Discontent

This video, an amazing on-the-ground point of view compilation of the protests in Rio de Janeiro—one of many throughout Brazil—is making the rounds.

This footage affected me because the fact that these protests are taking place right alongside those in Turkey, another significant country, along with the fact that both are occurring shortly after the Arab Spring and various Occupy movements makes the trend too big to ignore. 

When I introduced this blog, I wrote about how we in the Valley can’t ignore the broader aspects of the society we live in—issues like inequality, justice, employment, and education. 

As I stated then as well, Steve Jobs was able to create Apple and its iconic products because he appreciated aspects of the arts and humanity in general beyond what was immediately applicable to technology. 

In his own words when he introduced the iPad 2:

It is in Apple’s DNA that technology alone is not enough—it’s technology married with liberal arts, married with the humanities, that yields us the results that make our heart sing.

And in his commencement speech at Stanford about dropping out of Reed College and auditing calligraphy classes:

I learned about serif and sans-serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can’t capture, and I found it fascinating.

None of this had even a hope of practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would never have had multiple typefaces or proportionally spaced fonts.

I don’t have a solution to offer, but at least we can start asking the questions and having the conversations that may ultimately lead to a solution. If we set the goal to improve the world as we build great technology and great companies, we’ll be able to do it. That’s the amazing thing about creativity—you don’t know when and where the solution will emerge. 

Daft Punk

In honor of Kanye releasing his latest (and very much anticipated) album Yeezus today, I thought I’d try out SquareSpace's SoundCloud music feature for another album that made a huge splash in 2013: Daft Punk’s Random Access Memories. Plus, Daft Punk and Kanye are frequent collaborators, and they make an appearance in Yeezus. The richness and creativity of this music is just amazing. 

A Tech Subculture

This weekend’s Financial Times had a great cover story on Bitcoin titled "The Bitcoin Believers". 

While I’ve been following Bitcoin’s developments closely and the article’s insights into the development (and continued struggles) of the currency were very interesting, what I found most fascinating was one description of the subculture of “Bitcoin believers” that I thought very elegantly captured a cultural theme that could describe a large and growing subculture of tech generally:

Around the world, a generation is growing up whose intellectual framework was forged in an economic conflagration which destroyed the reputations of government, finance and central banks alike. The only heroes in this landscape are the hoodie-wearing tech entrepreneurs with their billion-dollar businesses.

This is one of the topics touched upon in George Packer’s recent article in The New Yorker, "Can Silicon Valley embrace politics?".

The sentiment is certainly a driver of the outrage in the Valley (and certainly more broadly) over the NSA’s activities exposed by Edward Snowden. For periods of times in the days following Glenn Greenwald’s article on the matter in The Guardian, every single link on Hacker News was related to the issue. I’ve never seen anything like that happen.

I’ve heard similar sentiments in conversations with friends in the developer community related to issues like Bradley Manning, bank bailouts, taxi regulations affecting Uber, internet sales tax, and so forth. 

For these reasons, I do believe this is a very significant aspect of Silicon Valley. I’m going to weigh in with a more thoughtful post on whether or not I agree with the sentiments embodied in this subculture, but for now I just wanted to highlight it and the fact that more people broadly seem to be noticing as well. 

Annual Letters

I’ve been reading Warren Buffett’s Annual Letters. You can access them back to 1977 at Berkshire Hathaway’s website, or you can buy a book with the full unedited collection going back to the start (1965).

They’re excellent. I’ve learned a lot, not just about investing but financial and economic history as well. It’s one thing to read about stagflation in the ’70s in an economics book and another to hear someone trying to generate returns in a business talk about it as it was happening.

I was curious who else writes thoughtful annual letters and learned from an excellent post by Ben Horowitz about CEOs that Jeff Bezos does. 

Horowitz referenced Bezos’s 1997 letter (the first one after its IPO) as an excellent example of how a CEO gives a company a strategy and a story. All of Bezos’s letters are well done and worth reading. You can find them here. 

I’m going to write more about what I learn from all of this reading, but for now I just wanted to note the power of writing these letters. They’re an excellent way to organize your thinking, both retrospectively, allowing you to share what happened and why, and prospectively, describing what you plan to do. 

In Buffett’s own words (from a lecture he gave at Notre Dame):

I proposed this to the stock exchange some years ago: that everybody be able to write out “I am buying 100 shares of Coca Cola Company, market value $32 billion, because…” and they wouldn’t take your order until you filled that thing out. 

I find this very useful when I write my annual report. I learn while I think when I write it out. Some of the things I think I think, I find don’t make any sense when I start trying to write them down and explain them to people. You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be. And if it can’t stand applying pencil to paper, you’d better think it through some more.

Bezos has clearly taken this idea of writing’s ability to help you think even further. At the beginning of every meeting of senior executives, the entire team sits in silence for thirty minutes reading a six page memo discussing various aspects of the issue at hand. 

From Fortune:

Amazon executives call these documents “narratives,” and even Bezos realizes that for the uninitiated—and fans of the PowerPoint presentation—the process is a bit odd. “For new employees, it’s a strange initial experience,” he tells Fortune. “They’re just not accustomed to sitting silently in a room and doing study hall with a bunch of executives.” Bezos says the act of communal reading guarantees the group’s undivided attention. Writing a memo is an even more important skill to master. “Full sentences are harder to write,” he says. “They have verbs. The paragraphs have topic sentences. There is no way to write a six-page, narratively structured memo and not have clear thinking.”

Mobile

The mythology of Amazon’s founding is that it all started in 1994 when Jeff Bezos read that the internet was growing 2,300 percent. It’s not clear what that metric was exactly. Some say it was annually, some say monthly, and I haven’t been able to figure out exactly what the metric was measuring, whether pages, page views, etc. Another story talked about user growth—from 16 million in 1995 to 31 million in 1996. 

It doesn’t matter really. It was a huge shift. He perceived it. And he acted on it. 

The equivalent, if not more significant shift today, is mobile. And by far the best articulation of those trends that I’ve seen is here (h/t to Fred Wilson):

2013 05 BEA - ’Mobile is eating the World’ from Benedict Evans

Slide 6 had the most impact on me. The world in 2017 will have about 7.5 billion people of which 3.2 billion will have smart phones (i.e., small internet-connected computers). And that’s from a base of about 1.2 billion in 2012. 

That compares to a PC base of about 1.5 billion, with sales collapsing.

Consider the following from Pew Internet for another perspective:

Recalling what Jeff Bezos saw of a doubling in internet users, the percentage point increases in the above are mind-boggling. In April 2012, 18 percent of Americans over the age of eighteen had a tablet. In May 2013, that had increased to 34 percent. The right hand column is misleading in giving point increases and not percentage increases. The percentage growth is tremendous, 80 percent and even 100 percent or higher in many cases.

The uniformity of adoption is amazing, too. 

Low income, minority, elderly, rural—those are the fastest growing percentages. Granted, they’re from smaller bases, but they’re converging to the average adoption.

Paul Graham wrote the most thoughtful post I’ve seen on the imprecise nature of describing these devices. He pointed out that if the iPad had come first, we wouldn’t think of the iPhone as something very different. We would think of it as a small iPad that you can hold to your ear to double as a phone. It’s just slightly more tailored to one specific app on the phone.

So smartphones and tablets are really the same thing—a new internet connected device with a touch capability that can run different types of applications that also has special characteristics like knowing where it is in the world, how it’s physically moving through space, and how it’s oriented. That’s all in addition to its ability to deliver all the pre-tablet consumer services that are more valuable with increased mobility: music, video, email, etc.

Oh, and they can be pretty cheap. Sure, Apple is extracting margin for the time being. But given the dynamics of supply chains, contract manufacturing, and scale, prices will drop dramatically. I already know of one entrepreneur that is building an incredible business leveraging the fact that he can buy Android phones built to last year’s specs in bulk for about $50 per unit.

Returning to my earlier post on prophecy, this is one of those shifts that may be prone to both of the failures Clarke identified: failure of nerves and failure of imagination.

On nerves, there’s no doubt the world is moving in this direction. We have to accept it and act accordingly (which means boldly).

On imagination, there’s more that we can’t imagine about what will be possible than we can imagine so entrepreneurs have to be willing to experiment and investors have to be willing to dig to the core of an idea or offering and be willing to suspend disbelief, relying on more fundamental signals—the quality of the entrepreneur and the product. The rest will emerge over time.

It’s an exciting time.