Tag archives for business

Silicon Valley: Hackers, hucksters, and the hopeful

Two articles in the business news caught my eye recently, providing very different takes on entrepreneurship in Silicon Valley.

From Business Insider, Google’s Larry Page Does Exactly the Right Thing: Says ‘Whatever’ to Wall Street. “In some people’s minds, Google’s Larry Page just committed the cardinal sin: He offended Wall Street. Wall Street has reacted to the first quarter in the Page regime by tossing the stock overboard. Larry Page is spending way too much, Wall Street says. Larry Page isn’t communicating well enough. Larry Page couldn’t even be bothered to spend more than a couple of minutes on the earnings call with Wall Street last night. So to hell with him! Lost under the outrage, of course, is that Larry Page may be doing exactly the right thing: Focusing on Google and Google’s products and users, instead of Wall Street.” I’d agree that finance has become too involved in business. Bankers should be providing businessmen with capital and letting them innovate and sell useful products. Big mergers, private equity firms, and the whole Wall Street machine has become very good at shaking money out of business, but their track record on long term health is less than stellar. Hopefully, Larry Page has enough clout, and an actual strategy, to keep Google doing what they’re doing.

Of course, that leads to the question, what is it that Google does? Most people think of them as a search engine, but in fact, Google sells advertisements, and Business Week has an article about how toxic the focus on advertising has become. Says early facebook employee Jeff Hammerbacher, “”The best minds of my generation are thinking about how to make people click ads.” “Once again, 11 years after the dot-com-era peak of the Nasdaq, Silicon Valley is reaching the saturation point with business plans that hinge on crossed fingers as much as anything else. “We are certainly in another bubble,” says Matthew Cowan, co-founder of the tech investment firm Bridgescale Partners. “And it’s being driven by social media and consumer-oriented applications.”” One of the big open questions at Prevail is how new forms of media, particularly social media, can be used to increase social participation and guide what we call the Second Curve of Social Change. But if at the end of the day, if everybody is focused advertising, social media is just perpetuating a cycle of consumption, with more wasted time for average people in an already advertising saturated world, and for the researchers who are supposed to be improve the technology.

Makes you think, doesn’t it? These are big issues, and if any entrepreneurs out there are reading, maybe they could share some ideas.

Davos: Back to the Future

Parag Kanna has a fascinating thesis on what the Davos conference is. Davos, for the unfamiliar, “where each January the planet’s most influential heads of state, CEOs, mayors, religious leaders, NGO heads, university presidents, celebrities and artists flock for the annual meeting of the World Economic Forum (WEF), an event that over the past four decades has established itself as what “60 Minutes” last year dubbed “the most important meeting on Earth.”” But more than a meeting, Davos represents a new paradigm for diplomacy, taking place outside of the conventional structure of Nation-States dating back to the treaty of Westphalia. And it’s not just a new paradigm, it’s a better one.

Compared to the modern inter-state diplomatic system, Davos represents anti-diplomacy—and yet it actually reflects the true parameters of global diplomacy today better than the United Nations. The reason is that in our ever more complex diplomatic eco-system, relations among governments represent only one slice of the total picture. Beyond the traditional “public-public” relations of embassies and multilateraism, there are also the “public-private” partnerships sprouting across sectors and issues. Qatar’s natural gas fortunes hinge on its arrangement with Exxon, India’s ability to attract foreign investment is contingent on support from the business magnates who make up the Confederation of Indian Industry (CII), and the alliance of the Gates Foundation, pharmaceutical company Merck, and the government of Botswana saved the country’s population from being wiped out by AIDS, to name just a few of the now literally countless such arrangements flourishing today. The third and often neglected dimension of the new diplomacy is “private-private” interactions which circumvent the state altogether. Think of the Environmental Defense Fund dealing directly with Wal-Mart to cut the company’s overall emissions by 20 million metric tons and install solar panels at 30 new locations. The diplomats at Cancun could only dream of such concrete measures.

All three of these combinations of negotiating partners thrive at Davos and in all WEF activities, which range from mini-Davos-style regional conferences to year-round multi-stakeholder initiatives in public health, climate change, anti-corruption and other areas. The WEF does what no U.N. agency would ever do: allow “coalitions of the willing” to organically “grow and go”—incubating them but also quickly spinning them off into self-sustaining entities; but importantly also letting projects die that fail to attain sufficient support from participants. In this sense the WEF is both a space for convening but also a driver of new agendas.

Absolutely fascinating, the idea that an alliance of the super-wealthy, and professional activists could make a difference on the world more effectively than traditional governments. The end of the nation-state is something that we’ve seen before, along with the rise of a new global elite, but Ranna puts an interesting spin on it, hearkening back to the Middle Ages when a variety of actors could influence global diplomacy, not just people bearing the seals of powerful nations. This is more than anarchy or oligarchy, this is the return of an ancient and resilient system of governance. We can only hope that they have some way of implementing wise decisions, and not just imposing choices for personal benefit from the top down.

John Robb is far less sanguine, and in typically vituperative fashion,

“[Davos] is a collection of elites generated by the antiquated, hierarchical systems of the 20th Century — akin to a collection of corrupted inebriated noblemen from depleted, inbred bloodlines discussing the future of war, peace, and prosperity during the post fox-hunt feast.”

Well, yes, and it’s certainly not democratic nor accountable. But if Davos is where the action really is, then we need to be paying attention. And this new ruling class is a minimum, more egalitarian and less concerned with holding power forever than the ones that have come before.

Kanna does make one critical point, and I’ll leave it in his words:

Global governance is not a thing, not a collection of formal institutions, not even a set of treaties. It is a process involving a far wider range of actors than have ever been party to global negotiations before. The sooner we look for new meta-scripts for regulating transnational activities and harnessing global resources to tackle local problems the better. Davos continues to be a good place to start.

Amen. Global governance starts with all of us.

Why Our Best Officers Are Leaving

Anybody who has spent significant time with military officers will know that they are often smart, ambitious, patriotic people. Yet, at the same time the military as a whole is a slow and clumsy organization. Why? The American military uses an incentive system that rewards conformity and mediocrity, and actively punishes people doing what they love. The military attracts the best, but in order to survive in the 21st century, it will have to keep them satisfied in their jobs, not make them bureaucratic zombies. Read the rest at the Atlantic.

The Profits of Nonprofits

“Technology is way advanced, and it’s the business models that are lagging way behind, limiting what social entrepreneurs are able to accomplish,” says Victoria Hale, founder of two nonprofit pharmaceutical companies.

The Scientist has an exciting new article on new model for the pharmaceutical industry, blending the social mission of non-profits with the efficient business practices of big corporations. The perennial problem of big pharma and global health is that developing new treatments is expensive, and many of the most horrible disease are suffered by small numbers of people in the third world. Even though these diseases exact a terrible human toll, it isn’t financially viable to search for cures.

Enter non-profit pharmaceutical companies, which target these diseases, like malaria, dysentery, or the deadly visceral leishmaniasis:

Since its inception, [Institute for OneWorld Health] has received more than $200 million from the Bill & Melinda Gates Foundation as well as funds from other philanthropic donors. The socially conscious company has even tugged at the heartstrings of several for-profit pharmaceutical companies, who have agreed to make and distribute drugs developed by iOWH on a no profit, no loss basis. With that backing, the company has already brought to market a drug to treat visceral leishmaniasis—the world’s second-largest parasitic killer after malaria—and developed a pipeline of others designed for scourges of the developing world: malaria, diarrheal diseases, and parasitic worm infections.
iOWH is unusual, but it is not alone. With philanthropists funneling billions of dollars into biomedical research and traditional drug discovery efforts producing fewer and fewer therapies, the line between for-profit and nonprofit life science companies is beginning to blur as both sides of the divide look for new options. More and more for-profit enterprises are experimenting with nonprofit models, while nonprofit organizations look to incorporate for-profit business practices to stay afloat.
“At one time, people in the nonprofit world had a disdain for business, and business people thought nonprofits were without discipline,” says Jack Faris, CEO of the Pacific Northwest Diabetes Research Institute, a nonprofit research center in Seattle, Washington. “People have matured a substantial amount beyond that…There’s much more appreciation of the role that each plays and a readiness to work together.”

The typical pattern is a partnership, where non-profits use advanced scientific knowledge to find cures, and local partners get the drugs into the hands of those who need them:

iOWH, however, did not have funds for manufacturing facilities to make and distribute the product. So to get the drug to those who needed it, iOWH partnered with a for-profit company in India, Gland Pharmaceuticals, which has agreed to take on those roles for no profit, no loss. With Gland’s help, paromomycin is now available in India and costs $10-15 for the whole 21-injection course of therapy. “It’s a family-run company, and they really care a lot about diseases of the poor,” says Chin. “They’ve been fantastic.”

iOWH, however, did not have funds for manufacturing facilities to make and distribute the product. So to get the drug to those who needed it, iOWH partnered with a for-profit company in India, Gland Pharmaceuticals, which has agreed to take on those roles for no profit, no loss. With Gland’s help, paromomycin is now available in India and costs $10-15 for the whole 21-injection course of therapy. “It’s a family-run company, and they really care a lot about diseases of the poor,” says Chin. “They’ve been fantastic.”

These hybrid models might offer one solution to the crisis of global health, distributing socially beneficial knowledge to help everybody, not just those who can afford it.