…I don’t want to talk about this specific deal. Too much information. But I do want to talk about being nice in business. The conventional wisdom is nice and business don’t go hand in hand.
We learned from The Godfather that “it’s not personal, it’s business.” We know that some of the most successful entrepreneurs in tech have been difficult individuals who did what they had to do to get ahead.
We know that a lot of investors, VCs included, will do what is required to make a buck.
So its conventional wisdom that being nice is a bad idea in business.
I have found otherwise. I have found that reputation is the magnet that brings opportunities to you time and time again. I have found that being nice builds your reputation. I have found that leaving money on the table, and being generous, pays dividends.
I am not saying you should be overly generous or nice to a fault. There’s a limit to everything. But I do think that thinking about others, and trying to make things right for everyone (which is impossible and will drive you crazy) is an approach that pays off in business.
It’s not the fastest way to make a buck. It takes time. But it is way more sustainable than screwing people over.
Silicon Valley is known for disruptive innovations, which makes old technologies obsolete. And they also have made old men (40+) obsolete. While the average life expectancy is rising almost to 100, success seems to be defined in first 30 something years, at least in Silicon Valley. It is not a matter that can be easily answered, either right or wrong. There are things people can do better in youth and other things they can do better aged. And everybody grows old. Btw, what happened to meritocracy? Silicon Valley has changed the world. But what has it been doing in recent years? It is nice to have Apps like WhatsApp, Angry Birds and many others. Still, do they make the world a better place? There look to be much more important and urgent matters to be solved in this world: health care, poverty, violence, human dignity…Why don’t those brilliant entrepreneurs and venture capitalists dare to spend their lives working to face these challenging issues? Probably people do not take that kind of issues seriously until they grow old and have children and think about death. The brilliant people in Silicon Valley might be too young to know yet.
Silicon Valley has become one of the most ageist places in America. Tech luminaries who otherwise pride themselves on their dedication to meritocracy don’t think twice about deriding the not-actually-old. “Young people are just smarter,” Facebook CEO Mark Zuckerberg told an audience at Stanford back in 2007. As I write, the website of ServiceNow, a large Santa Clara–based I.T. services company, features the following advisory in large letters atop its “careers” page: “We Want People Who Have Their Best Work Ahead of Them, Not Behind Them.” And that’s just what gets said in public. An engineer in his forties recently told me about meeting a tech CEO who was trying to acquire his company. “You must be the token graybeard,” said the CEO, who was in his late twenties or early thirties. “I looked at him and said, ‘No, I’m the token grown-up.’ ” The darkness of this irony is not hard to see. In the one corner of the American economy defined by its relentless optimism, where the spirit of invention and reinvention reigns supreme, we now have a large and growing class of highly trained, objectively talented, surpassingly ambitious workers who are shunted to the margins, doomed to haunt corporate parking lots and medical waiting rooms, for reasons no one can rationally explain. The consequences are downright depressing. This, too, did not faze him. Most Silicon Valley investors, he came to believe, were just like the suits at Cisco: highly susceptible to “presentation bias” and, as a result, prone to shallow conventional thinking. “Paul Graham”—the founder of Y Combinator, the world’s best-known start-up incubator—“says the most successful [investor] makes his decisions in twenty-four hours,” Scheinman told me dismissively. It was time to set off on his own. The only question was what to invest in. “I could see the reality was I had two choices,” Scheinman told me. “One, I could do what everyone else was doing, which is a losing strategy unless you have the most capital.” The alternative was to try to identify a niche that was somehow perceived as less desirable and was therefore less competitive. Finally, during a meeting with two bratty Zuckerberg wannabes, it hit him: Older entrepreneurs were “the mother of all undervalued opportunities.”2 Indeed, of all the ways that V.C.s could be misled, the allure of youth ranked highest. “The cutoff in investors’ heads is 32,” Graham told The New York Times in 2013. “After 32, they start to be a little skeptical.” The economics of the V.C. industry help explain why. Investing in new companies is fantastically risky, and even the best V.C.s fail a large majority of the time. That makes it essential for the returns on successes to be enormous. Whereas a 500 percent return on a $2 million investment (or “5x,” as it’s known) would be considered remarkable in any other line of work, the investments that sustain a large V.C. fund are the “unicorns” and “super-unicorns” that return 100x or 1,000x—the Googles and the Facebooks. And this is where finance meets what might charitably be called sociology but is really just Silicon Valley mysticism. Finding themselves in the position of chasing 100x or 1,000x returns, V.C.s invariably tell themselves a story about youngsters. “One of the reasons they collectively prefer youth is because youth has the potential for the black swan,” one V.C. told me of his competitors. “It hasn’t been marked down to reality yet. If I was at Google for five years, what’s the chance I would be a black swan? A lot lower than if you never heard of me. That’s the collective mentality.” Naturally, Scheinman decided to lurch in the opposite direction. He became an angel investor, meaning he typically provides the cash the founders tap once they’ve exhausted their family members and credit cards. If the angel’s bet is sound and the company continues to grow, it will frequently need an “A round” of funding from a V.C. later on, usually between $2 and $10 million. Scheinman’s hypothesis was that, with enough money to pay their bills for a year or two, the older entrepreneurs could rig up a product that was sufficiently impressive to overcome the V.C.s’ prejudice. He could force them to wonder if maybe, just maybe, they were staring at a billion-dollar business. Fast-forward to the present and it’s hard not to detect the PCC/Homebrew influence on the local patois. In 2011, famed V.C. Vinod Khosla told a conference that “people over forty-five basically die in terms of new ideas.” Michael Moritz, of Sequoia Capital, one of the most pedigreed firms in the tech world, once touted himself as “an incredibly enthusiastic fan of very talented twentysomethings starting companies.” His logic was simple: “They have great passion. They don’t have distractions like families and children and other things that get in the way.” But, of course, whereas the Homebrewers mostly wanted to unleash the power of computers from IBM and share it with the common man, the V.C.s want to harness youthful energy in the service of a trillion-dollar industry. Just because overt age-discrimination is illegal doesn’t mean it never happens. In 2011, Google settled a multimillion-dollar claim brought by a computer scientist named Brian Reid, who had been fired when he was 54. Reid said colleagues and supervisors had frequently referred to him as “an old man” and “an old fuddy-duddy” whose ideas were “too old to matter.” They allegedly joked that his CD cases should be called LPs. A labor lawyer I spoke with told me he recently got a call from a thirtysomething supervisor at a start-up who said her job was at risk because the team she was managing—most of them ten years younger—had rejected her on account of her age. “She was being referred to as a ‘den mother,’ ” says the lawyer. “If no one is following your lead, you’re not much of a supervisor.” Often the discrimination comes veiled in that vaguest of tech-world concepts: culture. One recent trend in Silicon Valley recruiting is for job candidates to interview with a programmer at their level or below after they’ve cleared every other bar in the hiring process. Ostensibly, the point is to make sure a candidate meshes with the whole team, a perfectly noble impulse. In practice, it’s frequently a tool for weeding out older applicants. No doubt there are valid reasons to prefer funding youngsters. If, for example, a company is in the market for teenage eyeballs, it probably makes sense to have a founder who’s not long from adolescence. Often these entrepreneurs turn out to be world-class programmers, having affixed themselves to a keyboard since long before puberty. “By the time they’re twenty-two, they’re already expert. They’ve put in the ten thousand hours,” says Marc Andreessen, who co-founded Netscape in his early twenties and is one of Silicon Valley’s most respected venture capitalists. “But it doesn’t happen in other fields. … You can’t start designing bridges at age ten.” But even if it’s true that the young are more innovative, it’s not entirely clear that we’d want to elevate them above the rest of us. For one thing, there’s something to be said for marginal improvements, which have worked out quite well in other countries. Ben Hammersley, a programmer and author who has advised the British government on creating a technology hub in London, points out that the incremental model largely explains Germany’s economic strength. “The majority of the German economy is light engineering. It’s family-owned businesses engaged in long-term planning,” he says. “ ‘We’re going to be around for another hundred years. What can we do to make a five percent improvement every year?’ ” By contrast, he says, economies that embrace the Silicon Valley model writ large—throwing massive amounts of money at highly speculative investments—are suspiciously bubble-prone. And then there is the question of what purpose our economic growth actually serves. The most common advice V.C.s give entrepreneurs is to solve a problem they encounter in their daily lives. Unfortunately, the problems the average 22-year-old male programmer has experienced are all about being an affluent single guy in Northern California. That’s how we’ve ended up with so many games (Angry Birds, Flappy Bird, Crappy Bird) and all those apps for what one start-up founder described to me as cooler ways to hang out with friends on a Saturday night. Or take a company called Outbox, which cooked up the idea of charging customers $4.99 a month to collect, scan, and deliver snail mail to their e-mail account, a proposition for which it raised $5 million in venture capital. “This company sends out humans in Priuses three days a week,” one fortysomething programmer groused to me last year. “It only works for people who come home at nine and go to work at ten and have everything else in life taken care of.” Which is to say, the most dynamic portion of the most dynamic sector of the U.S. economy has taken it upon itself to replicate a service the U.S. government already performs quite ably. At least up until Outbox folded in January. Alas, as Goldenson’s experience suggests, the whole premise of youthful innovation isn’t even true. It turns out older people have historically been just as “disruptive” as younger people. A 2005 paper by Benjamin Jones of the National Bureau of Economic Research studied Nobel Prize winners in physics, chemistry, medicine, and economics over the past 100 years, as well as the inventors of revolutionary technologies. Jones found that people in their thirties contributed about 40 percent of the innovations, and those in their forties about 30 percent. People over 50 were responsible for 14 percent, the same share as the twentysomethings. Those under the age of 19 were responsible for exactly nothing. One study found that even over the last ten years—the golden age of the prepubescent coder, the youth-obsessed V.C., and the consumer Internet app—the average age of a founder who could claim paternity for a billion-dollar company was a rickety 34. Despite the promised funding, Stamos was still upset by the V.C.s’ cold shoulder. He seemed preoccupied with some of his competitors, whom he believed had inferior products but had had little problem lining up financial backers. The one that drove him completely nuts was called Ionic Security. Based in Atlanta and founded by a twentysomething who was recently featured in a Forbes “30 under 30” list, the company had somehow raised nearly $40 million from V.C.s, including a $9.4 million round in 2013 led by the storied firm Kleiner Perkins, and another $25.5 million this year. Stamos considered the company amateurish, shuffling from one concept to the next without fleshing any of them out. “If you can convince a brand name V.C. to back you, they won’t let you die,” he groaned. “They will throw good money after bad.” As the week went on, Stamos became ever more consumed with Ionic, constantly bringing up the company in conversations. It stood for everything he considered unholy about Silicon Valley’s youth fetish. One evening, while we were walking toward the convention floor, he spotted an Ionic executive across the room and said to a friend, “Forty million dollars raised and they still don’t have a product.” (Steve Abbott, Ionic’s CEO, says the company has a product that came out last year, as well as six to twelve paying customers.) I had to see for myself what $40 million in venture capital buys you. When I showed up at the Ionic booth—really more of a pavilion—I noticed several attractive women gathered off to one side. A sales manager dressed in black invited me to take a seat in one of the tank-sized massage chairs the company had wheeled in, then handed me an iPad and a set of headphones with the Ionic logo. The iPad played an eleven-minute video, and I began jotting down some notes as the chair worked me over. Suddenly, the sales manager came back toward me and asked that I stop. “We’re still in stealth mode,” he explained apologetically. I didn’t quite understand his urgency because the video was wholly unremarkable and larded with marketing-speak. The only interesting part came toward the end, when Ionic’s young founder catalogued the inscrutable features of his product. “We’d like to show it to you under NDA [non-disclosure agreement],” he said. “We hope you come take a look.” At that moment, I found myself in perfect agreement with Stamos: Here was the future as the V.C.s would have it, and it was contentless and tacky. Nick Stamos has no kids, few hobbies, and even fewer extravagances. He works all the time and is consumed by his company every second he’s away from it. For as long as he can remember, all he ever wanted to do was to build a start-up that would go public and send the stock tickers into tilt—the way Netscape did when he caught on to the start-up phenomenon back in 1995. He has already come close a few times. If Stamos can’t get Silicon Valley to give him the time of day, the problem isn’t him. It’s Silicon Valley. On Wednesday morning, the second to last day of the conference, I met Stamos at the Starbucks in the lobby of his hotel. One of the V.C.s he’d met with at Sequoia back in the fall, a man named Aaref, had e-mailed him over the weekend asking if they could find a time to connect while he was in town. Stamos had invited me along, but when I showed up, I found him alone by the picked-over sugar and milk station. His voice had a slight edge and he was less keen on eye contact than usual. He told me Aaref had blown him off. When the two finally met the following afternoon, Aaref bought Stamos a cup of coffee and gushed about nCrypted Cloud. “He was, ‘Rah rah rah, great, wonderful,’ ” Stamos told me. But Aaref never broached the possibility of funding. The encounter was just a professional courtesy, and after precisely 30 minutes, Aaref said, “I’m really sorry, my next meeting is here.” Stamos looked up and the person waiting for his seat was pimply and young.
Silicon Valley’s Youth Problem In start-up land, the young barely talk to the old (and vice versa). That makes for a lot of cool apps. But great technology? Not so much.
This Is What 80 Looks Like On Tuesday, Gloria Steinem turns 80. Do not bother to call. She’s planning to celebrate in Botswana. “I thought: ‘What do I really want to do on my birthday?’ First, get out of Dodge. Second, ride elephants.”
From Facebook CEO Mark Zuckerberg “Our mission is to make the world more open and connected. For the past few years, this has mostly meant building mobile apps that help you share with the people you care about. We have a lot more to do on mobile, but at this point we feel we’re in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences. This is where Oculus comes in. They build virtual reality technology, like the Oculus Rift headset. When you put it on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. The incredible thing about the technology is that you feel like you’re actually present in another place with other people. People who try it say it’s different from anything they’ve ever experienced in their lives.”
Silicon Valley is for young people, who regard useful, entertaining and personal experiences most important. When people grow older and have family, they come to think about something more than entertaining personal experiences: health, children and real things. There are some merits in growing older. Does Silicon Valley really change the world into a better place? It is fun to play a game, probably more fun to play a virtual reality one…But, don’t we have many more important real matters to deal with first than virtual reality ones? Chronic illnesses, health care, food poisoning, violence, human dignity, environmental issues… Silicon Valley has been replacing Wall Street in prestige, wealth creation and importance to the world. Now in big gambles as well. Given proprietary trading has been closed at banks, Silicon Vally comes to become a large player in option trading (they are buying the private companies at the unreal valuations as an option to protect their trillions of dollars of collective market capitalizations).
Update: Facebook share price was at $60.38 down 6.94% on Wednesday. $10+ billion market cap disappeared. Market has learned Zuckerberg and the insiders might think current Facebook stock price is overvalued and why Facebook makes deals aggressively with its stocks.
PROTAGONIST | DEUTERAGONIST | TRITAGONIST 