The Best Videos about Startups

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Of course the title is misleading, there is no such thing as “the best”, but there is certainly a list of the videos about startups which struck me. Here it is:

Feature films and TV series

I begin with the top of the top, Something Ventured, a documentary I have watched so many times, at least once a year since I showed it to the EPFL students interested in the topic. The trailer is available below and I am not sure which part is best, the one about Sandy Lerner maybe, the co-founder of Cisco. Here is the trailer, you can buy or watch the movie quite easily online.

There are additional feature films or TV series about startups, but not that many. The best film might be The Social Network. The best series is probably The Playlist even if HBO’s Silicon Valley has become kind of the standard.

Short videos

Now when I thought about this short post, I was thinking of miraculous Stanford Ecorner: I could not find when it was launched and I had the feeling I knew about it since I began to be interested in technology entrepreneurship.

The first I remember of is Larry Pages’s tips for entrepreneurs, among them: Tip 2: There is a benefit from being real experts. Experience pays off. Tip 3: Have a healthy disregard for the impossible. Stretch your goals. Tip 4: It is OK to solve a hard problem. Solving hard problems is where you will get the biggest leverage. And I think all Page’s videos are great.

The definition of a startup by Steve Blank is a definitive reference and must watch. More of his videos on his blog or here

I thought Randy Komisar was also on eCorner but apparently not. Here are his great advice on “how to about entrepreneurship”:

Venture Capital is a time bomb by David Heinemeier Hansson is funny and nuances my bias in favor of venture capital. Worth remember when you take venture capital (if you need it and if you can!)

I think it is good to finish with another of my favorite ones, so tipycally Silicon Valley: Making Meaning by Guy Kawasaki:

But now you understood: visit Stanford ecorner (Wikipedia) and watch them, randomly, once a day!

Marie Curie in Morbihan according to Xavier Jaravel

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Here is a short, dense and convincing essay that anyone interested in innovation should read. The subject is nevertheless complex, but the author gives a clear and argued vision of it. So here is my summary or rather selected extracts, because you have to go directly to the text which only takes an hour or two to read!

A diagnosis

Taxation?

In the top 1% of the income distribution, around 70% of taxpayers receive income from entrepreneurship, a figure which increases further for the richest, reaching 85% for the top 0.1%. [Page 21]

A list of individuals with the highest wealth is drawn up each year by Forbes magazine: less than 10% of the individuals appearing on the list in 1983 are still there in 2023. [Page 23]

The author is not convinced that taxing the rich is a solution to the inequalities created. Provided that the incentives and dynamics do not ultimately favor a tiny minority [but taxation in general remains a subject of fairness (see Piketty]. The tech giants, however, seem to have become dangerous monopolies because they are unregulated [page 24]

On the “Darwinian” dynamics of innovation, see also an older post, Silicon Valley will soon be 65 years old. Should she be retired?

Globalization ?

Companies that automate increase their employee workforce. [Page 28] Of course, this result only reflects average trends and does not mean that there are not negative effects on employment for certain technologies. For example, organizational innovations in logistics tend to reduce labor requirements. But it is very difficult to identify such cases with certainty; and, on average, the effect on employment is very positive. [Page 30]

Innovation for whom?

Due to the increase in inequality in the United States since the 1970s, the size of the market for products consumed by wealthy households is growing more quickly, and it is therefore on these markets that innovators are focusing their efforts. […] In an economy where the purchasing power of the most modest stagnates, which has been the case in the American economy for decades, the most modest never see the color of these innovations [Page 35]

The flow of innovations that generate purchasing power throughout society is not automatic: it depends on economic incentives. […] In the absence of a solvent market, there will be no innovation, so what can we do? [Page 37]

Some directions

Market size

It is estimated that a 10% increase in market size leads to a 3% drop in prices for consumers. [Page 42]

The sociology of innovators

The innovative or entrepreneurial idea is often born by directly experiencing a need or a problem to be solved. If those who innovate are not representative of society as a whole, innovations are biased in favor of a minority, those of the privileged who innovate. [Page 43] And the author mentions the examples of Louis Braille and Joséphine Cochrane.

In the United States, individuals whose parents are in the top 1% of the income distribution are ten times more likely to become innovators. […] There is no self-made innovator: the social environment plays a major role. […] Same thing in France for individuals who become doctor-engineers or doctor-researchers. [Page 44]

Innovators are turning to consumers who are like them. [Page 46]

When it comes to innovation, the scope for public action is immense. [Page 48] Innovation policy has given an emphasis to financing innovation, with tax credits and direct subsidies […] Conversely, investment in education and public research has had a tendency to decline. […] States spend relatively little on innovation. The innovation policy consists of around ten billion euros. Of these 10 billion annually, the most important system is by far the research tax credit (CIR), amounting to 7 billion. [Page 51] Despite numerous analyzes attesting of its low effectiveness, the CIR remains the main instrument today. [Page 52]

Note by the way that this process is not accompanied by a public debate. […] It is a process in small committees bringing together senior civil servants, a few politicians and a few captains of industry, whose sociology is just as selective as that of the innovators, that is to say not very representative of the population in its entirety. [Page 52]

Education

X. Jaravel devotes a long chapter to the importance of education in all its dimensions for the least privileged as well as for the highest potential, in the sciences as well as behavioral skills, to combat all the biases of the sociology of innovators who are basically middle-aged white men [page 47]

For example, those who excel in the International Mathematics Olympiads will not always have the opportunity to do a doctorate, due to lack of opportunities in their country. That’s so many researchers and innovators lost. [Page 53] With the reference “Invisible geniuses: could the knowledge frontier advance faster?”

Education produces its effects in the long term, which does not attract the attention of those in a hurry, obsessed with other, more short-term priorities. [Page 56]

In his chapter 4, the author explains his skepticism about the taxation of the rich, the establishment of a universal income, the taxation of robots, protectionism or planning, while qualifying his remarks, as he knows that acting on a complex system can have effects that are difficult to measure. Once again he expresses the blind spots of such decisions, due to very technocratic processes on the one hand, not very effective on the other hand, especially if they are not evaluated a posteriori and finally because too much of a role is given to innovative projects rather than education and training. [Pages 68-70]

In search of the lost Marie Curies

There are innovation clusters, not only from the point of view of the production of innovations, but also with regard to the origins of the new generation of innovators. [Page 74] Those who are most likely to become innovators in tech are those who have spent the most time in Silicon Valley, as if they were embedded in the environment and planned for these careers. [Page 76] Which makes me think of how many Robert Noyce, from a small town in the American Midwest, compared to Steve Jobs and Larry Page.

Achieving perfect parity between women and men to access innovation would increase the growth rate of labor productivity from 1% to 1.80%. [Page 78] We obtain equally important effects when we analyze a hypothetical situation in which individuals from disadvantaged backgrounds (rather than women) would no longer face any barriers in accessing professions in innovation and science. [Page 79]

It is also instructive to appreciate the effects of a very targeted policy which, by hypothesis, would achieve parity among the top 1% of individuals classified according to their aptitude for innovation. In the macroeconomic model, the most important innovations come from a small number of innovators (which is consistent with the data on the extreme concentration […] of start-up fundraising.) [Page 79]

The next pages are devoted to the impact of awareness raising in schools, an equally fascinating subject. Women are largely under-represented in scientific fields in France, which explains a third of the salary gap between women and men, which amounts to around 15% (for identical working hours). [Page 83]

X. Jaravel therefore insists on the importance of investment in education by emphasizing parity and territorial equality [Pages 85-6]. The author is concerned about the deterioration of education. Both in the basic “read, write and count” as well as on the best: In 2017, only 1% of students reached the level of the top 10% in 1987. [Page 91]

Three principles of action

– We know well that there is no single mechanism with a magical power, but that it is rather the conjunction of tools that makes it possible to change the situation.
– Under no circumstances should technical training be left aside.
– Several reforms could be specifically considered in their link with innovation and entrepreneurship. For example, introductory courses in entrepreneurship and innovation in high school, and strengthening teaching on the use of new technologies.

Democratizing innovation

At the end of his essay, X. Jaravel recalls two blind spots: a technocratic bias (leaving little room for citizens) and a limited use of evaluation. It is important to determine whether a scheme creates windfall effects or is truly effective. Thus an American study showed that certain subsidies constituted a pure and simple windfall effect when the subsidized technologies were already mature [while] conversely subsidies for start-ups at the very beginning of their life, in particular to realize prototypes had a strong ripple effect. [Page 110]

The author ends with three priorities:
– An educational policy that inspires vocations
– Do not give in to protectionist temptation
– Promote active participation of citizens

With the observation that innovation flows neither from the most brilliant entrepreneurs nor from the top of the State. Innovation is always collective, it infuses slowly, in the “rhizome” of innovation [Page 115]

I doubt that the reader in a hurry will understand much of these notes, and the author also indicates that this same reader could jump directly to the conclusion of his essay. You should read the full essay even if I doubt that the decision-makers often mentioned in Marie Curie habite dans le Morbihan – Démocratiser l’innovation will take the time to implement the recommendations, assuming they read them. But we must remain optimistic!

From Counterculture to Cyberculture by Fred Turner (second & final part)

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I must admit having mixed feelings after finishing my reading of Fred Turner’s book. In my previous post, I tried to show why it is an important book and how the counterculture influnced the early days of Silicon Valley (together with different influences illustrated by Christophe Lécuyer in Making Silicon Valley (another post here).

Steward Brand with his Whole Earth Catalog had a major influence and many people did not know it. Even Steve Jobs in his famous speech at Stanford celebrated Steward Brand and probably many people discovered him then.

But what has been the influence of the counterculture and its impact after Steward Brand? This is where I am intrigued: Fred Turner does not seem to admit it, but the impact is disappointing…

Politically, the influencers moved towards a kind of techno-anarchist not to say libertarian philosophy and even to the far right of the political spectrum (Newt Gingrich). Let us not forget the proximity of Peter Thiel or Elon Musk to Donald Trump (despite the diner of titans). I am not sure what to believe of other people or institutions such as the MIT Media Lab of Nicholas Negroponte, the Santa Fe Institute or Esther Dyson.

All this was apparently and symbolically represented by magazine Wired and its founder Louis Rossetto. As a prime symbol, the cover below seems to claim that Wired was the successor to the Whole Earth Catalog.

All these people and institutions seemed to have of the future not to say an ability in predicting it… but in the end what is the final output. If it is just Burning Man which Olivier Alexandre has perfectly described in his book La Tech, it is, yes, disappointing… how Burning Man ended up is in 2023 (see wikipedia) when I was finishing my book seems to be a strange coincidence…

From Counterculture to Cyberculture by Fred Turner

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From Counterculture to Cyberculture is another recent reading of mine after Making Silicon Valley of a not so recent book. It is subtitled Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism.

Here is a short extract of why the book is important: By the end of the 1960s, some elements of the counterculture, and particularly that segment of it that headed back to the land, had begun to explicitly embrace the systems visions circulating in the research world of the cold war. But how did those two worlds together? How did a social movement devoting to critiquing the technological bureaucracy of the cold war come to celebrate the socio-technical visions that animated that bureaucracy? And how is it that the communitarian ideals of the counterculture should have become melded to computers and computer networks in such a way that thirty years later, the Internet could appear to so many as an emblem of a youthful revolution reborn? [Page 39]

The Whole Earth Catalog

One explanation of this strange phenomenon is Stewart Brand and the Whole Earth Catalog:

Here are some more extracts: “In late 1967 [Stewart Brand and Lois Jennings] moved to Menlo Park where Brand began working at his friend Dick Raymond’s nonprofit educational foundation, the Portola Institute. Founded a year earlier, the Portola Institute housed and helped a variety influential Bay area organizations, including the Briarpatch Society, the Ortega Park Teachers Laboratory, the Farallones Institute, the Urban House, the Simple Living Project, and Big Rock Candy Mountain publishers, as well as its most visible production, the Whole Earth Catalog. As Theodore Roszak has suggested, Portola’s efforts were all designed “to scale down, democratize and humanize our hypertrophic technological society.” When Stewart Brand joined, much of Portola’s energy was directed towards providing computer education in the schools and developing simulation games for the classroom.

[…]

The Portola Institute served as a meeting ground for counterculturalists, academics, and technologists in large part because of its location. Within four blocks of its offices, one could find the office of the Free University – a polyglot self-education project that offered all sorts of courses, ranging from mathematics to encounter groups, usually taught in neighboring homes – and two off-center bookstores (Kepler’s and East-West). A little farther away was the Stanford Research Institute, where Dirk Raymond had worked for a number of years, and not far beyond that, Stanford University. In addition, many of Portola’s members represented multiple communities. Albrecht had worked at Control Data Corporation and brought with him advanced programming skills and links to the corporate world of computing, along with a commitment to empowering schoolchildren. Brand and Raymond both had extensive experience in the Bay area psychedelic scene. And Portola’s various projects kept its members in circulation: teachers, communards, computer programmers – all came through the offices at one time or another.” [Page 70]

An additional note states: “For a fascinating account of the intermingling of countercultural and technological communities in this area see What the Dormouse Said. How the 60s Counterculture shaped the Personal Computer by John Markoff, Viking Penguin 2005.” Turner is convincing in the description of the society turbulence, with the New Left focusing on civil rights whereas the New Communalists in a less organized, more anarchist vision of the world, neither being opposed to technology, but trying to scale down the impact of capitalism and cold war, Norbert Wiener, Marshall McLuhan and Buckminster Fuller being influential thinkers.

Turner concludes his chapters with these quotes : “Once while working with him on the catalog, I asked Mr. Brand if he would not carry out any of a various number of politically oriented underground newspapers. Upon reply, he told me that three of the first restrictions he made for the catalog were no art, no religion, no politics.” … then pointed out that Catalog offered all three : the art was fined art or craft; the religion, Eastern; the politics; libertarian: “From all the 128 pages of the Whole Earth catalog there emerges an unmentioned political viewpoint, the whole feeling of escapism which the catalog conveys is to me unfortunate.”

Brand responded with a defense of local action and of his personal experience : The capitalism question is interesting: I’ve yet to figure out what capitalism is, but if it’s what we’re doing, I dig it. Oppressed peoples: all I know is that I’ve been radicalized by working on the Catalog into far more personal involvement with politics than I had as an artist. My background is pure WASP, wife is American Indian. Work I did a few years ago with Indians convinced me that any guilt-based action toward anyone (personal or institutional) can only make a situation worse. Furthermore the arrogance of Mr. Advantage telling Mr. Disadvantage what to do with his life is sufficient case for rage. I ain’t black, nor poor nor very native to anyplace, not eager any longer to pretend that I am – such identification is good education, but not particularly a good position for being useful to others. I am interested in the Catalog format being used for all manners of markets – a black catalog, a Third World one, whatever, but to succeed I believe it must be done vy people who live there, not well-meaning outsiders. I’m for power to the people and responsibility to the people: responsibility is individual stuff. [Page 99]

And a little further a tough comment by Turner : Like P. T. Barnum, he had gathered the performers of his day – the commune dwellers, the artists, the researchers, the dome builders – into a single circus. And he himself had become both master and emblem of its many linked rings. [Page 101]

Taking the Whole Earth Digital

The next chapters covers the influence of the Whole Earth Catalog, outside the more or less closed circles of the famous Augmented Research Center (ARC) of Douglas Engelbart at the Stanford Research Institute (SRI) and the Palo Also Reserach Center (PARC) of Xerox, undoubtedly materialized in the no less famous Homebrew Computer Club. The cross-influences are multiple and described in detail by Fred Turner, in his chapter Taking the Whole Earth Digital.

There is in particular the reference to an article that I did not know from Rolling Stone magazine written by Steward Brand with photographs by Annie Lebowitz: Spacewar: Fanatic Life and Symbolic Death among the Computer Bums.

1972-12-07 Rolling Stone (Excerpt) Spacewar Article V02 - lowres

Turner concludes his pages on the Rolling Stone article with this: In the pages of Rolling Stone, the local work of individual programmers and engineers became part of a global struggle for the transformation of the individual and the community. Here, as in the Whole Earth Catalog, small-scale information technologies promised to undermine bureaucracies and bring about both a more whole individual and a more flexible, playful social world. Even before minicomputers had become widely available, Steward brand had helped both their designers and their future users imagine them as “personal technologies”. [Page 118]

In the article, there is a mention of Hackers which ethics are described by Steven Levy, in his book Hackers, Heroes of the Computer Revolution (my next read ?). They include:
– All information should be free.
– Mistrust authority—promote decentralization.

Brand, not surprisingly, celebrates them : I think hackers… are the most interesting and body of intellectuals since the framers of the US constitution. No other group that I know of has set out to liberate a technology and succeeded. They nt only did so against the active disinterest of corporate America, their success forced corporate America to adopt their style in te end. In reorganizing the Information Age around the individual, via personal computers, the hackers may well have saved the Amerian economy. High tech is now something that mass consumers fo, rather than just have done to them… The quietest of the ’60s subcultures has emerged as the most innovative and most powerful – and most suspicious of power. [Page 138]

Turner does not hesitate to nuance Brand’s enthusiasm in the following lines, because once again the arrival of technology in everyday life has been a complex phenomenon in Silicon Valley. I am not even half way through Turner’s book. Maybe another post. Already a very intersting reading.

Making Silicon Valley according to Christophe Lécuyer

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I mentioned in a recent post – Birth and Death of Silicon Valley ? – the book Making Silicon Valley – Innovation and the Growth of High Tech, 1930-1970 by Christophe Lécuyer.

I had bought that book many years ago and had only read some parts of it. Because Olivier Alexandre (see my posts about his excellent book La Tech) had mentioned it as an excellent work, I finally read it. It is indeed excellent even if demanding and technical.

What is really interesting is what is not well-known about Silicon Valley:

  • there was technical activity in Silicon Valley before Fairchild. I always date the birth of Silicon Valley with the foundation of the first semiconductor startup in 1957. Lécuyer tells the history of lesser-known companies such as Litton Engineering Labs, Eimac (Eitel-McCullaugh) and Varian Associates. Strangely enough Lécuyer does not study Hewlett-Packard, probably because that company, founded in 1939, is really well-known. (Lécuyer is a historian and he focuses on publishing new knowledge);
  • most of that activity was linked to military activity, first telecommunications then guiding systems and radars. However Silicon Valley really grew when all these companies had to diversify with civilian applications in the early 60s;
  • there were as many social innovations as technical ones: in parallel to the development of klystrons, magnetrons, power tubes first and then transistors, planar transistors (“planar process, arguably the most important innovation in the twentieth-century technology” [page 297]), integrated circuits, there were a variety of management experiments, usually not hierarchic and quite egalitarian in decision making, freedom of communication to make the companies more efficient, and related to this there were financial incentives for employees (participation to profits, stock options);
  • Silicon Valley began to develop overseas very early: in 1965 already Fairchild had factories in Hong Kong and South Korea. The rationals were cost cutting and also fear of trade unions. The social innovations mentioned in the previous point were also linked to the fear of powerful trade unions…
  • as soon as 1961, Fairchild could not develop all the inventions made in-house. And in some case did not believe in their potential as Gordon Moore himself acknowledged about integrated circuits. Some of the Fairchild employees, including founders, decided to leave to explore these opportunities, sometimes also because they were not happy to be fully recognized and financially rewarded. The first startups were Rheem, Amelco and Signetics;
  • the previous point illustrates the difficulty of marketing (see my recent glossary): validating a market with only customers who do not see the value of a product is insufficient. You also have to be able to imagine what customers cannot imagine, such as advances in technology that will eventually make a new generation of products essential, which seem useless or unattractive at the time of analysis…

From an anecdotal point of view, Lécuyer mentions the “famous” Wagon Wheel Bar [Page 275]: “Bars also fostered the exchange of information among engineering groups. In the first half of the 1960s, engineers and managers at Fairchild and other Silicon corporations on the Peninsula had developed the habit of meeting after work at a local bar. (The Wagon Wheel Bar as a favorite.) At these bars, they would discuss the problems of teh day. Bars were also wheres sales and marketing men met with the manufacturing guys to discyuss order prices and delivery schedules. After leaving Farichild, many of these engineers returned to these bars and discuss the business with their former associates. A lot of information flowed over beer and hard liquor, to teh point that the management of many of the startups expressly forbid their engineers to go to the Wagon Wheel Bar and other bars. The end result of these daily interactions was that design techniques and solutions to particulary difficult process problems moved from firm to firm. As a result, teh MOS community on the Peninsula developed a repertoire of process “tricks” that were known only in the area. These tricks enabled them to solbve their won process problems and obtain good manufacturing yields. In contrast, MOS firms located outside of Northern Calfornia were not pluged into these networks and did not benefit from this shared knowledge. This put them at a distinct competitive disadvantage.”

In his conclusion, he mentions again the human side : “These men also developed a subculture characterized by its camaraderie, a strong democratic idelology, and genuine appreciation of ingenuity and innovation. […] These groups also brought their professional ideology and politicla ideals. The microwave and silicon communities both valued egalitarianism and viewed engineers as independant professionals. However the microwave and semiconductor communities differed in other ways: a substantial number of the microwave groups had socialist learnings and utopian ideals and longed for a society where the distinction between capital and labor would be abolished. In contrast, the semiconductor community was meritocratic and resolutely capitalistic.” [Page 296]

Lécuyer does not insist too much on individuals, even if he does not neglect the importance people such as Robert Noyce, Gordon Moore and others. He emphasizes more the importance of the collective. He does, however, mention lesser-known characters such as:

  • Robert Widlar : “Widlar drank and gave free rein to his irreverent and abnoxious self. Among his many pranks, he once brought a goat to mow national Semiconductor’s lawn. On another occasion, he destroyed the company’s paging system with firecrackers. He also threatened his co-workers with an axe and defied management as much as he could.” [page 269] or
  • Pierre Lamond “a tough French engineer that had made a name for himself by overseeing the production of the switching transistor for Control Data” [page 240]. Whatever that means, I can add a personal note because I met Pierre Lamond when he was a venture capitalist at Sequoia and his political positions are more in line with the world of the semiconductor than those of the microwaves!

Lécuyer thus explains a lot of what would come later. He also provides some new elements about why Silicon Valley has been so creative for years, decades, and maybe many to come. The conclusion is a masterpiece of synthesis and I could not avoid scanning it in pdf.

As a reminder:

(High resolution image here).

SiliconValleyGenealogy-All

A glossary of the startup world

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When you come from the world of research or the “normal” world, that of startups can sometimes seem mysterious. Many acronyms and specific terms are used there which can make it difficult to understand this world, which is however not so complicated. So here are some explanations, they show probably my bias but hopefully they will be useful for the curious mind.

Startup: perhaps obvious as the term is used or even overused! A young innovative company? The best definition of a startup is undoubtedly that of Steve Blank: a temporary organization in search of a repeatable and scalable business model.

Spinoff: a company (a startup in particular) created out of another entity (a team leaving another company, an intellectual property from a research laboratory)

Business model and business plan: An enterprise has (often) the goal of making money, at least in the long or middle term. Its founders must have in mind how it will make money, what they sell, to whom and how the service or product is sold. We speak of a “business model” which has given rise to a rich literature, including the “business model canvas”, a tool for building this model.

The business plan is the structured writing, among other things, of this business model and more generally of all the components of a company allowing it to find stability and growth. We speak of a “roadmap” to describe this multi-annual plan, the path that leads to prosperity, or at least to finding the means to survive. Financial projections and finance is a whole science or art in itself. The “burn rate” is, for example, what a company spends each month or each year and must be well known to entrepreneurs who do not wish to go bankrupt (find themselves without resources).

The business plan is sometimes a difficult or premature exercise. The pitch is an oral or written presentation in the form of slides (the “pitch deck”) which can last one minute (“elevator pitch”), 5 or 10 minutes, rarely more than 20 minutes. It is an exercise that has become essential for any entrepreneur and its practice makes the exercise easier over time, in particular by using all the jargon in this glossary! The pitch deck is a summary of the Business Plan with a clever dose of storytelling. The reference is Guy Kawasaki’s book, Art of Start.

In this literature, we find the concepts of lean startup, agile startup, pivot, which describe flexible, fast and frugal ways of moving forward and changing direction when the path is blocked (the “pivot”).

The term “pricing” is one of the simplest to understand but most difficult to implement: at what price to sell your service or product? Certainly not at the production cost because you have to integrate all the indirect costs of a company (R&D, G&A, S&M) and in a capitalist world, even make a profit (we talk about margins).

– R&D: Research and Development,
– G&A: General and Administration (including accounting, finance, human resources – HR),
– S&M: Sales and marketing.
All these terms speak for themselves, except perhaps the word “Marketing”.

Marketing

Marketing is not advertising, but the analysis of a company’s market, as well as all the actions taken by a company relating to this market. But what is a market? A market is made up of consumers or customers who buy a product or service, with the price paid, its size is obtained by multiplying the number of customers by the price. We talk about TAM (“Total Available Market”), some talk about the size of the universe, because the TAM is rarely accessible to a single company. We are talking more about SAM (Served Available Market), which a company can realistically address. Finally, there is the SOM (“Serviceable Obtainable Market”), the market that can realistically be captured.

Marketing is a complex discipline with its vocabulary. Strategic marketing represents the overall analysis of a company of its market and its (hoped-for) place in this market, while operational marketing includes all the techniques that will allow it to exist in this market. We talk about segmentation, to define a homogeneous set of customers, we also talk about vertical market. The “go to market” is the market entry strategy. The landing beach (“beachhead”) is an entry into a small market (“niche”) which may or may not give access to a larger market.

Finally, there is also the concept of Minimum Viable Product (“MVP”), the version of a product that allows you to obtain maximum customer feedback with minimum effort. It is more a question of analyzing the viability of hypotheses than of selling anything.

Enough for marketing! The great marketing guru for high-tech startups is Geoffrey Moore, author of Crossing the Chasm and Inside the Tornado. We will talk little about sales here, except that prospective customers are called leads or prospects. We sell in B2C (“Business to Consumer”) to individual consumers or in B2B (“Business to Business”) to companies, but also in B2B2C…

The enterprise

An enterprise is therefore a complex and structured organization (while a startup is only a temporary and often chaotic organization). It often has its hierarchy with its officers (CxO for Chief “x” Officer) and Vice-Presidents (VP). At the very top the CEO or Chief Executive Officer (PDG or DG in France) then the CTO or Chief Technical Officer (Technical Director), CSO or Chief Scientific Officer (Scientific Director), COO or Chief Operating Officer (Director of Operations), CFO or Chief Financial Officer (DAF or Director of Administration and Financz). The list of CxOs is endless. Yahoo had its Chief Yahoos. The most common VP roles are Engineering, Sales, Marketing.

In a startup, it is advisable to forget the titles. The founders do not need to give themselves misleading titles of CEO or CTO (except when facing certain somewhat rigid investors) because all the founders are doing a little of everything (otherwise the risk is the absence of transparency, a miscommunication and loss of trust).

Above the CEO, there is the Board of Directors, headed by the Chairman (the CEO often combines the functions of CEO and Chairman of the Board, the DG becomes the PDG in France). Above the board are the shareholders who hold parts of the company, generally shares (indifferently in English, Share, Stock or Equity). There are different types of shares, preferred (with privileges) or ordinary (common). These shares have a price (the value of which fluctuates). The product of the price multiplied by the number of shares is the value of the company.

The founders create a company with an initial capital (the number of shares multiplied by the nominal price). Then the capital can be increased by fundraising from acquaintances (Friends & Family), individual investors (Business Angels) or institutional investors, such as Venture Capital or VC. The succession of such fundraising is called investment rounds (financing rounds) with series A, B, C… The first rounds are called Seed and even pre-seed. In recent years, this terminology has been linked to the size of the amounts, the series A or first round has a size of a few million ($ or €) while the Seed is a few hundred thousand and at most $1M or €1M. The pre-seed is a few tens of thousands of euros or dollars.

A company can also find funds by going public through an initial public offering (IPO). As long as it is not listed, a company is said to be private (we talk of Private Company and Private Equity). The IPO is quite rare and startups are often acquired by larger players or merge with other companies (we talk about Merger and Acquisitions or M&A).

The value of a company is increased by its fundraising, but sometimes also by the increase in the price per share. During such an event, it is calculated that post-money valuation = pre-money valuation + fundraising amount, each of the three terms being equal to the number of shares multiplied by the share price at the time of the fundraising. Investors expect a return on investment (ROI). This is calculated similarly to the return of a bank account, i.e. the annual percentage increase in the share price.

Employees are compensated in Stock Options (ESOP is the Employee Stock Option Plan), the right to acquire shares in the future at a favorable price. In France, the name is BSPCE for « Bons de Souscriptions de Part de Créateurs d’Entreprises »). Warrants (in France, BSA for “bons de souscriptions d’actions”) are reserved for entities external to the company (investors, consultants, technology or service providers). Stock options have their jargon: they are generally granted at monthly or quarterly dates over a period of 4 or 5 years (the “vesting”) and the option is exercised by paying a small sum (“exercise price”) allocating the shares to the holders. There is a period without vesting, generally the first year called “cliff”.

Many entrepreneurs dream of not going to investors, in particular by developing their business with the income and profits generated by sales. If these are convincing, the banks will agree to lend money. Financial objects that do not modify the capital of a company are said to be non-dilutive (loans, debt, non-convertible bonds and also subsidies). We speak in English of “bootstrapping”.

Birth and Death of Silicon Valley ?

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At a time when Silicon Valley seems more powerful than ever, with GAFAs and others reaching values difficult to imagine just a few years ago, at a time when Artificial Intelligence seems to scare many and fascinate others with huge fund raising for openAI ($10B) or Inflection AI ($1B) [not to forget smaller French Mistral AI ($100M)], why would I like to talk about the death of Silicon Valley ?

The Birth and Growth of Silicon Valley

Well before digging any further, you may want to watch the short video above. And by the way when was Silicon Valley born ? I always claim it was in 1957 with the foundation of Fairchild (The First Trillion-Dollar Start-up) and the industry of the semiconductor. This is probably a little more complex as you’ll see in the video.

Now the figure above does not contradict that Silicon Valley began around that year, but the region was strong with microwave and power tubes before, mostly for military applications, with companies such as Litton Engineering Labs (1932), Hewlett-Packard (1939) or Varian Associates (1948). I took the figure from a book I found in my archive (but have not read yet – will do with maybe another blog article) : Making Silicon Valley – Innovation and the Growth of High Tech, 1930-1970 by Christophe Lécuyer.

Enough with history and back to the present. If you are not convinced by how powerful Silicon Valley is, just have a look at the table below. Even if I am aware that Microsoft and Amazon, neither Tesla anymore, do not belong geographically to Silicon Valley, they certainly are part of it from a cultural standpoint. And this is why I talk about the death of Silicon Valley. From a cultural standpoint.

Death of Silicon Valley from a Cultural Standpoint

A few days ago, friends from IMF sent me articles about the retirement of Michael Moritz. I would not be surprised if you do not know him, even if I mentioned his name on this bog in the past. He was a venture capitalist and venture capitalists are not the heroes of Silicon Valley. Bob Noyce, Steve Jobs, Larry Page and Sergey Brin were. Elon Musk probably not any more. “Look around who the heroes are. They aren’t lawyers, nor are they even so much the financiers. They’re the guys who start companies” (see here).

His Wikipedia page mentions “In July 2023, Moritz stepped down from Sequoia after nearly four decades.” It also adds that “his internet company investments include Google, Yahoo!, […] PayPal, Webvan, YouTube, eToys, and Zappos.” One can read for example on Techcrunch, Michael Moritz moves on, book-ending a long chapter at Sequoia Capital.

Moritz is in a long list of investors who decided to retire. The first generation stopped being active a long time ago (Arthur Rock, Don Valentine, Tom Perkins and Eugene Kleiner belong to that list) and the second generation is disappearing too (John Doerr who co-invested with Moritz in Google and was on the board of the company with him, also retired). All these relatively unknown people contributed in building Silicon Valley by supporting financially the most famous entrepreneurs.

It is not the first time I expressed doubts about Silicon Valley:
– a series of 3 articles about Optimism and Disillusionment in Silicon Valley in January 2023,
– an article from September 2021, Silicon Valley will soon be 65. Should it be Retired ? with references to Silicon Valley 2018 : The Libertarians Have Replaced the Hippies,
– or even older ones (2013) The promise of technology. Disappointing? and The Capital Sins of Silicon Valley.

It is really strange that a region could keep being so innovative more now for more than 60 years. And it will probably continue to be for a while. What is less clear is the continuation of this unique culture that Olivier Alexandre has brilliantly explained in his recent book, La tech.

We shall see…

nVidia, the new giant

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nVidia has made the headlines recently as its stock value jumped by 25% to reach a valuation close to $1T ($1’000B) joining a small club of companies generally called the GAFA(M) or BigTech. I knew nVidia as just another Silicon Valley success story, a big one, but just one more. It belongs to my 800+ startup list and here is my typical cap. table.

Nvidia was founded in 1993 by Jen-Hsun “Jensen” Huang, Curtis Priem, and Chris Malachowsky and is headquartered in Santa Clara, California.


There would be so many little things to mention about how typical it is, but here are a few:
– The founders were young engineers (29, 33 and 33), one from Stanford University, the two others from solid even if lesser known schools. One is of Taiwenese origin. They worked in big tech companies before founding their startup, and they are still leading it. They had equal ownership at foundation.
– There was a typical support of venture capital, a total of $20M in 4 rounds between 1993 (the foundation) and 1997 (the IPO), followed by an IPO in 1999, less than 6 years after the incorporation. The VCs were Sequoia (which also funded Apple and Google), and Sutter Hill. The board included experts from Synopsys (its cofounder) and Avid.
– Employees owned at least 20% of the company through stock options (and maybe even 35%+ throug additional common shares).
– It went public at a $500M valuation, more than decent and was a leader in computer graphics chips until nVidia applied its technology to AI. Hence its current popularity.

Cormac McCarthy – the Reality and Life of Imaginary Things

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I seldom talk about litterature on this blog. It happened a couple of times when there were some links to startups, entrepreneurship, innovation or even science and mathematics. It happened with my beloved Hopeful Monsters and it has some similarities with Cormac McCarthy’s The Passenger.

Cormac McCarthy is a great and rather famous author, you may have read or heard of The Road, No Country for Old Men or even lesser known, but still masterpiece Suttree.

I do not know if The Passenger is a masterpiece, and I have not begun its sister novel Stella Maris. But I love the story, its depth and beauty. At nearly 90-year old, McCarthy is just impressive again. Here is an excerpt that hopefully may push you to read further:

I work all the time. I just dont write that much of it down.

So what do you do? Just loll around and mull over the problems?

Yeah. Lolland mull. That’s me.

Dreaming of equations to come. So why dont you write it down?

You really want to talk about this?

Sure.

All right. It’s not just that I dont have to write things down. There’s more to it than that. What you write down becomes fixed. It takes on the constraints of any tangible entity. It collapses into a reality estranged from the realm of its creation. It’s a marker. A roadsign. You have stopped to get your bearings, but at a price. You’ll never know where it might have gone if you’d left it alone to go there. In any conjecture you’re always looking for weaknesses. But sometimes you have the sense that you should hold off. Be patient. Have a little faith. You really want to see what the conjecture itself is going to drag up out of the murk. I dont know how one does mathematics. I dont know that there is a way. The idea is always struggling against its own realization. Ideas come with an innate skepticism, they dont just go barreling ahead. And these doubts have their origin in the same world as the idea itself. And that’s not something you really have access to. So the reservations that you yourself in your world of struggle bring to the table may actually be alien to the path of these emerging structures. Their own intrinsic doubts are steering-mechanisms while yours are more like brakes. Of course the idea is going to come to an end anyway. Once a mathematical conjecture is formalized into a theory it may have a certain luster to it but with rare exceptions you can no longer entertain the illusion that it holds some deep, insight into the core of reality. It has in fact begun to look like a tool.

Jesus.

Yeah, well.

You talk about your arithmetic exercises as if they had minds of their own.

I know.

Is that what you think?

No. It’s just hard not to.

Why arent you going back to school?

I told you. I dont have time to. l’ve got too much to do. I’ve applied for a fellowship in France. I’m waiting to hear.

Crikey. For real?

I dont know what’s going to happen. l’m not sure that I want to. Know. If I could plan my life I wouldnt want to live it. I probably dont want to live it anyway. I know that the characters in the story can be either real or imaginary and that after they are all dead it wont make any difference. If imaginary beings die an imaginary death they will be dead nonetheless. You think that you can create a history of what has been. Present artifacts. A clutch of letters. A sachet in a dressingtable drawer. But that’s not what’s at the heart of the tale. The problem is that what drives the tale will not survive the tale. As the room dims and the sound of voices fades you understand that the world and all in it will soon cease to be. You believe that it will begin again. You point to other lives. But their world was never yours.

Ifyou are still non convinced, here is an analyis from the New Yorker, dated December 2022 : Cormac McCarthy Peers Into the Abyss. The eighty-nine-year-old novelist has long dealt with apocalyptic themes. But a pair of novels about ill-starred mathematicians takes him down a different road.

Tech – When Silicon Valley Changes the World (final part)

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I advertise this book to my friends and colleagues. This is definitely the book I wish I had written. Everything is said, as we sometimes say! You will find previous articles here and there.

The workers of Silicon Valley

Chapter 6 is dedicated to developers, coders. Historian Alfred Chandler has shed light on how the centralization of information and decision-making by top and head managers, located at the top of separate divisions, constituted a comparative advantage for the leading companies that emerged in the 19th century in the fields of transport, energy and communications. Managers prevail as intermediaries between producers-suppliers and customers-demanders. They embody and concentrate power for functional reasons, because they allow the coherent, hierarchical and vertical circulation of information and decision-making within companies.
Through the writings and conclusions of F. Brooks ([in The Mythical Man-Month] shows an inverse pattern. According to him, to give free rein to the iteration process necessary for software production, the work must be coordinated horizontally, to favor support for the continuity of software development. He pleads in favor of small teams gathered around a central worker, whom he compares to a “chief surgeon” placed, no longer upstream and overhanging as in the large companies analyzed by A. Chandler, but at the heart of the action.
This mode of organization aims to adapt to the type of product that is the software and its characteristics in terms of production. Developers project themselves into a job without knowing the outcome, the time required, or the final properties of the production process. Software design thus necessarily proceeds via projections. If the developers can rely on scenarios, visions, schemes, diagrams, these do not allow a lasting and stable coordination unlike scripts in the cinema or scores in the field of music. This dimension explains the role assigned to managers in Silicon Valley companies. It is not a question of circulating information between managers at the top of different divisions to control the work of subordinates but of ensuring the coherence and coordination of the team within the framework of a project. […] If the developers cannot rely on downstream continuity supports, they mobilize a series of tools upstream of the production process [Pages 316-18].

Start a business

Founding a business is a more radical choice. […] This entrepreneurial move to action turns out to be paradoxical if we consider the treatment that developers are given within Silicon Valley companies and the low chances of leading a company to success, i.e., according to the criteria of investors, a sale or an IPO. For those who work for the big names in tech, leaving to start your own company means giving up, for an unknown period of tim,e a high salary, bonuses, health insurance, free catering and transport services, maternity and paternity leave, child care systems, etc., all for a greater amount of work. From this point of view, the creation of a business does not meet the criteria of rational choice within a professional group that is nevertheless attached to objectivity, reason and logic.
While many cite Silicon Valley’s entrepreneurial culture to justify this shift, they also point to the desire to retain control of the value possibly generated by their work. Indeed, the creation of a business proves for the developers not the surest means of enrichment but the one which represents the greatest potential [Page 335].

Burning man, an inverted carnival

When I started reading the last part of his book, I wondered why Olivier Alexandre devoted so many pages to this very special event that is the Burning Man festival. The chapter devoted to it therefore deserves careful reading, starting with a note on page 529: “The habitus is a set of enduring dispositions which consists of categories of appreciation and judgment and engenders social practices adjusted to social positions. Acquired during the early education and the first social experiences, it also reflects the trajectory and later experiences: the habitus results from a progressive integration of social habits. This explains why, placed in similar conditions, the agents have the same vision of the world, the same idea of what can be done and what cannnot be done, the same criteria for choosing their hobbies and their friends, the same clothing or aesthetic tastes” [Anne-Catherine Wagner in Les 100 mots de la sociologie].

It is from this remarkable point of view that the term “connection” finds multiple uses in Burning Man: connecting with others, reconnecting with oneself, connecting with the festival, connecting the different stages of one’s life (or according to Steve Jobs’ formula “connect the dots”) or take MDMA or LSD to better “feel the connection” (with other people, the environment, etc.), etc. This mode of engagement, which is based on immediacy and interaction, ultimately leads to bringing into play habits, stabilized and incorporated representations, including in terms of self-representation. This bringing into play of habitus proceeds from a series of tests [Pages 361-62].

As seen above, Silicon Valley is characterized by a significant turnover of workers. Their high geographic mobility poses uncertainty about the sustainability of relations. The idea that a departure almost overnight is within the realm of possibility remains deeply rooted in people’s minds. Especially since Silicon Valley has had one of the highest divorce rates in the country since the 1980s and expatriates rarely see their families. For these various reasons, the Burning Man represents for certain participants a “family” of substitution. In 2008, 67% of participants were in contact with Burners outside the festival [Page 380].

For the participants, the festival tends in different ways to enchant a world that they contribute the rest of the year to disenchant through the production of digital tools, measuring instruments, calculation methods and a rationalist approach. Art is not considered an object but a support for interaction. As a component of an environment, it allows the development of skills before, during and after the festival. The latter confronts the Burners with a series of tests whose learning and experiences are reinvested during the rest of the year, within the framework of projects. In this, the Burning Man is not a simple party, a festival or a laboratory, but a device that makes possible the interconnection between individuals, repertoires of skills and communities of practice. It leads to the construction of an ethos oriented towards change. [Page 382]

Silicon Valley, a political project?

Olivier Alexandre ends his book with what the region represents from a political point of view. A place of experimentation par excellence, this region is also at the origin or development of movements such as libertarianism, transhumanism and long-termism, whose influences and relationships are shown in the following figure (see page 361 and original source dated 2013 on Julia Galef’s blog). They are themselves mixtures or synthesis of anarchism, liberalism and isolationism [Page 387]. Their political vision would be characterized by a lack of empathy as well as a willingness to go beyond the boundaries of mind and body [Page 388].

Once again, Olivier Alexandre gives a subtle description of the region: one can legitimately wonder about the novelty, the coherence of this constellation within a region which has a majority of pragmatist progressives, pro-government libertarians, liberals voting mostly Democrats, who (like Elon Musk) favor the investor state while demanding tax cuts [Page 394]. And adding in note 12, page 501: Libertarians are only a minority in Northern California. The Libertarian Party had 2,600 registered voters out of 468,000 voters in the city of San Francisco in the early 2010s.

I can’t resist adding here some additional references for my own archives:
– The vast majority of tech entrepreneurs are Democrats — but a different kind of Democrat. A big new survey tells us a lot about Silicon Valley’s politics by Dylan Matthews, Sep 6, 2017
– Techno-feudalism by Cédric Durand. See a review by Jérémy Lucas on Dygest (in French).
– Mouvement syndical et critique écologique des industries numériques dans la Silicon Valley (Labor movement and ecological criticism of the digital industries in Silicon Valley) by Christophe Lécuyer dans Réseaux 2022/1 (N° 231), pages 41 à 70
– Some articles with the #politics tag on this blog, including the recent work of Anthony Galluzzo who participated with Olivier Alexandre in programs on France Culture.

The impact on the region is known and is not new even if it has increased. The attractiveness of the region has left too many people behind and the observation already existed in … 1979. See for example Silicon Valley, more of the same that I published in the early days of this blog. The following extract deserves to be copied here again: “In 1979, I was a graduate student at Berkeley and I was one of the first scholars to study Silicon Valley. I culminated my master’s program by writing a thesis in which I confidently predicted that Silicon Valley would stop growing. I argued that housing and labor were too expensive and the roads were too congested, and while corporate headquarters and research might remain, I was convinced that the region had reached its physical limits and that innovation and job growth would occur elsewhere during the 1980s. As it turns out I was wrong” by AnnaLee Saxenian.

“I don’t necessarily blame the workers. […] By and large the real people in the tech industry don’t seek to do harm. In fact, they seek to do good, at least in the way they see it, especially the elders, the OPs [the Old Programmers]. But they are just one small piece in a larger system that is sinister. One of the things that I try to explain to people I work with about this industry is that one of the best parts of it is working with very smart people on projects you devote yourselves totally. When you work like that, there is something that happens… that makes you forget everything else. It’s like in a war… it causes people to develop a psychology where they become myopic to what surrounds them. That’s passionate work, and it’s wonderful. But if you go nearsighted, you can’t see anything outside your field of vision because you’re immersed in it. As a result, they are not against the right to housing, or more social justice. It’s just that it’s not part of their consciousness, they don’t feel like they have the ability to care or think about it, because they’re so focused on the task in front of them. When we started this organization, I had the good fortune to have a few experiences that opened my eyes to the corrupting influence of money. So we don’t do high-priced galas, I don’t go to wealthy family foundations, corporations or anything else to raise funds [Page 438, Brian Basinger, July 2016].

It is difficult to finish reading such a book and to review it. I can only encourage one last time to read it. I will limit myself to a few additional quotes: “The painful paradox of modern technology is that it has been so successful, but it has also failed miserably. We live in this paradox that challenges the very meaning of being modern” [Page 455, by Lee Bailey in The Enchantments of Technology].

This book is a description of an ultra-competitive but enchanted world, Balzacian in that the grandeur of ambitions meets the fragility of solutions. The analysis will serve those wishing to “change the world” as well as their critics determined to think of new models [Page 456].

Many thanks to Olivier Alexandre.