Tag Archives: Policy

What has Silicon Valley to do with Capitalism?

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(this is a quick and dirty translation of a French post as it is linked to a French radio broadcast – sorry for the bad english if any)

I was a guest yesterday of French radio Culturesmonde France Culture in a series about capitalsim entitled Des capitalismes (1/4) – Silicon valley: l’émancipation par l’argent. I had to give my views abotu SV and capitalism. Is it unique or extreme? Does the area care, does it have an ideology or is it indifferent to capitalism?

FranceCultureMondes-SiliconValley

The topic is rich and complex because with 7 million people, opinions in SV are also diverse and were built over 50 years. Each decade brough a new generation of entrepreneurs and investors. You can listen to the broadcast (in French) who also involved Yann Moulier-Boutang, who talked about « cognitive capitalism » and Sébastien Caré, a spécialist of libertarian thinking.

A big thank you to Clémence Allezard who prepared the series, pushing me to think about the region in a manner I was not used to. 🙂 So I thought about it as follows. Is SV an extreme form or a unique form of capitalism? or as I have a tendency to think a region quite indifferent to capitalism? On the one hand you have large powerful firms who do not really pay taxes, you have a fast Schumpterian creative destruction, the government is not active as it is in Europe (health, schools, transportation) so that firms (at the anecdote level or not?) do the work (Google buses, Apple And FB recent initiative about freezing women eggs, Peter Thile encouraging school dropouts) and even induce the SF authorities in changing housing laws. One the other hand, it is not just extreme, it is unique, SV created venture capital, systematized stock options, and has active co-opetition. Richard Newton was saying SV is the firm and all the companies are its divisions. People move from one to the other easily with market dynamics.

Finally, it is the “revenge of the nerds”. They are problem solvers, and do not care about society (hence the libertarians) and even about capitalism (making money is a by-product and if an objective, far from being the only one). I read a great New Yorker article where George Packer explains that these nerds hate the friction created by negotiation and compromises politics and society necessarily induce. So they avoid it as long as they can. And do more when they feel limited by the government but are quite neutral about it. They are selfish. But i doubt “changing the world to make it a better place” is totally convincing at the same time. It is more selfish than generous. These people are mild versions of Asperger and are obsessed by solving their problems. If it solves others’, good, not critical. (Of course SV is 7 million people and is a diverse region, I am focusing on what is visible). I was saying to the journalist when we prepared the talk, that I see more indifference than real strategy, I see some lobbying in SF or Washington, but rather limited compared to general lobbying in the USA.

Another way to summarize is: is there a particular ideology of capitalism in Silicon Valley? I would say that rather than a strategy, there has been a practice that was put in place over decades, by iteration, by trial and error. Ultimately, Silicon Valley is the meeting of ideas (entrepreneurs, and academics sometimes) and money (investors). But unlike the rest of the world where investors are bankers who lend money, in SV they are often former entrepreneurs who “give” money (in the sense that they take the risk of not finding it back), in fact they take shares in the company (often around 50%). They literally invented venture capital, which has found its final form in the 80’s. In addition, the “stock options” decried in Europe are recognized in the SV as a motivation. Secretaries at Apple or Microsoft did sometimes become millionaires, something unthinkable at home in Europe. I have also said, there is an optimism that encourages risk-taking. Moreover, there is no real risk because the skill allows you to find a new job quickly. The risk lies in the possible error in the choice of the project and nobody is ever ruined normally, except one’s health. And as the model works, it is enriched in new areas beyond which the electronics is the root, through the electric car (Tesla Motors), aeronautics (SpaceX) and even the food 2.0 movement (for synthetic food). And the last frontier, aging, death, trans-humanism … which seems to me personally crazy, but …

As a post-scriptum, some comments I got… very interesting! i think SV is more diverse these days. there are the really old school types, like intel, cisco, even apple. then there are places like google and Facebook, that actually do something valuable. and then there are the startups with a hand full of 20 year olds that do not much, but have valuations measured in billions. i think the question should be answered differently for the different groups. and it’s important to not lump cisco in with, say, whatsapp or snapchat.

i’d say for many of them, it’s indifferent to mildly positive feeling abotu politics, as you say. for some (many of the VCs) it’s definitely capitalism on steroids. (or at least, they like to think of themselves that way; they blabber all the time about “wealth creation”, making sure that much of that new wealth goes to them.) more than capitalism, i think what’s concentrated in SV is talent, especially, technical talent. creative destruction resonates *very strongly* with people here; the whole idea of SV is that a handful of kids can change an entire industry, or even create a new one. they usually fail, and sometimes they succeed. imagine how steve jobs or the google guys would have done in europe. the google guys would have gone to the librarians and asked, how can we help you find information? steve jobs would have run long, extensive marketing tests to determine what people want. or maybe he’d go to siemens to try to convince some high level manager that a smart phone was a good idea. of course what happened is way cooler. steve jobs had better taste than everyone else, so he made stuff he liked, period. and the google guys just forged a new path, without seeking the endorsement or buy in of the librarians. in europe, a startup would try to get some giant company to use their product/technology, a long, boring, and tedious process.

typically, a handful of EPFL students would not imagine/believe that they can change the world. stanford students (who are not more talented) do. so, i think it’s mostly a cultural difference, and not something that has to do with capitalism.

Innovation and Society: are the Returns and Benefits Sufficient?

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Here is my latest contribution to Entreprise Romande. I return to a subject that is dear to me, Innovation and Society. (If you read French, the original version is certainly better…)

ER-Lebret-June2014

The Enterprise is more than ever at the core of the political debates through its role in the creation of jobs and wealth – both individual and collective. It is indirectly the source of populism and of protectionist temptations. Inside and outside of its walls, innovation is the subject of similar tensions: are the returns and benefits of innovation sufficient for society?

Mariana Mazzucato and the Entrepreneurial State

A recent book tackles the topic of the respective roles of business and government in innovation: Mariana Mazzucato, a professor at the University of Sussex, develops in The Entrepreneurial State [1] – a fascinating and quasi-militant book – the argument that the States have not collected the fruits not only of direct investments in their universities, and even indirectly from the help and support provided to businesses, investments and supports that are at the origin of the major innovations of the last fifty years.

Mazzucato brilliantly illustrates this through the example of the iPhone and the iPad, which integrate components initially financed by the public bodies: from electronics developed for the space and military programs to the touch screen or GPS, or even Siri, the voice recognition tool (which has sources at EPFL), the author shows that Apple has masterfully integrated technologies initiated by public money. Google is also the result of research done at StanfordUniversity. Mazzucato adds that clinical trials for new drugs are mainly made ​​in hospitals funded by public money, from molecules equally discovered in university laboratories.

Mazzucato therefore advocates major reforms both on the governance of the initial support and on taxation. She fights for a new tax system that would compensate the absence or insufficiency of direct returns to universities or from businesses, all the more that it is indeed undeniable that multinational companies easily optimize their taxation. She shows how Apple has taken advantage of international rules to create subsidiaries in Nevada or Ireland to minimize its taxes.

The English researcher is convincingly claiming that Apple has to pay more. But how to pay? Paying a license for the GPS, but to whom? I’m not even sure that the GPS is patented. And if the Internet had been patented, it would probably not have had the same development – I do not ned to go over the limitations of the French Minitel. By seeking more direct financial returns (which are not as insignificant as one might think – Stanford has received more than $300M for its equity shares in Google and over $200M of the first patents in biotechnology), the risk would be very high to discourage creators and stifle innovation. I doubt that the solution lies in more rigorous national rules.

Peter Thiel and the Individual Entrepreneur

Peter Thiel, an libertarian entrepreneur and investor, is so opposed to such views that he encourages youung people motivated in entrepreneurship to abandon their studies by providing them with $ 100,000 grants and he even imagines moving businesses to offshore vessels off California so they totally escape tax. He is afraid of any form of public support which, he considers, quickly becomes bureaucratic. It is worth adding that Thiel’s motto also shows his skepticism about the social benefits of innovation: “We wanted flying cars; instead we got 140 characters.” [2]

Upstream, there is therefore the question of direct returns and the actual role of the state. But without the incredible creativity of Steve Jobs at Apple, without the extraordinary ambition of Larry Page and Sergei Brin at Google, without the vision of Bob Swanson, a co-founder of Genentech, the world would probably not have experienced the same technological revolutions. Downstream, the question arises of how to create international rules on innovation. Let me make a wide digression. The Internet, another innovation initiated by public authorities, has become a major topic in the political, economic and fiscal fields. But “neutrality and self-organization are part of the libertarian options […] and are inconsistent with politics. Humanity must seize this opportunity to revisit what is considered important. […] The Internet enables the emergence of a global political space, but it is still to be invented. At the time of this invention, the Internet will probably be gone!” [3]

If from experience I lean more toward Thiel’s view on innovation as an individual act of exception, actually quite far from the public investment, even if it is its seed, yet, I cannot agree with abandoning the public good. It is the soil that allows the emergence of exceptional talent. Companies also have their share of responsibility in discounting the importance of the collectivity. Just like in any complex human activity, innovation is a delicate balance between private and public actors. But especially today, issues have become global. The question is not so much as Mazzucato says that the role of the state has been largely underestimated in this process, but rather that the tax return has largely been decreased by globalization and the lack of economic governance.

Tax as a single global solution?

Does society receive any return from the public money spent on schools, roads, security? No, because it’s not an investment in the true sense of an objective of financial gain. These are infrastructure provisions that allow citizens and businesses to exist and develop properly. And they 8should) pay taxes in return. When Darpa funds Stanford, it is not sure that a student from Korea will not benefit from it and later work for Samsung. The concept of ​​supporting national champions seems of another age.

We are left with Tax, in a renewed vision of its global governance. Whether innovation is in the public or private domain, the world globalization will soon prevent from hiding behind the argument of whom is basically at its origin. Not only individuals but states also must agree upom a greater share of its profits, at the risk of serious crises. At a time when Switzerland reviews its tax policy and its citizens think they can create barriers from its neighbors as its borders, it is important to be aware that the current tensions are an opportunity to revisit the status of innovation in society before new major crises emerge. Wishful thinking?

[1] The Entrepreneurial State – Debunking Public vs. Private Sector Myths. 2013, Anthem Press, http://marianamazzucato.com
[2] Peter Thiel. Zero to One – Notes on Startups or How to Build the Future. Sept. 2014, Crown Business press, http://zerotoonebook.com
[3] Boris Beaude. Les fins d’Internet. 2014, FYP Editions, http://www.beaude.net/ie

The Ends of the Internet by Boris Beaude

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The Internet is only a reflection of technological change and globalization. As with these two issues, social and political tensions have naturally emerged, but are even more acute because of the specifics of the Network and the revolution it created in much less time than the previous World developments. (I will add below that the disappointments caused by excessive expectations from technology have also played a role.)

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The cover page of the book The Ends of the Internet says that the Internet has revolutionized the world in the fields of information, production, collaboration and transactions. Its author, Boris Beaude, is a geographer by training, which is an important point for the topic addressed here. Beaude has a strong contribution to the discussion about the constraints created by the Network. It is synthetic, and detailed, thanks to a short book (95 pages) however dense and exciting.

(I would not say the same of Evgeny Morozov’s book, To Save Everything, Click Here, which is also dense on related subjects, but too provocative or extreme to be totally convincing. I might come back on that book later in another post.)

Morozov-ToSaveEverything

The Internet (just like globalization) has revolutionized the World (page 15) by re- balancing the priorities (and re-creating tensions) between:

Before the Internet Since the Internet
Equality Freedom
Society Individual
Privacy Public Life / Transparency
Property Free

Beaude also mentions (page 24) problems linked to:
– Freedom of expression,
– Collective intelligence,
– Openness,
– Decentralization,
– Neutrality,
which are the topics of his chapters.

The Internet thus disturbs the local values in the territories, but the Internet (which is “a proper name just as well as France or the European Union” – page 14) is anything but virtual; it is an intangible space. Yet it must be able to survive private interests. The Internet makes distance (and time) less relevant without abolishing them, which “makes clear its disjunction with the plurality of territorial spaces” (page 23). It disrupts the States that have put some values higher than freedom (safety, property in the USA to which must be added dignity, privacy in Europe). Beaude is geographer!

He adds: “A common space for humanity is clearly not enough to spontaneously create common values. But the social contracts are at the heart of politics. They offer to give up freedoms by collectively delegating authority in the name of freedoms seen as more fundamental” (page 29). See the “my freedom ends where someone else’s begins.” The Internet is both a space of freedom and space of absence of law (intellectual property, widespread surveillance, private use of the data; the list is long.)

And this is where is one of the worst issues – among others. Not only in the world of the Internet, but also in the field of technological innovation where experts often impress politics and society. This creates a tension between the individual and society, between private and public entities, between experts and decision makers. “The computer code is now the law” (page 47).

About Collective Intelligence: “Believing in the potential of individuals is precisely not to believe in one only, and it is to accept individual fallibility, while recognizing the power of appreciation that resides in anyone” (page 38). Then follows a section on democracy and “its difficulty in organizing common will/good with individual will/good” (and the famous, the “worst system except for all the others.”) In addition, the largely minority character of the contributors to the collective intelligence on the Internet (e.g. 0.0002 % of users for French-speaking Wikipedia) is an additional limit, not to mention the loss of their independence and the privatization of this intelligence (pp. 40-46).

You should also read his excellent synthesis on free and property. The emerging intellectual property concepts of Copyleft and Creative Commons. Free only exists because a third party pays; not only advertising but also sponsors in the case of Wikipedia or Mozilla. This is not so new since both Press and TV used these methods. It is just a matter of scale and strong dematerialization. The minimal costs of copying and transmission revolutionize the world, but the initial production of goods must still be financed. Netflix and Spotify show that new models are possible, but only if only the aggregator or distributor is correctly paid, the content producers may disappear if not in quantity, at least in quality… And at the same time, Beaude reminds us that free is also a freedom factor.

Another subtle topic: hypercentrality (Google, Facebook, Twitter) poses fantastic problems, not least being the circumvention of laws and taxation (page 75). For example, the “weak links” (those which are neither daily nor intense) are also essential. And threatened?

Beaude interestingly mentions the Fourth Amendment of the U.S. Constitution, which requires a warrant for any search. It raises the constitutionality of the monitoring carried out by the NSA (page 81).

How has the Internet reached the point where the results of Google and Twitter differ depending on the country and offers by iTunes, Netflix or YouTube are different or even inexistent with geography? (Page 85). This missing neutrality will lead to the neutralization of the Internet, even its death (page 89). “Neutrality and self-organization are part of the libertarian options […] and are inconsistent with politics. […] Humankind must seize this opportunity to revisit what we consider to be important, really important. […] The challenge is unusually complex. We will have to choose between the end of the Internet and the globalization of politics” (pp. 91-93).

Beaude therefore indicates that the dilemma is simple: “If in accordance with the national social contracts, the Internet is partitioned according to the Nations. By not respecting national social contracts, the Internet might be partitioned even more in the relatively near future” (page 35). “The Internet enables the emergence of a global political space, but it is still to be invented. Before this invention comes, the Internet will probably be gone!”(Page 36)

As usual my synthesis is imperfect, but if you’re interested or intrigued, read Beaude!

Thiel-FlyingCars

Finally, and this is not quite the subject of Beaude, there is also some disappointment with the promises of technology and the Internet in particular… Just read again Thiel’s motto – “We wanted flying cars, instead we got 140 characters” – that I have already mentioned here. This only would not be so bad. But then what about the citation of the former CEO of TF1 – “what we sell to Coca-Cola is human brain time made available. […] Nothing is more difficult than getting this availability” – or that of Jeff Hammerbacher (thanks Martin for the reference): “The best minds of my generation are thinking about how to make people click ads, that sucks.” Which brings me back to Morozov whose arguments on centrism and solutionism of the Internet seem very excessive. It is not the exaggerate promises of the Internet that are so much delusional, but the risk of drift and disappearance of the Internet that is the real problem – but this is another topic!

Ray Kurzweil has mostly wrong predictions

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As often, Marc Voinchet had a remarkable broadcast this morning on France Culture. First a great guest, Cécile Lafontaine for her book The body market, the commodification of human life in the era of bioeconomy (in French only – my translation of the title) which goes beyond the adressed topic by asking questions about the tensions between the individual and society. It provides excellent answers to the debates opened by Thiel. But here I stop and let you discover the interview if the subject interests you.

FranceCulture-Matins

In addtion Xavier de la Porte wrote an excellent chronicle that I copied directly from the website of France Culture on the French part of my blog (in order to be able to translate it here): The brain is not one million lines of code.

When we look at what the digital world has to say about the body and life, there is a high likeliness to find quickly intimidating predictions: “Soon we will all be cyborgs” and “In 2045, we will have completely merged with the machines.” A specialist in this kind of statements is a guy named Ray Kurzweil – which I mentioned here already. Pretty awesome inventor, wise businessman, Kurweil became in the last twenty years the promoter of a movement called transhumanism – which considers that humankind will soon merge with machines, thus giving rise to post-humanity – ideas that Kurzweil sold worldwide with books and conferences, ideas that he also sells to super-powerful companies: Google has hired him to run a program on teaching language to machines. The problem with Kurzweil – and many transhumanists – it is their strength of conviction that passes through a scientific-techno-philosophical discourse which we feel is not right, but without knowing exactly where. But recently , I came across evidence that Kurzweil says non-sense. I enjoyed my discovery and I want to share this joy with you.

It has to do with an important aspect of transhumanism: the belief always repeated that very soon we can duplicate our brains into computers. Kurzweil believes that this will be possible in 2020, and moreover, he has stored the brain of his deceased father in that perspective. And in order to support his thesis, here is the type of speech that Kurzweil gives: “The code of the brain is in the genome. The human genome is 3 billion base pairs, six billion bits, which is about 800 million bits after compression. After eliminating redundancies […] this information can be compressed into approximately 50 million bits. But the brain is about half of that, about 25 million bits, or one million lines of code.” And here, in a ruthless and intimidating demonstration, Kurzweil shows us a million lines of code suffice to duplicate the function of the human. (I say “sufficient” because it is just one million lines of code; for comparison, Microsoft Office 2013 is 45 million lines of code).

Except that for once, someone came forward to explain that Kurzweil told non-sense. This person is called Paul Zachary Myers. He is a recognized biologist at the University of Minnesota, specializing in developmental genetics and writes a blog called Pharyngula. And it is on his blog that Myers explains very calmly why what Kurzweil says is wrong. Here is his demonstration. The premise of the reasoning of Kurzweil is “The code of the brain is in the genome.” Totally wrong, says the researcher. The code of the brain is not encoded in the genome. What is in the genome is a collection of molecular tools which is the regulating portion of the genome, which makes cells sensitive to interactions with a complex environment. During its development, the brain unfolds through interactions between cells, interactions which we understand today a small part only. The final result is a brain that is much more complex than the sum of nucleotides that encode a few thousand proteins. One can not deduce a brain from the protein sequences of its genome. How will these sequences express is dependent on the environment and the history of hundreds of billions of cells, interdependent on each other. We have no way to calculate in principle all possible interactions and functions of a single protein with tens of thousands of others who are in the cell, which is the essential first step in the execution of the unlikely algorithm of Kurzweil. In support of his argument, the researcher takes a few examples of some proteins and shows how the interactions are numerous, complex and mostly still unknown.

What is very interesting is that Myers states that he is not hostile to the idea that the brain is a kind of computer, and we will be able to artificially reproduce one day its functions. But he says that he does not need to say stupide nonsense, as does Kurzweil and build hisreasoning on false premises. And here is for you, Kurzweil. If only more researchers could take more time to bring their expertise to question the transhumanist speech, it may save us to hear many absurdities and attend another commodification of human life, which is about seeling biotechnology dream.

Something rotten in the Silicon Valley kingdom?

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

NewYorkerHeader

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

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

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

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

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

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

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

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

Silicon Valley and (a)politics – Change the World

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

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

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

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

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

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

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

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

France: a New Deal for Innovation?

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It can be said: France is trying hard to change its innovation culture. After many months of thinking (I was part of an expert group, the Beylat-Tambourin mission), French Minister for Innovation and the Digital Economy, Fleur Pellerin announced a New Deal for Innovation. Some will smile, another state decision! But if you read my posts about Mariana Mazzucato’s The Entrepreneurial State, you will understand my interest.

Fleur Pellerin, à Paris le 30 octobre 2011

In a nutshell, Fleur Pellerin and her team are focusing on:
– additional resouces: money is the fuel of innovation, far from sufficient, but critical. A new €500M fund, Large Ventures as well as €30k grants for new entrepreurs (about €10M per year). It’s important to cover seed funding as well as later stage.
– attracting talent with a “New Argonaut” policy. there are 50’000 French people in Silicon Valley, they have experience to bring.

Exactly what Paul Graham says in How to be Silicon Valley: you need nerds and rich people. And it is not just the state. Xavier Niel, the most succesful French entrepreneur in recent years is launching 1000start-ups, a huge and ambitious initiative in the heart of Paris with a lot of money…

Yes, France is trying hard!

1000start-ups

You can have a look at the following references, but you need to read French!

“ L’innovation, c’est un projet de société” in La Tribune
“Nous avons une vision trop idéologique de l’entreprise” in Le Monde
Une nouvelle donne pour l’innovation (A New Deal for Innovation) with a 25-page pdf (in French)

Nouvelle-donne-innovation-dossier-presse-France-2013

America and entrepreneurship

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Nearly 3 years after my unusual post about Obama, here is a post slightly related. Before digging into the topic, I have to admit I have a huge respect for the American president. Even after watching George Clooney’s The Ides of March and the disappointment expressed by many people, I am intrigued and fascinated by his track record. I should add for the anecdote that I was in Washington in October 2009 when he was award the Nobel Peace Prize and in Silicon Valley in September 2011 when he pronounced his recent speech to the Congress. I also quite liked the Titan Dinner.

The White House recently published TAKING ACTION, BUILDING CONFIDENCE and the second initiative is about entrepreneurship. It is worth reading these dense 6 pages and among other things, it is striking to notice that the USA, “the most entrepreneurial nation on earth” [page 17] is extremely worried about an “increasingly unfavorable environment” and a “fallen optimism”. For these reasons, the report suggests 12 initiatives to “help spur renewed entrepreneurship”. (They are listed at the bottow on this post)

Here is my simplistic vision of the proposals:
– a few are about lowering the barriers, i.e. “changing the Rules”, what I tagged with an “R” below.
– a few more are about enabling more money and investment towards start-ups, tagged with an “M”.
These are classical measures, important and necessary.

What I found very interesting are the other ones:
– three are about Intellectual Property and Technology Transfer, a sign that the patent system might be in trouble
– even more interesting, the last three are about the People, the Talent. They mention the Immigrants and the Mentors.

These are great advice, that we should also look at very seriously in Europe!


Click on the picture to enlarge

Win the Global Battle for Talent
Some of the most iconic American companies were started by immigrant entrepreneurs or the children of immigrant entrepreneurs. Today, however, many of the foreign students completing a STEM degree at a U.S. graduate school return to their home countries and begin competing against American workers. A significant majority of the Jobs Council calls upon Congress to pass reforms aimed directly at allowing the most promising foreign-born entrepreneurs to remain in or relocate to the U.S.

Reduce Regulatory Barriers and Provide Financial Incentives for Firms to Go Public
Lowering the barriers to and cost of IPOs is critical to accessing financing at the later stages of a high growth firms’ expansion. A significant majority of the Jobs Council recommends amending Sarbanes-Oxley and “rightsizing” the effects of the Spitzer Decree and the Fair Disclosure Act to lessen the burdens on high growth entrepreneurial companies.

Enhance Access to Capital for Early Stage Startups as well as Later Stage Growth Companies
The challenging economic environment and skittish investment climate has resulted in investors generally becoming more risk-adverse, and this in turn has deprived many high-growth entrepreneurial companies of the capital they need to expand. The Jobs Council recommends enhancing the economic incentives for investors, so they are more willing to risk their capital in entrepreneurial companies.

Make it Easier for Entrepreneurs to Get Patent-Related Answers Faster
There are concerns among many entrepreneurs that, as written, the recently passed Patent Reform Act advantages large companies, and disadvantages young entrepreneurial companies. The Jobs Council recommends taking specific steps to ensure the ideas from young companies are handled appropriately.

Streamline SBA Financing Access, so More High -Growth Companies Get the Capital they Need to Grow
The SBA has provided early funding for a range of iconic American companies. The Jobs Council recommends that the Administration streamline and shorten application processing with published turnaround times, increase the number of full time employees who perform a training or compliance function, expand the overall list of lending partners, and push Congress to fully authorize SBIR and STTR funding for the long term, rather than for short term re-authorizations.

Expand Seed/Angel Capital
The Jobs Council recommends that the Administration clarify that experienced and active seed and angel investors should not be subject to the regulations that were designed to protect inexperienced investors. We also propose that smaller investors be allowed to use “crowd funding” platforms to invest small amounts in early stage companies.

Make Small Business Administration Funding Easier to Access
The SBA has provided early funding for a range of iconic American companies, including Apple, Costco, and Staples. The Jobs Council recommends that the Administration streamline and shorten application processing with published turnaround times, increase the number of full time employees who perform a training or compliance function, expand the overall list of lending partners, and push Congress to fully authorize SBIR and STTR funding for the long term, rather than for short term re-authorizations.

Enhance Commercialization of Federally Funded Research
The government continues to play a crucial role in investing in the basic research that enables America to be the launchpad for new industries. The Jobs Council recommends that the Administration do more to build bridges between researchers and entrepreneurs, so more breakthrough ideas can move out of the labs and into the commercialization phase.

Address Talent Needs by Reducing Student Loan Burden and Accelerating Immigration Reforms
A large number of recent graduates who aspire to work for a start-up or form a new company decide against it because of the pressing burden to repay their student loans. The Jobs Council recommends that the Administration promote Income-Based Repayment Student Loan Programs for the owners or employees of new, entrepreneurial companies. Additionally, we recommend that the Administration speed up the process for making visa decisions so that talented, foreign-born entrepreneurs can form or join startups in the United States.

Foster Regional Ecosystems of Innovation and Support Growth of Startup Accelerators
There is a significant opportunity to build stronger entrepreneurial ecosystems in regions across the country – and customize each to capitalize on their unique advantages. To that end, the Jobs Council recommends that the private sector support the growth of startup accelerators in at least 30 cities. Private entities should also invest in at least 50 new incubators nationwide, and big corporations should link with startups to advise entrepreneurial companies during their nascent stages.

Expand Programs to Mentor Entrepreneurs
Research consistently shows that a key element of successful enterprises is active mentorship relationships. Yet, if young companies do not have the benefit of being part of an accelerator, they often struggle to find effective mentors to coach them through the challenging, early stages of starting a company. Therefore, the Jobs Council recommends leveraging existing private sector networks to create, expand and strengthen mentorship programs at all levels.

Allow University Faculty to Shop Discoveries to Any Technology Transfer Office
America’s universities have produced many of the great breakthroughs that have led to new industries and jobs. But too often, research that could find market success lingers in university labs. The Jobs Council recommends allowing research that is funded with federal dollars to be presented to any university technology transfer office (not just the one where the research has taken place).

Is there something rotten in the kingdom of VC?

1 Reply

Following my recent post, Is there something rotten in the state of IP, I could not avoid to add this provocative statement despite all my respect for venture capital. When Kleiner Perkins, one of the best West Coast VC (not to say one of the best VC ever), Charles River, one of the best East Coast VC and Index, one of the best European VC co-invest in an IP company (a “Patent Risk Manager”) such as RPX, I thought there had been a major event. And Randy Komisar who is mentioned in my latest post is on the board… Now RPX is filing to go public so as I do usually, here is the cap. table. All these data remain subject to the IPO date and share price which I just had to imagine… You may also be interested to know that the founders of RPX come from Intellectual Ventures…

Is there something rotten in the state of IP?

2 Replies

I have been surprised not to read more about Intellectual Ventures’ recent legal actions. You can read more about the companies they are suing for infringing IV’s IP.

If you do not know about Intellectual Ventures, you should know they have filed or bought about 30’000 patents or patent applications and raised billions of dollars. Until now, nobody really knew why, but their recent actions show IV is just another patent troll.

Around the same period, Paul Allen has been dismissed by a judge about the complaint he had filed for another patent infringment. More here. I should add I read about both pieces of news thanks to the Xconomy web site.

This is an opportunity to say that I have never been a big fan of IP, intellectual property, patent applications and copyrights. I do not have good alternatives to propose, but innovation is often more a matter of speed and being more advanced that being protected by IP. I am aware it is not so simple though. I have worked in the field for a while and I still give general courses on the topic. Those interested may click on the picture below or on this link.

Intellectual Ventures was founded by Nathan Myhrvold, who was formerly CTO at Microsoft. Not need to add which role Paul Allen had at Microsoft. All this could be funny when you think about the fact Microsoft success was not based on patents (and Microsoft did not suffer that much from all the people who copied all their software…)