The Code – Silicon Valley and the Remaking of America – by Margaret O’Mara

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About 15 years ago, I was challenged by a colleague, who knew my passion about Silicon Valley, about why the region should survive and lead for the years or even decades to come. I had just arrived at EPFL and now that I am leaving this place where there are many people I love, I could give the same answer to my colleague: the talent and capital gathered there, with an expertise which seems to be never lost and an appetite for experiments and risk with not too much fear of failure, at least no stigma, are reasons why Silicon Valley has a bright future. Yes it has many drawbacks and weaknesses, but even when there is a major crisis, there is stil, whatever we think, enough diversity to continue to strive.

Margaret O’Mara probably thinks the same. At least she has written one of the most comprehensive history of the region and describes brilliantly all its strong and weak, positive and negative attributes.

The Code
Silicon Valley and the Remaking of America
By Margaret O’Mara

You have to think of it like a horse race, Morgenthaler would explain. That’s how the high-tech game worked. The horse was the technology. The race was the market. The entrepreneur was the jockey. And the fourth and last ingredient was the owner and trainer – the high-tech investor. You could have the best jockey, but if he rode a slow horse, then you wouldn’t win. Same thing if you have a fast horse but a terrible jockey. Great technology without good people running the shop wouldn’t get very far. And the race had to have good stakes. Riding a fast horse to win at the country fait wouldn’t reap many rewards, but the Kentucky Derby was another matter indeed. So it went with the market. These needed to be customers and growth, not saturation. [Pages 11-12] (You can check the Computer Museum archive about Morgenthalerhere (as a pdf).)

The flow wasn’t about transfer of technology, it was about talent – about people who moved back and forth from the labs of Stanford to the offices of its research park to the ramshackle warehouses and prefab office buildings that began stretching southward down El Camino Real. Everywhere else in the 1950s, academia was a true ivory tower, surrounded by impregnable walls between town and gown, between “pure” research and business enterprise. At Stanford, those walls dissolved. [Page 32]

“Inventions come from individuals,” observed Regis McKenna, “not from companies.” [Page 152]

“Good ideas and good products are a dime a dozen,” [Arthur Rock] later explained. “Good execution and good management – in a word, good people – are rare.”

More controversial maybe is John Doerr’s comment: Much later, one of the regions most successful and influential VCs, John Doerr, got in hot water after admitting that a major factor guiding his decisions was “pattern recognition.” The most successful entrepreneurs, he found, “all seem to be white, male, nerds who’ve dropped out of Harvard or Stanford and they absolutely have no social life. So when I see that pattern coming in”, he concluded, “it was very easy to decide to invest.” [Page 76]

After HP went public in November 1957, fortunes rose along with its share price. Yet from the start, the two founders consciously presented their firm as a business concerned with higher and better things. “I think many people assume, wrongly, that a company exists simply to make money,” Packard once told HP managers. “While this is an important result of a company’s existence, we have to go deeper to find the real reasons for our being.” Nonhierarchical, friendly, a change-the-world ethos paired with an unflagging focus on market growth and the bottom line – HP created the blueprint for generations of Silicon Valley companies to come. [Page 33]

The missile maker, the entrepreneurial university, the distinctive business sensibility, the professional networks, the government money, the elite (and homogeneous) workforce: many of the key ingredients were coming together in Palo Alto by the middle of the 1950s. [Page 38]

O’Mara combines anecdotes, stories and economic trends. For example, more than 500 companies went public in 1969. Only 4 did in 1975. […] in 1969, the national venture capital industry had raised more than $170 million in new investment. In 1975, it raised a paltry $22 million. What’s more, only one venture investment in four went to tech companies. [Page 158]

She shows there were thousands of similar (and unknown) companies to the one which became phenomenal success. In parallel to Apple, there had been ProcTech (or Processor Technology), IMSAI, Cromemco, Xitan, Polymorphic. Vector Graphic, with an initial $6’000 investment in 1976 reached 4’000 units and $400’000 in sales in 12 months, and $25M fiver years later. By 1977, there were 50,000 personal computers in use. [Pages 144-6]

(A side comment about a book I did not know of: The Innovation Millionaires: How They Succeed by Gene Bylinsky (Charles Scribner’s Sons, New York, 1976.)

She also clearly illustrates the role of public intervention and support. One story I did not know about is how much John Doerr was involved in fighting proposition 211 in 1996. It shows that despite the general view that Silicon Valley has no interest in politics, on the contrary, many individuals and institutions are much more interested than generally thought. (See Proposition 211 ) [Section The Litigator – Pages 333-8]

Similarly, the complexity of things is illustrated with Peter Thiel, a famous Libertarian, a strong advocate of weak states and of President Trump: he is the (funding) founder of Palantir, a startup which most revenues at least early in its history, came from the government… [Pages 384-7]

But culture is never far. When Russian president Medvedev visited Silicon Valley in 2010 to try and understand the region’s secrets, he concluded that there simply wasn’t enough appetite for risk. “It’s a problem of culture as Steve Jobs told me today. We need to change the mentality.” [Page 388]

So Silicon Valley’s success does not stop… “By mid-2018, Facebook had made 67 acquisitions, Amazon had made 91, and Google had made 214.” [Page 391] Let us remember tough that in the GAFAM group, 2 companies are not based in Silicon Valley, showing how powerful the region is, just in terms of perception! Let me just add here an old post about startups M&As: Cisco A&D published in 2016.

It is also from an architectural standpoint as mention on Page 392. With the new Facebook building in 2015, or Amazon biospheres and Apple Park.

And there is a lot of money made. Google has a few years after its IPO more than 1’000 employees or former employees with a $5M wealth including an in-house massage therapist. [Page 392]

As a conclusion of my reading, a final quote:

“As wealth grew, so did the mythos around how Silicon Valley was able to generate one innovative company after another. It was about allowing risks and not penalizing failure, they’d say. It was about putting engineering first – finding the best technical talent, with no bias about origin or pedigree. It was about that “pattern recognition” so fatefully identified by John Doerr, looking for the next Stanford or Harvard dropout with a wild but brilliant idea.

Of all those assertions, Doerr’s slip-up came closest to the heart of the Valley’s secret. “West Coast investors aren’t bolder because they are irresponsible cowboys, or because the good weather makes them optimistic”, wrote Paul Graham, founder of the Valley’s most influential tech incubator, Y Combinator, in 2007. “They’re bolder because they know what they’re doing.” The Valley power players knew tech, knew the people, and knew the formula that worked.

They looked for “grade-A men” (who very occasionally were women) from the nation’s best engineering and computer science programs, or from the most promising young companies, and who had validation from someone else they already knew. They sought out those exhibiting the competitive fire of a Gates or a Zuckerberg, the focus and design ascetism of Kapor or Andreessen or Brin and Page. They funded those who were working on a slightly better version of something already being attempted – a better search engine, a better social network. They surrounded these lucky entrepreneurs with support and seasoned talent; they got their names in the media and their faces on the stage at each premier conferences. They picked winners, and because of the accumulated experience and connections in the Valley, those they picked often won.” [Pages 399-400]

Loonshots or how to nurture crazy ideas by Safi Bahcall

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This is one of the best books about innovation I have read in years. The importance of crazy ideas, not the recipe on how to make them successful, but the attitude to make them less crazy. And more importanly, crazy ideas have much more impact on our lives than we may think. A must read. Here are some extracts to convicne you…

Loonshot : a neglected project, widely dismissed, its champion written-off as unhinged.

The Loonshot thesis :
1. The most important breakthroughs come from loonshots, widely dismissed ideas whose champions are often written off as crazy.
2. Large groups of people are needed to translate those breakthroughs into technologies that win wars, products that save lives, or strategies that change industries.
3. Applying the science of phase transitions to the behavior of teams, companies, or any group with a mission provides practical rules for nurturing loonshots faster and better. [Page 2]

“Bush changed national research the same way Vail changed corporate research. Both recognized that the big ideas – the breakthroughs that change the course of science, business, and history – fail many times before they succeed. Sometimes they survive through sheer chance. In other words, the breakthroughs that change our world are born from the marriage of genius and serendipity.” [Page 37]

“But the ones who truly succeed – the engineers of serendipity – play a more humble role. Rather than champion any individual loonshot, they create an outstanding structure for nurturing many loonshots. Rather than visionary innovators, they are careful gardeners. They ensure that both loonshots and franchises are tended well, that neither dominates the other, and that each side nurtures and supports the other.” [page 38]

“As we will see over the next chapters, managing the touch and the balance is an art. Overmanaging the transfer causes one kind of trap. Undemanaging that transfer causes another.” [Page 42]

A project champion: On the creative side, inventors (artists) often believe that their work should speak for itself. Most find any kind of promotion distasteful. On the business side, line managers (soldiers) don’t see the need for someone who doesn’t make or sell stuff – for someone whose job is simply to promote an idea internally. But great project champions are much more than promoters. They are bilingual specialists, fluent in both artist-speak and soldier-speak, who can bring the two sides together. [Page 63]

Contrarian answers, with confidence, create very attractive investments. [Page 63]

LSC: Listen to the Suck with Curiosity. LSC, for me, is a signal. When someone challenges the project you’ve invested years in, do you defend with anger or investigate with genuine curiosity? [Page 64]


Some famous creators of Loonshots:
https://en.wikipedia.org/wiki/Akira_Endo_(biochemist)
https://en.wikipedia.org/wiki/Juan_Trippe
https://en.wikipedia.org/wiki/Edwin_H._Land

Years later, Land became known for a saying: “Do not undertake a program unless the goal is manifestly important and its achievement nearly impossible.” [Page 96]

“Then the author has an amazing thesis about team size. “I will show that team size plays the same role in organizations that temperature does for liquids and solids. As team size crosses a “magic number”, the balance of incentives shifts from encouraging a focus on loonshots to a focus on careers.” [Page 164]

This magic number is

“Where G is the salary growth rate with promotion (for example 12%); S is management span – if it is narrow, each manager has a small number of direct reports and there are many hierarchical layers, whereas if it is wide, there will be more direct reports and less hierarchy – E is the equity fraction which ties your pay to the quality of your work. The final parameter F for fitness is return on politics vs. project-skill fit.
In many cases the magic number M equals 150… [pages 195-200]
Safi Bahcall has many other rich descriptions including the importance of power laws in innovations [Page 178] or this one [Page 240]

For a loonshot nursery to flourish – inside either a company or an industry – three conditions must be met:
1. Phase separation : separate lonnshot and franchise groups
2. Dynamic elequilibrium: seamless exchange between the two groups
3. Critical mass: a lonnshot group large enough to ignite.

Applied to companies, the first two are the first Bush-Vail rules discussed in part one. The third, critical mass, has to do with commitment. If there is no money to pay for hiring good people or funding early-stage ideas and projects, a loonshot group will wither, no matter how well designed. To thrive, a loonshot group needs a chain reaction. A research lab that produces a successful drug, a hit product, or award-winning designs will attract top talent. Inventors and creatives will want to bring new ideas and ride the wave of a winning team. The success will justify more funding. More projects and more funding increase the odds of more hits – the positive feedback lopp of a chain reaction.

How many projects are needed to achieve critical mass? Suppose odds are 1 in 10 that any one loonshot will succeed. Critical mass to ignite the reaction with high confidence requires investing in at least two dozen such loonshots (a diversified portfolio of ten of those loonhsots has a 65 percent likelihood of producing at least one win; two dozen, a 92 percent likelihood).” [Pages 240-1]

Disruptive innovation again [Page 263]

Use “disruptive Innovation” to analyze history; nurture loonshots to test beliefs.

In an article addressing recent controversy about the notion of disruptive innovation, Christensen explains why Uber is not disruptive, by his definition, and why the iPhone also began as a sustainable innovation. In Chapter 3, we saw that American Airlines – a large incumbent, not a new entrant – led the airline industry after deregulation with many brilliant “sustaining” innovations targeted to high-end customers. Hundreds of low-cost, specialty airline startups, “disruptive innovators” failed.
If the transistor, google, the iPhone, Uber, Walmart, IKEA, and American Airlines’ Big Data and other industry-transforming ideas were all initially sustaining innovations, and hundreds of “disruptive innovators” fail, perhaps the distinction between sustaining vs. disruptive, while interesting academically or in hindsight, is less critical for steering businesses in real time than other notions.
That, at least, is why I don’t use the distinction in this book. I use the distinction between S-type and P-type because teams and companies or any large organization develop deeply held beliefs, sometimes consciously, often not, about both strategies and products – and loonshots are contrarian bets that challenge those beliefs. Perhaps everything that you are sure is true about your products or your business model is right, and the people telling you about some crazy idea that challenges your beliefs are wrong. But what if they aren’t? Wouldn’t you rather discover that in your own lab or pilot study, rather than read about it in a press release from one of your competitors? How much risk are you willing to take by dismissing their idea?
We want to design our teams, companies, and nations to nurture loonshots – in a way that maintains the delicate balance with our franchises – so that we avoid ending up like the Qianlong emperor. The one how dismissed those “strange or ingenious objects”, the same strange and ingenious objects that returned in the hands of his adversaries, years later, and doomed his empire.

Fail fast or succeed slowly?

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Here is my lastest contribution to Entreprise Romande in their special summer edition “Le Temps, éternel insaisissable”.

If you are not a subscriber, here is a copy.

Fail fast or succeed slowly?
Hervé Lebret, head of startup unit, EPFL

Slow food, slow thinking, slow growth. After decades of hyperactive and probably destructive frenziness, humankind seems to want a pause. Yet for years I have been complaining that I do not see the Swiss and European startups growing fast enough and, natural corollary, I do not see failing fast enough these “living dead” as they are called in Silicon Valley, these startups that have or would have no future. So was I wrong too?

The debate between the supporters of Schumpeter’s creative destruction, “disruption” and those of a more sustainable incremental progress is as old as the word innovation itself. When I fell into the pot of startups during my American journeys, I quickly wondered why Europe had not experienced such spectacular success such as the GAFAs (Google, Apple, Facebook, Amazon). Whether it is desirable or not, the question is valid: is this difference not related to another less known phenomenon, namely that our startups never die or at least not fast enough?

Recently, the Swiss Startup Radar [1] gave the point of view of an Israeli: “In Switzerland, I observe a strong focus on the survival rate. Startups are encouraged if they have collateral, such as patents, and take a cautious course. As a result, eight out of 10 startups from ETH Zurich are still active five years after their foundation. In Israel, on the other hand, more attention is paid to the economic impact. What matters when assessing a project is the prospect of growth and the creation of new jobs.” The survival rate of companies after 5 years in Switzerland as in the USA is 50%. It is 90% for technology startups from Swiss academic institutions. It can be argued that researchers from these prestigious institutions are better trained and better able to withstand entrepreneurial storms. So why in Silicon Valley where researchers are probably no less well trained, the survival rate is only 75% after five years. And especially less than 50% after 10 years while we are still 80% in Switzerland? In fact, the multiplicity of support, mainly public, probably contributes to artificial survival and slow growth.

I fear that the debate will remain open and lively after this chronicle and only convince the already convinced. Impact and growth cannot only happen through cautiousness and moderation; they are also the result of risk taking and specialized financing which undoubtedly increase the failure rate: “Being an entrepreneur is not for the faint of heart” declared Bill Davidow, a famous American venture capitalist, the expectations are extraordinary and fatality is terrible. The investment horizon for venture capital is very short. Success must be visible in less than five to ten years and the success must be dazzling for these investors. It is a world that does not make any prisoner and failures are up to the ambitions, and worse, very fast (the famous “fail fast”). To have more impact, to create more capital value and also more jobs, it also requires investments of this kind. There is no question of the survival of startups of a few dozen employees, but the impact of a Google that in just twenty years will have created nearly 100,000 jobs, perhaps more than all European startups combined. We can criticize this industry for being very impatient and I understand that some entrepreneurs and political or economic decision makers are the first critics. I remain convinced that this is part of the price to pay for this larger impact.

[1] https://www.startupticker.ch/en/swiss-startup-radar

Bill Campbell, the Trillion Dollar Coach (Part II)

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A short second post following my recent one, here. Short notes.

Eric Schmidt and its coauthors emphasize the importance of teams, of people and of products. For example:

“In our previous book, How Google Works, we argue that there is a new breed of employee, the smart creative, who is critical to achieving this speed and innovation. The smart creative is someone who combines technical depth with business savvy and creative flair. […] As we were researching this book and talking to the dozens of people Bill had coached in his career, we realized that this thesis misses an important piece of the business success puzzle. There is another , equally critical, factor for success in companies: teams that act as communities. integrating interests and putting aside differences to be individually and collectively obsessed with what’s good for the company. […] But adhering to these principles is hard, and it gets even harder when you add factors such as fast-moving industries, complex business models, technology-driven shifts, smart competitors, sky-high customer expectations, global expansion, demanding teammates… […] To balance the tension and mold a team into a community, you need a coach, someone who works not only with individuals but also with the team.” [Pages 22-4]

“Bill started his business career as an advertising and marketing guy, then added sales to his portfolio after joining Apple. But through his experiences in the tech world, in his stints at Apple, Intuit, Google, and others, Bill came to appreciate the preeminence of technology and product in the business pecking order. “The purpose of a company is to take the vision you have of the product and bring it to life,” he said once at a conference. “Then you put all the other components around it – finance, sales, marketing – to get the product out the door and make sure it’s successful.” This was not the way things were done in Silicon Valley, or most other places, when Bill came to town in the 1980s. The model then was that while a company might be started by a technologist, pretty soon the powers that be would bring in a business guy with experience in sales, marketing, finance, or operations, to run the place. These executives wouldn’t be thinking about the needs of the engineer and weren’t focused on product first. Bill was a business guy, but he believed that nothing was more important than an empowered engineer. His constant point: product teams are the heart of the company. They are the ones who create new features and new products.” [Pages 67-8]

About teams again, and trust : “Not surprisingly when Google conducted a study to determine the factors behind high-performing teams, psychological safety came out at the top of the list [1]. The common notions that the best teams are made up of people with complementary skill sets or similar personalities were disproven; the best teams are the ones with the most psychological safety, And that starts with trust.” [Page 84]

About talent: Bill looked for four characteristics in people. The person has to be smart, not necessarily academically but more from the standpoint of being able to get up to speed quickly in different areas and then make connections. Bill called this the ability to make “far analogies”. The person has to work hard, and has to have high integrity. Finally, the person should have the hard-to-define characteristic: grit. The ability to get knocked down and have the passion and perseverance to get up and go at it again.” [Page 116]

And finally, may be most importantly, about founders: “He held a very special place in his heart for the people who have the guts and skills to start companies. They are sane enough to know that every day is a fight for survival against daunting odds and crazy enough to think they can succeed anyway. And retaining them in a meaningful way is essential to success in any company. Too often we think about running a company as an operating job, and as we have already examined, Bill considered operational excellence to be very important. But when we reduce company leadership to its operational essence, we negate another very important component: vision. Many times operating people come in, and though they may run the company better, they lose the heart and soul of the company.” [Page 178]

In conclusion, People, People, People.

[1] More details about the study can be found in James Graham, “What Google Learned from Its Quest to Build the Perfect Team” New York Times, February 25, 2016.

The Ideology of Silicon Valley by Fred Turner and Jean-Pierre Dupuy (among others)

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Excellent issue of the famous French review Esprit on The Ideology of Silicon Valley. You’ll find contibutions by Emmanuel Alloa, Jean-Baptiste Soufron, Fred Turner, Shoshana Zuboff, Antonio Casilli and Jean-Pierre Dupuy.

I was especially struck by the surprising interview with Fred Turner: Do not be Evil. Utopias, borders and brogrammers. This is in fact a translation from LogicMag, which you can find here: Don’t Be Evil. It is really worth reading! It is his explanation of the roots of Silicon Valley that surprised me the most and how they still influence today this region which in the end is not very ideological, even if the other authors have different points of view.

For example: “It owes its origins to 1960s communalism. A brief primer on the counterculture: there were actually two countercultures. One, the New Left, did politics to change politics. It was very much focused on institutions, and not really afraid of hierarchy. The other—and this is where the tech world gets its mojo—is what I’ve called the New Communalists. Between 1966 and 1973, we had the largest wave of commune building in American history. These people were involved in turning away from politics, away from bureaucracy, and toward a world in which they could change their consciousness. They believed small-scale technologies would help them do that. They wanted to change the world by creating new tools for consciousness transformation.” Then on the influence today: “It varies depending on the company. Apple is, in some ways, very cynical. It markets utopian ideas all the time. It markets its products as tools of utopian transformation in a countercultural vein. It has co-opted a series of the emblems of the counterculture, starting as soon as the company was founded. At other companies, I think it’s very sincere. I’ve spent a lot of time at Facebook lately, and I think they sincerely want to build what Mark Zuckerberg calls a more connected world. Whether their practice matches their beliefs, I don’t know. About ten years back, I spent a lot of time inside Google. What I saw there was an interesting loop. It started with, “Don’t be evil.” So then the question became, “Okay, what’s good?” Well, information is good. Information empowers people. So providing information is good. Okay, great. Who provides information? Oh, right: Google provides information. So you end up in this loop where what’s good for people is what’s good for Google, and vice versa. And that is a challenging space to live in.”

Jean-Pierre Dupuy in “The New Data Science” brilliantly explains there is no data science. Science is about causes, data are more about correlations which can not really help in predictions (I hope I understood his message!). Let me quote one sentence: “The ideology that accompanies big data, meanwhile, announces the advent of new scientific practices that, putting the theoretical requirement in the background, endanger the advance of knowledge and, more importantly, undermine the foundations of a rational ethic.” Really brilliant!

Le bonheur, une idée neuve dans les entreprises ? (selon France Culture)

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(Sorry I was too fast, this should have been posted on the French version… where it is also now. For non French-speaking readers, this post is about new management techniques that were born in Silicon Valley…)

J’étais invité ce matin à débattre des méthodes de travail et de management (y compris “l’utilisation du bonheur”) importées de la Silicon Valley. Je mets plus bas (après les tweets) les notes que j’avais prise pour préparer cette émission

Voici les notes que je m’étais préparées.

On ne peut pas mettre dans les même paquet tous les GAFAM. Tout d’abord Amazon et Microsoft qui par coïncidence ne sont pas basées dans la Silicon Valley, mais à Seattle ne sont pas connues pour un management original. Ni Bill Gates, ni son successeur Steve Ballmer, ni Jeff Bezos ne sont connus pour des styles de management innovants. Par contre Google, Apple et Facebook ont sans doute des similarités:
– ce sont des méritocraties et le travail est la valeur “suprême”, plus que le profit, au risque de tous les excès: recherche de performance, concurrence et risque de burn-out. On ne tient pas toujours très longtemps chez GAF
– on y recherche les meilleurs talents (sur toute la planète et sans exclusive, au fond le sexisme et le racisme n’y existent pas a priori)
– le travail en (petites) équipes est privilégié.
Du coup le management a innové pour permettre cette performance et reconnaître les talents (par le fameuses stock options mais aussi une multitude de services pour rendre les gens toujours plus efficaces)

J’aimerais vous mentionner 3 ouvrages (sur lesquels j’avais bloggé pour 2 d’entres eux)
– Work Rules décrit le “people management” chez Google (ils ne parlent “plus” de ressources humaines). L’auteur Lazlo Bock qui fut le patron de cette activité a quasiment théorisé tout cela. Vous trouverez mes 5 posts sur ce livre par le lien: https://www.startup-book.com/fr/?s=bock. C’est un livre en tout point remarquable parce qu’il montre la complexité des choses.

– I’m feeling Lucky décrit de l’intérieur ces manières hétérodoxes de “foncer”. Un pro du marketing montre comment Google a tout chamboulé par conviction / intuition plus que par expérience. https://www.startup-book.com/fr/2012/12/13/im-feeling-lucky-beaucoup-plus-quun-autre-livre-sur-google/

– Enfin un livre hommage sur Bill Campbell vient de sortir écrit par l’ancien CEO de Google Eric Schmidt. https://www.trilliondollarcoach.com. Comme je viens de commencer ce livre, je peux en parler plus difficilement mais il serait dommage d’oublier cette personnalité qui fut le “coach” de Steve Jobs, Eric Schmidt et Sheryl Sandberg, trois personnes majeures pour justement les GAF! Or ce Bill Campbell, décédé il y a 3 ans, fut une personne essentielle à cette culture du travail et de la performance. Ses valeurs sont décrites dans https://www.slideshare.net/ericschmidt/trillion-dollar-coach-book-bill-campbell. Bill Campbell revient de temps en temps sur mon blog pour des anecdotes assez étonnantes. (https://www.startup-book.com/fr/?s=campbell). Par exemple, chez Google on a souvent pensé que les managers étaient inutiles. L’autonomie d’individus brillants devait suffire… mais ce n’est pas si simple! – voir https://www.startup-book.com/fr/2015/09/01/google-dans-le-null-plex-partie-3-une-culture/.

A nouveau excellence des individus et travail en équipe, reconnaissance des talents à qui on donne autonomie, responsabilité(s) avec peu de hiérarchie semble être le leitmotiv… Tout cela on pas pour rendre les gens heureux, mais pour leur permettre d’être plus efficace parce qu’ils sont “heureux” au travail. “People First”. L’objectif c’est de fidéliser, de rendre plus productif, mais c’est aussi une mise en pratique de la confiance en les autres.

Alors comme je l’avais lu chez Bernard Stiegler, à toute pharmacopée sa toxicité. Les excès dans des valeurs conduisent à des abus. Trop de travail, de concurrence, de pression conduit au burnout. J’ai l’impression que la politique et même le sexisme y jouent moins de rôle qu’on pense, même s’il y en a comme partout. Quant au racisme, il me semble limité (et on est aux USA!) Le sexisme est un vrai sujet, mais je vois plus des nerds qui ont peur ou ne connaissent pas les femmes que des “old boy clubs of white men” qui dirigeraient les choses comme je l’ai lu (même si cet élément existe j’en suis sûr). La polémique sur la congélation des ovocytes chez Facebook peut être lue de manière contradictoire j’imagine. J’ai aussi abordé le sujet dans le passé, https://www.startup-book.com/fr/?s=femmes ou https://www.startup-book.com/tag/women-and-high-tech/. L’autre sujet de diversité, est plus clair: il y a tellement de nationalités dans les GAFAs et les startup en général que le racisme est dur à imaginer. Indiens, chinois surtout sont présents et jusqu’au somment (les CEO de Google et Microsoft aujourd’hui). Seule la minorité “African-American” est sans doute sous représentée et on peut imaginer que tout cela est corrélé avec le problème de l’accès à l’éducation (qui existe moins en Asie)

Voilà, c’est déjà beaucoup pour ne pas dire trop… je trouve que commencer par Bill Campbell est une manière simple et efficace d’entrer dans le sujet. Et maintenant que j’y pense tout cela est d’autant plus facilement que vous verrez que mes lectures récentes sont liées au “sens du travail” (Lochmann, Crawford, Patricot) https://www.startup-book.com/fr/?s=travail

Bill Campbell, the Trillion Dollar Coach

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I had so often heard of this hidden secret of Silicon Valley that when I read about a book written about him, I had to buy and read it immediately. Which I did. And what about the authors: first and foremost, Eric Schmidt, the former CEO of Google…

I had mentioned Campbell 3 times here:

– first in 2014, in Horowitz’ The Hard Thing About Hard Things: there is no recipe but courage. This is there I had Campbell picture just between Steve Jobs and Andy grove.
jobs-campbell-grove

– then in 2015, in Google in the (Null)Plex – Part 3: a culture. This piece is also mentioned in the new book: Google decide management was not needed any more and neither Schmidt, nor Campbell liked it. Here is how it was solved: “The newly arrived Schmidt and the company’s unofficial executive coach, Bill Campbell, weren’t happy with the idea, either. Campbell would go back and forth with Page on the issue. “People don’t want to be managed,” Page would insist, and Campbell would say, “Yes, they do want to be managed.” One night Campbell stopped the verbal Ping-Pong and said, “Okay, let’s start calling people in and ask them.” It was about 8 P.M., and there were still plenty of engineers in the offices, pecking away at God knows what. One by one, Campbell and Page summoned them in, and one by one Page asked them, “Do you want to be managed?” As Campbell would later recall, “Everyone said yeah.” Page wanted to know why. They told him they wanted somebody to learn from. When they disagreed with colleagues and discussions reached an impasse, they needed someone who could break the ties.”

– finally last year, in Business Lessons by Kleiner Perkins (Part II): Bill Campbell by John Doerr.

Not bad references! I am not finished with the Coach. I have never been a fan of coaching and I am probably wrong. Let me just begin. “I’ve come to believe that coaching might be even more essential than mentoring to our careers and our teams. Whereas mentors dole out words of wisdom, coaches roll up their sleeves and get their hands dirty. They don’t just believe in our potential; they get in the arena to help us realize our potential. They hold up a mirror so we can see our blind spots and they hold us accountable for working through our sore spots. They take responsibility for making us better without taking credit for our accomplishments. And I can’t think of a better role model for a coach than Bill Campbell”. [Page xiv]

On the next page, Schmidt explains he may have missed on important point in his previous book (How Google Works) where he emphasized the importance of brilliant individuals, the smart creatives. And this may be the higher importance of teams, as described in Google’s Project Aristotle. I just give a link form the New York Times about this: What Google Learned From Its Quest to Build the Perfect Team. New research reveals surprising truths about why some work groups thrive and others falter.

The first two chapters are devoted to the life of this extraordinary character. A tireless worker, who started as an American football college coach to become the CEO of high-tech companies such as Claris or Intuit before becoming the Silicon Valley star coach. All told on the occasion of his funerals in 2016. If you do not want to wait for my next blog and not buy the book you may want to read the slideshare from the authors, but first you should read his manifesto, it’s the people.

People are the foundation of any company’s success. The primary job of each manager is to help people be more effective in their job and to grow and develop. We have great people who want to do well, are capable of doing great things, and come to work fired up to do them. Great people flourish in an environment that liberates and amplifies that energy. Managers create this environment through support, respect, and trust.

Support means giving people the tools, information, training, and coaching they need to succeed. It means continuous effort to develop people’s skills. Great managers help people excel and grow.

Respect means understanding people’s unique career goals and being sensitive to their life choices. It means helping people achieve these career goals in a way that’s consistent with the needs of the company.

Trust means freeing people to do their jobs and to make decisions. It means knowing people want to do well and believing that they will.

Entrepreneurship, startups and luck : Google according to Daniel Kahneman

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I offered Thinking Fast and Slow by Daniel Kahneman a few months ago and this morning the reader made me read pages 200-1. It’s a great lesson about how luck plays an important role in startup creation, through the Google story. So I give you below the full extract.

“A compelling narrative fosters an illusion of inevitability. Consider the story of how Google turned into a giant of the technology industry. Two creative graduate students in the computer science department at Stanford University come up with a superior way of searching information on the Internet. They seek and obtain funding to start a company and make a series of decisions that work out well. Within a few years, the company they started is one of the most valuable stocks in America, and the two former graduate students are among the richest people on the planet. On one memorable occasion, they were lucky, which makes the story even more compelling: a year after founding Google, they were willing to sell their company for less than $1 million, but the buyer said the price was too high. Mentioning the single lucky incident actually makes it easier to underestimate the multitude of ways in which luck affected the outcome.

A detailed history would specify the Google’s founders, but for our purposes it suffices to say that almost every choice they made had a good outcome. A more complete narrative would describe the actions of the firms that google defeated. The hapless competitors would appear to be blind, slow, and altogether inadequate in dealing with the threat that eventually overwhelmed them.

I intentionally told this tale blandly, but you get the idea: there is a very good story here. Fleshed out in more detail, the story could give you the sense that you understand what made Google succeed; it would also make you feel that you have learned a valuable general lesson about what makes businesses succeed. Unfortunately, there is good reason to believe that your sense of understanding and learning from the Google story is largely illusory. The ultimate test of an explanation is whether it would have made the event predictable in advance. No story of Google’s unlikely success will meet that test, because no story can include the myriad of events that would have caused a different outcome. The human mind does not deal well with nonevents. The fact that many of the important events that did occur involved choices further tempts you to exaggerate the role of skill and underestimate the part that luck played in the outcome. Because every critical decision turned out well, the record suggests almost flawless prescience – but bad luck could have disrupted any one of the successful steps. The halo effect adds the final touches, lending an aura of invincibility to the heroes of the story.

Like watching a skilled rafter avoiding one potential calamity after another as he goes down the rapids, the unfolding of the Google story is thrilling because of the constant risk of disaster. However, there is an instructive difference between the two cases. The skilled rafter has gone through the rapids hundreds of times. He has learned to read the roiling water in front of him and to anticipate obstacles. He has learned to make the tiny adjustments of posture that keep him upright. There are fewer opportunities for young men to learn how to create a giant company, and fewer chances to avoid hidden rocks – such as a brilliant innovation by a competing firm. Of course there was a great deal of skill in the google story, but luck played a more important role in the actual event than it does in the telling of it. And the more luck was involved, the less there is to be learned.”

Progress and Innovation according to Arthur Lochmann

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Magnificent book again, La Vie solide (The Solid Life) by Arthur Lochmann that comes at the right moment when France asks the question of repairing the frame of Notre Dame. Starting on page 182, he makes a brilliant analysis of heritage and innovation. He talks about duration and time, which immediately made me think of all the activities I took years to master (venture capital, research on startups, more personal hobbies on Street Art). Without duration, no mastering. Here are my last (translated) excerpts from this beautiful book.

At the other end of the spectrum wriggles innovation. In a few decades, this has replaced the idea of progress in public discourse. The success of the rhetoric of innovation is one of the most palpable expressions of the phenomenon of acceleration of time in modern space. Today we speak of disruption to denote radical innovations that have the effect of breaking existing social structures. As Bernard Stiegler puts it in a recent work [1], this disruption has as an operating principle going faster than society without giving it time to adapt. […] As the author summarizes, for the “lords of the economic war […] it is a question of going faster than societies to impose on them models that destroy their social structures”. How not to go crazy: this is the subtitle of this book which focuses on the effects on individuals and social groups in the nihilist desert that is born of these constant mutations.
The physicist and philosopher Etienne Klein compared the conceptions of time that underlie notions of progress and innovation respectively. Progress, a structuring perspective since the Enlightenment, is based on the idea of a constructing time, “an accomplice of our freedom”. The future is credible and desirable; it is this that allows us to make sacrifices of personal time now to make possible a better collective future. Innovation, on the other hand, projects a completely different conception of time: it is corruptible, it damages things. This was already the case before the Enlightenment, especially for Bacon, for whom the notion of innovation meant the small modifications necessary to preserve the situation as it is. This is again the case today, in a slightly different way: facing the ongoing climate catastrophe, who is still able to imagine any future? In short, innovation is the notion that has taken the place of progress when it has become impossible to think of a future. Like heritage, but in an inverted way, it’s a form of immobilization in the present. In short, heritage conservation and the cult of innovation are two aspects of one and the same thing: the abolition of duration by the advent of a time that has been left out. [Pages 185-7]

“A liquid society is one in which the contexts of action of its members change in less time than it takes for the modes of action to freeze in habits and routines,” wrote Zygmunt Bauman in La Vie liquide (The Liquid Life) [2]. In the capitalism of innovation, every day brings new changes. Social structures, as well as friendly and loving bonds, have lost their former rigidity to become fluid. Everything is always going on and time is running out to be a present without perspective. The paradoxical effect of acceleration is the petrification of time and the erasure of duration. [Page 191]

It is no coincidence that the figure of the craftsman has seen in recent years a return to grace, both on the side of social criticism by a Richard Sennett or by a Matthew B. Crawford and with enthusiasts that are the makers of the fablabs or the “firsts of the class” in reconversion. First of all, because the craftsmanship is very alive and constantly shatters the apparent opposition between tradition and modernity. On a construction site, there is no choice between old techniques and new ones. There is always a clever mix of each other. The practice of the frame, in particular, teaches us that being at the forefront of modernity does not mean giving up centuries-old techniques. The knowledge of the past is not outdated; it is enriched by new methods of work, and sometimes even by older ones that are rediscovered. [Pages 193-4]

[1] Bernard Stiegler, Dans la disruption : Comment ne pas devenir fou ? Paris, Les liens qui libèrent, 2016.
[2] Zygmunt Bauman, La Vie liquide, translated by Christophe Rosson, Paris, Albin Michel, 2013, p. 7 (modified translation)

The analysis of 500+ startups

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Following my traditional analysis of startups through their IPO filings documents (you can check my 2017 analysis on 400+ documents here or the tag #equity on this blog), here is an updated analysis with 500+ start-ups.

You can have a look at the full 500 cap. tables on scribd or look at a shorter synthesis which follows.I hope this is self-explanatory enough.