Silicon Valley Blog

San Francisco new hub for venture capital

noreply@blogger.com (Anonymous) — Tue, 18 Jun 2013 06:08:00 -0700

San Francisco-Oakland Bay Bridge

San Francisco has surpassed Silicon Valley as the nation's top hub for venture capital. Greater San Francisco, including Oakland, attracted some $7 billion in VC money in 2012, compared to nearly $4 billion for the San Jose-Silicon Valley area. The Bay Area as a whole attracted over $10 billion in venture capital, about 40 percent of the nationwide total, reports The Atlantic Cities.

San Francisco's emergence is part of a growing movement toward urban tech centers, away from suburban office parks such as Silicon Valley, the Route 128 suburbs outside Boston and the Raleigh-Durham Research Triangle.

New York City is now the number one destination for startups, slightly ahead of San Francisco. London is the third most popular city for startups, reflecting a global urban trend.

Silicon Valley started migrating to San Francisco not long after Twitter set up shop there, reports the San Jose Mercury News.

Twitter's new headquarters in San Francisco

Last year, Pinterest moved from Silicon Valley to San Francisco. Young tech workers, such as those that work at startups like Dropbox, Yelp and Airbnb, are attracted to San Francisco, reports the San Francisco Chronicle.

San Francisco's famous fog has not been a deterrent to its tech renaissance

SoMa is the neighborhood near the Bay Bridge and downtown San Francisco that is the epicenter for the city's startups, including Twitter. The neighborhood has evolved over the last 20 years to rival its Silicon Valley neighbor in the South Bay, reports Wired.

Techies at The Creamery in SoMa

The rising popularity of the SoMa coffee shop The Creamery illustrates how the San Francisco's tech boom has changed the neighborhood, reports the San Francisco Chronicle.

Designers in vogue in Silicon Valley

noreply@blogger.com (Anonymous) — Wed, 12 Jun 2013 13:58:00 -0700

Pinterest and Flipboard, the two hottest startups in Silicon Valley, owe much of their success to sleek graphic design. They are dressed for success. The tech hub has taken notice. Designers are now in high demand.

Shannon Callahan, a partner at the venture capital firm Andreessen Horowitz and one of Silicon Valley's leading talent scouts, has taken heed, reports Advertising Age.

"It's important to realize that designers in general have elevated themselves to being equivalent to engineers," she said.

The new trend was especially evident at Google's I/O developers conference last month. The tech titan showed off new redesigns for Google Maps and Google+. The later appeared to be influenced by the Pinterest design, reports CNET.

An attractive business card is the model for a new Google design theme that's noticeable in Google Maps, Google Now and Google+, reports The New Yorker.

Under the leadership of Steve Jobs, design became an important part of product development at Apple. When Larry Page took over the helm at Google, like Jobs, he put a major emphasis on aesthetics. The Verge recently reported the details of the Project Kennedy design initiative inspired by Page.

Images like Grand Canyon emphasized in new Google Maps

When Flipboard was launched on the iPad in 2010, it was heralded as much for its design as for the novel way it aggregated and delivered the news, reports Mashable. Flipboard's success may be one of the reasons venture capitalists are now focused on grooming the next generation of designers. Kleiner Perkins Caufield & Byers, for example, started a design fellowship program this year, selecting college juniors from schools including Rhode Island School of Design, Yale and Stanford as interns at companies such as Square, Jawbone, Klout and Shopkick.

Design is also trending at Twitter. Award-winning designer David Wright is leaving NPR to work with what he considers an all-star team of Web platform designers at the microblogging service, reports Nieman Journalism Lab.

The CIA and Silicon Valley after the Cold War

noreply@blogger.com (Anonymous) — Tue, 11 Jun 2013 14:43:00 -0700

Former CIA and NSA Director Michael Hayden

During the Cold War, the National Security Agency helped to create the Internet and pioneer the computer industry.

"We were America's Information Age enterprise during America's Industrial Age," Michael Hayden, retired general and former Director of the Central Intelligence Agency and National Security Agency told The Atlantic recently. "We had the habit of saying if we need it, we're going to build it."

By 9/11, however, things had changed. "In the outside world there was a technological explosion in the two universes that had been at the birth of the agency almost uniquely ours: telecommunications and computers," Hayden said.

As a result, NSA turned to Silicon Valley and private defense contractors to attract the best and brightest scientific minds. Read more

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China's Silicon Valley connection growing

noreply@blogger.com (Anonymous) — Sat, 1 Jun 2013 04:13:00 -0700

Stanford grads Tarun Pondicherry, left, and Josh Chan, founders of startup LightUp.

There is a growing relationship between startups in China and Silicon Valley.

For example, China has become the third-largest source of downloads for the popular Silicon Valley-based Flipboard app.

Evernote, the hot Redwood City-based startup, gained some four million customers for its personal organization app in its first year in China.

The startup scene in China has strong ties to Silicon Valley. Four startups that have recently found success in China are evidence of this new trend, reports the Silicon Valley Business Journal.

TrustGo Mobile, a Silicon Valley mobile security startup, did its research and development in China but established itself in Santa Clara with backing from the U.S.-China incubator base there called InnoSpring. "People outside of China will accept an American security solution, but not one from China," explained CEO Xuyang Li.

InnoSpring and another Chinese incubator, Hanhai, just celebrated their first year in Silicon Valley. Victor Wang, president of Hanhai Investment, regularly makes trips to China to introduce Silicon Valley startups to potential partners.

Frank Wang, Steve Gu and Shangpin Chang founded several companies in the Bay Area before starting their latest, Dew Mobile, in Beijing. Dew Mobile software allows devices that are within about 30 feet to share games or content without having to rely on Wi-Fi or other networks.

LightUp is a startup founded by Stanford grads Josh Chan and Tarun Pondicherry. Chan recently returned from a trip to Shenzhen organized by Haxir8r, a new Chinese incubator that has mentors in the South China city and San Francisco.

"I could design a part and have it delivered in an hour in Shenzhen. The ecosystem is amazing and that's attracted everyone from startups like us to giants like Apple," said Chan.

LightUp makes an education kit that teaches children the basics of building electronic devices.

Startup Empower Micro has developed a new inverter that converts DC power from solar panels and electric car batteries into AC power suitable for home and commercial use.

"Sand Hill Road is virtually closed to clean tech today," says Empower's Mika Nuotio. "People in China are very interested in what we have."

The idea for another startup, Waygo Visual Translator, was conceived by Ryan Rogowski while working in Beijing for an iPhone software development company.

The Waygo app could allow tourists in China to point their smartphone at a street sign or menu and have the characters instantly translated.

Rogowski came back to the U.S. and co-founded Translate Abroad to develop the Waygo app. "There are a number of good engineers in China at a lower cost but most people capable of innovative, cutting- edge research and development are here in the U.S., particularly in Silicon Valley," Rogowski said. "The algorithms we are building aren't trivial and we needed to be here to find the talent for that."

He eventually wants to introduce Waygo to the Chinese market.

Can Silicon Valley help rebuild America's crumbling infrastructure

noreply@blogger.com (Anonymous) — Fri, 31 May 2013 04:31:00 -0700

Dilapidated bridge in Virginia

The urgent need to repair America's crumbling infrastructure was documented in a recent report by the American Society of Civil Engineers. Can Silicon Valley fix the public network?

Crowdfunding groups such as Kickstarter are a popular method in Silicon Valley for funding startups, films and other projects.

The civic crowdfunding platform Neighbor.ly and the solar energy crowdfunding site Mosiac have started to address the problem of repairing the country's infrastructure, reports the Washington Post. Read more

For Twitter, less is more

noreply@blogger.com (Anonymous) — Fri, 31 May 2013 03:07:00 -0700

I have a short attention span. For me, less is more. That's what makes Twitter and Vine special.

"We're not trying to add new things into Twitter," explained Dick Costolo, CEO of the microblogging service, at the D11 All Things Digital conference. "My challenge is how do you pull things out of it."

Sarah Lacy of PandoDaily elaborates in the retweet below:

Do less: Dick Costolo's $10 billion Zen garden pandodaily.com/2013/05/29/do-… via @pandodaily
— Sarah Lacy (@sarahcuda) May 30, 2013

Finding dates for busy Silicon Valley geeks: There's a dating service for that

noreply@blogger.com (Anonymous) — Tue, 28 May 2013 13:04:00 -0700

Amy Andersen

Amy Andersen is SiliconValley's renowned matchmaker. Hard-working geeks get lonely too.

"There's just not enough time to be out meeting people," George Shaw, a Silicon Valley tech worker looking for love told ABC7 News.

Shaw travels and works day and night as the head of research and development for a hot Silicon Valley startup. He sought the services of Linx Dating.

Linx is a premium service. Membership starts at $2,500. For all the bells and whistles, you can spend up to $50,000.

Andersen conducts gatherings at the Fours Seasons in Palo Alto for her elite members. She handpicks a select few from a group of hundreds to introduce to her top members.

Related article:

High-tech sex workers thrive in Silicon Valley - CNNMoney

Silicon Valley learns from high-tech Alabama vision screening program

noreply@blogger.com (Anonymous) — Tue, 28 May 2013 09:22:00 -0700

Silicon Valley plans to duplicate a model vision screening program for children in Alabama that uses high-tech cameras.

"Photo optic scan cameras take pictures of children's eyes so they don't have to wait until there're old enough to read an eye chart to get a fair assessment of their vision," explains Stephen Black, president and founder of Impact Alabama. "We start screening at 16 months of age."

"If one eye has a serious problem the other eye doesn't have, your brain literally starts to shut that other eye down," said Black. "You have a window of opportunity to fix it at the end of which, there's no repairing it."

There is now a similar eye screening program in Silicon Valley, reports CBS Francisco. Read more

I have a daydream

noreply@blogger.com (Anonymous) — Thu, 23 May 2013 14:31:00 -0700

Dr. King delivering his 1963 "I Have a Dream" speech.

Martin Luther King, Jr. had a dream. I too have a healthy imagination. Even though I don't buy lottery tickets, a recurring theme in my daydreams is to one day be wealthy enough to throw money at a worthy cause. Near the top of my list of important movements is the effort to find a cure for cancer.

I live in the San Francisco Bay Area. Silicon Valley dreams bigger than the rest of the country, according to a Wall Street Journal analysis of LinkedIn profiles.

People who use the keywords "change the world" in their professional profiles are much more common in the Bay Area.

The Bay Area "has long attracted people who in a way believed that they are doing visionary work, almost doing God's work through technology," said Chuck Darrah, head of the anthropology department at San Jose State University and co-founder of the Silicon Valley Cultures Project.

What prompted me to pontificate on this subject is a Forbes piece I read today entitled "Hope, Hype, and Health in Silicon Valley." The writer, David Shaywitz, suggests that Silicon Valley could have a powerful impact on crucial healthcare problems if it were so inclined.

David is not alone. James Temple recently vented in a San Francisco Chronicle article about "The hypocrisy in Silicon Valley's big talk on innovation." The media pays little attention to the tireless work of scientists, notes Temple, instead focusing on the latest trending app.

"Let's drop the pretense that we're curing cancer unless, you know, we're curing cancer," says Temple.

An Economist article this year also chimed in on the subject, suggesting that too many tech innovators are focused on "low-hanging fruit."

Temple's criticism is balanced, however. He specifically pays homage to the work of Elon Musk at SpaceX, Google's self-driving cars and Autodesk's work on software for printing human tissues and possibly one day human organs.

Chris Granger left Microsoft a few years ago to start up is own company. He was passionate about cancer and startups in a piece he wrote earlier this month.

I have discovered there are seven startups fighting cancer in the Boston area. In the Bay Area, Stanford and the University of California at San Francisco are engaged in the cancer struggle.

Personally, I think it's time for a campaign similar to the effort that lead to the eradication of the polio epidemic in this country in the 1950s. Even though it was a protracted struggle, in 15 years a cure was found for the deadly disease.

In 1937, President Franklin Delano Roosevelt, himself a victim of polio, announced the formation of a new charity called the National Foundation for Infantile Paralysis.

The organization soon got a nickname. Comedian Eddie Cantor took up the cause immediately, calling for Americans to contribute to the March of Dimes by sending dimes to the White House. In a very short period of time, almost $2 million was raised, some $268,000 of which was mailed to the White House one dime at a time.

In the spring of 1952, at the height of the epidemic, Dr. Jonas Salk tested his polio vaccine for the first time.

Canada poaching frustrated immigrant tech workers in Silicon Valley

noreply@blogger.com (Anonymous) — Mon, 20 May 2013 15:08:00 -0700

Jason Kenney, Canada's immigration minister, is touring Silicon Valley and San Francisco in an effort to promote his new visa initiative for startup entrepreneurs. The above video, a classic Silicon Valley elevator pitch, is part of an aggressive effort by Kenney, a member of Canada's ruling Conservative Party, to lure talented immigrant tech workers away from the San Francisco Bay Area.

"I think everybody knows the American system is pretty dysfunctional," Kenney said in an interview in Vancouver, B.C., before he embarked on his tour. "I'm going to the Bay Area to spread the message that Canada is open for business; we're open for newcomers. If they qualify, we'll give them the Canadian equivalent of a green card as soon as they arrive."

"Pivot to Canada" suggests a billboard that appeared off Highway 101 on the route from San Francisco to Silicon Valley days before Kenney's tour.

(Government of Canada)

Canada's startup visa policy stems from an idea first proposed but never passed by the U.S. Congress. Canada will now grant permanent residency to an entrepreneur who can raise enough venture capital and start a Canadian business. Under current U.S. law, skilled foreign workers are only eligible for temporary H-1B visas.

"I met a guy who had been here for 12 years who couldn't get his green card," Kenney told the Silicon Valley Business Journal. "It personalized the frustration that exists with the dysfunctionality of the immigration system here."

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Silicon Valley fuels commercial drones

noreply@blogger.com (Anonymous) — Wed, 15 May 2013 15:06:00 -0700

An Airware employee installing drone system. (Airware)

Silicon Valley venture capital is funding the nascent commercial drone market.

Drone startup Airware today announced a $10.7 investment from Andreessen Horowitz, one of Silicon Valley's leading venture capital firms. Google Ventures, the investment arm of the search giant, is also funding the drone startup.

Airware is a recent alumnus of Y Combinator, the world's leading tech incubator.

The company is based in Newport Beach, near the southern California aerospace hub. Airware doesn't actually build drones. They provide a drone platform that includes hardware, software and an API. The hardware includes radio technology, GPS and sensors.

Software, however, is the chief component of the Airware platform. "I think of it as the operating system, " says Chris Dixon, a general partner at Andreessen Horowitz who will become a member of the Airware board. "There is a hardware component, but that is only because there is no one who has emerged yet to be the Intel to Airware's Windows."

Chris Downey, the chief executive of Airware, worked on drones while studying at MIT. Later, at Boeing, he worked on a pilotless helicopter intended for the military.

Initially, Airware is developing applications that are not intended for the military. Downey does not plan to compete with the larger aerospace military suppliers. The startup's platform is not being developed for hobbyist either. Airware is targeting the middle ground: drones in the $20,000 to $50,000 range.

For example, Airware is integrating its system into drones that will be used to prevent the poaching of rhinos in Africa with the aid of RFID tags.

"The majority of applications are away from people and away from cities in places unlikely to interfere with air traffic or people on the ground," says Downey. "Anywhere it is too expensive or too dangerous to send in a person."

Downey told Wired "there is a strong use case in infrastructure inspections - power lines, pipelines, bridges, levies and oil derricks - where in some cases people are doing these dull, dangerous jobs, drones can be used to keep people out of harm's way."

Currently, drones equipped with cameras and sensors are being deployed over power lines in Europe and oil pipelines in Africa. They are also being used in search-and-rescue missions in the French Alps.

For the time being, the Airware platform will be used overseas. Federal Aviation Administration regulations for small drones will probably not be issued until 2015.

Airware shows off its drone platform in the video below.

Related article:

Drones and Airware: Why we invested - First Round Capital
German railways to use mini drones to stop graffiti - News.com.au

'Delightful' is the new trend in Silicon Valley

noreply@blogger.com (Anonymous) — Fri, 10 May 2013 11:38:00 -0700

Steve Jobs left an indelible imprint on Silicon Valley. Part of Jobs' Silicon Valley legacy is the concept of wanting to "surprise and delight" people.

The new campus Apple is building in Cupertino, California, is a shrine to delight. In an official planning document, the company says it wants the new "campus to provide an on-site venue for the introduction of Apple's new products that will generate surprise and delight."

Yahoo, Square, Instagram, Dropbox and many other Silicon Valley companies are following suit, reports the Los Angeles Times. Read more

Related article:

How Intuit became a pioneer of 'delight' - latimes.com

Disney's rebirth: Standing tall on the shoulders of Pixar

noreply@blogger.com (Anonymous) — Fri, 10 May 2013 09:42:00 -0700

Artist concept of San Fransokyo, the setting for Disney's "Big Hero 6" (Disney)

"We're trying to build back that Disney name," Disney Animation Chief Creative Officer John Lasseter recently told the Los Angeles Times.

The studio has been undergoing a huge metamorphosis since the arrival of Lasseter and Disney Animation President Ed Catsmull. The two executives are alumnus from Pixar Animation Studios, which was acquired by Disney seven years ago. At the time, Disney's hand-drawn animated pictures had become obsolete.

Lasseter and Catsmull have brought a startup environment to Disney from Pixar, which was created in Emeryville, California. The later is a small town sandwiched in between Oakland and the outskirts of the University of California at Berkeley. Emeryville is considered Silicon Valley East.

"Pixar seemed so out of the ordinary that I was a little skeptical that it could be re-created," said "Wreck-It Ralph" and "Simpsons" alumnus Rich Moore, who was wooed to Disney five years ago. Read more

Silicon Valley and Detroit reinvent the car

noreply@blogger.com (Anonymous) — Wed, 8 May 2013 08:56:00 -0700

Google's cutting edge self-driving car technology has thoroughly disrupted the auto industry worldwide. The race is on to develop the car of the future and the carmakers in Detroit, in particular, do not want to be left behind.

Detroit has its guard up, like an anxious, aging prizefighter. They want to avoid a knockout punch after suffering a devastating knockdown at the hands of the upstart Japanese automakers years ago when they ate Detroit's lunch with the introduction of maintenance and fuel efficient cars.

Self-driving cars are part of an automotive revolution that may be the most transformative since Henry Ford's assembly line, reports Forbes. Read more

Former king of venture capital in Silicon Valley trying to reclaim his crown

noreply@blogger.com (Anonymous) — Tue, 7 May 2013 10:12:00 -0700

John Doerr

John Doerr is to venture capital in Silicon Valley what Tiger Woods is to professional golf - the former undisputed champion trying to reclaim his tarnished crown.

Doerr is the driving force behind Kleiner Perkins, for many years the top dog on Sand Hill Road, the equivalent of Wall Street in Silicon Valley for private equity. Many astute Silicon Valley observers are wondering if the aging star of venture capital has lost touch after Kleiner admittedly missed the boat on recent bellwether IPOs - namely, Facebook, LinkedIn and Groupon.

But Kleiner has proven recently that it can take a punch. The battered legendary 41-year-old firm has been the biggest booster of Flipboard, the very popular magazine-style, news aggregation app for Andriod and iOS.

The Kleiner portfolio also touts Square, social network Path, and online education startup Coursera.

Details of the Flipboard saga and more are detailed in the Forbes article The Kleiner mojo: still alive and well in Silicon Valley. Doerr also appears on the May 27 cover of Forbes. Read more

Related article:

Kleiner Perkins' Next Generation: Mike Abbott and Megan Quinn

A Silicon Valley fairy tale: Facebook, Twitter and the Instagram IPO

noreply@blogger.com (Anonymous) — Mon, 6 May 2013 10:19:00 -0700

Instagram founder Kevin Systrom photographed at Ocean Beach in San Francisco.

The sale of Instagram to Facebook for a cool billion dollars last spring was the ultimate Silicon Valley fairy tale: 18 months from launch to offer. But for co-founder and CEO Kevin Systrom it was more of a roller-coaster ride, writes Kara Swisher in Vanity Fair. Read more

Silicon Valley's startup machine

noreply@blogger.com (Anonymous) — Thu, 2 May 2013 08:34:00 -0700

An in-depth New York Times report tells the story of Michelle Crosby, an energetic 37-year-old lawyer in Boise, Idaho, who applied for a loan last November from a local bank, Western Capital. She proposed to use the money, $10,000, to help start a new business, Wevorce, which could be described most reductively as an H&R Block for divorces. The bankers liked the idea, and Crosby was a strong candidate. They had even given her an earlier loan to open Wevorce’s first office. But after four weeks, the bank was stalling and Crosby had yet to receive a cent. At the height of her frustration, she received an e-mail from a small group of private investors in Mountain View, Calif. They invited her to an interview and, after listening to her story, promised her $100,000 in exchange for a 7 percent stake in Wevorce. Crosby accepted on the spot. The next day, she found a condo for rent, at $2,500 a month, in Mountain View, and left Boise, and her boyfriend, behind.

Haisha Chen is a 23-year-old Chinese-born University of Chicago graduate who goes by David so that Americans remember his name. With two friends, Teng Bao and Dafeng Guo, Chen created software that allows Internet users to build simple, elegant Web sites, designed with mobile devices in mind, in 15 minutes. They called their product Strikingly. Last July, to their parents’ alarm, the men bought one-way tickets to San Francisco — Chen from Shanghai, Guo from Hong Kong, Bao from Chicago. They rented a single bedroom in a cramped apartment in San Francisco’s Outer Richmond neighborhood, sleeping on two futons, one of which prevented the door from opening more than a few inches. They spent $1,600 a month on rent, food and all additional expenses combined. After four months, they got a call from Mountain View, offering $100,000 for a 7 percent stake. They moved immediately. “When I got here, I was very emotionally touched by all the great companies in this area,” Guo told me in an outburst of passion. “These were all the companies I had heard of since I was a kid. I felt like I should be here. Like I belong.”
Last year at Brown University, Walker Williams and Evan Stites-Clayton created Teespring, a crowdfunding Web site that sold custom-made apparel — “Kickstarter for T-shirts.” For six months they had mild success with fraternities and campus clubs but were only slightly profitable. Then something unexpected happened: a New Zealand man used Teespring to design a Sherlock Holmes T-shirt and sold it on a Facebook fan page with about 300,000 members; ultimately, 1,800 people bought the shirt. The man earned about $18,000; Teespring made $8,000. Soon other virtual communities — like the Twitter account for fans of the 1990s TV show “Boy Meets World,” and a Facebook page called “I Big Trucks, Mudding, Bon Fires . . . Country BOYS! :)”— began selling shirts, with staggering success. In November, Teespring earned $133,336; in January, $489,029. But the founders felt they could do better. “We don’t want this to be a $30-, $40-, $50 million business,” Williams told me. “We’re looking at the big picture here.” I asked Williams and Stites-Clayton to define “big picture.” They responded in unison: “A billion dollars.” When the investors called with their offer of $100,000, Williams and Stites-Clayton also moved to Mountain View.
The Mountain View investors are the partners of Y Combinator, an organization that can be likened to a sleep-away camp for start-up companies. Y.C. holds two three-month sessions every year. During that time, campers, or founders, have regular meetings with each of Y.C.’s counselors, or partners, at which they receive technical advice, emotional support and, most critical, lessons on the art of the sale. There is no campus, only a nondescript office building in Mountain View — on Pioneer Way, around the corner from Easy Street. Founders are advised to rent apartments nearby, so that they can run to the office in minutes should an important investor pay a visit.
Among the eight start-ups that graduated Y.C.’s first class, in the summer of 2005, were the social-news site Reddit, recently valued at $400 million; Loopt, a location-tracking application, which at its peak was valued at $500 million; and Infogami, the Web-site builder created by the tech martyr Aaron Swartz, which merged with Reddit. Other Y.C. success stories include Dropbox (file-sharing service, $4 billion), Airbnb (online market for vacation rentals, $1.3 billion) and Stripe (Web-based credit-card-payment software, $500 million). In Y.C.’s first six years, 72 percent of its 249 start-ups raised money after Demo Day. Today the average value of a Y.C.-financed start-up is $22.4 million. For the most recent term, which ran from January through March, Y Combinator received 2,633 applications. Wevorce, Strikingly and Teespring were three of the 47 groups invited.
The director of this camp, as well as its founder and animating spirit, is Paul Graham, an infectiously giddy and hyperarticulate programmer, investing magnate and essayist who, depending on whom you ask, is the closest thing the technology community has to either a Bertrand Russell or a P. T. Barnum. Wearing a fleece jacket, khaki shorts and sandals, Graham spends much of his day offering advice and encouragement to the founders in whom he has invested. Every Tuesday night the entire class congregates in the basketball-court-size dining hall that serves as Y.C.’s main meeting space, where, over burritos or spaghetti Bolognese, they are lectured by guest speakers like Mark Zuckerberg, Marissa Mayer and Al Gore.
The Y.C. term culminates with Demo Day, or D Day. Before 450 of the world’s richest and most influential technology investors and about two dozen journalists, a representative from each start-up delivers a two-and-a-half-minute pitch. Afterward the investors meet with the most-impressive start-ups, which can receive millions in financing. In the weeks and months following Demo Day, those few who fail to attract enough interest must decide whether to begin a new company, find employment at Google or Facebook or persist and grow “organically” — an unsightly word in the valley of silicon.
Demo Day has become a biannual milestone, Silicon Valley’s version of the N.F.L. Scouting Combine, where investors size up the new talent. It also serves as the industry’s State of the Union, a chance to learn about the most-recent developments in technology and gauge the buoyancy of the market. Are prices increasing, or are there murmurings, sotto voce, of a “cooling off”? Although the word “bubble” is blasphemous in Santa Clara County, even Graham admits that valuations for start-ups became “frothy” (adj.: “full of bubbles”) a couple of years ago. Still, a gold-rush mentality reigns. According to the research institute Wealth-X, there is now a higher per-capita concentration of “ultrahigh-net-worth individuals” (assets worth at least $30 million) in the San Francisco Bay Area than anywhere in the country — more than that of the New York and Los Angeles metropolitan areas. An unspoken question on Demo Day is, How long can this possibly last? Y.C.’s job is to assure investors that it is here to stay.
Several years ago, Paul Graham — whom everybody calls P.G. — began to film the interviews he and his partners held with prospective Y.C. inductees. When reviewing the footage, he focused on the interviews with start-ups that ultimately failed. Like any savvy marketing executive, he wanted to isolate patterns that portended ill, which he called “negative predictors.” He was already aware of a few — investors tended to be biased against older founders, for instance. “The cutoff in investors’ heads is 32,” Graham says. “After 32, they start to be a little skeptical.” And Graham knew that he had his own biases. “I can be tricked by anyone who looks like Mark Zuckerberg. There was a guy once who we funded who was terrible. I said: ‘How could he be bad? He looks like Zuckerberg!’ ”
Watching the video footage, Graham noticed another correlation: the longer he took to decide a group’s fate, the less likely the group was to succeed. “When you have to talk yourself into something, it’s a bad sign — that’s true also of relationships, hiring and so many other parts of life.” (Graham has a rhetorical talent for moving swiftly from the valley to the universal.) But after ranking every Y.C. company by its valuation, Graham discovered a more significant correlation. “You have to go far down the list to find a C.E.O. with a strong foreign accent,” Graham told me. “Alarmingly far down — like 100th place.” I asked him to clarify. “You can sound like you’re from Russia,” he said, in the voice of an evil Soviet henchman. “It’s just fine, as long as everyone can understand you.”
This was bad news for Strikingly’s David Chen, who moved in 2005 from Guangzhou to the United States to attend high school at Houghton Academy, in upstate New York. He spoke English fluently but struggled to pronounce words like “build,” “mobile” and, most ominously, “strikingly.” Yet Chen had clearly established himself as the fledgling company’s impresario and spokesman. While his partners spent their days writing code and fixing software bugs, Chen met with lawyers, potential investors and reporters. In a Forbes magazine article, a college classmate wrote of Chen’s evolution since moving to the Bay Area: “He used to tell me, ‘I want to build a product that helps social entrepreneurs and changes the world.’ Now he tells me, ‘I want to be the next Airbnb or Dropbox.’ ”
One week before Demo Day, Graham told the Strikingly founders that Chen’s accent was too strong. The quiet, reserved Bao — who spoke less frequently than either of his partners despite being the group’s only native English speaker — would have to deliver the pitch instead. Bao denied that he was anxious, but as he tried to memorize the pitch, he grew even quieter than usual. “I haven’t gotten to the point where I’m comfortable with public speaking,” he admitted. There was only one day before Rehearsal Day, when every start-up would deliver its pitch in front of the entire Y.C. class. One Y.C. partner thought it odd that in Strikingly’s final pitch meeting, Chen still did all the talking while Bao sat mutely off to one side.
Michelle Crosby, meanwhile, pacing around the rental condo that served as Wevorce’s office, hadn’t even begun to practice for Demo Day. But she had been perfecting her pitch for years. When she was 3 years old, her parents had, as she put it, “one of those ‘War of the Roses’ divorces.” At 9, she was called to the witness stand, where a lawyer asked her, “If you had to be stranded on a desert island with one parent, which one would you choose?” She couldn’t answer the question. “I knew then that the system was broken,” she told me. Her story, far more emotionally wrought than those of her Y.C. competitors, has become one of Wevorce’s most valuable assets. Unmentioned in the pitch is the fact that Crosby herself, after a 12-year marriage, divorced — amicably, she says. One source of tension in her relationship, she said, was her determination to start Wevorce.
On the cusp of becoming a partner at her corporate law firm, Crosby had what she calls “a quarter-life breakdown” and quit. She attended Harvard’s mediation training program and developed a six-step process designed to yield an amicable divorce. Using a software program with a video-game-like interface, the couple, with the help of a Wevorce mediator, creates an exhaustive divorce contract, its stipulations extending to such subjects as a child’s diet and curfew. Crosby puts the average divorce at around $27,000 in legal fees; Wevorce charges a flat rate of $7,500. She imagines a Wevorce office for every 400,000 Americans and estimates $1 billion in annual revenue. “We want,” she said, reaching for one of the valley’s most ubiquitous buzzwords, “to disrupt divorce.”
Crosby’s business partner is Jeff Reynolds, 38, a kind, jittery software designer. He had found it difficult to explain to his wife, a dental hygienist in Boise, and their two children, 9 and 12, why he moved to California for at least three months to start a divorce company. Crosby can sympathize — her current boyfriend of a year, a homebuilder in Boise, has grown frustrated by her absences. “It’s one of the gifts of Y.C. that you get three months of ‘Sorry, don’t bother me, I’m building something,’ ” Crosby said. “But you can’t sustain this. Everything else would start to crumble.”
When Crosby and Reynolds joined Y Combinator, Wevorce had a single office in Boise. Graham told Crosby that investors would be impressed if they were to expand quickly to other cities. In the next two months, they opened offices in four states. Each required a lawyer, a counselor and a financial professional, and they had to be trained. In the previous weeks, Crosby flew between Seattle, Portland, Boise, San Francisco and Asheville, N.C. The term of art for this is “nefarious business” — creating the appearance of success in order to attract actual success. Fake it till you make it. But Wevorce’s success rate wasn’t fake: only one out of 110 Wevorces has gone to court.
Back at Y.C., Teespring’s Walker Williams was rehearsing his pitch with Sam Altman, who founded Loopt as a Stanford sophomore and sold it last year for $43.4 million and is, at 28, Y.C.’s youngest partner. Because of this, Altman is, after Graham, the most highly esteemed by the entrepreneurs. He is skinny, short and pallid, and he speaks rapidly, with the assuredness — if not quite the cockiness — of a Ph.D. student forced to teach a section of Intro to Comp Sci. Williams, on the other hand, despite being four years younger, looks like the kind of jock who might have tormented a kid like Altman in grade school; he has the broad shoulders, fair hair and rugged boyishness of a rugby player, which he was at Brown. But Williams has always idolized Altman. They happened to have lived as children on the same block in the Hillcrest neighborhood of St. Louis.
Williams and Altman were conducting a “walking meeting,” pacing slowly around Y.C.’s cul-de-sac. They passed three Teslas, one that belonged to Altman and two that belonged to other Y.C. partners. It had just rained, and the pavement was slick.
“Investors,” Williams said, “always think our ideas are crazy. So I’m going to lead with the numbers. When we were interviewing with Y Combinator, we were coming off our best month: $185,000 in top-line revenue. This month, we’re on track to do $750,000.”
“You’re going to do a million dollars next month, right?” Every sentence Altman speaks sounds urgent.
“Yeah.”
“Say that. It’s more impressive. What’s next?”
“We’ll say: Why are we so successful? Because we turn affinity into money.”
“I would add that, traditionally, if you had a consumer Internet site or a community, the only way to make money was by selling display ads. But ads suck. Users hate them, and they don’t make much money. What if there was a better way? Then say what you do.”
Walker nodded. He acknowledged that he was anxious about speaking in front of the crowd of investors on Demo Day. Perhaps his partner would do a better job. Stites-Clayton, the Oakland native, was never nervous.
“Both prepare,” Altman said. “But if, that morning, you get overcome by anxiety and can’t go on, then Evan can do it. I’ve seen this happen before. But I think you’ll be fine.”
Walker shrugged. He was hunched over, as if trying to shrink himself to Altman’s height.
“A little-known piece of trivia,” Altman announced. “This smell, after it rains for the first time. You know what’s that called?”
“Is this going to freak me out?” Williams said.
“Petrichor,” Altman said. “It’s my favorite smell. You only get to smell this once or twice a year, because it has to not rain for a while, and then rain. It’s the smell of summers in St. Louis.”
“Petrichor?” Williams said, uncertainly.
“Petrichor,” Altman said.
On Rehearsal Day, each start-up presented its idea before the entire Y.C. class while pretending not to sneak looks at Paul Graham. Standing off to one side, Graham scribbled notes on a pad but often communicated his reaction through exaggerated pantomimes — exasperated sighs, rubbing his temples as if suffering from a migraine and smacking his forehead. When he couldn’t take it anymore, he screamed:
“This sounds like a bunch of numbers. Tell us what you do!”
“Don’t just stand there holding your device, grinning.”
“You’re using that intonation people use when reciting a memorized speech. That tone tells the audience not to pay attention.”
“You’re talking too fast. You’re turning five syllables into one. And in a foreign accent!”
After one pitch, in which a group promised future revenues of $360 million, one Y.C. partner, Paul Buchheit, said, “$360 million makes me lose interest.”
“It should have a ‘B’ in front of it,” said another Y.C. partner, Geoff Ralston.
Michelle Crosby’s Wevorce presentation, while unpolished, was a hit. “Divorce,” she said, “is a $50 billion space.”
“I got a little teary,” said Jessica Livingston, a Y.C. partner and founder who is married to Graham, after Crosby finished.
“It’d be good to put the cost savings on one of your slides,” Buchheit said. “Because whatever, kids, you know —” he made a flicking gesture. “But money. . . .”
Everyone laughed.
During his pitch, Walker Williams appeared relaxed and forceful. “Teespring turns affinity into money,” he said. “And we do it through beautiful, high-quality T-shirts.”
“That was pretty good,” Graham said. “You could give the exact same presentation on Demo Day and still be one of the better ones. You’ve got an unfair advantage there with those numbers.” Teespring had another advantage: almost every single founder in the room was wearing a T-shirt, or hooded sweatshirt, embroidered with the name of his start-up. All of the apparel had been made using Teespring. Williams and Stites-Clayton made about $10,000 off their fellow Y.C. classmates alone.
There was a break for lunch before Strikingly’s presentation. Chen encouraged Bao, who was sitting catatonically in his seat. Chen asked if he wanted lunch. Bao didn’t reply. He began mouthing the words of the pitch to himself. When, after the break, Bao took the stage, Chen sat in the front row with his head bowed, his hands clasped behind his head. It was as if he couldn’t watch.
“We are Strikingly,” Bao began. “We are the fastest-growing mobile Web-site builder.”
Graham was already beside himself.
“Slower!” he interrupted. Someone laughed anxiously. “Talk slower!”
“Start again!” Livingston said. More nervous laughter. Chen’s head went deeper into his lap.
“Why do our users like Strikingly so much?” Bao said.
“Oh, my God,” Graham interrupted, in disgust. “That was like one syllable! Slow, slow, slow!”
By the time Bao finished, Graham was groaning audibly. Demo Day was only six days away.
The number most frequently cited in the pitches did begin with a “B.” This might be because the most famous start-up success of the last year is Instagram, which Facebook bought for a cool billion. The sale caused great befuddlement, at least outside Santa Clara County, because Instagram had no revenue. It was not merely unprofitable — it had no way of making money whatsoever. But Instagram wasn’t alone. Some of the more prominent deals for “zero revenue” start-up companies in recent years have included TweetDeck (Twitter took the bait for $40 million); GroupMe (purchased by Skype for $85 million); and Siri (Apple, $200 million). Instagram, by some measures, is already looking like a bargain. In February, investors valued the revenue-free Pinterest at $2.5 billion.
It is a modern-day riddle of the Sphinx: How can a company that earns no money be worth a billion dollars? How you answer that question will determine whether you believe that what is now occurring in the office parks and strip-mall coffee shops of the San Francisco Peninsula is the last gasp of another speculative financial bubble or the early articulations of a new world order. It is tempting, given recent history, to make ominous comparisons to the last days of the gold rush or the dot-com bubble in 2000. But it was also tempting, in 1999, to view Google as merely the next AltaVista, or in 2005 to view Facebook as merely the next MySpace. Mark Zuckerberg was ridiculed more for turning down Yahoo’s $1 billion offer for Facebook in 2006 than for buying Instagram at the same price.
“This is the most counterintuitive aspect of the business,” said Paul Buchheit, or P.B., a baby-faced former programmer whose retiring, junior professorial manner makes an appealing juxtaposition with the fingernails of his left hand, each of which is painted a different color of glitter. Though Buchheit’s name may be unfamiliar, it is very likely that his inventions occupy much of your waking life. The 23rd employee of Google, he developed the prototype for AdSense, which earned Google about one-quarter of its annual revenue; he coined the company’s credo, “Don’t Be Evil”; and he was instrumental in creating Gmail. After leaving Google, he helped found FriendFeed, another company with zero revenue, which was sold to Facebook for $47.5 million.
“The general public doesn’t understand start-ups at all,” Buchheit said. “They’re mystified how a company with no revenue can be worth a billion dollars. It’s because of this power law: If a company has a 1 percent chance of being a hundred-billion-dollar company, then it’s worth about a billion dollars. That kind of thing doesn’t happen in your normal life experience. If I get a cup of tea, it’s a cup of tea — there isn’t a chance that it’s actually made out of solid gold. But that’s how this works.”
We were sitting in the Y.C.’s cafeteria. Founders were scattered around the tables, working on their Demo Day pitches. “One of the companies in the room will be worth more than all of the others put together,” he said. “Ninety percent will ultimately fail. That makes for a very interesting game of trying to figure out who that one company is.”
Graham has a different analogy: “Imagine an assembly line where Facebooks and Googles come along every few years. You can either pick that cookie off the assembly line or not. If you pick it off, it’s market price, which varies. But if you don’t pick it off, you’re out of the game.”
There is a lot of talk in Silicon Valley about the “game” and who is “winning.” Whatever the game is, Graham has been winning in a rout. I asked him whether he thought prices had become inflated. He freely acknowledged that they were — perhaps by double or, as he puts it, “two X.”
“One of the reasons,” he said, “is because there’s nothing else to invest in. If you have money, there’s nothing to put it in. Bonds return nothing. And the stock market — what public company do you feel reasonably assured is going to go up at historical norms of 8 percent a year? It could all just fall apart. . . .” If, on the other hand, you discover the next Google, you can increase your investment by “a thousand X.”
But what if there isn’t another Google?
“If there’s not going to be another Google,” Graham said, “then we’re so deeply screwed that we all should be getting bags of silver and shotguns.”
It is safe to say that everybody in Silicon Valley believes there will be another Google. If anything, the consensus is that there will be many more Googles, and soon.
“We’re in the early days of the Internet,” Buchheit said. “Every other industry will be eaten by tech.” This conviction, more than any other, explains the feeding frenzy that occurs on Y.C.’s Demo Day. If there’s going to be another Sergey Brin and Larry Page, and anyone can be Sergey and Larry, then it’s only logical for investors to bet on as many founders as possible. You can’t win the game unless you ante up.
This also explains Y.C.’s role in the game. To earn a large valuation, a Y.C. start-up doesn’t have to be the next Google. It must only persuade buyers that it could be the next Google. It is crucial therefore that Y.C. founders be charming salesmen, with persuasive sales pitches.
At 10 o’clock on the morning of Demo Day, there was a traffic jam in Mountain View. Priuses, Teslas and Fiskers queued on North Shoreline Boulevard, on the way to the Computer History Museum. Inside, an hour before the presentations began, obsession was in the air; also insomnia, caffeine and paranoia. The prominent venture-capital firms were represented in force — Sequoia Capital, Bessemer Venture Partners and Andreessen Horowitz — as were the Hollywood investors, which included Ari Emanuel and his associates from W.M.E.; a trio of superciliously grinning representatives from C.A.A.; and Guy Oseary, Madonna’s manager and Ashton Kutcher’s partner at A-Grade Investments. The man who attracted the most attention of all was Ron Conway, a founder of S.V. Angel and an early investor in Google, PayPal, Facebook and Twitter. Conway is a regal personage with a sweep of thick white hair and a stately manner. He greeted well-wishers and acolytes with a wry, avuncular smile, distributing his business card as a priest might hand out alms. Less-prominent investors cautiously approached founders, asking questions designed to obscure interest and commitment. One approached Evan Stites-Clayton and squinted at his nametag.
“We’re Teespring,” Stites-Clayton said. “It’s like Kickstarter for T-shirts.”
The investor winced. “I just want simple,” he said apologetically, beginning to inch away.
“We made $750,000 this month.”
The investor stopped and chatted for a while. “We have to do something,” he said finally.
David Chen darted around the room, introducing himself, indiscriminately, to as many investors as possible. He seemed re-energized — after Bao’s disaster on Rehearsal Day, Graham encouraged Chen to present after all. They had simplified Chen’s script, avoiding difficult words. “Create,” for instance, was swapped for “build”; “options” for “tools.” “If they don’t understand, there’s a problem,” Chen said. “But I’m very confident. Very, very confident.” Bao, for his part, appeared enormously relieved.
The doors to the auditorium opened, and the founders, the 450 investors and the press filed past the museum’s wall of fame, with its framed portraits of Steve Wozniak, Steve Jobs and Bill Gates. After a brief introduction from Graham, the lights dimmed. Michelle Crosby was waiting in the wings with Jeff Reynolds. She wore jeans and a jean jacket, brown leather boots and matching belt, and her blouse was bright green — Wevorce green. She had goose bumps. Reynolds touched her arm.
“You’re better when you smile,” he said.
Crosby took the stage and told her desert-island story.
“I guarantee someone you know will need a Wevorce,” she said, before walking off to applause.
The 46 presentations that followed were dominated by the language of Silicon Valley, a hybrid of tech slang and insipid sales patter. Common terms included “disruption,” “scale” (verb), “game changer,” “thought leaders,” “ecosystem,” “pivot” and “verticals.” “We’ve 10 X’ed,” one founder said, using a Grahamism to describe his company’s growth. Most of the founders wore T-shirts and sneakers — Asics mostly, never Nike — and spoke in a manner that might best be described as Zuckerbergian: pauses imposed after every four words, delivered in an insistent, cheerful tone, with a painted-on smile.
A formula emerged. Most pitches began with a slide that showed a steeply rising graph, representing the company’s growth (“40 percent month over month!”). Then came the inevitable “Why have we been so successful?” An answer followed: “Our product is simple, and it’s solving a fundamental problem.” Hearty outrage at the status quo was expressed. The size of the market was estimated (“the rental-car market is an $11 billion industry,” “the authentic-designer retail market is $30 billion,” “the fashion-magazine market is a $2 billion industry, and it’s dying”), and the founder promised that his company would soon take it over. The pitch concluded with a summation of three main bullet points and an invitation for investors to “come see us.”
Not every investor was sold. During the first break, one told me that Demo Day “used to be a can’t-miss event, but that’s not so anymore. It’s a different vibe. Some major investors are starting to skip it.”
“It used to be a feeding frenzy, but not anymore,” another said. “It was more pumped up last year.”
“It’s more standoffish now,” said a third.
All of the naysayers insisted that they not be named, out of fear that Graham wouldn’t invite them back next year.
Another common complaint was that the entrepreneurs have become too powerful. Investment terms, it is true, have become increasingly favorable to start-ups. Y.C. has contributed to this trend by creating a standard investment contract, preventing investors from taking advantage of naïve founders. But this criticism hardly bothers Graham. If Y.C.’s founders are doing well, that means he is doing well.
“There are two things that people grumble about Y Combinator that are actually compliments,” he told me. “One is that Y.C. start-ups are overvalued. The only way for a company to be overvalued is if there’s someone willing to pay that price. So what they’re saying is: Going through Y.C. causes companies to raise money on better terms than they would have otherwise. We wouldn’t have the barefacedness to make that claim ourselves!
“The other thing they say is that they can’t tell on Demo Day which are the good start-ups. Well, it’s not because the good start-ups look bad; it’s because the bad start-ups look good! Which means we’re doing our job.”
Teespring was up. Before Walker Williams took the stage, he rolled his shoulders and jumped in place like a boxer. His delivery seemed effortless, spontaneous. The audience applauded vigorously. When he walked off the stage, Stites-Clayton gave him a thumb’s up.
Then it was David Chen’s turn. He stuttered at one point, and pronounced “Strikingly” in such a way that the “ly” was inaudible, but he spoke forcefully, with charm and enthusiasm. Polite applause followed. In the greenroom, once the door closed, he and Bao high-fived.
Over the following weeks, the Y.C. start-ups met with dozens of investors. They had been told by Graham and Altman that they never would have more interest than in the days following Demo Day. It was Graham’s insight that scheduling all the presentations for a short period of time would create a sense of urgency, driving up interest and prices.
In less than two weeks, Teespring raised $1.3 million. Their largest investor was Sam Altman, at $500,000; Paul Buchheit contributed as well. Williams and Stites-Clayton might have raised more, but because Teespring’s profits were already so large, they didn’t want to dilute their ownership unnecessarily. They expected to surpass $1 million in monthly revenue in April.
Wevorce has raised $1.5 million so far. Crosby has hired a chief operating officer and a chief legal officer and will hire additional staff and rent office space on the peninsula. Reynolds is moving his befuddled family to California, but Crosby’s boyfriend won’t leave Boise. “There’s a tidal wave of change coming quickly at me,” she said. “As you go on a journey like this, you have to tell yourself little lies to make it through. But at some point the adrenaline stops, and you have to re-evaluate things.”
Strikingly raised $1.4 million from 16 investors, among them Ron Conway. They, too, were in the position of turning down more money. They celebrated at an all-you-can-eat sushi bar in Mountain View. “I’m more excited than ever about our business,” Chen said. “I feel a relief that strengthens my excitement.”
I wondered whether the ease at which all three companies raised millions of dollars might be considered a sign of excess — that the market was getting too high, an Icarus racing for the sun. When presented with 47 consecutive audacious pitches, some investors seemed to have shown signs of fatigue, even cynicism. But then I remembered the last thing that Graham told me on Demo Day, as the crowd was filing out of the Computer History Museum. It helped me to understand the nature of Graham’s enthusiasm. From 1993 to 2004, Graham suffered a crippling fear of flying. The anxiety had arisen suddenly one day, with no good reason. “I said to myself: Wait a minute, I don’t like this! I’m five miles high in the sky, and nothing is holding me up, I can’t control it, and all I can do is look out of this one little window.”
Finally he hit upon a miracle cure: he would learn how to fly. He began with hang-gliding lessons. It was a gradual process. First he ran along flat ground with a hang glider strapped to his back. If there was any head wind, he would feel a sensation of lift but not enough to levitate. Next he walked 10 feet up a hill and ran down it, clearing the ground by several inches. He increased the height until, before he knew it, he was jumping off a 450-foot cliff. “By that point, you’re not even worried anymore,” he said. “My reputation as a hang-gliding pilot was at stake. I was trying not to mess up.”
Next he enrolled in flight training. In one lesson, his instructor switched off his Cessna’s engine, and he had to guide it onto the runway. This was easy for him, because the glide ratio of a Cessna 152 is almost exactly the same as a hang glider.
After 30 hours of classes, Graham decided that it was time for the real thing. He booked a ticket on the shuttle from Boston, where he was living, to New York. Not only was he fine — he found it exhilarating. Never again did he fear a crash. “Compared to a Cessna,” Graham said, “that plane was like a spaceship. It took off like a rocket, went up to this immensely high altitude, and there was zero turbulence. It was like flying for the first time all over again — like starting over with a new brain. It felt fabulous. And I thought, Wow!”

Silicon Valley battles Wall Street for talent

noreply@blogger.com (Anonymous) — Thu, 2 May 2013 03:25:00 -0700

Nicole Shariat Farb, a former VP at Goldman Sachs

Silicon Valley is raiding Wall Street, reports the Wall Street Journal.

Large and small technology companies, from Square Inc. to Rackspace Hosting Inc., with deep pockets and a pressing need to broaden their workforces are snagging top talent from financial firms.

Personal car service Uber Inc. has hired 10% to 15% of its nearly 250 employees from the finance industry and 5% from investment bank Goldman Sachs Group Inc. in particular, says Uber Chief Executive Travis Kalanick. Among the recruits is Gautam Gupta, a Goldman Sachs vice president who joined San Francisco-based Uber in business operations and finance in April.

Mr. Kalanick says the finance industry recruits stellar young people and trains them in skills that are also important to tech companies: managing data and selling to and communicating with customers. "They are the seam between the bits and asphalt," he says, adding Uber employs many former bankers in nonfinance roles like city managers and supply-chain operations.

Talent has flowed between finance and tech for decades, with tech luring more people during booms like the present one. But tech firms and recruiters say the trend is accelerating as the balance of power between the two industries shifts in favor of tech.

For years, Wall Street had the prestige and biggest checkbooks to hire the best young talent and programmers. Now, the tech industry and the wealth around it continue to grow, while compensation on Wall Street has tightened.

That means the tech industry has "a fighting chance to get the best and the brightest from Wall Street," says Martha Josephson, a partner at Egon Zehnder in Palo Alto.

Some younger professionals say finance doesn't offer the same opportunities it used to and that the path to becoming a partner has become longer and less lucrative.

Nicole Shariat Farb, a former vice president at Goldman Sachs, says the tech industry now offers the attributes that drew her to finance: the ability to have an impact and work with smart people. She left Goldman Sachs in March to start soon-to-launch DIY e-commerce company Darby Smart in San Francisco. "In my view, capital is now a commodity and I don't want to be in a commodity industry," she says.

The exodus from Goldman Sachs, long a breeding ground of talent for other industries like government, has been particularly acute. Former Goldman Sachs managing director Scott Stanford, who was involved in the firm's investments in Internet companies like Facebook Inc. and LinkedIn Corp., recently left to launch a new startup investment firm in San Francisco. Scott Hegstrom, one of the firm's managing directors, will join Web-hosting company Rackspace as vice president of business development later this month. Mobile-payments company Square Inc. last year hired Chief Financial Officer Sarah Friar, who spent more than a decade at Goldman Sachs.

But the trend is broader. Kristina Salen, who ran a group of analysts at Fidelity Investments, became chief financial officer of e-commerce site Etsy Inc. earlier this year. Tech companies say hiring from Morgan Stanley and J.P. Morgan Chase & Co. is up too.

Gene Sykes, co-head of Goldman's global M&A practice, says migration to tech is natural as the industry has become more relevant. "Most people come to Goldman Sachs for an extraordinary experience and a great foundation to learn," he says. "We embrace that. It makes us a stronger place."

Representatives of other financial firms declined to comment on the departures or didn't respond to requests for comment.

Tech companies are also trying to compete with finance for talent earlier and on their own turf. In February Sequoia Capital co-hosted a recruiting event for its portfolio companies, including Dropbox Inc., at Princeton University in New Jersey.

Partner Bryan Schreier says Sequoia targeted the East Coast because it has a concentration of schools and is where financial firms have well-honed recruiting machines. He tried to calm the anticipated concerns of some of the 150 students in attendance about the risks of joining a startup with stats like the 2.3% unemployment rate among computer programmers in the U.S.

The students "needed the education and bullets to go back to their parents," he says, adding that several attendees have expressed interest in startups since and the firm is holding a second event in Manhattan in the fall. "These people are oriented around prestige."

LinkedIn: A cautionary tale about the need for speed in Silicon Valley

noreply@blogger.com (Anonymous) — Mon, 29 Apr 2013 04:14:00 -0700

Silicon Valley has a long-running obsession with speed. Ever since Intel co-founder Gordon Moore formulated what would become known as Moore's Law, the tendency has been to make things go quicker, get smaller, and cost less, reports Businessweek.

This used to apply mostly to hardware, like chips and storage devices, but it now seems to be carrying over to the software side of the world. Read more

Silicon Valley's battle for tech talent and immigration reform

noreply@blogger.com (Anonymous) — Fri, 26 Apr 2013 16:55:00 -0700

Michael Solomon, agent for elite Silicon Valley programmers

"The dirth of talent is the big bottleneck in Silicon Valley and in technology," proclaims Michael Solomon, co-founder of 10X Management, a recently formed recruiting firm that represents Silicon Valley's top programmers.

"We're seeing horrible statistics about the shortage," Solomon said in a Bloomberg interview.

10X Management emerged from a partnership between Altay Guvench, a musician and freelance Web developer, and two long-time music managers, Solomon and his childhood friend, Rishon Blumberg.

Guvench recently told San Francisco television station KGO, "I met these music managers in New York. They used to represent John Mayer. They've been in the business about 20 years. We hit it off and realized that what they do for their musician clients would actually be useful for me as a freelance programmer."

In recent years, half a dozen tech recruiting startups have sprung up. They conduct worldwide searches for the best programmers. Startups and tech companies in Silicon Valley and San Francisco are their chief customers.

One of these startups, InterviewStreet, was the ticket out of Serbia for Alexander Yakunin, a physicist and programmer. Yakunin impressed the hiring personnel at Quora, a Silicon Valley-based question-and-answer website, by being the only person out of over 700 respondents to get a perfect score in a coding competition.

Two top tech recruiters, Shannon Callahan, the chief talent scout at Andreessen Horowitz, and Juliet de Baubigny, a partner at Kleiner Perkins, have become very influential in Silicon Valley because of their ability to attract premiere software engineers, reports Fast Company.

"Recruiting in Silicon Valley is more competitive and intense and furious than college football recruiting of high school atheletes," declares Keith Rabois, the chief operating officer of Silicon Valley startup Square.

There are not enough engineers in Silicon Valley to go around, reports the New York Times. Because of the pressing need to attract world-class tech talent, Silicon Valley is battling in Washington to make the immigration process easier, according to another in-depth New York Times report.

"We have a strange immigration policy for a nation of immigrants," declared Facebook CEO Mark Zuckerberg in a recent Washington Post editorial. "And it's a policy unfit for today's world."

Laurene Powell Jobs recently spoke out publicly for the first time since her husband Steve Jobs' death in support of immigration reform.

These efforts may be paying off as a group of eight Senators are negotiating the details of a comprehensive immigration deal to be announced next week.

Related article:

Immigration is the big one right now - Bloomberg

Two top Silicon Valley recruiters on the frontlines of battle for elite talent

noreply@blogger.com (Anonymous) — Tue, 23 Apr 2013 12:16:00 -0700

Juliet de Baubigny

The competiton for top tech talent in Silicon Valley is a serious pursuit for two women who are shaping startups and high-growth companies. Fast Company sat down with Shannon Callahan, who runs the talent network for Andreessen Horowitz, and Juliet de Baubigny, partner at Kleiner Perkins, to get their take on hiring trends and what makes a candidate standout. Read more

Who's hot and who's not in Silicon Valley

noreply@blogger.com (Anonymous) — Sun, 21 Apr 2013 02:03:00 -0700

The SV150 is Silicon Valley's report card, an annual performance review, a bucketful of numbers that begins to answer the questions: Are we up? Are we down? Who's in? Who's out? Read more

'Facebook freshman class' storms the ranks of Silicon Valley's largests companies

noreply@blogger.com (Anonymous) — Fri, 19 Apr 2013 08:51:00 -0700

Workday founders and company executives ring the opening bell at the New York Stock Exchange last October in celebration of their IPO

Nearly 10 percent of the names on the latest list of top-grossing Silicon Valley tech companies weren't there a year ago because they weren't yet public. But with outfits like Workday, Yelp and Palo Alto Networks - not to mention Facebook - having scored initial public offerings in 2012, other companies from last years SV150 index compiled by the San Jose Mercury News have been shoulder asisde. Read more

Startups scout elite programmers for Silicon Valley companies

noreply@blogger.com (Anonymous) — Thu, 18 Apr 2013 03:37:00 -0700

In the past few years, half a dozen recruiting startups have figured out how to entice elite software engineers with programming competitions. These firms make money by sharing the results for a fee. Fast-growing companies in Silicon Valley and San Francisco are prime customers, reports Forbes. Read more

San Francisco SoMa tech hub emerging from shadow of Silicon Valley

noreply@blogger.com (Anonymous) — Wed, 17 Apr 2013 05:37:00 -0700

Skyline of San Francisco South of Market tech hub

I have been covering the tech scene in Silicon Valley for many years. What I've noticed is that recently, the most significant trends in the tech world are coming from SoMa, Silicon Valley's neighbors in the West Bay. The San Francisco neighborhood is a magnet for startups, the most prominent being Twitter.

"An astounding number of startups have launched in San Francisco since 2009," notes Kevin Kelly, the executive editor of Wired. The magazine, which is located in the South of Market neighborhood, is celebrating its 20th anniversary by putting the spotlight on the emerging SoMa tech hub. Read more