Tag: Finance

WTF Is Wrong With Capitalism?

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Shift Forum Reads

In capitalism, we’ve built an artificial intelligence that’s badly in need of a reboot, argues longtime tech observer Tim O’Reilly.

Image Boing Boing

Reading books is good for your head, at least that’s what my mother, a middle school English teacher, drilled into me as I was growing up. I was reminded of that maxim as I was finishing Tim O’Reilly’s WTF?: What’s the Future and Why It’s Up to Us — not because the content of the book dramatically changed my point of view (I tend to agree with O’Reilly on most topics, we were partners for years) but because the act of reading WTF clarified certain foggy notions with which I’ve been wrestling, distilling them into more concise reckonings.

WTF is not a straightforward book. It’s part memoir (Tim’s career spans four decade of tech and policy), part tech business book (a review of technological disruption and its impact on society), and part diatribe (a rant against a broken capitalist system). As you might expect, I liked the diatribe parts the best.

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Facebook Can’t Be Fixed.

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Dept. of Acid Trips

Facebook’s fundamental problem is not foreign interference, spam bots, trolls, or fame mongers. It’s the company’s core business model, and abandoning it is not an option.

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Mark Zuckerberg has announced his annual “personal challenge,” which in the past has ranged from eating meat he personally kills to learning Mandarin.

This year, his personal challenge isn’t personal at all. It’s all business: He plans to fix Facebook.

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Your “Financial Shock” Wealth

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Understanding money, inequality, and why the tax bill is important

Imagine that today you accidentally got overcharged $1 somewhere, and a week from now they realized this and gave you your dollar back. On the whole, this might be annoying, but it probably won’t be a big deal to you. Not having that dollar likely didn’t affect your life in any material way; the “opportunity cost” you lost out on could probably be well-summarized by the interest rate on a dollar for a week.

That means that an unexpected expense of $1 basically costs you $1. If you got the dollar back later, you’d be more or less where you started.

“Money!,” by Hans Splinter
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Understanding Venture Capital

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Medium Premium Preview

Our new series takes a hard look at how venture capital works, and finds positives — and plenty of negatives.

Our latest Medium Premium series from author (and software company founder) Luke Kanies delves into the details of how venture capital firms work, from how they raise and return capital to their investors, to why the best companies tend to partner with the most successful investors, causing the gains to accumulate in the top firms. The series also focuses on venture’s lack of diversity, and argues for new approaches to fix what has become a glaring deficiency.

Kanies’ work does not pull punches. He warns founders against raising capital unless they truly understand the deal they are agreeing to: You must manage your company to grow toward a highly unlikely exit, and in doing so, you will likely run your company into the ground. Venture capital, he argues, is structured in such a way as to deliver trauma to everyone involved. After all, this is an industry built around making many bets, but expecting most to fail. The first series warns that If You Take Venture Capital, You’re Forcing Your Company To Exit, while the second piece explains how the spoils of success will keep accumulating at the top. The next installment, due early next week, examines the problem of diversity in the sector.

But all is not gloom and doom in the world of venture capital. The series will soon shift to how we might build a more open market around investment and company creation. That way, venture capital can include, enrich, and benefit all parts of the economy.

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How Schwab Does Innovation: Focus On the Client, Not the ROI

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NewCo Shift Forum

The largest public investment platform decided to build its technology in house. It actually worked out.

Neesha Hathi, Charles Schwab

Neesha Hathi is EVP, Investor Services Strategy, Segments and Platforms, at Charles Schwab. That’s a long title for a short job description: Haathi runs Schwab’s platform, the technology millions use to manage their investing experience. In this talk from earlier this year at Shift Forum, Haathi explains how Schwab thinks about innovation. The answers may surprise you.

Neesha Hathi: I’m really excited to come and share a little bit about what we’ve been doing at Schwab. I’ve been in the Bay area since 2000 or so.

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Dow 36,000?

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NewCo Daily Aug 2 2017

Why are markets ignoring political chaos and merrily pushing upward? Plus P&G fights raiders, and Birkenstock goes ballistic.

Back in the go-go days of the first dot-com bubble, a pair of economic analysts wrote what became that era’s most discredited book: Dow 36,000. With the markets already at historic heights (the Dow reached a peak of 11,700 or so in early 2000, before crashing back to earth later that year), the duo predicted a three-fold rise to 36,000 in just a few short years.

The authors doubled down on their bet by publicly wagering that the index would be closer to 36,000 than 10,000 by the year 2010. The Dow would have had to cross 23,000 for them to have won. Thanks to the great recession of 2009, they lost that bet, bigly.

But just yesterday, the Dow flirted with 22,000, setting another record high amongst a string of record highs and prompting a slew of chin stroking pieces on the state of our financial markets. The New York Times set the tone, pointing out that “the president’s promise to slash regulations and cut taxes — even if unfulfilled — has stoked long-dormant animal spirits among investors. That corporate earnings are excelling and the global economy is growing faster than many expected has only added to the bullish vibe.”

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A Trio of Tech Takedowns

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NewCo Daily July 17, 2017

Watson Slapped, Is Content King?, and a Call for Antitrust from…the Journal?

Welcome back to the Daily. We’re back to our Monday-Wednesday-Friday schedule, but absent our fearless writer, Scott Rosenberg, who’s moved on to a publication we all love, Backchannel. I’ll be writing the Daily for now, please be gentle with me, as Scott’s prose is hard to match. But for today, enjoy what seems to be a building narrative: the role of tech in society is getting a bit too big for its own britches.


It Ain’t Elementary, Watson

IBM’s stock suffered a high profile downgrade late last week, thanks to an analyst report which essentially called bullshit on Watson, IBM’s high-profile “AI as a service” unit. The report, from investment bank Jeffries, used the failure of a cancer diagnosis project at M.D. Anderson as a jumping off point to conclude that IBM’s significant investments in Watson would fail to return shareholder equity anytime soon. Jeffries also pulled data from major jobs posting sites that showed IBM to be far behind Amazon, Facebook and Microsoft when it comes to attracting AI-related talent. That’s a problem for a company that has made Watson the center of its public brand (you did see the ads with Bob Dylan and Serena Williams, right?).

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Innovative Exuberance

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How Tech Bubbles Accelerate Innovation

Visualization of the Internet

Is there a bubble in artificial intelligence? Are we in a virtual reality bubble? Are Uber and Airbnb overvalued? Or, are we even in another tech bubble?

Given the unprecedented valuations of the so-called “unicorns” — Uber is still valued at more than $60 billion, Airbnb at $25 billion, and Palantir at $20 billion — talk about bubbles has intensified in Silicon Valley. Bubbles are often considered to be negative: they are described as destructive, economically inefficient, and as generating financial waste. Indeed, almost $6 trillion evaporated after the dotcom collapse in the early 2000s, and the globalized financial system crashed when the financial bubble burst in 2008.

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Crypto Tokens Are Rewriting Startup Finance Rules

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The NewCo Daily: Today’s Top Stories

Andre C | Flickr

While you were getting on with your life, the world of crypto-tokens and currencies has been evolving at an astonishing clip. Bitcoin broke the ice and introduced the world to the concept, but new mutations are happening fast, many built on the Ethereum platform. Consider:

  • Startups and new-technology ventures are using “initial coin offerings” to raise capital, auctioning off cryptographically secured tokens (Joon Ian Wong in Quartz). Proponents see this mechanism, which has already been used to raise $150 million this year, as a method for bypassing traditional venture funding and routing around the “take investment, scale up, cash out” mode of technology finance that dominates today. If a new venture succeeds, its token will appreciate in value, giving early adopters a nice payoff. Of course, there’s huge risk for investors, too — and the more value these new currencies have, the harder people will work to break their still immature underlying technologies. Also looming in the wings: regulators.
  • As venture capitalist Chris Dixon points out, the larger implication of the rise of tokens is that they provide a method to finance the creation and support of open technologies. Traditional financial models demand that innovators close off their work. Tokens allow entrepreneurs to release a protocol or network technology, and to profit as it gets widely adopted, without hoarding the intellectual property. Dixon sees the token movement as “spiritual heir” to open projects like Linux and Wikipedia. Tokens, Dixon writes, are “a breakthrough in the design and development of open networks, combining the societal benefits of open protocols with the financial and architectural benefits of proprietary networks.”
  • Alexander Ruppert offers a deeper dive on how tokens can decentralize industries as they move up the value chain from network protocols to end-user applications, in realms like law and gov tech, logistics, energy, and payments.
  • Kik, the chat app, announced that it’s launching its own crypto-currency called Kin (Sonya Mann in Inc), which will function similarly to Kik’s existing “Kik points” rewards system. Kin also represents a bid to find a new business model for apps in the social media attention-sphere — one that doesn’t rely on ads.
  • Crypto-currencies function outside existing financial record-keeping rules and offer some levels of anonymity. That makes life easier for people who want to evade existing laws. The real-world consequences are already on display in the opioid overdose crisis: As The New York Times’ Nathaniel Popper reports, Bitcoin-based online markets are playing a big role in the distribution of the deadly painkiller fentanyl. Every time we introduce a new technology for connection, we amplify both social benefits and costs. It would be nice to think we’d be getting a little better at minimizing the harms, but so far, there’s not much evidence of that.

Apple HQ’s Splendid Isolation Is So 1950s

When Apple’s humongous beached-UFO of a new office opens, the world will gawk at its perfection, from the toroid curves of its glass roof to its 40-foot high dining-hall doors. But all you need to do is look at its site to see something that’s horribly, anachronistically wrong with Apple’s project, writes Adam Rogers in Wired: “Apple’s new HQ is a retrograde, literally inward-looking building with contempt for the city where it lives and cities in general.”

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