All Screens Are Not Created Equal

Recently, Taiwanese lawmakers approved the “Child and Youth Welfare and Protection Act,” making it illegal for children under the age of 18 to use electronic devices for excessive periods of time.

In the United States, we don’t have legislation restricting screen time, but organizations like the Campaign for a Commercial-Free Childhood have addressed the issue of screen time by creating Screen-Free Week, an annual initiative that encourages families to unplug from technology for a week.

But these actions ignore a fundamental principle: All screens are not created equal. A tablet, TV and computer are all different in terms of function, the way people interact with them and the type of content consumed. All things considered, why don’t we delve into what matters, which is the activity being done, rather than the channel or device?

The basic misconception stems from the notion that the screen itself is more important than the action being performed. Well-meaning organizations have made blanket recommendations calling for an end to screen time for kids, but these recommendations are based on obsolete studies, conducted prior to the iPad and other interactive devices.

In May 2014, Dr. Dimitri A. Christakis, co-author of the 2011 American Academy of Pediatrics Guidelines on Infants and Media, spoke out about the guidelines, arguing the “judicious use of interactive media is acceptable for children younger than the age of 2 years.”

Screens have evolved from the days of TV, when most viewing was passive and lacked interaction. Today, tablets can be used for language learning, playing games, watching Khan Academy videos or video chatting with family. The possibilities are endless, and while it’s all done on the same screen, each activity is different, tapping into different emotions, skills and parts of the brain. Knowing this, why would we treat all screen activities the same?

According to a 2014 Zero to Three study, “research shows that when parents and other trusted adults make screen use an interactive, shared experience, it can become a tool for learning, and the potential negative effects can be reduced.” The study advised parents to be selective with content and to “choose programs and apps with interactive components that engage your child’s participation, that use strong story lines, and that model positive interactions between characters.”

As with most things, a balance between kids’ activities is generally best. Too much of anything is not healthy. Reading books is great, but if your nose is stuck in a book and you never step outside, there’s an imbalance there. The same concept applies to sports. Being active and playing basketball is a fantastic way to get exercise and build teamwork skills, but if that means that you never pick up an instrument or draw a picture, then you are missing out on valuable experiences.

This concept is obvious for most parents, and the same simple approach applies to screen time  — keep a balance. If screens can provide value and be useful, use them! If not, put them away. Technology isn’t a one-size-fits-all solution and shouldn’t be treated as such, but it also shouldn’t be deemed categorically bad, either.

Instead, think of tablets as a tool — one that can be used for education, entertainment or communication, depending on your preference. It’s a versatile tool that contains the world’s collected information, all in one single place.

Does your child want to learn how to play the piano? There are videos online that can teach your little Mozart. Do you have a bookworm who is longing to read a new story? Snag a free e-book download. Does your little one miss Grandma and Grandpa? They’re just a video call away.

When you start thinking about technology as a tool, it becomes clear that the point is not to replace anything — it’s just to add value where it can. It shouldn’t take the place of face-to-face interaction. On the contrary, your phone helps you stay in touch with more people than you might otherwise. The two aren’t mutually exclusive. Having friends on Facebook doesn’t mean that you can’t have dinner without a phone on the table.

Use technology where it is useful. Teach your kids to think of it in the same way. It’s the same common sense you’re already teaching them.

We know that technology is going to play a major role in kids’ lives. It’s not a matter of “if” children should be using technology, but “how.”

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How Should We Learn?

Ignorance has been a fait accompli throughout the history of human society. There was never enough information about the world and how it functions, and even when we had it, few people had access. Whole branches of knowledge could be lost or simply stagnate, like much of science and mathematics in the European Dark Ages.

The internet changed all that. Data is everywhere, and knowledge is accessible on almost any subject imaginable with just a few clicks. Suddenly, we went from people ignorant of our own ignorance to content consumers struggling to keep up with the information all around us.

We will never stop being the deer in the headlights of knowledge. We shouldn’t celebrate ignorance, but neither can we cure it. Instead, students – hopefully aided someday by a new generation of education startups – need to learn how to navigate in a world where the frontier of knowledge is rapidly expanding and dynamic. We need to inculcate purpose-driven learning and move away from a model of slurping up all the data in the world.

Cancel The Deluge

When pundits describe data in the 21st century, they often resort to the flood metaphor, describing how we are “inundated” or “awash” with data. It is true that the internet has given us almost unlimited and practically free access to the sum of all human knowledge in a way never before seen in history.

The flood metaphor breaks down pretty quickly though upon deeper inspection. Data doesn’t just rush flow by us as we struggle to stay anchored above the deluge. Rather, we have built sophisticated tools to filter through that data and find the pieces that we are most interested in.

Yet, we still feel so overwhelmed by all of this. We are so concerned about our next email or text message that we have to buy special devices for our wrists just to make sure we aren’t falling behind. It’s no better at work, where a majority of executives feel completely powerless to handle the roaring current of data flowing in (I’m metaphorically guilty now).

The challenge is that most of us aren’t actually that good at learning. Sure, we can seek out facts, read news articles and tweets, and analyze tough problems. The software industry in particular is filled with autodidacts who can learn both the higher-level architecture of a massive computer system and the extremely nuanced implementation details required to run it. Data is abundant, and we can consume all of it given enough time.

Data is not knowledge however, and knowledge is not wisdom.

I am reminded of one of my “friends”* who years ago used to constantly click on the random article button on Wikipedia and ingest the articles as quickly as possible. He was considered smart by many people, even brilliant by some who marveled at the level of his know-how. In the end, that data was superficial, enough to keep a conversation going with a specialist but without the ability to fully engage on a topic.

We can consume all the facts in the world and still not comprehend what is really going on. The rise of explanatory journalism – pushed aggressively by Vox and several other internet publications – is a partial antidote to this problem. However, we are only moving from data to knowledge, and we still haven’t found wisdom.

The Ignorance Gap

One of my professors once described education as a fraction. The numerator is the knowledge we know about the world, and the denominator is our understanding about all of the knowledge that exists in the world. He argued that grade school equally expanded the numerator and denominator, and that college expanded the numerator at a slightly faster clip, giving everyone confidence.

The punch line was that getting a doctorate degree would only expand the denominator, which is why after five or more additional years at a university, people feel dumber than when they first started.

One reason we feel overwhelmed by all of this data is that we suddenly know how much we don’t know about the world. Our collective denominators have expanded rapidly in the last twenty years, without a concomitant increase in our own base of knowledge. We are constantly being confronted with stories we know nothing about, in countries we weren’t even truly aware existed.

We have to accept our present condition: we will always be more ignorant than knowledgeable about the world. Our societies are too complicated and the human lifespan is too short to ever hope to try to bridge that gulf.

Instead, we need to accept ignorance and handle it graciously. That doesn’t mean we should revel in our ignorance, but we shouldn’t be bothered when we don’t know the latest trend or some news story, nor should we judge others as “stupid” if they don’t know some factoid. There is a fear that we will enter a conversation not being completely up-to-date, but what is the point of a conversation if all we are exchanging are the facts we already know?

Wisdom comes when we increase both our numerators and our denominators. We need to both know what we know and as much as possible about what we don’t.

How Should We Learn?

We have had an explosion of learning products published online, whether sites like Wikipedia that offer a huge library of content for consumption or MOOCs like Udacity and Coursera that have more interactivity built in. We can learn about almost any subject imaginable today, and of course, get the details and data that the internet always offers.

Yet, these companies have barely started to build platforms for purpose-driven learning. In fact, the rhetoric around online education has focused so much on skills, credentials, and mechanisms of accountability that we have mostly neglected building up the more fundamental skill of simply learning what information is invaluable, merely valuable, and useless in a field.

We need to develop thinkers, not information processors. That’s incredibly hard in a world where students want instantly useful skills that are going to be worth a premium in industry. Just look at all of the coding education startups – there is far more coverage of CSS gradients than algorithms in many of these curriculums. Yet that deeper material is precisely what will differentiate students as thoughtful developers.

We do students a disservice when we only focus on that numerator of knowledge they know rather than that denominator of knowledge they are aware of exists. Yes, we want students to know how to process an HTML form, or to run a regression. But we also want them to become independent learners, adults who know when they need help, and how they might seek out the answers they are looking for.

Two weeks ago, I asked why the university is still here. The answer really comes down to its ability to teach students both knowledge and wisdom. There is no reason this can’t be done online or through books, but so far it hasn’t. It remains one of the largest opportunities in the edtech learning space available to entrepreneurs today.

People can be incredibly smart, even brilliant sometimes, and yet still be bad at deep learning. The internet has given us this omniscience that we have never had before, and we suddenly have this ability to see all of the details that we don’t know about. We need to inculcate the skills to navigate that world, handle ambiguity and ignorance, and become more purpose-driven learners.

*Note: May actually be me.

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Hard-Core Career Advice For A 13-Year-Old

I’m ashamed because I felt the need to brag to my 13-year-old. But she asked for it. My daughter Mollie had a homework assignment for her guidance class that had her ask me what I do for a living. This put me in a weird position. I do a lot of things. I didn’t know how to tell her.

But it also shows that school is too focused on “education leads to a job.” This is not true anymore.

The reality is the average person has 14 different careers in their lives and the average multi-millionaire has seven different sources of income. So anything that is “one-job focused” will create a generation of kids that will learn the hard way that life doesn’t work like that.

The world changes fast. The jobs I do now didn’t exist when I was 13. And the jobs she will do don’t exist now. So learning how to learn is more important than memorizing facts.

Here’s how the assignment went:

What is the name of your occupation? What are the educational requirements to work in your career?

I don’t have a single occupation. And you can drop out of school right now and do what I do. In fact, Mollie, I hope you drop out of school right now. Please?

I’m a firm believer that people feel more well-being in their life when they are around people they love, they are good at what they do, and they have some autonomy (freedom) in how they make decisions.

You have to give yourself permission to totally humiliate yourself repeatedly.

You get more freedom in your life by doing many different things. Some of which make money, some don’t, but all increase your competence, relationships and freedom: the three musketeers of well-being.

So I am a writer (I write books and articles). I’m a podcaster (I’ve had 10 million downloads of my podcast). I speak occasionally. And I advise or invest in over 30 different companies.

And I screw up a lot. If you do a lot of things, you screw up a lot of things. You have to give yourself permission to totally humiliate yourself repeatedly. If you can do that, then happiness results.

With companies I advise I try to stick to one criteria: can this company help over a billion people [I think I exaggerated here. Pathetically bragging to a 13-year-old. Maybe a million people is more accurate. Or, heck, a hundred people.]

And remember, there are zero formal education requirements for what I do.

What do you like in your work? What do you dislike?

I am really happy with the friends I’ve made in the past five years. Also, I learn a lot. Probably a day has not gone by where I haven’t learned a huge amount.

The thing I dislike is that sometimes I don’t say “no” enough (even though I wrote the book “The Power of No.”) Here is the secret: If something is not a “hell yes!” then you should say “no.”

If something is not a “hell yes!” then you should say “no.”

But even though this is a good technique, it is sometimes hard to follow and you end up saying “yes” because you want people to like you and you end up having less time to do the things that make you creative and give you life and energy.

I don’t know how to solve that. Practice.

How is your day typically spent? What are your work hours?

I have no work hours. Neither will you. You have school hours now but those are fake work hours.

BUT.

Daily routine is very important. We are at different levels of energy and productivity throughout the day. For instance, at an extreme example, late at night we tend to be tired (that is why we sleep). So if you try to do important work at night, it might not come out good.

We are at our peak productivity in our brain from two to four hours after we are awake.

Daily routine is very important. We are at different levels of energy and productivity throughout the day.

So if you wake up at 5 a.m., from 7 a.m. to 9 a.m. your brain is about 100 times more active than it is at night. So I wake up at 5 a.m. I read for two hours. Then I write for two hours because this is the activity that is most important to me.

Then I walk or exercise and then start to do things that require less and less brain power. Like advising businesses (I will do that first) and then do things like running errands or things that don’t require as much energy.

Our brain is only 2 percent of our body mass but burns 25 percent of our calories every day. So how you make use of this magnificent tool that you have is very important for how well your day turns out.

How did you chose your occupation?

I don’t have an occupation.

But then I got desperate and scared. I started building businesses when I was in my 20s because I needed to make some money.

When your sister was born it was like this new U.S. citizen moved into my house and she was one foot tall, didn’t speak English, couldn’t walk, shat all over the floor, and cried all the time, and I had to take care of her. So I felt I needed to make money to do that.

Sometimes I was good at it and sometimes I was incredibly stressed out and bad at it. Sometimes I wanted to run away. But I’m glad I didn’t. Because now both that little one-foot-tall person and you are now in my life.

I’ve built over 20 businesses and maybe 17 of them have failed and three have done well. But I’ve also loved writing and creating since I was a little kid. I’ve written every single day for almost the past 25 years.

Because I know a lot of people and write about a lot of people, I’ve also started doing a “radio show” (podcast) where I interview people. I’ve interviewed entrepreneurs (Mark Cuban, Arianna Huffington), entertainers (Coolio, Amanda Palmer), many authors, many athletes, and all people who have tried to make their lives better.

I interview them because I want to learn from them and share their stories with my listeners. I try to be a good interviewer but it’s hard. I try to practice.

For every 10 people who like you, at least one or two people hate you and they are the ones who reach out and contact you. So the better you do, the more you hear from people who hate you. So you have to give yourself permission to do things that a lot of people hate.

And I like helping businesses because often we are solving problems very important to many people.

When you have impact on people, money is a byproduct.

I chose to do these things because I love them and I also love the impact they have on people. It was very hard for me to figure out all the things I want to do and it often changes. When you have impact on people, money is a byproduct. You get better and better at how to make that byproduct when you mine for value.

Every six months I end up doing different things. I have no idea what I will be doing for a living six months from now. Nobody does. Nothing in life is predictable. You can say, “I will do X” but then in a year you will end up doing Y and that’s fine.

Being unpredictable is more normal than being predictable. Humans were made to be nomads, to be in different environments, to roam the world, and we evolved to adapt quickly to new experiences.

So what new experiences we all adapt to six months from now is unknown. But I hope and think I will still love what I do and still help people and still be creative in everything I do.

What advice would you suggest to young people regarding career choices?

Whenever you are curious, ask questions.

If you feel a question is stupid then definitely ask that question. If you are shy about asking a question, then ask two questions.

Your mom has a good trick for this. Whenever she is at a conference and it’s question time, she raises her hand fast before she even knows what question she wants to ask. Then she has to figure out a question to ask.

Otherwise you stay in a tight line with everyone else. You have to step out of the line to see how the entire formation works.

Curiosity will fuel this giant engine we call our brain. It will help you learn things that nobody else knows. It will help you figure out what you want to do and be and what problems you want to solve faster than all the people who are too afraid to ask questions.

The next thing is: always be healthy. You can’t be creative if you are sick. Every seven years your body is made up of 100 percent new cells and the old cells die.

Where do the cells come from? Mostly from the food you eat. Eat junk and you are junk. Eat well and you are well.

Every day is the only day we have to work with.

Also remember this saying: “You are the average of the five people you surround yourself with.” If you surround yourself with good, creative, smart people then you will be a good, creative, smart person. These are like your “emotional cells.” They change 100 percent every six months.

Every day remember to be creative, even a little bit. Write, or read, or draw, or write down 10 ideas. This builds your “creative cells.” Note that my biology skills are off the chain.

Finally, remember that every day is the only day we have to work with. Regrets are already dead in the past. And worries about the future are unpredictable. So be grateful for the many blessings you have right now. You have a blessed life with an entire world that is your drawing board. Paint a beautiful picture on it.

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London Is Redefining Tech Startups Through Adventurous Capital

London hit an important milestone this month, but you may have missed the news as it emerged with a characteristically British lack of fuss. For the first time, the city’s technology startups attracted in excess of half a billion dollars of VC funding in a single quarter – $646.98 million for the period January to March 2015.

The data, collected by London and Partners (the evangelical wing of the London Mayoralty) puts the city on course for a $2 billion-plus investment year. That feels a lot like progress when you consider that London’s tech firms scraped together a miserly $10 million in Q2 2010. However, on purely numerical terms, our achievements are still modest.

London’s 2014 funding total of $1.35 billion puts it on par with Redwood City, Calif., population 76,000 and home to Evernote, Reputation and Turn. Even more humbling is the fact that San Francisco-based Uber raised $3 billion on its own last year.

But size isn’t everything. London exerted architectural influence long before its sedate skyline was punctured by the monolithic Shard. So it is with our technology companies – modestly proportioned, but globally significant.

Consider fintech and the foundations on which this rapidly growing sector is built; London is the world’s leading foreign exchange hub, handling $2.6 trillion per day, more than double that of New York City. It sits on the prime meridian, literally the centre of the world, at least in terms of time zones.

The U.S. is so large and service-hungry that there’s also money to be had launching the first, second and even third valet parking app.

Yet, Britain is a small island with a population of just 60 million people. The need to seek and service markets beyond our own borders shapes London’s burgeoning technology firms. Many of the companies that have attracted substantial investment – our own included – have internationalized rapidly.

By contrast, some of the best known and most generously funded U.S. startups are focused on American solutions to American problems. And why shouldn’t they be? The U.S. is a huge and lucrative market whose financial system is creakingly antiquated and ripe for disruption. Domestic bank transfers still take several days and the slow adoption of chip and pin technologies and NFC cards primed shoppers for the likes of Square and Apple Pay.

Beyond finance, the U.S. is so large and service-hungry that there’s also money to be had launching the first, second and even third valet parking app.

It is still possible, in 2015, to create a multi-billion-dollar business without venturing beyond the borders of the United States. By contrast, European startups enjoying a level of success are compelled to internationalize almost immediately.

Compare Square, which, six years after launch, is only available in the U.S., Canada and Japan, to its younger Swedish counterpart iZettle, which is already being used in 10 countries.

Early in the growth cycle we are faced with operating in multiple legal jurisdictions, setting up local business entities, language translation, international recruiting, marketing and customer support. That drives very different business models.

International agility is increasingly important in a connected world because common platforms and global distribution means that dominant players in one territory can quickly find themselves under siege from overseas. Facebook’s defensive purchase of WhatsApp showed that entrenchment in one or two large markets is no match for global virality.

Having a different perspective on internationalization also opens up new business opportunities. It is tempting to turn first to big, homogenous markets like the U.S. and China. Everything else is seen as “long tail” because the ratio of set-up effort to financial return is less favorable. However, there is such a thing as a “rest of the world” business.

And the potential rewards are far from long tail. In the case of international remittances, $5.5 billion is sent annually, most of which is currently offline. These growth patterns are not exclusive to London; we see them elsewhere in Europe also.

Having a different perspective on internationalization also opens up new business opportunities.

Adyen is a Netherlands-based online payments service (and fellow-member of the European fintech 50). Fewer than 10 years old, it now handles more than 180 currencies and is used by the likes of Facebook, Spotify and Airbnb. Adyen is favored precisely because it solves the problem of diverse local payment systems. Its rival, the longer established WorldPay, is based in London.

The effect of investors’ increasing engagement with these ‘rest of world’ opportunities is startling. Although the UK’s share of global fintech investment is still relatively small in financial terms, our rate of growth is not. According to Accenture, investments in UK fintech increased by 3x the global average and 5x that of Silicon Valley over a five-year period.

In 1982 Chariots of Fire screenwriter Colin Welland proclaimed to the Oscars crowd “the British are coming.” More than 30 years later, few in Hollywood would dispute that prediction.

There is some way to go before UK startups and London fintechs in particular enjoy Benedict Cumberbatch levels of acclaim stateside, but we are already more than ones to watch. We’re building something here, we’re doing it differently, and it looks like we’re onto something.

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A Fundraising Template Every Entrepreneur Can Use

Raising massive rounds these days is so commonplace that most of us tune out fundraising news altogether. The fundraising environment has changed so dramatically over the past four years, it’s almost incomprehensible to those of us who lived through it.

A lot has been made of how ridiculous late-stage rounds have gotten, as well. Bill Gurley penned one of the best pieces I’ve read on the subject recently; to raise late-stage rounds, startups go through far less diligence and scrutiny than they would if they decide to go public. As a result, a lot of late-stage startups lack the operational discipline necessary to go public. I would argue that trend trickles down all the way to the earliest stages of venture-backed companies and really starts there.

Early-stage CEOs are practically taught to not even put a financial model in any of their fundraising decks until they get to their Series B. It’s all about building product in the early stages right? You don’t need to worry about figuring out a business since it’s all about growth in the early stages, right? Wrong.

Every CEO needs to fully understand the cost of doing business before deciding to raise any outside capital. You don’t want your burn rate to get ridiculous in the early days, so force yourself to put something basic together, even if it’s out of your comfort zone.

For those of you short on time, I decided to put something together very basic for you, which will at least give you a start in understanding how much you need to raise to get to your next milestone. I used Gumroad to share the link – you don’t need to pay anything to download the model – just donate “$0.” A few notes about my template are below.

This is not a one-size-fits-all solution. Think about customizing this in the context of your business. As an example, some companies may want to get a lot more granular about sales expenses to see if it makes sense to build an enterprise sales team. In order to analyze those costs, you will need to, as an addendum to this, add a lot of details on the quotas of individual salespeople, seasonality, ramp time, and numerous other factors. My model, simplistically looks at the fully loaded cost of salespeople if they hit their quota.

Include all of your recurring expenses, however small. The little things add up and you will discover that you are spending way more than you should on services you don’t use. Once you write down all of the little expenses, you’ll realize you’re burning a big hole in your wallet.

Write down everything as small as a domain that you bought from GoDaddy for a $19.95/year; you need to be frugal in the early days in order to be disciplined. Unanticipated, or unaccounted-for expenses will kill your startup faster than a bullet.

You should eventually take the time to build a marketing funnel. As you mature as a company, the marketing tab should be more granular and based on a real-life cost per acquisition number. For example, if you know that it costs you $200 to acquire a customer, and you know what your conversion rate by channel is (Facebook, Google, email, etc.), you should build an addendum to this that gets granular about which channels you intend to spend on.

Really sophisticated companies (generally at the growth stages) can get fancy with this and know exactly how many leads they are going to “buy” with their new funding, how many will convert to sales-qualified leads, and how many will eventually turn into paying customers (and know the LTV). This helps companies understand how quickly they can grow in the context of their funding.

You will spend more on vendors than you think, so cushion that substantially. The one that always gets people is “recruiting expenses.” The market is hyper-competitive right now for talent, and you may think for a while that you can do it yourself. The reality is, you will hire a contingency recruiter at some point in your company’s life cycle, and when you do, you will get a $25,000 surprise bill. I recommend third-party services to hire engineers; it takes the risk out of this type of expense because you only pay if the employee works out for a prolonged period of time.

“Fringe” is much higher than you think. The cost of hiring a salaried, full-time employee in the San Francisco Bay Area is expensive. It’s not limited to salary itself – you have to burden the employee’s cost to account for things like healthcare, 401k (if you’re going to have one), payroll tax and so on. To hire a $100k full-time employee in San Francisco in reality costs substantially more than $100k.

Office space prices are getting ridiculous. I often joke with my other founder friends that the reason companies have to raise so much is to pay their leases. Depending on the neighborhood, you will spend up to $97 per square foot in San Francisco. Not only that, but it’s rare to find a property management company that will take you in these days for lease terms less than three years. Kiss a few hundred k of your new shiny money behind to office space.

The bottom line is the money goes extremely fast depending on where you’re based. Bay Area salaries and office space are out of control (but the talent pool and access to capital are amazing), and if you are building a company here you will need more capital. With that being said, do not raise a dollar more than you need to – otherwise you may end up like Javeed from “Silicon Valley.”

I encourage every early-stage entrepreneur to use this, or something like this when considering how much to raise.

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The Obsession With Silicon Everywhere

There are many commentators who argue that there is a bubble in Silicon Valley today. They may or may not be right, but there is certainly a bubble in places named after the preeminent global tech ecosystem.

Silicon Border. Silicon Hills. Silicon Steppe. Silicon Prairie. Silicon Roundabout. Silicon Gulf. Silicon Avenue. Silicon Canal. Silicon Alley. Silicon Beach. Silicon Forest. Philadelphia has a groaner of a region with Philicon Valley (whoever invented this should be banished from marketing for five years or forced to market Path). That leaves Korea as one of the only places in the world to emphasize geography over metals with its Honghap Valley district.

Silicon may be one of the most abundant materials on the earth, but the absolute obsession with naming any tech office park after Silicon Valley is a trend that needs to stop.

Innovation ecosystems don’t just pop out of the ground once a sign blasting “SILICON!” is staked. Instead, they are inculcated over many years through effective government policy around education and business regulation, plus are usually offshoots from other globally-competitive industries. It is no surprise that some of the most successful new high-tech regions of the past decade are in Los Angeles, New York, and London.

Pursuing disruptive technology companies as a policy is deeply distracting, and governments will find that their time and money would be better spent investing in the quality of life of their residents.

The Silicon Mirage

Every government in the industrialized world is talking about high-tech growth. It’s understandable. High-tech jobs tend to pay well in many parts of the world, and the jobs are “clean” relative to other areas of the economy like manufacturing. Rapidly growing companies make for a great economic revitalization story, and the creation of millionaires can get voters to ignore more fundamental issues with an economy.

Plus, it’s just pure fun. It’s rare in policy where science fiction and reality get to meet, and one of those is innovation ecosystem development. Witness all the politicians who have stopped by Facebook, Google, or Twitter over the past few years. There is a sexy quality to these companies that politicians want to be near.

Of course, never mentioned during those photo ops is the dark underbelly of Silicon Valley. Inequality is growing rapidly in the region, driven by the hollowing out of the middle class. Also growing are the rents, which have surged in all the high-tech areas due to increasing demand from high-income earners and limited housing construction. In addition, politicians seem willfully blind to the millions of jobs displaced by computer automation over the last few decades.

High-tech can have incredible economic performance, but it is not an inclusive industry like manufacturing, where highly-paid executives, designers, and product managers can work alongside middle-income factory workers. It really is an all-or-nothing industry: either you can perform at a peak level and net the full SV compensation package, or you are mostly irrelevant. The bus drivers of tech’s private shuttles and the security guards at Google would probably know a thing or two about that.

It’s certainly not unusual for politicians to pursue these sorts of elite jobs out of status and glamour. Many state governments in the United States offer film tax credits to production companies to shoot movies within their states, a system of corporate welfare that is now starting to be repealed since it doesn’t work.

Unfortunately, tech is a harder beast to analyze, which is why it continues to flourish in policymaking circles. There is all of this supposed “magic” that happens when we add the high-tech powder into the urban economy soup. Industries become more competitive, quality of life should improve, and the city becomes more attractive to potential workers. Like magic!

The reality is harder to discern, but we are probably spending too much. Technology is indeed a “good” industry that adds value to an economy (as do many other industries, of course). The challenge is matching the value created with the policy incentives and programs that suck up government revenues. In many places throughout the world, spending remains grossly unbalanced.

The Silicon Valley Playbook

One of the incredible parts of attending government policymaking conferences on innovation ecosystems (and you thought C-SPAN was boring!) is that few politicians and their policy managers even know what Silicon Valley is, or more specifically, what makes it tick.

The region has many “key” qualities, but two are far more important than the others. The first is risk-seeking behavior, which should be self-evident every time you hear about another crazy entrepreneur with a crazy idea, and especially when you hear about the venture capitalist willing to throw millions behind him or her. Everyone in this industry understands risk, albeit with different tolerances, and is willing to play the game to make huge returns.

The other characteristic is that the region is entirely centered on extremely fast growth. Engineers inexorably move to faster growing companies so talent is concentrated in the most likely future success stories. Lawyers and accountants are willing to push the law around taxes and valuations in ways that firms in other regions are simply not willing to do.

Here is the thing: Silicon Valley is not unique in the United States as a dynamic innovation ecosystem. Both New York in finance and Los Angeles in media are examples of regions that have many of the same qualities of San Francisco. Producers in Hollywood are just as calculating about creativity and returns as their venture capital brethren. That’s why Silicon Beach and Silicon Alley have had disproportionately faster growth than other newer tech regions in the world.

The good news is that most nations already have some sort of industry that fits this pattern. Rather than trying to reinvent the wheel by importing tech companies, governments would do better to invest their time into increasing the competitiveness of these already-existing industries. In other words, accentuate the strengths.

Balancing Silicon And Reality

The tech industry is held in high status by many throughout the world, so it is little surprise that politicians would try to attract this industry to their home districts. Unfortunately, that spending is often wasted on useless initiatives designed to build a startup ecosystem at the expense of the actual strengths of the local economy.

Instead of spending, try listening. Maybe the regulations around venture capital need to be reworked. Maybe hiring and firing for startups is prohibitively expensive. Maybe broadband networks need to be modernized. Every region and city in the world has something it is doing well that could be potentially world-changing. That will always be your best ticket to the high-growth lottery.

Along this line, realize that the most impactful change is going to come from bottoms-up ecosystem development. There is incredible money to be made in innovation ecosystems, and so there is rarely an incentive problem when it comes to the numbers. Often a change in culture is the first step to building these regions, and that will only come when the people decide it themselves.

Finally, and most practically, spend the time you would have spent on startups on the fundamentals of your region instead. Well-diversified economies with great public amenities are always going to be desired by the kinds of workers these types of industries attract. Random startup incentives are almost certainly less useful than, say, a great transportation system.

Part of the Silicon Valley ethos is learning to forge your own path. My advice to politicians is to do the same. A Silicon Path.

Featured Image: Danny Crichton

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Push For Greater State Surveillance Powers Could Have Chilling Effect On U.K. Tech Sector

The U.K. government is lining up a new piece of legislation to expand the state’s digital data capture powers. The incoming bill, the Investigatory Powers Bill, was announced in the Queen’s speech this week. It has not yet been published in draft form so specific details of what is being planned remains unclear, but in recent times the Conservative party has been banging the drum to expand the type and volume of captured comms data. The U.K. Prime Minister has even appeared to suggest that strong encryption should be outlawed.

The Telegraph newspaper this week suggested new powers to be outlined in the Bill will require companies like Google and Facebook to give U.K. intelligence agencies access to the encrypted conversations of suspected terrorists and criminals. That scenario presupposes Internet companies have the ability to access their users’ encrypted messages. While that is certainly true for some digital services with a sloppy attitude to security (or with business models that rely on data mining their users), others, such as Apple, claim they intentionally do not hold encryption keys — which presumably sets up a legal clash with security- and privacy-conscious tech companies and the U.K. government. Does the Tory government intend to make iMessage illegal? That really will be a *gets popcorn* moment…

The Tory’s prior attempt to expand the state’s data capture powers, the Communications Data Bill — widely criticized as a ‘Snoopers’ Charter’, on the grounds that it would have required ISPs to retain detailed data on web usage — failed to pass through Parliament owing to the lack of support from the Conservative’s Lib Dem coalition partners. The new Tory majority government has no such limitation. Former Lib Dem MP Julian Huppert, who lost his seat in the election this month but was a prominent critic of the Communications Data Bill, tells TechCrunch he has concerns about the surveillance powers that the government will be pushing for.

The concept of keeping track of every website everybody ever goes to, or of requiring ISPs to keep track of what you do on Facebook all the time are deeply intrusive.

“We’ll have to see how much they’ll try and throw in to it. When they were trying to push the Communications Data Bill, initially, the first version was incredibly broadbrush and afforded powers to do any data collection. They then admitted, during the process of our [parliamentary committee] enquiry, that actually there were only three things they particularly wanted. One of which was IP addressing matching, which there was good evidence for and we agreed to do… One was about requiring ISPs to keep track of web logs, effectively. So a list of every website you go to, and things like that. And the third thing was to have a power to require ISPs to keep track of third party information — so what you do on Facebook, what you do on any other site,” says Huppert.

“Those were the three things they said they wanted. The IP address matching basically was the only thing they had any evidence for. And it doesn’t involve any significant privacy intrusions but has huge advantages. Whereas I think the concept of keeping track of every website everybody ever goes to, or of requiring ISPs to keep track of what you do on Facebook all the time are deeply intrusive. And actually they couldn’t come up with any significant evidence of why it was useful.”

“There should be a clear piece of legislation that sets out what is ok, what is not ok, what the processes are for changing it. And it needs to be written with an acceptance of the need for accountability. And the need to have as much transparency as is consistent with the genuine requirements for operational work. But that’s not the approach that’s been taken before. It’s not the approach that the Home Secretary has previously urged. Maybe she will change her mind this time but I’m sceptical,” he adds.

“I worry that the Home Secretary will largely try to simply procure more powers for the state without justifying it or consider the count of balancing issues that there are. And certainly, like we’ve seen with the Prime Minister’s comments about encryption, those are huge threats to the UK technology sectors. And is definitely not the right way to proceed.”

Beyond the overreach and privacy intrusion of having the state require systematic logging of citizens’ web browsing habits and social media activity, another reason to oppose more expansive state data retention is that it makes the intelligence agencies’ job harder — given it increases the noise to signal ration, as Huppert notes.

“There’s no doubt that if you demand more things you have more data, and if you believe that the problem the intelligence services face at the moment is a shortage of data then it would address the problem. I think the problem is they don’t know what to do with all the data that they have. If you look at the killing of [U.K. soldier] Lee Rigby for example the problem isn’t that they have no idea. The problem is they have so much data they couldn’t prioritize it properly,” he argues.

“So unlike IP address matching where there really was a strong case, there isn’t a clear case here. Beyond ‘we can think of some situations where it might be useful’. And I think one of the things that people should look very very carefully at this is what is the evidence for any of the claims that are made. We certainly found the ones given initially were, I think the word we used was ‘misleading’.”

He also notes that the Joint Committee report on the draft Communications Data bill was hugely critical about the lack of data ministers were able to provide to support assertions that expanding data capture powers for counter-terrorism purposes would save lives. So that’s another thorny problem with legislation in this area — the government can and does shroud its arguments in claims of national security secrecy. Saying, in essence, ‘we need more data — but we can’t tell you why’.

And where the U.K. Parliament’s Intelligence and Security Committee should be playing a robust role in holding the government to account in such a sensitive area, Huppert says there has been further failure. So he’s also not putting much store in claims that the Investigatory Powers Bill will “provide for appropriate oversight and safeguard arrangements”.

“We do need better oversight. The intelligence services play an incredibly important role and we want them to be able to do their jobs in a clear and accountable way. But the ISC has not played that role,” he adds. “The Investigatory Powers Tribunal ruled against the government but the executive response was to do nothing and soon after deny that the ruling had happened. So I don’t have much confidence in that.”

One portion of U.K. legislation he does support overhauling is RIPA. Aka the Regulation of Investigatory Powers Act 2000, which regulates the powers public bodies have to carry out surveillance and communications interception. Briefing notes for the Investigatory Powers Bill state it will aim to “modernise our law in these areas and ensure it is fit for purpose”.

RIPA has been criticized for years for eroding press freedoms and sanctioning disproportionate surveillance — by, for instance, enabling police and local councils to spy on journalists. Or, in another instance, a local authorities to check if a family was living in a school catchment area. So there’s a clear need for ripping up RIPA and starting again.

But again Huppert has concerns about the government’s approach here.

“RIPA does need to be re-written. There’s no doubt about that,” he says. “It is an atrociously written piece of legislation… I think that everybody agrees RIPA is not fit for purpose. And that would include strong critics like myself but also if you look at some of the things that [Commissioner for the Global Commission on Internet Governance] David Omand has said… He’s argued for full public and parliamentary understanding of new powers… So I do think we need to have a re-write of RIPA but the correct way to do that is through the joint committee process, thinking about it slowly and carefully — not something rammed through by a new government eager to get on with it.

“And the intention, which the Tories had agreed to or stated publicly, was that [to get this balance] there would be a joint committee set up between both houses to consider how to re-do RIPA. And it does seem to me that they are jumping the gun somewhat on it.”

Huppert is not alone in his concerns either. This week a UN report dubbed encryption an essential tool for protecting the right of freedom of opinion and expression in the digital age. While Sir Tim Berners-Lee, inventor of the world wide web, called for checks and balances on government surveillance. Speaking at an Internet festival taking place in London this week he asked of politicians: “Can you show us that you can build a system which is accountable to us, where when the security services take the ability to look at private data, they do it in a way where it goes through a court, they do in way so my personal data is not going to be snooped on and when people do have their data snooped on it’s only used in a very serious process of tracking down organised crime and terrorism?”

The Investigatory Powers Bill is one of a series of initial bills announced in the Queen’s speech, which sets out the government legislative agenda for the new Parliament — so shoring up and expanding state surveillance and data capture powers is evidently front of mind and a clear priority for the new U.K. government. How that preoccupation with supporting and enabling greater state powers of intrusion on the one hand vs an apparent desire to modernize problematic older laws pertaining to interception powers plays out remains to be seen. But the government’s anti-encryption rhetoric suggests another serious clash of politics vs technology is incoming — the outcome of which will ripple out to affect both U.K. web users and their online behavior, and global companies doing business in the U.K.

The U.K. is often referred to as the most surveilled country in the world — typically a reference to the pervasive use of CCTV. At the last count there were estimated to be between 4 million and 5.9 million of these surveillance cameras in the U.K. (which has a population of around 64 million), although the vast majority are privately owned and operated — rather than being directly controlled by the state. (The number of publicly operated cameras in England and Wales is around 100,000.)

This month the U.K.’s surveillance camera commissioner warned that budget cuts are forcing councils to switch off CCTV cameras. But the idea that state surveillance capabilities will diminish because of shrinking government resources seems fantastical. Rather the role of providing state surveillance apparatus continues to be outsourced to private operators. So U.K. police and intelligence agencies obtain whatever CCTV footage they’re after from the private operator funding a camera in their shop or carpark or driveway — or, hey, even that in-home Dropcam or the lens on that life-logging wearable that never stops recording what’s going on around you. Imagine the power of state surveillance tapping into an expansive Internet of Things infrastructure that ceaselessly gathers real-time data on every point of human intersection — public and ‘private’.

When it comes to surveillance of digital comms data, this same outsourcing modus operandi used with CCTV is being applied by governments to Internet companies — with the U.K. government now preparing to push one of the most hawkish data retention agendas in the Western world, and that despite the censure that has been directed at systematic digital dragnets in the wake of the Snowden revelations. How hugely powerful commercial digital platforms respond to being co-opted as the coal face of state surveillance, where their user data is then subject to systematic mining by the state as a byproduct of citizens’ digital participation, continues to be one of the most pressing issues of our technology-fueled times.

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