Here are a four reflections, as we enter 2006, and continue coverage of Silicon Valley innovation and the money fueling it.
1) Cooking: Still ringing in our heads is a conversation we had with the founder of a start-up called Meebo in late October. Meebo’s Elaine Wherry sat across from us at a pizzeria, and told the us the story of how she launched the company with two others, Seth Sternberg and Sandy Jen.
Before they fell on Meebo’s current idea — which brings together the instant messaging platforms (Google, AIM, Yahoo Messenger, MSN etc) onto a single page — the trio went through months of brainstorming. They devised two other ideas, which weren’t good enough. They abandoned the second version of Meebo two days after they’d completed it. That’s when, this summer, Sandy proposed building something on instant messaging. They cooked the thought a bit, they seasoned it, brainstormed some more — and voila — they devised the IM aggregator site that was launched in September. (Here’s our earlier blog on Meebo).
Elaine said Meebo happened because “we like to build things…it is like cooking, and we like to cook.” Indeed, we went back to visit their headquarters — Elaine’s pad — just above the pizzeria on Santana Row. A wall of shiny cooking utensils lined one side of her studio.
Something else she said stuck, as she mused about the long hours cubby-holed side-by-side with co-founder Sandy in the small study she’d cordoned off from…
the main room. Just a few hours Saturday afternoon were all they allowed themselves to take off. “You have to be a little bit insane to do this,” she said.
2) Meaning. In other words, Elaine and her colleagues had found “meaning,” a somewhat elusive term because it translates into something different to each person. But for the Meebo team, thousands of people — practically overnight — had flocked to the Meebo site, tried it out, and given them positive feedback. A U.S. soldier in Afghanistan emailed to say how it had let him communicate with friends and family. Knowning they’d filled a need, their passion and energy crested, and the Meebo trio plowed on.
Silicon Valley start-ups are generally about hard work — lots of brainstorming — to make meaning. Earlier in the year, while talking with Roger McNamee, one of Silicon Valley’s more accomplished investors, the mental cooking, and the search for meaning that drives it, was foremost in our hour-long discussion. He’d taken more than a year to brainstorm the idea for his new fund Elevation Partners (in fact, McNamee has been mulling the forces behind the consumer revolution — which Elevation seeks to serve — for more than two decades!) and it took him another nine months to raise the fund. On the surface, McNamee’s outward charm and intelligence makes it seem like he breezes through easily. You sit down and talk with him, and with those closest to him, and you realize how insanely devoted he is to what he is doing, and what a significant personal price he is paying in dealing with challenge.
But for McNamee, too, it comes down to meaning. Check out his book, The New Normal; it is really just one long search for meaning, and an effort to express what he has found.
We can almost hear T.J. Rodgers, the chief executive of Cypress Semiconducter, snickering at our fuzziness. Rodgers, an adherent of Ayn Rand philosophy, told us he backed SunPower, one of the few IPOs in Silicon Valley this year as “strictly a capitalist enterprise”, not because it was producing some sort of great positive social need (more efficient solar energy). Indeed, if you believe business is by definition good, seeking some sort of greater meaning is a waste of time. And yet, SunPower is committed to a great cause. Perhaps it was pursued without an iota of sentimentality from Rodgers — but it has meaning, and a big use for society.
3) Environment: Investing in cleaner sources of energy will continue to be a trend through 2006 — and Silicon Valley will be a big player. Regardless of your thoughts on the global warming debate, there is huge demand for cheaper energy supplies.
We were saddened when we read a couple of weeks ago that greenhouse gas emissions by the U.S. reached their highest annual total on record in 2004, the latest year for which results are available. Emissions rose by 2 percent, to 7.1 billion tons of carbon dioxide, according to the U.S. Department of Energy. That, even though many other industrialized countries are seeking (via the Kyoto Protocol) to curb reduce greenhouse gas emissions to an overall level 5 percent beneath those of 1990. And lately, both China and the U.S have walked out of global treaty talks seeking again to bring the two biggest polluters on board.
Silicon Valley has much to offer. It has technologists with ideas, and investors to help fund them. We’re encouraged that folks like William McDonough, a thought leader for green and clean technologies, are still joining local venture capital firms (McDonough has joined with VantagePoint Venture Partners, the San Bruno firm). It is just the latest of an encouraging string of moves suggesting we’re making progress in building a local “clean-tech cluster” — after the valley was considered a laggard when we started talking about it. DFJ, Firelake Capital, Kleiner Perkins, Mohr Davidow and VPVP are all local VC firms leading the charge to invest in clean-tech.
The valley’s progressive mindset also makes it an obvious place to push clean-tech. As we reported in the Merc a couple of weeks ago, a group of 19 Silicon Valley companies, including Oracle, Cisco and HP, have acted together over four years to lower emissions by 3.2 percent.
By the way, here’s a notable interview with McDonough, the clean-tech investor, about the future of energy, and how it looks set to be coal-burning (very dirty). Unless, that is, we bring down solar cost. And China’s vast population can help us do this by contributing to economies of scale. This, in turn, can help our economy.
4) China: We at SiliconBeat find meaning through writing. Our reporting, we hope, helps others make better decisions. But when we write about the opportunity in China, or about local investors headed there to invest in that huge, growing Chinese market, we’re covering one side. The other side, which we’ve left for others to cover, is media control, government secrecy, and pollution.
The Chinese government last month violently suppressed a demonstration against the construction of a power plant in China, leaving as many as 20 people dead. And we hear that Chinese officials barred newspapers from writing about it, and banned keywords associated with it from being searched on search engines like Google.
A Chinese researcher for the New York Times, after spending 15 months in prison without a hearing, was indicted on charges of disclosing state secrets. Why exactly are Beijing controllers mad? They allege — despite the Times’ denial — that he was the source of a story that the former president, Jian Zemin, had unexpectedly offered to resign his latest leadership post a chief of the military. It was supposed to stay secret.
On Wednesday, in a separate move, (sub required) officials dismissed the editor of The Beijing News and his two deputies, in what observers say is a general government campaign to control the media.
We met with several journalists when we visited Shanghai in late November. One, who we will call “Jill” (to shield her identity) said she enjoys a remarkable degree of freedom in her personal life. She can choose where to go, what to buy, and whether she has a boyfriend or who she chooses to marry. However, when asked whether she’s happy with the regime there, she answered dispassionately. “I can’t say I’m happy with the government,” she said after mulling the question for a bit. “But I don’t know why I’m dissatisfied.” She showed little interest in lingering on the topic, but did add that the Chinese government has managed to lift a lot of people out of poverty through pragmatic policy.
This sort of resignation (to the fact we don’t seem to have much choice about China — “if you can’t beat ’em, join em”) is evident among American investors too — though we have paid a price over the past century with case after case of deals that have lost money. It’s not just money. There are ethics too. On Dec. 2, California’s Treasurer, Phil Angelides, called upon California’s giant state teachers pension fund, CalSTRS, to sell its holdings in PetroChina, after an explosion at a PetroChina plant in China that killed five and spewed carcinogenic chemicals into a river providing water to more than 3 million Chinese residents. The Chinese government, which holds the vast majority of PetroChina’s stock, covered up news about the water contamination for 10 days.
And now we’re seeing U.S banks buying up large portions of Chinese banks, despite widespread consensus that these banks are plagued by corruption and bad loans. U.S. and other foreign banks are so eager to get a portion of the fast-growing Chinese economy, they want a stake in these banks anyway. A group led by Citigroup has just bid for 85 percent of Guangdong Development Bank, “one of the most destitute of China’s big banks” (sub required). Its $3 billion bid is twice the bank’s book value.
Perhaps the strategy to buy up struggling Chinese banks is a smart one. Perhaps not. Our point is only that we are flocking to China, and simultaneously accommodating China’s excesses, whether we’re talking environmental scandal, harsh control of media or plain bad economic management (huge bank debt). We enter 2006 reflecting on this state of affairs. We owe it to our readers to keep these uncomfortable truths in mind too, even as we continue coverage of the other fascinating China story — the mind-blowing economic recovery. And yet as we say that, we are reminded that we too, here in the U.S., have our own problems. We too aren’t sufficiently stepping up to the plate on the environment (if we did more, we’d bring China a step forward too, even if it is not as much as we want). And Washington has got questions to answer about its own treatment of perceived enemies of the state. And this raises ethical questions for some companies, including in Silicon Valley.