March 23 – 26, 2019
Recap by Bill Sharp with input from Jane Shivers
We kicked off a cocktail party Saturday evening March 23 for 24 SIBF members and guests at our Russian Hill abode on Saturday evening followed by an earlier arrivals group dinner at a locally-owned neighborhood Italian restaurant, Amarena. We then opened the Silicon Valley briefing Sunday evening March 24 with a reception and dinner on Sunday evening at the Palo Alto Four Seasons. On Monday the real work began.
MONDAY, MARCH 25, 2019
A conversation with Tim Draper Founding Partners, Draper Associates & DFJ
We had lectures beginning Monday March 25 at 8:30 a.m. We kicked-off with a conversation with Silicon Valley icon Tim Draper, who is recognized as a leading supporter of entrepreneurship with many awards and honors including the number one Most Networked Venture Capitalist by a leading publication among other accolades (moderated by Greenville, South Carolina member Brice Bay). Tim was also honored as the “Entrepreneur for the World” in 2015 by World Entrepreneurship Forum. Tim is regularly on CNBC, CNN, Fox News, BBC and several other networks as a leading commentator.
Following Tim Draper’s opening session we had the pleasure of learning from several riveting panels led by SIBF members Rakesh Vaidyanathan, Mark Kaiser, and Marion Smith – we had many of the big names in tech from the Valley on our various panels, and needless to say Rakesh as our Briefing Chair did an outstanding job in executing one of the most educational and enriching Briefings of all time!
Can Elephants Dance? Making Disruptive Innovation work for Corporate America
The panel was led by SIBF Chairman Mark Kaiser (Georgia 2001), President & CEO, Venadar LLC, and featured Michael Janse, Managing Director, Samsung Ventures; Mark Platshon, Managing Director & Co-Founder, Icebreaker Ventures, Former Silicon Valley Head of BMW Ventures; and Bonny Simi, President, JetBlue Technology Ventures as speakers.
This was a riveting panel discussing the pattern of disruptive developments in innovation and the impact on international business. You could not buy this stuff on Amazon, it was so compelling. v 3D: Diagnostics, Data and Digital: Healthcare’s New Future We then were enlightened by an excellent panel for an hour and a half addressing
3D: diagnostics, data and digital: healthcare’s new future
I provided the introduction and the thanks to this panel consisting of moderator Rajen Dalal, Chairman of Cardiac Designs, Inc. and also the founder of Outward Bound California among other initiatives (Rajen has served on at least a dozen boards and has had half as many startups all of which he monetized) and several other all-stars as noted below.
We also had the Global Head and VP for Roche based out of Switzerland, the CEO of Sandstone Diagnostics, as well as Silicon Valley’s leading health-care inventor, entrepreneur and founding manager of the leading healthcare venture fund, Ted Driscoll among others. This panel provided jarring and enlightening perspective of how technology is driving the delivery of healthcare in the future, focusing on point-of-care diagnostics that bring the lab to your cell phone, highlighting discoveries in gene and immune therapies seeking breakthrough cures for deadly diseases by cracking the code of life, technology that can deliver superior value and perhaps lower cost. It was absolutely amazing to hear to what is actually going on in the world.
Age of the Machines: Demystifying Machine Learning
We then had a panel of the managing partner of the Boston Consulting Group, the Global VP for Data and Artificial Intelligence of Visa, the head of research science at Uber, as well moderated by our own SIBF member Rakash Vaidyanathan, managing partner of the Jai Group, a leading tech startup, to dive into machine learning and artificial intelligence and their impact on economy, jobs, lifestyle and humility.
While machine learning and AI will make our life simpler and more cost effective, the cost to society may be overbearing as we will see hundreds and thousands of jobs lost over the next several years, as detailed by the panel. If anyone is interested in this topic please see me, have several pages of notes and the statistics are not overly optimistic as to what is going to happen over the next 10 to 20 years in terms of our employment base both in the U.S. and abroad.
After nearly seven hours in lecture sessions, we heard from long time entrepreneur and Silicon Valley veteran Bill Reichert, who has over thirty years of experience as an investor, entrepreneur, and operating executive, and is behind many success stories in the American tech space. Bill provided an invigorating and informative study about team building and how important it is to build a team for high performance. His theme was “People Trump Technology.” He provided us with two significant myths, and four major lessons regarding venture capital and the ecosystem in Silicon Valley and surrounding parts of the world.
The first myth is that Silicon Valley is all about new technology developed in the valley. This is really a myth because most successful companies develop other people’s technology. Of all major companies, Silicon Valley startups and successful public companies have leveraged innovation based on other people’s technology and success. Silicon Valley borrows or buys others’ technology and puts it in a different position in a novel way through innovation. The only exceptions are Intel, which made the microprocessor, and Cisco, which created the router. So it’s not about inventing, but it’s about innovation, and to have innovation you must have great people. For example, Elon Musk did not invent the electric car, he invested in and purchased this technology.
The second myth is that Silicon Valley great technology companies are not built by visionaries, but rather are built by high performing teams, and there are many examples of technology leveraged off others by using innovation and team building to get to the finish line. The list is long and we see this from many examples.
We then focused on team building, and this segment was a particularly informative discussion, as Bill Reichert reviewed his four primary lessons.
First, we need to look at our philosophy of leadership. Everybody talks about leadership, but no one really knows what this means - so in the first lesson it is important to hire leaders and not followers. Everyone must have a leadership culture, and everyone must feel that he or she is leader, otherwise if you have one leader and all followers the leader becomes the bottleneck. Team members must take initiative, solve problems, and know when to use the team and when to handle matters on their own.
The second lesson is to hire team members who have diverse perspectives and it is best not to build a balanced team but an unbalanced team. This generates creative conflict and results in different skills but with varying perspectives. Remember most entrepreneurs are optimists but you also need pessimists to keep them in check. And thirdly you also need an engineer, someone who is objective and neither is an optimist or a pessimist. Every diverse team must have this unbalanced characteristic to create appropriate conflict to extract ideas then to commit to a plan of action. Arguments do not equal dysfunction, and the team cannot allow conflict to rule the culture but a team culture first must be developed from which positive conflict flows.
Lesson number three is how to create an organization of a culture that has values aligned within all team members, because people must be aligned on vision, process and design. It’s hard to get alignment on processes when people have different cultural values. Teams that aren’t aligned will always miss their plans.
Lesson number four, and most importantly, is the overall “intentionality” of our team. Is it to focus on making money? If so the team will fail. The focus needs to be on value, and define that value in creating a process built on value and therefor a financial return. With these lessons in mind Bill provided several illustrations on the success by way of example on how great teams are created.
TUESDAY, MARCH 26, 2019
Markkula Center and GSV Labs, Santa Clara
We departed the hotel at 7:15 Tuesday morning in order to beat the traffic and arrive at the beautiful campus of Santa Clara University, home of the Markkula Center for Applied Ethics. Funded by the co-founder of Apple, Mike Markkula and his wife Linda, the Center has researchers and scholars who work on all aspects of applied and professional ethics under the leadership of Dr. Don Heider, Executive Director. This was a very propitious time to be at the Center because everyday now we see questionable ethics in business, government, journalism, healthcare, bioethics, internet, leadership, technology, religion and other categories.
Dr. Heider discussed the process the Center’s team goes through to help leaders determine the right path when faced with an ethical issue. He then divided our group into teams of 3-5 people to work on an ethical question that Facebook’s leadership team had to solve based on the live-streaming of the terrible crime in New Zealand. He gave us eight questions to discuss in our small groups and then we had a discussion with the whole group. We all were amazed at how many angles, how many stakeholders, and how many questions arose in the process of trying to come to a decision that in this case, involved a worldwide user audience, most of them using the technology for good and not evil. We then headed over to GSVLabs in Santa Clara.
GSVLabs Overview & Discussion
GSVLabs in Santa Clara was founded by Michael Moe, who is also the founder of GSV Assets Management. Michael is regarded as one of the world’s preeminent authorities on growth investing and who has been routinely solicited from CNBC to Congress. He presented to us about the wonderful work of the GSVLabs.
Michael commented that talent is spread everywhere around the world but the opportunities are not so well allocated and part of the mission of GSVLabs is to democratize and spread learning and technology opportunities throughout the world. More on this below.
A little background. Every day in the United States 1,100 new businesses are formed, yet every day in the United States, 1,100 businesses fail. In the venture capital space, twenty percent of all start-up ventures survive after three years, with an eighty percent failure rate.
Michael then asked us to focus on three major “gravitational shifts” as follows: First, the role of digital data, and the impact on the Class of 2020. These young people think differently at age twenty, and more than fifty percent of them believe that online learning is as good or better than classroom learning. They do not know about the Dotcom Bust, but they do know about the Great Recession, so they don’t believe in owning anything as they saw their parents lose homes and lose jobs. In this class of 2020, most of them believe they will have at least fifteen or more careers from graduation to retirement. They don’t want to get locked down on any given area and be at the mercy of an employer as many of them saw their parents lose their jobs during the Great Recession.
The second major gravitational shift is the so-called digital disruption. Today over 3.7 billion people are on the internet, and the cost of computing has dropped over ninetynine percent in the past twenty years. 2.6 billon people own smart phones. 258 million apps were downloaded in 2018 alone.
At the same time, department stores since 2007 have lost an excess of 100,000 jobs, and people don’t realize that this is far more than the number of coal workers employed in the U.S. in the past ten years. But since 2007 e-commerce has gained 350,000 in new jobs, and we have also seen 100,000 new robots come online.
McKinsey predicts that 350,000 manufacturing and warehouse jobs will be gone in the next 15 to twenty years, with another twelve million white collar jobs gone by the year 2025. One of the big losers will be financial advisors because much of the financial advisory platform will be replaced by robotic applications with artificial intelligence. In fact, 50% of all jobs are at risk to be replaced in the next twenty years. While the new data and e-commerce jobs will amount to 1.2 million over the next ten to fifteen years, this barely dents the surface due to the disruption of loss of jobs.
The third gravitational shift relates to the evolving “global Silicon Valley,” which is extending the opportunities and expertise of Silicon Valley in a democratic way around the globe. We need to look to history to know how this goes. Back during the early phases of innovation the merchant bankers in London said” risk is not our cup of tea”. Then decades later in New York following World War II those in New York said “well if it’s not already in place, then it must not be very good.” And then going to the Midwest at the least they became a little more flexible by saying “Ok, let’s test it, let’s test it and test it again … hmm …. it looks promising.” And then those in San Francisco who saw emerging technology said “Can I write you a check?” And then we move over to China and we demonstrate technology and the quote is “What a great idea - now it’s mine.”
The point here is that we can’t replicate the successes of Silicon Valley all over the world but we can leverage it. We connect Silicon Valley with emerging countries and develop hubs of innovation that will spread and allocate the expertise and experiences of Silicon Valley with other partners in geographical regions around the world. This is the mission of GSVLabs.
Now let’s look at the venture capital shift. In the last ten years 92% of all venture capital emerged from the U.S. and most in Silicon Valley. But in 2018 55% of all venture capital originated from outside of the United States and thus only 45% in the United States. Shanghai has become second to Silicon Valley in providing venture capital.
And back on the Class of 2020, yes corporate law requires only doing business to enhance the value to shareholders but these new students and graduates are saying we better be doing business to better the community and improve the environment and not focus just on shareholders.
The Santa Clara-based GSVLabs center is home to over 170 startups with another 500 startups in the GSVLabs ecosystem by 2020. To be in house the cost is simply $33 per employee or $600 per year up to three employees with adjustments. GSVLabs offers an extensive “passport website” including discounts, cash credits and financing lines, and other forms of support plus an entire ecosystem of mentors, venture capitalists, legal support and other services.
Then the CEO of the emerging startup known as WhoKnows.com presented his story and a compelling understanding of how GSVLabs supported and launched this now successful venture.