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The Hypocrisy In Silicon Valley's Big Talk On Innovation 208

Posted by samzenpus
from the profits-over-progress dept.
glowend writes "James Temple writes in the San Francisco Chronicle: 'In the fall of 2011, Max Levchin took the stage at a TechCrunch conference to lament the sad state of U.S. innovation. "Technology innovation in this country is somewhere between dire straits and dead," said the PayPal co-founder, later adding: "The solution is actually very simple: You have to aim almost ridiculously high." But for all the funding announcements, product launches, media attention and wealth creation, most of Silicon Valley doesn't concern itself with aiming "almost ridiculously high." It concerns itself primarily with getting people to click on ads or buy slightly better gadgets than the ones they got last year.' I feel like this may be true as more money and MBA types invade the Silicon Valley. There's a lot of 'me-too' startups with some of the best and brightest figuring out ways to sell me stuff rather the working on flying cars."
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The Hypocrisy In Silicon Valley's Big Talk On Innovation

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  • by onyxruby (118189) <onyxruby AT comcast DOT net> on Monday March 11, 2013 @01:01PM (#43140679)

    Look back at the innovative days of Silicon Valley and pick something, anything you can think of and think of what would happen if you were to try and perform the same thing again today. You could never do it, because overzealous IP has killed all American engineering innovation. Many products now spend a significant amount of their budget on patent attorneys and cross license costs. You simply cannot innovate in today's climate as things presently stand.

    Some simple ideas that would help protect IP and turn the tide back for innovation:

    A patent fee, every patent that is held by an organization (or it's parents organization) doubles in costs.
    - Allows the small time inventory to register patents without undue cost while adding some measure of expense to patent warchest building.

    A patent tax, every patent is taxed at a rate that makes large patent war-chests financially unfeasible.
    - You can cripple IP trolls on this by increasing the tax for a patent that is not in active production.

    Shortening the length of time that a patent is good for based on the type of patent.
    - Decreasing a patent's shelf life to 5 years would probably do more to free up the IP logjams than any other thing.

    Make RAND rates standardized for everyone and don't allow them to be offset.
    - Everyone pays the same RAND rates and if your patent is essential than anyone can license it at a fixed and /reasonable/ rate.

    End massive patent paydays like Apple's recent billion dollar court win.
    - Reform the financial benefits for 'going nuclear' and seeking large court settlements for patent violations and make the penalties fixed.

    • Re: (Score:2, Insightful)

      by Wonko the Sane (25252) *

      In all the discussions about the evils of the "private" sector one factor is conveniently overlooked: large institutional investors in the form of public sector pension funds which are desperately seeking excess profits to make good on political promises to government retirees. Most of these funds based their actuarial projections on permanent 8% growth, which anyone who knows what an exponent is can tell you is impossible. An investment that grows at a rate faster than the economy would eventually need to

      • by Darth Snowshoe (1434515) on Monday March 11, 2013 @01:36PM (#43141083)

        "public sector pension funds which are desperately seeking excess profits to make good on political promises to government retirees."

        A pension is not a political promise. A pension, whether in the public or private sectors, is an agreement between employer and employees.

        • by MightyYar (622222)

          A pension, whether in the public or private sectors, is an agreement between employer and employees.

          Not where I live (Pennsylvania). All sorts of laws trump what can be negotiated with certain types of occupations. For instance, if you hire a public school teacher, you must use the state pension system and you must give them tenure after 3 years. So in some cases, it is as much political as it is negotiated.

          • by idontgno (624372)

            To be honest, "negotiated" could include more than the stereotypical labor bargaining process between the leadership of the worker bargaining unit ("Union negotiator") and representatives of the hiring organization's management ("Management negotiator"). Public service unions have always had the alternative of negotiating with their Management counterparts' bosses: legislators. Most people would call that "lobbying" but the means and goals are the same as plain-ol' bargaining. And it's probably more effecti

            • by MightyYar (622222)

              Most people would call that "lobbying" but the means and goals are the same as plain-ol' bargaining.

              Whatever it's called, there's no denying it is "political", which is the point I was trying to make.

    • by ron_ivi (607351) <sdotno AT cheapcomplexdevices DOT com> on Monday March 11, 2013 @01:50PM (#43141201)
      Related to the big business around owning IP is the distinction between Invention (pushing the bleeding edge in technology) and Innovation (squeezing out competitors using sly business tricks). http://www.pbs.org/cringely/pulpit/2003/pulpit_20030904_000784.html [pbs.org]

      But there is another issue here, one that is hardly ever mentioned and that's the coining of the term "innovation." This word, which was hardly used at all until two or three years ago, feels to me like a propaganda campaign and a successful one at that, dominating discussion in the computer industry. I think Microsoft did this intentionally, for they are the ones who seem to continually use the word. But what does it mean? And how is it different from what we might have said before? I think the word they are replacing is "invention." Bill Shockley invented the transistor, Gordon Moore and Bob Noyce invented the integrated circuit, Ted Hof invented the microprocessor. Of course others claimed to have done those same three things, but the goal was always invention. Only now we innovate, which is deliberately vague but seems to stop somewhere short of invention. Innovators have wiggle room. They can steal ideas, for example, and pawn them off as their own. That's the intersection of innovation and sharp business.

    • Some simple ideas that would help protect IP and turn the tide back for innovation:

      A few others ideas:

      - Make it easy and cheap to file defensive patents. So you own the idea, and nobody can stop you from exploiting it, but you cannot stop anyone else from exploiting it as well.

      - Make the "patent tax" exponential. So it starts out small. The first few year you may pay, say, a $100 renewal fee. Then it doubles to $200/yr, then $400/yr .... The result will be that bad patents are abandoned after a few years, while good patents earn money for both the innovator and the government that gra

      • Make it easy and cheap to file defensive patents. So you own the idea, and nobody can stop you from exploiting it, but you cannot stop anyone else from exploiting it as well.

        Write up your description and claims as if you were going to apply for a patent, but do not file it with the Patent Office. Instead, publish it as a white paper and notify the major tech news sites in your field. Congratulations: you've just made a defensive publication [wikipedia.org]. If you publish details of how to build your idea, then you've established your inventorship. After the date of publication, if anyone else applies for a patent on ideas that you've published, the application is invalid because it is not nov

        • ... the application is invalid because it is not novel.

          ... and the burden of proof is on YOU to show that it is invalid. Getting an existing patent invalidated is a time consuming and expensive process, even when you have obvious and copious evidence to support your case. In the meantime, your investors pull out, and your business folds ....

          • So the problem, as I understand your explanation, is that the novelty requirement is a dead letter because the USPTO routinely grants patents that fail novelty and patent holders abuse the presumption of validity to dilate proceedings. How is it different from any other area of law where the party with the biggest litigation budget wins?
            • How is it different from any other area of law where the party with the biggest litigation budget wins?

              The party with the biggest budget doesn't always win. You are just being cynical. A big budget is only beneficial when you can win by dragging out the process. So allowing defensive patents (and maybe patent pools) is a win because it switches the burden of proof from the polyopolists to the monopolist. If the wannabe monopolist uses their big budget to drag out the process, they lose, because everyone can use the innovation in the meantime.

    • The biggest difference is that the truly big inventions aren't just software. They use software but are associated with sharp hardware developments.

      The truly big things require exploiting new physics and chemistry. 6 person startups of the Proper Profile of Startups (24 to 31 year old Stanford CS graduates) don't do this well. New physics requires large labs, many years of work, and listening to old men with European accents. Return on capital is much lower for the owners of physical atom-based companies

  • by Gr33nJ3ll0 (1367543) on Monday March 11, 2013 @01:02PM (#43140681)
    There is no room for failure. Without failure, and the ability to take risks, you'll get a lot of me too ish. Silicon Valley thrived when it was cheap to fail, now that it nolonger is you need to look to other places. I'd expect something more radical outta Detroit (where the buildings are almost free) or Kansas City, with the Google Fiber, than the Valley.
    • by MrEricSir (398214) on Monday March 11, 2013 @01:14PM (#43140833) Homepage

      A two bedroom home for $500k? OMG tell me where! That's practically free by Bay Area standards.

      • http://www.redfin.com/CA/Newark/4931-Bosworth-Ct-94560/home/1763349

      • A two bedroom home for $500k? OMG tell me where! That's practically free by Bay Area standards.

        Take that 10th Ave exit from I-280 and head south, past "Little Saigon", into the Hispanic areas of south San Jose. You can find plenty of houses for less than $500k.

    • by scamper_22 (1073470) on Monday March 11, 2013 @04:34PM (#43142859)

      What it really boils down to is having enough cash flow to freely innovate.

      So yes, it means Joe the Plumber being able to afford cheap housing and life to be cheap enough for him to take a few years off 'regular' work to pursue his dream. Let's not discount this. People like Thomas Edison basically pursued this model. He worked pretty regular clerk like jobs to then work on his inventions in his off time.

      At the corporate level, it means having stable cash-flow.
      Microsoft Research for example is able to do all kinds of wonky things basically because Microsoft has a big STABLE cash cow to fund regular operations.

      Google is able to throw money at all kinds of wonkey things like self-driving cars because it has very STABLE cash-flow with the ad business.

      If you see a big company doing innovative things, look to find the stable cash-cow to fund it.

      Back in the days, ATT used to do a lot of good research. Wait for it... the big STABLE cash-flow was a monopoly on the telecom sector. Government splits up ATT and kills the monopoly... and well Bell labs/ATT basically died and hasn't done anything.

      I'm much more in favor of so called monopolies as long as they are well regulated then most of my engineering people. This is not to say I support the model... just that, I don't see it as being that bad.

      Or at least, it is much better than the current model where venture capitalists funneled by cheap debt start random companies, hope it gains enough attention, then goes IPO, and no one sees any long term vision to being a researcher or engineer.

  • Is that wrong? (Score:5, Interesting)

    by pushing-robot (1037830) on Monday March 11, 2013 @01:04PM (#43140711)

    Computers have been getting "slightly better than last year" for a few decades now.

    Because of that, I'm now running a Quad i7 with a Geforce and a couple terabytes of SSD+HDD rather than a IBM PC with a monochrome adapter and two floppies.

    I'm not complaining.

  • by Loughla (2531696) on Monday March 11, 2013 @01:06PM (#43140745)

    Silicon valley, and more about economic theory. Do free-markets drive the world in the right direction, or does the government? This, as in most things, seems to boil down to a compromise.

    We need agile markets, able to open and close companies overnight, therefore allowing for innovation, failure and re-birth. BUT, we also need big, slow-moving government to keep those businesses from harvesting short-term profits and dumping losses on investors/governments.

    The problems that we have today (a bit off topic here) are related to business being tied a bit too close to government. Why do we have the lowest congressional approval rating that I can remember? Because they all seem to be bought and sold by the same companies. In reality, though, they're not outright bought and sold, they're just trying to secure a sweet, sweet consulting deal after they retire from government. But I digress.

    This article isn't about the hypocrisy in silicon valley in particular, and more about the hypocrisy in people lauding free-market capitalism.

    • by fredprado (2569351) on Monday March 11, 2013 @01:34PM (#43141061)
      And you have hit the nail on the head here. The problem is crony capitalism that is where we are heading too (and in many places already are). The excessive protection to big business IP and interests is what hinders any kind of innovation, and, as time progresses, laws keep being enacted to give them more and more power. There is no more need to innovate when you can control the markets by force of law. You can just slow crawl and make lots of cash.
    • by moeinvt (851793) on Monday March 11, 2013 @01:47PM (#43141177)

      We need government to stop companies from dumping their losses on government? That makes no sense. How about we take wealth and power away from the government so they are in no position to cover losses or hand out favors at all?

      Imagine a federal government that was given 8% of annual GDP (roughly $1.2 trillion) to perform its duties and constrained by a balanced budget law. Let's see them do an $800 billion bailout of their banker friends on that budget.

      • by SlippyToad (240532) on Monday March 11, 2013 @02:29PM (#43141571)

        e. How about we take wealth and power away from the government

        Because then you're just giving that power to other people who will rape you and pillage from you and destroy everything you have for a quick buck.

        The government is us. One way to make sure it actually represents us is to not be lazy about using your right to vote, and informing yourself as to what is going on and why.

        Usually when I encounter your kind of thinking, I find people who are lazy in the brain, and therefore wildly misinformed.

        Imagine a federal government that was given 8% of annual GDP (roughly $1.2 trillion) to perform its duties and constrained by a balanced budget law

        Imagine a nation in complete collapse and disarray because their government can't do anything and cronies and bullies run it all for their own personal benefit.

        I notice people like you get the most upset when it looks like someone else is benefiting from government services. Someone with a particular tone of skin color, in point of fact, who you feel should be out in the fields working harder.

        I notice this even more amusingly when for example last week the POTUS cut white house tours short and all the right-wing jeering drooling idiots all started screaming. Apparently, cutting spending is only important when it's not for you.

        So, you can pardon me if I don't take your POV very seriously. I can tell you've never, ever, ever thought it through.

        • Fuck you for accusing someone of racism just because they disagree with you about the proper scope of government. Where the fuck do you see any mention of skin color in the gp post? Go back and comment on msnbc site where you belong you fucking asshole. Those morons see racism everywhere.

          • Non-falsifiable accusations are a pretty standard way unethical people use to silence dissent when the truth is not on their side.

          • by mvdwege (243851)

            If the folks who care about 'the proper scope of government' did a better job of keeping the racism out of their ranks, they'd not have to worry about being accused of it so much.

            A few bad apples spoil the bunch, and I haven't seen the US libertarians do a good job of keeping the bad apples out. In point of fact they seem to lionise them (see: Ron Paul).

        • by Talderas (1212466)

          You mean cutting White House tours while at the same time the DHS put out an open PO for 1.6bn rounds of ammunition, spends $50m on new uniforms, and buys over 2,700 MRAPs?

      • by dkleinsc (563838)

        Imagine a federal government that was given 8% of annual GDP (roughly $1.2 trillion) to perform its duties and constrained by a balanced budget law.

        We don't have to imagine that government: that's exactly what we had in the Hoover administration. Herbert Hoover, contrary to popular belief, responded to the stock market crash of 1929 ... by vigorously pursuing completely successful efforts to keep the federal budget balanced. The economy after a few years of that was why the country elected Franklin Roosevelt.

        • by Wonko the Sane (25252) * on Monday March 11, 2013 @02:43PM (#43141717) Journal

          It's rare to see someone post something so perfectly opposite of the truth.

          Herbert Hoover spent over $3 billion via the Reconstruction Finance Corporation to bail out Wall Street cronies, instead of letting them go bankrupt as Warren Harding did in 1920. That's why the 1930s depression did not end until a significant fraction of Europe's population was murdered and their industrial production destroyed while the 1920 depression only lasted 18 months.

          Unsurprisingly, Herbert Hoover was the Treasury Secretary in 1920 who argued for bailouts at the time but was ignored. When he was in charge and able to implement exactly what he advocated a decade before the Great Depression was the result.

          • by ensignyu (417022)

            Not that I think that bailouts are a good idea, but I'd like to see some more factual analysis before saying that "X happened, therefore Y".

            The only definitive conclusion you can draw without more background is that the bailouts did not stop the Great Depression. But for all we know, the bailouts could have been ineffective with no impact on the economy, or perhaps the depression would have been even worse without the bailouts. Maybe the bailouts were too small.

            Maybe the economy was so badly screwed that th

          • by dkleinsc (563838)

            I'm happy to agree with you that bailouts did little to nothing to prevent economic catastrophe, and are a demonstrably stupid policy.

            Hoover was at the very least telling Congress that he was trying to balance the budget, as Brad DeLong [typepad.com] at UC Berkeley points out. In doing so, he was following the economic wisdom of the day: Keep the budget balanced, and you'll build market confidence, which will allow the stock markets to bounce back, which will allow businesses to invest again, and then people will be hire

    • You describe crony capitalism which is made possible by exessively big and powerful government and then you blame free-market capitalism. I think you are making a classic mistake of confusing support for capitalism with support for capitalists.

  • by Tridus (79566)

    Sending a URL using a modem only with smartphones isn't innovative enough for you?

    Man, people are so demanding.

  • by pitchpipe (708843) on Monday March 11, 2013 @01:15PM (#43140847)

    There's a lot of 'me-too' startups with some of the best and brightest figuring out ways to sell me stuff rather the working on flying cars.

    The flying car was your grandfather's future, and it now sounds weird to use it as a symbol for the future.

    The flying car is a symbol for a future that never was.

    • by Anonymous Coward on Monday March 11, 2013 @01:43PM (#43141137)

      The flying car is a symbol for a future that never was.

      Give me the self-driving car. So I can reclaim the 1000 hours/year I waste physically guiding my car. I bought a luxury car so I would hate it less, but using it to "experience the drive" is like using an abacus to "experience the math". Fuck that. I have better things to waste my life on.

      Now give me another self-driving car without any seats. No airbags, no overengineered crumple zones, no creature comforts. Just a cheap autonomous box on wheels for one-tenth the price. That's the 'car' that will pick up my drycleaning, my groceries. That's the car that will save local businesses, letting them compete with Amazon on convenience and beat them on speed.

      That's my future.

      • by SecurityGuy (217807) on Monday March 11, 2013 @01:54PM (#43141233)

        This needs to be +5, Awesome. It's exactly right.

        Flying cars are DOA until we have self driving cars. On the way home last week, I saw a 5 car pile up. Nose to tail, every one. How did that happen? Either some moron managed to plow into the last car in a row hard enough to drive them all together (been there, done that as one of the hit cars, not the moron) or a chain of morons was all following so closely they couldn't stop as the first moron plowed into stopped cars.

        These are the people the "flying car" crowd want flying. I don't even want these people driving, let alone driving over my head at 150 mph or more. These people can have flying cars when we have self-driving flying cars, and never before or the carnage will be obscene.

        • or a chain of morons was all following so closely

          This is usually the cause of a pileup. Most people follow too closely. And then get mad at you when you have to stop.

          Even funnier is when they tailgate me for 8 miles on the freeway, angrily whip past me as if how dare you get in my way, and then Indiana's finest pull them over because it's called the fucking "no-fly-zone" and I'm following the speed limit because I do not have $150 to give away today.

          I always am reminded of this when people start bitching

          • I really want to see that Bosch car radar system put on all new cars with a mandatory speed/distance check to the car in front. If you are following too close the computer recognizes it and applies the brake lightly to put the car into a safe following distance.
        • Pretty much anybody can fly an airplane under general aviation, yet you see relatively few nasty accidents. This is because, surprise, it's much more difficult to get a pilot's license than a driver's license because the standards are high. I imagine flying cars would be no different.
      • by mbkennel (97636)

        "Now give me another self-driving car without any seats. No airbags, no overengineered crumple zones, no creature comforts. Just a cheap autonomous box on wheels for one-tenth the price. That's the 'car' that will pick up my drycleaning, my groceries.:"

        That's the car which will be stolen in 10 days and reprogrammed to deliver narcotics, and you will find yourself on the end of a SWAT team and if they don't shoot you (your dogs are toast), you will find your home forfeited, and still owe the mortgage. You c

        • by mlts (1038732) *

          Security can be done right. It is a matter of "won't", rather than "can't" in general. A lot of companies have the "security has no ROI" attitude, but if it is something that their names are on the line for, they might actually follow working practices.

          Take the Mercedes DAS (drive authorization system) keys/remotes. Very few, if any, people are bypassing the anti-theft system on these vehicles. So far, there are key cloners out there at best. If there is actual money and lives on the line, even this wo

      • by jafac (1449)

        Fuck that.

        Give me a boss that treats me as an adult, so I can work at home 3-4 days a week. No more commute in any kind of car.

      • by mlts (1038732) *

        Bingo. Self-driving cars would be very useful in the US for a number of reasons:

        1: The passive servicing aspect. Aft night, the vehicle can haul itself to a garage for overnight servicing, and I'm sure 24 hour service stations/car dealers would sprout up for this demand. Having a car get serviced while asleep would save hours of time.

        2: The ability to set up shops which are essentially reverse delivery drivers. Car drives to window, order is placed in vehicle, car drives away. This makes it possible

  • What do you expect, with the business environment that we are working. They would work on the flying cars if they thought they could sell any of them.

  • Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself.

    Innovation != Invention. Innovation is, by definition, easy. Innovation is the blue collar work of the intellectual realm.

  • by Tablizer (95088) on Monday March 11, 2013 @01:31PM (#43141025) Journal

    Newton, Xerox Star, Next, Intel's iAXP432, Xanadu Project, the Windows 2001 Tablet, Japan's HD analog TV R&D project, that company that tried to make an online MS-Office competitor with Java applets, and many other "bold" ideas that were ahead of their time failed.

    The market and technology has to be "just almost ready" for stuff to take off. If you are too early, then your configuration and vision are probably all wrong. It takes trial and error with consumers and users to tune products right. The first shot at something bold is usually just too quirky or too expensive.

    Palm Pilot did Newton better than Newton, and smart devices improved up the ladder through Blackberry until they were ready for mainstream with iPhone having the right mixture of features and ease of use. (Sorry fans, but Newton sucked from a practicality angle.)

    And the few times big gambles get wings, competitors usually make a better run at the idea and the payoff is not big enough to justify the up-front risk. VisiCalc, the first spreadsheet is just such an example. After about 3 years of strong sales, Lotus came along and did it better, faster, and cheaper (gambling on IBM PC instead of CPM), and VisiCalc went belly-up. (Software patents didn't really exist back then, which will be another problem with very new ideas.)

    In investing, you usually don't want to take a big risk unless there is a big potential payoff. But history shows for big-leap projects, the risks are big but usually not the payoffs. Incremental innovation looks like a better mix of risk and reward to rational investors who study history.

  • by PythonM (2184020) on Monday March 11, 2013 @01:37PM (#43141099)
    Millions of people lost their real (not paper) money "investing" in Silicon Valley companies. For example AOL’s market value went from $226 billion to about $20 billion now.

    The money did not evaporate like water, so who got the $$$ that millions of american lost by "investing" in Silicon Valley companies?

    • by moeinvt (851793)

      "...who got the $$$ that millions of american lost by "investing" in Silicon Valley companies?"

      The big banks who did the under-writing of the IPOs for these over-hyped companies and the early shareholders (sometimes the same banks doing the IPO) who sold out before the reality of the company's prospects became apparent.

    • by alen (225700) on Monday March 11, 2013 @02:29PM (#43141575)

      going from say $10 billion market cap to $226 billion does not mean someone invested that money into the company. it just means people bid up the price of the shares based on beliefs of the company's future earnings and ability to pay dividends. chances are only a small percentage of shares held actually changed hands.

      same thing with the fall in valuation. people dump their shares at lower and lower prices and the market cap goes down. not like people lose real money

    • by ottothecow (600101) on Monday March 11, 2013 @02:47PM (#43141753) Homepage
      That money went to the last person to sell the share to the person who lost all of their money.

      Maybe that person said "this is crazy, I gotta get out", or maybe they rode the tide all the way up to $226 billion and said "I want to buy a house with my proceeds, gotta sell". or they noticed that rapid gains in the tech sector had left their asset allocation unbalanced so they said "Gotta rebalance--sell half the tech and buy some other sectors and a few bonds"

      The value of the company evaporated, but the money was already gone. The people who kept their money aren't that different from the people who were left holding the stock when it fell...it's just what happens when you toy with a bubble.

    • I'll agree with you on the dotcom bubble. AOL may be a bad example. AOL managed to rack up enough money to buy Time Warner before being spun back off as a stand alone company again years later so stock value doesn't tell the whole story. Smart move to take the hyped stock value to buy real assets. Sure even Time Warner said it was a bad idea but they're still around. It wasn't a crash and burn the likes of webvan or PETS.com or all the other huge chunks of money thrown away.

    • The money did not evaporate like water

      When you're talking about the stock market, yeah, it does simply 'evaporate like water'. Market value is a collective hallucination, not a checking account.

      • Market value is a collective hallucination...

        Wow, just like water. When those dihydroen oxide molecules get moving fast enough it just disappears. Water isn't real.

    • by Solandri (704621) on Monday March 11, 2013 @04:36PM (#43142871)

      For example AOLâ(TM)s market value went from $226 billion to about $20 billion now.

      The money did not evaporate like water, so who got the $$$ that millions of american lost by "investing" in Silicon Valley companies?

      The money was given to previous stockowners who sold their shares. If AOL IPOs at $10, gets sold to person A for $20, sold to person B for $40, sold to person C for $75, and sold to person D for $100, then the stock crashes to $10, the $90 person D lost was distributed as:

      $25 to person C
      $35 to person B
      $20 to person A
      $10 to person AOL

      Note that the company is not the beneficiary of its own high stock price (unless it held onto and decides to sell additional stock at a later date). The capital AOL received for its IPO was (number of IPO shares sold) * (stock price at IPO). $10 in the above example even though its stock peaked at $100. Also, don't make the mistake of thinking from the above example that the economy is zero-sum. It's not. But increases in the valuation of stock have to be linked to real increases in productivity for everyone to get "richer". If AOL had introduced real long-term productivity gains to the economy, their stock wouldn't have have crashed, and person D would still be holding onto $100 of real value instead of $10.

      Furthermore, money is a representation of value/productivity. In fiat monetary systems like ours, it's created out of thin air to try to keep its value proportional to the size of the economy. If you do this right, the price of goods stays relatively constant (though you want a small amount of inflation to encourage people to use money to try to improve their productivity, instead of hiding it under a mattress waiting for its value to go up). If you do it wrong and make too much money, or a bunch of money is made and its value evaporates due to an economic bubble popping, the economy normalizes for this by increasing the price of goods (the money becomes worth less because there's more of it per unit of productivity than there used to be, though weak economic growth replacing some of the lost valuation can also help the normalization). This process of normalization is what causes a recession (slowdown in velocity of money).

      This is the same reason why simply increasing the minimum wage to make it a living wage doesn't work. The value of the work done by minimum wage workers - the productivity their jobs add to the economy - has to be sufficient to live off of before it can be paid a living wage. If its not, then raising the minimum wage doesn't magically make it possible to make a living doing those jobs. It simply eliminates those jobs from the market since the employer would be paying the worker more than the value they get for the job being done.

  • It seems to me that most of the 'startups' covered are based around trivially simple ideas (camera filters, decisions, etc) and a polished mobile application.

    This seems to be the formula for media coverage (since the tech press largely lacks a technical background and can't comprehend or write about anything more complicated) and it this is apparently the formula to get bought by one of the tech companies.

  • As TFA says, the MBA types have killed the innovation that laid the golden egg.
    • by moeinvt (851793)

      Well said. Seems like the natural evolution of a company is to keep moving marketers and bean counters into positions of authority, gradually killing whatever innovative capacity the company had.

    • As TFA says, the MBA types have killed the innovation that laid the golden egg.

      This is such a silly statement. I'm sure it sounds cool and awesome and avant-garde to the slashdotter's ears, but what exactly does it mean? How do you measure that? Who are the MBA types? What is a MBA type? What do you mean by killing innovation? Lots of cliched emotions on this statement, but little analyzable substance.

  • Capitalism is supposed to be beneficial for mankind in that advancing technology is supposed to be profitable, which is the reason for the recent incentives to privatize the space industry. Of course the link between innovation and profits isn't direct, so oftentimes innovation will steer off course towards designing a more visible animated billboard for the underside of that flying car rather than increasing redundancy in its lift components.
  • Paypal (Score:4, Insightful)

    by Applekid (993327) on Monday March 11, 2013 @02:28PM (#43141555)

    Max Levchin, co-founder of Paypal, is right. Silicon Valley should instead focus on providing services that treat their customers like dirt and everyone hates, like Paypal.

  • For many, many reasons. Well known to anybody that cared to find out. In fact, people calling for work on flying cars are pretty stupid themselves.

  • I tune out when I hear a companies business model is "ad-based". Reason: there is only so much revenue available from companies that make "real" products. Of that they will only part with a certain amount of it for marketing before the marginal return goes negative. Thus every stinking crapware company is fighting for the same dollar. Ultimately someone has to make something that will make a customer willing to part with their money to make the size of the tech industry to grow otherwise you might be making

As in certain cults it is possible to kill a process if you know its true name. -- Ken Thompson and Dennis M. Ritchie

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