Enough is enough, Silicon Valley must end its elitism and arrogance or be shut down by the consumers

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Enough is enough, Silicon Valley must end its elitism and arrogance or be shut down by the consumers

 

By Vivek Wadhwa


A storm is brewing over Silicon Valley. The world expects better behavior from its tech titans. (Jeff Chiu/AP)

When computers were just for nerds and large corporations, Silicon Valley’s elite could get away with arrogance, insularity and sexism. They were building products for people that looked just like them.  The child geniuses inspired so much awe that their frat-boy behavior was a topic of amusement.

Now technology is everywhere.  It is being used by everyone. Grandma downloads apps and communicates with junior over Facebook. Women are dominating social media and African Americans are becoming Twitter’s fastest-growing demographic group.

The public is investing billions of dollars in tech companies and expects professionalism, maturity, and corporate social responsibility.  It is losing its tolerance for elitism and arrogance.

Note what just happened when Silicon Valley luminary Tom Perkins wrote to the Wall Street Journal to complain of public criticism of the Bay Area elite and his ex-wife Danielle Steel. He said “Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its ‘one percent,’ namely its Jews, to the progressive war on the American one percent, namely the ‘rich.'”

There was such an outpouring of anger on social media over the comparison to the Nazi genocide that the venture capital firm Perkins founded, Kleiner Perkins Caufield & Byers, disavowed its association with him. Tech blogs and newspapers lashed out. Silicon Valley heavyweights such as Marc Andreessen and Marc Benioff expressed their disapproval. It is a rare thing in Silicon Valley for any venture capitalist or CEO to speak up against a tech luminary — no matter how much out of line he may be. So this was a surprise.

The Perkins controversy is the tip of the iceberg. Kleiner Perkins is itself embroiled in a sexual-harassment scandal that it chose to litigate rather than settle. When Twitter filed for an IPO with an all-male board, the New York Times slammed it for being an old boys’ club. Rather than admitting that his company may have erred, Twitter CEO Dick Costolo chose to lash out publicly against a critic—me—for expressing outrage in the article. A few weeks later, Twitter gave in to the growing backlash and announced a woman director. There was no apology or humility, however.

In most industries, discriminating on the basis of gender, race, or age would be considered illegal. Yet in the tech industry, venture capitalists routinely show off about their “pattern recognition” capabilities. They say they can recognize a successful entrepreneur, engineer, or business executive when they see one. The pattern always resembles Mark Zuckerberg, Bill Gates, Jeff Bezos, or them: a nerdy male. Women, blacks, and Latinos are at a disadvantage as are older entrepreneurs. VCs openly admit that they only fund young entrepreneurs and claim that older people can’t innovate.

It isn’t just venture capitalists who are insensitive to federal employment-discrimination laws. Most tech companies refuse to release gender, race, or age data. They claim this information is a trade secret. Whatever data are available reveal a strong bias towards young males.

In his letter to Wall Street Journal, Tom Perkins complained of the outraged public reaction to Google buses carrying technology workers and to rising real-estate prices. But these are genuine grievances. Long-time residents of San Francisco are being displaced because of skyrocketing rents. Bus stops are being clogged with fleets of luxury buses. The tech industry is taking advantage of the investment that taxpayers made in public infrastructure, the Internet, and education—without giving much back or even acknowledging its debts to society.

Silicon Valley’s tech companies are also disconnected from the communities in which they live. They remain aloof about the problems that the poor face. Very few help set up soup kitchens, build houses for the homeless, or provide scholarships for disadvantaged children. Tech moguls such as Peter Thiel go as far as admonishing the value of higher education itself—and paying children $100,000 to drop out of college. Most startups focus on building senseless social media-type apps or solving the problems of the rich—and that is what venture capitalists typically fund.

Silicon Valley has an important role to play in solving the world’s problems.  It is the epicenter of innovation. Most technologists I know have a social conscience and want to do whatever they can to make the world a better place. Yet the power brokers—most venture capitalists, super-rich angel investors, and CEOs consistently show a disregard for social causes. They display a high level of arrogance, demand tax cuts for themselves, and have a don’t-care attitude. As demonstrated by the Perkins letter, this sends the wrong message to the world and holds Silicon Valley back.

It is time for the Silicon Valley elite to smell the coffee and realize that the world has changed—and that they must too. It is time for tech entrepreneurs to focus on solving big problems and giving back to the world.

Vivek Wadhwa is Distinguished Fellow and professor at Carnegie Mellon University Engineering at Silicon Valley and a director of research at Center for Entrepreneurship and Research Commercialization at Duke. His past appointments include Stanford Law School, the University of California, Berkeley, Harvard Law School, and Emory University.

Follow @wadhwa

 

 

Engineers Allege Hiring Collusion in Silicon Valley

 

 

SAN FRANCISCO — Tech companies love new ideas, unless they belong to someone else. Then any breakthroughs must be neutralized or bought. Silicon Valley executives know all too well that a competitor’s unchecked innovation can quickly topple the mightiest tech titan.

Just how far Silicon Valley will go to remove such risks is at the heart of a class-action lawsuit that accuses industry executives of agreeing between 2005 and 2009 not to poach one another’s employees. Headed to trial in San Jose this spring, the case involves 64,000 programmers and seeks billions of dollars in damages. Its mastermind, court papers say, was the executive who was the most successful, most innovative and most concerned about competition of all — Steve Jobs.

The suit shows how more than two years after his death, Mr. Jobs still casts a long shadow. It also offers a portrait of Silicon Valley engineers that differs sharply from their current caricature as well-paid villains who are driving up the price of real estate in San Francisco and making the city unbearable for others.

Instead, the court documents portray the engineers as “victims of a conspiracy” who were cheated by their bosses, said Joseph R. Saveri, a lawyer for the plaintiffs.

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Adam

All jobs and industries do this to some point.i was recently told that if the company I work for was called about my work experience they...

Michael

Seems to me that they should have read the fine print. If they didn't want to be subject to such agreements, they shouldn't have taken the...

Yogamom

Employees were not permitted the freedom to move from one position to another in any of the companies. They deserve their day in court and...

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These are the engineers building the hardware and software that are the lifeblood of the technology industry,” Mr. Saveri said. “But they were prevented from being able to freely negotiate what their skills are worth.”

The actions described in the suit were first uncovered in an investigation by the Justice Department, which concluded with an antitrust complaint against a half-dozen companies. In a simultaneous settlement, the companies agreed to drop the no-poaching practice. The settlement did not preclude the programmers from pursuing their own case against the companies, and the class-action lawsuit quotes emails and other communications from some of Silicon Valley’s biggest names.

Mr. Jobs was particularly worried about Google, which was hiring rapidly and expanding into areas where Apple had an interest. In 2005, for instance, Google’s co-founder, Sergey Brin, tried to hire from Apple’s browser team. “If you hire a single one of these people that means war,” Mr. Jobs warned in an email, according to court papers.

Mr. Brin backed off, and Google and Mr. Jobs soon came to an informal agreement not to solicit each other’s employees. Apple made similar deals with other companies. So did Google.

Photo

From left, Sergey Brin and Eric Schmidt, of Google, and Steve Jobs, of Apple, in 2008. Credit Paul Sakuma/Associated Press

By 2007, when a Google recruiter slipped up and contacted an Apple engineer, Mr. Jobs immediately complained. To appease the Apple chief, Google fired the recruiter within an hour. Mr. Jobs’s control extended even to former Apple engineers. When Google wanted to hire some, the suit says, Mr. Jobs vetoed the idea.

Google declined to comment for this article. Apple did not respond to requests for comment.

Alan Hyde, a Rutgers professor who wrote “Working in Silicon Valley: Economic and Legal Analysis of a High-Velocity Labor Market,” said the no-poaching accusations go contrary to what has made the valley so successful: job-hopping.

There is a fair amount of research that tech companies, particularly in California, have distinctive personnel practices,” he said. “They hire for short tenures and keep ties with former employees so there can be an exchange of information across company lines. The companies in this suit might have been killing the golden goose.”

They certainly tried to keep their practices quiet. Eric E. Schmidt, then Google’s chief executive, said he preferred that the company’s Do Not Call list be shared orally, according to court papers, “since I don’t want to create a paper trail over which we can be sued later.”

In a similar vein, an Intel recruiter asked Paul S. Otellini, the company’s chief executive, about a hands-off deal with Google.

We have nothing signed,” Mr. Otellini responded in an email. “We have a handshake ‘no recruit’ between Eric and myself. I would not like this broadly known.”

The origins of the conspiracy, according to the lawsuit, date back to the 1980s, when the filmmaker George Lucas sold part of his company to Mr. Jobs.

We cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing,” Mr. Lucas is quoted as saying in the court papers. So Lucasfilm and what was to become Pixar made a deal that there would be no cold-calling, that they would notify each other when offering a job to an employee and that any offer was final and would not be improved in response to a counteroffer.

What worked for Pixar would work for Apple, Mr. Jobs decided.

The Justice Department inquiry that brought the anticompetitive deals to light concluded in 2010 with an antitrust complaint against Apple, Google, Intel, Intuit, Adobe and Pixar. There were no financial sanctions.

 

Joseph Saveri is a lawyer for 64,000 engineers in a class-action suit. Credit Joseph Saveri Law Firm

Google explained at the time that it used no-poaching agreements “to maintain a good working relationship” with other companies, but said they did not affect wages or hiring. An Intel spokesman said the chip maker “denies that it violated any laws or engaged in any wrongdoing.” Adobe declined to comment.

The hands-off deals might have been more widespread than many in the valley assumed. The Justice Department is currently pursuing a case against eBay, accusing it of having an illegal no-poaching deal with Intuit. An eBay spokeswoman said the company was in settlement talks with the government.

Pixar (bought by Disney for $7 billion in 2006) and Lucasfilm (bought by Disney for $4 billion in 2012) have already settled the class-action suit, as has Intuit. The three companies agreed to pay a total of $20 million.

The engineers will get their day in court to face the remaining defendants. Which does not mean they will get much sympathy.

Santa Clara County, in the heart of Silicon Valley, has the highest average wage in the country,” said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy. “San Francisco and San Mateo are not far behind. It would be a mistake to think of these plaintiffs as an oppressed set of victims.”

Only one Silicon Valley executive appears to have resisted Mr. Jobs’s threats and blandishments.

In the summer of 2007, Palm Inc., a maker of hand-held devices, hired Jonathan J. Rubinstein, a highly respected former Apple executive who played a key role in developing the iPod. Apple engineers were clamoring to work with him.

Mr. Jobs proposed a no-poaching deal to Edward T. Colligan, Palm’s chief executive. Mr. Colligan responded that such a deal would be unfair to employees as well as “likely illegal.” Mr. Jobs then threatened to unleash Apple’s patent lawyers on Palm.

A patent suit “certainly had the potential for creating some havoc,” Mr. Colligan said in an interview. But he said he felt it was important not to bend.

A lot of times you’re confronted with things that may be advantageous, but you have to make the critical decision that morally, it is not right,” he said, noting that Apple never did sue. “Unfortunately, this does not happen as often as it should.”

 

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