Tag Archives: Silicon Valley

Politics and Silicon Valley

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This post is motivated by an article by Olivier Alexandre for La Tribune. This CNRS sociologist, whom I have already mentioned here because I appreciate his analyses of Silicon Valley, summarizes an interview on his LinkedIn page entitled The tragedy is that Silicon Valley has come to push reactionary programs, La tragédie est que la Silicon Valley en vient à pousser des programmes réactionnaires.

I wanted to react on LinkedIn but this site limits the length of comments. Here is what I would have liked to write: There might be a book to write about the left and tech, particularly in Silicon Valley. If Silicon Valley has always been a progressive region, at least in the north close to San Francisco and Berkeley, I don’t remember meeting many “left-wing people” at Stanford or in tech companies. Not to mention that being left-wing in the United States probably doesn’t have quite the same meaning as in Europe. The individualist, even anarchist component (I prefer not to talk about libertarians who I’m not sure represent a large number of people) remains very strong among Republicans and Democrats who always seem a little wary of central power, a central power whose attraction remains a very French particularity on the contrary. There was indeed the dinner offered by Obama at the White House with the tech elite, www.startup-book.com/2011/03/28/the-whos-who-of-silicon-valley/ and it is anecdotally quite amusing to see in the donations to the parties (see for example here www.opensecrets.org/industries/contrib?cycle=2024&ind=F2500) that the two major historical funds of American venture capital lean differently, Sequoia towards the Republicans and Kleiner Perkins towards the Democrats, even in 2024.

It is not surprising that entrepreneurs are rather right-wing, it seems quite universal to me. Looking back at the early days of Silicon Valley, it seems that the big semiconductor entrepreneurs like Robert Noyce were mostly moderate Republicans who mostly tried to influence Washington to protect their industry from Japanese competition. More recently, Kleiner Perkins had recruited Colin Powell as a partner (www.nytimes.com/2005/07/13/business/colin-powell-joins-venture-capital-firm.html), who was not known for being a very left-wing politician. Finally, I have never really seen the founders of Apple or Google take a position on any political issue, but I have noted how all these companies from Intel to Google were “scared to death” of seeing unions set up shop in their company. Politics seems rather absent. Perhaps Fred Turner could inform us on the subject and write the book I am talking about if it does not already exist?

And a blog post allows to go further, so I continue. I talk about politics from time to time, as the #politics tag indicates, but probably not enough. I have rightly or wrongly stayed away from activism and taking positions, just like a lot of people in the world of technology and Silicon Valley, I will come back to that. But again, you can browse the articles linked to the previous tag. I have also just ordered the book entitled Au delà de l’idéologie de la Silicon Valley (Beyond Silicon Valley Ideology) after reading the one in Esprit magazine a few years ago.

What more can I say? I found another site that doesn’t give the amounts of people’s donations to political campaigns, but a profile of tech personalities, including their political leanings. It’s quite interesting. It has profiles of Larry Page, Sergey Brin, the two founders of Google, John Doerr (Kleiner Perkins) and Michael Moritz (Sequoia). All four lean toward the center-left or left of center, but in a rather discreet way.

More recently, a long analysis of the region showed that it is rather progressive and Democrat, except on one point, that of regulation: The vast majority of tech entrepreneurs are Democrats — but a different kind of Democratt.

I really liked Hillbilly Elegy by JD Vance. I knew he was a Republican, but I thought he was a moderate and anti-Trump. What a disappointment, not to say what a sad character. So bravo to Jennifer Aniston for her recent review: Jennifer Aniston criticizes JD Vance for ‘childless cat ladies’ remarks: ‘I pray that your daughter is fortunate enough to bear children’. There are also the (too?) well-known positions of Peter Thiel or Elon Musk, but again, I don’t know if they represent a majority opinion in tech. Do we know that well that Jeff Skoll, founder of eBay, has become a producer of particularly interesting, not to say brilliant, movies?

Politics should belong as much to those who speak and act quietly as to those who speak so loudly that we end up believing they represent the opinion of the majority…

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

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.

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.

Tech – When Silicon Valley Changes the World (part 2)

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I’ve already written all the good things I thought of La Tech – Quand la Silicon Valley refait le Monde (Tech – When Silicon Valley Remakes the World) (see my previous post). Here is more.

Olivier Alexandre explains in his introduction that he conducted 147 in-depth interviews. His work is full of testimonies that often say more than, at least as , statistical analyses (the two complement each other wonderfully). Especially since in the second part of the book, the author describes essential but intangible ingredients of Silicon Valley: confidence, luck, social attitudes, for example. So I continue with a few excerpts.

“Google came to us in different ways and everyone will have a different story of how it happened. My version is the following: I started interviewing all the people who had a PhD at Stanford and who continued to work there in the engineering departments. It was about fifty people. They are the best and the brightest. And I asked each of them: Who is the best with the best idea? And almost all of them answered: the two guys who worked on Google. And what’s interesting about this story is that this way of doing things is exactly the same as Google’s algorithm.” [Page 195]

“In 2000, I had the vision of Facebook… But because we didn’t meet the right person, it didn’t work. I tried my luck until the end. It’s the investor’s assistant, who says to you: Sorry, he can’t see you. The guys who succeed, there is timing, perseverance, but also luck.” [Page 210]

“There is no concept of caste here, if you come up with a good idea, you will be able to meet guys, raise funds and sit at the table; I’m a living proof of that: we didn’t know anyone. We did not raise 20 million, ok; but we were given a chance; we screwed up, but that’s our problem. Afterwards, if the question is whether Silicon Valley is a utopia: it is not one, obviously. There are old families, networks of alumni, diasporas, new wealthy people, who help their friends and help each other; of course. But there is still this idea: we do not know you, but we will give you a chance.” [Page 211]

And funnier still, or more tragic: “Here everything is organized in communities… We are the first to suffer from being French abroad. It’s never easy to create a startup, even harder when you’re not at home. We all suffer from this. Because the codes are different. And you need to understand them and you’re not sure you understand them on your own. And it’s useful to meet someone who says to you: You’re not crazy, I’m having exactly the same problem and I think that… And that takes a lot of time. It took me four years. The French are arrogant when they arrive. They are so much that they think they are going to become Americans. It’s: Yes, I don’t want to see French people. So they go to the Americans. But without having the codes… I compare them to Barbapapa [A funny French alien family]. They are intelligent, they know how to adapt, but we still recognize them. On the other hand, he, the Barbapapa, he is persuaded to be a car when everyone knows that he is a Barbabapa. It doesn’t work at all. Me, for four years, it took me that long to first understand that you shouldn’t try to imitate them, and then that I wouldn’t be able to change them. […] Except that the French, he already blends into the decor, that physically, he looks like them, so he will blend into the thing, with an added bonus: subtlety. Which is actually exotic. The French entrepreneurs, the executives of the CAC40 who come here, I tell them: You are Senegalese in boubou who come from your village in the bush. Do you give a damn about guys from the Middle East who come to business meetings in traditional attire? But you are the same. You come in a tie… Have you seen people in a tie here? So you have to accept and tell yourself: I’m a Senegalese who just arrived in Paris, I’m black and I have a shitty accent, I don’t dress like them, and I can’t go back to the village, because otherwise I am the shame of the village, while everyone believes in me. They are the same: they are the light of France; when you realize that, that you are a projected dream in fact, how do you do when you are that guy? Well you reboot. Everything I did before doesn’t count. So it’s not an Italian renaissance. No way. It’s a rebirth, meaning that everything I’ve done doesn’t count. All the people I met no longer count and I have to build a new project and a new identity.” [Pages 208-210]

What is great and pretty amazing with this long excerpt is that Silicon Valley has not changed between the late 80s and 2016 when Olivier Alexandre conducted most of his interviews. The culture is absolultely the same ! (See the Post-Scriptum at the end of the article).

Pages 217 to 234 on the entrepreneurial experience are perhaps the most extraordinary that I have read since the beginning of the book. They should be quoted in full, so all to your readers! It is about roller coasters, the virtues of simplicity and sincerity, and energy capital. The illusion of meritocracy is another topic that brings complexity to the whole picture. With, at the end of the passage, “Gradually the articulation between the individual and the collective tends to be reversed: entrepreneurs become the imprint of their environment rather than impacting it. The company is the main vehicle of their dialectic.”

A permanent evolution in search of talents

In Silicon Valley, companies are therefore characterized by a Proteus syndrome, due to a pressure of constant evolution. […] The belief of Silicon Valley entrepreneurs, managers and investors is that change is not only desirable but also “inevitable”. This horizon of expectation leads to making routines, these devices of predictability at the base of the efficiency of bureaucracies and large companies, objects of rejection. […] This dialectic of desired and organized change poses a series of problems within organizations: remaining effective despite instability, maintaining consistency despite changes.
[…] In the sector of new technologies, companies, whatever their size, seek to be innovative. However, innovation presupposes differentiated development phases. The first stages of a project are characterized by phases of trial and error, through tight and close exchanges with users; the usage value remains undetermined. This phase is based on the involvement of enthusiasts, at the crossroads of amateurism, research and the business world, in chiaroscuro spaces, on the border between public space and private space. The cliques formed on this occasion have a number of occurrences in the history of Silicon Valley: amateurs (“hobbyists”) in the field of broadcasting, hackers from MIT fiddling on the sly with DEC and IBM computers, participants of the Homebrew Computer Club in the 1970s, Nolan Bushnell programming his first game “Computer Space” in his daughter’s bedroom before founding Atari, the dormitory brogrammers behind Facebook, etc. After several years, a product with stable properties emerges. A second phase then begins.
The growth in the number of users and the addition of new functions require the involvement of workers with a high level of technical skills. However, developing a solution, increasing its capacities and the number of its applications, solving the problems that arise, are all objectives that require hiring. The profiles sought are designated in Silicon Valley according to a common metonymic name in the fields of creation, “talents”. […] This second phase is decisive in that it suggests a shift in financial terms. The organization is then ready to engage in a third phase, which brings it closer to traditional sectors: an operating technology, a structured and clearly identified market, with means of production, the counterpart of which is a slowed down innovation dynamic. Indeed, once a commercial niche has been invested and marked out, the teams tend towards the systematization of processes and the organization is characterized by effects of bureaucratization. These “slow” development companies (referred to as “slow moving organizations” in Silicon Valley) are often powerful but discredited because the learning effects are limited. To maintain a dynamic of innovation, large companies commonly resort to a so-called external growth strategy, by hiring or buying companies in order to integrate their innovations or their teams. The recent history of large companies illustrates the consistency of this strategy: Apple made 100 acquisitions between 1976 and 2020, Microsoft 225 in forty-five years of existence, Amazon 88 in twenty-five years, Facebook 82 in fifteen years, Google 236 in twenty years, an average of one acquisition per week. During these three phases, the destiny of organizations rests largely on the human factor. [Pages 242-5]

Company cultures

Faced with these constant challenges, it seems that Silicon Valley has developed a rather unique culture. Sincerity and simplicity are mentioned again with the famous pitch: “In presentations, there is a lot of waste, a lot of people don’t know what they are talking about and it is obvious right away. The speech is incoherent and they do not know how to express what they are doing precisely. And that is the first sign that they are going to screw up. They don’t know how to explain in a concise paragraph what they are doing. It is not just a problem of intellectual coherence. Oral and written communication is one of the fundamental skills of a successful entrepreneur. An entrepreneur must be able to raise funds. If he is not able to express clearly, concisely, what he does, why it is interesting and how it is new, he will not succeed” [Page 272].

Clearly establishing a mission makes it possible to stay on course whatever the circumstances and for the long term, by providing motivation to overcome difficulties, put suffering into perspective and make choices [Page 270]. Could this be an explanation to the quasi-absence of workers’ unions?

However, every company is different, even within the same sector. The openness and flow of information at Google, networking at Facebook, competition at Uber, design at Apple, etc. […] In the 2010s, Lyft made a name for itself by promoting a culture of openness and inclusion, in contrast to Uber [Page 268].

With some risk: “Company culture is our own spiel in Silicon Valley. […] But it’s still bullshit in the sense that it quickly becomes artificial if it’s not embodied. The thing is carried by the founder and it works as long as he is there, he is the one who embodies it, who carries it. […] But the day he leaves, values become boxes in an evaluation grid” [Page 283].

Post-Scriptum: personal notes related to the second part of the book.
– Olivier Alexandre gives very interesting statistics, especially on pages 170-72. I mention my own data on startups from Stanford or other startups that have prepared an IPO on this recent post. On the age of the founders – 45 years old -, the number of founders – 75% are more than 3 – or on the serial entrepreneurs – 60% are, I have built similar data sets.
– For those interested in the topic of startup acquisitions (M&A), here are two blog links: Cisco’s A&D and Google in the Plex. An additional link show that even public companies are often acquired.
– But as I said before, statistics are one thing. The description by a multitude of cases is another and the two complement each other perfectly, I believe. I remembered a trip to Silicon Valley in 2006. The report we made is confidential because of the non-anonymized testimonies. But I extract the non-secret part:

06-05-Trip in the Silicon Valley-FILTERED

Tech – When Silicon Valley Changes the World

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I had the chance to take part in a debate on France Culture with Olivier Alexandre the author of La Tech – Quand la Silicon Valley refait le Monde (Tech – When Silicon Valley changes the World). I say “chance” because I was able to discover a book which I consider to be among the best about this still poorly-known and fantasized subject that is this region of innovation and startups. In fact Fred Turner, an expert of the region, wrote on LinkedIn: “If you read French, you should read this book – a rich and close view of Silicon Valley by an outsider who has become an insider long enough to learn the system . Highly recommended”

It is perhaps because Olivier Alexandre was not a specialist of the region at the start of his career as a sociologist that his work is fascinating. The perspective he shows (which is not always the case with analysts who often take too negative or too positive point of views) and the variety of subjects he studies (although I am only a third of the way through) strenghten my belief, which I hope to confirm when I get to the last page. Here are some illustrations.

Players more than actors

To account for this state of mind and the conditions that favor it, it is therefore necessary to make a phenomenological detour. Entrepreneurs, investors and engineers seek to change the world, that is to say to put it into play. The term play is not understood here in the sense of idleness (hobby) or of a ludic phenomenon (amusement), but covers a mundane scope, i.e. the desire to modify the organization of the world by means of new technologies. For this reason, the workers of Silicon Valley will not be qualified as “agents”, “actants” or “actors” but as players, a notion which is often mobilized in English (“players”, whether they are “new”, “big” or “global”). It does not designate a specific professional category, but a mentality as well as a regime of action. [Page 28]

“We were all more or less in PhD programs at MIT. My co-founders did the VC [roadshow] tour. We were still students, we thought it was cool, to take a plane, to find ourselves in offices talking about research to get money from people who tell you: Great, go ahead, take this money, and you return with it to the airport. It was much more exciting than the lives of the rest of our college friends. For a 25-year-old kid, finding yourself with 2 or 3 million in the bank is super exhilarating. We went to an ATM, to see the balance of our bank account… And we planned: what we were going to need, how to assess the risks of what we were doing… We started to pay ourselves, which represented for a student a pretty insane amount of money, around 80,000 dollars a year, compared to 25,000 for a PhD student. And we moved to the Bay Area… To do a start-up, you have to have an idea… But the thing is, people are going to change, your idea is going to change, you have to be ready for that. And we weren’t ready for that. We thought we were super smart and our tech was super cool, which was the wrong way to do it [laughs]. After several months, we came to the conclusion that we were different, in our personalities, our agendas, on what a company was for us or what it was not… So, in the end, one went to Google, another went back to college, and we started something again together. The VCs said to us: OK you burned everything, but here is the money, 2-3 million, we believe in you.” [Page 96]

“Here you see two things: smart people and money. Money, there has been a lot of it and for a long time. Is it a bubble or not? That’s not the problem. The issue is concentration. When you go on Sand Hill Road [the street where the main venture capital brands are located], for a few kilometers, you have an insane amount of money that is concentrated… Venture capital in the world is 87 billion dollars, two-thirds is in the United States, and half of that is in Silicon Valley. When you realize this, you think to yourself Wow… it means that the two resources of the chemical reaction to undertake great things are available here. Paul Graham [founder of accelerator Y Combinator] says this is sufficient. But it’s not just that. It’s a bit like in Hollywood, with universities that intelligently play their role in an economy that is both global and local: there are labs that do research, specialized people, etc. In the movie industry, there are people who are capable of doing high-level janitorial work, of buying or liquidating a company, of negotiating contracts with seven, eight or nine figures. It’s the same thing here. There is this economy of specialized services, which is under the surface, which is an invisible but determining element. It is upon this that the ability to value a firm depends, i.e. to assign a value to it, or to liquidate it. In every sense of the term; and it is infinitely precious. Lawyers, specialized banks, VCs, HR firms specializing in start-ups, etc.” [Page 70]

This is another enlighting way of describing What makes an entrepreneurial ecosystem as mentioned by Nicolas Colin, Martin Kenney or Paul Graham again. But this description does not explain why Silicon Valley was never replicated. The author shows also that two important laws, Moore’s law and Metcalfe’s law had a strong impact in creating a virtuous cycle of self-fulfilling prophecies. [Pages 47-52]

A reversed capitalism

In Silicon Valley, three characteristics make the keeping of fair accounting particularly complex: the partial freeness of services, the practice of exchange, and the proportion of failures. [Page 89] … The exchange value corresponds to the usage value. However, the situation is different for intangible services, where consumption may be collective. For this reason, economists refer to intangible goods as public goods. [Page 90]

“On my first two start-ups, we never found the market fit. Never.” [Page 93] Market fit is credited to one of the region’s first venture capitalists, Don Valentine. Marc Andreessen helped to popularize it in the 2000s, through a post on his blog. On the inequalities of success of start-ups, he identifies three factors: the team, the product and the market, emphasizing that the most important of these three elements for the success of a company is the third term, the market (or “market fit”) justifying this position as follows: “In a large market – a market with many real potential customers – the market pulls the product from the start-up. The market must be satisfied and the market will be satisfied by the first viable product that comes along. The product doesn’t have to be great, it just has to work. And the market doesn’t care about the quality of the team, as long as the team can produce this viable product. In short, customers are knocking at your door; the main objective is to answer the phone and all the emails of people who want to buy. And when you have a great market, it’s remarkably easy to scale the team on the fly.” Chosen (and translated) by the author from web.stanford.edu/class/ee204/ProductMarketFit.html [Note 14 page 497] Here we find the fundamentals sought by VCs, as indicated in What makes Silicon Valley Venture Capital unique?

I had to find I disagreed with Olivier Alexandre, but it is at the level of detail, so successful is the first part of this book! “Kleiner Perkins had several difficult years before realizing a substantial return on investment with Sun Microsystems and Lotus Development in the early 1980s. Despite their rivalries, they [Sequoia and Kleiner Perkins] made a joint investment in Google in June 1999, at the initiative of micro-investor Ron Conway, against 5% of the shares of the company.” [Page 125] So my nuances are as follows:
– the first KP fund was particularly successful, as early as 1972, as indicated in About Kleiner Perkins first fund,
– I think that Sequoia and KP invested $25M for 34% of Google during the series B round and Ron Conway only arrived after, I think Andy Bechtolsheim was the business angel who made the intro, but I could be wrong. But here we are in the micro-detail. On the other hand, Pierre Lamond at Sequoia corrected me by claiming that despite their rivalry, KP and Sequoia had quite often invested together. The famous co-opetition of this world, people are in competition but collaborate… See When Kleiner Perkins and Sequoia co-invest(ed).

The Cultures of Silicon Valley

Silicon Valley is quite poor with culture (the arts and other manifestations of human intellectual achievement regarded collectively) and Olivier Alexandre shows it by comparing the number of movie theaters, bookshops and art galeries in San Francisco and in other cities worldwide. Museums in Silicon Valley with the exception of one on the campus of Stanford University are not really impressive.

The culture of Silicon Valley, on the other hand, is unique. Alexandre mentions the praise of doing, freedom at work, an open society, a tradition of welcome, a progressive elite. “What struck me right away was that they were discussing what they would do, they were talking, without hiding, sharing information, talking about their business… People who for me were a priori competitors… Where I had been, in Paris, in New York, you had to remain secretive. Today, I’ve been here for seven years, I now know that it’s a typical cultural trait here. If you compare to elsewhere, in terms of cultural, psychological traits, there is this ability to say things.” [Page 156] How not to mention here the little-known Wagon Wheel Bar ?

Ultimately, the prevalence of the notions of “ecosystem” and “community” illustrates the ambiguities of this industry, certainly localized but with a globalized vocation: open to the integration of new entrants; but selective and Darwinian. [Page 165]

I hope you will discover this fascinating book. And certainly to be followed. In fact here.

Silicon Valley Bank and Venture Capital

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I have been very surprised by the bankruptcy of Silicon Valley Bank (SVB). Silicon Valley finance was (and I think still is) about venture capital and not banking, about equity and not loans/debts. So how is it possible that a bank fail by serving startups?

When I was in venture capital, and this is 20 years ago, startups would marginally borrow money. Banks indeed did not trust these fragile entities and they were statistically right. Of course startups could borrow money if they had sound collaterals like equipment and this is when Silicon Valley Bank and its peers were used by startups: for leasing for example (office space, equipment that could be reused).

Apparently things have changed as I recently learned. Some venture capitalists managed to convince SVB to go further. Money was cheap and if “powerful” VCs were financing a startup, then SVB thought the startup was solid.

As the article by the New Yorker below says, it appears to have been a combination of incompetent management, lax regulation, and some powerful people in Silicon Valley crying fire in a crowded theatre.

You may read additional material from the New Yorker with
– The Old Policy Issues Behind the New Banking Turmoil (March 13)
– Why Barney Frank Went to Work for Signature Bank (March 15)
Another interesting article is In Their Own Words: What Silicon Valley Bank Meant To The Valley

There is also this interview about Peter Thiel’s role in SVB collapse

Some quotes include :
“Silicon Valley has an image problem but remains hugely popular.”
“The issue is not that VCS are powerful but more not as smart as they think they are”.

Finally, there is no doubt that the money had become very easy, in too big quantity as indicated by the wikipedia page about SVB. The end of megarounds and the recent new startup crisis have played their part.

This probably needs to be looked at over the long term. When I wrote my book, I had a look at the correlations between the Nasdaq Index, VC fund raising and the economic crisis. Here is what it gave:

and here is what it looks like in 2022 with, among other things, the 2008 crisis

I post this article because I was invited to debate about Silicon Valley, Venture Capital and how can technology startups my impact the banking system on France Culture in Entendez-vous l’éco ? (in French). I now have to read the new book of the other guest, Olivier Alexandre, La tech. Quand la Silicon Valley refait le monde (Seuil, 2023) (Tech. When Silicon Valley changes the world) which seems very interesting. Probably a futrure post.