genericresponse

No it's a commodity if it's non-differentiated from others. You can still have non-commoditized work that operates at scaled efficiency. You just have to have something that makes you better or different.

You don't tell them: give me what you value it for. You do your best to estimate what success will be (in value) to them. Then you negotiate from that.

They're a lot more cooperative around BigCorp compliance related stuff than AWS. It doesn't sound like that big a deal, but it really is.

It is absolutely not. On every level there are healthy competitors: Shipping (Ocean freight Cos, Trains, Trucking Cos, UPS, FedEx), Online Sales (AliBaba), General Goods (Wal-Mart)

These are all very healthy competitors, it's just that they are all operating on a massive scale.

Man takes prescription drug for the first time. He discovers that he has most of the side effects and does not like his experience.

News at 11

I'm not claiming that failure rate is the sole value destruction mechanism. Rather that it is one. The other, perhaps more pernicious, mechanism is solving problems with little to no long term social benefit. (i.e. much entertainment)

Your point about drug discovery helps illustrate the second item. If most of the drugs being pursued were cosmetic in nature, we could challenge the long term benefit of drug discovery.

I appreciate the apology, but that's part of my frustration. My claims do have some grounds for validity and consideration. They have a rational basis.

My evidence is not high quality, but it's evidence. Just because I don't have higher quality evidence at hand doesn't make it true. The sky is blue. You can disagree, but where I sit it looks blue.

I claimed my point and my evidence centers on failure rate and personal observation. You can disagree or choose to maintain your own anecdotal/limited evidence. Neither hypothesis is proven invalid until clear high quality evidence is provided.

I find your strawman distasteful bordering on offensive.

I'd love to hear it, because it took me a quick Google search to find numbers for startup failure from 80%-95% cited. (Much higher than the 48.8% I found for small business failure rate.)

Moreover, I'd be interested if anyone has actually done a comprehensive study on total value (long-term economic and short term investor profits) added/lost from startups. I wouldn't be surprised if we found something that looks net/net negative or even pretty small.[1] (That is startups globally, not just VC funded or SV startups.)

If startups are engines of wealth re-allocations rather than drivers of long term economic benefit. Well, then silicon valley is just as bad as Wall Street.

[1] We're quick to count the successes, but struggle to count the failures. More than that, many startups, as the author points out, are entertainment companies that don't add much economically. Finally, how much money is churned out of investable capital into acqui-hires? How much of that delivers a meaningful return vs. defending a market position?

I actually think it's quite well written. It's not out there to dispute PG's central point. It's written to dispute the idea that Silicon Valley's engineering/business/vc minds have demonstrated skill at building anything more than an economically better future for themselves and those within the system. If it achieves that it seeks to invalidate PG's expertise. (From which much of his authority is derived. A concept familiar to Holly Wood as she is a sociologist.) It also criticizes his breadth of knowledge in the subject area, something an academic would be in a position to comment on. (I'd love to hear from an economist or another social scientist on whether PG's suppositions reflect the broader literature.)

Getting back to the article's main attack- It does so by making a logical, if emotion filled, attack. Venture capitalism is still capitalism. Participants work to, primarily, their own economic benefit rather than the benefit of society. (Yes, it's the worst system except for all the rest, but it still doesn't make the most long term beneficial allocations. See: poor funding for fundamental science research.)

Moreover the article criticizes PG (citing his lack of perspective) for promoting a "bootstraps" ideology. It tries to illustrate that the ideology is flawed in two ways: 1. The people who could most benefit don't necessarily have the personal capital (time, knowledge, etc.) to effectively run a startup. 2. It implies that there is only so much problem space that can be effectively addressed at any given time.

This is written in the style of a qualitative sociology monograph. I find it quite compelling, however, I'm not surprised that the crowd here doesn't share my view.

Read the article and try to replace every description of computer technology with mechanization. You'll find that in many instances you'll see the same thing. I don't disagree with the piece, but I think its chief error is failing to identify what's coming from network effects vs. pure economies of scale.

I would argue that Uber's dominance is the intentional strategic choice to seek monopoly in their space. We saw the same things during the growth of mechanization.

I'm really interested in the underlying source data and sample groups. Based on the article, I'm unclear if these are actually startups or just small businesses.

We know that much of a delivery network's cost is the last mile, but I'd be interested in the costs of the last 100 yards. Suddenly, instead of one driver/one truck per neighborhood per day it's one stop per neighborhood per day. They can stop once or twice in the neighborhood, load drones with packages and then drones do all the deliveries. If you even have a separate "loader" in the back, you can have the driver jump out and make the few targeted heavy package (20+lbs) deliveries.

The keyword there being "seems". Most of the firms that I've worked with are actively automating or offshoring repetitive tasks. Much of the work that is being done requires meaningful critical thinking.

Her words are carefully chosen. They don't look at it when they make hiring decisions. They do look at background and skill set when selecting candidates. (i.e. If you can lateral into the interview process it's cool that you don't meet the job description. If you come in off the street looking to interview, you better check all the boxes if you want our time.)

I'd argue that we'd probably need a lot more. Diagnoses would be more accurate so people would be inclined to use the health system more. Health work would be cheaper because the expensive doctor component would be used less. Time to go to the doctor could be more efficient (still working through the car ride) so people are even more likely to go. Overall that could likely mean higher demand for healthcare, including the human component.

Your food shopping point still needs middlemen. You have "chain of trust" issues with the producers. How do you know that you'll get good oranges from the orange grove. Who capitalizes the distribution system and designs the business model.

Considering historical examples, we'll see more use for people in the economic problems that are still machine hard. Machine easy economic problems will converge to resource costs + any premium for monopoly. This will free up more demand for other products. People still want to buy an easier, better life.

That's why you commit to multiple layers and types of defensive and recovery measures. Intelligence, preparation, prevention, prevention, prevention, monitoring, adaptation, more monitoring, effective response, well planned recovery.

Much equity does have intrinsic value. I think the lifelong work of both Benjamin Graham and Warren Buffet have been focused on acquiring equity (and other assets) with intrinsic value.

A lot of equity, especially with startups, lacks intrinsic value or it's hard to do accurate fundamental analysis on the total intrinsic value. (Berkshire does not buy high tech for this reason.) Moreover the utility value of the equity to you or the limitations on your ability to sell or transfer may make any existent intrinsic value negligible to you as an employee.

Just for everyone's awareness, there is a broad astroturf and professional political push that has been happening for over a year by FIRE, a right leaning think tank. This is a concerted effort to bring controversy around campus free speech into the news.

My perception is that this is an effort to weaken student's ability to speak freely, but is coded as a "free speech" issue. Similar to how many churches coded marriage equality as trampling on their freedom of religion.

Just to remind everyone how free speech works: You are free to say whatever you want. I am free to choose to speak out against you or even pull my support from you if I disagree with what you say. My freedom extends to let me voice my opposition to you just as loudly as you voice your opinions. That is not censorship.

So I think you're mixing up my two points. A reverse split destroys the stock object, reducing the total number of shares but the proportional value remains the same. We both agree on this (per my previous comment).

Destroy can be used in both ways because language is context sensitive and the definition is somewhat broad. You can destroy value through dilution by getting less than you give. Example: If my company is fairly worth $100 and I own two shares and you own one, you own $33 worth of value. I can then issue my friend bob another share because he gave me a great lunch recommendation and I thought it was a big morale boost, something I can do because you don't have a covenant in place. My company is still worth $100, you now own one of 4 shares and only $25 worth of value. I have now destroyed $8 worth of your value. It's an ownership shift relative to the company, but a value destruction relative to you.

At a $40M valuation, Khosla got 25% of the company at that time. They have $10m/$.22 shares or ~45M shares of the 182M shares you mention. They're netting $945M (sale)-$10M(invested)=~$409M.

Between Series A and IPO they had roughly 40% of their stake wiped out through dilution. (45M/182M=25%-> 45M/300M=15%) The dilution happened because, during that time Square issued 118M shares to investors in trade for the investor money. The company valuation at each round was determined by: Investment/shares issuedTotal shares outstanding after transaction.

What I was saying with the "destroyed" was something like a reverse stock split. (Your proportional ownership stays the same, but your number of shares reduce.) The idea I was communicating that the number of shares itself is not a meaningful judge of anything unless you understand what those shares represent.

If covenants are not in place, you could also "destroy" the proportional ownership of shares by diluting down to a negligible value.

I guess what I'm saying is that people should always be sure they can trust management, ask for a cap table and probably consult a lawyer.

I'll answer what I can: First, you're correct on the valuation. If they are exercised and cashed out at the IPO price, the employee would earn $80k pre-tax. However, historically most IPOs are priced to get a "bounce" on opening day also there are usually restrictive covenants around the number of insider shares that can be cashed on IPO day. (This is meant to give investors warm fuzzy feelings about the stock.) In all likelihood the employee will have to wait some more time and will probably cash out closer to $10/share.

The Pricing and Valuation implies 300M shares. However there can be many classes of stock, both common and preferred that grant different rights and ownership. If they have different classes they could have a different number of shares, but the different share types are valued differently.

Shares are just objects granting different rights around the company within certain legal limits. (Ownership, Governance, Profit share, etc.) If you have agreement from the controlling body you can instantiate, remove, or restructure shares at any time. The point is that they could have decided with their bankers that 300M was a good number of shares to have at an IPO and decided to split or reverse split as part of the transaction. It has no bearing on the number of shares today or a year ago.

The rule of law and the basic functioning of the state is one and the same. The state sets and enforces the law. The state's strength and the consent/will of the populace determines the success of the state and the law.

If this really is what Greenwald is saying, than he's pretty solidly turned into the Glenn Beck of the left.

The rule of law might not seem always fair, but it hampers the powerful much more than the weak. As an example: None of the billionaires in my city have set up their own duchy pressed us into an army, enforcing their own laws. Their taxes, while not as high as I would like, in fact pay for much of our city budget including city services. Even the poor in my city have access to clean water and the library system.

Just because we have to fight to maintain the sanctity of the legal system and because every actor isn't perfect, does not mean that it's entirely corrupt and captive. I would ask you to take a moment to compare the current rule of law, rule of law in a developing country, and rule of law without the rights guarded by a nation-state.

While that might be true in a few cases, in most it flatly isn't.

Anyone else wonder if much of their R&D and design on this is coming from international espionage? Chinese exfiltration of sensitive industrial data is becoming pretty well known.

I find it an amusing irony that one of their issues with meetings is that they are about "abstract concepts" not "real things", but the entire book is about abstract concepts.

You know, I like how there is this view out there that anyone who's doing classically "business" or "sales" work is not actually working that hard. I know some recruiters. They aren't the world's smartest people, but the successful ones work really damn hard. They don't make more than minimum wage unless they place people.

These guys are cold calling, searching LinkedIn, crawling phone trees, and sending requests all day. When they can they're touching up resumes and doing screening/placement interviews.

Moreover, their technical is different than your technical. It's social hacking and networking. It's learning how to find better opportunities and better people faster.

You might not like that they're Ronin, and work socially. However, they're pulling 12-15 hour days to make their sale.

How is this relevant to the conversation? How is this a positive contribution to the dialog? How is this meaningful towards the essay about Andreesen?

But that's not how this works. By saying that he can't disclose, he's disclosing the existence of the program. It's entirely possible that the program's existence was classified. The NSA's existence was classified for many years and I believe the "Groom Lake Facility" (aka Area 51) might still be. Everyone knows it exists, but the government won't admit it.

He can't address it beforehand if the admission of its existence is classified. By addressing it beforehand and saying "you can't ask me this question" he indicates its existence.