Technology, Business & Cool Toys

New Biography of Georges Doriot, Founding Father of Venture Capital

by Berin Szoka on June 25, 2008 · 5 comments

MIT’s Technology Review has a great review of a new biography of Georges Doriot (Wikipedia) by Businessweek Editor Spencer E. Ante entitled, Creative Capital: Georges Doriot and the Birth of Venture Capital. Born in France, Doriot fought in World War I, then studied at Harvard Business School, served as director of the U.S. military’s Military Planning Division during World War II as a brigadier general, and in 1946 launched American Research and Development Corporation (ARD) as the first publicly owned venture capital firm.

Doriot’s legacy looms large today, even if his name is new to most:

Contemporaneously with ARD’s watershed investment in [Digital Equipment Corporation], others began walking the trails Doriot had blazed: Arthur Rock (a student of Doriot’s in the Harvard class of 1951) backed the departure of the “Traitorous Eight” from Shockley Semiconductor to form Fairchild Semiconductor in 1957, then funded Robert Noyce and Gordon Moore when they left Fairchild to found Intel; Laurance Rockefeller formed Venrock, which has since backed more than 400 companies, including Intel and Apple; Don Valentine formed Sequoia Capital, which would invest in Atari, Apple, Oracle, Cisco, Google, and YouTube.

Doriot himself would likely have felt at home among today’s embattled and outnumbered regulation-skeptics in the technology policy community:

he opposed both the dirigiste political economy of his native France and the tax hikes and anticompetitive laws enacted in the United States under the New Deal. Such regulations, he maintained, arrogated to bureaucrats the function of the markets; their worst feature was that they let government lend money to failing businesses. Ante notes that a former colleague of Doriot’s, James F. Morgan, recalled him as “the most schizophrenic Frenchman I’ve ever met”–devoted to his original land’s wine, cuisine, and language even as “the French capacity to make very simple things complicated drove him nuts.”

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Confusing Fact and Fiction at Techdirt

by James Gattuso on June 25, 2008 · 5 comments

Mike Masick over on Techdirt yesterday decried the “amount of misinformation flying around” on the retention marketing issue. Unfortunately, however, his attempt to clear things up actually added to the airborne debris.

Specifically, Mike claims that I erred the other day in writing that the question at hand was whether Verizon can contact customers who have agreed to switch telephone service providers, and ask them not to switch. That, he says, is incorrect. Saying that “no one” is saying that telcos can’t try to convince customers not to switch, he claims the issue is instead whether Verizon can delay making the change while it trys to take them out of it:

What the FCC has said is that Verizon cannot abuse its position to block the switch while it tries to convince customers not to switch. That’s what Verizon is doing. When it gets the request from the cable companies to switch, it basically goes into procrastinate mode, even though it’s required to process the switch. It codes the switch request as a “conflict” which gives it extra time to resolve the “conflict” before obeying the switch request.

Masick is simply wrong. The FCC’s order, released Monday, explains clearly that a conflict code is entered only after Verizon is successful at convincing a customer not to change carriers. There’s no claim that, or even a reference to, Verizon improperly delaying any pending switch requests (although the cable industry is certainly pushing for telcos to be required to make switches more quickly).

What the FCC did say was that the information contained in the switch request (i.e., that the customer wants to change), is “proprietary,” and that — to quote Commissioner McDowell: “marketing efforts [based on that information] cannot take place during the window of time when a customer’s phone number is being switched”.

Bottom line: I stand by my original post.

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Google CEO Says the Future Belongs to ‘Cloud Computing’

by Drew Clark on June 10, 2008 · 3 comments

WASHINGTON, June 9 – High-speed Internet connections, social networks like Facebook and MySpace, and the concept of “cloud computing” make it possible to “live a lot of your lives online,” Google CEO Eric Schmidt said Monday.

Schmidt said that the ability to transfer and run computer programs, data, and individual software customization temporarily to any computer — a concept known as “cloud computing” — is an important example of how new developments in Internet access facilitate a mobile lifestyle.

“There is a shift from traditional PC computing to cloud computing,” Schmidt said. “That is where the servers are somewhere else, and the servers are always just there.”

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Odds and Ends of Research–Mostly Odds

by Solveig Singleton on May 23, 2008 · 6 comments

From an interesting collection of economists, including L. Vernon Smith and Cass Sunstein, a paper calling for changes to facilitate the growth of prediction markets.

Another paper on happiness research and cost-benefit analysis. “Opportunity cost, Opportunity Cost!” shrieks Ludwig von Lachman from beyong the grave.

Here is a more questionable contribution from the more mainstream Herbert Hovenkamp. ., “Innovation and the Domain of Competition Policy” “U Iowa Legal Studies Research Paper No. 08-07 . The paper advocates the more expansive use of antitrust law in intellectual property disputes, on the grounds that IP law has been tainted by rent-seeking, and that antitrust law has not. Granted, that the antitrust statutes have not been much revised. So the lobbying action is at the DOJ, the FTC, and pretty much everywhere else rather than in the halls of Congress. And yet more action in the offices of the countless economic consultancies that have sprung up, spouting reams of game theoretic nonsense in the pursuit of fat expert witness fees. And the antitrust bar. Dr. Hovenkamp has been fortunate to remain oblivious to it all. See George Bittlingmayer at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=344040.

Another curiousity is this paper by Dr. Richard Gilbert, proposing that “innovation” as such also be subject to antitrust scrutiny when the distribution of market power is interesting. Talk about subjecting ordinary business conduct to a chilling and error-prone regulatory regime. I read it through wondering if it was a clever reductio ad absurdum of the whole enterprise, but in the end when there was no punch line delivered I concluded sadly that the author was serious. Gilbert, Richard, “Holding Innovation to an Antitrust Standard,” 3 Competition Policy 47 (2007). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=987322

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Let There Be Light

by Tim Lee on May 21, 2008 · 10 comments

Who says Twitter isn’t useful?

Control Lights with Twitter from Justin Wickett on Vimeo.

Via TechCrunch

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The Rise & Inevitable Fall of Tech Giants

by Adam Thierer on May 18, 2008 · 21 comments

Randall Stross, a Silicon Valley-based technology author, has penned an excellent essay for the New York Times making an argument that many of us here have made in the past: “The Computer Industry Comes With Built-In Term Limits.” That is, tech giants can rise very quickly and attain something approaching market dominance thanks to the power of bandwagon effects and the “winner-takes-all” economics that characterize digital markets in the short-term. But that dominance, Stross rightly argues, is difficult to maintain over the long haul because technology and markets evolve rapidly and new players displace old ones. Mr. Stross notes that IBM is a classic example, but Microsoft is experiencing a similar fate:

two successive Microsoft chief executives have long tried, and failed, to refute what we might call the Single-Era Conjecture, the invisible law that makes it impossible for a company in the computer business to enjoy pre-eminence that spans two technological eras. Good luck to Steven A. Ballmer, the company’s chief executive since 2000, as he tries to sustain in the Internet era what his company had attained in the personal computing era. Empirical evidence, however, suggests that he won’t succeed. Not because of personal failings, but because Mother Nature simply won’t permit it.

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Culture Clash on the Future of News

by Tim Lee on May 15, 2008 · 13 comments

One of the striking things about the Future of News conference is the culture clash between newspaper people on the one hand and technology people on the other. The former was exemplified by the second panel, which included representatives of the Wall Street Journal and the San Diego Union-Tribune and a journalism professor. The latter is exemplified by the panel that’s going on right now, which includes people from Microsoft, Princeton’s computer science department, and a blogger affiliated with the Guardian. The former were quite pessimistic. All three of them tried to put a brave face on things and suggest strategies newspapers could use to adapt to the changing world, but all three seemed to feel that the future of news was pretty grim—that blogs and other online news sources wouldn’t be able to pick up the slack from thousands of journalists laid off from mainstream newspapers.

In contrast, the technologists’ perspective was that there was an unprecedented abundance of content available online, and that the real challenge is in filtering it all. The technologists didn’t seem to feel there was anything grim about the media environment.

Fundamentally, I think what’s going on here is that people tend to over-estimate the importance of their own profession. Newspapers in particular are used to regarding themselves as the center of the universe, so as the center of gravity in the news business shifts away from the newspaper, and monolithic “mainstream media” outlets more generally, they tend to regard this as the decline of news in general rather than a decline of a particular news format.

I’m sure the newspaper peoples’ response would be that the technologists are guilty of the same crime, over-estimating the importance of technology and taking for granted the resources required to do high-quality reporting. There’s probably some truth to this, but I think the technologists have a better sense than the newspaper folks of the diversity of new news-gathering techniques that are being developed. It’s not the case that newspapers are being replaced with nothing. They’re being replaced with things that look very different, but serve many of the same purposes as the newspaper do.

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Future of News

by Tim Lee on May 15, 2008 · 4 comments

I’m at Princeton’s Future of News conference. One of the more interesting people I’ve met is Kevin Anderson of the Guardian. In an impressive feat of multitasking, he’s been providing blow–by–blow coverage of the speakers, complete with multi-media. It’s been a great discussion, so please check it out.

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Thoughts on Apple, MBA’s, and Distribution

by Solveig Singleton on April 30, 2008 · 2 comments

An interesting analysis of Apple and competing distributor and network business models appears on “Going Private.” Agree or disagree? Agree with about half.

One point that I thought worth noting; the allegedly pernicious influence of MBAs laden with theory. This runs counter to the classic free-market (Austrian-school-influenced) model of the entrepreneur taking advantage of local knowledge and designing from the bottom up. But the latter could be, in the long run, a better description only of the more successful contenders, the ones whose actions are rewarded. At the starting line, a more motley crew will be assembled, and markets will not necessarily bring them to account immediately or in an obvious way for mediocrity. But they will do so eventually. By comparison, regulators may never bear any consequences for poor decisions at all.

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Amateurs Study Cryptography; Professionals Study Economics

by Jim Harper on April 28, 2008 · 15 comments

What a delightful chapter title in Adam Shostack’s and Andrew Stewart’s new book, The New School of Information Security. Adam is a guy I’ve known for a lot of years now – somehow. He always seems to pop up in the places I go – both physically (at conferences and such) – and intellectually. He blogs at Emergent Chaos and maintains a list of his interesting papers and presentations on his personal homepage.

Adam and his co-author have produced a readable, compact tour of the information security field as it stands today – or perhaps as it lies in its crib. What we know intuitively the authors bring forward thoughtfully in their analysis of the information security industry: it is struggling to keep up with the defects in online communication, data storage, and business processes.

Shostack and Stewart helpfully review the stable of plagues on computing, communication, and remote commerce: spam, phishing, viruses, identity theft, and such. Likewise, they introduce the cast of characters in the security field, all of whom seem to be feeling along in the dark together.

Why are the lights off? Lack of data, they argue. Most information security decisions are taken in the absence of good information. The authors perceptively describe the substitutes for information, like following trends, clinging to established brands, or chasing after studies produced by or for security vendors.

The authors revel in the breach data that has been made available to them thanks to disclosure laws like California’s SB 1386. A libertarian purist must quibble with mandated disclosure when common law can drive consumer protection more elegantly. But good data is good data, and the happenstance of its availability in the breach area is welcome.

In the most delightful chapter in the book (I’ve used it as the title of this post), Shostack and Stewart go through the some of the most interesting problems in information security. Technical problems are what they are. Economics, sociology, psychology, and the like are the disciplines that will actually frame the solutions for information security problems.

In subsequent chapters, Shostack and Stewart examine security spending and advocate for the “New School” approach to security. I would summarize theirs as a call for rigor, which is lacking today. It’s ironic that the world of information lacks for data about its own workings, and thus lacks sound decision-making methods, but there you go.

The book is a little heavy on “New School” talk. If the name doesn’t stick, Shostack and Stewart risk looking like they failed to start a trend. But it’s a trend that must take hold if information security is going to be a sound discipline and industry. I’m better aware for reading The New School of Information Security that info sec is very much in its infancy. The nurturing Shostack and Stewart recommend will help it grow.

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