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An Alternative History of Silicon Valley Disruption
October 22, 2018 12:00 pm|Comments (0)

A few years after the Great Recession, you couldn’t scroll through Google Reader without seeing the word “disrupt.” TechCrunch named a conference after it, the New York Times named a column after it, investor Marc Andreessen warned that “software disruption” would eat the world; not long after, Peter Thiel, his fellow Facebook board member, called “disrupt” one of his favorite words. (One of the future Trump adviser’s least favorite words? “Politics.”)

The term “disruptive innovation” was coined by Harvard Business School professor Clayton Christensen in the mid-90’s to describe a particular business phenomenon, whereby established companies focus on high-priced products for their existing customers, while disruptors develop simpler, cheaper innovations, introduce the products to a new audience, and eventually displace incumbents. PCs disrupted mainframes, discount stores disrupted department stores, cellphones disrupted landlines, you get the idea.

In Silicon Valley’s telling, however, “disruption” became shorthand for something closer to techno-darwinism. By imposing the rules of nature on man-made markets, the theory justified almost any act of upheaval. The companies still standing post-disruption must have survived because they were the fittest.

“Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not,” Andreessen wrote in his seminal 2011 essay on software in the Wall Street Journal. “This problem is even worse than it looks because many workers in existing industries will be stranded on the wrong side of software-based disruption and may never be able to work in their fields again.”

Even after the word lost its meaning from overuse, it still suffused our understanding of why the ground beneath our feet felt so shaky. They tried to freak us out and we believed them. Why wouldn’t we? Their products were dazzling, sci-fi magic come to life. They transformed our days, our hours, our interior life. Fear of being stranded on “the wrong side,” in turn, primed us to look to these world-beating companies to understand what comes next.

It is only now, a decade after the financial crisis, that the American public seems to appreciate that what we thought was disruption worked more like extraction—of our data, our attention, our time, our creativity, our content, our DNA, our homes, our cities, our relationships. The tech visionaries’ predictions did not usher us into the future, but rather a future where they are kings.

They promised the open web, we got walled gardens. They promised individual liberty, then broke democracy—and now they’ve appointed themselves the right men to fix it.

But did the digital revolution have to end in an oligopoly? In our fog of resentment, three recent books argue that the current state of rising inequality was not a technological inevitability. Rather the narrative of disruption duped us into thinking this was a new kind of capitalism. The authors argue that tech companies conquered the world not with software, but via the usual route to power: ducking regulation, squeezing workers, strangling competitors, consolidating power, raising rents, and riding the wave of an economic shift already well underway.

Job Insecurity

Louis Hyman’s new book, Temp: How American Work, American Business, and the American Dream Became Temporary, argues that many of the dystopian business practices we associate with fast-growing tech platforms—operating with a small group of well-paid engineers, surrounded by contractors—began in the 1970’s when McKinsey consultants and business gurus pushed for flexible labor over job security as a way to maximize profits. But from its earliest days, Silicon Valley said automation was the reason high-tech companies were more profitable and productive.

For instance, in 1984, along with the Macintosh computer, Apple also introduced a $ 20 million “Robot Factory” in Fremont, California, that the company called “the most automated factory in the Western world,” even though it was 140 human beings, “mostly women, mostly immigrants–who actually put the Macintosh together,” Hyman says. In that, it was like the rest of the fast-growing electronics industry, which relied on undocumented workers and immigrants for its factories and temps for its offices to create a “buffer zone” to keep layoffs off the front page.

Apple’s use of the word “robot” turned out to be a “a very important cultural sleight of hand,” Hyman says. “This rhetorical distinction helped Silicon Valley employ workers in ways that never would have happened in postwar Detroit,” because unofficial and subcontracted workers were not protected by the same wage and safety rights.

To Hyman, an economic historian at Cornell, this explains the absence of labor unions in tech. “Managers wanted obedient employees—preferably immigrants. While technical knowledge, and venture capital, was lauded for the valley’s achievements, that success was made possible by a hidden underworld of flexible, poorly paid labor,” he writes.

Decades later, Uber could stay flexible because workers had few options. But observers often conflated cause and effect, blaming the gig economy, its use of non-employee contractors, and the unfeeling efficiency of smartphone apps. “Uber did not cause this precarious economy. It is the waste product of the service economy,” Hyman counters. “Uber is possible because shift work, even with a W-2 is so bad.”

The social disruption came first, and technology was built to exploit it. Nonetheless, Uber’s association with our ruthless app-driven future served the company well. Regulators were reluctant to enforce the law not only because consumers loved the convenience, but also because we were told that technology made this business model—which shifted risk to cities, workers, and citizens—inevitable.

It may seem self-evident that Silicon Valley is not the alpha and omega of economic change. In fact, the critiques in these books resonate not because they expose the industry’s villainous core or reveal some nefarious intent, but because the authors provide context missing from the tech industry’s often ahistoric version of events. The ruminations on technology are tucked between chapters on Wall Street, big pharma, robber barons, the Sackler family, and McKinsey, gently eroding the idea that the tech industry operates (and should be treated) differently.

The Risk and Reward of Innovation

In The Value of Everything: Making and Taking in the Global Economy, economist Mariana Mazzucato chips away at another myth of Silicon Valley exceptionalism: the idea that big tech and its investors deserve massive profits because they are risk-taking innovators who create value, rather than extract it. “In the case of venture capitalists,” Mazzucato writes, “their real genius appears to lie in their timing: their ability to enter a sector late, after the highest development risks had already been taken, but at an optimum moment to make a killing.”

Much of the hard work of innovation, she argues, has been funded by the government, which sees little direct return. Contrary to tech industry sneering, public funds are responsible for a lot of the technology we attribute to Silicon Valley. Mazzucato points out that GPS was funded by the US Navy, touchscreen display was backed by the CIA, both the internet and SIRI were funded by the Pentagon’s DARPA, and Google’s search algorithm was funded by a National Science Foundation grant.

Yet the government reaps few of the rewards. For instance, the same year the government loaned $ 535 million to solar-power company Solyndra, it also loaned Tesla $ 465 million. “Taxpayers footed the bill for Solyndra’s losses—yet got hardly any of Tesla’s” gains, she says. Solyndra has become “a byword for the government’s sorry track record when it came to picking winners,” a story that has helped keep regulators at bay, she says.

In theory, Mazzucato says, the public sector gets paid back through indirect means, like higher tax receipts, or public good. Instead, the “persuasive narrative” that technological progress would not be possible without Silicon Valley has enabled it to privatize the profits from big data, while offloading all the risks.

Advocacy as Prophecy

In Winners Take All: The Elite Charade of Changing the World, journalist Anand Giridharadas unpacks the same penchant for prediction when it’s applied to philanthropy instead of the free market.

Giridharadas takes readers aboard Summit at Sea, a startup conference on a cruise ship, where world-changers have gathered for a panel on storytelling from investor Shervin Pishevar, who urges the crowd to keep their bodies alive because genetic research that prolongs the human life span will soon arrive. “The idea of retiring at 70 is gonna seem like people telling you at 30 to retire,” Pishevar said.

Giridharadas argues that this is a reflection not of where science is headed, but rather the type of causes favored by tech donors. “Longer lives for rich people were just something that happened to be coming down the pipe. Not so much better healthcare system for all,” he writes.

“Here Pishevar was engaging in advocacy that disguised itself as prophecy,” Giridharadas writes. “VCs and entrepreneurs are considered by many to be thinkers these days, their commercial utterances treated like ideas, and these ideas are often in the future tense: claims about the next world, forged by adding up the theses of their portfolio companies to extrapolating rom their own startup mission statement”

The weather has turned on tech since Giridharadas stepped off that cruise. The arguments in these books would’ve been shrugged off a few years ago, now the authors are invited to give talks at tech events. On Capitol Hill, regulators have finally found their voice; in Silicon Valley, companies are acting contrite. But look a little closer and it’s clear they are still pitching a future where disruptors know best. AI can fix hate speech and misinformation. China is better off with Google’s censored search. Basic income will set us free.

In a winners-take-all economy, it’s hard to prove the rulers wrong. But if the tech backlash wants to become more than just the next chapter in their myth, we have to question the fitness of the companies that survived.


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U.S. entrepreneur bets on new Silicon Valley in west France
December 6, 2017 12:28 pm|Comments (0)

PARIS (Reuters) – When Rob Spiro left San Francisco to settle in France with his wife and kid in 2016, the family chose a mid-sized city on France’s west coast over Paris’ burgeoning start-up scene.

Rob Spiro, American entrepreneur and Director of Imagination Machine, poses in Nantes, France, November 30, 2017. REUTERS/Stephane Mahe

At 32, the Yale-educated entrepreneur and former Google product manager had already co-founded two start-ups, including one sold to Google for $ 50 million in 2010.

In Nantes, France’s sixth largest city, known for its mediaeval castle and whimsical mechanical creatures, he sees the potential for a smaller version of America’s Silicon Valley, home to tech giants Apple, Facebook and Google.

Quality of life, not money, is the key, he says.

“What everybody in Nantes sees and experiences is that there are thousands of people who move here from Paris,” he said at his start-up accelerator, Imagination Machine.

“They’re looking for a better quality of life, but they want to remain in a city that is active and dynamic.”

His “incubator”, financially backed by the region’s biggest companies, opened its doors in June to support the launch of selected start-ups with seed funding and mentoring.

Nantes itself is part of the promotional picture. The city was ranked second after Bordeaux among cities where Parisian executives would wish to move, according to an August poll for recruiting website Cadremploi.fr.

“Here’s the strategy to become the next Silicon Valley: become a place where people, especially young people, want to live,” Spiro said.

With venture capital investments reaching new records in Europe, the competition to lure new tech companies goes beyond the three usual metropolises – London, Paris, Berlin – and now includes smaller cities that bet on their own mix of schools, research centers, investors and culture to lure hotshots.

RECORD INVESTMENTS

Gregoire Monconduit, Atelier Rosemmod CEO, poses in Nantes, France, November 30, 2017. REUTERS/Stephane Mahe

Venture capital firms invested 8.7 billion euros ($ 10.3 billion) in European tech companies in the first half of 2017, up 21 percent from the year before, according to Dealroom. Such investments jumped 18 percent to 1.3 billion over the same period in France, putting it third after Britain and Germany.

The trend is now gaining further momentum, driven by high expectations for business-friendly policies under new President Emmanuel Macron and the uncertainties caused by the British vote to leave the European Union.

Nantes-based iAdvize has benefited from the boom. The company, which offers a marketing platform connecting customers to experts, closed a 32-million-euro fundraising in October.

It is one of the prime examples of Nantes’ success in the tech field, along with Akeneo, which makes software for retailers, and Lengow, which does the same for e-commerce sites.

Slideshow (2 Images)

French venture capital fund Alven has shares in all three.

Part of Spiro’s plan for boosting Nantes’ profile is inviting former U.S. colleagues to come and check it out. Julian Nachtigal, who worked as head of Spiro’s second start-up, signed up for the “French tech visa” available since January.

“I never imagined it would be so easy to get a four-year residential visa to the EU,” Nachtigal said, comparing Europe favorably to the U.S. approach under President Donald Trump.

“There’s a growing trend of people leaving Silicon Valley to live elsewhere,” he added, citing the high cost of living.

Within France, too, a similar trend can be seen. Gregoire Monconduit, co-founder of Atelier Rosemood, an online maker of personalized birth announcements and wedding invitations, chose to move to Nantes years ago from Paris.

“We hesitated between three cities: Lyon, Aix and Nantes,” he said. “We thought we’d be out of Paris for three years, it’s been six years already and it’s the best decision we made.”

A long road lies ahead, however, if Nantes is to catch up with Paris, where a 34,000-square-metre megacampus for start-ups, called Station F, opened in June.

The Parisian region drew three quarters of all venture capital investments in the first half of this year, according to accounting firm EY. The region that includes Nantes got less than 3 percent of the total.

Editing by Luke Baker and Gareth Jones

Our Standards:The Thomson Reuters Trust Principles.

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The 13 Best Quotes About Silicon Valley & The People Who Live In It
October 18, 2016 6:10 am|Comments (0)

Love it or hate it, Silicon Valley continues to be the home of innovation and insanity. Elon Musk, Temple Grandin et al. tell us why.


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The Real CEO Chairs of Silicon Valley
May 30, 2016 1:45 am|Comments (0)

CEO’s can invest in the best; here’s a look at some of the strange and wonderful chairs that top their must-have list.


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Silicon Valley’s Hottest Startup Incubator Takes On This Indian Venture
January 12, 2016 3:35 pm|Comments (0)

Just one year ago, Indian e-coupon aggregator LafaLafa.com was barely a blip in the mind of, well, anyone. It’s been quite the year though – testament to the booming tech environment in India, they’re one of the privileged few to be on their way to be accelerated by one of Silicon Valley’s hottest startup incubators.


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IBM lures startups with Silicon Valley hub for Watson supercomputer
October 12, 2015 1:10 pm|Comments (0)

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SAN FRANCISCO — IBM’s Watson supercomputer is coming to San Francisco to do more business with Silicon Valley startups.

The company will be opening a new cognitive computing hub for Watson, called Watson West, next year in San Francisco. IBM’s Senior Vice President Mike Rhodin announced the news during an event in San Francisco Thursday

The goal of the center is to make it easier for local developers, startups and venture capitalists to tap into Watson’s cognitive computing abilities

As IBM continues to expand its Watson business, opening up an official Bay Area presence represents a big opportunity for the company. Rhodin noted that there are already many startups whose products rely on Watson’s technology.One fantasy sports startup, called Edge Up Sports, for instance, uses Watson APIs to help users make decisions for their fantasy teams Read more…

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Samsung says new U.S. offices are its ‘biggest investment in Silicon Valley’ to date
October 7, 2015 2:05 pm|Comments (0)

samsung-new-office-silicon-valley

Samsung officially opened the doors to its new 1.1-million-square-foot Silicon Valley offices Thursday, more than 30 years after its arrival in the San Jose tech corridor in 1983.

The building will house various research labs dedicated to semiconductors, LEDs and displays, staff in sales and marketing, and other support areas, the company said.

“[We are] laying the groundwork for a more aggressive pace of growth over the next several decades,” said Samsung’s chief executive, Dr. Oh-Hyun Kwon, at the grand opening ceremony.

Meanwhile, the company’s president of its U.S.-based device solutions operations, Jaesoo Han, said that the move “represents a major milestone as we open our most strategically important Samsung facility in the U.S., and also our biggest investment in Silicon Valley.”

samsung-office

Samsung also announced that it has established a $ 1 million STEM College Education Scholarship Fund. In its own words:

Deserving university students who are currently enrolled in STEM-focused programs at a California State or University of California school will benefit from this program, beginning with a $ 50,000 gift to San Jose State University this year. Each scholarship will cover tuition and living expenses for one year.

But the announcement of the new office has been largely overshadowed by news in virtual reality today: We reported that the Samsung Gear VR will launch as a consumer product this November for $ 99. (You can read our full roundup from today’s Oculus event here.)

Earlier this week, Samsung unveiled its new fonts-inspired Serif TVs, and shared more about how it relies on startups to stay ahead on technological innovation.

If you happen to be passing through the area, Samsung’s new building certainly looks worth checking out.

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Samsung says new U.S. offices are its ‘biggest investment in Silicon Valley’ to date
September 25, 2015 10:55 am|Comments (0)

samsung-new-office-silicon-valley

Samsung officially opened the doors to its new 1.1-million-square-foot Silicon Valley offices Thursday, more than 30 years after its arrival in the San Jose tech corridor in 1983.

The building will house various research labs dedicated to semiconductors, LEDs and displays, staff in sales and marketing, and other support areas, the company said.

“[We are] laying the groundwork for a more aggressive pace of growth over the next several decades,” said Samsung’s chief executive, Dr. Oh-Hyun Kwon, at the grand opening ceremony.

Meanwhile, the company’s president of its U.S.-based device solutions operations, Jaesoo Han, said that the move “represents a major milestone as we open our most strategically important Samsung facility in the U.S., and also our biggest investment in Silicon Valley.”

samsung-office

Samsung also said that it has established a $ 1 million STEM College Education Scholarship Fund. In its own words:

Deserving university students who are currently enrolled in STEM-focused programs at a California State or University of California school will benefit from this program, beginning with a $ 50,000 gift to San Jose State University this year. Each scholarship will cover tuition and living expenses for one year.

But the announcement of the new office has been largely overshadowed by news in virtual reality today: we reported that the Samsung Gear VR will launch as a consumer product this November for $ 99. (You can also read our roundup from that event here.)

Earlier this week, Samsung unveiled its new fonts-inspired Serif TVs, and shared more about how it relies on startups to stay ahead on technological innovation.

More information:

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