9/11 Silicon Valley: The Network

The state, they – we – all realize is here to protect us. So lots of people – many who should know better – put their faith in President George Bush’s plans to create a U.S. foreign policy that put protection of the unknown at the top of its list of things to do.

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What About the Jews?

But now that President George Bush has chimed in, it’s pretty clear what’s going on. They’re going after the Jews, specifically Jewish-American voters who have long supported Democrats and might, just might, be talked into voting Republican.

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You Still Can’t Get There From Here

It’s a long way from 4 Times Square, the shiny skyscraper that’s home of The New Yorker, Vogue and other glossy magazines to the San Jose Hyatt, the low-rise hotel that was the temporary home of this year’s BlogHer, a gathering of some 700 women, most of whom wouldn’t know (or care) about the difference between a Blahnik and a Louboutin. An entire country – in more ways than one – lies between the two places.
Reading a (justifiably) much-maligned piece by Nick Lemann in last week’s New Yorker, I kept thinking about the gathering in San Jose. Why? Well, mostly because of the tech guys who braved the conference, returned home and spent a fair amount of bandwidth looking down their noses at what happened. And they used the same dismissive tone as Lemann, dean of the Columbia Journalism School, a well-award writer and solid political journalist, took in his piece about “citizen journalism.”
Not enough people at BlogHer talked about technology and when they did it was rudimentary, say the Big Boy Bloggers. The conference was was really…uh, personal. My favorite came from Microsoft’s former on-line voice, Robert Scoble. In a long, rambling post Scoble admitted that well, he kind of had a good time and boy those big (non-tech) corporations really seemed to know how to market to women! Lemann in his piece “Amateur Hour” talked about how no important national reporting was getting done on-line. It’s small beer, he said, comparing a group of post – most written by women, oddly enough – to church newsletters. It’s not important, he says, again and again.
Listen carefully. In both cases – Lemann and his antithesis, the Geeks – you’ll hear the complacent sound of the insider explaining why his clubhouse can’t possible admit just anyone who applies. This isn’t anything new, particularly with Lemann. As for geeky men and women…well, you don’t need me to weigh in on that one.
Now, Lemann deserves being taken to task for handing in a poorly-researched and sloppily reported piece. Any story about on-line technology that quotes from 2003 is off to a bad, bad start. And yes, some of what goes on at BlogHer (like lots of other conferences) is annoying and trivial but it’s not a conference about technology and, yeah, some of that “feel-good sister” stuff drives me nuts, too.
But – with a few notable exceptions, the best by Rebecca MacKinnon – the denunciations that are flying back and forth in all cases here just aren’t on target.
To start with, I’d like everyone to stop using the word “blogging” when they talk about all forms of writing on-line. Microsoft doesn’t tell you that its Word program is only for writing letters does it? So why must a “blog” by definition be something related to the gathering and processing of information with an aim toward professional-like reporting and writing? Some sites built on blogging software are nothing more than an improvement on the “cc” line on an email. Others are political advocacy sites. Some, like Spot=on., are media businesses, run for profit.
This is why I talk so often about “stand alone journalism.” Placing the emphasis on a specific piece of software, as the Geeks like to do, means we writers would bog down in small-minded thinking about products and features. Putting technology first also lumps everything happening on-line in the same category, a classification dictated by the way in which the information is delivered. Both are unfair and both arguments have, sad to say, found supporters with people who should know better; many media-savvy writers use the word “blog” to mean “I’m important again – look at my mastery of this new technology.” One result? Big Media writers like Lemann have been guided by very myopic views of how technology is changing the business. Tech Geeks hew to very narrow ideas about how their miracle products should be used and for much of the past few years they’ve been calling the shots. That’s a mistake. There is a large middle ground here; much of it unexplored.
When we talk about changes in the media business, we’re not really talking about “blogging.” The changes in the Big Media universe are changes being wrought by the Internet; the network that now connects almost all of us that allows us to hear the poorly served when they complain which they have more of a reason to do – because they’re poorly served. The ‘net is relentless and ruthless in its ability to foment change and to keep fomenting change upon the changes it’s already created. BlogHer and the rise of the “citizen journalist” are examples of the broadening use of the Internet for a variety of purposes and their cumulative effect on the network is to make established authorities less important. Many of those established authorities – be they tech geeks or Columbia professors – are shocked to find out that they do not matter. They’re coping with it in different ways by each doing what they’ve always done without much regard for how things are changing. Tech folks are defensively sticking to their code; Big Media boys are huddling in the offices of their glossy magazines.
The large gathering of “Mommy Bloggers” is just one more example of just how poorly served women are by our society as a whole. Like tech bloggers who have sprung up to serve the Geeks of Silicon Valley, or the political bloggers who have risen up to grind their partisan axes, these women have been ignored and they’re frustrated. Their work – raising children – is trivialized; their sensibility (what about the children?) mocked and their achievements (“I’m a writer,” says Grace Davis) are patronized. There are plenty of audiences like this out there – some like Debbie Galant’s Baristanet are gathered around cush suburbs; some like Global Voices, have risen up to serve a gap in international reporting. Others are more nefarious: If you don’t think Al Queada is a web-based business and communications network, you should reconsider. Treating them all the same because they’re all on the Internet is as silly as saying anyone who sits in front of a keyboard for more than 20 minutes a day is a secretary. It’s just not true anymore. And it never will be again.
And that’s a New Yorker story – a good one. Too bad Nick Lemann’ll never read it. It’s being written on the web.

Run HRC Run

One of the most interesting things about covering politics is also one of the most annoying: Very often you have to change your mind. And you have to do it in public. That’s worth bearing in mind as we consider – along with the rest of the Democratic Party, if not America – the candidacy of Sen. Hillary Rodham Clinton for president of the United States of America.
I’ve written a lot in this space about why I don’t relish the idea of a second Clinton presidency. For starters, I’m opposed to dynastic politics. I also think the Clintons – and we should think of them as a team, and no, I don’t think that’s sexist – embody a lamentable trend: placing strategy above policy in the name of winning elections. It’s not just that they’ll do almost anything to get elected – that’s the nature of the political beast – it’s that they’re not subtle about it. Chameleons like the Clintons concentrate on the parsed, the unsaid, the ambiguous. Clinton’s candidacy means more quasi-non-renuciations renunciations like her abortion speech last year and political folks like me will roll our eyes, sigh and, well think of what the Dempcratic Party could be…if it could find its way.
These are reasons not to vote for the Clintons as they seek a third and fourth term in office in the general election. And – who knows? – I could and may well change my mind again. But these are not reasons to denounce Hillary Rodham Clinton’s desire to seek her party’s nomination. She is as qualified as any of the men – Democrats or Republicans – who want the job, her chief political strategist, William Jefferson Clinton, is a stone cold genius at this stuff and, most importantly, the field of Republican opponents is not exactly presenting a challenge. If there is any year when it’s ideal for a Democratic woman to run for the White House, this looks to be it and the Clintons have done everything they can to make sure there are no serious contenders.
Much of what we’re hearing about how Hillary can’t win – particularly from the Big Boy political Bloggers – is the sour voice of sexism weakly disguised as insider insight. Hillary Clinton should not be the nominee because she can’t win, they say. Democrats need a candidate who is less divisive, who can unite the country. American isn’t ready. Occasionally an honest soul will be more direct and say they don’t believe people will vote for Clinton because we live in a sexist culture that is not ready for change and conservative Americans – who dominate our politics – are not ready to put a woman in the White House.
Well, you know, I’ve surveyed the landscape and – once again, as a Democrat – come up uninspired. If Hillary’s not in the race, I see another snooze-fest kind of like the sleepwalk California Democrats managed to ignore earlier this year. Who you boys got in mind to liven things up and bring voters to the polls? Howard Dean? John Kerry? Mark Warner? John Edwards? Al Gore? What do these men have to recommend themselves for the office of the presidency? Their personal wealth? Their experience in the U.S. Senate? Their previous – and unsuccessful – attempts to claim the office? The only one who is vaguely likable is Edwards. And with Clinton’s hand on the fundraising apparatus of the Democratic Party Edwards is going to have a hard time finding the cash to keep going (which makes him – along with his wife Elizabeth – a very interesting vice presidential choice for the Clintons).
Democrats are holding Hillary Rodham Clinton to a higher standard that her fellow party rivals, her potential Republican opponents and – oh yeah – the standard used to measure her husband’s accomplishments (er…..) in and out of the White House. On top of that, Conservatives don’t determine general elections; moderates do and it is the Democrats’ failure to attract moderate voters – call ’em Soccer Moms or Security Moms or swing voters or Independents – that’s hurt the party at the polls from coast to coast.
The harsher truth about Hillary Clinton is that many people – Liberal female Democrats among them – don’t want to see a woman in the White House. And don’t want to “risk” putting her there. They’d rather chart the safe course. So many party regulars want to hand the nomination over to another rich white guy who will consider the polling data, position himself squarely in the political middle and then, taking no chances because so much is at stake, run a boring, lame-ass centrist campaign aimed a political moderates and swing voters. In California, this gave us a primary with the lowest turn out in 60 years. Oh baby!
But setting the moderate course is exactly what Clinton’s doing and it’s another reason the party’s Left (holding her to a standard higher than it holds the millionaire male candidates) has been harshly critical of her initial campaign efforts. Why? Could it be that many Democrats who profess to understand and care about politics aren’t ready to have Hillary Clinton become president simply because she’s a woman? Is it that they aren’t ready? They don’t like powerful women? Of course, no one’s fessing up. Instead, they’re blaming “other people.” Other people won’t vote for Clinton, she’s to divisive a political figure. She’s a powerful woman. And as we all “know” no one likes powerful women.
Well, I like powerful women. And I vote. And I think a lot of women who don’t have a lot of power like powerful women. Know what else? I think a lot of women – powerful or not – are going to be sympathetic to the idea of a “wronged” woman like Sen. Hilary Clinton picking herself up, getting on with her life and making peace in in her marriage and going on to work for the job she thinks – she’s always thought – she deserves. None of this is easy and if Hilary Clinton and everyone – every woman – knows it, even if they’re not running for president of the United States. Besides, if the white boy Republicans go rabid – and they’re showing every indication that they will – this campaign tactic – she’s here, she’s competent, so what? – might work very, very well with those nice moderate female voters who have had just one too many “you’re not ready” comments from the Big Boy Boss. It’s a clever and subtle campaign strategy that, in combination with her calculated moderation, might have a lot of women and more than a few men quietly pulling the lever next to Hillary Rodham Clinton’s name.
They’re ready. Some have even been waiting.

They Fought the Law, the Law Won

For this bubble, it seems Silicon Valley will have a sheriff and a deputy, too. It’s about damn time.
The U.S. government – finally! – means business when it comes to how Silicon Valley conducts its affairs. For Bubble 2.0 the valley is going to have to join the real world, you know the one with real, regulator oversight, non-partisan legal advice and objective accounting? That real world, the one in which the rest of American businesses are located.
That’s the message blaring out from Saturday’s New York Times and Friday’s Wall Street Journal which carried news that the U.S. Attorney for the Northern District of California, one Kevin V. Ryan, is conducting an investigation and has managed to – gasp! – get indictments against Brocade Communications for back-dating the stock options it gave employees.
The reaction from folks who’ve been working and living in and around tech businesses for the past 10 years? “Oh, so NOW you’re interested?” Man….talk about your barn doors and horses…..
Ryan, a local boy, was appointed to his job in 2002. Educated at St. Ignatius – the alma mater of some of the city’s sharper (but strictly masculine) legal and political minds – he’s worked in Alameda County and was appointed to his current job from the state’s Superior Court. He announced his indictments with another Californian, Former Congressman Christopher Cox, the chairman of the Securities and Exchange Commission. In other words: They’re interested. Real interested. Oh, and they know their way around.
Ryan knows state politics – he was a Pete Wilson appointee to the bench – and Cox, former member of the House Commerce Committee, is no P&L neophyte. He’s also forgotten more about that tax code than half the lawyers in Palo Alto have ever learned. And, oh yeah, even though Cox works in Washington, he doesn’t think of California “out there.” Having lived and represented the state – from Newport Beach – for years, he thinks we’re part of the Lower 48 unlike the rest of the East Coast.
In other words, there won’t be any of this fancy “new economy” mumbo jumbo with Cox and Ryan around. Nah. These guys are the law. The smart law.
You can hear the caterwauling, can’t you?
With 80 (or more) companies facing some kind of SEC or Department of Justice inquiry on how they treated their employee stock options, Silicon Valley’s execs are sure to make the claims they always make. It’s a really fancy version of “but we’re special.” The first objection? This is the work of a politically ambitious prosecutor!
Probably. But guess what? It doesn’t matter. He’s got the job. You don’t. And, oh, don’t rush to get all partisan here. Cox and Ryan are Republicans and they’re going after Republicans. Verisign’s Stratton Sclavos and Lawyer to the Stars – All the Stars, Larry Sonsini ain’t Democrats. Which is telling. Ryan and Cox are smart enough to play fair when it comes to where they’re looking. It’ll make their cases stronger and – both being good lawyers – they know it.
That’s not to say there isn’t a political element to all this. Embarrassing the Democrats is probably somewhere on the agenda, not too far down. The state’s political leadership, save Gov. Arnold Schwarzenegger, were all in office during the Bubble 1.0 and they used Silicon Valley’s ambitions like an ATM: punch in a few code words, get a lot of checks. The Clinton Administration’s SEC took a big long, comfy nap for much of Bubble 1.0, worried more about boosting economic growth than keeping an eye on what was going on off – way off – Wall Street.
That’s one reason why the valley’s persecuted millionaires, get to make somewhat outrageous complaints about those who might regulate them. They don’t understand – it’s the market! You can’t control the market! This is my favorite excuse; I only wish Adam Smith and his “hidden hand” were this popular in how the valley actually conducted its affairs. The “it’s the market” excuse was used from about 1997 to 2001 to explain why IPO shares issued to executives – the “Friends of Frank” plan was the most notorious – weren’t gifts; they were just “tips” that happened to be really, really lucrative. No, you can’t control the market. But when you’re making the market – as so many companies did back in the late 1990’s with the help of their bankers – well, then you have an advantage. Particularly when, as Ryan and others are alleging, companies cooked the books and back-dated option grants to make the well-off even wealthier. You can do that when you’re a private company (although it’s still dicey) but not when you’re playing with shareholders.
And oh, yeah, while we’re on the subject: The word “shareholder” in situations like this is the same as the word “consumer.” And yeah, for politicians “consumers” are “voters.” And yeah, this is politics. But, so what?
They don’t understand – we need these options to stay competitive! Yup. You do. Which is why the playing field has to be level and every company in every industry needs to play by the same rules. Interesting, isn’t that the SEC is looking at non-tech companies as well? Why? For the same reason they’re looking at Democrats and Republicans. The government isn’t supposed to be in the business of letting crooks cheat ’cause it’s good for the American economy. (Many of you may, with reason, say this has not been true of the Bush Administration; for that argument, I refer you to my Spot-on colleague Christopher R. Brauchli who is eloquent on this and other, related, topics)
But this whole competitive argument reminds me of something I find fabulous annoying: Put that stupid excuse about India and China – how they don’t have stock options – away and forget you ever heard it. There’s private property (the right to own stock or property) in China but its existence isn’t that secure and the per capita income in India’s capital is about what your average California business person pays to fly to New York.
Then there’s this chestnut: Everybody does it. Well, clearly they did and maybe some still do. But remember when your Mom asked what you would do if “everybody” jumped off the Brooklyn Bridge? Well that logic applies here as well. Yes, Silicon Valley is special – you guys changed the world and some of you are still at it – but guess what? You play in the public market – as the companies being investigated for back-dating do – you play by the laws as enforced by the Securities and Exchange Commission to protect shareholders (consumers and voters).
And lastly: This is not a crime, no one lined their own pocket. That’s for the courts to decide and it’s cases like this and situations like this that help create our understanding of the law and the regulations that stem from the law. The New York Times – coming late to the story as it does with everything Silicon Valley – did a nice job of exploring the back-dating practice pointing to Sonsini’s law firm as one that apparently advised clients that the practice was legitimate. Wilson Sonsini famously pioneered the practice of taking stock options as payment for its young start-up clients. In hindsight, that seems like a classic conflict of interest – a firm that could benefit financially from taking its own advice to a client – and it’s been unexplored until now. Maybe it’s fine, maybe it’s not. But we won’t know until the SEC makes a decision.
Remember, the government regulates white collar crime by example. That’s why they’re stepping in now – they can see Bubble 2.0 as clearly as the rest of us. And while much of what Silicon Valley will say in response to the investigations, the investigators, the scandals, the indictment and the possible convictions may well be true – it doesn’t matter. This is how regulation is enforced and laws are interpreted.
And while everybody does it and we need to do this to stay competitive and what’s the harm, no one made themselves rich it was for the company so how can that be a crime and politicians really don’t understand the pressure of running a business….in the end, no one gets – or should get – to give lame excuses for cheating. Not in kindergarten. Not now.

Micro Cells, Macro Economics

The U.S. Senate debate on measures designed to expand federally funded research with the use of embryonic stem cells promises to sound familiar – in its claims and its omissions – to the debate held here in California two years ago.
Led by Sen. Arlen Specter – who has been fighting cancer – there will be plenty of tales and moving anecdotes about the life-saving potential of stem cell research. There will be more talk about the show-down that Congress is having with the White House over this legislation. And there will probably be a few more long-drawn out op-eds about politics and religion. But there won’t be a lot of talk about another aspect of the measure – its economic importance to the U.S. And the omission of that argument is worth noting.
There’s nothing wrong with a little bathos and pathos. It’s how laws like this get passed. The California proposition was approved by almost 60 percent of the state’s voters just a few days after one of its most famous supporters, the actor Christopher Reeves, died. And it had hard core Republican support from Nancy Reagan and her son, Ron, still grieving over former President Ronald Reagan’s death. And almost everyone has a relative or friend with a disease or syndrome that might be relieved by the research and discoveries that come from embryonic stem cell research. And that potential should offer a clue to what should be talked about in the debate over this research: Its power to give real economic clout to the biotech industry.
The campaign to create state-funded stem cell research was backed here in California by a group of savvy and smart businessmen, many of them the same folks who brought you Google, Amazon.com and other companies. These venture capitalists many of them affiliated with the powerhouse firm Kleiner Perkins Caufield and Byers are interested in the life-saving potential of stem cells. But they are businessmen, not humanitarians.
Stem cell research has the promise to make the biotech businesses as important – in real dollar terms – as the Internet and tech business that have made so much money and effected so many changes in how we live and work. That’s the argument that politicians – particularly Democrats so anxious to show up the White House – ought to be making. For biotech backers in California, the stem cell debate is one about stay competitive against scientists in India, the U.K. and other places that support – even foster – stem cell research.
And most everyone in Silicon Valley knows, federally funded research has been the seedbed of tech innovation for a long time. The federal money that made the valley what it is today – the grants, procurements and research conducted during the Vietnam war and the space race – came here for a reason, however. It’s where the brains were. They were already working in California drawn by a research institute started at the turn of the century by a wacky Gold Rush millionaire now best known for the highways and streets that bear his name.
James Lick‘s decision to fund construction of an observatory and build a telescope – then, the largest in the world – high on Mt. Hamilton a few miles from downtown San Jose, is the beginning of California’s attraction for physicists and astronomers. As Carey McWIlliams recounts, Lick figured that a telescope high on a hill in the clear dry California air, would give a clear and accurate view of the heavens. He was right. The scientists came and they stayed, turning Mt. Hamilton into an important research center for its time. That research center, which is now part of the University of California, attracted scientists and so 50 years later when the feds wanted to fund brains to build missiles, satellites and lunar modules – and the microchips that make them go “boom” – they came to California.
Something similar is already at work with the funding that’s been unleashed over the California stem cell program. The $3 billion initiative – that’s more than $250 million a year for 10 years – isn’t just about the pure research that will be done. It’s about the discoveries that will be made – and commercialized – as that research is conducted along the way. As they say in Silicon Valley, it’s about “the IP” – the intellectual property that will accrue. That intellectual property – the knowledge that’s built up over time – that’s a 21st Century gold mine.
There’s an argument to be made that having private funding for this sort of effort is desirable. The religious one – with which I don’t agree – that the state should not fund the taking of human life, no matter how young. Better to have the sin rest in the private sector. And, of course, there’s the small-government case. Why should tax dollars be spent on what will in the end be commercial enterprises?
Those arguments over look the role that the U.S. government has played in advancing scientific and technological achievement since this country was founded. A look at how Lick’s hunch about telescopes fostered a place for a future industry he could only have imagined is a good example. It’s what has allowed this nation’s economy to dominate the world.
The private funding argument also sidesteps an important element in the role that government plays when it fund research: the ethical and thorough accounting of how public money is spent. Putting moral and ethical decisions in the hands of peoples who are interested in commerce a bit more than the public good is always risky. When the money gets good, the temptations gets stronger. A look at the fate, er, fable created in South Korea is a good example of how dramatically things can go wrong.
The stem cell research legislation is expected to pass and President Bush is expected to veto it. But in doing so he’s acting against the nation’s economic interest. And that’s an argument that ought to be made with a lot more force and vigor.