Systemic Arrogance has Become Part of Silicon Valley’s Newer Public Narrative

Silicon Valley’s image … suffered briefly after the 1990s bubble, which was created by an unholy collaboration among founders, venture capitalists and investment bankers, inevitably deflated and left countless retail investors, among others, holding the bag. The negative image didn’t last long as a new generation of tech giants emerged. For the last decade or more, until quite recently, the public love affair with Silicon Valley blossomed again, encouraged by the West Coast’s journalist-courtesans. That’s all changing as people consider what the tech culture has wrought on our society in less positive ways… The public isn’t thrilled, either, at being considered lab rats in Web giants’ experiments… the Internet industry’s essential business model—advertising-driven spying on us in ever-more pervasive ways. Eyes rolled as … ballot initiative for a vote on whether California should split into six states, one of which would be a Silicon Valley that would jettison its poorer neighbors like so much flotsam.
Is Silicon Valley the New Wall Street?

The collusion reportedly began in 2005, when Apple’s Steve Jobs approached Google’s top executive, Eric Schmidt, about working together to hold down salaries. After getting Google on board, Jobs “strong-armed” Adobe into joining the secret pact, according to court documents. The documents show that Adobe CEO Bruce Chizen was reluctant to go along until Jobs threatened to poach Adobe engineers…
64,613 Software Engineers Join Class Action Hiring Conspiracy Lawsuit …

See also:
~ Google Buses Fuel Inequality Debate as Boom Inflates Rents
~ San Francisco as a Capital of the “Left Coast” of America
~ Zuckerberg Bought 4 Pieces of His Privacy …
~ Silicon Valley “War on Women”
~ Silicon Valley as a “black hole”

Average Company Age of 11 at the Time of IPO

Since 2001, companies have had an average age of 11 at the time of their U.S. IPOs, compared with 5 at the peak of the dot-com bubble in 1999-2000 and 7 to 9 in the previous two decades… Venture capitalist Marc Andreessen sees all of this as a sign of trouble… In Andreessen’s opinion, overregulation is largely to blame. CEOs of startups are choosing to stay private to avoid having to comply with Regulation FD, issued by the Securities and Exchange Commission in 2000, and the Sarbanes-Oxley Act of 2002, both of which helped new disclosure requirements on public companies, he said.
Read more:

Investing is Very Psychological

… As Warren Buffett has said: “Investing is simple, but not easy.” Jim Breyer is saying that what is not “easy” is investor psychology…

“We will have many booms and busts forever in Silicon Valley.” All markets are cyclical. Venture capital is more cyclical than other markets, not less. … One can at best hope to make general forecasts about the probability of a shift in the business cycle, which can help with investing.

“We like to think that we will make a mistake only once and learn from it. We also are humbled every day by a new mistake.” … The natural human tendency is to gloss mistakes over with psychological denial. By celebrating rather than burying mistakes, you learn faster.

A Dozen Things I’ve Learned from Jim Breyer By Tren Griffin

What Silicon Valley refuses to learn from Steve Jobs

Lesson #1 — Creating great products requires patience … In an era when most follow the lean doctrine of releasing a product early, and letting the market dictate product direction, Steve spent time refining the product internally until he felt it was ready to release. That requires time that most companies don’t want, or can’t afford to invest. Steve’s approach took vision—and yes, arrogance— to think he knew better than others, plus the willingness to look beyond the horizon and envision products that customers did not know they needed yet. Lesson #2 —  Think big… For every Elon Musk who makes tackling three big, crazy ideas before breakfast seem easy, there are thousands of others who come to the valley to launch any project that an investor will put money into, worthwhile or not. Steve dared to shake things up, and thinking small was not part of his character. Lesson #3 — Focus on your strengths… Many admire how successfully Steve cut projects and saved Apple when he returned as interim CEO in 1997… Yet, we still see companies squander energy and resources in too many directions…  Lesson #4 — Think different… Steve would tell you that listening to others is the route to mediocrity. You can’t “think different” when you’re taking your lead from the same people as everyone else. Lesson #5 — Technology by itself is not enough… As Steve said at the iPad 2 launch in March of 2011, “It’s in Apple’s DNA that technology alone is not enough. It’s technology, married with liberal arts, married with the humanities, that yields us the result that makes our heart sing.”

Rea more:

Things Investors Say When Really What They Mean is, “No”

  • “have you considered joining an accelerator?”
  • “Who else is in your round?”
  • “Let me talk with the MP’s at our next partner meeting and get back to you.”
  • “We’re at the tail end of our current fund, which we’re using for follow-on investments, but we’ll be looking at new investments with our next fund.”
  • “I’m a fan of what you’re doing, I just don’t know anything about the space, so I couldn’t bring any value to you.”
  • “We like to follow a lead. Let me know when you’re about to close your round.”
    Read more:

  • Startup Founder VS. Company Creator

    Below is a quote from one of the online discussions:

      […] with all my huge respect for Meg, she did not create eBay. She has been its CEO for a long time, she bought PayPal, she developed its business – but when she joined, it was already a successful established company.

    Gregory Gromov: If you want to talk about company founders, then of course Meg is not eBay founder, otherwise I would have called her in my post “eBay’s co-founder”. Whereas I wrote – read carefully – “the lady who was creating eBay”.

    I believe there are good reasons to call Meg that.

    When she came to eBay, it employed a few dozens people, with the sales volume in a few millions. Can’t recall exactly, but I’m pretty sure they didn’t make even $10 mln at the time.

    I’ll agree that by then – late ‘90s – E-Bay was already a successful established company. True, but it was exactly under Meg’s leadership that in the next 10 years E-Bay has become world-known, with thousands employed and billions in trade volume

    It happens quite often that a team that shone at the start would suddenly hit the wall to a large-scale transition when time comes to reap the fruit of early success.

    This is an obstacle that only a few can overcome, especially since there are just not enough Megs and Erics for every startup – even in the Silicon Valley.

    But I am sure that neither Meg Whitman nor Eric Schmidt would even try to create a startup of their own, because they are fully aware that this is not their strong suit, where the art of business is concerned. I would also suggest that under no circumstances either of them would have succeeded in that.

    Yet one can argue that eBay would have reached their current world status if Meg Whitman had not come to lead it in 1998 – in the exactly right moment when, like a newborn chick, they were picking their way out of the startup’s eggshell. Ditto for Google headed by Eric Schmidt in 2001.

    Even by 2001, three years afer Google was founded, its sales volume stood at $19 mln with the expenses at $34 mln.

    Let us also bear in mind that it was taking place amid the turn-of-the-century crisis when not only freshly hatched dot-coms collapsed, but the respectable established industry leaders were starting to crumble as well.

    And in this dramatic moment, like a fairy-tale knight in shining armor, the Grandmaster of Managerial Arts and Sciences Eric Schmidt rides into Google’s field of vision.

    10 years later, Schmidt has trained young founding fathers in the ABCs of management and built up Google – and then, and not a moment earlier, the company”s co-founder Larry Page wished to take back the CEO chair…

    Browsers War

    As of 2008-2014: Google has unseated rival Microsoft as the leading browser maker in the U.S. for the first time:


    ~Google unseats Microsoft as the U.S. browser powerhouse. By Gregg Keizer, Computerworld.

    How this war began: 20 years ago …

    June, 1996: Turn-point  in the Browser’s War

    Month Netscape Navigator Microsoft Internet Explorer
    May-96 83.2% 7.0%
    Jun-96 78.2% 8.3%
    July-96 72.6% 15.8%
    Aug-96 62.7% 29.1%

    ~ Roads and Crossroads of the Internet History : Chapter #4 – Birth of Web, Browsers Wars …


    Two Key Factors that Makes Silicon Valley Such Fertile Ground for Startups

    The most important legal factor is the California State ban on Non Compete Law:

      … a very special law was enacted in California in 1872. The law in question declared null and void any contract between a business owner and employee if said contract in any way restricted the employee’s freedom to change employers, even if that meant joining the former employer’s competition.

      In other words, any previously signed agreements—for example, an employee contract signed upon hiring—that could in any way limit the employee’s right to freely choose his or her place of work were deemed unenforceable in this 1872 law. More specifically, those clauses that were in conflict with this law were deemed unenforceable.

      This law was initially ratified in 1872 as part of California’s Civil Code. It is now listed under California Code – Section 16600, also known as CAL. BPC. CODE § 16600, and reads:

        Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

      As a result of this cascade of direct and indirect consequences from the application of this law in Silicon Valley, today a number of generally operating U.S. legal standards, including some of the most important, are practically blocked (“de facto” canceled). Read more: From the Gold Mines of El Dorado to the “Golden” Startups of Silicon Valley

      The above California law was recently tested during the Hewlett-Packard special experimental research: NDA Experiment Set up by Mark Hurd.

    The most important among Silicon Valley startups motivation factors is the “not afraid to fail” attitude:

      Perhaps one of the first practical application of this attitude was formulated about 22 centuries ago.

        “A mistake in choosing the right way of actions should be punished less than omission”
        ~ Roman army, 200 BC


      Two thousands years later people still continue to look for some of the alternative approaches that can bring the positive results as well:

      See also, a bit more detailed description of the same phenomenon:

        “Our results indicated that the frequency of omission increases when punishment is possible. We conclude that people choose omissions to avoid condemnation and that the omission effect is best understood not as a bias, but as a strategy”.
        ~ The Omission Strategy. Peter DeScioli, Brandeis University, Departments of Psychology and Economics

    My Startup Failed, and This is What it Feels Like…


    Over 90% of tech startups fail, but I never thought my baby, …, would be one of them… Since then I’ve survived being stabbed in the back by cofounders, investment rounds falling through, massive technology fuckups that brought sales to a halt, visa problems, lack of money, lack of traction, lack of a team, hiring the wrong people, firing people I didn’t want to fire, lack of product-market fit, and everything else in between. I learned so much, and yet I failed. I won many battles but I lost the war.
    ~ Nikki Durkin

    See also:

  • Silicon Valley “War on Women”
  • For Silicon Valley’s Leading VC “it doesn’t matter what your probability of failure is …”
  • For Silicon Valley’s Leading VC “it doesn’t matter what your probability of failure is

    If there’s a 90% chance of failure, there’s a 10% chance of changing the world.”

    • Most technology startups fail. There’s a winner, and there’s 7 out of 10 that lose.
    • I don’t mind failing, but if I succeed it better be worth succeeding for.
    • I have seen too many startups where they have reduced risk to a point where they have a higher probability of succeeding, but if they succeed it is inconsequential.
    • We invest more in people than in a specific plan, because plans often change.\
    • Where most entrepreneurs fail is on the things they don’t know they don’t know.
    • There are probably three or four things you can control out of ten that matter for the success of your company… The rest is just luck.

    Partly for that reason, he is dismissive of business plans: “I’ve never seen one that’s accurate.”

    ~ Tren Griffin “A Dozen Things I’ve Learned from Vinod Khosla“.