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Archives for Politics, Business and Economics

Steve Jobs As Metaphor

Jan
22
2009

An era – a golden time when the boys of Silicon Valley could do whatever they wanted, whenever it suited them – is coming to an end. And the failing health of Apple CEO Steve Jobs is a poignant metaphor for its passing. That’s one reason why the conversations about his fate are so emotionally charged – even among strangers.

Jobs is clearly fighting a serious illness. Whether he is winning and will return to run the company he founded, saved and launched into an entirely new line of business is open to debate and speculation – and there’s been plenty of that. It seems unlikely not necessarily because Jobs is mortally ill but because his illness has sapped so very much of his raw physical presence. He may have to – belatedly it seems – face the fact that his life-saving surgery for some sort of pancreatic cancer, in fact, altered his life. Like all of us, he is mortal.

And, like all of us, he and the company he runs are being told they must obey the law. The Securities and Exchange Commission has expressed an interest in the timing of news and announcements about Jobs’ health and, like many inquiries the commission launches, it may mean nothing. Except that they’re paying attention.

And this, my friends, this is the end.

You see, Silicon Valley has skated along quite nicely, thank you, without a whole lot of regard for the government. This was in no small part because the government had little interest in Silicon Valley. Throughout the 1980s and 1990s, enormous fortunes were made by a small group of very well-connected insiders who invested in small start-ups, took those companies public and reaped the rewards. It was a glorious and wonderful time. It gave us The Internet. And the Internet has changed our lives. And yes, that accomplishment should be rewarded.

But there was a fair amount of cheating as you might expect when a small group of very smart people realize that they can game a complex and seemingly opaque system because the rules haven’t quite caught up them. The cheating and the attitude about cheating (“everybody does it”) was – and to some extent is still – the problem.

When I worked as a business columnist for one of the local papers here in Silicon Valley, it was understood that the SEC simply didn’t have the resources to evaluate, check or even investigation suspicions about public offerings made by tech companies. It was taken for granted that the cautionary statements included in the boilerplate in the SEC documents were sufficient to warn investors. After that, the market would measure whether a company was succeeding or failing and investors would react accordingly. You buy the stock, you take a risk. End of conversation.

The market, many said, was the ultimate arbitrator. Insiders – start-up CEOs, venture capitalists, seed investors – couldn’t help it if the market raised stocks to 10 or 20 times the pre-IPO value. They couldn’t restrain the public’s appetite for these shares; the market made their stock, purchased for pennies, worth dollars. That was just the way things were and everybody understood it. When the tech bubble had collapsed, a lot of people who had believe the promise of the Internet lost a lot of money but in the end, the SEC shrugged. The market had prevailed.

Well, a few million home foreclosures later (everybody, it seems, was also lying on their mortgage applications) and the government is not shrugging anymore. The days of regulatory oversight are coming to the valley. Which is why Jobs failing health is such an apt metaphor. I’m not predicting the death of innovation or the wholesale regulation of the venture capital business but I won’t be surprised at all to see the idea floated. Some venture funds hold hundreds of millions of dollars from their limited partners, unions, pension funds and public university endowments. Besides, it’s been clear for some time that the practices of the banks that the valley depends on for its paydays – those multi-million dollar trips to the stock market known as public offerings – are going to be tightly overseen, regulated and controlled.

Like it or not, like Apple’s ailing CEO, tech companies born and bred in Silicon Valley are going to have to answer a lot of tough questions. Their privacy – which is really nothing more than their sense that they and only they know what’s best – is going to have to become a bit less opaque. Their firms are going to have to run cleaner; their investors are going to have to disclose more. Total control – the ability to ignore or worse, bully, the government – is gone.

As painful as it is to see him so frail and ill, Steve Jobs, raised in the anything-goes atmosphere of the valley is in sickness, as he was in health, the embodiment of the place and it’s thinking. That’s one reason why so many are fixated on his health; why no one will let him alone. There is often no tangible reward for those who are smarter better or faster; for some things there is no inside track, and in the end, we all face the same fate.

Posted by Chris Nolan at 5:48 PM | Permalink

Getting Real About The U.S. CTO

Jan
8
2009

It’s only a slight exaggeration to say that Silicon Valley is complete binary in its passions. It’s only feels like it’s either fully on or fully off. But when it comes to politics, that statement rings more true that it does with others. And right now, the valley is fully “on” for Obama.

The fact that the president-elect has a Blackberry habit almost as bad as his nicotine addition (and harder to break) adds to the allure. It’s not just that Obama “gets” the Internet and the culture it’s created; he uses it. And clearly, to judge from his campaign, he likes it.

This has led to all sorts of silly conversations, mostly about the job of “chief technology officer”. With breathless enthusiasm, the names of some of the smartest folks in town have been mentioned. Google’s Vint Cerf (aka “father of the Internet”) or its CEO Eric Schmidt. Even more ridiculous: Bill Joy or Stanford professor Larry Lessig. It’s been suggested that the job was cabinet-level, meaning the CTO would be in touch with the president regularly.

Yes. Well. All these suggestions assume that the CTO job within the U.S. government will be akin to the CTO job within a high tech start-up. The job held by the guy who is either the founder or the inventor who turned the founder’s ideas into real products, thereby changing the world – for the better, of course.

The U.S. CTO will be a similar visionary, goes the thinking. Someone who can convince the government to change copyright laws, create and enforce net neutrality, put all government records on the Internet, create email accounts for all bureaucrats, and make Congress put its proceedings on-line. A miracle worker, in other words. But no administration needs a room full of visionaries; it only needs one. And we elected him in November.

Which is why U.S. CTO job is probably going to go to someone who knows how to run something. Something big. Like a large high tech company with a history of buying, developing, refining and commissioning software and hardware for its employees. If Cisco CEO John Chambers weren’t a Republican, he’d be perfect. Assuming he’d take the pay cut. For my money, the speculation about John W. Thompson – recently retired (!) CEO of Symantec and one of Silicon Valley’s few African-American executives – is closer than any of the “Internet famous” visionaries’ names being bandied about.

The reality is that the Internet infrastructure the U.S government uses has been built with the 20th Century equivalent of paperclips, bubble gum and duct tape. Various agencies have gone their own way in getting on the web and the confusion is a little bit like what happened when the airlines started selling tickets on-line. There was the system the company used; the system customers used and God-only-knows what else in the middle. Like the old SABRE system, the government needs help. Badly. And that’s what the U.S. CTO is probably going to end up doing.

That doesn’t mean the job isn’t going to be important. It just means it’s not going to be West Wing glamorous. It can’t be. Can you imagine the breathless drama over the ordering of another 1,000 Apache servers to, for instance, get the Environmental Protection Agency’s enforcement division up and running on the web so inspectors can share maps, photos, reports and information as seamlessly as they do at say, Boeing? Hmmm. You’re not staying up past 10 p.m. to watch that an neither am I, even if it is on Hulu.com.

What many of the folks new to politics – and this is Silicon Valley – forget is that the U.S. government can move markets by purchasing to somewhat dramatic effect. Quietly. Over time. A government purchase can create a de facto standard not just for the feds but for state and local governments. Getting government procurement agents to realize that all software doesn’t come from Redmond is one part of this process of changing how the government sees the Internet. So is the idea that off-the-shelf might just work for their needs. And “open source” doesn’t mean stolen; it can, in fact, mean low-cost and reliable.

That change will push a lot of money into the tech sector. It will foster a lot of low-key innovation and, by the end of the next four years, it will probably give us a lower-cost, more efficient federal government.

All these are obvious ideas to anyone with a working knowledge of how the mechanics of the Internet actually function. But for many many people in government agencies, this is news. The reality is that a working on-line presence – internal and external – doesn’t cost very much money and may, in a few short years, save the government a lot of money is one that I’m betting you’ll hear the Obama administration start touting in a big loud voice. It only makes sense.

But these initiatives won’t be announced in the Rose Garden while Obama’s Silicon Valley faithful look on with delight at how the Internet is now cool. They’ll be rolled out without a lot of fanfare as part of the way a restructured U.S. government should work. And if the U.S. CTO is successful there will soon be little difference between the folks who “get it” and those who never thought there was anything to “get” in the first place.

Posted by Chris Nolan at 5:00 AM | Permalink

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