise a small amount of money, say $1 million. And it has never been easier to build a company—especially a web or mobile product—from that small amount of money, thanks in part to the proliferation of cheap, easy development tools and such cloud platforms as Amazon Web Services. But the amount of “real” VC funding (i.e., Series A rounds) to be allocated hasn’t kept pace. The institutions that write the big checks, those that might support and sustain real growth, can survey what a hundred companies have managed to do with a small check and put their real money on the propositions that promise the greatest yield with the least risk” (41/847) and “The problem in 1999 was that to get $5 million you didn’t need very much. You needed one or two Stanford résumés, an idea for a prototype, and a live body to give the money to.” It’s hard to get that $5 million now in part because it’s so easy to get $500,000, especially if you’re coming out of an accelerator. One way to look at it is that the $5 million that went to one company of 10 people in 1999 is now going to 10 companies of two people. You’ve lowered the bar 10X” (753).
And the consequences are slightly different… “The Valley is the place where the astounding success of the very few has been held out to the youth in exchange for their time, their energy and, well, their youth” (60). “You know the odds on any given company’s success are long, but that’s why you make a lot of bets. In the first dotcom boom, the risk was largely carried by the investors. Now that the financiers have gotten a grip on the market, and specialized engineering knowledge has become a commodity, the risk has been returned to the youth” (760). “The worst thing is that these guys get their funding tomorrow and are stuck doing this for another year. So far, they only lost one” (778).
His comments are right, but isn’t this true of any bet you make in life, becoming an artist, a scientist. You can go for a safer life for sure. Lewis-Kraus is pessimistic, he sees the people who do not win. And this exists anywhere people try. I have more optimistic views. Even if I know it is a tough experience… I prefer what Latour said of his experience with Everpix: “I have more respect for someone who starts a restaurant and puts their life savings into it than what I’ve done. We’re still lucky. We’re in an environment that has a pretty good safety net, in Silicon Valley.”
A final quote I liked (related to my previous post about age): “There’s been a lot written recently about the age divide in Silicon Valley, but even the more thoughtful pieces — such as those in The New York Times Magazine and The New Republic — tended to miss the obvious: Older people don’t typically work at startups because they have families and can no longer stomach the perpetual crisis. It’s exactly the same reason that people in their fifties tend not to be magazine freelancers or underground-club bassists. As one investor put it to me, When I see a 40-year-old in a Series A meeting, I want to pull him aside, put my hand on his shoulder, and tell him to just go get a job.” (706).
PS: it’s still a challenge for me to read an e-book all the more with these references which are not pages anymore. So I cheated, created a pdf and printed the stuff to take notes and later copy/paste the pdf…
The Internet is only a reflection of technological change and globalization. As with these two issues, social and political tensions have naturally emerged, but are even more acute because of the specifics of the Network and the revolution it created in much less time than the previous World developments. (I will add below that the disappointments caused by excessive expectations from technology have also played a role.)
The cover page of the book The Ends of the Internet says that the Internet has revolutionized the world in the fields of information, production, collaboration and transactions. Its author, Boris Beaude, is a geographer by training, which is an important point for the topic addressed here. Beaude has a strong contribution to the discussion about the constraints created by the Network. It is synthetic, and detailed, thanks to a short book (95 pages) however dense and exciting.
(I would not say the same of Evgeny Morozov’s book, To Save Everything, Click Here, which is also dense on related subjects, but too provocative or extreme to be totally convincing. I might come back on that book later in another post.)
The Internet (just like globalization) has revolutionized the World (page 15) by re- balancing the priorities (and re-creating tensions) between:
| Before the Internet | Since the Internet |
|---|---|
| Equality | Freedom |
| Society | Individual |
| Privacy | Public Life / Transparency |
| Property | Free |
Beaude also mentions (page 24) problems linked to:
– Freedom of expression,
– Collective intelligence,
– Openness,
– Decentralization,
– Neutrality,
which are the topics of his chapters.
The Internet thus disturbs the local values in the territories, but the Internet (which is “a proper name just as well as France or the European Union” – page 14) is anything but virtual; it is an intangible space. Yet it must be able to survive private interests. The Internet makes distance (and time) less relevant without abolishing them, which “makes clear its disjunction with the plurality of territorial spaces” (page 23). It disrupts the States that have put some values higher than freedom (safety, property in the USA to which must be added dignity, privacy in Europe). Beaude is geographer!
He adds: “A common space for humanity is clearly not enough to spontaneously create common values. But the social contracts are at the heart of politics. They offer to give up freedoms by collectively delegating authority in the name of freedoms seen as more fundamental” (page 29). See the “my freedom ends where someone else’s begins.” The Internet is both a space of freedom and space of absence of law (intellectual property, widespread surveillance, private use of the data; the list is long.)
And this is where is one of the worst issues – among others. Not only in the world of the Internet, but also in the field of technological innovation where experts often impress politics and society. This creates a tension between the individual and society, between private and public entities, between experts and decision makers. “The computer code is now the law” (page 47).
About Collective Intelligence: “Believing in the potential of individuals is precisely not to believe in one only, and it is to accept individual fallibility, while recognizing the power of appreciation that resides in anyone” (page 38). Then follows a section on democracy and “its difficulty in organizing common will/good with individual will/good” (and the famous, the “worst system except for all the others.”) In addition, the largely minority character of the contributors to the collective intelligence on the Internet (e.g. 0.0002 % of users for French-speaking Wikipedia) is an additional limit, not to mention the loss of their independence and the privatization of this intelligence (pp. 40-46).
You should also read his excellent synthesis on free and property. The emerging intellectual property concepts of Copyleft and Creative Commons. Free only exists because a third party pays; not only advertising but also sponsors in the case of Wikipedia or Mozilla. This is not so new since both Press and TV used these methods. It is just a matter of scale and strong dematerialization. The minimal costs of copying and transmission revolutionize the world, but the initial production of goods must still be financed. Netflix and Spotify show that new models are possible, but only if only the aggregator or distributor is correctly paid, the content producers may disappear if not in quantity, at least in quality… And at the same time, Beaude reminds us that free is also a freedom factor.
Another subtle topic: hypercentrality (Google, Facebook, Twitter) poses fantastic problems, not least being the circumvention of laws and taxation (page 75). For example, the “weak links” (those which are neither daily nor intense) are also essential. And threatened?
Beaude interestingly mentions the Fourth Amendment of the U.S. Constitution, which requires a warrant for any search. It raises the constitutionality of the monitoring carried out by the NSA (page 81).
How has the Internet reached the point where the results of Google and Twitter differ depending on the country and offers by iTunes, Netflix or YouTube are different or even inexistent with geography? (Page 85). This missing neutrality will lead to the neutralization of the Internet, even its death (page 89). “Neutrality and self-organization are part of the libertarian options […] and are inconsistent with politics. […] Humankind must seize this opportunity to revisit what we consider to be important, really important. […] The challenge is unusually complex. We will have to choose between the end of the Internet and the globalization of politics” (pp. 91-93).
Beaude therefore indicates that the dilemma is simple: “If in accordance with the national social contracts, the Internet is partitioned according to the Nations. By not respecting national social contracts, the Internet might be partitioned even more in the relatively near future” (page 35). “The Internet enables the emergence of a global political space, but it is still to be invented. Before this invention comes, the Internet will probably be gone!”(Page 36)
As usual my synthesis is imperfect, but if you’re interested or intrigued, read Beaude!
Finally, and this is not quite the subject of Beaude, there is also some disappointment with the promises of technology and the Internet in particular… Just read again Thiel’s motto – “We wanted flying cars, instead we got 140 characters” – that I have already mentioned here. This only would not be so bad. But then what about the citation of the former CEO of TF1 – “what we sell to Coca-Cola is human brain time made available. […] Nothing is more difficult than getting this availability” – or that of Jeff Hammerbacher (thanks Martin for the reference): “The best minds of my generation are thinking about how to make people click ads, that sucks.” Which brings me back to Morozov whose arguments on centrism and solutionism of the Internet seem very excessive. It is not the exaggerate promises of the Internet that are so much delusional, but the risk of drift and disappearance of the Internet that is the real problem – but this is another topic!
HBO had its final (eighth) episode of Silicon Valley. Apparently it was succesful enough for the channel to decide about a second season. I laughed again even if I would not claim the series is great. However extreme, the anecdotes in the series look realistic enough though.
The team looks first extatic and after the presentation by their competitor, less so… “Look at me, look at me , look at me. We’ve got a great name, we’ve got a great team, we’ve got a great logo and we’ve got… a great name. Now we just need an idea. Let’s pivot, let’s pivot.”
Will this be sufficient? Not sure when you listen to what happens next:
“Look at them, all full of hope. They just got $20M in series A at a $280M valuation.” It might be time to join them…
…except if brainstorming is not too late. I will not tell you how new ideas came, but it was geeky, nerdy…
…but apparently successful. Everyone looks happy. And this is America. In fact this is one of the first images showing the Bay Area. Nothing else did really prove it was shot in SV.
A conclusion to the series. A sad one as I learnt from a video I posted in an earlier article…
PS: in addition to my posts about the series (tag: HBO), you may be interested in:
– the HBO web pages: Silicon Valley
– the Wikipedia link: Silicon Valley (TV series)
Episode 7 is about friends,
well friends…
or foes?
Still, the team begins to be seriously disturbed …
… whatever it seems to be ready for TechCrunch. More in final episode 8?
I began my previous blog about Horowitz’ The Hard Thing About Hard Things by quoting the first page. I will begin here with his final page:
“Hard things are hard because there are no easy answers or recipes. They are hard because your emotions are at odds with your logic. They are hard because you don’t know the answer and you cannot ask for help without showing weakness. When I first became a CEO, I genuinely thought that I was the only one struggling. Whenever I spoke to other CEOs, they all seemed like they had everything under control. Their businesses were always going “fantastic” and their experience was inevitably “amazing”. But as I watched my peers’ fantastic, amazing businesses go bankrupt and sell for cheap, I realized I was probably not the only one struggling.” […] “Embrace your weirdness, your background, your instinct. If the keys are not there, they do not exist.”[Page 275]
Again the book is not an easy read. It is more advice about processes than anything else, so you may not enjoy the book if you do not need to apply it now. If you are not an ambitious entrepreneur who needs to scale his venture, reading the book may not be useful. Still it is a great book. Let me give you a couple of examples.
“Figuring out the right product is the innovator’s job, not the customer’s job. The customer only knows what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but often must go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage. Sometimes only the founder has the courage to ignore the data.” [Page 50]
Funnily enough, Horowitz quotes Thiel. (By the way, quotes on the back page supporting Horowitz’s book are from Page, Zuckerberg, Costolo and Thiel…) “I don’t believe in statistics, I believe in calculus”. And his advice “when things fall apart” are
– Don’t put it all on your shoulders.
– This is not checkers, this is motherfuckin’ chess.
– Play long enough and you might get lucky.
– Don’t take it personally.
– Remember that this is what separates the women from the girls.
I summarize his advice from pages 64 to 93 as when things fall apart, face the truth and tell the truth. Tell the truth to your employees, tell the truth to your future ex-colleagues, tell the truth to your friends and more importantly, tell the truth to yourself.
I understand now why Andreessen-Horowitz is seen as a firm which has put in place tons of processes. Horowitz describes many tasks founders should be utmost careful about. Taking care of people, first. He also describes how you can do mistakes by trying to do good. Just one example: “our hockey stick [the shape of the revenue graph over the quarter] was so bad that one quarter we booked 90% of our new bookings on the last day of the quarter. […] I designed an incentive to closed deals in the first two months. […] As a result, the next quarter was more linear and slightly smaller… deals just moved from the third month to the first two months of the following quarter.”
Other interesting examples are about smart people and bad employees. “Sometimes, you will have a player that’s so good that you hold the bus for him, but only him.” And senior (old) people: “When the head of engineering gets promoted from within, she often succeeds. When the head of sales gets promoted from within, she almost always fails”. [Page 172] Horowitz explains also there is not one rule, it is company-dependent. Andreessen favors giving titles easily, Zuckerberg has opposite views.
“Perhaps the most important thing that I learnt as an entrepreneur was to focus on what I needed to get right and stop worrying about all the things that I did wrong or might go wrong.” [Page 200] Again focus on the strengths, not the weaknesses.
Ones and Twos
Horowitz quotes Collins’ “Good to Great”. “Internal candidates dramatically outperform external candidates.” And then adds that “Collins does not explain why internal candidates sometimes fail as well”. There are “two core skills for running an organization: First, knowing what to do. Second, getting the company to do what you know. While being a great CEO requires both skills, most CEOs tend to be more comfortable with one or the other. I call managers who are happier setting the direction of the company Ones and those who more enjoy making the company perform at the highest level Twos.” When they are not competent at both, “Ones end up in chaos and Twos fail to pivot when necessary.” [Pages 214, 216]
Horowitz shows that great CEOs need vision like Steve Jobs had, competence in implementing like Andy Grove had, and ambition like Bill Campbell. One of Horowitz favorites references is indeed Andy Grove and his “High output Management.” Horowitz shows how much respect is has for Jobs and Campbell, but the systematic processes remain his favorite, therefore Grove.
Wartime/peacetime
Horowitz also strongly believes that “life is struggle” (quoting Karl Marx) and that CEOs have to be ready to be both peacetime CEOs (when a company has a large advantage over competition in a growing market – Eric Schmid at Google until Page took over) and wartime CEOs (companies facing existential threats – Grove at Intel when they switched from memories to microprocessors or Jobs at Apple when he came back).
“Be aware that management books tend to be written by management consultants who study successful companies during their times of peace. As a result, the books describe the methods of peacetime CEOs. In fact, other than the books written by Andy Grove, I don’t know of any management books that teach you how to manage in wartime like Steve Jobs or Andy Grove.” [Page 228]
Horowitz hates the idea that founders should be replaced, that companies need professional CEOs who know how to scale companies or who “should be the number-one salesperson.” CEOs define the Strategy (“The story and the strategy are the same thing.”) and do Decision making (“with speed and quality”).
You may like the “Freaky Friday Management Technique” [Page 252] and “Should You Sell Your Company?” [Page 257] but let me finish with some of his final thoughts: “First technical founders are the best people to run technology companies”. […] “Second, it is incredibly difficult for technical founders to learn to become CEOs while building companies.” [Page 268] Which is why VCs should help these founders becoming CEOs, by helping them acquire the skill set as well as building a network.
Finally if you wonder why Andreessen-Horowitz web-site is www.a16z.com, you just have to count the number of letters in the name between the a and the z…
You will discover about the genius of people
and machines
and then might have to decide if you prefer the autism of machines
or the craziness of people
Clearly the authors of HBO’s Silicon Valley do not have a great fascination for any of them, as you may discover through the TechCrunch interview they participated in…
“Every time I read a management or self-help book, I find myself saying, “That’s fine, but that wasn’t really the hard thing about the situation.” The hard thing isn’t setting a big, hairy, audacious goal. The hard thing is laying people off when you miss the big goal. The hard thing isn’t hiring great people. The hard thing is when those “great people” develop a sense of entitlement and start demanding unreasonable things. The hard thing isn’t setting up an organizational chart. The hard thing is getting people to communicate within the organization that you just designed. The hard thing isn’t dreaming big. The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.
The problem with these books is that they attempt to provide a recipe for challenges that have no recipes. There’s no recipe for really complicated, dynamic situations. There’s no recipe for building a high-tech company; there’s no recipe for making a series of hit songs; there’s no recipe for playing NFL quarterback; there’s no recipe for running for president; and there’s no recipe for motivating teams when your business has gone to crap. That’s the hard thing about hard things— there is no formula for dealing with them.”
This is how begins The Hard Thing About Hard Things by Ben Horowitz [see page ix]. After a first chapter about his experience in start-ups (Netscape, LoudCloud), Horowitz gives advice to entrepreneurs. And it is not business school-like advice indeed.
Marc: “Do you know the best thing about startups?
Ben: “What?
Marc: “You only ever experience two emotions: euphoria, and terror. And I find that lack of sleep enhances them both.
[Page 21]
Marc is Andreessen, the founder of Netscape, with whom he co-founded VC firm Andreessen Horowitz (a16z.com) in 2009.
“People often ask me how we’ve managed to work efficiently across three companies over eighteen years. Most business relationships either become too tense to tolerate or not tense enough to be productive after a while. Either people challenge each other to the point where they don’t like each other or they become complacent about each other’s feedback and not longer benefit from the relationship. With Marc and me, even after eighteen years, he upsets me almost every day by finding something wrong with my thinking, and I do the same for hi. It works.” [Page 14]
I plan to come back with comments about this book when I am finished, but let just me finish for now with my usual start-up cap. tables. here Netscape and LoudCloud.
Click on picture to enlarge
Click on picture to enlarge
I could not imagine I would make a link between my posts on Street Art and the ones about Silicon Valley. But here is the missing link: in episode 5, you will know more about Chuy
and how our heroes decide to use a street artist for their logo. The result I cannot really show full size but here are extracts of the first attempts.
Here is the final logo.
And you can enlarge by clicking for the x-rated attempts. Not difficult to find who might pay $500k for the work. Not their best friends….
click here or on picture to enlarge – xrated
All this comes from the fact that when pp was thought of as a logo for PiedPiper, Erlich explodes:
“Lower case. Are you serious?
Twitter, lower case t
Google, lower case g
Facebook, lower case f
every f… company in the Valley has lower case.
Why? because it’s safe.
We are not going to do that…”
Now of course, there are also serious people in the series, talking about burn rate…
and process…
I think SV is funnier and funnier and I disagree with people who wrote that the best jokes were in episode 1. Well, I am probably not the same age as they are… 🙁 Whatever, you see s… people dropping names like here:
click to enlarge
Do you recognize the signatures? And then you see our founder struggling with his vision…
… to beautiful Monica. He is really a great actor. I think! 🙁
I knew in my previous life about consultants who go on the beach. Here are developers who go on the roof, the “Unassigned.”
But everything seems to be the best in the best of possible worlds.
