Trump’s Policies Are Already Sending Entrepreneurs to Canada and France

Canadian and French Policies to Attract Entrepreneurs and Researchers Impacting Silicon Valley

Last week, the U.S. Department of Homeland Security delayed the International Entrepreneur Rule to next March, and it is currently accepting comments on plans to rescind it altogether. The agency cited logistical challenges in vetting these new visas. The International Entrepreneur Rule was designed by the Obama Administration to support Silicon Valley and the high tech industry’s need for immigrant entrepreneurs and engineers. Immigrant entrepreneurs in the U.S. account for 44% of all startups.   The news has prompted a backlash from immigrant entrepreneurs like PayPal cofounder Max Levchin and leadership at the National Venture Capital Association, who argue that rolling back the rule will drive would-be job creators to other, more welcoming nations. This is already happening.

Canada’s Global Talent Stream Visa Program For Immigrant Entrepreneurs Targets U.S. Immigration Policy

To Silicon Valley observers, Canada has always seemed incapable of igniting a technology-driven economy, despite years of the government support for telecommunications, and a byzantine maze of government grant programs for research and development. Canada has remained a laggard in R&D investment compared to other OECD industrialized nations. Venture capital and government tax policy in Canada seemed to have a focus on short-term tax deductions rather than long-term gains as in California.  Then there was the demise of Nortel and the decline of Blackberry. There may be a new opportunity to bootstrap Canada into the high-tech industry big league: Trump Administration immigration policies that are already impacting Silicon Valley.  Not long after Justin Trudeau’s Liberals came to power in 2015, Trudeau sensed the opportunity to exploit Trump’s anti-immigration stances and the Liberal government swung into action to create the Global Talent Stream visa program specifically designed for rapid immigration for entire entrepreneurial teams. Since that time Trump has fulfilled his promises by slashing the H1-B visa program and announcing the end of the Obama Administration’s Startup Visa Program. Immigrant enrollments at U.S. universities is already down over 40%. Startup Genome, the acknowledged global leader in entrepreneurial ecosystems rankings, currently ranks Vancouver and Toronto 15th and 16th globally in its 2017 study, but those in the know acknowledge that Canada still lacks crucial technology ecosystem capabilities.  Nevertheless, Canada may be on the verge of a technology tidal wave.

Source: Trump’s Policies Are Already Sending Jobs to Canada | WIRED 

Source: Macron Inspires Entrepreneurs to come to France – Financial Times

Source: Trump Administration to end Startup Visa Program – Government Tech

Macron Determined To Make France “A Startup Nation” With Major Technology Initiatives

In 2015, long before Emmanuel Macron’s launched his campaign for the Presidency of France, as a minister in the Hollande government, Macron launched a significant new technology initiative, The Camp, on a seventeen-hectare campus just outside Aix-en-Provence, designed to inspire new thinking on crucial technology issues, and to incubate new entrepreneurial companies. The Camp will open officially this Autumn.  Now that Macron has swept the country in a stunning Presidential victory, it is clear that technology and entrepreneurship are crucial elements of his vision for France, backing it up with a 10B € technology-based economic development fund. The South of France generally, the Cote d’Azur and Provence are emerging as France’s technology center.  France’s nuclear research facility, Cadarache, just northeast of Aix-en-Provence, is the equivalent of California’s Lawrence Livermore Labs, and the home of ITER, the European nuclear fusion project. Prior to Macron’s 2015 launch of The Camp, the government had already established the Sophia Antipolis technology park near Nice, as a center for advanced telecommunications research and entrepreneurial start-ups.

The Camp, Aix-en-Provence

As if to underscore France’s rise on the global stage, France has recently leapfrogged the U.S. and Great Britain as the world’s new leader in “soft power,”  the ability to harness international alliances and shape the preferences of others through a country’s appeal and attraction.

 

 

Uber is Enron Deja Vu: Culture Trumps Strategy

A Silicon Valley Tragedy

Remember Enron’s “Smartest Guys in the Room?”

An early photo of Uber’s management team

Why did Uber spin so wildly out of control?

For over a  year now I have blogged here about the red flags flying about Travis Kalanick and Uber. Many investigative articles have been published over this time, in the New York Times and other publications, which have raised disturbing questions about Uber, Kalanick and some members of his team. The Board of Directors has finally taken action but it feels like its a day late and a dollar short.  Why did it take so long?  I have bluntly used the epithet that “Uber is Trump,” but now on reflection, it is more apt to describe Uber as Enron the sequel, and “deja vu all over again.” Remember the audio of two Enron electricity traders laughing about “screwing grandma?” That is Uber.

Culture Trumps Strategy

So as the current management adage says, culture trumps strategy.  This is not simply about the bad behavior of a few individuals and that eliminating them will solve Uber’s problems. The aggressive, confrontational business strategy is itself an integral and inextricable part of the problem. Some have said that Uber has a good business model and deserves to succeed.  I dispute that.  Jeremy Rifkin’s Third Industrial Revolution describes his vision for a new sharing economy.  The book has been read by world leaders and praised for its insights into a bright new evolving economy.  Uber and other companies like it have morphed the sharing economy into something ugly.

Uber morphed the sharing economy into “the gig economy,” epitomized by jobs without security or benefits, and the now viral video of Kalanick berating an Uber driver who was going bankrupt. SFGate also exposed the Uber operating strategy of psychologically manipulating drivers to work more hours than intended. The central principle of Kalanick’s business strategy is what he euphemistically describes as “principled confrontation.” Uber enters a market without following any existing rules or regulations, simultaneously entering into negotiations with municipalities which are typified by stalling tactics from Uber, and no intention to conclude an agreement. Uber’s goal is to take over the market by force, making any agreements with municipalities unnecessary. While pursuing its strong-arm goal, Uber has used a software tool, Greyball, to evade law enforcement. Uber is now under criminal investigation for the use of Greyball. Even the notion that Uber somehow improves traffic congestion has been debunked by a Northwestern University study commissioned by the San Francisco Transportation Authority which found that ride sharing has a heavy negative impact on San Francisco’s traffic congestion. See www.sfcta.org/TNCsToday

Uber is also facing a major lawsuit from Google for expropriating Google driverless car technology by hiring one of Google’s engineers. Uber has now fired the engineer in question, but the firing itself may be a circumstantial admission that its intent was to steal Google IP.  In another case, nearly 200 Uber employees were encouraged to use fake ID, burner phones and credit cards to sabotage Lyft, by booking and then quickly canceling more than 5000 rides with Lyft. Then there is the matter of what can now only be described as pervasive sexual harassment within Uber. Adding to all of these issues, local communities have begun to resist Uber much more aggressively. In one example, a protest movement in Oakland is opposing Uber’s plan to open offices in Oakland. There are other examples dotted around the World. Finally, there is the unresolved matter of the status of Uber’s drivers as “independent contractors or employees” which is nearing a final decision in California state and federal courts.

Clearly, Uber’s business strategy is driven by its ugly corporate culture. Stepping back to consider the complete picture, Uber’s business strategy looks to me like a house of cards.

Uber’s Leadership Conundrum

Those who know me and my blogs here know that I am a student of Harvard Business School professor John Kotter and his philosophy of leadership with humility at its core.  Uber presents a leadership conundrum for me. I was interested to hear BackChannel journalist Jessi Hempel express the same point tonight on PBS Newshour.  Uber obviously urgently needs to change its culture, yet without the wild aggressive culture defined by Kalanick, the question remains whether Uber can survive? It is not clear to me that humility could turn the Uber cultural battleship. There have also been a number of business articles suggesting that changing a corporate culture is far more challenging than changing a corporate strategy. So I am left to ponder Peter Drucker’s Four Quadrants of Managerial Behavior, and Quadrant Four’s “high task, low relationship” model for Uber. I learned this in Intel’s M Series management courses years ago. The course used the case study of the film “12 O’Clock High,” a demoralized B-17 bomber unit as its example. Gregory Peck arrives as the new unit commander and begins by “kicking ass and taking names.”  A similar case would be George Patton’s arrival in North Africa to take command of a demoralized tank unit.  My sense at the moment is the only best hope is that somehow an interim leader at Uber will have the latitude to take whatever actions he deems necessary to right the ship.  Such a solution seems doubtful at the moment.

Business Ethics Missing in Action

This morning on NPR’s Morning Edition, Nina Kim interviewed the Director of the Markulla Center for Applied Ethics at Santa Clara University, Kirk Hansen. The Center is named for early Intel and Apple executive, Mike Markkula. Mr. Hansen said that “Uber will undoubtedly become one of the most important business case studies” to emerge from Silicon Valley. Hansen went on to point out that founders of startups are often not capable of taking the company to a mature large company, and that it may be necessary to remove or reassign the founder. In the case of Uber, this is impossible because Kalanick and his founder group have the majority of shares.  This contrasts with most startups legal framework, where the investors or Board may hold the right to remove the founder in specific circumstances.

The Smartest Guys in the Room

As a grey-haired Silicon Valley alumni, I am personally offended and outraged by what has happened at Uber. I am deeply ashamed. Over the years I have worked for some well-known SV companies, startups, VC firms, and my own consultancy. I have personal knowledge of things that happened that were not kosher, and I have been present in situations where the ethics were not the best, but nothing in my Silicon Valley experience rises to the level of Uber. Something has gone wildly out of control since my time with how we conduct ourselves in business, and it is now tarnishing the history and reputation of fifty years of Silicon Valley achievements. From my own personal experience working at one wildly successful company years ago, and after rewatching the Enron documentary video,  “The Smartest Guys in the Room,” the answer is simple: too much money.

 

Source: Uber CEO Kalanick likely to take leave, SVP Michael out: source | Reuters

TECHNOLOGY NEWS | Mon Jun 12, 2017 | 4:22pm ED

By Heather Somerville and Joseph Menn | SAN FRANCISCO | Reuters

Uber Technologies Inc [UBER.UL] Chief Executive Travis Kalanick is likely to take a leave of absence from the troubled ride-hailing company, but no final decision has yet been made, according to a source familiar with the outcome of a Sunday board meeting.

Emil Michael, senior vice president, and a close Kalanick ally has left the company, the source said.

At the Sunday meeting, the company’s board adopted a series of recommendations from the law firm of former U.S Attorney General Eric Holder following a sprawling, multi-month investigation into Uber’s culture and practices, according to a board representative.

Uber will tell employees about the recommendations on Tuesday, said the representative, who declined to be identified.

The company is also adding a new independent director, Nestle executive, and Alibaba board member Wan Ling Martello, a company spokesman said.

Holder and his law firm were retained by Uber in February to investigate company practices after former Uber engineer Susan Fowler published a blog post detailing what she described as sexual harassment and a lack of a suitable response by senior managers.

The recommendations in Holder’s firm’s report place greater controls on spending, human resources and other areas where executives led by Kalanick have had a surprising amount of autonomy for a company with more than 12,000 employees, sources familiar with the matter said.

Kalanick and two allies on the board have voting control of the company. Kalanick’s forceful personality and enormous success with Uber to date, as well as his super-voting shares, have won him broad deference in the boardroom, according to the people familiar with the deliberations.

Uber CEO Travis Kalanick speaks to students during an interaction at the Indian Institute of Technology (IIT) campus in Mumbai, India, January 19, 2016. REUTERS/Danish Siddiqui/File photo

Any decision to take a leave of absence will ultimately be Kalanick’s, one source said.

The world’s most valuable venture-backed private company has found itself at a crossroads as its rough-and-tumble approach to local regulations and handling employees and drivers has led to a series of problems.

It is facing a criminal probe by the U.S. Department of Justice over its use of a software tool that helped its drivers evade local transportation regulators, sources have told Reuters.

Last week, Uber said it fired 20 staff after another law firm looked into 215 cases encompassing complaints of sexual harassment, discrimination, unprofessional behavior, bullying and other employee claims.

SILICON VALLEY SHOCK

Even a temporary departure by Kalanick would be a shock for the Silicon Valley startup world, where company founders in recent years have enjoyed more autonomy and often become synonymous with their firms.

Uber’s image, culture, and practices have been largely defined by Kalanick’s brash approach, company insiders and investors previously told Reuters.

Uber board member Arianna Huffington said in March that Kalanick needed to change his leadership style from that of a “scrappy entrepreneur” to be more like a “leader of a major global company.” The board has been looking for a chief operating officer to help Kalanick run the company since March.

The debate over Kalanick’s future comes as he is also facing a personal trauma: His mother died last month in a boating accident, in which his father was also badly injured.

Michael, described by employees as Kalanick’s closest deputy, has been a recurring flashpoint for controversy at the company.

He once discussed hiring private investigators to probe the personal lives of reporters writing stories faulting the company. Kalanick disavowed and publicly criticized the comments.

Michael will be replaced as the company’s top business development executive by David Richter, currently an Uber vice president, the company spokesman said.

Alongside Uber’s management crisis, its self-driving car program is in jeopardy after a lawsuit from Alphabet Inc alleging trade secrets theft, and the company has suffered an exodus of top executives.

One Uber investor called the board’s decisions on Sunday a step in the right direction, giving Uber an “opportunity to reboot.”

Jerks And The Start-ups They Ruin

Perhaps the premiere of Season 4 of “Silicon Valley” twigged me to share this post. but despite the title, the HBO series only connection may be the now viral “mean jerk time algorithm.”     The real “Silicon Valley jerk” has been around for decades, buried with all the other dirty laundry. Uber’s Travis Kalanick has only brought it front and center at this moment. It is something of a conundrum as some of the jerks are also the most successful. We all now know about the “bad” Steve Jobs. Oracle for years had a very bad reputation that came directly from Larry Ellison himself.  Microsoft was long known as a “sweatshop” with a highly negative culture led by Steve Ballmer. Even venture capitalists themselves have caught the disease as evidenced by Reid Hoffman and the late Tom Perkins of KPCB.  The best assessment I have heard is that these aggressive unrestrained corporate cultures destroy their own goals. Or better yet, the saying that “culture trumps strategy.”

 

Reblogged from the New York Times

SundayReview | OPINION

Jerks and the Start-Ups They Ruin

By DAN LYONS, APRIL 1, 2017

Credit: Tim Enthoven

The tech industry has a problem with “bro culture.” People have been complaining about it for years. Yet nobody has done much to fix it.

That may finally change if the people in charge of Silicon Valley — venture capitalists, who control the money — start to realize that the real problem with tech bros is not just that they’re boorish jerks. It’s that they’re boorish jerks who don’t know how to run companies.

Look at Uber, the ride-hailing start-up. It’s the biggest tech unicorn in the world, with a valuation of $69 billion. Not long ago Uber seemed invincible. Now it’s in free fall, and top executives have fled. The company’s woes spring entirely from its toxic bro culture, created by its chief executive, Travis Kalanick.

What is bro culture? Basically, a world that favors young men at the expense of everyone else. A “bro co.” has a “bro” C.E.O., or C.E.-Bro, usually a young man who has little work experience but is good-looking, cocky and slightly amoral — a hustler. Instead of being forced by investors to surround himself with seasoned executives, he is left to make decisions on his own.

The bro C.E.O. does what you’d expect an immature young man to do when you give him lots of money and surround him with fawning admirers — he creates a culture built on reckless spending and excessive partying, where bad behavior is not just tolerated but even encouraged. He creates the kind of company in which going to an escort bar with your colleagues, as Mr. Kalanick did in South Korea in 2014, according to recent reports, seems like a good idea. (The visit led, understandably, to a complaint to the personnel department.)

Bro cos. become corporate frat houses, where employees are chosen like pledges, based on “culture fit.” Women get hired, but they rarely get promoted and sometimes complain of being harassed. Minorities and older workers are excluded.

Bro culture also values speedy growth over sustainable profits, and encourages cutting corners, ignoring regulations and doing whatever it takes to win.

Sometimes it works. But often the whole thing just flames out. The bros blow through the money and find they have no viable business. For example, Quirky, founded in 2009 by the 20-something Ben Kaufman. It raised $185 million to build a “social product development platform” that sold kooky gadgets but filed for bankruptcy basically because the “brash” and “unorthodox” chief executive had no business being a chief executive. One indication that Mr. Kaufman is a bro? Well, the first reference he lists on his LinkedIn page is: “He’s a dick … but hilarious.”

Zenefits, a human-resources start-up, and another bro co., raised $583 million, at a peak valuation of $4.5 billion, then crashed after reports that it had used software to cheat on licensing courses for insurance brokers, and operated a hard-partying workplace where cups of beer and used condoms were left in stairwells. Zenefits limps on, but its C.E.-Bro co-founder has left the company, and nearly half the staff has been laid off.

Uber’s public downfall began in February, when Susan Fowler, a former engineer at the company, wrote about enduring sexual harassment and discrimination there. Other employees came forward with stories. One involved a manager groping employees’ breasts. Mr. Kalanick’s own bro-hood became part of the story when a video surfaced showing him berating a Uber driver who complained that Uber’s price cuts had driven him into bankruptcy. Mr. Kalanick said the driver needed to take responsibility for his own life.

As this was happening, Google’s self-driving car unit sued Uber, alleging it had stolen its ideas. Then word leaked that Uber had been using a sneaky software tool to deceive regulators in cities around the world. All this is as much a part of “bro culture” as the poor treatment of women; the point is to get away with as much as you can.

Hoping to right the ship, Uber appointed one of its board members, Arianna Huffington, to join former attorney general Eric Holder and others to investigate the sexual harassment claims. Mr. Kalanick has apologized and vowed to “grow up.” (He’s 40.) Most important, Uber has announced that it is planning to hire a chief operating officer, ideally a steady hand like Sheryl Sandberg, the chief operating officer of Facebook. It’s a great idea, but it should have happened years ago. Now it may be too late.

Ms. Huffington insists the board has full confidence in Mr. Kalanick. But should it? He’s a college dropout with a spotty track record and a reputation for pugnacity. His record at Uber includes racking up enormous losses — reportedly $5 billion over the last two years. Despite this, the bluest blue-chip investors (including Goldman Sachs and Morgan Stanley) have invested a total of $16 billion in Uber.

Bro C.E.O.s are better at raising money than making money. So why do venture capitalists keep investing in them? It may be because many of the venture capitalists are bros as well.

Venture capitalists used to be tech engineers who had made a bundle, retired early and took up investing in start-ups as a kind of white-shoe hobby. The new breed are competitive alpha males who previously might have gone to work as bond traders. At the same time, there are fewer women. In 1999, 10 percent of investing partners at venture capital companies were women. By 2014 the number had declined to 6 percent, according to the Diana Project at Babson College. This is probably one reason that, despite many studies showing that women run companies better than men, none of the 15 biggest American tech companies valued over $1 billion has a female chief executive.

Uber’s collapse should not come as a surprise but it does offer a lesson: Toxic workplace culture and rotten financial performance go hand-in-hand. It’s possible for a boorish jerk to run a successful company, but jerks do best when surrounded by non-jerks, and bros do best when they hire seasoned executives to help them. Without “adult supervision” and institutional restraints, the C.E.-Bro’s vices end up infecting the culture of the workplaces they control.

This poisonous state of affairs will get fixed only when investors start getting hurt. A crash at Uber, the most high-profile tech start-up in the world, could provide the jolt that finally brings the tech industry back to its senses.

Dan Lyons is the author of “Disrupted: My Misadventure in the Start-Up Bubble.”

Vancouver Technology Industry On Verge Of New Era

The Vancouver technology industry may well be on the verge of an extraordinary period of growth.  Global, national, and regional factors appear to be aligning in ways that could create an extraordinary economic opportunity for the Lower Mainland which could not have been anticipated.  Vancouver has been an endless topic of discussion about its comparability (or not) to Silicon Valley, the historical Canadian investment conservatism, and the lack of other resources necessary to create the “secret sauce” that makes a region achieve critical mass. That may be changing if only the convergence of factors is grasped and exploited.

In an expansion of regional cooperation, the University of British Columbia and the University of Washington today announced the establishment of the Cascadia Urban Analytics Cooperative.

Universities establish joint centre to use data for social good in Cascadia region

Media Release | February 23, 2017

University of Washington President Ana Mari Cauce, Microsoft President Brad Smith, and University of British Columbia President Santa J. Ono at the Emerging Cascadia Innovation Corridor Conference in Vancouver, B.C., September 20, 2016.

In an expansion of regional cooperation, the University of British Columbia and the University of Washington today announced the establishment of the Cascadia Urban Analytics Cooperative to use data to help cities and communities address challenges from traffic to homelessness. The largest industry-funded research partnership between UBC and the UW, the collaborative will bring faculty, students and community stakeholders together to solve problems, and is made possible thanks to a $1-million gift from Microsoft.

“Thanks to this generous gift from Microsoft, our two universities are poised to help transform the Cascadia region into a technological hub comparable to Silicon Valley and Boston,” said Professor Santa J. Ono, President of the University of British Columbia. “This new partnership transcends borders and strives to unleash our collective brain power, to bring about economic growth that enriches the lives of Canadians and Americans as well as urban communities throughout the world.”

“We have an unprecedented opportunity to use data to help our communities make decisions, and as a result improve people’s lives and well-being. That commitment to the public good is at the core of the mission of our two universities, and we’re grateful to Microsoft for making a community-minded contribution that will spark a range of collaborations,” said UW President Ana Mari Cauce.

Today’s announcement follows last September’s Emerging Cascadia Innovation Corridor Conference in Vancouver, B.C. The forum brought together regional leaders for the first time to identify concrete opportunities for partnerships in education, transportation, university research, human capital and other areas.

A Boston Consulting Group study unveiled at the conference showed the region between Seattle and Vancouver has “high potential to cultivate an innovation corridor” that competes on an international scale, but only if regional leaders work together. The study says that could be possible through sustained collaboration aided by an educated and skilled workforce, a vibrant network of research universities and a dynamic policy environment.

Microsoft President Brad Smith, who helped convene the conference, said, “We believe that joint research based on data science can help unlock new solutions for some of the most pressing issues in both Vancouver and Seattle. But our goal is bigger than this one-time gift. We hope this investment will serve as a catalyst for broader and more sustainable efforts between these two institutions.”

As part of the Emerging Cascadia conference, British Columbia Premier Christy Clark and Washington Governor Jay Inslee signed a formal agreement that committed the two governments to work closely together to “enhance meaningful and results-driven innovation and collaboration.”  The agreement outlined steps the two governments will take to collaborate in several key areas including research and education.

“Increasingly, tech is not just another standalone sector of the economy, but fully integrated into everything from transportation to social work,” said Premier Clark. “That’s why we’ve invested in B.C.’s thriving tech sector, but committed to working with our neighbours in Washington – and we’re already seeing the results.”

“This data-driven collaboration among some of our smartest and most creative thought-leaders will help us tackle a host of urgent issues,” Gov. Inslee said. “I’m encouraged to see our partnership with British Columbia spurring such interesting cross-border dialogue and excited to see what our students and researchers come up with.”

The Cascadia Urban Analytics Cooperative will revolve around four main programs:

• The Cascadia Data Science for Social Good (DSSG) Summer Program, which builds on the success of the DSSG program at the UW eScience Institute. The cooperative will coordinate a joint summer program for students across UW and UBC campuses where they work with faculty to create and incubate data-intensive research projects that have concrete benefits for urban communities. One past DSSG project analyzed data from Seattle’s regional transportation system – ORCA – to improve its effectiveness, particularly for low-income transit riders. Another project sought to improve food safety by text mining product reviews to identify unsafe products.

• Cascadia Data Science for Social Good Scholar Symposium, which will foster innovation and collaboration by bringing together scholars from UBC and the UW involved in projects utilizing technology to advance the social good. The first symposium will be hosted at UW in 2017.

• Sustained Research Partnerships designed to establish the Pacific Northwest as a centre of expertise and activity in urban analytics. The cooperative will support sustained research partnerships between UW and UBC researchers, providing technical expertise, stakeholder engagement and seed funding.

• Responsible Data Management Systems and Services to ensure data integrity, security and usability. The cooperative will develop new software, systems and services to facilitate data management and analysis, as well as ensure projects adhere to best practices in fairness, accountability and transparency.

At UW, the Cascadia Urban Analytics Collaborative will be overseen by Urbanalytics (urbanalytics.uw.edu), a new research unit in the Information School focused on responsible urban data science. The Collaborative builds on previous investments in data-intensive science through the UW eScience Institute (escience.washington.edu) and investments in urban scholarship through Urban@UW (urban.uw.edu), and also aligns with the UW’s Population Health Initiative (uw.edu/populationhealth) that is addressing the most persistent and emerging challenges in human health, environmental resiliency and social and economic equity. The gift counts toward the UW’s Be Boundless – For Washington, For the World campaign (uw.edu/boundless).

The Collaborative also aligns with the UBC Sustainability Initiative (sustain.ubc.ca) that fosters partnerships beyond traditional boundaries of disciplines, sectors and geographies to address critical issues of our time, as well as the UBC Data Science Institute (dsi.ubc.ca), which aims to advance data science research to address complex problems across domains, including health, science and arts.

Find other stories about: Cascadia Urban Analytics Cooperative, Emerging Cascadia Innovation Corridor Conference, Microsoft, University of British Columbia, University of Washington

Source: Universities establish joint centre to use data for social good in Cascadia region

The Okanagan Never Has Been, And Never Will Be, Silicon Valley: A Lesson From New Zealand

UPDATE: This post from February 21, 2016, is being republished in the light of the announcement that Club Penguin is closing its doors in March. No amount of PR spin, arm waving, or equivocation can make the bitter truth of this post go away.  I note that Lane Merrifeld and Accelerate Okanagan have been conspicuously silent.  Before that, it was Silicon Valley company Packeteer, that morphed into Vineyard Networks when Packeteer pulled the plug and was eventually “parked” with Procera in Silicon Valley, which benefited very few in the Okanagan.  There is a long legacy of this that need not continue.

Kelowna Innovation Centre

British Columbia and New Zealand share many economic similarities, except that New Zealand has way more sheep, is way better at rugby and has much better sailors.  Both economies are focused on natural resource exploitation, tourism, wine, and horticulture. The motion picture industry has been a major factor in both economies, but both are highly vulnerable to foreign exchange fluctuations. Both economies have similar populations though we have more space and are not isolated in the South Pacific.   Both economies have made efforts to diversify into high tech, pouring millions into development of startups. Both economies have had modestly successful companies in high tech, which seemingly have mostly been bought out, moved out and any benefit to the local economy lost.  The crucial difference may be New Zealand’s pragmatism about how to deal with this economic reality.  British Columbia could learn from New Zealand.

Andy Hamilton, the long-time Director of Auckland, New Zealand’s Ice House high-tech incubator shared the following article from New Zealand’s NATIONAL BUSINESS REVIEW.  I first met Andy when I headed up New Zealand’s “Beachhead” incubator facility in Silicon Valley some years ago. The article has significant relevance to our situation in the Okanagan and British Columbia as a whole.  The Okanagan has seen high-profile startups like Club Penguin, Vineyard Networks, and Immersive Media bought by much larger foreign buyers, essentially leaving little benefit to the local economy. The founder of perhaps the most successful startup in BC, Ryan Holmes of Hootsuite, admitted that he did not base the company in the Okanagan (he is from Vernon) because he knew he could not attract the necessary talent here. It is well-known that many if not most UBC Okanagan graduates do not stay here.  While Vancouver has D-Wave and General Fusion, it has also seen Recon Instruments bought by Intel.  New Zealand has dealt with the same reality.  Forget the names of the Kiwi companies in the following editorial piece and substitute any Okanagan or BC startup company you feel is comparable. With Kelowna now tarred with the reputation as the worst job market in Canada, it would serve the local Okanagan establishment to give serious thought to the editorial below.

New Zealand: We’re not, and never will be, Silicon Valley

NATIONAL BUSINESS REVIEW (NEW ZEALAND)

MONDAY FEBRUARY 22, 2016

OPINION

BEN KEPES

New Zealand’s Diligent Corporation chief executive Brian Stafford

John Donne famously wrote that no man is an island entire of itself. The same is true for countries, and especially those countries situated in the middle of nowhere and with a relatively tiny population. At the same time, the old adage of not wanting to throw out the baby with the bathwater springs to mind.

All this mixing of metaphors seems timely given the current debate over Diligent Corporation [NZX: DIL] and its likely sale and exit from New Zealand. People on one side of the debate bemoan foreign sales and suggest this is why we should stick to our primary production knitting. Those on the other side suggest  offshore sales are fine since the money reenters into the economy via the oft-quoted “rinse and repeat” cycle.

To be honest, both sides simplify things with their arguments and I think it’s time for New Zealand to think a bit more deeply about what we want our economy to look like.

We’re not, and never will be, Silicon Valley.

It frustrates me when people glibly suggest that New Zealand should create a mini-Silicon Valley down here in the South Pacific. Silicon Valley only exists in one place and is a unique creation of a number of factors including a university that was founded on the idea of entrepreneurship. Leland Stanford created the university as a memorial to his 15-year-old son who died of typhoid. The university was to be co-educational (a rare thing at that time) and, above all, designed to produce practical members of society. This wasn’t about research for research’s sake, Leland Stanford, a railroad magnate, wanted to produce research which was focused on commercial possibilities.

Add to that a hub of military research, significant funding streams for startups, a cultural focus on technology generally, and entrepreneurship specifically, and you have a unique place. Silicon Valley the product is very much a product of the crucible of Silicon Valley the place. We’d be advised to remember this.

But there are more reasons beyond viability to not want to recreate Silicon Valley in Auckland, Wellington or Christchurch. I’m lucky enough to spend a huge amount of time in “The Valley” and while I’d be the first to suggest that it is an exciting and bustling place, I’d also hate to live there. Unaffordable housing that makes Auckland look easy by comparison, ridiculous traffic issues (don’t even bother trying to drive the 101 on a weekday). A slightly weird culture in which 20-year-old entrepreneurs trying to reinvent laundry services or lawn care are seen as more heroic than doctors, firefighters or teachers.

Silicon Valley has something of a culture of “viva la revolution”. Ride-sharing service Uber’s founder, Travis Kalanick, is almost religious in his fervor for making transportation undergo a rapid revolution. Ultimately, he sees drivers as an impediment to this and is actively investing in driverless car technology in an effort to get rid of the very individuals who are currently making his service viable.

Perhaps this is the very reason that we shouldn’t try and recreate Silicon Valley in New Zealand. We have a society that, to some extent, at least, looks out for everyone. We were the first country in the world to give women the vote. We have a social welfare system that provides a safety net for people. When we’re sick in New Zealand we take it for granted that (hospital waiting lists notwithstanding) we’ll get treatment. The Silicon Valley focus on “automation and efficiency above all” forgoes all of this and, while creating a society where we can get our floors vacuumed by robots, our lawns mown as-a-service and even our meals prepared with synthetic meat by robot chefs, also helps create a dystopian world where anyone who isn’t a computer programmer, a robot engineer or independently wealthy falls by the wayside as an “unfortunate side effect of productivity enhancing tools and technological change.”

A final note on this point. Rod Drury, the chief executive of Xero [NZX: XRO], famously chooses to live in Hawke’s Bay where he can enjoy all that the region has to offer. Rod has seized this idea of balance in his working life and has found a way to build a business while not forgoing all possible quality of life. Indeed, this is a theme that Xero has used often when trying to attract talent. Let’s never forget these aspects in the desire to create GDP growth.

Do these technology exits really feed our economy?

All of this talk of quick technology exits funding lots of $100,000 plus software developer jobs here in New Zealand is a nice sound-bite but it arrogantly sidesteps the questions about what all those people who are left disenfranchised by those technologies are going to do. While TradeMe’s exit certainly helped to create companies like Vend, we need to be thinking, as a nation, about what is going to happen to all of those people who actually do things – tradespeople, manufacturing staff etc – once this ultimate in globalized efficiency is achieved.

If we look at the money that has been brought back to New Zealand from the sale of companies like TradeMe, how much has really gone into the economy? Yes, I’m well aware that TradeMe money has gone on to fund Vend, Xero, SLI Systems and a host of other companies. But while these are all interesting companies, doing good things and with (hopefully) a chance of a good outcome, they’re not particularly big employers and hence I’d be keen to see some empirical data about how much the so-called “trickle down effect” from exits like TradeMe actually exists.

True, both Sam Morgan and Rowan Simpson have built big houses that have kept a few tradesmen busy for a while – it would be helpful for some independent economists to really nut out the continuing value from this model. Often this argument is one which is had from a perspective of dogma – we need to really get some clarity as to the economic impacts of the technology industry in New Zealand.

Notwithstanding the economic benefits of these offshore sales, or otherwise, the fact is there is little option for our technology companies. Again, in this respect, Xero remaining, at least to some extent a New Zealand company is very much an outlier.

This talk of the problems caused by companies like Navman, The Hyperfactory, and NextWindow, that have grown, been sold offshore and all the jobs (along with the tax revenue) lost to NZ Inc is simplistic as well. We live in a tiny market, one which makes a domestic focus pretty much impossible for all but the most niche of players. To achieve growth, these companies need to look to customers overseas. In this technology space, the norm is very much to follow a rapid merger and acquisition path.

The very model of the technology industry is for there to exist a myriad of startups, all of whom sprint in order to get ahead of the others. The prize for being at the front of the bunch is generally (with only a handful of exceptions) a quick acquisition by one of the titans of the industry. After which, and other than a general couple of years spent in purgatory working for said vendor, the founders head back and do it all again. Hopefully.

Is there a third way?

Now I’m not suggesting that we shroud ourselves in an isolationist mist. The last person to do that was Robert Muldoon and it was a disaster. But to suggest, as many do, that technology will replace the need for any of our traditional businesses is simplistic. Similarly, the view that it is best to follow these models of building fast-growth software companies to be quickly flicked off to the highest bidder is unhelpful.

So maybe there is a third way. Maybe we can look at what we naturally do well – things like growing grass and turning it into milk and meat, horticulture and agriculture generally, and the technologies that help those industries to be more efficient, ideas that need a unique combination of practicality and DIY-mentality (Gallagher’s fences anyone?) – and apply technology to those things. With the utmost respect to Xero, a company that is a terrific success story for New Zealand, there is nothing about accounting software that we fundamentally have a point of difference with. Xero could have been created out of Bangalore, Silicon Valley or London. The fact that it has been successful out of New Zealand is down to good luck, good timing and some unique factors. Xero is an outlier – a great one – but an outlier nonetheless. It would be a dangerous bet to make to assume that we can create enough Xeros to fund our big, expensive economy.

Ever greater extension of dairy farming isn’t, of course, an option. Our rivers and lakes are already enough of an abomination without more nitrate runoff. But how about celebrating those companies that are attempting to add value to primary production – Lewis Road Creamery is one that springs to mind. But there is a host of exciting new startups in the agricultural technology space as well.

We need a diverse economy, one in which we have small companies making added-value products alongside companies that will grow rapidly and be sold off. If I look at the companies I’m involved with, I certainly invest in the “high-growth and sell offshore” model. Appsecute, a company I was an early backer of, sold a couple of years ago to a Canadian company which, in turn, sold to Hewlett-Packard last year. Companies like MEA mobile, Raygun, ThisData and Wipster will, potentially, follow this model. But other technology companies have a domestic focus or one which favors remaining independent and growing from New Zealand – PropertyPlot, CommonLedger, and Publons are examples. And finally, companies that are involved in real physical products. While it may be totally unsexy to actually make anything in New Zealand anymore, I’m proud to be involved in Cactus Equipment, a company that not only makes awesome products but keeps scores of people employed here in New Zealand – people who are unlikely to become software developers any time soon.

Focus on a diverse NZ Inc

When Sam Morgan suggested that a focus on NZ Inc was unhelpful for companies and would get them killed, he was referring to technology companies specifically. I believe that, as an economy, we should look more broadly at what we do and celebrate both the meteoric risers of the industry, but also the bit players – those who aren’t gunning for a US exit, those who are able to make a living in the traditional economy and those who are trying to add extra value to what we do well.

Christchurch entrepreneur and cloud computing commentator Ben Kepes blogs at Diversity.net.nz.

Want to listen to the day’s hottest stories, plus interviews and panel discussions? Stream NBR Radio’s latest free 40-minute podcast from iHeartRadio, TuneIn, or iTunes.

Read more from Ben Kepes

Email Ben: ben@diversity.net.nz

The Importance of “Convergence” In Market and Industry Analysis

If You Get Technology “Convergence” Wrong, Nothing Else Matters

I came across this book during my most recent visit to the UBC Vancouver campus.  As good as I think this book is at focusing attention, in workbook style, on the importance of market and industry analysis in new venture due diligence, there is an issue that I think is not adequately addressed by any model or theory: not Porter, not STEEP or SWAT. Convergence is the issue.

We can imagine and even potentially envision a very cool business idea, but if the technology to achieve it is not ready, not sufficiently mature, the idea is Dead on Arrival (DOA).   I do not mean to pick on young entrepreneurs, but I reviewed a business concept last week that was a superb and compelling idea, but the technology necessary to achieve it simply was not there, either in terms of its capability or its price point. I am confident that it will be there in time, but it is not now.  As if to make my point, Apple announced that it was acquiring a company for $20 Million in the exact same technology area: indoor location tracking (no small feat).  At this point it is not clear that the acquired company has any extraordinary intellectual property or expertise, and the article primarily focused on the point that this “location identification” technology was “heating up.”  It looks like it may be a simple “aquihire.”   Global Positioning and geo tagging as in smart mobile phones, radio frequency identification technology (RFID), and inertial guidance are all currently used in various combinations by a host of competitors (too many) to achieve required levels of accuracy, immediacy and cost.  A local industrial RFID company has just closed its doors because it simply could not compete and make money.  The simple problem was that this company’s idea, as compelling as it was, could not achieve the necessary price point, or possibly would not even work.

So we have the problem of “convergence.”  Great idea but the technology simply is not ready….yet.

I have three personal case study examples of the problem of “convergence,” that every potential entrepreneur should study. I have to admit that I was a senior executive at all three of these Silicon Valley companies, one of which actually made it to the NASDAQ exchange.  All of them had the “convergence” problem.. Too early for the available technology.

1. Silicon Graphics.  Silicon Graphics was founded in the late 1980’s by a pre-eminent Stanford professor, Jim Clark, on the idea that 3D visualization of complex problems would become the next big wave in technology. As a minor side business, it also excelled at computer animation, a growing new market of interest to Steve Jobs and others. It is now obvious that Clark was onto something that has now finally become the Next Big Thing, but at that time, the available technology simply made it too difficult and too expensive. Silicon Graphics no longer exists. Silicon Graphics crown jewel was its enabling software code, the SGI Graphics Library. It does still exist in open form.

Read more:http://mayo615.com/2013/03/31/hans-rosling-makes-visual-sense-of-big-data-analytics/

2. iBEAM Broadcasting.  iBEAM was the precursor of YouTube, but too far ahead of its time.  the founder, Mike Bowles, a former MIT professor, envisioned streaming media across the Internet, but this was in 1999.  Intel, Fox Entertainment, Reuters, Bloomberg, Microsoft were all involved, some investing significant sums in the company. We tried mightily to make it happen for Mike, but there were technology convergence problems.  The Internet at that time simply did not have sufficient reliable broadband capability.  In 1999 the vast majority of Internet users still used a dial-up connection.  The company, with help from Microsoft and its other big pockets investors turned to satellite transmission, which is immensely expensive.  I did learn a lot about the satellite business. Great idea, way too early, and the company failed early.

3. P-Cube.  In 2001, I was approached by prominent friends at two downtown Palo Alto venture capital firms to consider joining an Israeli startup in which they had invested. The idea was wildly popular at the time….traffic policy management and so-called Internet traffic shaping.  I enthusiastically joined the new company and became its first U.S. based employee.  The compelling idea was simple, make money by charging for bandwidth. The background idea was to enable deep IP packet payload snooping to prioritize traffic, but also for its political potential. This is the technology that Dick Cheney employed after 9/11 to snoop all Internet traffic.  The only problem was that the technology was simply not yet ready.  The P-Cube Internet traffic switch was a 24 layer printed circuit board (hideously difficult to fabricate), with 5 IBM PowerPC chips, 1 Gig of onboard memory (at the time bleeding edge, but today laptops have more memory), a host of “application specific integrated circuits” (ASIC), and to top it off a proprietary software language to program the box.  In the end, P-Cube burned up $100 Million in venture capital, and I had great fun traveling the World selling it, but the box never worked, largely because the technology simply was not there..  P-Cube’s assets were bought by Cisco Systems and t0day such capability is built into the boxes of Cisco System, Juniper Networks and others.

The key takeaway lesson from this: do not underestimate the importance of technology convergence with a great idea.

Tough Love From Silicon Valley For Tough Times

Heidi Roizen is a very well-known Silicon Valley venture capitalist and entrepreneur. I first met Heidi years ago at a European COMDEX event in Nice when she was still in her entrepreneurial phase. Since that time she has gone on to fund numerous startups, and is now a Partner at Draper Fischer Jurvetson.  In this blog, Heidi is sounding the alarm to entrepreneurs that, as she says, the market has already turned for the worse. She has been there before and offers her sage advice to this generation of entrepreneurs on how to survive. IMHO, she is spot on.

Dear Startups:  Here’s How to Stay Alive

By Heidi Roizen

Reblogged from Tumblr

February 15, 2016

There are storm clouds gathering over Silicon Valley – and it’s more than just El Nino.

As a venture capitalist, I see a lot of data points within the private company marketplace.  Every Monday, I sit in a room with my partners and we discuss dozens of companies, both portfolio companies as well as those we are considering for investment.  When a market turns, we tend to see the signs earlier than the entrepreneurs working on the front lines.

This market?  I’d say it has turned.

It is going to be hard (or impossible) for many of today’s startups to raise funds.  And I think it will get worse before it gets better.  But, hey, my entrepreneurial friend, whoever said it was going to be easy?  One of my favorite expressions is: “that which does not kill us makes us stronger.”

So which is it going to be for you?  Tougher?  Or dead.

Fortunately, (unfortunately?) I’ve been to this movie before, during the dot-com “nuclear winter” – anyone remember that?   I’d like to think I’ve learned some things from that painful experience.

I’ve seen companies live, and I’ve seen them die. And I’ve concluded that certain behaviors separate the two.

Which behaviors, you ask? Here are a few from my downturn playbook for how to stay alive.

Stop clinging to your (or anyone else’s) valuation:  You know what somebody else’s fundraise metrics are to you?  Irrelevant.  You know what your own last round post was?  Irrelevant. Yes, I know, not legally, because of those pesky rights and preferences.  But emotionally, trust me, it is irrelevant now.  We even have a name for this – valuation nostalgia.  Yes, it was great when companies could raise those amounts, at those prices, blah, blah, blah, but the cheap-money-for-no-dilution thing is largely over now. The sooner you get on with dealing with that, and not clinging to the past, the better off you will be. As my DFJ partner Josh Stein says, “flat is the new up.”

Redefine what success looks like:  I had lunch last week with a friend of mine who broke her leg in three places four months ago.  “I used to think a successful weekend was 10+ miles of running,” she said.  “For now,  success is going to have to mean making it to the mailbox and back without my crutches.”  When a market like this turns, in order to survive, it is critical to redefine what success is going to look like for you – and your employees, and your investors, and your other stakeholders.  Holding on to ‘old’ ideas about IPO dates, large exits and massive new up rounds can ultimately be demotivating to your team.  If you can make it through the downturn, you will have those opportunities again.  But for now, reset your goals.

Get to cash-flow positive on the capital you already have (AKA, survive):My DFJ partner Emily Melton said this in our last partner meeting:  “Must be present to win.”  I used to say it at T/Maker (the company for which I was CEO) in a slightly different way:  “In order to have a bright long-term future, we need to have a series of survivable short term futures.”  You need to survive in order to ultimately win.

You know what kind of companies generally survive?  Companies that make more money than they spend.  I know, duh, right?  If you make more than you spend, you get to stay alive for a long time.  If you don’t, you have to get money from someone else to keep going.  And, as I just said, that’s going to be way harder now.  I’m embarrassed writing this because it is so flipping simple, yet it is amazing to me how many entrepreneurs are still talking about their plans to the next round.  What if there is no next round?  Don’t you still want to survive?

Yes, some companies are ‘moon shots’ (DFJ has a fair number of those in our portfolio) where this is simply not possible.  But for the vast majority of startups, this should be possible.

So, for those of you in the latter group, I want you to sharpen your spreadsheet, right now, and see if, by any hugely painful series of actions, you could actually be a company that makes money.  ASAP.  Or at least before you run out of money.   Because that’s the only way I know to control your own destiny.  You don’t have to act on it (although I would), but at least you will know if you have a choice.

And if you absolutely, positively, cannot get there without more capital?  Then you need to…

Understand whether your current investors are going to get you there: Guess who else cares about whether you live or die?  Yep, your current investors.   Another duh.  That’s why they are your best source of ‘get me to cash flow positive’ financing.  And yet, even though we all know this, why is it we don’t actually (1) create the plan that gets us to cash flow positive ASAP, and then (2) go to our backers and get their commitment that they will see us through  (or know that they won’t, because if they won’t, the sooner we know that, the sooner we can go out and do something about this.)  I know many VCs hate to be put on the spot about this, but I think entrepreneurs have the right to ask, and to know.

Stop worrying about morale:  Yes, you heard me right.  I can’t tell you how many board meetings I’ve been in where the CEO is anguished over the impacts on morale that cost cutting or layoffs will bring about.

You know what hurts morale even more than cost- cutting and layoffs?  Going out of business.  

I was at a conference once where someone asked Billy Beane how he created great morale at the A’s.  His answer?  “I win.  When we win, morale is good.  When we lose, morale is bad.”

Your employees are smart.  They know we are in uncertain times. They see the stress on your face.  They worry about their jobs.  What do they want to see most?  A decisive plan for survival, that’s what – even if some of them have to go.   Trust me, a clear plan is a real morale turn-on.

Cut more than you think is needed:  Yes, this is simple, but not easy.  It is so easy to justify why you want to lay off fewer people.  However, when you do, by and large, you’ll be laying even more off later.  Why we humans seem to prefer death by a thousand cuts is a mystery to me.  Don’t.  It’s easier on everyone if you cut deeper and then give people clarity about the stability of the remaining bunch.

Scrub your revenues:  Last week an entrepreneur pitched us, and his ‘current customers’ slide was alight with bright, trendy logos of bright, trendy venture-backed companies.  You know what I saw?  A slide full of bright, trendy, money-losing, may-not-survive companies.  (Luckily, in this case, the entrepreneur referenced these customers because he thought VCs would like to see that their smart startups use his stuff, but he actually had a lot of mainstream customers too.  He has a new slide now.) This, I think, was one of the biggest surprises from the last dot-com bust – we all knew we had to cut our expenses, but no one thought about what our customers might be doing. And guess what? They were all cutting costs too – including those costs which comprised our revenues.  Or worse, they were going out of business. If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried.  And yes, it sucks, but it is better to be worried than surprised.

Focus maniacally on your metrics: I know a few CEOs who delegate the understanding of their financials and their business metrics to the CFO, and then stop worrying about all that ‘numbers stuff’.  Don’t do that.  You have to know your numbers inside and out – they are your life blood.  You also have to know which metrics drive the business, and focus on them like your survival depends on it – because it does.  Figure out your canary (or canaries) in the coal mine (by that I mean the leading indicators that tell where your business is headed and whether it is healthy) and watch them weekly, or daily, or in real time, whatever is possible.  And, have a plan in advance about what you will do if/when the metrics go south.  Many of the best companies to have survived the last downturn became super data-driven, and were constantly course-correcting to make small but continuous improvements in their operations with what they learned.

Hunker down:  These markets generally take a long time to recover. Longer than you think. And, it might get worse. So don’t plan for the sun to start shining tomorrow. Or next month.  Or next quarter.  Or maybe even next year. Sorry.

Having just thoroughly depressed you, let me say that I’ve seen amazing transformations by companies who adapt early to the new reality.  Severe budgets give clarity.  Smaller teams often find greater purpose in their work.  Gaining control (by becoming profitable) feels really, really good.  Watching your competition (who didn’t read this) die, feels – can I say it? – well let’s just say that when your competition goes out of business, you often gain their customers…and that’s a very, very good thing.

Some of the greatest companies were forged in the worst of times.  May you be one of them.

Uber Is Still Trump

Permits? We don’t need no stinkin’ permits!

UPDATE:  This February 3, 2016 post on Uber deserves an update. This week Uber announced that it lost $800 Million in its 3rd quarter. That’s correct, $800 Million in only three months. The Uber announcement tries to spin the loss as good news for Uber as ” increased by only 25% over the third quarter last year.  An $800 Million quarterly loss is right up there in the same league with Trump lost money. I guess we need to remember Trump’s admonition that debt is good, and it’s ok to lose other people’s money.  Uber’s announcement goes on to project continuing losses projected to be greater than $3 Billion next year, as Uber continues its plans for an apparent IPO for brain dead investors.

Then we have Uber’s new dispute with the California Department of Motor Vehicles and Attorney General’s office. Uber has begun operating self-driving vehicles in San Francisco without obtaining the necessary permits. Uber is claiming that they are exempt and don’t need permits to operate driverless cars. They “don’t need no stinkin’ permits,” though video posted on SFGate shows an Uber driverless vehicle running a red light on 3rd Street, right in front of SFMOMA.  Why do I feel like Uber and Trump are the same thing?

The Problem With Uber Has Absolutely Nothing To Do With Ride Sharing

Donald Trump, Travis Kalanick, and Uber

So Trump is Uber and conversely, Uber is Trump. This comparison has been made by both supporters and opponents, so as they say, there must be some truth in it. Both Uber and Trump have based their strategies on disrupting the status quo and the establishment with politically incorrect behavior.  My argument here is simply that while the disruption fostered by both Trump and Uber may appear attractive at first glance, and desirable to many, in both cases, there are much deeper ethical issues that are only now coming to the forefront.

Uber’s origins date back to a cold winter night in Paris in 2008, when founders Travis Kalanick and Garrett Camp were stranded without a cab.  Having personally also been stranded in Paris without a taxi on a cold and rainy night, I can commiserate.  But the real strategy behind the founding of Uber was to disrupt what they perceived to be an overregulated industry ripe for the picking, managed by municipalities and regional agencies ill-equipped to handle the kind of corporate pressure brought to bear by Uber.  The Uber strategy involves massive PR, faux negotiations with slow-moving regulatory bureaucracies, followed by defiantly ignoring the law, which Uber euphemistically describes as “principled confrontation.”  It is nothing less than blitzkrieg. Similarly, Donald Trump has crafted his strategy to disrupt politics as usual, with political incorrectness, bluster, and bombast.  Both Travis Kalanick of Uber and Donald Trump share the same odd appeal for their disruption, but both also have armies of critics who perceive much deeper and disturbing issues.  It all has an air faintly of Fredrick Nietzche’s Man and Superman and Ayn Rand’s philosophy of total self-interest.

Ayn Rand

I also ask rhetorically why and how Uber has managed to attract such a massive unprecedented pile of investment capital.  Uber is the current global symbol of defiant confrontation with any and all regulation of industries. Some are arguing convincingly that the huge pile of cash may have to do with sheer plutocratic greed, driven by Wall Street lobbyists, keen to roll back all regulation of capitalism everywhere.  There is no shortage of circumstantial evidence that this may be correct, from the ongoing global banking scandals to corporate tax evasion.

Both Trump and Uber also now appear to be hitting serious bumps in their strategies.  Trump ignominiously lost the Iowa Caucus and is facing a serious threat from a Republican establishment determined to stop his candidacy one way or another. Uber is facing its own disruption, a federal lawsuit by the California Public Utilities Commission, challenging Uber’s definition of their drivers as “contractors.” The California PUC lawsuit has spawned numerous other similar actions against Uber and is being closely watched by legal experts around the World, particularly in the European Union countries and India. A decision against Uber could have major global consequences for Uber’s business model.  Meanwhile, organized protests against Uber’s practices, policies, and contractor pay have also evolved and escalated.  The early protests were particularly unsuccessful and counter-productive, and which served only to aggravate the public. However, more recent protest strategies have been much more effective.  For whatever reason, Uber elected to announce its intent to reduce contract driver pay recently, which has provided a strategic opportunity for organized protests in many cities.

The core issue for me is the glaring distortion of Jeremy Rifkin’s Third Industrial Revolution into an unabashed corporate takeover of the sharing economy.  The capital feeding frenzy around Uber is disturbing, and still a potential bubble if things don’t go as planned. It also betrays myopia for Big Ideas in favor of the quick buck.

ANALYSIS

Uber discussions need to go beyond the fact it offers a cheaper ride

‘This isn’t just an Uber problem. If they get away with it, every company will do this.’

By Paul Haavardsrud, CBC News Posted: Jan 24, 2016 5:00 AM ET Last Updated: Jan 24, 2016 9:30 AM ET

A man rides his bicycle between taxis parked on the street during a protest against Uber in Rio de Janeiro, Brazil on July 24, 2015. A number of protests have cropped up the world over as the ride-hailing app grows in popularity. (Ricardo Moraes/Reuters)

This is part three of a three-part series on Uber. Read parts one and two.

Outraged taxi drivers the world over telling anyone who will listen that Uber is the devil in corporate form makes it tough, even for those so inclined, to blithely accept at face value the company’s argument that it’s just a technology firm disrupting a sheltered industry.

• Part 1: A look at Uber’s playbook
• Part 2: How Uber is waging its PR war

It would be nice if that were the case. Easier.

But nothing is ever that easy, is it? And neither is Uber.

In fairness, you could say there’s much to like about a company that can deliver a prompt ride at the push of a button, often at a cheaper price than cabs. So far, so good.

But that’s only the beginning of the Uber discussion. A closer look at the company’s particular brand of disobedience could quickly become unsettling.

Uber may like to cast itself as a harmless scofflaw that’s willing to bend a few rules for the greater good, but legal experts say its practices are hardly benign.

Uber’s confrontational approach to changing regulation is taking direct aim at the taxi industry. (Alistair Steele/CBC)

Working for its own narrow self-interest, the company’s systemic disregard for regulations — a stratagem termed “corporate nullification” — can undermine the laws of the land that everyone else follows.

“This isn’t just an Uber problem. If they get away with it, every company will do this; every company will become a platform and just say ‘oh, the laws don’t apply to us.’ If we enter into that stage, then it’s game over for vast swathes of business regulation: environmental, insurance, civil rights, worker protection, consumer protection, that’s all gone,” said Frank Pasquale, a law professor at the University of Maryland.

“People don’t see the stakes of it, they think ‘oh well, you know, we have to disrupt taxi cabs and we have to get this stuff done,’ but it doesn’t have to be done on Uber’s terms. The stakes couldn’t be higher in terms of the ability of these platforms to just get out of regulation.”

Gig economy

In the here and now, of course, warnings about the consequences of corporations flouting the rule of law can feel abstract compared to the immediate gratification of getting a cheaper ride to the airport.

That may soon change. While researchers haven’t yet reached a consensus on the number of workers participating in the so-called gig economy, most agree that new forms of contract employment made possible by companies like Airbnb, TaskRabbit and Uber are on the rise.

In the U.S., a recent poll suggests more than one in five Americans have participated in this type of on-demand contract employment. Part of the conversation now taking place there, which is beginning to migrate to Canada, involves asking what responsibilities 21st-century companies will have to workers, as well as the rest of society.

• Taxis likely hurting themselves, helping Uber with protests
• Uber debate overlooks taxi industry’s ‘silent victims’
• Uber’s NYE price surge meant painful bills for revellers

As it stands, employers and employees both pay to fund programs such as health care, employment insurance, Old Age Security and other parts of the social safety net. The question of who will cover those costs if the nature of work changes to include fewer traditional full-time positions — not to mention the fate of worker protections such as overtime and minimum wage — is still in search of an answer.

Indeed, the recent popularization of the term “gig economy” reflects thisevolution of the work world to include more part-time and contract employment and fewer of the full-time jobs that have traditionally been the bedrock of the middle class.

As for the more well-known term, “sharing economy,” it’s losing ground amidst a growing recognition that sharing isn’t really part of the equation. A transaction in which a passenger pays a driver wouldn’t seem to be any different from what happens with a taxi. Yet taking a cab isn’t known as sharing a ride.

Play Media

 Angry taxi driver confronts Uber driver1:13

Wrapping itself in the language of the sharing economy, however, allows Uber to align itself with values like co-operation, sustainability and community. It’s a smart play, if disingenuous, particularly insofar as it helps to bathe a business model that’s so nakedly commercial in a kinder, gentler light. Uber, as is often pointed out, is libertarian to its core, whether it’s the company’s attempts to dismantle regulation or its belief in the righteousness of the unfettered free market.

What happens to cabbies?

None of this, of course, makes Uber an evil corporation. At the same time, the speed at which the company, among the fastest-growing startups in the history of Silicon Valley, is crashing through the world puts it at the centre of any number of questions.

On the front lines of those looking for answers is the taxi industry. The existing system may be flawed, overregulated, and too costly, but that doesn’t mean cabbies should just be written off as collateral damage — the result of rule changes inspired by the financial ambitions of a single company.

Many taxi drivers say they can’t compete with a company that isn’t governed by the same strict, and costly, regulations. (John Rieti/CBC)

By pushing cities into making immediate changes, though, Uber is manufacturing a binary choice. To limit the decision to Uber or the current flawed system, however, is a false construct. The taxi system doesn’t need to be overhauled tomorrow and changes could come in many different ways that allow for ride-hailing services while also protecting existing taxi drivers.

“The main problem is it’s not an empty space,” said Mariana Valverde, a professor at the University of Toronto and an urban law expert. “Uber is coming in and they’re combining the power of a big, U.S.-based corporation with lots of lobbyists and lots of money, on the one hand, with a total disregard for regulations and rules. Taxi drivers have played by the rules and they’ve often followed really strict, often quite picky and annoying rules, and they’re seeing their livelihoods vanish.”

Big issues

The back-and-forth between Uber and the taxi industry opens up any number of considerations, ranging from practical to theoretical to troubling.

If Uber’s continued success pushes existing taxi fleets out of business, it’s worth wondering what happens to fares. The company’s introduction of surge pricing, which allows the price of rides to float when demand outstrips supply, points in a direction that may have customers yearning for the regulated days of yore. A market monopoly may never come to pass, but Uber’s success to date, combined with the controversies that surge pricing have already inspired, doesn’t make it a comforting thought.

Uber’s introduction of surge pricing, which allows the price of rides to float when demand outstrips supply, may one day have customers yearning for the regulated days of yore if a market monopoly is ever reached. (The Canadian Press)

The us-versus-them dynamic that’s developed between Uber and cab companies is also too often accompanied by an ugly undercurrent of racism that targets the ethnic makeup of the taxi industry. To be clear, this isn’t Uber’s fault per se, but it is an element of the ongoing confrontation that needs to be better recognized, understood and defused.

The many issues surrounding Uber can also become an issue in itself. As tales of Uber’s unsavoury tactics continue to circulate, how does someone who just wants to take an Uber across town reconcile the tension between wanting to be a good citizen, yet also a savvy consumer at the same time.

One theory, put forward by Robert Reich, suggests that no one can be blamed for seeking out a cheaper ride, regardless of how conflicted they may feel about the company offering the service. Our consumer selves, he says, are wired to look for the best deal possible and, on some level, we’ve made peace with what that entails. At the same time, he continues, serious thought must also be given to the responsibilities of citizenship.

As Uber inspires changes to the existing system, the idea of what our citizen selves might contribute to the discussion is worth considering. Yes, change is going to happen and outdated regulations need to be updated. How those changes happen, though, also matters a great deal. And not just to cabbies.

Risk of Global Financial Contagion Is Growing

Wall Street is currently basking in a vigorous “Trump rally,” with the Dow rising more than 1000 points since the election.  The rally is driven by analysts who are salivating over the future prospect of sweeping deregulation of many markets. But there is also a chorus of concern from dozens of financial experts, that the global financial markets are “whistling in the graveyard,” acting in a classicly irrational manner. I am reminded of the often cited 19th Century classic, “The Madness of Crowds and Extraordinary Popular Delusions.” Experts  cite a host of issues both financial and geopolitical, among them Trump’s intention to exit TPP, NAFTA, and the COP21 Climate Agreement. Combined with rising geopolitical tensions with China, North Korea, and Iran, a perfect storm of global uncertainty and instability is forming.

REBLOGGED FROM MAYO615, February 18, 2016

What is “Global Financial Contagion”?

 

Global Financial Contagion, is a well-understood phenomenon among economists, but less so among the general public.  Financial contagion refers to “the spread of market disturbances — mostly on the downside — from one country to the other, a process observed through co-movements in exchange rates, stock prices, sovereign spreads, and capital flows.” Financial contagion can be a potential risk for countries who are trying to integrate their financial system with international financial markets and institutions. It helps explain an economic crisis extending across neighboring countries, regions, or in the worst case, the entire global economy.

An examination of economic history suggests that the effects of financial problems in one country rippling through other countries may have begun in the 18th Century with colonialism, with the mother country’s economy having large direct impacts on the colonies.  Today, in Marshall McLuhan’s global village, and with the World Wide Web, a financial hiccup in Asian markets late on our Sunday night, can turn into a major global financial crisis in Europe and North America in less than 24 hours.

At the moment, the number of risk factors that contribute to a major financial contagion is at an all-time high. The following article from the Associated Press details some of these global economic issues, but ironically also omits additional other issues contributing to the anxiety in markets.

The attached article does place China at the top of its list but fails to mention a number of additional issues contributing to global worries about China. The first is the Chinese leadership itself, led by Xi Jinping.  Concerns have increased regarding the overall management of the Chinese economy. These issues include the lack of faith in economic numbers released by China, the poor management of the unrest in the Shanghai financial market, and the $1 Trillion flow of money out of China by wealthy Chinese, which has had a dramatic impact on the Vancouver housing market. Add to this, the neo-Maoist tendencies of the current PRC leadership and its saber-rattling in the South China Sea. There are other disturbing domestic Chinese economic issues, but I will not list them here. The ultimate risk, understood only too well by the Chinese leadership is the risk of social unrest. Harvard professor Niall Ferguson has said that in his view nothing has really changed in 2000 years of Chinese history. The Mandarin class still rule at the expense of the peasants.

Glaring out at me, the AP analysis omits any specific mention of military and social unrest. This week it would seem that North Korea and Kim Jong Un have risen to the top of concerns, but not far behind were the satellite photographs of ground-to-air missiles installed by the Chinese on the Spratley Islands in the South China Sea. Syria has been described as an order of magnitude more complex than the crisis in the Balkans in the 1990’s. With the U.S., Russia, Turkey, NATO, and a host of other smaller players, it would take only a small spark, like another pilot burned alive, to ignite the entire region.

The AP article mentions the oil economy only in the context of emerging markets. In many economists view, the global oil market chaos is a crucial major issue in its own right, and likely to persist for many years.  Just last week, as Russia, the UAE and Venezuela agreed to cuts in production, Iran defiantly declared that it would not be bound by OPEC or any other group’s attempts to curtail oil production. Petroleum industry debt increasingly is a concern affecting the financial stability of the banks who lent the capital.  Taken together, it is known as The Natural Resource Curse, the fact that economies focused on natural resource exploitation underperform more diversified economies.  It is a vicious circle spinning out of control

Finally, we have the lack of confidence in financial institutions generally and the lack of regulation. Despite efforts to restore reasonable regulations like Glass-Steagall, put in place during the Great Depression, nothing has happened to restore confidence in financial institutions in the United States or globally. The problems in the housing markets, particularly the bizarre behavior of the Vancouver housing market are directly a result of the global financial instability and yet the local and regional British Columbia governments have failed to take any action. The LIBOR scandal has shown how vulnerable we all are to ongoing financial mismanagement across the globe, which could contribute to a collapse of the World as we know it.

–David Mayes

 

 

Christine Lagarde, Managing Director

International Monetary Fund

REBLOGGED FROM THE ASSOCIATED PRESS

Wednesday, February 17, 2016

WASHINGTON (AP) — Eight years after the financial crisis, the world is coming to grips with an unpleasant realization: serious weaknesses still plague the global economy, and emergency help may not be on the way.

Sinking stock prices, flat inflation, and the bizarre phenomenon of negative interest rates have coupled with a downturn in emerging markets to raise worries that the economy is being stalked by threats that central banks — the saviors during the crisis — may struggle to cope with.

Meanwhile, commercial banks are again a source of concern, especially in Europe. Banks were the epicenter of the 2007-9 crisis, which started over excessive loans to homeowners with shaky credit in the United States and then swept the globe into recession.

“You have pretty sluggish growth globally. You don’t really have any inflation. And you have a lot of uncertainty,” says David Lebovitz, who advises on market strategies for JP Morgan Funds.

Some of the recent tumult may be an overreaction by investors. And the rock-bottom interest rates are partly a result of easy money policies by central banks doing their best to stimulate growth.

Unemployment is low in several major economies, 4.9 percent in the United States and 4.5 percent in Germany. The IMF forecasts growth picking up from 3.1 percent last year to 3.4 percent this year.

But that’s still far short of the 5.1 percent growth in 2007, before the crisis. The realization is dawning that growth may continue to disappoint, and that recent turmoil may be more than just normal market volatility.

In Japan, the yield on 10-year bonds briefly turned negative, meaning bondholders were willing to pay the government for the privilege of being its creditor — for years. In the United States, long-term market rates are sliding again, even though the Federal Reserve has begun pushing them higher.

That’s alarming because such low or negative rates are way out the ordinary. For one thing, they suggest investors don’t expect much economic growth.

Here are some of the risks that markets have been waking up to.

___

CHINA

A sharp slowdown in China threatens to remove a pillar of global growth. Slackening demand for raw materials there is hitting producers of oil and metals in other countries. Energy exporter Russia, for instance, slid into recession and its currency has plunged.

German automaker Daimler made a record operating profit last year, helped by a 41 percent surged in sales in China for its Mercedes-Benz luxury cars. But its shares fell when it announced a cautious outlook for only a slight profit increase for 2016 and “more moderate” growth in China. CEO Dieter Zetsche cautioned that he saw “more risks than opportunities” amid “restrained” global growth.

___

EMERGING MARKETS, SUBMERGING

Money is flowing out of so-called emerging markets like Brazil, Russia, South Africa and Turkey. Investors pulled $735 billion out of such countries in 2015 — the first year of net outflows since 1988, according to the Institute of International Finance.

And emerging markets aren’t so emerging any more: they provide 70 percent of expected global growth.

Central banks led by the U.S. Fed responded to the global recession by slashing interest rates and printing money. That encouraged investors in search of higher returns to place their money in emerging markets.

Now the Fed is trying to push up its interest rates, and those flows have gone into reverse, causing financial markets and currencies in emerging markets to sag. Debt becomes harder to repay.

IMF chief Christine Lagarde has warned of “spillback” effects from emerging markets on more advanced economies.

Stephen Lewis, chief economist at ADM Investor Services, argues the Fed should simply go ahead with raising rates to a more normal level.

“Unless we’re going to paralyze monetary policy in the advanced economies forevermore, it is inevitable that the funds that have gone into emerging markets are going to come back out of them,” he said.

___

UNCLE SAM

The other pillar of the global economy besides China, the U.S., is also now showing signs of weakness. Maybe not a recession, yet. But growth was a weak 0.7 annually during the fourth quarter. Factory output has declined.

Though unemployment has dropped, wages have not recovered quickly and companies appear to be unsettled by the global jitters.

A rising dollar — a side effect of expected Fed interest rate increases — could hurt exporters. That’s one reason the Fed may in fact hold off raising rates again soon.

___

BANKS

Banks stocks have been plunging in the U.S. and Europe.

In the U.S., low oil prices may mean companies involved in expensive drilling and extraction will be unable to repay loans made to dig wells that are no longer profitable.

In Europe, bank shares have been shaken by the bailout of four Italian lenders and fears about 1.2 trillion euros ($1.35 trillion) in bad loans across the 19 country currency union.

John Cryan, co-CEO of Deutsche Bank, had to take the unusual step of publicly reassuring that the bank’s finances were “rock-solid” after investors pounded the bank’s stock.

The spread of negative interest rates could reduce banks’ profitability, since it squeezes the different between the rates at which banks borrow and at which they lend.

Sick banks can choke off credit to companies and dump huge costs on governments, shareholders and creditors.

___

RETURN-FREE RISK

Low rates help people pay mortgages and buy cars. But there’s some concern that they suppress spending by savers, and may steer investment to less productive uses. The typical 10 million-yen ($87,900) in savings held by a household with a member over 65 would have earned $3,500 in 1995, but only returns $175 now, estimates Richard Katz, editor at the Oriental Economist.

“We’re retired, so it would be nice to see them go up,” said 75-year-old Lynne Metcalfe, who was having coffee and reading the morning paper with her husband in a Sydney shopping center Tuesday.

Metcalfe, a retired teacher, says she is part of a generation that lived frugally and thanks to that she and her husband haven’t had to change their savings or investment strategies. And though they’d like to see the rates go up for their own sake, “for our son’s sake, no,” she says. “Because he has a mortgage.”

___

OUT OF BULLETS?

With interest rates below zero in some cases, it’s much harder for central banks to apply more stimulus if needed.

Low rates and stimulus in the form of bond purchases — using some $3.6 trillion in newly printed money in the case of the Fed — have driven up stocks worldwide.

Yet inflation has remained quiescent. U.S. consumer prices fell 0.1 percent in December. European inflation is only 0.4 percent annually, despite massive ECB stimulus.

So markets may be realizing this is one downturn where the central banks can’t ride to the rescue as before.

Google’s Quantum Dream May Be Just Around The Corner

In 1981, Richard Feynman, probably the most famous physicist of his time asked the question: “Can we simulate physics on a computer?” At the time the answer was “theoretically yes,” but practically not at that time. Today, we may be on the verge of answering “yes” in practice to Feynman’s original question. Quantum computers operate in such a strange way and are so radically different from today’s computers that it requires some understanding of quantum mechanics and bizarre properties like “quantum entanglement.” Quantum computers are in a realm orders of magnitude beyond today’s supercomputers. Their application in specific computational problems like cryptography, Big Data analysis, computational fluid dynamics (CFD), and sub-atomic physics will change our World. Canadian quantum computing company, D-Wave Systems has been at the center of Google’s efforts to pioneer this technology.

Reblogged from New Scientist

 

31 August 2016

Revealed: Google’s plan for quantum computer supremacy

The field of quantum computing is undergoing a rapid shake-up, and engineers at Google have quietly set out a plan to dominate

By Jacob Aron

SOMEWHERE in California, Google is building a device that will usher in a new era for computing. It’s a quantum computer, the largest ever made, designed to prove once and for all that machines exploiting exotic physics can outperform the world’s top supercomputers.

And New Scientist has learned it could be ready sooner than anyone expected – perhaps even by the end of next year.

The quantum computing revolution has been a long time coming. In the 1980s, theorists realised that a computer based on quantum mechanics had the potential to vastly outperform ordinary, or classical, computers at certain tasks. But building one was another matter. Only recently has a quantum computer that can beat a classical one gone from a lab curiosity to something that could actually happen. Google wants to create the first.

The firm’s plans are secretive, and Google declined to comment for this article. But researchers contacted by New Scientist all believe it is on the cusp of a breakthrough, following presentations at conferences and private meetings.

“They are definitely the world leaders now, there is no doubt about it,” says Simon Devitt at the RIKEN Center for Emergent Matter Science in Japan. “It’s Google’s to lose. If Google’s not the group that does it, then something has gone wrong.”

We have had a glimpse of Google’s intentions. Last month, its engineers quietly published a paper detailing their plans (arxiv.org/abs/1608.00263). Their goal, audaciously named quantum supremacy, is to build the first quantum computer capable of performing a task no classical computer can.

“It’s a blueprint for what they’re planning to do in the next couple of years,” says Scott Aaronson at the University of Texas at Austin, who has discussed the plans with the team.

So how will they do it? Quantum computers process data as quantum bits, or qubits. Unlike classical bits, these can store a mixture of both 0 and 1 at the same time, thanks to the principle of quantum superposition. It’s this potential that gives quantum computers the edge at certain problems, like factoring large numbers. But ordinary computers are also pretty good at such tasks. Showing quantum computers are better would require thousands of qubits, which is far beyond our current technical ability.

Instead, Google wants to claim the prize with just 50 qubits. That’s still an ambitious goal – publicly, they have only announced a 9-qubit computer – but one within reach.

“It’s Google’s to lose. If Google’s not the group that does it, then something has gone wrong“

To help it succeed, Google has brought the fight to quantum’s home turf. It is focusing on a problem that is fiendishly difficult for ordinary computers but that a quantum computer will do naturally: simulating the behaviour of a random arrangement of quantum circuits.

Any small variation in the input into those quantum circuits can produce a massively different output, so it’s difficult for the classical computer to cheat with approximations to simplify the problem. “They’re doing a quantum version of chaos,” says Devitt. “The output is essentially random, so you have to compute everything.”

To push classical computing to the limit, Google turned to Edison, one of the most advanced supercomputers in the world, housed at the US National Energy Research Scientific Computing Center. Google had it simulate the behaviour of quantum circuits on increasingly larger grids of qubits, up to a 6 × 7 grid of 42 qubits.

This computation is difficult because as the grid size increases, the amount of memory needed to store everything balloons rapidly. A 6 × 4 grid needed just 268 megabytes, less than found in your average smartphone. The 6 × 7 grid demanded 70 terabytes, roughly 10,000 times that of a high-end PC.

Google stopped there because going to the next size up is currently impossible: a 48-qubit grid would require 2.252 petabytes of memory, almost double that of the top supercomputer in the world. If Google can solve the problem with a 50-qubit quantum computer, it will have beaten every other computer in existence.

Eyes on the prize

By setting out this clear test, Google hopes to avoid the problems that have plagued previous claims of quantum computers outperforming ordinary ones – including some made by Google.

Last year, the firm announced it had solved certain problems 100 million times faster than a classical computer by using a D-Wave quantum computer, a commercially available device with a controversial history. Experts immediately dismissed the results, saying they weren’t a fair comparison.

Google purchased its D-Wave computer in 2013 to figure out whether it could be used to improve search results and artificial intelligence. The following year, the firm hired John Martinis at the University of California, Santa Barbara, to design its own superconducting qubits. “His qubits are way higher quality,” says Aaronson.

It’s Martinis and colleagues who are now attempting to achieve quantum supremacy with 50 qubits, and many believe they will get there soon. “I think this is achievable within two or three years,” says Matthias Troyer at the Swiss Federal Institute of Technology in Zurich. “They’ve showed concrete steps on how they will do it.”

Martinis and colleagues have discussed a number of timelines for reaching this milestone, says Devitt. The earliest is by the end of this year, but that is unlikely. “I’m going to be optimistic and say maybe at the end of next year,” he says. “If they get it done even within the next five years, that will be a tremendous leap forward.”

The first successful quantum supremacy experiment won’t give us computers capable of solving any problem imaginable – based on current theory, those will need to be much larger machines. But having a working, small computer could drive innovation, or augment existing computers, making it the start of a new era.

Aaronson compares it to the first self-sustaining nuclear reaction, achieved by the Manhattan project in Chicago in 1942. “It might be a thing that causes people to say, if we want a full-scalable quantum computer, let’s talk numbers: how many billions of dollars?” he says.

Solving the challenges of building a 50-qubit device will prepare Google to construct something bigger. “It’s absolutely progress to building a fully scalable machine,” says Ian Walmsley at the University of Oxford.

For quantum computers to be truly useful in the long run, we will also need robust quantum error correction, a technique to mitigate the fragility of quantum states. Martinis and others are already working on this, but it will take longer than achieving quantum supremacy.

Still, achieving supremacy won’t be dismissed.

“Once a system hits quantum supremacy and is showing clear scale-up behaviour, it will be a flare in the sky to the private sector,” says Devitt. “It’s ready to move out of the labs.”

“The field is moving much faster than expected,” says Troyer. “It’s time to move quantum computing from science to engineering and really build devices.”