The SVB debacle has exposed the hypocrisy of Silicon Valley

This morning’s Observer column:

The first thing to understand is that “Silicon Valley” is actually a reality-distortion field inhabited by people who inhale their own fumes and believe they’re living through Renaissance 2.0, with Palo Alto as the new Florence. The prevailing religion is founder worship, and its elders live on Sand Hill Road in San Francisco and are called venture capitalists. These elders decide who is to be elevated to the privileged caste of “founders”.

To achieve this status it is necessary to a) be male; b) have a Big Idea for disrupting something; and c) never have knowingly worn a suit and tie. Once admitted to the priesthood, the elders arrange for a large tipper-truck loaded with $100 bills to arrive at the new member’s door and cover his driveway with cash.

But this presents the new founder with a problem: where to store the loot while he is getting on with the business of disruption? Enter stage left one Gregory Becker, CEO of SVB and famous in the valley for being worshipful of founders and slavishly attentive to their needs. His company would keep their cash safe, help them manage their personal wealth, borrow against their private stock holdings and occasionally even give them mortgages for those $15m dream houses on which they had set what might loosely be called their hearts.

So SVB was awash with money. But, as programmers say, that was a bug not a feature…

Read on

Wednesday 19 August, 2020

Quote of the Day

“He is the man who sits in the outer office of the White House hoping to hear the President sneeze”.

  • H.L. Mencken, writing about the Vice President, 29 January 1956.

Musical alternative to the morning’s radio news

Anne-Sophie Mutter, Daniel Barenboim, Yo-Yo Ma:
Beethoven: Triple Concerto in C Major, Op. 56 No. 2

5 minutes and 22 seconds of pure bliss.

Link

Note: I’ve decided that the embedded links that I’ve been providing up to now create more problems for some readers than they’re worth. So henceforth each musical interlude will just have a simple URL link. Often, simplest is best.


A European at Stanford

Terrific New Yorker profile of the Dutch politician (and former MEP) Marietje Schaake and what she found when she entered the belly of the Silicon Valley beast.

In conversation and lectures, Schaake often describes herself as an alien, as if she were an anthropologist from a distant world studying the local rites of Silicon Valley. Last fall, not long after she’d settled in, she noticed one particularly strange custom: at parties and campus lectures, she would be introduced to people and told their net worth. “It would be, like, ‘Oh, this is John. He’s worth x millions of dollars. He started this company,’ ” she said. “Money is presented as a qualification of success, which seems to be measured in dollars.” Sometimes people would meet her and launch directly into pitching her their companies. “I think people figure, if you’re connected with Stanford, you must have some interest in venture capital and startups. They don’t bother to find out who you are before starting the sales pitch.”

These experiences spoke to a pervasive blurring between the corporate and the academic, which she saw almost everywhere at Stanford. The university is deeply embedded in the corporate life of Silicon Valley and has been directly enriched by many of the companies that Schaake would like to see regulated more heavily and broken apart; H.A.I., according to one of its directors, receives roughly thirteen per cent of its pledged gifts from tech firms, and a majority of its funding from individuals and companies. The names of wealthy donors on buildings and institutes,the department chairs endowed by corporations, the enormous profits from high tuition prices—none of this happened at her alma mater, the University of Amsterdam, where tuition is highly subsidized and public funding supports the operating expenses of the university. (The University of Amsterdam, of course, is not internationally known as an incubator of startups and a hotbed of innovation.) Beyond Stanford, the contrasts seemed just as stark. Roughly sixty per cent of housing in Amsterdam is publicly subsidized. The main street running through Palo Alto, by contrast, is lined with dozens of old R.V.s, vans, and trailers, in which many semi-homeless service workers live. The public middle school in Menlo Park, where Schaake now resides, has students who are homeless, although the area’s average home value is almost $2.5 million.

When I first heard that she was going to Stanford, I feared for her sanity. Having read this, I think she’ll be ok. Her bullshit detector is still in good working order.


Scream if you want to go faster: Johnson in Cummingsland

This is my long read of the day. Terrific essay by Rachel Coldicutt

The emergence of a patchwork of UK innovation initiatives over the last few months is notable. Rather than fiddling with increments of investment, there is a commitment to large-scale, world-leading innovation and enthusiasm for the potential of data.

But there is also a culture of opacity and bluster, a repeated lack of effectiveness, and a tendency to do secret deals with preferred suppliers. Taken together with the lack of a public strategy, this has led to a lot of speculation, a fair few conspiracy theories, and a great deal of concern about the social impact of collecting, keeping, and centralising data.

But it seems very possible that there is actually no big plan — conspiratorial or otherwise. In going through speeches and policy documents, I have found no vision for society —save the occasional murmur of “Levelling Up” — and plenty of evidence of a fixation with the mechanics of government.

This is a technocractic revolution, not a political one, driven by a desire to obliterate bureaucracy, centralise power, and increase improvisation.

And this obsession with process has led to a complete disregard for outcomes.

The thing about Cummings — and the data-analytics crowd generally — is that they know nothing of how society actually works, and subscribe to a crippled epistemology which leads them to think that the more data you have, the more perfect your knowledge of the world.

Actually, most of them don’t even realise they have an epistemology.


Furloughed Brits got paid not to work—but two-thirds of them worked anyway

From Quartz:

Economists at the universities of Oxford, Zurich, and Cambridge looked into the UK furlough program, which supports one-third of the country’s workforce, accounting for more than 9 million jobs, furloughed by mid-June 2020. Under the scheme, the UK government pays workers up to 80% of their salary for a limited period of time, allowing companies to retain them without paying them—though companies were allowed to top up the government money.

Until July 1st, the plan also specifically prohibited workers from working for their employers when on the scheme. But the researchers, who surveyed over 4,000 people in two waves in April and May 2020, discovered a striking fact: Only 37% of furloughed workers reported doing no work at all for their employers during that time.

In some sectors, the imperative to work definitely came from employers. In the the sector termed “computer and mathematical,” 44% of those surveyed said they had been asked to work despite being furloughed.

But it also seems that many employees chose to work because they wanted to. Two-thirds of all workers said they had done some work despite being on furlough, even though only 20% were actually asked to. Perhaps unsurprisingly, those on higher salaries, those able to work from home, and those with the most flexible contracts were most likely to do some work.


One in five college students don’t plan to go back this fall

As the coronavirus pandemic pushes more and more universities to switch to remote learning — at least to start — 22% of college students across all four years are planning not to enroll this fall, according to a new College Reaction/Axios poll.

Among other things, the report claims that 20% of Harvard undergraduates have decided to defer for a year. Harvard (a hedge fund with a nice university attached) can ride out that kind of dropout, but many poorer institutions will struggle.

Source: Axios


Summer books #8

Puligny-Montrachet: Journal of a Village in Burgundy by Simon Loftus, Daunt Books, 2019.

If you like France, or wine, or (like me) both then you’ll enjoy this eccentric but utterly charming social history of the village (well, pair of villages) from which some of the country’s finest dry white wine comes. Loftus is a very good social historian, and his account of what are, in most respects, unglamorous villages is both affectionate and unsentimental. Some good friends of mine, when driving home to Holland from Provence, always used to have an overnight stop in Puligny, from which they would depart the following morning with a car boot full of the most wonderful wine. My fond hope is that, when the plague recedes a bit, we might one day do the same.


This blog is also available as a daily email. If you think this might suit you better, why not subscribe? One email a day, delivered to your inbox at 7am UK time. It’s free, and there’s a one-click unsubscribe if you decide that your inbox is full enough already!


Silicon Valley discovers politics

This morning’s Observer column:

For many years, Silicon Valley companies didn’t even bother to have lobbyists in Washington. As late as 2015, Eric Schmidt, then the executive chairman of Google, was predicting that authoritarian governments would wither away in a comprehensively networked world, which made some of us wonder what exactly Dr Schmidt was smoking.

During that period, governments generally played along with this myth of their irrelevance. Presidents and prime ministers queued up for invitations to the campuses of the Silicon Valley giants. And insofar as the tech moguls paid any attention to presidential politics, it was to support the Democrats. Schmidt, for example, played a big role in Hillary Clinton’s campaign for the presidency.

Unsurprisingly, the valley was thunderstruck by the election of Donald Trump…

Read on

Silicon Valley’s monoculture

Jessica Powell, formerly Head of Public Relations at Google, has published a satirical novel about the tech industry. I haven’t read it yet, but noticed that Farad Manjoo of the New York Times had, and was struck by his commentary on it, especially this bit:

Ms. Powell smartly recognizes a truth that many in the industry elide: A lack of diversity is not just one of several issues for Silicon Valley to fix, but is instead the keystone problem — the source of much else that ails tech, from its recklessly expansionist zeal to the ways its brightest companies keep stepping in problems of their own making.

In short, Silicon Valley’s problem is sameness, stupid — and in Ms. Powell’s telling, we are not going to get a better, more responsible tech industry until we get a more intellectually diverse one.

“I don’t think that everyone has an equal voice,” Ms. Powell said in an interview. “Even putting aside broader issues around gender diversity, ethnic diversity or class diversity, there’s also an issue around people’s educational backgrounds. If you have a hierarchy where engineers are at the very top and the people who are interfacing with the outside world are a couple rungs below that, you really miss something when those people don’t have an equal voice at the table.”

She added: “It’s a monoculture of thought, and that’s a real problem.”

It is. I’ve long thought of Silicon Valley as a Reality Distortion Field, inhabited by rich male nerds who think that Palo Alto is the Florence of Renaissance 2.0 and they are the Medici. It’s all baloney, of course, but it’s amazing how sudden wealth insulates people from reality.

Accidental empires

From an interesting (if sometimes chaotic) interview by Kara Swisher with Adam Fisher, author of Valley of Genius: The Uncensored History of Silicon Valley:

“Silicon Valley still actually makes things, but less and less. We had an economy that was based on making things first, making chips and then computers, and then making bits of software, and then at some point we started getting everything for free; in quotes, “free.” And it stopped being an economy that made things. It became an economy where people made money by extracting things, by mining data.

So it flipped from a making economy to an extraction economy, and we have all the dysfunction that you would see in a mining site in the third world. Mining economies, extraction economies, are kind of corrupt economies because one person or one company ends up controlling everything.”

Fascinating, rambling interview with stories that sometimes bring one up short. Worth reading (or listening to) in full.

So are the Democrats ready to unfriend Facebook?

Nice Observer piece by Thomas Frank, reminding us of how Obama & Co drank the Facebook Kool-Aid:

Seated with a panel of entrepreneurs from around the world, the president [Obama] lobbed his friend Zuckerberg an easy question about Facebook “creating this platform for entrepreneurship around the world”. In batting it out of the park, the Facebook CEO, clad in his humble costume of jeans, T-shirt and sneakers, took pains to inform everyone that what animated him were high-minded ideals. “When I was getting started,” he burbled, “I cared deeply about giving everyone a voice, and giving people the tools to share everything that they cared about, and bringing a community together …”

No rude senator spoke up to interrupt this propaganda. Instead, Zuckerberg went on to describe his efforts to connect everyone to the internet as a sort of wager on human goodness itself.

“It’s this deep belief that you’re trying to make a change, you’re trying to connect people in the world, and I really do believe that if you do something good and if you help people out, then eventually some portion of that good will come back to you. And you may not know up front what it’s going to be, but that’s just been the guiding principle for me in the work that we’ve done …”

That’s how it works, all right. Gigantic corporate investments are acts of generosity, and when making them, kind-hearted CEOs routinely count on Karma to reward them. That’s the “guiding principle”.

Reader, here is what the president could be heard to say as Zuckerberg ended this self-serving homily: “Excellent.”

Read on

High IQ + childlike naiveté = Silicon Valley

Today’s Observer column:

Put simply, what Google and Facebook have built is a pair of amazingly sophisticated, computer-driven engines for extracting users’ personal information and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely unregulated and opaque to everyone except the companies themselves.

The purpose of this infrastructure was to enable companies to target people with carefully customised commercial messages and, as far as we know, they are pretty good at that. (Though some advertisers are beginning to wonder if these systems are quite as good as Google and Facebook claim.) And in doing this, Zuckerberg, Google co-founders Larry Page and Sergey Brin and co wrote themselves licences to print money and build insanely profitable companies.

It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted ideological and political messages to voters. Hence the obvious question: how could such smart people be so stupid?

Read on

Sexism in the Valley

This morning’s Observer column:

A few months ago, a Google engineer named James Damore wrote an incendiary internal memo on a 12-hour flight to China. He had just attended a “diversity programme” run by his employer, which had clearly annoyed or disturbed him. “I heard things that I definitely disagreed with,” he later told an interviewer. He said there was a lot of shaming at the programme. “They said ‘No you can’t say that, that’s sexist… You can’t do this…’ There’s just so much hypocrisy in a lot of the things that they’re saying.”

Damore’s 10-page memo – entitled “Google’s Ideological Echo Chamber: how bias clouds our thinking about diversity and inclusion” – went viral within Google, and eventually news of it reached the outside world. When it did, it provoked a predictable firestorm…

Read on