By James Santagata
Principal Consultant, SiliconEdge
One of the frequent topics we discuss besides the myth and meme that "Necessity Is the Mother of All Invention" is the fact many of Silicon Valley's most vaunted startups are all post-tech businesses.
Yes, you read that right. Post-tech.
They surely use technology in their day-to-day operations just as UPS does, the Hilton hotel chain or even Walmart. However, many of these startups may actually use even less tech than these brick and mortar firms. Examples of such startups and ventures include Airbnb, Uber and Zappos which is analogous to an online Nordstrom in terms of the customer service experience.
What does all this mean?
As we've discussed many times before, this means that what many of these startups will face (are facing) as their primary challenge is human in nature not technical.
Specifically, the markets that post-tech startups will want or tend to target or those which are massively inefficient (and have huge profit potential with tepid or ossified competition) due to the use of regulatory capture by rent-seeking incumbents.
The transportation industry is a perfect example of this as seen in the TechCrunch article below (although the writer seems oblivious to what this term or concept) whereby these rent seeking incumbents are using regulatory capture to have the French government force more efficient and consumer desired transportation services to artificially extend customer wait times by 15 minutes (apparently the average wait time for some of these alternative car services is only 7 minutes).
You can't make this up. But it is should be expected, not just in the tech world but especially the post-tech world.
Uber, LeCab And Others Now Have To Wait 15 Minutes Before Picking You Up In France
Posted by Romain Dillet (@romaindillet)
At first, it was just an idea, but this bill is now very real — urban transportation services like Uber and LeCab will now have to wait 15 minutes in France before letting a customer in the car. Back in October, the French government mentioned this piece of legislation as these new services would hurt traditional cab drivers. But nothing was set in stone until the AFP spotted the new bill today — and this news comes as a surprise.
In France, you have to pay a hefty price to get your taxi license. As a payback, the taxi industry is very regulated in this country, and drivers can expect to get a healthy influx of clients.
Yet, when the young and fearless startups appeared, many taxi drivers protested against LeCab, Chauffeur-privé, SnapCar, Allocab, Voitures Jaunes and Uber. While the French law calls these companies “VTC” services (car services), taxi drivers think that they are direct competitors — and smartphones certainly make Uber and others act like taxi services. That’s why the government sided with taxi drivers and talked about creating the 15-minute rule.
Shortly after that, Allocab, Chauffeur-privé, LeCab and SnapCar put together an online petition against the project. Then, nothing happened. It was like the government had forgotten about this idea.
In November, French heavyweight LeCab raised $6.8 million (€5 million) in Series B funding. At the time, I wrote that it was “a good time for it to raise” with the impending changes.
Last week, the Competition Authority (Autorité de la concurrence) even wrote that the 15-minute delay was a bad idea.
“This competitive imbalance is not necessary to protect the taxi monopoly on this market. Moreover, it potentially contradicts the objective to improve free traffic flow,” the report says.
By James Santagata
Principal Consultant, SiliconEdge
Ask the average person to think of Japan and then to share with you the first thing that pops into their mind. I can guarantee you that they'll almost certainly read back from one or more of these several powerful and well-established myths and memes:
1. High-Tech Japan:
A High-tech and Cyberpunk culture and society comprised of very polite albeit non-thinking and undifferentiated robots and drones all clothed similarly in their business or school uniforms and all marching off to the office or to school. Visitors find themselves amazed by the high-tech, 20-function paperless Toto toilets, the jaw-dropping variety of merchandise dispensed by ubiquitous vending machines, the automated, elevator-driven parking structures, auto-opening doors, sensor-controlled escalators and so on.
2. Old Japan:
The nostalgic view of Japan found in Tom Cruise's "The Last Samurai" and other movies before which focuses on the picturesque Japan. The culture and the style. The polite, disciplined demeanor of the people. The attention to detail and quality. The lacquer ware artisan, the sword craftsman. Mount Fuji (富士山), Kyoto, Nara and Kamakura. Geisha. Sumo. Onsens. Samurai. Ninja. Swords. Shamisen. Kimono.
3. Modern Japan / Culture Japan:
The exporting of top talent in baseball as well as having its players picked up by European soccer clubs. The deep stable of world-class swimmers, gymnasts, wrestlers and figure skaters. Beyond this, the delicious, healthy cuisine of Japan: sushi, sashima and various other staple dishes of Japan. Karaoke, manga, anime, video games. Modern Japan is about talent and culture.
4. WWII Japan:
Banzai human waves attacks, Kamikaze pilots, rapacious invasions of civilian cities along with soldiers and civilians who would rather toss themselves off the cliffs at Saipan than surrender.
5. Basket-case Japan:
20 years of economic malaise, a deflating economy, aging population, declining birthrate, a broken self-image and the inability to create or innovate as China continues to eclipse Japan in terms of GDP all while the world waits for Japan to sink into economic obscurity and irrelevance.
I've discussed and hopefully skewered a few of these myths and memes in detail, in particular:
1. Japan May Be Able To Compete Globally But Not Yet
2. Can Japan Compete? You Betcha And Here's Why
3. Japan's Problem: Severe Lack Of Leadership Not A Lack Of Innovation Or Creativity
We've also discussed these topics in detail (articles and podcasts) over at FirstPoint Japan. The FirstPoint Japan Expert Interview Series may be of interest to you.
The New York Times' Martin Fackler (see below) wrote a nice piece on some of the startup activity happening in Japan, however, I think it still misses some of the key points of where Japan has been, where it is, and what it needs.
In a nutshell, over the last 30 years the Japanese economy has been held captive by the power wielded by ossified electronic giants such as Panasonic and others, as well as the very real monetary, career and social risk that entrepreneurs face in Japan which is only compounded by the huge amount of regulatory capture found in Japan.
Surely Japan has had world class entrepreneurs before, such as Akio Morita who founded Sony, Soichiro Honda who founded Honda,Konosuke Matsushita who founded Panasonic (formerly known as Matsushita) and Kiichiro Toyoda who took his families Toyoda Loom Works and transformed them into an automotive powerhouse called Toyota.
The point remains, though, that if Morita were still alive today, he wouldn't recognize Sony as it stands today, and worse, the suits currently running Sony would never, ever hire a maverick entrepreneur and genius like Morita.
Akio Morita was Japan's Steve Jobs, except that he was Steve Jobs, before Steve Jobs even got out of his diapers.
How aggressive and prolific was Akio Morita?
Well, in terms of fights. he didn't not shy away, not only co-penning the somewhat acerbic book "The Japan That Can Say No: Why Japan Will Be First Among Equals" (and see Amazon) but also refusing to bow to arm-twisting by the US content industry that wanted to ban his Betamax recorder.
Morita fought this case all the way to the US Supreme Court (Sony Corp. of America v. Universal City Studios, Inc) and won!, making this not only a victory for Morita and Sony but for all other electronic manufacturers after them and especially making this a victory for us lowly consumers.
If you look closely at Japan, you'll find that it is usually during absolute or relative social or economic chaos that such dynamic entrepreneurs have risen. Mind you, this is not because "necessity is the mother of all invention" but because the chaos at had had broken or cracked the social conformity or regulatory capture just enough for a few green shoots to sneak through.
These green shoots, these entrepreneurs and creators and makers, the were always there. They always had the ability to perform. But they were choked out. By a combination of social conformity and most importantly rent-seeking incumbents.
In recent years, perhaps over the last three or four years, Japanese entrepreneurs and startups as well as entrepreneurs and startups in general are getting media attention (thanks in part to the visibility of Steve Jobs / Apple / iPhone and Mark Zuckerberg / Facebook among others). And with that, it has slowly become "okay" to be an entrepreneur again while at the same time the immediate financial and social risks are greatly reduced and even longer term social and career risks are lower.
In other words, currently, huge momentum is building in Japan, it's under surface and it's not just Japanese entrepreneurs but foreigners as well, many of whom have relocated in Japan from tech hot spots in the US including Silicon Valley, New York and everywhere in between.
These startups are critical to put further pressure on the ossified Japanese corporations to either compete and streamline their business OR die a quick, brutal death and then be composted, releasing and recycling their talent and know-how back into the pool of Japanese labor, intellectual property and financial pool.
It's exactly that intra-industry competitiveness and dynamism that is a hallmark of Silicon Valley's constant success in the world technology markets (and post-tech as well) and conversely it was exactly that lack of intra-industry competitiveness and dynamism that was the death knell for Detroit's once vaunted auto industry.
Japanese Start-Ups Channel Samurai Spirit
By Martin Fackler
Published: December 25, 2013
TOKYO — The 20-somethings in jeans sipping espresso and tapping on laptops at this Tokyo business incubator would look more at home in Silicon Valley than in Japan, where for years the surest signs of success were the gray suits of its corporate salarymen. But for those hoping the nation’s latest economic plan will drag Japan from its long malaise, the young men and women here at Samurai Startup Island represent a crucial component: a revival of entrepreneurship.
The signs of that comeback are still new, and tentative enough that the statistics on start-ups and initial public offerings have not caught up. But analysts and investors report that hundreds of new Internet and technology-related companies have sprung up in the last two to three years, creating an ecosystem of incubators like Samurai Startup Island and so-called accelerator new venture investment funds, which invest in early-state start-ups in hopes of cashing in.
For years, sagging entrepreneurial spirit has been cited as a major reason for Japan’s inability to save itself from a devastating deflationary spiral. The nation that produced Sony, Toyota and Honda has created few successors.
When he started investing in new companies six years ago, Mr. Sakakibara was lucky if two would-be entrepreneurs approached him in a week to seek financing. Now he gets two such queries a day, he said.
He and others closely watching start-ups attribute the increase in interest to cultural shifts that have slowly chipped away at Japan’s famously insular culture.
Having grown up immersed in an online world that stretches beyond national borders, young Japanese appear more willing to draw inspiration from foreign role models like Steve Jobs, the founder of Apple. And having seen Sony cede market share to South Korea’s Samsung, many no longer share their salarymen fathers’ belief in the permanence of established corporations or lifetime jobs.
“In a world where everything is risky, it’s better to be your own boss, in charge of your own destiny,” said Yoshinori Fukushima, 25, whose year-old Internet company has grown to 14 employees.
Some warn that Japan has a way to go to become a hotbed of break-the-boundaries venture behavior. Noriyuki Takahashi, who specializes in entrepreneurship at Tokyo’s Musashi University, pointed to comparative global surveys that place Japan at the bottom among leading Western and Asian economies in social acceptance of entrepreneurs.
By James Santagata
Principal Consultant, Silicon Edge
I've had in interest in Korea for quite a long time both in cultural and business terms so you can imagine how quickly I was drawn to the article entitled, "Can Korea’s new culture of business creativity rival Silicon Valley?".
It's fascinating to me for several reasons.
First, I read a book on this subject back around 1990 entitled, "Is Korea the Next Japan?: Understanding the Structure, Strategy and Tactics of America's Next Competition" by T.W. Kang.
Now, T.W., Kang while not a famous author by any stretch of the imagination, is extremely insightful in his writing and should be famous as he writes from a unique perspective -- a Korean raised in Japan and educated in the US (BSEE MIT / MBA Harvard). He is trilingual and as an "outsider" to all three cultures slices and dices these cultures and explains them like a boss.
Apparently T.W. Kang is now Managing Director of Global Synergy Associates, a management consulting firm based in Tokyo and prior to this he was on the advisory board of advisors of a number of high tech ventures including GEM Services, Inc., Synaptics, Inc, and SiliconWave, Inc. and was a General Manager for Intel Japan.
Second, around 1995, when I was working at Applied Materials (AMAT), the Japanese were still dominating chip production, primarily memory chips, and yet the Koreans were coming on fast. Not only were they pushing their R&D forward extremely aggressively, but they began mimicking and borrowing Japanese chip production techniques and technologies. For instance, on the semiconductor fabrication tools that Japanese firms would buy from Applied Materials they often had a certain configuration, in both the components they chose such as the Mass Flow Controllers (MFCs) but also in the gas panel designs -- and this "signature" look was across Japanese chip makers. And yet, by 1996, if you took a Japanese process engineer onto the floor of AMAT's manufacturing facility and showed them the gas panel of a Korean chip maker (covering up any signage or badges), the Japanese process engineer would broadly smile and say, "It's for a Japanese chip maker!". If you then told them the truth, it was for a Korean chip maker, they be, "What?! Really?!". How do I know this is true? Because I did it and experienced it with a co-worker on several ocassions.
What was happening even in 1995 and 1996 is that Koreans were going in all the way to own these component markets. And even when the 1997 Asian Financial Crisis hit, they keep right on investing in component development and production tools. They also, along with Japan invested very heavily in telecom infra for their country giving them an early lead in pervasive, persistent high-bandwidth communication network all for a pittance.
Third, after the dot com / dot bomb crash, the Koreans continued building and investing. But unlike the Japanese, how in modern times, shy away from getting into a scrap or lawsuit, the Koreans almost relish it. When someone like Steve Jobs / Apple sues Samsung, they are scrappy and come out fighting. And then they use other leverage they have, like the Samsung components that Apple relies for its iPhone. These Korean firms also took advantage of the labor immobility and horrible talent management policies found in Japan, such as the refusal to hire from direct competitors or to hire a mid-career executive or old engineer. Korea took them all and gave them a home. And these Japanese engineers produced.
Can Korea’s new culture of business creativity rival Silicon Valley?
By Mario Gamper, VentureVillage
Published on December 24, 2013 4:00 PM
“This is the best time ever to start your company in Korea,” said Dreamcamp Manager Ryu Hahn. The coworking space and incubator is funded with more than $450m by 20 Korean banks who have formed the “Banks Foundation for Young Entrepreneurs”. Offering a wide range of support, from pitch clinics to funding, Dreamcamp is just one example of the structures for new business ideas that popped up in the last couple of years.
“Korea is now the biggest startup in the world,” smiles Richard Min, cofounder of the SeoulSpace incubator and brand new Fashion Tech (FT) Accelerator. “60 per cent of all venture capital here is government-backed. In the US it’s one per cent,” said Min.
This creates a unique startup ecosystem: “Korea has always been a top-down economy. The government has now decided to merge it with bottom-up creativity. We’re creating a completely new business culture, one that’s not even seen in Silicon Valley, or anywhere else,” added Min.
In 2012 the 10 biggest conglomerates were responsible for more than 80 per cent of Korea’s GDP, more than ever before. For decades the Chaebol – a form of business conglomerate in South Korea – throttled local entrepreneurship. In its quest to create new jobs, the Korean government is finally taking the side of SMEs. And it’s telling them to take bigger risks in hopes this will lead them to bigger markets.
“Before this year, almost all support was about creating a new startup. But this year they really pushed startups to go abroad,” Daniel Cho, cofounder of Step, a journaling app that used government funds to send a small team to the Plug & Play accelerator in Sunnyvale.
“Korea used to be a Galagapos of business creativity,” said Kim. An ecosystem so specific, that ideas and solutions could be successful here, but wouldn’t make it anywhere else. “This has changed.”
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Merry Christmas & Happy New Year!
By James Santagata
Principal Consultant, SiliconEdge
Many executive and business coaches proudly and publicly proclaim:
"I'm not here to teach you anything -- because I can't do that.
Rather I'm here to bring the best out of you, which you need to have brought out."
I’m adamantly opposed to this type of thinking and this is where my philosophy, frameworks and methodologies part ways with much of the establishment coaching industry and even media-annointed “coaching gurus”.
You see, unlike so many other executive and business coaches who are operating under the principle that it's somehow wrong to teach you things or to directly and explicitly provide a model for your success, I'm actually here to teach you things and provide a variety of models for success and improvement.
Not to tell you things, but to teach you things.
Sometimes you'll discover the solutions on your own. Other times, I'll drop hints or steer you in certain directions for exploration and understanding. But if or when that no longer works for you or we are not satisfied with the results, I'll step in and then together we'll look at various solutions and models, trying them on for size and future-pacing them to ensure efficacy and fit.
You see, besides teaching, advising and guiding you, I'm here to help you solve problems. And yet within the traditional executive and business coaching industry it's almost verboten to do so. Perhaps this is because some many coaches don't have a sufficiently stocked tool box or a set of proven models to work with, choose from and future pace.
From my vantage point, this actually wouldn't be surprising, since in the current business environment so many the current Western coaching models along with many of the associated coaching techniques appear to have hit a wall if they aren't straight-out broken.
The fact is many of these models and techniques were created by pure academicians who never had to battle-test, let alone battle-prove these models and techniques in the fast-paced and, more often than not, viciously competitive corporate world.
If your coach can't help solve your problem, why work them? Anything less than solving a problem is simply therapy. There's nothing wrong with that as we all need a shoulder to cry on once in a while and it's always help to have someone available with which we can share our difficulties. But imagine how much better it would be to solve and mitigate if not eliminate the issues and obstacles confronting or confounding us.
The challenges facing executives as well as entrepreneurs are legion, ranging from communication issues, office politics, marriage and relationship problems and so forth. All of these are addressable and must be addressed for the executive or entrepreneur to operate at peak or near peak effectiveness without over revving their engine and burning out.
Problems never take years to solve, unless you go a therapist.
By James Santagata
Principal Consultant, SiliconEdge
Coming across entitled, "Foreign startups in Silicon Valley still a rarity" I immediately asked myself two questions:
a. Why is that? (first thought: money & visas)
b. Does it even matter to be in the Valley now?
I first moved to the Valley at the end of January, 1995 and although it seems like yesterday I'm still amazed to see how far both the internet and technology in general have come in terms of their capability and diffusion into our society. For instance, while many newspapers at ground zero of the dot com boom, such as the San Jose Mercury News, used to worry and fret about the so-called "digital divide", we see how misguided those worries were as even the Bloods and Crips have made great use of Facebook, Twitter and other online media and communication services.
The fact is, these once nascent and intriguing technologies have now become deeply embedded in our daily existence to the very point that although we rely on them for the most mundane tasks, they have effectively become invisible to us. In fact, they only time we do notice the technology that we've come to rely on is when it fails to work or breaks such as during a blackout.
Over the last 18 to 20 years (and especially in the last 7 years) the skills and knowledge need to quickly and cost effectively build and mass produce these technologies and tools have now become all but common place. Moreover the amount of computing power (and bandwidth) we have stuffed into just our smart phones is mind boggling as is the ability to buy right off the shelf parts and services of most of the things we need to create just about any product or business and to do so immediately.
We are now longer concerned with the theory or possibility behind building a router or the design and development of a packet switched (rather than circuit based) networks. It's done and proven. Similarly, IPTV is no longer a dream but a reality.
I could go on and on but I won't bore you.
Beyond core technology, the Valley has grown and matured in the knowledge, processes, skills and resources needed to not only build a product but to launch a company and to make it successful (although, often times, the Valley still greatly struggles with market-based productization and ultimately the monetization of the product. These two sticking points, by the way, provide huge opportunities for the next generation of entrepreneurs to focus on.
It's again hard to believe, but much of this was only possible in the late 1990's and again in the mid 2000's. First, we had the explosion of open source software, from Linux to MySql to Perl to PHP to Python and beyond with various applications available to all. This was coupled with the continuing march forward of technology-price improvements where the price point of servers, routers, SANs and bandwidth plummeted as the power, stability, ease of use and ubiquity rocketed upward. The knowledge of how to set these up and admin them diffused as well -- from the US and Western developed countries into developing countries and even as far as to the pimply-faced high-school kid across the street who could setup or administer your Linux server. This helped pushed the total cost of ownership (TCO) of these technologies down even further, and making them even more ubiquitous and more intertwined in our lives, whether we knew it or not.
This continued after the Dot Com Boom (or Dot Com Crash depending on your point of view), however, around 2005 and 2006 something else happened. We began to see huge improvements in both the knowledge, formation and management of startups and venture capital investments. Once opaque and arcane industries, terms and activities such as the VC industry, the meaning of the terms on a term sheet (such as a liquidity preference or cramdown) as well as the funding raising process itself become transparent, almost overnight!.
What was once at best, Tribal Knowledge regarding the startup process and how best to anticipate and overcome common obstacles and business threats soon became openly discussed, then codified and finally shared widely to the point that by reading perhaps 15 bloggers in a variety of thematic areas as well as perhaps 30 additional books, a fairly intelligent person running a startup or looking to launch a startup could go from Newbie to low-level Sage in a matter of 3 to 6 months.
With all of these aforementioned changes as well as the codification and diffusion of knowledge it begins to beg the question, "Is being in Silicon Valley even important anymore?"
I would say it was 10 years ago. The knowledge, what there was of it, was very silo-ed as well as tribal and often very anecdotal in nature.
But now with all of the knowledge, mentors, books, forms, templates and so on I question that. Further, most of the "tech pain" and "tech risk" has been taken out of the equation.
No longer do you need to rent some space at some sketchy colo at a former bomb shelter in San Jose or Mountain View where you need to provision your own rack and where you rack is separated from the next customer's rack by some chicken wire (anyone remember Best Internet on Winchester Blvd that sported the chicken wire colo cages?)
Heck, you no longer even have to physically be there. Better yet, provisioning happens at the click of a button and almost immediately. And with cloud-based services like Amazon's AWS, scalability isn't a problem either. Only the cash to pay for it.
In effect, so many of these startups are post-tech. Sure, these startups use tech, just as KFC, Walmart or UPS does, but those firms aren't tech firms either. Even vaunted Silicon Valley startups like Airbnb and Uber aren't tech firms. Netflix may be now that it's streaming media, but before that, it was a mail order rental house for DVDs. And what about Groupon? Is that a tech play?
Now of this makes any of these startups "less" or "more" of a startup as it is simply a reality of where the startup world is today.
So why should you be in the Valley?
Well, some people will do it just for a challenge -- you won't find a more concentrated community of super-switched on, open-minded, openly-sharing people anywhere. Sure there are great communities like it everywhere, but not at the scale that the Valley offers.
In some cases, it's critical to see, learn and reset yourself to what "Valley time" really means. A crushing rush forward. Sure, you can do that anywhere, in any city in the world, but you'll be looked at as "weird". And it's fantastic to benchmark yourself against other world-class competitors.
In the Valley, you come to see that as normal, because all your friends and co-workers will be doing the same thing.
For me, I'm glad I lived in the Valley and I still do business there. It was a very huge turning point and critical chapter in my life. However, for many reasons, not everyone can get there, at least now. Yet they worry and fret about it.
My advice, is don't worry or fret, do the best you can, with what you have, where you are. If the Valley is in your future you'll be there. And beyond that, there is a downside to the Valley -- too many people acting like entrepreneurs attending events and conferences rather than building product or businesses. It's also a huge echo-chamber.
Those are major downsides.
Even if you aren't there, you can still read and see what's going on, without being pulled into the echo-chamber and backslapping "ataboys" that are often made with good intentions but inadvertently damage companies or entrepreneurs in the long run.
Foreign startups in Silicon Valley still a rarity
Summary: Asian programmers may be a common sight in Silicon Valley, but foreign entrepreneurs are practically a rarity, says Valley-based accelerator.
By Victoria Ho for Starting Up Asia
December 5, 2013 -- 08:58 GMT (00:58 PST)
Asian programmers may be a common sight in Silicon Valley, but foreign entrepreneurs are practically a rarity, according to Ben Levy, a partner at BootstrapLabs.
"If you start digging into how many of the foreign entrepreneurs that go through them manage to stay in Silicon Valley, the number might be close to zero or in the single digit percentage," he said.
Foreign startups in Silicon Valley still a rarity, according to BootstrapLabs.Levy, who is based in the Bay Area, said foreign entrepreneurs who try to set up shop in the Valley—even those who manage to go through prestigious programs with Y Combinator or 500 Startups—almost never manage to stay on.
Of course, Levy was speaking from the perspective of BootstrapLabs, whose raison d'etre is to bring foreign startups to the Valley in the first place. But his point is supported by several high-profile tech CEOs who have been pushing for immigration reform in the U.S., in order to attract more tech-savvy workers to the country.
In March, over 100 tech executives including Facebook CEO Mark Zuckerberg, HP CEO Meg Whitman, Intel CEO Paul Otellini and Yahoo CEO Marissa Mayer, signed a letter urging President Obama to relax immigration laws especially for highly-skilled workers into the U.S.
Levy said the missing piece for many startups wanting to stay is the need to have sufficient funding while they build relationships, without having to start out from ground zero "begging for money" already.
While many may have landed in Silicon Valley with some seed funding, follow-on funding can be a challenge for those new to the scene, he said.
Founded in 2008, BootstrapLabs has been active in relocating startups to the Valley, including Zerply and Witsbits from Sweden, and Budapest's Prezi, for example.
Recently however, it's started to plant roots in Asia, with partnerships with accelerators in South Korea and Malaysia.
Earlier this week, it announced a tie-up with Seoul-based Coolidge Corner Investment (CCVC), to set up a program in Seoul for Korean startups. CCVC manages a US$22 million fund.
The visa is not subjected to the same restrictions as the broader H1B visa for most foreign workers into the States, and has allowed Varun to avoid some of the waiting time and regulatory hoops after Semantics3 finished its term with Y Combinator last year.
By James Santagata
Principal Consultant, SiliconEdge
Given the current media frenzy of "everything Bitcoin" (BC) you probably would've had to have been living under a rock to not have heard about it.
Along with this attention there's been no shortage of proponents as well as detractors. Many detractors have pointed to some of the weaknesses or flaws they see or have purportedly been found in Bitcoin.
While there are certainly many things to be sorted out regarding Bitcoin it always seems that whenever something new comes about there are immediate detractors telling you that this or that is the new shiny thing's "achilles heel" and with Bitcoin it is no different.
Specifically, I'm referring to Bitcoin: What You're Not Being Told which suggests that the blockchain is BC's achille's heel.
As usual, this type of doom and gloom usually never comes to pass as the world is dripping with intelligence and ingenuity. We've seen this with the Y2K situation and numerous others. This isn't to say that detractors aren't valuable, because they are. And very often it is only because of their efforts and concerns that issue or problems come to light and are addressed.
So for that we are very thankful.
But back to the BC's blockchain and the doom and gloom surrounding it. Once upon a time, there were any number of people telling us that the internet was doomed because of the perceived lack of bandwidth (remember those silly "conserve bandwidth" sig lines?) -- that the internet would collapse upon itself. Yet technology and the market place rode to the rescue and we now can download huge video files at the click of a mouse button or watch streaming media on our smart phones very minimal, if any, latency and all for peanuts.
More analogous to the BC blockchain concerns is the limited addressable space provided by IPv4 with IPv4 being 32 bits in length and providing approximately 4.3 billion IP addresses. I first heard concerns about this back around 1995 in tech circles and perhaps in the late 1990's it began to hit the mainstream or at least business press.
And yet this hasn't stopped the internet from growing even though we have more and more devices connected by the minute -- just off the top of my head, we have about 10 devices connected. Perhaps more.
So what gives?
Well, as a short term solution, the NAT protocol was developed and introduced as well as dynamically assigned (recycled) IP addresses. And eventually, we've come to see IPv6 being implemented as more robust solution (of course, IPv6 offers many other benefits, the massively enlarged address space being just one and perhaps the most obvious).
IPv6 implementation has been slow as it's had to contend with both cost and compatibility issues (i.e., you may need something like NAT64, as IPv4 / v6 are not compatible). But it works (as far as I know -- techies, correct me if I'm wrong).
Most importantly, though, IPv6 is 128 bits in length which yields about 340 trillion trillion trillion addresses.
Not bad - that'll support a lot of devices and objects to be sure.
So what can be done about the current and projected length and subsequent weight of blockchains? One possibility is Blockchain pruning but as there are some extremely smart people out there, certainly other solutions will arise to fill this and other needs and issues as they arise.
And given other uncertainties about BC, surely this issue of "blockchain weight and length" will be seen to have been a trivial bump in the road for BC.
By James Santagata
Principal Consultant, Silicon Edge
Recently Andy Serwer, managing editor of Fortune, sat down with Marc Andreesen to discuss The Future of Work, Cars and the Wisdom in Saying 'No' (full, unabridged version on Forbes Magazine here: Inside the mind of Marc Andreessen).
In this interview, I was particularly struck with Marc's views on the impact of the ever-accelerating and widening technological adoption on the job market, and the elimination of entire categories of jobs as well as his comments on education and the need for re-training.
Andy Serwer: We all understand that the Internet revolution is inevitable at this point, but it’s also kind of controversial. There are scads of new jobs at Facebook and Twitter and other places, but what about the ones that are destroyed by the inroads of technology into every industry? Are you actually creating more than you’re destroying?
Marc Andreessen: Jobs are critically important, but looking at economic change through the impact on jobs has always been a difficult way to think about economic progress. Let’s take a historical example. Once upon a time, 100 percent of the United States effectively was in agriculture, right? Now it’s down to 3 percent. Productivity in agriculture has exploded. Output has never been higher. The same thing happened in manufacturing 150 years ago or so. It would have been very easy to say, “Stop economic progress because what are all the farmers going to do if they can’t farm?” And of course, we didn’t stop the progress of mechanization and manufacturing, and our answer instead was the creation of new industries.
From my vantage point, this is completely off track for one main reason -- in the earlier stages of mechanization and automation we had far, far, far fewer people on this planet so that these productivity increases could support and sustain larger and larger populations. In addition, the rate of change was far lower and more localized. It was the difference of seeing single family home burn, to the firebombing off an entire city with no where to run to the simultaneous firebombing of an entire country if not world.
The logical implication of the initial waves of mechanization and automation was that an individual had to gain more or better skills perhaps in either designing, manufacturing, managing or servicing the production and automation manufacturing tools (such as injection molding machines, machine vision, semiconductor fabrication tools like a CVD tool or a stepper, etc.), the automation or productivity tools to design or support the development of these tools (such as CAD/CAM software, testing software, etc.) or in some other area supporting it such as marketing, sales and so forth.
There was still great pain associated with this in parts of the US and other markets, but by and large it worked.
The new wrinkle, though, is that this automation is not only happening everywhere at once but across wide swaths of both industries and functional areas. If you look at what is on the near horizon, autonomous vehicles, drones, 3D printers, even greater factory automation, visual inspection, automation for agriculture and so on, we saw that especially in labor intensive or high wage (on a relative basis) jobs, much of this work was first offshored or moved internally/domestically to the low cost provider or region.
For the next phase, many of these jobs that have already been offshored (such as call centers or assembly jobs),may be completely eliminated through more efficient troubleshooting algorithms and well as expert systems to handle the service call rather than people.
This is happening now in both China where Foxconn has increased its purchase of factory automation (FA) systems and robotics and in the US where higher value manufacturing is moving back on shore -- but it's highly automated, not employing large amounts of people but a few select technicians and managers who, of course, are highly trained (on a relative basis).
All and all, this wouldn't be a problem as people could and I feel should move up stream educationally and into more and more cerebral work.
Many people then blindly shoot out that these displaced workers as well as everyone will need an "an education" or more of an "education".
But this is completely off base. An education by itself is irrelevant unless it is the proper education. And that often means obtains some tools or skills that allow you to keep learning or give you some longer-term competitive advantage and/or are monetizable.
Your skills need to bring value to the market place in a way that you can monetize them directly or through an employer.
But wait, there are two more wrinkles: First, most of the education that is being offered now is sorely lacking in transferring the key skills that people may need to not only be able to do the job, but to keep the job and then keep moving on to the next job again and again while trying to their maintain value in the marketplace until they "retire".
Marc seems extremely optimistic on this point:
Marc Andreessen: And then for all this to work, a lot of people will have to get retrained, they’ll have to develop new skills. Education is going to become even more important. People are going to have to be much more adaptable in this economy. This has been a trend for a long time; the days of lifetime employment are long since over. And the whole system of how everything works – from education to health care and housing – has to adapt to an era in which people are going to have a lot more jobs over the course of their career.
The problem is if it were that easy for people to skill up, they already would have. But they haven't. Why didn't all of the autoworkers and steel factory workers do this and simply skill up in the 1970's and 1980's when their ranks were decimated?
There are many reasons but the fact is they didn't. And that was easy back then. The jump from skill level A to C was a cakewalk compared to the requirement many times to jump from skill level A to M...
In the coming years, perhaps by 2020 at the lastest, we will have almost complete elimination of truck drivers, cab drivers, many medical personnel, book keepers and yes, software developers and so on where will they all go? Who will retrain them? And most importantly what will they retrain to do?
This is especially going to be an issue for manual laborers (ironically, excluding plumbers and perhaps auto mechanics for the foreseeable future), factory workers and transportation drivers. Again how will the retrain? Do they have the ability to do so? After all, if they had the ability or resources to skill up beyond their current job, and on a relative basis it's a simple and cheap task to accomplish compared to what it's going to be, why haven't they done it?
And again, if they haven't been able now to make the small jump from skill level A to C, how does Marc expect these same folk to make the massive leap from skill level A to M in the near future?
This leads me to believe that we are at not Peak Oil (we're pumping more than ever with Mexico, as just one more example, about to float us away in crude) but Peak Jobs. As more and more automation eats away the lower and lower levels of jobs as well as the easily automated jobs albeit higher value jobs, starting with the middle class (book keeping, accounting, call centers, etc.), they'll be more and more displaced people.
The good news is this. It won't be an unmitigated disaster for everyone. No. Only the unprepared. So instead, prepare for a hyper competitive forms of global musical chairs where you competitors are humans from all around the world as well as robots, drones, bots, algorithms and expert systems.
The ability to take a seat, fortunately, won't be predicated on your reaction time when the music stops playing. Nope. It'll be predicated on both the value you can add as well as your ability to package, present and communicate that value to the employer or customer.
For those that are already skilled or who can skill up in the proper areas with the proper curriculum (going back to the traditional academic environment offering the same tired, numb curriculum not only isn't going to help but it will hurt you as you layout hard earned cash and waste time, energy and suffer forgone wages while you are out of the labor market) by redirecting their current outlay of time and energy, the future may be brighter than ever. That means more and more people will need to ask themselves:
It becomes a decision of where people put their time. Now, this bar is going to be raised even higher in the US and other developed countries versus the developing world, although the developed world will most likely be able to respond, though it is doubtful about England and France. Others developed countries like Germany and the Scandinavian countries are much better positioned for this.
But where does this leave the developing countries?
We can expect this compounding rapidly. I think what Marc misses is that we are now at "peak jobs" -- I'm no Luddite, just a realist. You add in all of the new automation now and in development from autonomous vehicles, drones, factory automation, 3D printing, expert systems + AI, and you'll see huge numbers of jobs being irrelevant, including soldiers, and this will become even more apparent and widespread as more and more of the cartels are broken and the enabling regulatory capture is done away with -- or as a reaction to this, regulatory capture by special interest groups and incumbents may increase or accelerate. In the face of global competition, that will be tough though.
At the same time, the easy access to labor, technology, markets, etc.no longer assures that "average" or "below average" people are employable just by virtue of their geographic location. Forty or fifty years ago, if you were a small bar near an auto plant in Detroit, you could have subpar service or drinks but make money because you were local, Detroit was flush with cash, and people obviously drank local. Same with book shops, shoes shops, dvd shops and record shops. Not any more. You can get what you need from Amazon, Zappos, Javari, Gilt Groupe, NetFlix and iTunes among many others.
We also see this playing out in Silicon Valley, where there are many great paying jobs, but it is not the proximity to the valley or the jobs that matter but the skills you have.
So a local resident from say, Bayview-Hunters Point, doesn't have an automatic advantage over an applicant who is applying from Massachusetts, India or China (although the Indian or Chinese applicant has some barrier due to acquiring the proper work visa). In fact, if the BHP applicant has no relevant tech skills while the Massachusetts applicant is a switched on computer science graduate, guess who's getting the $150,000 software development job?
Being local is irrelevant.
On a national basis, the countries that succeed in the future in the face of this accelerated automation and mechanization will be those that empower their citizens while maintaining (on a relative basis) a small, highly-educated and tightly knit, socially-cemented population.
Examples would include obviously Japan, perhaps Switzerland and Denmark. Other nations like the US will be a split case (have's and have not's due to the huge continuing immigration waves + the heterogeneous cultures operating within the US (see: Two Cultures In America Separated By I Do - New York Times).
And still other countries with huge and growing populations (Indonesia, China, India, Mexico) will be hard hit by virtue of having too many people, especially too many people in low wage, low value jobs, especially in assembly or agrarian roles. These populations will then shrink from this economic pressure or it will lead to massive unrest and/or forced redistribution of assets to support those that are having too many dependents and/or non-marketable skills based on the market needs at the time.
The next 10 to 20 years are going to be amazing, though not necessarily for those outside the system and without skills.
Action Items: To position yourself (or your children) now and in the future for these tectonic labor market shifts I would suggest:
1. Understand the skills you acquire should help you do a job and future proof yourself. These skills must be monetizable.
2. Understand that acquiring these monetizable skills aren't enough. You need to understand how to discover a job.
3. Understand that after discovering a job (or creating one) you must be able to package and present yourself and then close the job.
4. Understand that once you have the job you need to maintain it/keep and work to produce deliverables and takeaways for when you leave or are asked to leave your current job.
5. Understand that you still then need to know how to move to the next job (which one? when and how?) and somehow stay on track to leverage each previous skill and job and continue to build a career as you monetize your skills.
The skills you should acquire:
Start with hard skills in the sciences, computers, math, critical thinking & analysis and foreign language acquistion (even if they are basic or rudimentary). From there:
1. Communication Skills
2. Negotiating Skills
3. Influencing Skills
4. Persuasion Skills
5. Assertiveness Skills
6. Leadership Skills
Silicon Valley is currently experiencing one of its peak in which the frenzy could be said to be approaching idol worship. At the same time, there is much discussion of what can be gleaned from the successes of a multitude of startups emanating from Silicon Valley.
This is a contrarian view.
- James Santagata
Silicon Valley Is No Model For America (New Geography)
By Joel Kotkin
Its image further enhanced by the recent IPO of Twitter, Silicon Valley now stands in many minds as the cutting edge of the American future. Some, on both right and left, believe that the Valley's geeks should reform the nation, and the government, in their image.
Increasingly, the basic meme out of the Valley, and its boosters, is that, as one venture capitalist put it: “We need to run the experiment, to show what a society run by Silicon Valley looks like.” The rest of the country, that venture capitalist, Chamath Palihapitiya, recently argued, needs to recognize that “it's becoming excruciatingly, obviously clear to everyone else, that where value is created is no longer in New York, it's no longer in Washington, it's no longer in L.A. It's in San Francisco and the Bay Area.”
But do we really want these people in control? Not if we care at all about privacy, social justice, upward mobility and the future of our democracy.
None of this suggests that the Valley does not have a critical role to play in the recovery of the American economy. Just like Wall Street, Beverly Hills or, for that matter, Newport Beach, clusters of well-connected and well-educated people play a critical role in taking risks in investment and innovation, whether it involves technology, finance, fashion or media. Yet given their dangerous hubris, disdain for privacy rights, lower rates of tax compliance and minimal ability to create middle-class jobs, the Valley's elite should not be held up as supreme role models, much less the hegemons, of the Republic. That is, unless we have decided that we wish to live in a high-tech, 21st century version of a highly ossified, feudal society.
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