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      in Elections

      Why Google, Microsoft and Amazon Shy Away From Buying A.I. Start-Ups

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      Google, Microsoft and Amazon have made deals with A.I. start-ups for their technology and top employees, but have shied from owning the firms. Here’s why.In 2022, Noam Shazeer and Daniel De Freitas left their jobs developing artificial intelligence at Google. They said the tech giant moved too slowly. So they created Character.AI, a chatbot start-up, and raised nearly $200 million.Last week, Mr. Shazeer and Mr. De Freitas announced that they were returning to Google. They had struck a deal to rejoin its A.I. research arm, along with roughly 20 percent of Character.AI’s employees, and provide their start-up’s technology, they said.But even though Google was getting all that, it was not buying Character.AI.Instead, Google agreed to pay $3 billion to license the technology, two people with knowledge of the deal said. About $2.5 billion of that sum will then be used to buy out Character.AI’s shareholders, including Mr. Shazeer, who owns 30 percent to 40 percent of the company and stands to net $750 million to $1 billion, the people said. What remains of Character.AI will continue operating without its founders and investors.The deal was one of several unusual transactions that have recently emerged in Silicon Valley. While big tech companies typically buy start-ups outright, they have turned to a more complicated deal structure for young A.I. companies. It involves licensing the technology and hiring the top employees — effectively swallowing the start-up and its main assets — without becoming the owner of the firm.These transactions are being driven by the big tech companies’ desire to sidestep regulatory scrutiny while trying to get ahead in A.I., said three people who have been involved in such agreements. Google, Amazon, Meta, Apple and Microsoft are under a magnifying glass from agencies like the Federal Trade Commission over whether they are squashing competition, including by buying start-ups.“Large tech firms may clearly be trying to avoid regulatory scrutiny by not directly acquiring the targeted firms,” said Justin Johnson, a business economist who focuses on antitrust at Cornell University. But “these deals do indeed start to look a lot like regular acquisitions.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      in Elections

      He Stole From His Tech Boss and Killed Him to Conceal the Crime

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      Tyrese Haspil, 25, was convicted of murdering his former boss, the entrepreneur Fahim Saleh, and dismembering his body in 2020.Just days after the body of Fahim Saleh, a successful tech entrepreneur, was found dismembered in his luxury condominium in Manhattan in July 2020, his former personal assistant, Tyrese Haspil, made a series of unsettling web searches.“Fahim Saleh.” “Murder of tech C.E.O. in New York.” “Dismembered body.”The search queries were just some of the chilling details that emerged during Mr. Haspil’s murder trial this month in Manhattan Criminal Court. And on Monday jurors convicted him of stealing hundreds of thousands of dollars from Mr. Saleh — and then killing him and cutting up his body in an effort to conceal what he had done.Mr. Haspil, 25, of Brooklyn is expected to be sentenced on Sept. 10.“Tyrese Haspil tragically cut Mr. Saleh’s life short — a man who came from a close-knit immigrant family and followed his passions to become a successful entrepreneur,” said Alvin L. Bragg, the Manhattan district attorney, in a statement announcing the conviction on Monday. “I hope the accountability delivered by today’s verdict can provide a measure of comfort to Mr. Saleh’s loved ones as they continue to mourn his loss.”Mr. Saleh, 33, was born in Saudi Arabia to Bangladeshi parents and grew up in Poughkeepsie, N.Y. He was the founder of two motorcycle ride-sharing companies, based in Bangladesh and Nigeria, the latter of which raised millions in venture capital. After his death, he was remembered as an innovative businessman and a generous friend.Sam Roberts, Mr. Haspil’s lawyer, said on Monday that he was disappointed by the verdict. He acknowledged that Mr. Haspil had committed the crime and said the killer felt remorse. “We fully believe that Tyrese Haspil is not solely and only the worst thing that he’s done in his life,” he said. “We hope that the court will understand that there are mitigating factors here.”Mr. Haspil’s ill-fated scheme began in the fall of 2018, when he was working as Mr. Saleh’s entrepreneurial assistant and began stealing money from his companies to purchase lavish gifts for his new girlfriend.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      in Elections

      Inside Amira Yahyaoui’s Claims about Mos, a Student Aid Start-Up

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      Amira Yahyaoui, a human rights activist, promoted the success of her student aid start-up, Mos. Some of her statements do not add up, according to internal data and people familiar with the company.As a Tunisian human rights activist in the 2000s, Amira Yahyaoui staged protests and blogged about government corruption. In interviews, she described being beaten by police. When she was 18, she said, she was kidnapped from the street, dropped off at the Algerian border and placed in exile for several years.Ms. Yahyaoui’s compelling background helped her stand out among entrepreneurs when she moved in 2018 to San Francisco, where she founded a student aid start-up called Mos. The app hit the top of Apple’s App Store and Ms. Yahyaoui raised $56 million from high-profile investors, including Sequoia Capital, John Doerr and Steph Curry, according to PitchBook, which tracks start-ups. Mos was valued at $400 million.In podcasts, TV interviews and other media, Ms. Yahyaoui, 39, frequently discussed Mos’s success.Among other things, she said the start-up had helped 400,000 students get financial aid. But internal company data viewed by The New York Times showed that as of early last year, only about 30,000 customers had paid for Mos’s student aid services. The rest of the 400,000 users included anyone who had signed up for a free account and may have gotten an email about applying for student aid, two people familiar with the situation said.After Mos expanded into online banking in September 2021, Ms. Yahyaoui told publications such as TechCrunch that the company had more than 100,000 bank accounts. But those accounts had very small amounts of money in them, according to the internal data. Less than 10 percent of Mos’s roughly 153,000 bank users had put their own money into their accounts, the data showed.Some employees tried to speak up about Ms. Yahyaoui’s claims, said Emi Tabb, who worked at Mos in operations and had roles such as head of financial aid before resigning in late 2022. But Ms. Yahyaoui dismissed and sometimes disparaged employees who tried pushing back against her public comments, five people who witnessed the incidents said.“She created a culture of fear,” Mx. Tabb said.Mos is among a class of tech start-ups that rose during the fast money era of the late 2010s and early in the pandemic, when young companies landed millions of dollars in funding with little more than promises. Now as the money has dried up and many tech start-ups grapple with a downturn, investors are pickier, customers are warier of bold claims and employees are more suspicious of founder pronouncements.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      in Elections

      ‘La French Tech’ Arrives Under Macron, but Proves No Panacea

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      The president has brought innovation, jobs and growth. Still, resentments fester on the eve of the presidential election.PARIS — In full Steve Jobs mode, President Emmanuel Macron of France donned a black turtleneck in January and took to Twitter to celebrate the creation in France of 25 “unicorn” start-ups — companies with a market value of over 1 billion euros, or almost $1.1 billion.He declared that France’s start-up economy was “changing the lives of French people” and “strengthening our sovereignty.” It was also helping to create jobs: Unemployment has fallen to 7.4 percent, the lowest level in a decade.The start-up boom was a milestone for a young president elected five years ago as a restless disrupter, promising to pry open the economy and make it competitive in the 21st century.To some extent, Mr. Macron has succeeded, luring billions of euros in foreign investments and creating hundreds of thousands of new jobs, many in tech start-ups, in a country whose resistance to change is stubborn. But disruption is just that, and the president has at the same time left many French feeling unsettled and unhappy, left behind or ignored.As Mr. Macron seeks re-election starting on Sunday, it is two countries that will vote — a mainly urban France that sees the need for change to meet the era’s sweeping technological and economic challenges, and a France of the “periphery,” wary of innovation, struggling to get by, alarmed by immigration and resentful of a leader seen as embodying the arrogance of the privileged.Which France shows up at voting booths in greater numbers will determine the outcome.Campaign posters on display this month in the northeastern French town of Stiring-Wendel.Andrea Mantovani for The New York TimesIn many Western societies, the simultaneous spread of technology and inequality has posed acute problems, stirring social tensions, and France has proved no exception. If the disenchanted France prevails, Marine Le Pen, the perennial candidate of the nationalist right, will most likely prevail, too.Worried that he may have lost the left by favoring start-up entrepreneurship and market reforms, Mr. Macron has in the past week been multiplying appeals to the left, resorting to phrases like “our lives are worth more than their profits” to suggest his perceived rightward lurch was not the whole story.He told France Inter radio that “fraternity” was the most important word in the French national motto, and said during a visit to Brittany that “solidarity” and “equality of opportunity” would be the central themes of an eventual second term.Learn More About France’s Presidential ElectionThe run-up to the first round of the election has been dominated by issues such as security, immigration and national identity.On the Scene: A Times reporter attended a rally held by Marine Le Pen, the far-right French presidential candidate. Here is what he saw.Challenges to Re-election: A troubled factory in President Emmanuel Macron’s hometown shows his struggle in winning the confidence of French workers.A Late Surge: After recently rising in voter surveys, Jean-Luc Mélenchon could become the first left-wing candidate since 2012 to reach the second round of the election.A Political Bellwether: Auxerre has backed the winner in the presidential race for 40 years. This time, many residents see little to vote for.The pledges looked like signs of growing anxiety about the election’s outcome. After several months in which Mr. Macron’s re-election had appeared virtually assured, the gap between him and Ms. Le Pen has closed. The leading two candidates in Sunday’s vote will go through to a runoff on April 24.The election will be largely decided by perceptions of the economy. In Mr. Macron’s favor, the country has bounced back faster than expected from coronavirus lockdowns, with economic growth reaching 7 percent after a devastating pandemic-induced recession.Marine Le Pen speaking this month in Stiring-Wendel.Andrea Mantovani for The New York TimesThe most significant cultural transformation has come in the area of tech, where Mr. Macron’s determination to create a start-up culture centered around new technology has brought changes the government considers essential to the future of France.Cédric O, the secretary of state for the digital sector, wearing jeans and a white dress shirt, no tie, admits to being obsessed. Day after long day, he plots the future of “la French tech” from his spacious office at the Finance Ministry.Five years ago, that may have seemed quixotic, but something has stirred. “It’s vital to be obsessed because the risk France and Europe are facing is to be kicked out of history,” Mr. O, 39, said, borrowing a line often used by Mr. Macron. “We have to get back into the international technological race.”Toward that end, Mr. Macron opened Station F, a mammoth incubator project in Paris representing France’s start-up ambitions, and earmarked nearly €10 billion in tax credits and other inducements to lure research activity and artificial intelligence business. A new bank was created to help finance start-ups.The president wined and dined multinational chief executives, creating an annual gathering at Versailles called “Choose France.”Since 2019, France has become the leading destination for foreign investment in Europe, and more than 70 investment projects worth €12 billion have been pledged by foreign multinationals at the Versailles gatherings, said Franck Riester, France’s foreign trade minister.In the past four years, IBM, SAP of Germany and DeepMind, the London-based machine learning company owned by Google’s parent, Alphabet, have increased investment in France and created thousands of jobs.Station F, a mammoth project in Paris that represents France’s start-up ambitions.Roberto Frankenberg for The New York TimesFacebook and Google have also bolstered their French presence and their artificial intelligence teams in Paris. Salesforce, the American cloud computing company, is moving ahead with over €2 billion in pledged investments.“Macron brought a culture shift where France was suddenly open to the world of funders,” said Thomas Clozel, a doctor by training and the founder in 2016 of Owkin, a start-up that uses Artificial Intelligence to personalize and improve medical treatment. “He made everything easy for start-up entrepreneurs and so changed the view of France as an anticapitalist society.”François Hollande, Mr. Macron’s Socialist Party predecessor, had famously declared in 2012: “My enemy is the world of finance.” As a result, Mr. Clozel said, securing funds as a French start-up was so problematic that he chose to incorporate in the United States.No longer.“Today, I am thinking of reincorporating in France,” he said. “The ease of dealing with the government, the consortium of start-ups helping one another, and the new French tech pride are compelling.”Among the start-ups that have had a significant effect on French life are Doctolib, a website that allows patients to arrange for medical appointments and tests online, and Backmarket, an online market for reconditioned tech gadgets that just became France’s most valuable start-up, at $5.7 billion.They began life before Mr. Macron took office, but have grown exponentially in the past five years.“I have made 56 investments in the last two years, and 53 of them are in France,” said Jonathan Benhamou, a French entrepreneur who founded PeopleDoc, a company that simplifies access to information for human resources departments.Now funding new ventures and focusing on a new start-up called Resilience in the field of personalized cancer care, Mr. Benhamou credits Mr. Macron with “giving investors confidence in stability and creating a virtuous cycle.”Talented engineers no longer go elsewhere because there is an “ecosystem” for them in France, Mr. O said.Yellow Vest protesters blocking a road in Caen, in France’s Normandy region, in November 2018.Charly Triballeau/Agence France-Presse — Getty ImagesMr. Macron has insisted that opening the economy is consistent with maintaining protections for French workers and that the arrival of la French tech does not mean the embrace of the no-holds-barred capitalism behind the churn of American creativity.Despite the president’s overhauls, France remains one of the most expensive countries for payroll taxes, according to the Organization for Economic Cooperation and Development, with hourly labor costs of nearly €38, close to levels seen in Sweden, Norway and other northern European countries.“We know that we have to go further,” Mr. Riester, the foreign trade minister, said in a recent interview. “We still have some brakes that could be taken off the economy, and we have to cut some red tape in the future.”Who Is Running for President of France?Card 1 of 6The campaign begins. More

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      in World Politics

      America’s True Hyperreal Heroes

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      At the very moment that US President Joe Biden is busy demonstrating how little power he wields, whether in reigning in the neocolonial and militaristic behavior of the Israeli government or in attempting to push key legislation through Congress, Elon Musk, who has never been elected to any public office, is flaunting his unchallenged personal power over what may be the most disruptive force in today’s global economy: cryptocurrency.

      Can the US Really Rally Other Nations?

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      Gregory Barber, writing for Wired, notes that through his tweeting, Musk has become a self-contained agent of volatility. He can send the value of different cryptocurrencies north or south, whenever he feels like it. As Barber frames it, “Musk is creating and destroying small fortunes, 280-characters at a time.” In his email promoting the article, Barber speculates: “Perhaps it’s strategic, or just whimsy, or maybe it’s a kind of performance art to inspire us all to wonder at the value of things. We might never know Musk’s true motives.”

      Today’s Daily Devil’s Dictionary definition:

      True motives:

      In the current society built on the principle of hyperreality, intentions that though detectable, will never be exposed in public, even by the media who understand that reporting on reality could only confuse their consumers who have become addicted to the manipulated representation of reality rather reality itself.

      Contextual Note

      Elon Musk is a true hyperreal hero, whose only serious rival on the world stage has been Donald Trump. Both are committed to finding ways to obscure the public’s ability to understand some serious public issues. But, contrary to Barber’s assertion, their true motives have never been in doubt. They can be summarized in two words — money and power — and two pathologies — greed and narcissism.

      Because most people in the United States have been taught to revere money and power — money as the key to power, power as the means of obtaining wealth — for all their obvious faults, their admirers not only continue to admire them but also celebrate their consummate ability to epitomize hyperreality. In the Calvinist tradition, wealth and power in the community were signs of divine favor. With the fading of the Puritan ethic of sober achievement, in their excess, Musk and Trump have attained the status of secular gods.

      Embed from Getty Images

      American culture struggles helplessly with the idea of truth. Where the condition for basic survival is to be constantly selling something to other people (ideally by creating a marketplace), truth tends to disappear into a misty horizon, spawning a destabilizing doubt that it even exists. But rather than resigning themselves to the absence of truth, Americans now want to reduce it to the question of facts. Fact-checking is all the rage.

      But serious philosophers and psychologists have always understood that the idea of truth means much more than establishing facts. Paradoxically, facts themselves can represent a convenient way of burying the truth. Journalists and public figures know this. A typical New York Times article on a potentially controversial issue typically contains a breathless series of short paragraphs citing facts, events and expert statements.

      The authors avoid providing logical connections between the paragraphs in an effort to let the facts accumulate. After aligning litanies of factoids and well-chosen quotes, the authors can be certain that no reader will be capable of stitching together anything that leads them towards an underlying meaning. “True motives” will be lost in the onslaught. Here at The Daily Devil’s Dictionary, we have cited examples of these logicless developments, for instance here and here.

      Both of our hyperreal heroes have been publicly disciplined for tweeting irresponsibly. Perceived as less dangerous, Musk still has a Twitter account whereas Trump had his taken away just before leaving the White House. Musk once declared that “Twitter is a war zone,” whereas Trump was accused of using it to foment civil war. His “true motive” appears to have been an attempt to create enough havoc to justify remaining in the White House. It didn’t work for Trump, but Israeli Prime Minister Benjamin Netanyahu may have been inspired by Trump’s example after failing to form a new majority earlier this year.

      According to Barber, Musk’s tweets “drop from the sky without warning. He controls the narrative, and thus the market effect.” This is not just hyperreal posturing or playing an expected public role with melodramatic or comic effect, as both Trump and Musk are wont to do on practically any occasion. Musk’s tweets concerning cybercurrency give him a power to make money instantly, at the expense of millions of other people. It sounds dangerous and downright unethical, but as a lawyer quoted by Barber explains, “You can’t police based on what you think is somebody’s subjective heart-of-hearts intent.” Is “heart-of-hearts intent” a synonym of “true motive”? In US culture, people tend to think so.

      Barber notes that only “a small number of people” possess something comparable to Musk’s hyperreal power. He cites Warren Buffett and the Federal Reserve chair, Jerome Powell. Neither of them is addicted to tweeting. But what is the true source of irresponsibility in this story? Is it Musk himself? Or is it Twitter as an institution that facilitates manipulation? Could it be cryptocurrency, which, as a pure product of purchasers’ greed, with no direct link to anything of substance, might justifiably be called hypercurrency? All three combine to define the hyperreal landscape that surrounds us, along with our media who amplify the drama the others generate.

      Historical Note

      Throughout history, political leaders have managed to control events by influencing the behavior of tens of thousands, and sometimes millions, of people. Think of Julius Caesar, Genghis Khan, Napoleon and Hitler. Whatever extraordinary narrative their culture invented for them and whatever personal charisma on their part contributed to their success, what these figures from the past did was rooted in the reality of government, administration, coercive force and concrete economic relationships.

      Hyperreality today sits atop all those features of power but thrives in an independent world of its own. It may be that without the example of Hollywood we never would have reached this stage. Musk and Trump alike are more like entertainment figures — both writing the script and playing the role — than to leaders of social, political or cultural movements.

      Two centuries ago, P.T. Barnum provided the model for hyperreality that would fully blossom in the 20th century thanks to the disruptive technology of movies, television and finally the internet. Barnum invented an entire sector of entertainment based on the misrepresentation of facts when, after purchasing an aging slave, Joice Heth, put her on display, claiming she was 161 years old and had been young George Washington’s nurse. Barnum understood how facts and symbolism combine to draw the public to his spectacles.

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      George Washington was already known as “the father of the nation.” Barnum provided an exotic, black mothering figure for the father of the country. At the same time, the supposed relationship served to justify slavery and racism by promoting the idea that blacks in a situation of service could nurture whites, and whites would protect and nurture blacks.

      Barnum later became famous for organizing his three-ring circus, but before that he built his reputation around presenting facts or the appearance of facts. He created the American Museum in Manhattan. It featured both authentic historical artifacts and a freak show, prolonging the spirit of deception he developed around Joice Heth. With his partner James Bailey, he launched hyperreality’s ultimate theme with a circus they called “The Greatest Show on Earth.” Barnum himself never sought to be a hyperreal hero. He simply propagated the values of the culture of American hyperreality that would be refined by a later generation of architects of hyperreality.

      William Randolph Hearst modeled the modern idea of the news. Sigmund Freud’s American nephew, Edward Bernays, invented the art of public relations built around the science of advertising designed as a form of mind control. Trump and Musk have come to represent the ultimate hyperreal heroes, but they have built their identities around the culture created by geniuses like Barnum and Bernays combined with the culture of Hollywood’s larger-than-life screen heroes. They are not alone. There are plenty of hyperreal supporting actors and extras who give depth to the representation. But they are the ones talented enough and sufficiently narcissistic to occupy center stage and ultimately influence the audience’s behavior.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      Tech Exodus: Is Silicon Valley in Trouble?

      by

      On January 7, the news media announced that Elon Musk had surpassed Jeff Bezos as “the richest person on Earth.” I have a personal interest in the story. Two of my neighbors just bought a Tesla, and this morning, on the highway between Geneva and Lausanne, an angry Tesla driver flashed me several times, demanding that I let him pass. His license plate was from Geneva. Apparently, these days, driving a Tesla automatically gives you privileges, including speeding, particularly if you sport a Geneva or Zurich license plate. In the old days, at least in Germany, bullying others on the highway was a privilege reserved for Mercedes and BMW drivers, who, as the saying went, had an “inbuilt right-of-way.” Oh my, how times have changed.

      Texas: The End of Authentic America?

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      Elon Musk is one of these success stories that only America can write. He is the postmodern equivalent of Howard Hughes, a visionary, if slightly unhinged, genius, who loved to flout conventions and later on in his life became a recluse. And yet, had you bought 100 shares of Tesla a year ago, your initial investment would be worth more than eight times as much today (from $98 to $850). Tough shit, as they like to say in Texas.

      The Lone Star

      Why Texas? At the end of last year, Elon Musk announced that he was going to leave Silicon Valley to find greener pastures in Texas. To be more precise, Austin, Texas. Austin is not only the capital of the Lone Star State. It also happens to be an oasis of liberalism in a predominantly red state. When I was a student at the University of Texas in the late 1970s, we would go to the Barton Springs pool, one of the few places where women could go topless. For a German, this was hardly noteworthy; for the average Texan, it probably bordered on revolutionary — and obscene.

      In the 2020 presidential election, in Travis County, which includes Austin and adjacent areas, Donald Trump garnered a mere 26% of the vote, compared to 52% for the whole state. Austin is also home to the University of Texas, one of America’s premier public universities, which “has spent decades investing in science and engineering programs.”

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      Musk is hardly alone in relocating to Texas. Recently, both Hewlett Packard Enterprise and Oracle announced they would move operations there, the first one to Houston, the second to Austin, where it will join relatively long-time resident tech heavyweights such as recently reinvigorated Advanced Micro Devices and Dell. It is not clear, however, whether Oracle will feel more comfortable in Austin than Silicon Valley. After all, Oracle was very close to the Trump administration.

      Recently, there has been a lot of talk about the “tech exodus” from Silicon Valley. Michael Lind, the influential social analyst and pundit who also happens to teach at UT, has preferred to speak of a “Texodus,” as local patriotism obligates. Never short of hyperbole, Lind went so far as to boldly predict that the “flight of terrified techies from California to Texas marks the end of one era, and the beginning of a new one.” Up in Seattle and over in Miami, questions were raised whether or not and how they might benefit from the “Texit.”

      Lind’s argument is that over the past decade or so, Silicon Valley has gone off track. In the past, tech startups in the Bay Area succeeded because they produced something. As he puts it, Elon Musk and Jeff Bezos “are building and testing rockets in rural Texas.” Musk produces cars and batteries. Against that, Silicon Valley’s new “tech” darlings come up with clever ideas, such as allowing “grandmothers to upload videos of their kittens for free, and then sell the advertising rights to the videos and pocket the cash.”

      The models are Uber and Lyft, which Lind dismisses as nothing more than hyped-up telephone companies. Apparently, Lind does not quite appreciate the significance of the gig economy and particularly the importance of big data, which is the real capital of these companies and makes them “tech.” This is hardly surprising, given Austin’s history of hostility to the sharing economy — at least as long as it associated with its industry giants. As early as 2016, Austin held a referendum on whether or not the local government should be allowed to regulate Uber and Lyft. The companies lost, and subsequently fired 10,000 drivers, leaving Austinites stranded.

      In the months that followed, underground ride-sharing schemes started to spring up, seeking to fill the void. In the meantime, Uber and Lyft lobbied the state legislature, which ultimately passed a ride-hailing law, which established licensing on the state level, circumventing local attempts at regulation, which allowed Uber and Lyft to resume operations.

      Unfortunately for Lind, he also has it in for Twitter and Facebook for their “regular and repeated censorship of Republicans and conservatives” — an unusual failure of foresight in light of recent events at the Capitol. Ironically enough, Facebook has a large presence in Austin. Business sources from the city reported that Facebook is in the market for an additional 1 million square feet of office space in Austin. So is Google, which in recent years has significantly expanded its presence in the city and elsewhere in Texas.

      Colonial Transplant

      Does that mean Austin is likely to be able to rival Silicon Valley as America’s top innovation center for the high-tech industry? Not necessarily. As Margaret O’Mara has pointed out in the pages of The New York Times, this is not the first time that Silicon Valley has faced this kind of losses. And yet, “Silicon Valley always roared back, each time greater than the last. One secret to its resilience: money. The wealth created by each boom — flowing chiefly to an elite circle of venture investors and lucky founders — outlasted each bust. No other tech region has generated such wealth and industry-specific expertise, which is why it has had such resilience.”

      Industry insiders concur. In their view, Austin is less a competitor than a “colony.” Or, to put it slightly differently, Austin is nothing more than an outpost for tech giants such as Google and Facebook, while their main operations stay in Silicon Valley. It is anyone’s guess whether this time, things will pan out the same or somewhat differently. This depends both on the push and pull factors that inform the most recent tech exodus — in other words, on what motivates Silicon Valley denizens to abandon the Bay Area for the hills surrounding Austin.

      A recent Berkeley IGS poll provides some answers. According to the poll, around half of Californians thought about leaving the state in 2019. Among the most important reasons were the high cost of housing, the state’s high taxes and, last but not least, the state’s “political culture.” More detailed analysis suggests that the latter is a very significant factor: Those identifying themselves as conservatives or Republicans were three times as likely than liberals and Democrats to say they were seriously considering leaving the state.

      Embed from Getty Images

      The fact that 85% of Republicans who thought about leaving did so for reasons of political culture is a strong indication of the impact of partisanship. Among Democrats, only around 10% mentioned political culture as a reason for thinking about leaving the state. Partisanship was also reflected in the response to the question of whether California is a “land of opportunity.” Among Democrats, 80% thought so; among Republicans, only about 40% did.

      Until recently, thinking about leaving hardly ever translated into actually going. COVID-19 has fundamentally changed the equation. The pandemic introduced the notion of working from home, of remote work via “old” technologies such as Skype and new ones like Zoom. In late February 2020, Zoom’s stock was at around $100; in mid-October, it was traded at more than $550. In the meantime, it has lost some $200, largely the result of the prospect of a “post-pandemic world” thanks to the availability of vaccines.

      At least for the moment, remote work has fundamentally changed the rationale behind being tied to a certain locality. Before COVID-19, as Katherine Bindley has noted in The Wall Street Journal, “leaving the area meant walking away from some of the best-paying and most prestigious jobs in America.” In the wake of the pandemic, this is no longer the case. In fact, major Silicon Valley tech companies, such as Google, Facebook and Lyft, have told their workforce that they won’t be returning to their offices until sometime late summer. Given that California has been one of the states most affected by the virus, and given its relatively large population heavily concentrated in two metropolitan areas, even these projections might be overly optimistic.

      Distributed Employment

      And it is not at all clear whether or not, once the pandemic has run its course, things will return to “normal.” Even before the pandemic, remote work was on the rise. In 2016, according to Gallup data, more than 40% of employees “worked remotely in some capacity, meaning they spent at least some of their time working away from their coworkers.” Tech firms have been particularly accommodating to employee wishes to work remotely, even on a permanent basis. In May, The Washington Post reported that Twitter had unveiled plans to offer their employees the option to work from home “forever.” In an internal survey in July, some 70% of Twitter employees said they wanted to continue working from home at least three days a week.

      Other tech companies are likely to follow suit, in line with the new buzzword in management thinking, “distributed employment,” itself a Silicon Valley product. Its most prominent promoter has been Nicholas Bloom of Stanford University. Bloom has shown that work from home tends to increase productivity, for at least two reasons. First, people working from home actually work their full shift. Second, they tend to concentrate better than in an office environment full of noise and distractions.

      Additional support for distributed employment has come from Gallup research. The results indicate that “remote workers are more productive than on-site workers.” Gallup claims that remote work boosts employee morale and their engagement with the company, which leads to the conclusion that “off-site workers offer leaders the greatest gains in business outcomes.”

      It is for these reasons that this time, Silicon Valley might be in real trouble. Distributed employment fundamentally challenges the rationale behind the Valley’s success. As The Washington Post expose put it, in the past, “great ideas at work were born out of daily in-person interactions.” Creativity came from “serendipitous run-ins with colleagues,” as Steve Jobs would put it, “’from spontaneous meetings, from random discussions.’” Distributed employment is the antithesis of this kind of thinking. With the potential end of this model, Silicon Valley loses much of its raison d’être — unless it manages to reinvent itself, as it has done so many times in the past.

      A few years ago, Berkeley Professor AnnaLee Saxenian, who wrote a highly influential comparative study of how Silicon Valley outstripped Boston’s Route 128, has noted that Silicon Valley was “a set of human beings, and a set of institutions around them, that happen to be very well adapted to the world that we live in.” The question is whether or not this is still the case. After all, at one point, Route 128 was a hotspot of creativity and innovation, a serious rival of Silicon Valley. A couple of decades later, Route 128 was completely eclipsed by the Valley, a victim of an outdated industrial system, based on companies that kept largely to themselves.

      Against that, in the Valley, there emerged a new network-based system that promoted mutual learning, entrepreneurship and experimentation. The question is to what degree this kind of system will be capable to deal with the new challenges posed by the impact of COVID-19, which has fundamentally disrupted the fundamentals of the system.

      Embed from Getty Images

      In the meantime, locations such as Austin look particularly attractive. This is when the pull factors come in. Unlike California, Texas has no state income tax. In California, state income tax is more than 13%, the highest in the United States. To make things worse, late last year, California legislators considered raising taxes on the wealthy to bring in money to alleviate the plight of the homeless who have flocked in particular to San Francisco. Earlier on, state legislators had sought to raise the state income tax rate to almost 17%. It failed to pass.

      At the same time, they also came up with a piece of legislation “that would have created a first-in-the-nation wealth tax that included a feature to tax former residents for 10 years after they left the Golden State.” This one failed too, but it left a sour taste in the mouth of many a tech millionaire and certainly did little to counteract the flight from the state.

      No wonder Austin looks so much better, and not only because of Texas’s generally more business-friendly atmosphere. Austin offers California’s tech expats a lifestyle similar to that in the Bay Area, but at a considerably more reasonable cost. Add to that the absence of one of the most distressing assaults on hygiene: Between 2011 and 2018, the number of officially recorded incidences of human feces on the streets of San Francisco quintupled, from 5,500 cases to over 28,000 cases — largely the result of the city’s substantial homeless population. The fact is that California is one of the most unequal states in the nation. As Farhad Manjoo has recently put it in The New York Times, “the cost of living is taken into account, billionaire-brimming California ranks as the most poverty-stricken state, with a fifth of the population struggling to get by.”

      Homelessness is one result. And California’s wealthy liberals have done little to make things better. On the contrary, more often than not, they have used their considerable clout to block any attempt to change restrictive zoning laws and increase the supply of affordable housing, what Manjoo characterizes as “exclusionary urban restrictionism.”

      To be sure, restrictive zoning laws have a long history in San Francisco, going all the way back to the second half of the 19th century. At the time, San Francisco was home to a significant Chinese population, largely living in boarding houses. In the early 1870s, the city came up with new ordinances, designed “to criminalize Chinese renters and landlords so their jobs and living space could be reclaimed for San Francisco’s white residents.” Ever since, zoning laws have been informed by “efforts to appease the city’s wealthy, well-connected homeowners.” And this in a city that considers itself among the most progressive in the nation.

      None of these factors in isolation explains the current tech exodus from the Bay Area. Taken together, however, they make up a rather convincing case for why this time, Silicon Valley might be in real trouble. Unfortunately enough, the exodus might contribute to the “big sort” that has occurred in the US over the past few decades, meaning the “self-segregation of Americans into like-minded communities” that has been a major factor behind the dramatic polarization of the American political landscape. The signs are there, the consequences known — at least since the assault on the US Capitol.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in Elections

      Meena Harris, Building That Brand

      by

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      Election Results: Biden Wins

      Electoral College Votes

      Congress Defies Mob

      Georgia Runoff Results

      Democrats Win Senate Control

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    • 88 Shares149 Views

      in World Politics

      Learning to Become the World’s Second-Richest Man

      by

      After officially eclipsing Bill Gates to reach the rank of the second-richest person on the planet, Elon Musk clearly deserved a lengthy video interview with the Wall Street Journal. It could probe into how Musk managed to become the world’s wealthiest and most admired innovator. The Journal couldn’t saddle any random hack with that formidable task, and so its editor-in-chief, Matt Murray, rose to the occasion. The interview lasted nearly half an hour and can be viewed on YouTube.

      Most people consider Musk a genius, although here at the Daily Devil’s Dictionary we have regularly referred to him as an accomplished hyperreal performer who captures (because he is captured by) the spirit of the age. Call it the Taoist principle of reversion, being and non-being. The causal relationship between cultural icons like Musk and their environment is reversible and self-perpetuating. Pushing the metaphor, Musk’s hyperreality exists in a quantum state where the reassuring idea of stable identity disappears. Musk creates today’s culture because today’s culture has created Musk. Culture innovates; innovators hitch a ride.

      Who Rigs the Ship of State?

      READ MORE

      Interviews with Musk are generally painful to watch. This one is no exception. It reveals that there is nothing stable in Elon Musk’s thought processes and very little that is original. He is certainly deeply knowledgeable, with a well-focused technical vision of his companies and their products. But his attempts at “profound thought” are difficult to differentiate from the clichés promulgated by the ambient hyperreal culture, with its deep faith in anything, however superficial, that resembles technical progress and its belief that redesign and duplication on a massive scale equal innovation.

      Musk’s deepest wisdom includes things like his advice that “we don’t want to be complacent.” He brilliantly warns of the danger posed by “the gradual creep of regulations and bureaucracy.” He believes we must fear “regulatory capture by companies.” He sees a need to “have good feedback loops for the customer” and to “make the product better.” Clearly, these are the thoughts of an original thinker.

      Then Musk also offers this pearl of innovative insight, possibly borrowed from Ronald Reagan: “The best thing government can do is just get out of the way.” Murray might have seen this as an opening to plunge into the history of Musk’s lucrative relationship with the government. But he was apparently interested in deeper things.

      Just as everyone craves access to Warren Buffett’s secret formula for investing, Murray wants to know whether other people can be as brilliantly innovative as Musk. “Is it easily learnable?” he asks. Reporting on the interview, the website Inc. chose to focus on this theme: “During a candid and freewheeling interview with Wall Street Journal editor in chief Matt Murray this week, Musk argued that creating innovative products is ‘absolutely learnable.’”

      Today’s Daily Devil’s Dictionary definition:

      Learnable:

      The actions of very rich people that poor people should be encouraged to imitate.

      Contextual Note

      Murray believes that if there were more people like Elon Musk, the world would be a better place. Concerned with the future of humanity, he hopes that Musk can teach others, or at least serve as a model so that we can all eventually become the second-richest person in the world. Musk was initially taken aback by Murray’s question. He began his response by saying, “I think it is learnable” before convincing himself that the right thing to say was “I think that’s absolutely learnable.” The website Inc. helpfully repeated for its readers Musk’s three original recipes for learning. 

      Embed from Getty Images

      The first is: “Try hard.” Success is not for the lazy. The second is “Seek negative feedback” and then ask yourself this surprising question, “How can we make this better?” But even that requires its mystical corollary: you must “love your product.” The third is essentially negative: stay away from meetings, presentations and spreadsheets. Spend time on the factory floor. To prove his point, Musk mobilizes the metaphor of a general who leaves his “ivory tower” to fight with the troops on the front line. Inspiring! 

      Murray did at one point raise the more down-to-earth question of Musk’s relationship with government, an issue with financial implications WSJ’s readers tend to be interested in. But once Musk established the overriding principle that government should simply “get out of the way,” Murray saw no reason to follow it up. Luckily, other journalists have tried harder. Six years ago, New York Mag’s Intelligencer provided the details of Musk’s Amazon-style bullying and classic techniques of corruption.

      The piece summed up his dealings with the authorities in this succinct phrase: “This negotiation is straight out of the special-interest playbook.” It explained that in 2014 “SpaceX hired lobbyists and flew a key lawmaker to its offices. Musk gave about $12,000 in campaign contributions … During the meeting … Musk described his dream to take people to Mars. … He also said Texas needed to compete with other states.” 

      In other words, the government’s role is to pony up the cash Musk needs before it gets out of his way. Taxpayers pay for the right to trust Musk’s unimpeded judgment to do the right things (i.e., whatever he wants) with the cash they have offered him. Among those right things is, of course, the odd campaign contribution, just to keep things running smoothly.

      In 2015, the Los Angeles Times reported that “Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space. And he’s built those companies with the help of billions in government subsidies.” At the time, they set the figure at $4.9 billion. One analyst explained that “He definitely goes where there is government money. That’s a great strategy, but the government will cut you off one day.” That day has yet to come. Musk is now the one who has the power to decide when to cut the government off.

      At one point, Murray did ask Musk an embarrassing question: “What mistakes have you made?” Musk humbly admits he has made so many mistakes he wouldn’t have enough time to list them all. But he conveniently dodges the question by vaunting his involvement “on the factory floor.” He claims that “the morale is good” at Tesla, which is his Trump-like way of denying that he has ever made a serious mistake.

      Historical Note

      Musk’s employees have had the occasion to offer plenty of negative feedback, none of which he seems to have taken on board. Why should he? The government has not only backed him but is SpaceX’s main customer. The company “signed $5.5 billion worth of government contracts with NASA and the United States Air Force.” Just last week it was announced that “The FCC is giving SpaceX’s satellite internet service, Starlink, $886 million” as part of its program to bring broadband to rural America.

      Employees have regularly complained of Musk’s style of micro-management and his alacrity for making promises but failing to keep them. In September 2019, a court ruled that “the Tesla CEO and other company executives [had] been illegally sabotaging employee efforts to form a union.” Bloomberg reported last year that, after a leaker revealed a serious problem of mismanagement at the Gigafactory, “Musk set out to destroy him” — like a Mafia boss. On the other hand, the success of Musk’s companies, the pay and the challenge of the firm’s ambition has kept most of his employees reasonably happy.

      Nevertheless, Tesla has a few seriously worrying skeletons in its closet. Another whistleblower made some damning charges when he reported Tesla not only for “covering up and spying on its employees back in 2018” but for organizing a “drug cartel operation inside the Gigafactory.” These affairs have still not been adjudicated in the courts. Most likely, they will never be permitted to become public scandals. It is equally unlikely that Musk sees them as “learnable” moments.

      A year ago, Musk was officially worth about $20 billion. Two weeks ago, he became the world’s second-richest person, with a fortune estimated at $128 billion. He definitely works hard to earn what amounts to about 0.4 billion for every working day (assuming he takes weekends off and a month’s vacation). That’s the reward one can expect from spending the right amount of time on the factory floor.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More