How the Democrats Can Lose Silicon Valley and their senses


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That Was The Week, #39

Editorial


Ben Thompson, in Stratechery, wrote an essay this week. Its title was great - "Facebook's Missing Monopoly." In the same week, the House Democrats released a report accusing Facebook, Apple, Google, and Amazon of being monopolies and abusing their power.
The ignorance manifest in the accusation of monopoly power is striking and, at the same time, astounding. At a time when most of Silicon Valley is praying - or at least hoping - for a Biden win in the presidential election, the assumed winners are signaling the coming war with big tech.
To be clear, Facebook does not have a monopoly in its only market - digital advertising. Neither does Google. Amazon has no monopoly in eCommerce, and Apple certainly has no monopoly on smartphones, laptops, computers, or software and services. And you can't abuse what you do not have.
These are big and powerful companies and a testament to the Silicon Valley ethos to build the new and disrupt the old.
None of this is to say that these companies are not sometimes self-serving and aggressive. All successful companies are.
So, where does that leave us? Of course, nothing should stand in the way of removing the current government. But that said, it is hard to feel good about the assumed winners.
The future of humanity depends on technology that will be capable of automating much that is currently manual. The ability to reduce the price of food, drinks, housing, clothing, transport, energy, and much more closer towards zero is technology and automation driven. Automation is beneficial to humanity due to its impact on reducing human labor in producing for the needs of humans, animals, and the earth. Ultimately human work itself will be reduced to as close to zero as is achievable. When that happens, the choice of how to spend one's time will become available to all. Large technology companies are part of the path to that possibility.
The end of the private company is a meaningful goal in that context. It would be hard to imagine a fully automated society owned and run by private individuals. As a requirement of progress, social production can become possible, and surplus itself will probably become social, not individual. Universal Basic Income would be the likely form of the social distribution of wealth. But that is a long time in the future. Until that time, let's support the ability of capital and know-how to help us get there.
We all require a political agenda that places value on progress and understands that automation is the source of social progress and equality of opportunity. Combining technical progress and social progress is not a new idea. It was the heart of enlightenment thinking. We seem to have lost it,

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This week's video is here:

Top of the Week: Don't Trust Anti Trust


Reads of the Week: ChinAmerica


Startup of the Week: Unqork


Raise of the Week: Greycroft


Politics and Technology:


Venture: SPACs and Direct Listings


Startups: Shifting Sands


PodcastPodcasts of the Week of the Week: Fabrice Grinda


Tweet of the WeekTweet of the Week: Dan Rose on Facebook


Quote of the Week:


--Top of the Week - Don't Trust Anti-Trust

House Democrats say Facebook, Amazon, Alphabet, Apple enjoy 'monopoly power' and recommend big changes

CNBC

Mandel Ngan | AFP | Getty Images
  • After a 16-month investigation into competitive practices at Apple , Amazon , Facebook and Google , the House Judiciary subcommittee on antitrust has released Tuesday its findings and recommendations on how to reform laws to fit the digital age.
  • House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law Chair David Cicilline, D-RI, speaks during a hearing on "Online Platforms and Market Power" in the Rayburn House office Building on Capitol Hill in Washington, DC on July 29, 2020.


Apple 'Vehemently Disagrees' With U.S. Tech Company Antitrust Report

MacRumors

  • Apple in a statement to MacRumors said that it strongly disagrees with the conclusions reached in the report in respect to Apple, and that Apple does not have dominant market share in categories where it does business.
  • Earlier today, the U.S. House Judiciary Antitrust Subcommittee completed its ongoing antitrust investigation into the practices of Apple, Facebook, Google, and Amazon, reaching the conclusion that the tech companies are the "kinds of monopolies" last seen in "the era of oil barons and railroad tycoons."

Anti-monopoly vs. Antitrust

Ben Thompson, Stratechery

William Letwin, in Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act, argued that the only way to understand the Sherman Antitrust Act, and by extension antitrust in America, was to understand an ancient strand of American politics:

Hatred of monopoly is one of the oldest American political habits and like most profound traditions, it consisted of an essentially permanent idea expressed differently at different times.

As Letwin notes, American distrust of monopolies had its roots in England and 1624’s Statute of Monopolies, which significantly constrained the ability of the King to grant exclusive privilege; colonial and state legislatures similarly passed laws restricting grants of exclusive power by governments, and while the Bill of Rights did not have an anti-monopoly provision (contra Thomas Jefferson’s wishes), one of the most divisive political questions for the first several decades of the United States was over the existence (or not) of a national bank, in large part because it was a government-granted monopoly.


Steps from the House’s antitrust report are too little, too late when it comes to big tech

TechCrunch

  • The other interesting section — and the one that will likely prove most troubling for investors and startup founders who are looking to exit their businesses relates to how regulators should handle future mergers and acquisitions from big technology companies.
  • For startups, the most relevant points are the potential solutions the committee proposes for addressing big tech and they primarily boil down to giving small companies the benefit of the doubt when they claim that bigger rivals are exercising monopolistic advantages — and prevent the kinds of acquisitions in the future that allowed these companies to reach the unassailable positions they currently occupy in their chosen markets.

Facebook Says Government Breakup of Instagram, WhatsApp Would Be ‘Complete Nonstarter’

WSJ

  • A government antitrust case against the company would likely rely on the argument that Facebook made serial acquisitions to reduce competition, a question that wasn’t considered when the Federal Trade Commission originally chose not to oppose the Instagram and WhatsApp deals, he said.
  • The 14-page document, reviewed by The Wall Street Journal, offers a preview of the social-media giant’s defense as federal antitrust enforcers and members of Congress continue to pursue investigations into Facebook’s power and past competitive behavior

Rebels within: the Facebook staff openly challenging Zuckerberg

Technology | The Guardian

  • The resignation, first reported by the Washington Post , was the latest act of rebellion from inside a company that used to be one of the most coveted places to work in Silicon Valley but is facing growing internal dissent from its elite workforce.
  • They believes both internal dissent and external pressure will be needed to bring change inside a company that from their own personal experience is “not interested” in stamping out hate and incitement to violence on its platforms”.

--Reads of the Week - ChinAmerica


The end of the American internet — Benedict Evans

Benedict Evans

  • But they will also come from the EU, which is increasingly writing laws that, intentionally or not, change how American companies do business in America, and the more different rules we have in different places, the more fragmented and complicated things get.
  • Today, the rules come from Apple, or California, both of which are increasingly becoming America’s privacy regulators by default.


Unfavorable Views of China Reach Historic Highs in Many Countries

Pew Research Center's Global Attitudes Project

  • In Spain, Germany, Canada, the Netherlands, the U.S., the UK, South Korea, Sweden and Australia, negative views have reached their highest level in the 12 or more years that Pew Research Center has been polling in these countries.
  • Views of China have grown more negative in recent years across many advanced economies, and unfavorable opinion has soared over the past year, a new 14-country Pew Research Center survey shows.

What’s Next for Silicon Valley?

Harvard Business Review

  • Four main trends suggest the environment that allowed companies like Facebook, Amazon, Google, Apple, and Microsoft to flourish might not exist for much longer: the stifling dominance of top tech giants; changing investor attitudes; increased scrutiny from regulators, the media, and the public; and a growing emphasis on ethical capitalism.
  • As a results, the tech industry will likely experience major shifts, including: the decline of micro-targeted advertising, more rights for gig workers, a sorting of direct-to-consumer startups into big winners and many failures, and a pivot to “conscious capitalism.”

Reinventing the SPAC

Reid Hoffman - LinkedIn

  • What’s missing is a major financial investor with patient capital who will partner with the CEO for the long term (i.e. the next 10 years) to take the necessary risks to reinvent the business and capitalize on opportunities for innovation and growth.
  • But while it’s certainly possible to use SPACs for financial engineering, Reinvent Technology Partners , the SPAC that I sponsored with Mark Pincus and Michael Thompson , is focused on a very different opportunity, which we refer to as “venture capital at scale,” which offers greater and more sustainable benefits.

Nvidia has developed neural network that could revolutionise video streaming

DIYPhotography.net -Hacking Photography, One Picture At A Time

  • The new technology is possible due to Nvidia Maxine , their cloud-AI video streaming platform for developers.
  • Nvidia says that this technology also offers some other advantages for video conferencing, too, such as being able to reposition the subject’s head to face the camera.

--Startup of the Week - Unqork


Unqork’s $207M Series C underscores growing enterprise demand for no-code apps

Fundings & Exits – TechCrunch

  • This week, Unqork , a startup that helps other companies build business apps with a no-code platform, raised a $207 million Series C.
  • I want to better understand not only how Unqork managed to attract such a massive new check, but also what its notes tell us about the market for no-code services that help business build apps, a key portion of the no-code/low-code market.

--Raise of the Week - Greycroft


Greycroft has rounded up $678 million in capital across two new funds

TechCrunch

  • Greycroft , the New York and L.A.-based venture firm founded in 2006 by investors Alan Patricof, Dana Settle, and Ian Sigalow, has closed on two new funds totaling $678 million in capital commitments.
  • The venture fund invests between $500,000 and $10 million in a first check, and Greycoft will invest up to $15 million in a portfolio company over multiple rounds.


--Politics and Technology


2020 Crunchbase Diversity Spotlight Report

Crunchbase

Comprehensive Research on Funding for Black and Latinx founders Get key insights on: – The state of funding for Black and Latinx founders based on an analysis of over 970 companies



Orders from the Top: The EU’s Timetable for Dismantling End-to-End Encryption

Deeplinks

  • A series of leaked documents from the EU’s highest institutions show a blueprint for how they intend to make that happen, with the apparent intention of presenting anti-encryption law to the European Parliament within the next year.
  • The last few months have seen a steady stream of proposals, encouraged by the advocacy of the FBI and Department of Justice, to provide “lawful access” to end-to-end encrypted services in the United States.

Facebook to ban QAnon-themed groups, pages and accounts in crackdown

Technology | The Guardian

  • Facebook will ban any groups, pages or Instagram accounts that “represent” QAnon, the company announced Tuesday, in a sharp escalation of its attempt to crack down on the antisemitic conspiracy movement that has thrived on its platform .
  • Under those rules, in addition to removing QAnon groups from recommendation algorithms, Facebook said it would ban QAnon-themed groups, pages or Instagram accounts if they discussed potential violence.

What-The-Social-Dilemma-Gets-Wrong

Facebook rebuttal to The SocialDilemma

Our News Feed product teams are not incentivized to build features that increase time-spent on our products. Instead we want to make sure we offer value to people, not just drive usage.

For example, in 2018 we changed our ranking for News Feed to prioritize meaningful social interactions and deprioritize things like viral videos. The change led to a decrease of 50M hours a day worth of time spent on Facebook. That isn’t the kind of thing you do if you are simply trying to drive people to use your services more.

We collaborate with leading mental health experts, organizations and academics, and have our research teams devoted to understanding the impact that social media may have on people's well-being.

We want people to control how they use our products, which is why we provide time management tools like an activity dashboard, a daily reminder, and ways to limit notifications. We've already started dedicating product teams to focus on other areas like loneliness, racial justice, mentorship, mental health, and responsible innovation.

We will continue innovating and coming up with new tools to help people stay safe.


--Venture: SPACs and Direct Listings


A quick peek into Opendoor’s financial results

Fundings & Exits – TechCrunch

  • II (a public, blank-check company, or SPAC) is combining with Opendoor , a San Francisco-based tech startup that facilitates real estate transactions.
  • As investing whirlwind Chamath Palihapitiya continues to make headlines with his full-court press to take private tech companies public via SPACs while markets are hot, one of his targets has disclosed financial information that helps us better understand the transaction it is undertaking.

Opendoor Filing Reveals Lower 2020 Revenue, Smaller Loss

Crunchbase News

  • That’s a decline from the same period last year, when Opendoor had revenue of $2.27 billion and a net loss of $158 million.
  • The San Francisco-headquartered company posted a net loss of $118 million on $2 billion in revenue for the first half of 2020, according to a Monday filing with U.S. securities regulators.


What Palantir and Asana Mean for Direct Listings

The Information

Stocks enjoyed a robust rally on Monday—except for the two newest stocks to go public via direct listing, Palantir and Asana. For the fourth consecutive day, both stocks lost ground.


Why VC firms should stop chasing unicorns

Sifted

  • For the sake of founders, the industry and VCs themselves, we need to do more to generate exits among the long tail of startups that aren’t going to become outsized.
  • With small exits, VCs can focus on returning the bulk of their fund’s capital, which is invested in the long tail of startups.

Negative Social Proof - AVC

AVC

  • I like to tell the story of when I met Brian Armstrong, the founder of our portfolio company Coinbase in the summer of 2012.
  • There was no social proof on these investments other than the fact that nobody else wanted to make the investment as much as we did.

--Startups: Shifting Sands


Jobs, Wozniak, Cook (Build, Sell, Scale)

Elad Blog

Over the life of a startup, 3 archetypes are needed to found, build, and scale a company. It is rare to find someone who is a 10X version of one of these archetypes, so even rarer to find someone who captures 2 or 3 of them. As such, usually these characteristics are divided into 3 or more people who are uniquely good at their core function.

Archtype 1: Ability to Sell. Apple example: Steve Jobs.

Every startup needs someone who is great at selling. This founder convinces people to join the company, gets the first few customers, and pulls off the impossible partnership or ridiculous fundraise. Without a great sales person founders may find it hard to hire people, close customers or raise money.

Jobs was also great at product, which leads to Archetype 2....

Archetype 2: Ability to Build (a great product). Apple example: Steve Jobs & Steve Wozniak.

Wozniak could build anything. He was known for his impossible designs that dramatically increased utilization of the hardware and enabled the early Macs to do things similar hardware could not.

Coupled with Jobs, who later emerged as a product visionary, they drove great product and technical excellence. In other words, the ability to build.


Archetype 3: Ability to Scale (and run a tight ship). Apple example: Tim Cook.

Later in the life of the company someone is need to scale the organization, tighten controls, add process, and scale a company from tens or hundreds to many thousands. While some founders end up as excellent operators, often they need to hire someone who is their complement to learn from or to drive much of the scaling. These professional executives tend to be great at people issues but bad at making bold or controversial decisions or iterating on the next wave of disruption. This is why they are able to climb the corporate ladder and work with stubborn decisive founders, but also is why they are not usually founders themselves.


Crowdcube and Seedrs — which let you buy shares in privately-held start-ups — are set to merge

CNBC

  • "It's been a long process for us internally; but also externally, the observers of the market have seen the benefits of putting the two companies together." Westlake and Kelisky said both their businesses had experienced increased demand during the coronavirus pandemic — with the third quarter marking a "record" for Crowdcube — as start-ups under strain looked to crowdfunding as an alternative to traditional fundraising methods.
  • Crowdcube and Seedrs, founded in the wake of the 2008 financial crisis, shook up the capital markets by allowing the general public to buy shares in early-stage companies to help them raise money.

Tribe Capital Plans Challenge to AngelList

The Information

For years, venture firms have given pension funds, family offices and others who put money into their funds ways to invest more directly in the firms’ startups. Now, one well-connected VC firm in Silicon Valley has a plan to let a wider group of investors do the same.


Index Ventures’ Nina Achadjian and Sarah Cannon: ‘There’s basically an infinite bid’ for growth-stage startups

TechCrunch

  • This week on Extra Crunch Live , I interviewed Nina Achadjian and Sarah Cannon, two SF-based partners at Index, to discuss what they are seeing in the market, how VC fundraises have changed and continue to change and how they are adapting to the rise of rolling funds and other new seed vehicles.
  • Index Ventures’ Nina Achadjian and Sarah Cannon: ‘There’s basically an infinite bid’ for growth-stage startups

Fundraising for Open Source Startups

Mo's Blog About Open Source, SaaS, Startups

  • The Importance of Project-Market-Fit Building a company around an open source project provides you with a considerable advantage in the context of the step function concept.
  • You don’t need to raise money to build a great, successful company.

--Podcast of the Week - Fabrice Grinda


Playing With Unicorns – Episode 3: How VCs evaluate startups

Fabrice Grinda

In the first episode I covered how and when to fundraise. In this episode, I describe how venture capitalists (VCs) evaluate you once you are in front of them to help you refine your approach and pitch.


--Tweet of the Week - Dan Rose


--Quote of the Week - Steve Jobs


Still thinking about Steve

On my Om

"I have a great respect for incremental improvement, and I’ve done that sort of thing in my life, but I’ve always been attracted to the more revolutionary changes. I don’t know why. Because they’re harder. They’re much more stressful emotionally. And you usually go through a period where everybody tells you that you’ve completely failed"