Tag Archives: New Yorker

Where the Small-Town American Dream Lives On

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“As America’s rural communities stagnate, what can we learn from one that hasn’t?” is the subtitle of Our Town by Larissa MacQuhar in the Nov 13, 2017 paper edition of the New Yorker. The online title is Where the Small-Town American Dream Lives On. It is a strange and fascinating analysis of America. (By the way in the same edition, you can also read The Patriot a critic of the collected nonfiction of Philip Roth, another enlightening explanation of what American-ness is.


The Chamber of Commerce in orange City, Iowa. Photograph by Brian Finke.

Towards the end of this 10-page article, the author writes: In his 1970 book, “Exit, Voice, and Loyalty,” the economist Albert O. Hirschman described different ways of expressing discontent. Your can exit – stop buying a product, leave town. Or you can use voice – complain to the manufacturer, stay and try to change the place you live in. The easier it is to exit, the less likely it is that a problem will be fixed. That’s why the centripetal pull of Orange City was not just a conservative force; it could be a powerfully dynamic one as well. After all, it wasn’t those who fled the town who could push it onward, politically or economically -it was the ones who loved it enough to stay, or to come back.
Americans, Hirschman wrote, have always preferred “the neatness of exit over the messiness and heartbreak of voice.” Discontented Europeans staged revolutions; Americans moved on. “the curious conformism of Americans, noted by observers ever since Tocqueville, may also be explained in this fashion,” he continued. “Why raise your voice in contradiction and get yourself into trouble as long as you can always remove yourself entirely from any given environment should it become too unpleasant?”

There are many other interesting descriptions of people leaving and those staying; and of their ambitions, their motivations. I am not sure how this relates to innovation and entrepreneurship, but I remember Robert Noyce, one of Silicon Valley’s fathers with born in a small town in Iowa… and moved first to MIT for his PhD and then West.

Andreessen Horowitz: extrapolating the future

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I have already mentioned Andreessen Horowitz (a16z for its friends) in previous posts. First I have been very impressed by Horowitz’s book, The Hard Thing about Hard Things and second, the VC firm is close to Peter Thiel (check When Peter Thiel talks about Start-ups – part 4: it’s customer, stupid!). I also published data about Netscape.

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Marc Andreesseen – Photograph by Joe Pugliese – The New Yorker.

I have also mentioned how impressed I have been by a few articles published by The New Yorker, I wonder why I have not subscribed yet. I just finished reading Tomorrow’s Advance Man – Marc Andreessen’s plan to win the future by Tad Friend. Again this is a long, deep and fascinating analysis. When I printed it, I had a 25-page document. But it is worth reading, I promise.

I also read another article about Andresseen Horowitz, which is also interesting even if less profound: Andreessen Horowitz, Deal Maker to the Stars of Silicon Valley from the New York Times. Both articles try to show that a16z might be changing Silicon Valley and the venture capital world (or they are creating another bubble and will disappear when it bursts)

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Marc Andreesseen – Robert Galbraith/Reuters for The New York Times.

I really encourage you to read the 25 pages, but here are some short excerpts:

Venture capital became a profession here when an investor named Arthur Rock bankrolled Intel, in 1968. Intel’s co-founder Gordon Moore coined the phrase “vulture capital,” because V.C.s could pick you clean. Semiretired millionaires who routinely arrived late for pitch meetings, they’d take half your company and replace you with a C.E.O. of their choosing—if you were lucky. But V.C.s can also anoint you. The imprimatur of a top firm’s investment is so powerful that entrepreneurs routinely accept a twenty-five per cent lower valuation to get it. Patrick Collison, a co-founder of the online-payment company Stripe, says that landing Sequoia, Peter Thiel, and a16z as seed investors “was a signal that was not lost on the banks we wanted to work with.” Laughing, he noted that the valuation in the next round of funding — “for a pre-launch company from very untested entrepreneurs who had very few customers” — was a hundred million dollars. Stewart Butterfield, a co-founder of the office-messaging app Slack, told me, “It’s hard to overestimate how much the perception of the quality of the V.C. firm you’re with matters—the signal it sends to other V.C.s, to potential employees, to customers, to the tech press. It’s like where you went to college.”

[…] The game in Silicon Valley, while it remains part of California, is not ferocious intelligence or a contrarian investment thesis: everyone has that. It’s not even wealth: anyone can become a billionaire just by rooming with Mark Zuckerberg. It’s prescience. And then it’s removing every obstacle to the ferocious clarity of your vision: incumbents, regulations, folkways, people. Can you not just see the future but summon it?

[…] Most venture firms operate as a guild; each partner works with his own companies, and a small shared staff helps with business development and recruiting. A16z introduced a new model: the venture company. Its general partners make about three hundred thousand dollars a year, far less than the industry standard of at least a million dollars, and the savings pays for sixty-five specialists in executive talent, tech talent, market development, corporate development, and marketing. A16z maintains a network of twenty thousand contacts and brings two thousand established companies a year to its executive briefing center to meet its startups (which has produced a pipeline of deals worth three billion dollars). Andreessen told me, “We give our founders the networking superpower, hyper-accelerating someone into a fully functional C.E.O. in five years.”

[…] A16z was designed not merely to succeed but also to deliver payback: it would right the wrongs that Andreessen and Horowitz had suffered as entrepreneurs. Most of those, in their telling, came from Benchmark Capital, the firm that funded Loudcloud, and recently led the A rounds of Uber and Snapchat—a five-partner boutique with no back-office specialists to provide the services they’d craved. “We were always the anti-Benchmark,” Horowitz told me. “Our design was to not do what they did.” Horowitz is still mad that one Benchmark partner asked him, in front of his co-founders, “When are you going to get a real C.E.O.?” And that Benchmark’s best-known V.C., the six-feet-eight Bill Gurley, another outspoken giant with a large Twitter following, advised Horowitz to cut Andreessen and his six-million-dollar investment out of the company. Andreessen said, “I can’t stand him. If you’ve seen ‘Seinfeld,’ Bill Gurley is my Newman”—Jerry’s bête noire.

Time to read more, right?

Was Christensen wrong and is Disruptive Innovation a shaky theory?

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Clayton Christensen has been one of my heroes. Will I have to kill this father figure? The often excellent New Yorker magazine published recently The Disruption Machine with subtitle What the gospel of innovation gets wrong. Author Jill Lepore knows a lot about the Innovation gurus from Schumpeter to Porter and Christensen and what she has to say is at least very disturbing.

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“Disruption is a theory of change
founded on panic, anxiety,
and shaky evidence.”

You have to read the article: Lepore seems to have strong arguments about the weaknesses of Christensen’s. In the Disk Drive industry, she claims, Seagate Technology was not felled by disruption. Same with Bucyrus and Caterpillar for the mechanical-excavator industry or “Today, the largest U.S. producer of steel is — U.S. Steel”. Difficult for me to assess the claims. I have to admit I had read more recent books of Christensen which were really disappointing but I thought his first breakthrough remained strong.

Funnier: “The theory of disruption is meant to be predictive. On March 10, 2000, Christensen launched a $3.8-million Disruptive Growth Fund. Less than a year later, the fund was quietly liquidated. In 2007, Christensen told Business Week that “the prediction of the theory would be that Apple won’t succeed with the iPhone,” adding, “History speaks pretty loudly on that.” In its first five years, the iPhone generated a hundred and fifty billion dollars of revenue.”

There has been a debate following Lepore’s claims which I will let you discover:

– Business Week: Clayton Christensen Responds to New Yorker Takedown of ‘Disruptive Innovation’: here.

– Forbes: What Jill Lepore Gets Wrong About Clayton Christensen and Disruptive Innovation: here.

– Slate: Even the Father of Disruption Thinks “Disruption” Has Become a Cliche: here.

PS: thanks to Martin for pointing that amazing article to me!

Something rotten in the Silicon Valley kingdom?

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I have already recently discussed the difficulty Silicon Valley has in talking about or dealing with politics, for example in The promise of technology. Disappointing? and even more in Silicon Valley and (a)politics – Change the World. I was referring to two articles (which I considered as exceptionally great) written by George Packer in the New Yorker in 2011 and 2013. It is an article published on January 27 on the same web site, Tom Perkins and Schadenfreude in Silicon Valley by Vauhini Vara which motivates me in asking the question: Is there something rotten in the Silicon Valley kingdom?

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All this is rather indicative of a serious situation that deserves the attention. Four days earlier, Le Monde published the article by Jérôme Marin, In San Francisco, anti-Google protests go too far. The summary of all this can be done simply, but I encourage you to read these articles (especially those by Packer whose depth analysis is really of interest):

Many new millionaires (in particular employees of Twitter and Facebook), and even some billionaires (see Technology Billionaires in 2013) contributed to the recent acceleration of the gentrification of San Francisco. However, the authorities of San Francisco rather encouraged the phenomenon and to a large extent, the debate begins to rage. On the one side a population that expresses its frustration at this new situation by blocking the famous private buses carrying these high-tech employees from their home to their office (see A Google bus blocked, anger rises in San Francisco by the same Jerome Marin) or a Google employee at his home. On the other side, the “slip” of Tom Perkins comparing these protests to attacks of the Nazis against the Jews…

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These reactions illustrate a increasingly visible debate between the proponents of the Invisible Hand (let the rich be richer and the market will self-regulate for the benefit of all) and opponents increasingly exacerbated by the consequences of the global deregulation. As if Occupy Wall Street was moving to Silicon Valley. As Americans usually react fast, the city of San Francisco has taken the decision to have these private buses pay for the use of public bus stops. Vauhini Vara also mentions that Mark Zuckerberg has become the largest private donor in 2013 in the USA (with $1 billion …) and Sergey Brin ranks fifth .

My opinion is of little importance and I’ll let you judge. Let me just add (and you will understand where I am assuming that you care!) that large U.S. companies pay ridiculous amounts of tax lawfully using the possibilities offered by the law of international trade. In 2011, Le Monde published USA: profit does not necessarily mean tax, and waht follows comes from it:

Out of 280 companies among the 500 largest U.S. companies, 111, or 40%, enjoyed an average tax rate of 4.6%. There must be a rational explanation for this particular treatment you must think, falling profits for example, justifying a lower tax burden? The problem is that according to the data compiled in this report, this argument does not hold. The 111 companies we are talking about even recorded a total greater than the benefits of th oher companies combined. Between 2008 and 2010 the telecom operator Verizon has accumulated $32.5 billion in profits, the conglomerate General Electric totaled 10.4 billion profits, and toy manufacturer, Mattel, won over a billion dollars over the period. However, none of these companies did pay federal income tax.

“This is not a report against businesses, the study says in its preamble. Instead, like most Americans , we want the business to go well. In a market economy, we need managers and entrepreneurs, as we need workers and consumers. But we also need a better balance in terms of taxation.”

U.S. billionaire Warren Buffett recently called on governments to make him pay more taxes at the individual level for a greater tax fairness. Will multinational companies be capable of the same citizen behavior?

Since I started by mentioning that Sillcon Valley has changed the world, I conclude from memory with a quote I heard on France Culture this morning: “If you do not change the course of History, it is History that will change you.”

The promise of technology. Disappointing?

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After reading the great New Yorker article about Silicon Valley and politics, I searched for “Silicon Valley” on the magazine web site and found two contrasting articles:

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– the first one is a kind of introduction to my previous post, it was also written by George Packer (clearly a great and insightful writer) in 2011 and is about Peter Thiel, the famous libertarian entrepreneur and investor: NO DEATH, NO TAXES – The libertarian futurism of a Silicon Valley billionaire.
– the second one is much older and is about the early days of Google and Internet search: SEARCH AND DEPLOY by Michael Specter.

They are kind of contradictory because the second one is optimistic about what technology can solve (Google greatly improved our access to knowledge) whereas Packer shows Thiel’s pessimism with the outcome of technology even if he has great hope in it. In fact as mentioned in the previous article about SV and politics, he belongs to the group of people distrusting politics to the point that he believes technology might / must be the alternative.

Let me begin with the optimistic first: in 2000, Google was already seen as the winner of the Internet search race. Even if it did not have yet its business model, Google solved better our search on the Internet. Page and Brin did it by finding a better mathematics algorithm, the PageRank system based on the popularity and frequency of reference of web pages. As a funny side result, Google had less queries than other sites on porn: “About ten per cent of Google queries are for pornography. The figure is lower than that of most other search engines. This reflects the demographics of the people who use the search engine, but perhaps it also demonstrates one of Google’s obvious failings: porn sites are sought out by millions of Internet users but are rarely linked to prominent Web pages. Without links, even the most popular page is invisible.”

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The credo of Thiel’s venture-capital firm: “We wanted flying cars, instead we got 140 characters.” Photograph by Robert Maxwell.

It’s been known that Thiel has been disappointed with high-tech innovation. Just read again my 2010 post, Technology = Salvation. I think you should read Packer’s article if you liked (or even if you did not) his Change the World. Both articles show the power and limits of these visionary people and the sometimes scary vision of technology vs. politics. There is something of Kubrick’s 2001: A Space Odyssey in all this. He brilliantly shows the strange nature of these people (a high concentration of Asperger syndromes and dyslexia – apparently two rather high frequency features of entrepreneurs). Again just short notes (you have to read it to see the broadness of the topics:

“Thiel believes that education is the next bubble in the U.S. economy. He has compared university administrators to subprime-mortgage brokers, and called debt-saddled graduates the last indentured workers in the developed world, unable to free themselves even through bankruptcy. Nowhere is the blind complacency of the establishment more evident than in its bovine attitude toward academic degrees: as long as my child goes to the right schools, upward mobility will continue. A university education has become a very expensive insurance policy—proof, Thiel argues, that true innovation has stalled. In the midst of economic stagnation, education has become a status game, “purely positional and extremely decoupled” from the question of its benefit to the individual and society. It’s easy to criticize higher education for burdening students with years of debt, which can force them into careers, like law and finance, that they otherwise might not have embraced. And a university degree has become an unquestioned prerequisite in an increasingly stratified society. But Thiel goes much further: he dislikes the whole idea of using college to find an intellectual focus. Majoring in the humanities strikes him as particularly unwise, since it so often leads to the default choice of law school. The academic sciences are nearly as dubious—timid and narrow, driven by turf battles rather than by the quest for breakthroughs. Above all, a college education teaches nothing about entrepreneurship. Thiel thinks that young people—especially the most talented ones—should establish a plan for their lives early, and he favors one plan in particular: starting a technology company.”

Always consistent with his thoughts, he “came up with the idea of giving fellowships to brilliant young people who would leave college and launch their own startups. Thiel moves fast: the next day, at TechCrunch Disrupt, an annual conference in San Francisco, he announced the Thiel Fellowships: twenty two-year grants, of a hundred thousand dollars each, to people under the age of twenty. The program made news, and critics accused Thiel of corrupting youth into chasing riches while truncating their educations. He pointed out that the winners could return to school at the end of the fellowship. This was true, but also somewhat disingenuous. No small part of his goal was to poke a stick in the eye of top universities and steal away some of their best.”

I am not sure I follow him too much (I am just too normal), for example in his quest for eternity, but I understand many of his visions. He is as much a dreamer as a doer, his fund had mixed results, but he is with Elon Musk (one of his his co-founders in PayPal) among the people who push “trying” to the limits without being afraid of failing.

Silicon Valley and (a)politics – Change the World

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My colleague Andrea just mentioned to me this exceptional article about Silicon Valley and its lack of interest, not to say distrust, for politics. It’s been published in the New Yorker in May 2013 and is entitled: Change the World – Silicon Valley transfers its slogans—and its money—to the realm of politics by George Packer.

130527_r23561_p233“In Silicon Valley, government is considered slow, staffed by mediocrities, and ridden with obsolete rules and inefficiencies.” Illustration by Istvan Banyai.

All this is not so far from a recent post I published: The Capital Sins of Silicon Valley. George Packer’s analysis is however profound, subtle and quite fascinating. I will not analyze the article, you have to read it even if it is a vrey long article, and to encourage you in doing so, here are just five quotes:

– “People in tech, when they talk about why they started their company, they tend to talk about changing the world,” Green said. “I think it’s actually genuine. On the other hand, people are just completely disconnected from politics. Partly because the operating principles of politics and the operating principles of tech are completely different.” Whereas politics is transactional and opaque, based on hierarchies and handshakes, Green argued, technology is empirical and often transparent, driven by data.

– Morozov, who is twenty-nine and grew up in a mining town in Belarus, is the fiercest critic of technological optimism in America, tirelessly dismantling the language of its followers. “They want to be ‘open,’ they want to be ‘disruptive,’ they want to ‘innovate,’ ” Morozov told me. “The open agenda is, in many ways, the opposite of equality and justice. They think anything that helps you to bypass institutions is, by default, empowering or liberating. You might not be able to pay for health care or your insurance, but if you have an app on your phone that alerts you to the fact that you need to exercise more, or you aren’t eating healthily enough, they think they are solving the problem.”

– a system of “peer production” could be less egalitarian than the scorned old bureaucracies, in which “a person could achieve the proper credentials and thus social power whether they came from wealth or poverty, an educated family or an ignorant one.” In other words, “peer networks” could restore primacy to “class-based and purely social forms of capital,” returning us to a society in which what really matters is whom you know, not what you could accomplish. (…) Silicon Valley may be the only Americans who don’t like to advertise the fact if they come from humble backgrounds. According to Kapor, they would then have to admit that someone helped them along the way, which goes against the Valley’s self-image.

– “There is this complete horseshit attitude, this ridiculous attitude out here, that if it’s new and different it must be really good, and there must be some new way of solving problems that avoids the old limitations, the roadblocks. And with a soupçon of ‘We’re smarter than everybody else.’ It’s total nonsense.”

– “This is one of the things nobody talks about in the Valley,” Andreessen told me. Trying to get a start-up off the ground is “absolutely terrifying. Everything is against you.” Many young people wilt under the pressure. As a venture capitalist, he hears pitches from three thousand people a year and funds just twenty of them. “Our day job is saying no to entrepreneurs and crushing their dreams,” he said. Meanwhile, “every entrepreneur has to pretend in every interaction that everything is going great. Every party you go to, every recruiter, every press interview—‘Oh, everything’s fantastic!’—and, inside, your soul is just being chewed apart, right? It’s sort of like everybody’s fake happy all the time.”