Silicon Valley's China Envy
Not for the right reasons...
It feels surreal to be sending this newsletter on the same day a violent mob rioted into the US Capitol at the incitement of the sitting president. I wrote the bulk of this post on Tuesday. I hesitated sending it today, on Wednesday, after the riots in DC, but I knew I’d not be coherent if I tried to write something on the day of.
I am both terrified and ashamed of what I saw on, and heard directly from friends who were there. Never in a million years I’d have guessed I’d see a bunch of idiots running around on the House floor with confederacy flags. Ranjan and I literally had a cut meeting short, because our guest who lives in DC, was worried about what’s going on. Having witnessed multiple coup attempts in Turkey, it was scary to relive some of that today in America.
And today was a sad day for America. I hope that every single person responsible is held accountable for their shameless, cowardly acts. Hopefully that will include everyone: from who were on the ground to whose who have incited it all in the first place. Otherwise, nothing will prevent the same from happening again.
But here’s another thing. This is a technology newsletter with a sizable audience. There’s no denying that the tech industry, both with its callousness during the elections but also with disregard to those who left behind, is part of how we got here. Some of our most influential leaders have been supporters of these acts from Day One, many of us also helped by looking the other way while the problems bubbled up within our companies. We need to do better also.
And now, on with the newsletter…
Does America have a Monopoly Problem?
Unless you are the CEO of one of the supposed monopolists, the answer seems to be a resounding yes. Even Democrats and Republicans agree on this, and they can't even agree on things like climate change most days. It's tough to argue the opposite. I mean, it won't stop a specific class of VC Twitter from doing so, but alas.
Monopolies are bad for many reasons, from arbitrarily jacking up the prices to simply not giving a fuck about their employers or their communities. But they can also be harmful by becoming so big and powerful that they can take over what we consider critical duties of a government in a liberal democracy.
But, you know, turns out America doesn’t have a monopoly on having monopoly problems: (WSJ):
Central to the crackdown on Ant Group Co., in which Mr. Ma is the controlling shareholder, is what regulators view as the unfair competitive advantage the company has over small lenders or even big banks through swaths of personal data harnessed from its payment and lifestyle app Alipay.
The entire WSJ piece is pretty good but essentially the Chinese government claims the bank so much power that it no longer serves the party (or the country, sure) but Jack Ma himself and himself only (emphasis mine):
Mr. Ma has little room to bargain after the business empire he has built over decades has landed in the crosshairs of regulators and even President Xi Jinping, partly reflecting Beijing's concern that the flamboyant entrepreneur has been too focused on his business fortunes rather than the state's goal of controlling financial risks.
Where’s Jack (Ma)?
Oh yeah, I guess this is related (Yahoo! Finance) :
Speculation has swirled around Chinese billionaire Jack Ma's whereabouts after reports surfaced that the high-profile businessman has not made a public appearance in more than two months.
I don't really know how it works to "disappear" when you are worth around $60 billion dollars and live in a country with an oppressive and vindictive regime. At that point, is your fabulous net worth working against you or for you?
What does it even mean to be worth tens of billions of dollars when the government could just take everything away? Also, is Jack Ma a crypto guy?
Anyway (Yahoo! Finance):
Ma's business empire, Ant Group, has been under scrutiny by Beijing ever since Ma delivered a controversial speech in Shanghai on 24 October that criticised China's regulation system for stifling innovation and likened global banking rules to an "old people's club".
The entire thing is pretty sad, and while I suspect Jack Ma is "fine", at least physically, the fact this whole thing might be an overzealous antitrust enforcement gone wild is kinda…funny (CNBC):
[Mark Mobius:] "I believe the Chinese government stepped in because they realized that they had to regulate these companies so that they don't… get too big," he said, adding that other emerging markets have the same concerns. "A lot of it is related to privacy and other factors."
Should we be more like China?
I bring this section up specifically because as soon as I read this, it reminded me of a couple years back in Silicon Valley Discourse. I know 2017 feels like a decade ago now, but there was a time where you could legitimately say things like "China Good, America Bad" and get away with it.
I mean, not exactly, but close.
This is Sam Altman, who was the head of (President?!) YCombinator back then:
Earlier this year, I noticed something in China that really surprised me. I realized I felt more comfortable discussing controversial ideas in Beijing than in San Francisco. I didn't feel completely comfortable—this was China, after all—just more comfortable than at home.
Maybe Jack Ma should have posted his thoughts on Medium or something. Just kidding, Medium is blocked in China.
(It’s not a piece without merit, mind you, but Sam falls on his face trying to wrap his argument with a dramatic intro. Also, he ends up apologizing for various other in artful wording in a follow-up piece, staying true to the adage that “Medium is a service for tech apologies” (I know this isn’t on Medium))
Allegiances and Loyalties
One thing that I think a lot about is allegiances. Sometimes, it comes in the form of "paying back", like when I discussed a couple weeks ago that tech companies like Airbnb who owe part of their success to this region embracing their crazy ideas. But to me, it also means wondering about where you derive your core ideals and principles.
The thing with core values is that they aren't supposed to change with the wind. It's one thing to change your mind about what technology stack is good or even which city you'll live in or even what party you'll vote for in local or national elections; it's another thing to openly wonder whether we should do what others are doing, even though when we know the other is a regime that will not just keep a certain CEO away from the cameras for a couple of months, but imprison entire ethnicities?
Don't get me wrong. There's a lot to admire about China. Lifting billions of people out of abject poverty is a remarkable achievement. And I personally think there's a lot to learn from the country's ability to plan and execute for the long run, instead of just a few years out is something dearly missing from here in the US. And once you factor in how America has uniquely bungled its coronavirus response, and people are back to their normal lives, even in once the virus hotspots Wuhan, it's only natural to ask oneself if one side has some insight the other sorely lacks.
Yet, every time I go back and think about the tech companies' involvement in China, it seems like we are learning the long lessons. And it is frustrating.
Just as I was discussing the Ma news with Ranjan, I brought up the infamous Mike Moritz Financial Times op-ed where he argued Silicon Valley engineers had gone soft, I saw this on my feed (and he sent it to me at the same time):
How awful (South China Morning Post):
A 22-year-old female employee at Chinese e-commerce giant Pinduoduo died last week after working long hours past midnight, sparking an investigation into the company from Shanghai authorities and renewing discussions on social media about tech companies' notorious "996" overwork culture.
Maybe let's not copy that? I know Wall Street does this habitually, but I thought Silicon Valley was supposed to be not that! Isn't the whole idea behind the technology that it allows people to do more with less so that you just don't have to throw people at problems? Are Silicon Valley engineers, or those in China's tech industry, nothing more than glorified bricklayers who instead of getting calluses simply get repetitive stress injury?
I mean, whoever is telling you that the life of a Silicon Valley engineer at a fast-growing company is not without stress, they are lying to you. I firmly believe that most success is attributable to luck, but of the rest of the skill part, the biggest chunk is the ability to make sacrifices others won't make, not some inherent or learned skill.
This isn't to say everyone earned based solely on their merit, but overall, if you worked harder, all else being equal, you got rewarded more. There was always, however, a sane bottom. You never had to work yourself to the bone to not get fired. And if you thought the company's expected minimum was lower than yours, you could always find another job. Many even did. Many others like me, we worked a bit harder than we would have liked, complained about bosses on Slack for a bit to each other, and then worked a bit more.
What we didn't do is look at those who were doing better than us, and take their ideas wholesale. We did not, for example, awkwardly ask a president to name our kid to curry favors to enter their market but then turn around and call them a competitive threat when antitrust issues at home-reared their ugly head. Neither did we make plans to enter a new market by doing what we would never do at home, censor our results, only to make a U-turn to shut it down after deepening internal rifts with employees.
I've argued many times, both in this newsletter or in other forums, that it's not OK for a bunch of Silicon Valley companies, which are made up of a small number of people who all look and think alike, to impose their own arbitrary standards and cultures on other people. And there's no going around the fact what one considers holy might be blasphemous for another. There will inevitably be compromises made entering new markets, small and large.
But that doesn't mean everything is up for a compromise. The idea of a liberal democracy that ensures companies like those to exist and flourish in the first place, the quality of life that we hold dear which came at the expense of previous generations' sacrifices are just some of the values that should be worth exchanging for a few dollars on the stock price. It might be true that Silicon Valley is now more of an ethos, a way of thinking and living, rather than a tiny earthquake-prone region in Northern California. But it would be nice if it meant not just turning over your ideals for a quick buck but rather enabling people to do amazing things with technology, expanding opportunities to people who didn't have it before, and you know, just a better life.
Mostly nitpicking but want to add that not all monopolies are bad because they jack up prices. That’s the whole argument about Amazon and WalMart with lowering prices past the point of sustainable commerce - loss leaders and the like. You can kill industries by undercutting pricing and while that’s good for “consumers”, it’s a monopolistic practice that has downstream impacts through the chain of production that is ultimately bad for people, bad for choice.
The Moritz piece was the mask off moment for me. The issue with SV “culture” is that it considers itself as a holistic enlightened path whereas it’s chronically one dimensional and more rabidly capitalist than Wall St.
At least in finance, once you “make it” you spend your time buying art and attempting to act cultured. There’s an acknowledgment that there’s something else out there beyond making money.