Silicon Valley Jerks And The Companies They Ruin

Auguste Rodin was an obsessive genius, horrid toward his family and other people. This type of personality has been evident throughout history. Silicon Valley high tech jerks have also been around for decades. The “bad” Steve Jobs is only one of many examples. A more recent example would Uber’s Travis Kalanick, whose behavior arguably has severely damaged Uber’s business and its IPO. The conundrum we face with these people is that once they are in place it can be very difficult to remove them

Mayo615 Plans Live Interactive Webinars For French Tech Entrepreneurs

Seeking Your Feedback To Offer The Most Effective Program of Webinars

Now that I have a large number of weekly viewers, and subscribers, I want to use this update video to again offer a bit more about myself, and to give you advance notice of my plans for delivering more online streaming and live video content in the next few months. I am specifically looking for your feedback comments to assist me in making those plans most effective.

First, I am a Silicon Valley veteran, an Intel alumni. I have started my own companies in North America and Europe, and worked on both sides of the venture capital process. I was the Director of a technology incubator in Silicon Valley, and I have taught entrepreneurship and management at a major university.  I am now planning to offer more in-depth live Webinars specifically targeted for the French Tech entrepreneurial audience.  My plan is to begin offering 1 hour Webinars based on my most popular YouTube Channel weekly teasers beginning in early October. I will eventually be returning permanently to France to offer live seminars.  I am reaching out to you for your feedback on my plans, and your suggestions. Please comment here, and I will respond.

The Critical Need to Integrate The Humanities With Deep Technology

Human Oversight of Deep Technology Development Is Playing Catch-up

Systems Similar To Those In Place for Medical Science Are Urgently Required

 

After watching “The Great Hack” on Netflix I am appalled by the absence of any moral compass at Cambridge Analytica, which transformed Big Data into a political weapon. Other disturbing examples are Uber’s former corporate culture and Facebook’s collusion with CA in abusing our privacy. These cases are prima facie evidence of the crucial need and the opportunity to integrate the Humanities and ethics with deep technology development. I began my career as a Humanities graduate at Intel Corporation working closely with Ivy League MBA’s and senior engineers. We shared our knowledge and learned together to enable the company to excel. The best companies are those grounded in an appreciation of human values, companies that seek out Humanities graduates with a passion for technology to balance out their teams.

After watching “The Great Hack” on Netflix I am appalled by the absence of any moral compass at Cambridge Analytica, which transformed Big Data into a political weapon. Other disturbing examples are Uber’s former corporate culture and Facebook’s collusion with CA in abusing our privacy. These cases are prima facie evidence of the crucial need and the opportunity to integrate the Humanities and ethics with deep technology development. I began my career as a Humanities graduate at Intel Corporation working closely with Ivy League MBA’s and senior engineers. We shared our knowledge and learned together to enable the company to excel. The best companies are those grounded in an appreciation of human values, companies that seek out Humanities graduates with a passion for technology to balance out their teams.

 

The Critical Role of Corporate Culture

 

Last week I showed a graphic that at its center had the words “the critical role of corporate culture.” Entrepreneurs need to grasp those words as the very core of the formation and development of their new business. You have a unique opportunity to build the culture you want, to build your team and the values you want your entire team to share.  The company will develop its own culture if you do nothing, so it is better to intentionally form it and nurture it.

Paris, the Rising Hope for a European Silicon Valley | OZY 🇫🇷

Aix/Marseilles, Bourdeaux, Lyon, Paris, and Toulouse Are All Thriving French Tech Innovation Hubs

This article and others have focused on the recent meteoric rise of Paris as an emerging high technology innovation hub. However, there is much more to it than just Paris. There are thriving La French Tech Hubs all over France and in international locations around the World.  Both KPMG’s annual global Technology Industry Innovation Survey and the 2019 Startup Genome Global Startup Ecosystem Report have validated the significant advance of France and Paris as a leading innovation center.

 

Source: Paris, the Rising Hope for a European Silicon Valley | Fast Forward | OZY

Nick Fouriezos, Reporter

WHY YOU SHOULD CARE ABOUT THE RISE OF FRENCH TECH

The French, with their 35-hour workweek and café culture, might be poised to attract the next great tech talent.

Rand Hindi has the quintessential tech guru genesis story. He started coding at age 10 and built a social network by 14. After getting a Ph.D. in artificial intelligence, the entrepreneur set his sights on Silicon Valley. But that’s where the narrative began to fray. Despite all the hype, the Bay Area, known for innovation, felt like a bust. “When you [speak] to people, everybody says they want to do something great,” Hindi says. “But what people really want is to work at Google or sell their company to Google.” So Hindi returned to his native France, started Snips, a company specializing in AI voice technology, and watched his company flourish from three employees in 2013 to 80 today.

As a growing souring on Silicon Valley sinks in, young tech workers aren’t just leaving hot spots like San Francisco and New York, as OZY has previously reported. They are also leaving the country altogether. And while Asia’s — and in particular China’s — tech advances are drawing the world’s attention, it turns out that a growing number of startups are swooning for the City of Love.

For the first time, more than half of respondents to KPMG’s annual global Technology Industry Innovation Survey in 2019 believed that Silicon Valley will no longer be the technology innovation center of the world in four years — due to questions around its escalating cost of living, lack of diversity and troublesome corporate cultures. Cities like Beijing, Tokyo, Shanghai and Taipei are best placed to replace it, the survey suggests. But it’s Paris that is gaining the most steam. After not being ranked in last year’s KPMG survey, it moved up to No. 14 — behind only London among European cities. Other analysts are even more bullish: Paris ranked fourth in the A.T. Kearney Global Cities Report and third in the IESE Business School Cities in Motion Index.

IT MAKES PERFECT SENSE THAT PEOPLE WHO ARE THINKING ENTREPRENEURIALLY WOULD WANT TO BLAZE A DIFFERENT PATH.

ANDREW RUSSELL, SUNY POLYTECHNIC INSTITUTE

Driving this shift is a growing contrast in France’s approach toward global tech innovations to the U.K. and the U.S., experts say. On the one hand, London’s status as a financial and innovation hub stands challenged by Brexit’s enduring uncertainties. And America and Britain are tightening up on immigration. On the other hand, the French government is aggressively courting tech entrepreneurs and investments — a strategy that’s showing results. Paris rents are also 61 percent cheaper than San Francisco’s, according to Numbeo, the crowd-sourced global database of statistics such as consumer prices, perceived crime rates and quality of health care.

In 2017, the Emmanuel Macron government introduced a program that fast-tracks four-year residence visas for tech entrepreneurs and their families. Since then, French tech startups are witnessing a dramatic increase in funding: There were 743 French startups raising money in 2017, a 45 percent increase from 2016, according to CB Insights. Global giants are taking notice, with both Facebook and Google opening new AI research centers in Paris. Google has even announced plans to create local “hubs” to teach digital skills in other French cities, such as Rennes, with the goal of getting more people online (and using Google products).

The private and nonprofit sectors are pitching in too. Since June 2017, Paris has hosted the 366,000-square-foot Station F, the world’s largest startup incubator, backed by French billionaire Xavier Niel and Iranian-American executive Roxanne Varza. In October 2018, nonprofit StartHer hosted Europe’s biggest startup competition in Paris explicitly catering to female founders, with a record 363 applications from 30 countries. And this March, the French government further expanded access to its tech visa, from around 100 qualifying startups to more than 10,000.

“It makes perfect sense that people who are thinking entrepreneurially would want to blaze a different path” given the high rent, cost of living and income disparities emerging in the Bay Area, says Andrew Russell, dean of the College of Arts & Sciences at SUNY Polytechnic Institute. Cities like Paris see “an opportunity to capture some of the energy” of Silicon Valley “without falling into some of the excesses and toxicity,” Russell adds.

Admittedly, the European market does not hold the same kind of stratospheric (and, to this point, largely unrealized) potential of Asia. But the new buzz around France’s startup scene simply didn’t exist just a few years ago. Hindi remembers the policies of François Hollande being “anti-startup” when the former French president first took over in 2012. But a rising backlash driven by business leaders led to significant change, says Hindi, a former member of the French Digital Council advising on AI and privacy issues.

Before, if your company went bankrupt, you were banned from starting another one for nine years, making students from French business and tech schools risk-averse. That policy has since been scrapped. Tax credits for hiring people were created, and up to 30 percent of a startup’s technology and salary expenses are reimbursed by the French government, allowing French companies to operate at a fraction of the cost of their foreign competitors. Then there’s the tech visa and its expansion.

Those incentives are sorely needed, considering the obstacles France does have. While the country has enough angel investors — and a de facto investor with the government — there isn’t much of an exit market. Unlike American companies, European companies have a tradition of more of a revenue-profit mindset and less of a willingness to take on the (substantial) risk of acquiring a mid-tier player and turning it into a massive, industry-defining giant, Hindi says. They also prefer to invest in goods and services over potentially groundbreaking technology that needs a few years to develop before producing, he adds. The even bigger challenge? The language, which is why London has typically reigned supreme in the European market.

Some of those issues are more perception than reality, say entrepreneurs and tech workers in France. Snips engineer Allen Welkie — who moved to Paris after working at startups along the East Coast of the United States — says many French-based companies are bilingual and that the visa process was simple. A better work-life balance than in the U.S. helps boost retention too, Hindi says. “In Silicon Valley, everybody is fighting for the same few talented people. … If you’re lucky, they’re going to stay a couple of years. How can you build a company if people are constantly leaving?” As San Francisco becomes more and more untenable for everyone but the highest earners, it’s worth asking whether you can build a city that way either.

Engineer to Entrepreneur

For the last few years, I have been invited to speak with graduating classes of university engineering students. I call my lecture “Engineer to Entrepreneur.”  From my background in teaching management and entrepreneurial mentorship, I focus on the unique challenges engineers face in entering the business world, particularly those who may consider starting their own new business. I discuss a full range of issues, but my personal emphasis from my experience is the “character” issue.  Some excellent engineers have successfully made the transition to entrepreneurship and executive management, but for others, the Odyssey is a bridge too far. Engineers must learn to think differently than when they are solving an engineering problem.  Consequently, I place significant emphasis on honest self-analysis and appreciation of one’s strengths and weaknesses.  Listening is a priceless skill. If you have experienced Google’s Larry Page in public, he is an excellent example of an engineer who has very successfully transitioned into a senior management role. Sergei Brin, on the other hand, opted for a CTO-like role, which I think was the right choice for him. That is the point of my lecture. I hope that many who view my YouTube Channel will find it helpful. You can find the complete lecture on my website.

Remember that my website, mayo615.com has over 400 posts on a wide range of management and technology topics.

Help Us Return Home to France to Mentor Entrepreneurs: Fundrazr Campaign 🇫🇷

In less than 24 hours since our campaign launch, we are nearing 10% of our goal

 

Link to our FundRazr Campaign: Please Help Us Return to Home to France to Mentor Entrepreneurs/Startups

I am a native-born Californian with French family heritage and a French wife. We are both French citizens preparing to return to France. My university background is in the Humanities and Social Sciences, with a year of graduate study at Oxford University, researching in the Bodleian Library. When I returned to northern California, I eventually landed an entry-level job at Intel Corporation, which proved to be the crucible for my entire career. I eventually rose to be a senior executive in international business development with Intel. I have continued in international business for all of my career, working for a number of tech startups and venture capital investment firms over the years. I have led two tech industry consortia to develop global industry standards. I have been the director of a tech entrepreneurial incubator in Silicon Valley for the government of New Zealand and collaborated on mentoring promising entrepreneurs in locations here and around the world. I was an Adjunct Professor of Management at the University of British Columbia for four years.

I want to return to France to give back my experience, skills, and technical knowledge to the country of my heritage. France’s industrial economy is in the doldrums, but new policies are stimulating innovation, the key to economic growth and productivity, and technology industry leaders in France with strong technology industry backgrounds are looking to contribute to this new economy in France. I want to join them and give back.

I am now semi-retired, but very eager to return permanently to France to donate my technology industry experience and knowledge to assist French entrepreneurs to transform France into an innovation-based economy.

FundRazr Campaign Story:

We are David Mayes and Isabelle Roux-Mayes, a married couple, who are also French citizens. I am also a native Californian who has spent my career working for a number of Silicon Valley companies and investment firms, beginning with Intel Corporation. I am now semi-retired, but very eager to return permanently to France to donate my technology industry experience and knowledge to assist French entrepreneurs to transform France into an innovation-based economy. I am focusing specifically on building working relationships with three major new initiatives that could benefit from my background and achievements:    The Camp in Aix-en-Provence, launched last year, Startup Garage, Paris, and 1kubator in Bourdeaux.

I am more than happy to share my achievements and references to validate my credentials and verify my ability to make a serious contribution. You can start here with my LinkedIn profile and references David Mayes on LinkedIn.  You may also contact me here or on FundRazr where we can discuss my crowdfunding project.

Connect… Then Lead: HBS Professor John Kotter

One of my most popular posts from July 8, 2013

Harvard Business School Professor John P. Kotter

Years ago I was invited to join a newly forming Intel marketing group comprised primarily of Ivy League MBA‘s, with a few of us Intel veterans thrown into the mix to create some cross-fertilization in the group. This was the famous period of Harvard MBA’s belief that they were all marketing gods, and needed only to be ruthless: greed was good. One of my Harvard educated Intel colleagues related a story of HBS students playing an allegedly “friendly” game of football on the green next to the Charles River. One player suffered a compound fracture of his leg.  While waiting for an ambulance, a member of the other team came up and demanded to know when the game would resume.  Everything was about competition and one-upmanship. To this day I remember fondly (believe it or not) that this was also the mantra of our Intel group.  Who got the girl on Friday night: who got stuck with the bar tab. There was a big scoreboard in the sky tabulating the imaginary results.  Perhaps against the odds, our group survived and succeeded famously.  Many of us are still very close personal friends. One is the godfather of my son.

Ray Rund, one of my Intel colleagues, and Harvard MBA told me another story of HBS students eager to take John Kotter‘s leadership class, at the time called “Power & Influence.”  They all thought that Kotter’s course would teach them how to become the meanest “sons-of-bitches in the valley.”  Ray amusingly remembered that Kotter’s course taught them the exact opposite: managers must first learn to be humble, connect and gain the respect of their subordinates, before attempting to lead, or they would be doomed.  The book version of Kotter’s course is now 30 years old, but is still as relevant as ever. It is filled with case studies of “hard asses”  who failed miserably.

I have often explained Kotter’s point to others by using the example of an old WWII film clip of Lord Louis Mountbatten, leading the beleaguered British commandos in Burma against overwhelming Japanese forces.  Mountbatten was standing on a pedestal in some godforsaken Burmese village, with his troops standing at attention in rank. The first thing Mountbatten did was to beckon his troops to break rank and come up near him.  The old film clip speaks volumes about Mountbatten’s intuitive understanding of leadership.

Specialists in organizational behavior probably like to debate these points, pointing out the Peter Drucker “high task, low relationship” approach to change management. Basically, like the George S. Patton “school of management” in the film, kick ass and take names until the organization submitted to his will.  As the film shows, this approach has its drawbacks.

Ironically, I had learned Kotter’s lesson in leadership in my first assignment at Intel, managing 250 people running a semiconductor manufacturing operation.  On my first day, my manager introduced me to my people, half-jokingly saying to them, “Let’s see how long it takes you to break your new supervisor!”  Clearly, I needed to get with their program.  Just for the record, my manager, Dean Persona and I became fast friends. My employees had the knowledge of how to get the job done, and I did not. It is a valuable lesson I have never forgotten. I managed to get the respect of my people by respecting them. When an extra effort was required, I could ask for that extra effort, and it was given willingly.  Others failed miserably in their jobs while I rapidly rose to bigger and better things.

When I noticed this HBR blog post on leadership, titled “Connect…Then Lead,” I thought of Kotter, who is still teaching at Harvard.  I also see another potential case study of failure developing now.  For all of the good intentions of this manager, he is failing to understand Kotter’s lesson about leadership. This manager professes openness. This manager made a point to take a very modest office and leave his door open. But despite these superficial moves,  in reality, the substance of his management style is that of an austere, autocratic manager who isolates himself behind a wall of handlers who manage access to him, even reading all of his emails, which is offensive to many.  It takes weeks to schedule a simple meeting with this manager if you can successfully maneuver the gauntlet of handlers. Then the meeting will typically start late, only to be ended by another handler interrupting the meeting, tapping on their watch, to extract the manager early from the meeting, because he is so “busy” he must move on. He demands that his schedule is cleared for his own priorities.

The rudeness and distant behavior of this manager is obviously having a serious impact on the manager’s effectiveness with his people, but the manager seems more interested in his own matters. It has been noted by some that it is not uncommon for autocrats to view themselves as being open and welcoming toward their people when in reality the manager’s true behavior exhibits an extreme distance, lack of sensitivity, and the subordinates are intimidated by his overbearing personal style. This is all laid out in Kotter’s books and in the following HBR Blog article.  History seems to repeat itself.

Andrew Carnegie, a scion of the Gilded Age of Monopolists at the turn of the 20th Century, is noted for this quote about the importance of his employees…

“Take away my factories, my plants, take away my railroads, my ships, my transportation; take away my money, strip me of all these, but leave me my men and in two or three years, I will have them all again.”  Despite Carnegie’s megalomaniacal tendencies, he nevertheless seemed to understand the importance of having a strong bond with his people.

Connect, Then Lead

Reblogged from the HRB Blog

by Amy J.C. Cuddy, Matthew Kohut, and John Neffinge

Read More: Connect, Then Lead, HBR Blog

 Is it better to be loved or feared?

Niccolò Machiavelli pondered that timeless conundrum 500 years ago and hedged his bets. “It may be answered that one should wish to be both,” he acknowledged, “but because it is difficult to unite them in one person, it is much safer to be feared than loved.”

Now behavioral science is weighing in with research showing that Machiavelli had it partly right: When we judge others—especially our leaders—we look first at two characteristics: how lovable they are (their warmth, communion, or trustworthiness) and how fearsome they are (their strength, agency, or competence). Although there is some disagreement about the proper labels for the traits, researchers agree that they are the two primary dimensions of social judgment.

Why are these traits so important? Because they answer two critical questions: “What are this person’s intentions toward me?” and “Is he or she capable of acting on those intentions?” Together, these assessments underlie our emotional and behavioral reactions to other people, groups, and even brands and companies. Research by one of us, Amy Cuddy, and colleagues Susan Fiske, of Princeton, and Peter Glick, of Lawrence University, shows that people judged to be competent but lacking in warmth often elicit envy in others, an emotion involving both respect and resentment that cuts both ways. When we respect someone, we want to cooperate or affiliate ourselves with him or her, but resentment can make that person vulnerable to harsh reprisal (think of disgraced Tyco CEO Dennis Kozlowski, whose extravagance made him an unsympathetic public figure). On the other hand, people judged as warm but incompetent tend to elicit pity, which also involves a mix of emotions: Compassion moves us to help those we pity, but our lack of respect leads us ultimately to neglect them (think of workers who become marginalized as they near retirement or of an employee with outmoded skills in a rapidly evolving industry).

To be sure, we notice plenty of other traits in people, but they’re nowhere near as influential as warmth and strength. Indeed, insights from the field of psychology show that these two dimensions account for more than 90% of the variance in our positive or negative impressions we form of the people around us.

So which is better, being lovable or being strong? Most leaders today tend to emphasize their strength, competence, and credentials in the workplace, but that is exactly the wrong approach. Leaders who project strength before establishing trust run the risk of eliciting fear, and along with it a host of dysfunctional behaviors. Fear can undermine cognitive potential, creativity, and problem solving, and cause employees to get stuck and even disengage. It’s a “hot” emotion, with long-lasting effects. It burns into our memory in a way that cooler emotions don’t. Research by Jack Zenger and Joseph Folkman drives this point home: In a study of 51,836 leaders, only 27 of them were rated in the bottom quartile in terms of likability and in the top quartile in terms of overall leadership effectiveness—in other words, the chances that a manager who is strongly disliked will be considered a good leader are only about one in 2,000.

A growing body of research suggests that the way to influence—and to lead—is to begin with warmth. Warmth is the conduit of influence: It facilitates trust and the communication and absorption of ideas. Even a few small nonverbal signals—a nod, a smile, an open gesture—can show people that you’re pleased to be in their company and attentive to their concerns. Prioritizing warmth helps you connect immediately with those around you, demonstrating that you hear them, understand them, and can be trusted by them.

When Strength Comes FirstMost of us work hard to demonstrate our competence. We want to see ourselves as strong—and want others to see us the same way. We focus on warding off challenges to our strength and providing abundant evidence of competence. We feel compelled to demonstrate that we’re up to the job, by striving to present the most innovative ideas in meetings, being the first to tackle a challenge, and working the longest hours. We’re sure of our own intentions and thus don’t feel the need to prove that we’re trustworthy—despite the fact that evidence of trustworthiness is the first thing we look for in others.

Amy J.C. Cuddy is an associate professor of business administration at Harvard Business School. Matthew Kohut and John Neffinger are the authors of Compelling People: The Hidden Qualities That Make Us Influential (Hudson Street Press, August 2013) and principals at KNP Communications.

Uber And The False Hopes Of A Sharing Economy

Regulating Ride-Sharing: New York May Be The Model For The Future

Writing On The Wall: London and Vancouver Moving In A Similar Direction

At its inception, Uber touted itself as a shining example of the “sharing economy” described by Jeremy Rifkin, in this now famous book, The Third Industrial Revolution. As time has passed the reality has been radically at odds with a sharing economy.  Among the many issues that have emerged has been the legacy of Uber’s ugly corporate culture, secret apps used to confound regulators, and to intimidate journalists, a Justice Department investigation of illegal practices, including 200 Uber employees conspiring together to attack Lyft’s operations. The proverbial chickens have come home to roost, as municipalities around the world have begun to regain control of transportation policy within their jurisdictions, and the inflated valuations of these unicorns begin to deflate.

READ MORE:

READ MORE: Wharton Newsletter: Regulating Ride-Sharing: New York May Be The Model For The Future

From the Wharton Newsletter/Podcast, August 14, 2018

The largest market for Uber, Lyft and other ride-hailing app companies — New York City — last week had its first successful attempt at regulating the growth of the nascent industry. On Wednesday, the New York City Council passed a series of bills, notably one that places a one-year moratorium on the issue of new for-hire vehicle (FHV) licenses. Other bills establish minimum wage levels for ride-hailing service drivers; require FHVs to submit data on ridership with penalties for failure to do so; and create driver-assistance centers to provide counseling services.

New York City had little option to act, especially after a similar move by Mayor Bill de Blasio fell apart following intense lobbying by Uber. Increasing road congestion by cars was the biggest contributing factor to the passage of the bill capping new licenses, corroborated by a decline in subway ridership. The number of FHVs in the city had grown from 65,000 in 2015 to about 130,000 currently. Uber is the biggest gainer, as shown by its almost hockey-stick growth in ridership.

New York City took the right steps to regulate the FHV industry, according to Wharton professor of operations, information and decisions Senthil Veeraraghavan. “This is the right way to go,” he said. “This is a great experiment that we’re [witnessing].”

“They had to do something,” noted Wharton management professor John R. Kimberly. “This is part of an obviously much deeper story … and the timing seems to be right.”

The move to ensure that drivers receive a minimum pay of $15 an hour after they cover expenses is also significant, said James Parrott, director of economic and fiscal policies at the New School’s Center for New York City Affairs. He had worked on an extensive study for the city’s Taxi and Limousine Commission that looked at the ride-hailing sector and its growth, and in particular its impact on driver earnings.

Kimberly, Veeraraghavan and Parrott discussed the implications of the legislative actions governing New York City’s for-hire vehicle industry on the Knowledge@Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)

“This is the right way to go. This is a great experiment that we’re [witnessing].”–Senthil Veeraraghavan

Incentive to Improve

The establishment of a minimum pay for drivers is an important incentive for ride-hailing app companies to increase the utilization of drivers’ time, said Parrott. Drivers currently have a passenger in the car for only about 36 minutes of every hour, which means they don’t have a paying passenger for 42% of their time, he added.

Up to now, Uber’s business model has been “to flood the streets with cars,” since the firm gets a commission based on every fare, Parrott said. “There’s been no incentive for them to better utilize the drivers’ capital,” he added. “Keep in mind; this is an industry where the capital investment in the rolling stock – the cars – is entirely put up by the drivers. The pay standard gives them an incentive by allowing them to pay a little bit less if they make better utilization of the drivers’ time.”

The city will use the year ahead to study congestion levels in the city and find ways to redress that, including through congestion pricing mechanisms. Last week’s actions took a step in that direction with a surcharge on cabs below 96^th Street ($2 per ride for medallion trips and $2.75 for ride-hailing app cabs). It will also allow the city to monitor how the pay standard works out, and how the ride-hailing app companies make better utilization of drivers’ time, Parrott said.

“Even if you increase utilization by 10 percentage points – from 58% to 68% – you would only increase average wait times across the city about 20 to 30 seconds,” said Parrott, citing his study’s findings. “We sense that most people can live with that.”

According to Parrott, the number of Uber trips in the city increased 100% in 2016 and 70% in 2017. Going forward, he said that figure could probably grow another 40% over the next year, “even without any additional cars on the street – just from increased efficiency.” Those increased efficiencies could come from a variety of quarters, including urging part-time drivers to go full-time and recruiting some of the drivers from the non-app services, such as the traditional livery car segment that has no minimum pay standards.

“Uber and the drivers are on both sides of the story,” noted Veeraraghavan. Riders want low waiting times, which can be achieved with more vehicles. But drivers want fewer drivers, because that would allow them to get better pricing, he said.

“Granted it might have been done a lot sooner, but it seems to me that at least in the city of New York there’s a real, serious effort to get their arms around the problem.”–John Kimberly

Worsening Congestion

Parrott said New York City had first started talking about capping Uber and Lyft cars in 2015, drawing “heavy pushback” from the ride-hailing industry at that point. Between then and now, the number of trips using ride-hailing apps has skyrocketed to 600,000 a day, which is more than five times the level in 2015, he noted. A 2016 study by the mayor’s office proposed several remedial measures including those to reduce congestion, improve air quality, protect drivers’ interests and enhance passenger experiences.

Parrott said that while the city bears some responsibility for not acting sooner on the unbridled growth of the FHV industry, it faced a different climate when it attempted that in mid-2015. Uber at the time controlled 90% of the market in the city as opposed to 66% now, he pointed out. Suicides by six cab driversalso highlighted the “economic crisis” and changed public opinion in favor of the changes, he said.

“Theoretically speaking, there’s always a gap between what firms will want to optimize and what society wants to optimize,” said Veeraraghavan. “And it’s hard for individuals to see what’s optimal for this society.” However, as city residents have begun seeing the impact of the FHV industry’s growth — including on public transportation ridership numbers — they now have had a better understanding. “So we have a redo from 2015 to 2017 … and we’re seeing better support for this.”

“Granted, it might have been done a lot sooner, but it seems to me that at least in the city of New York there’s a real, serious effort to get their arms around the problem and to figure out how to solve it,” said Kimberly.

Congestion in New York City has worsened in recent years with not just the influx of cabs, but also other vehicles “providing instant service for a variety of needs that people believe they have,” including delivery vehicles, said Kimberly. “The density of tourists on the sidewalks is so great it spills over into the street – that slows down traffic and makes it hard for cars,” he added. The option of levying congestion pricing is being seriously considered also at the state headquarters in Albany, he noted.

At the same time, “the growth of FHVs has meant that there’s much better transportation access in the outer boroughs, so the city doesn’t want to diminish that newly available service,” said Kimberly. “And yet the city also has a great interest in making sure that the drivers are able to remain economically viable to meet their expenses and to earn a decent living.” Higher wages would also enable drivers to work fewer than the 10-12 hours a day they now put in, he added, and that would have safety benefits as well.

“If they can show that they have stability and regulatory certainty in their largest market in the U.S., that will give investors a lot more certainty….”–James Parrott

Congestion pricing will also help fund investments in maintaining and upgrading the city’s aging subway and public bus system, Parrott said. The decline in mass transit ridership is not just because of the growth of the FHV industry, he noted; commuters are turning away because of “under-investment and under attention to adequately maintaining the mass transit system.”

Uber’s Leadership Challenge

The changes also highlight a “leadership challenge” for Uber, said Kimberly. “They have hundreds of markets around the globe, and each market has its own political configuration, and its own way of doing business,” he noted. “When you think about the challenges of operating an enterprise like Uber on a global basis with all the local idiosyncrasies that need to be taken into account both economically and politically, it’s a really interesting [problem].”

Uber, which is currently valued at about $62 billion, is said to be preparing for an initial public offering of its stock next year. “If they can show that they have stability and regulatory certainty in their largest market in the U.S., that will give investors a lot more certainty about the potential prospects for the company,” said Parrott.

Uber’s impact on employment is also large, Parrott noted. Uber drivers are not legally considered employees, but if they were to be treated as full-time equivalent (FTE) employees, Uber would be the largest private-sector employer in New York City, with about 35,000 FTEs, he said. “[Ride sharing] has become a huge enterprise in New York City, and it and it’s not what people usually think of as gig work where you are doing this to supplement other income. We found that 80% of the drivers bought their cars mainly for the purpose of providing transportation services, and two thirds of the drivers are full-time drivers.”

Parrott noted that both Uber and Lyft embraced the pay standard proposal. But Kimberly thought they had little option in the matter. “I don’t think it’s by accident that they’re embracing the pay standard,” he said. “Left to their own devices, they probably would not have done that. But there’s been so much social criticism – and valid criticism – of their models that they’ve really had no choice.”

“Specsmanship”: Missing the Point of a “Complete Product”

The Definition of “Specsmanship”

Wikipedia defines Specsmanship as the inappropriate use of specifications or measurement results to establish the putative superiority of one entity over another, generally when no such superiority exists. It is commonly found in high fidelity audio equipment, automobiles and other apparatus where uneducated users identify some numerical value upon which to base their pride or derision, whether or not it is relevant to the actual use of the device. Smartphones and the early microprocessor market are also examples.

Two Specsmanship Case Studies

Most recently, we are seeing specsmanship in the smartphone market.  As the smartphone market has matured into 7th, 8th, 9th generations of smartphones, the differentiation among products has been reduced to smaller and smaller differences in the products : resolution of the camera, display size or alleged brightness, etc.. In earlier generations, Apple, and the Android phone manufacturers created a highly effective intangible market need to possess their latest generation phone in which features were less important. I called this market need the smartphone “Star Wars” phenomenon causing people to line up around the block as if to see the latest Star Wars film.  Most market analysts now agree that the smartphone market frenzy has run its course. Apple’s strategy to reinvigorate the market by creating a higher price point product has predictably fallen flat. Apple’s move surprised me because the marketers at Apple seemed to miss the consumer market sentiment. Water resistance in my view was the last major device feature with a market need to protect phones from the dreaded “toilet drop.” Samsung introduced water resistance in the 5th generation Galaxy, and permanently in the Galaxy 7. I have not been motivated to buy a new phone since the Galaxy 7.

In another, more dramatic and pivotal example, my first personal experience of the specsmanship phenomenon was at Intel, during the original first generation microprocessor war: the Intel 8086 versus the Motorola 68000. Without diving too deeply into the technical specifications, the Intel 8086 on its face was technically inferior to the Motorola 68000 at a critical time when microprocessors were very new, customers had doubts, and the market was just beginning to establish a foothold in electronics design. Facing this marketing challenge, Intel’s Vice President of Marketing at that time, Bill Davidow, made a momentous decision to “differentiate” Intel and the 8086 not its specifications, but on Intel’s long-term vision for its microprocessor family of products and to focus its marketing efforts on senior management executives of its customers, not the engineers.  Davidow famously delivered a presentation to the Intel sales force, “How To Sell A Dog.” The message was to ignore the spec and concentrate on the customers higher level needs, and the security of an investment in Intel with its long-term vision to provide them with greater value and competitive advantage.

Motorola fatefully decided to concentrate its marketing strategy entirely on the superior technical specifications of the 68000, poignantly winning a small skirmish but losing the war. Intel dominates the general purpose microprocessor market to this day. The Intel versus Motorola story is definitively detailed in Bill Davidow’s now famous book, Marketing High Technology: An Insider’s View. Davidow’s book also includes numerous gems of insight into marketing. Bill’s thoughts on the barriers to a new entrant into an existing market have stuck with me over the years.

If the smartphone market is ever to revive, it needs to learn from Davidow’s lesson, ignore the specs, and concentrate on creating a higher level marketing message that meets deep customer needs.

 

Bill Davidow, former Intel Marketing Vice President

 

 

HBS Professor Ted Levitt’s Total Product Concept And Its Influence On Davidow

Though I have met with Bill Davidow many times, spent time with him, and invited him to speak with executives of an emerging technology company, I have never directly asked him about the degree to which Harvard Professor Ted Levitt’s concept of a Total Product influenced him. It does seem highly likely that it is the case.  By way of example, marketers often refer to “product differentiation.” Specsmanship is the lowest possible form of product differentiation. Creating a higher level of product value is the true essence of product differentiation. This is also the essence of Levitt’s now legendary Total Product. What is different in the Intel case is my memory of how Levitt’s Total Product model, was adapted at Intel. I will explain.

Harvard Business School Professor Ted Levitt

 

READ MORE: Levitt HBR: Marketing Success Through Differentiation of Anything

Levitt’s classic Total Product model is graphically displayed here:

In my personal view and recollection which I show here, I believe Davidow focused on the “Augmented Product,” “Expected Product” and the “Potential Product,” and avoided the “Generic Product” to win the specsmanship war with Motorola. I also distinctly remember a slightly different Intel model which is shown below.

The Intel Variation On The Ted Levitt Total Product Model

It is my recollection that we at Intel, and most likely Bill Davidow in particular, adapted the Ted Levitt model to Intel’s particular new market realities, and focused on the outer circle, “Corporate Vision” and “Product Roadmap” to win the microprocessor war. The “Engineering Deliverable” is not a product. It is only a naked engineering project deliverable. Specsmanship does not make it a product. The “Corporate Vision” and “Product Roadmap” offer greater long-term value to customers, and ultimately create a powerful brand image.