Tag: Steve Jobs

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invest technology

Silicon Valley divided over choice between founders or managers

Because I was traveling this weekend, I don't have a good overview of the most important tech news. Therefore, I devote this newsletter to the only topic of conversation last week in tech circles: founders or managers - who are better?

The Uber driver's gold-rimmed sunglasses are a symbol of where I am this week. The answer is in the last photo, at the bottom.

In Silicon Valley last week most conversations were dominated by the discussions about "Founder Mode", following a blog post by Paul Graham, founder of the world's most successful startup incubator Y Combinator. Graham argues that startup founders shouldn't listen to investors who often insist on appointing experienced CEOs and managers, which Graham says often has disastrous consequences.

Founders or managers?

Operating in "founder mode," according to Graham, means adhering to a founder's mindset and management style. It's about bypassing rigid organizational structures and fostering close collaboration between departments. In contrast, startups in "manager mode" attract competent, experienced managers to lead teams with minimal interference from the CEO.

"The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it's up to them to figure out how. But you don't get involved in the details of what they do. That would be micromanaging them, which is bad.
" Graham wrote.

Airbnb almost successfully managed into the ground

He was inspired to write his blog post by a recent speech by Airbnb co-founder Brian Chesky at Y Combinator. In it, Chesky highlighted the pitfalls of conventional wisdom when scaling businesses, often advising to hire good people and give them autonomy. When he followed this advice at Airbnb, it led to disappointing results.

In his own words, inspired by Steve Jobs, Chesky developed a new approach, which now seems to be working, given Airbnb's strong financial performance - although residents of the inner cities of Barcelona and Amsterdam will think otherwise, awash in a wave of rolling suitcases and higher rents due to Airbn's "success".

Many founders in the audience shared similar experiences as Chesky and realized that the usual advice harmed rather than helped them. Chesky pointed out that founders are also often advised to run their companies as professional managers upon strong growth, which often proves ineffective.

Apple and Microsoft successful in manager mode

According to Chesky and Paul Graham, founders possess unique skills that managers without entrepreneurial backgrounds often lack. By suppressing these instincts, founders can actually harm their companies.

Risa Mish, management professor at Cornell University, contrasted that in Observer that it was precisely Steve Jobs who was succeeded with great success by the experienced manager Tim Cook. Microsoft has also performed many times better under Satya Nadella than anyone ever expected.

"But it could be as simple as the difference between a team trying to create new things and a company focused on growing existing products and revenue streams," Mish said.

Examples abound in both camps

Mish has apparently forgotten that Steve Jobs was fired from Apple in the 1980s by CEO John Sculley, who came from Pepsi Cola and ironically was recruited by Jobs himself.

The only innovation Sculley introduced at Apple was the legendary flop Newton, because he was unable to match the undeniably huge market potential of the mobile device (later proven correct by the iPhone) with the right timing, the most important skill for an innovative CEO. The technology was far from ready for a device like the Newton; high-speed mobile Internet was lacking and the small processors were still too weak.

Before I digress further: contrasted with the success of executives Tim Cook at Apple and Satya Nadella at Microsoft is a literally and figuratively (numerically and symbolically) equally great success in the person of Nvidia founder Jensen Huang, who has been CEO of the chipmaker he himself founded for more than three decades.

Nor will Salesforce shareholders shed any tears that founder Marc Benioff has been in charge there for more than a quarter century and, according to The Information, is even working on a comeback, as if that was necessary since Benioff was never out of it. In short: whether it's successful founders or successful managers, there are plenty of examples in both camps. Time for a quantitative comparison!

The data shows: founders perform better

Fortunately, the dilemma has since been studied quantitatively and it turns out that Paul Graham's thesis is correct: founder mode is often superior when it comes to value creation, according to an analysis of PitchBook data.

Pitchbook is clear: founders are better than managers.

Pitchbook concludes:

"In each of the past five years, VC-backed founder-led companies grew in value significantly faster than non-founder-led companies. This year, the relative rate of value creation for founder-CEOs was 22.4%, compared to 4.7% for non-founder-CEOs.
In the chosen methodology, the relative rate figure reflects the percentage of value increase between funding rounds, expressed on an annual basis. Among companies that raised funding this year, median value growth was $3.6 million higher among founder-CEOs.
According to Graham, founder-CEOs of high-growth companies are especially "more agile" than professional CEOs. That detail-oriented approach can lead to higher growth through product improvement, or by better motivating front-line employees."

Vulnerable businesses need entrepreneurs

Vulnerable companies need entrepreneurs. In my opinion, which is based on experience and observation but not supported by quantitative research, companies that regardless of their age rely primarily on one product or one revenue source should preferably have a founder at the helm.

Take Google, which is currently under pressure due to the rise of OpenAI with ChatGPT, while their revenue comes largely from ads, especially through the search engine.

As soon as the search engine generates less traffic, revenue will drop, and things will get very tough for Google. CEO Sundar Pichai is clearly a competent manager, but the next few years will show how good an entrepreneur he is.

We need only think back to the temporary successes of Nokia and Blackberry to see what happens when companies that lean on innovation are led by executives unable to adapt their products when they are attacked head-on.

Zuckerberg's flexibility

An excellent example of a relatively young founder who has mastered the craft is Mark Zuckerberg. When Instagram appeared to be a threat to Facebook, he quickly bought it for a billion dollars. An amount many frowned upon, but insiders knew it was a bargain. WhatsApp was about 20 times as expensive, but still a good deal.

When Snapchat posed a major threat to Instagram with Stories, Zuckerberg simply had Instagram copy Snapchat's full functionality, without ego. This saved Instagram. He is currently trying something similar in response to TikTok.

I am convinced that a classical manager would never have bought Instagram and Whatsapp or let Instagram respond so quickly to competition from Snapchat and TikTok. That Zuckerberg has now spent tens of billions on obscure Metaverse adventures is, by comparison, a rounding error.

Conclusion from thirty years as an entrepreneur and investor

Interestingly, many successful entrepreneurs say they have been mentored for years by a small group of experienced advisors who enjoy their trust. For example, ex-Intuit CEO Bill Campbell, about whom the excellent book Trillion Dollar Coach was written, was a famous advisor to Steve Jobs and the founders of Google, among others.

In Silicon Valley, investors and former entrepreneurs Reid Hoffman, Peter Thiel and Marc Andreessen are frequently mentioned names as examples of valued advisors. It is precisely in the combination of entrepreneurial experience and investment experience that they prove to be of unique value.

This topic is close to my heart because, after almost ten years as an employee during my school and college days, I have been an entrepreneur for 15 years and an investor and advisor for 15 years since.

Coachable crazies

My conclusion is that coachable entrepreneurs have the greatest chance of success.

One of the advantages of having been an employee first is that I learned mostly how I didn't want to deal with people once I became an employer. During my time as a young entrepreneur at Planet Internet, however, I have been immensely supported by valuable advice, both from entrepreneurs and managers.

In retrospect, I only realized how lucky I was that entrepreneurs like Eckart Wintzen (BSO) and Maarten van den Biggelaar (Quote Media) took the time for me, as did members of the Board of Directors of the Telegraaf and Ben Verwaayen of KPN.

It didn't escape me that Quote, Telegraph and KPN were shareholders, and that perspective obviously always came into play. But that doesn't diminish the quality of their opinions.

Later, as an advisor at the same Quote Media and at dance company ID&T, I saw how talents such as Jort Kelder and Duncan Stutterheim might appear to the outside world to be stubborn, but in practice, at crucial moments, they listened very carefully to advice - and then, as they should, made their own decisions.

It became more difficult in constellations where, on the contrary, many different winds were blowing, as I experienced with the OV Chipkaart: a consortium of public transport companies that competed among themselves, which tendered to a consortium of companies that in turn competed among themselves. 

At the Silicon Valley startup Jaunt, I experienced something similar. This virtual reality pioneer had a mix of tech and media people within both the team and the investors, a true fusion of Silicon Valley and Hollywood.

Making VR cameras as well as VR productions, having offices in Palo Alto and Santa Monica and owned by shareholders that ranged from the traditional profit-hungry Silicon Valley vc funds, to Disney and Sky; on top of that also a mix of American, European and Chinese investors. You end up with a sort of mash-up of fried rice and sauerkraut, or a pizza with ginger and kale. Separately excellent, but the combination doesn't work. It lacks focus and a unified mindset, which a good founder as CEO does have.

That's a long run-up to my conclusion: the best CEOs are founders who are maniacal in their vision, but coachable in their execution; call it coachable geeks. And then preferably coachable by both experienced founders *and* managers.

The sunglasses of the Uber driver already gave it away: this week I am in Dubai. 

Thanks for your interest and see you next week!

Categories
technology

Apple says sorry, Microsoft closes carbon megacontract

What's the reason an oompa loompa went off on Apple CEO Tim Cook?

Hugh Grant: 'The destruction of the human experience. Courtesyof Silicon Valley.'
Image created with Midjourney.

In the latest commercial for the iPad Pro, titled Crush, virtually every expression of human creativity is crushed by a huge vise until what remains is an iPad Pro that has survived the slaughter. A ridiculous idea in terms of content, and also an almost exact copy of a 2008 commercial for an LG cell phone. Apple imitating LG, the company actually called "Lucky Goldstar". How the mighty have fallen.

Since Crush debuted on Tuesday, Apple has been getting hammered daily in leading publications such as AdAge and Variety, but even the usually cautious BBC eagerly quoted actor Hugh Grant, who I adored in his role of Oompa Loompa in Wonka, responding to Apple CEO Tim Cook on X: 'The destruction of the human experience. Thanks to Silicon Valley.' A brief anthology of other headlines:

A crushing blow

Apple doesn't understand why you use technology

Apples also rot

Apple's 'Crush' ad is disgusting

Oops.

Afrojack versus Apple

Afrojack found it "maybe not such a good campaign. When the man, who parked a new Ferrari in the guardrail within an hour after picking up from the dealership and who fathered a daughter named Vegas with a contestant from a reality tv-show called The Golden Cage, when that man is concerned about your brand, we may speak of a crisis situation.

Apple has since announced it will no longer air the commercial and even apologized. A revealing report on how things could have gone so wrong at the company behind the most legendary TV commercial of all time, 1984's Superbowl commercial for the Macintosh, will surely appear at some point.

The Crush commercial is better backwards.

'Marketing is about values'

It has now been thirteen years since Steve Jobs passed away, and it's cheap to shout at every Apple mistake that it never would have happened under his leadership. But it is interesting to revisit this internal presentation Jobs made in 1997 just after his return to Apple. Introducing the campaign around the new slogan "Think Different," which was even grammatically incorrect, Jobs told the Apple employees:

"For me, marketing is all about values. The world is very complicated. It's a noisy world. We don't get many opportunities to make sure people remember us. No company gets that chance. That's why we have to be very clear about what we want them to know about us."

What impresses regardless of the content is that throughout the 15-minute presentation, Jobs never reads anything aloud, doesn't look at any screen or uses cheat sheets; the man lives this text, he means it. That's the only reason he can convey it so clearly. Even while wearing cargo shorts.

Apple was: help dissenters

The crux of the Crush commercial's failure lies in the fact that its creators seem to have forgotten Apple's values. Apple in the 1980s stood for the slogan "the power to be your best.Apple wanted to provide the tools that allowed people to be their best. So in 1997 it became "think different," an ode to people who think differently and follow their dreams.

In Crush, iconic symbols of creativity are literally crushed to introduce a new iPad, in a tragic unintentional metaphor for Apple's current identity crisis. The clumsy attempt to equate technological progress with the total destruction of artistic expression underscores how far Apple has strayed from its original mission.

Instead of unveiling revolutionary products, Apple is now focusing on licensing technologies such as OpenAI's ChatGPT. Such collaborations illustrate the shift from innovative leadership to reliance on external sources for innovation. The lack of appealing new products is the reason behind steadily declining sales. The Apple Vision Pro is beautiful, but a drop in the bucket in terms of sales.

It's high time Apple remembered the lines from its own Think Different TV commercial:

"Because the people who are crazy enough to think they can change the world, are the ones who do." 

Webinar on Tracer on May 22 and 23

Speaking of the kind of optimists who think they can make the world a better place: I've been getting a lot of questions about the blockchain project Tracer and how to participate in the emerging gigaton industry of CO2 removal, which I wrote about last week.

I share the amazement of many readers at the downright gigantic expectations expressed by firms like McKinsey, Morgan Stanley and Boston Consulting Group in their reports about the huge market of carbon removal.

The team at Tracer is therefore kindly hosting a webinar next week, especially for the readers of this newsletter, on the latest developments in carbon removal, how blockchain plays a role in it and how you can support this initiative. The webinar will be given in Dutch on May 22 and in English on May 23. Register for the obviously free webinar here.

On May 22, I talk with Gert-Jan Lasterie, Chief Business Officer of Tracer. While studying business administration, he started the weblog Flabber, which grew into a site with millions of visitors per month, partly due to successful series such as New Kids and Buitenbeeld. Lasterie sold Flabber to the American media conglomerate Vice, after which he headed social media at Coolblue with the lovely self-titled "chatty boss" and held various management positions at Telegraaf/Mediahuis.

In addition, Lasterie wrote the book "Bitcoin and other crypto currencies," which is considered the Dutch standard work on crypto investing. If only for the amusing subtitle: 'How you thought you were late getting into crypto but became more successful than people who didn't read this book.'

On May 23, in the English-language webinar, Chief Technology Officer of Tracer Philippe Tarbouriech joins us. Tarbouriech held technical positions at startups and large tech companies in Europe and the U.S., with his time as a Technology Fellow at Electronic Arts (EA) including working on the gaming classic SimCity. In a transition from virtual city builder to real life world savior, Tarbouriech has in recent years focused on blockchain applications such as the Carrot smart contract, which creates and tracks carbon removal tokens .

During the webinar, Lasterie and Tarbouriech will, of course, also discuss Tracer's funding and how you can still participate in the project during the seed round this month.

Microsoft signs largest ever contract for CO2 removal

The day after my last newsletter, which was devoted almost entirely to the carbon-removal industry (high word value in Scrabble), the New York Times published an article about it with the headline, 'Will there be a carbon market? A huge amount of work is being done to remove carbon from the atmosphere, but who is going to pay for it?'

Coincidence makes sense, to paraphrase Johan Cruijff, so it was nice that less than a day later Microsoft and Swedish energy company Stockholm Exergi announced a 10-year off-take agreement, under which Stockholm Exergi will supply Microsoft with more than three million tons of carbon removal certificates from its planned bioenergy plant with carbon capture and storage (BECCS) in Stockholm.

It is the largest carbon removal contract in history. 

In an effort to be not only carbon-neutral but even carbon-negative by 2030, Microsoft has in recent months announced a series of carbon removal agreements covering a wide range of technologies and approaches, including reforestation, direct air capture (DAC), ocean carbon removal and biochar-based projects.

On Thursday, Microsoft also announced the purchase of three million tons of removal credits in Brazil over a 15-year period. With this, the world's most valuable company gives a clear answer to the New York Times as to who will pay for carbon removal. No amounts were disclosed with either purchase, but I estimate that Microsoft is setting aside at least three billion dollars for these six million tons; an average of five hundred dollars per removal credit.

As if it were agreed work, the world's largest CO2 vacuum cleaner also opened in Iceland on Wednesday. Everything about Mammoth, from Climeworks, is impressive, as is seeping from the report CBS made. From nearly a thousand dollars per ton of CO2 removed, the price of removal credits produced by Mammoth should drop to less than three hundred dollars by 2030. 

Companies give sustainability higher priority

It is striking that while in the political arena many conservative parties are in power around the world, with lackadaisical policies on climate, it is precisely companies that are taking the lead on carbon removal. It seems as if companies better understand that in order to make annual sales and profits, it is quite convenient if there is still a livable planet thirty years from now. Politicians tend to view the world through a lense with a 4 year view, at most: until the next election.

The rosy forecasts from McKinsey, BCG and Morgan Stanley are obviously based on information coming directly from their clients' boardrooms. More than half of CEOs indicate that sustainability is a higher priority now than it was a year ago and that carbon removal is considered the top long-term strategic priority, according to a new survey by EY.

Categories
AI crypto technology

The journalist who became a billionaire as an investor, quits

This week a couple of human interest stories stood out. The richest Welshman, Sir Michael Moritz, who as a journalist at Time was once blacklisted by Steve Jobs, left Sequoia Capital after nearly 40 years. And while CEO Sam Altman traveled the earth meeting world leaders, OpenAI turned out to be led by Mira Murati, a virtually unknown 35-year-old Albanian woman.

Image: Midjourney. Prompt: man with gray hair walks away, San Francisco skyline in background.

The little kingdom

The first time I came across the name Michael Moritz was in 1992 when Frans Straver, with whom I would later found Planet Internet, and I were graduating together from the University of Amsterdam on the sexy subject of "success and failure factors of interactive media in the consumer market. At that time, only mustachioed accountants had computers and only the bigger drug dealers used cell phones.

If you were looking for a serious book about the computer industry, there was nowhere to turn but the American Book Center in Amsterdam. There we found the fantastic book, which by then was almost a decade old, by Moritz, entitled "The Little Kingdom," about how Steve Jobs developed the Mac at Apple in the early 1980s.

"So much of what has happened is connected to Apple and the story of this extraordinary company that I find that Apple's breadcrumbs have been strewn across my life's path," said Moritz, who regrets that he never settled his spat with Jobs before his death. The book planted the seed in Frans and me that it was possible for two young guys to set up a successful company in the technology world, something we had never considered until reading Moritz's book.

Of course, when I moved to America in the late 1990s for my next startup after Planet Internet, Moritz was the first investor on whose door I knocked. Tried to knock on the door actually, because I never got beyond the inbox of the intern of the assistant of the junior associate at Sequoia who kindly declined me. Later I understood that Sequoia, and Moritz in particular, received thousands of business plans a year during that dotcom boom but made only a few dozen investments.

From Airbnb to Zoom

Michael Moritz was born in Wales to Jewish parents who had fled the rise of the Nazis in Germany. He was stationed in San Francisco for many years as a Time journalist and wrote widely about the world of technology. Don Valentine, the founder of Sequoia and the man who invested in Apple, Atari, Cisco, Oracle and Electronic Arts, among others, saw something in the British journalist and offered him the chance to work as an investor.

Over the next 38 years Moritz worked for Sequoia, the investment company strung together successes. Under his reign, Sequoia invested in virtually every company whose apps we have on our phones or computers today, or which we use for work directly or indirectly, including Google, Dropbox, Linkedin, Yahoo, Airbnb, PayPal, Instagram, YouTube, Whatsapp, Nvidia, Zoom and OpenAI.

In one of his rare interviews, Moritz said:

"One of the things that is undervalued in our industry is how much you can learn from someone decades younger than you. Those are the people who might go on to do unusual things; they understand something very well, are independent thinkers and obviously smart and gifted."

Early this century, Moritz also initiated Sequoia's lucrative expansion into China. He was chairman of Sequoia from the mid-1990s until 2012, when he relinquished day-to-day management of the company due to "a rare medical condition that is treatable but incurable." Still, he remained a partner of Sequoia until his announced departure this week.

In recent years, Moritz apparently focused more on e-commerce and led Sequoia's investments in Stripe (estimated valuation $50 billion), Klarna ($6.7 billion), Instacart ($12 billion) and Getir ($6.5 billion). He will gradually transfer positions on the supervisory boards of those companies.

A hefty crank start

Forbes estimates Moritz's wealth at $5.2 billion, thanks largely to his holdings in Internet companies. Moritz and his wife donate most of it to charities, mainly through their own foundation, Crankstart. They are in quite a hurry to do so, judging by the report on the website:

"In 2022, we awarded $200 million in grants, 60 percent of which were to nonprofit organizations in the San Francisco Bay Area. The grants ranged in size from $1,000 to $18,500,000 and went to 363 organizations."

Other eye-catching donations included $20 million to the American civil rights movement ACLU, $50 million to his alma mater the University of Oxford, and no less than £75 million to the same university to spend on scholarships for children from low-income families. Moritz had not lost sight of the fact that he himself had once enjoyed a scholarship.

What I personally found remarkable was that Moritz is funding the famed literary Booker Prize through Crankstart for at least five years, after the previous sponsor pulled out. But unlike that sponsor, Moritz did not want to attach any name recognition to his donation because he and his wife believe that the Booker Prize is a prestigious award that should be associated with the name of the prize, not the name of the sponsor.

The similarities between Steve Jobs and Sir Alex Ferguson

In 2009, Moritz released a revised version of his book on Apple entitled "The Return to the Little Kingdom: Steve Jobs, the Creation of Apple and How It Changed the World. The book remains highly recommended for anyone interested in innovation and creativity.

To my surprise, Moritz, still a die-hard Manchester United fan despite having lived in San Francisco for nearly half a century, wrote a book on leadership with legendary manager Sir Alex Ferguson in 2015.

In an interview about that book, Moritz shared some observations about the similarities between Steve Jobs and Sir Alex:

"When it comes to leadership, I think there are similarities. In their own way, they are both perfectionists. With Sir Alex, I was looking for a way to explain what I think are the basic principles of good leadership. I don't think they are very different between Silicon Valley and the soccer field, and they are universally applicable. The problem with the principles of leadership is that they are pretty easy to list, but very difficult to apply.

Sir Alex, Steve, they both had the energy to consistently push, urge, persuade others toward a goal that they themselves envisioned. I think the big difference between management and leadership is that the leader can persuade people to do the impossible."

Time for a new book?

Things get even more interesting when Moritz shares his own investment criteria. "When I want to invest I start with a market opportunity, because if a company starts in a market that looks unchanging and doesn't look like it's going to grow, it's not going to be a great company. Furthermore, we are looking for people who are completely obsessed. People who love nothing more than to work on the product or service they have come up with."

In the Netherlands, many investors employ the archaic cliché "it's about the guy, not the tent"; but Moritz cites as the first criterion precisely a large market, prone to change. That's an interesting angle. A top entrepreneur in a small market is not so interesting in this view.

And that begs the question of whether Moritz, time and health permitting, would like to write a book for the first time sharing his own views on entrepreneurship, innovation and leadership, rather than writing about people like Jobs and Ferguson.

My favorite book for tech entrepreneurs is "The Hard Thing About Hard Things: Building a business when there are no easy answers' by former entrepreneur Ben Horowitz, now best known as co-founder of venture capital firm Andreessen Horowitz.

Horowitz is an exception, because just as many former top athletes turn out to be bad coaches, few successful entrepreneurs manage to develop into good investors. Let me stick to myself: when people ask me for advice on investing, I always reply that although I worked as an investor for many years, I never said I was good at it. That's why I became an entrepreneur again.

Moritz, now knighted Sir Michael, has no entrepreneurial experience whatsoever. Apparently, that was no impediment to achieving extreme success as an investor. It is high time someone with his amazing track record, huge network and sharp pen, shared his knowledge and experience in the form of a new book.

The driving force behind OpenAI is a 35-year-old Albanian woman

Founder and CEO of OpenAI Sam Altman visited as many as 22 countries in recent weeks including Israel, Jordan, Qatar, the United Arab Emirates, India, South Korea, Japan, Singapore, Indonesia and Australia. Altman met with students, venture capitalists and leaders including Indian Prime Minister Modi, South Korean President Yoon Suk Yeol and Israeli President Herzog. Earlier in his trip, Altman met with British Prime Minister Sunak, German Chancellor Scholz and French President Macron. (Remember, with dark brown shoes?)

The subject of all the conversations was the question: can AI be trusted, or are government measures needed? So it was instant news when Reuters saw Friday on the LinkedIn page of OpenAI's "Trust & Safety Leader" Dave Willner that he had left quietly after a year and a half. Willner talked about family reasons, which of course is possible.

But I also note that according to his LinkedIn profile, with 18 months of employment, Willner has already secured a sizable number of options in OpenAI, which at the estimated company valuation of $27 to $29 billion for OpenAI are worth enough that the Willner family's life would not be significantly improved if he stayed with the company for another year or so. After all, the difference in quality of life between earning 10,000 Euros or 20,000 Euros is far greater, than the difference between 10 million or 20 million in the bank.

Until a successor is found, Willner's team (apparently there is a Trust & Safety team at OpenAI) is managed by the CTO, Mira Murati. Who is this woman, who is still completely unknown on ChatGPT itself?

Mira Murati? Doesn't ring a bell, ChatGPT says of its own boss.

CEO Magazine came out with a portrait of Mira Murati last week. Although, portrait; from the lack of a posed photo and the absence of literal quotes from Murati, it may be concluded that she had not collaborated on the article.

Although Murati is unknown on her own ChatGPT, the competitor, Google Bard, does have some information about her:

"Mira Murati is the Chief Technology Officer of OpenAI. She is a brilliant engineer who has worked on several AI projects, including ChatGPT, Dall-E and Codex. She is also an advocate for the regulation of AI because she believes it is important to take precautions to prevent the misuse of AI.

Murati was born in Albania and studied mechanical engineering at Dartmouth College. She then worked as an intern at Goldman Sachs and Zodiac Aerospace before joining Tesla as Senior Product Manager of the Model X. In 2016, she joined Leap Motion. In 2018, she joined OpenAI and was promoted to CTO in 2021."

There are several things remarkable about this. First, Murati's description on Bard is almost literally identical to the one in the CEO Magazine article. That raises the question of which source had the original information and which source clumsily copied it? It's fodder for lawyers in the AI world, where real and fake or original and copy seem completely interchangeable.

Second, Murati must be something of a prodigy, because it is rare for someone with the study of mechanical engineering to make a career in software so quickly. One study is about how, for example, the Tesla X is put together, the other about the software that makes the car self-driving.

Third, it appears that Murati moved to Canada from Albania at the age of 16. I asked Bard if Murati moved alone, or with her parents. Bard replied that 'Murati and her husband Sokol fled to Canada with their two children in 1993.' But in 1993, Mira Murati was five years old, which is also on the early side in Albania to have already started a family. In short; there is still a lot to improve on Google's AI activities.

Murati and Moritz: America first

There is a striking parallel in the lives of Mira Murati and Michael Moritz. Both came to America from a small European country, where they had the opportunity to expand their knowledge at excellent universities and then to exploit their potential in top companies.

I am not saying that every Ethiopian is a potential top entrepreneur or that there is a brain surgeon hiding in every refugee from Aleppo, but in the month when a cabinet falls in the Netherlands over a few thousand additional immigrants a year, I do argue for a rational immigration policy. Europe is old, so is Asia; several continents are aging rapidly. At the same time, there are people in previously unexpected places who can contribute much to the world, if only they are given the chance.

Of course, my perspective is colored, because I too once came through an exchange and scholarship from Amsterdam to a university in San Francisco, where I first saw the Internet. Moritz and Murati came to the San Francisco Bay Area from Wales and Albania. But where in Europe or Asia would they have been as welcome as there? And where would their origins play such a minor role? What European or Asian venture capitalist would give a journalist a chance as an investor, or a young Albanian woman the technical leadership of a billion-dollar company like OpenAI? That should make entrepreneurs, voters and policymakers think.

Spotlight 9: Ripple continues to amaze, but for how long?

The chart is not upside down; there were only declines among the leading investments in the tech sector except for Ripple.

It was a week full of sadness and gloom in the tech corner of the stock markets. But where I expected a correction to Ripple's huge price jump after last week's court ruling, XRP remained fairly stable while the other major crypto currencies, Bitcoin and Ethereum, both fell.

So I downloaded from Coinmarketcap the XRP price data for the last 30 days and asked OpenAI's Code Interpreter to plot the price against trading volume. From there, this interesting graph rolled out:

The red line indicates the trading volume, the blue line the price.

Trading volume in XRP has declined dramatically over the last week, following a huge spike in the days immediately following the court ruling. The falling blue line representing the price now parallels the red line of falling trading volume.

That means the price can no longer be driven by increasing demand. Investors who believe in XRP are holding on. But not enough new buyers are entering the market at the current price to offset the number of sell orders. A further correction of XRP seems inevitable.

And bad news for crypto enthusiasts: anyone who bought XRP a year ago should certainly be happy with a 105% rise. But that's still a lot less than the 160% price jump Nvidia made in the last year, driven by the AI hype that requires strong processors.

Notable links this week

The White House on Friday invited representatives of seven leading companies in the AI field and announced a covenant of sorts with them, in which the companies pledged, among other things, to add digital watermarks to their systems. (So if all goes well, we'll soon know who had copied the text from whom about Mira Murati: Bard or CEO Magazine?)

The participating companies have been regular topics in this spot in recent weeks, namely Microsoft (with Bing), Google(Bard), OpenAI(ChatGPT), Anthropic(Claude), Inflection(Pi), Amazon and Meta(LLaMA).

In effect, Meta is thereby acknowledging OpenAI's lead and, by making its technology open source, hopes to attract so many developers from outside the company that it can still catch up with LLaMA 2. A smart strategy by Meta, which is distinctive from the closed AI platforms of OpenAI and Google.

It continues to be amazing how quickly AI applications are improving. After text and photos, now it's video's turn, and Twitter user Nathan Lands shared a nice overview.

Two weeks ago, I described my doubts about Mark Zuckerberg's jubilation about his new app Threads, the AliExpress version of Twitter. Granted, because of Instagram's installed base, hundreds of millions of people will try Threads. But the app is too sloppy, boring and predictable to generate much repeated use unless improvements are made to the app quickly.

This journalist explains in great detail all the shortcomings of Threads. A good point: why is there only an app for cell phones and Threads cannot be used on a computer, if the platform is about text messages? I wonder how long it will be before the first significant updates are released by Meta, because it would be good if a serious competitor to Twitter emerges.

Christopher Nolan and Hoyte van Hoytema literally and figuratively make great films

In all the digital opulence, film writer and director Christopher Nolan is a blessing. He filmed the masterpiece Oppenheimer on 70 millimeter IMAX film and does not use Computer Generated Images (CGI) in his films. This video shows how the film is literally pasted together from fifty-three rolls of film of three minutes and twenty-four seconds each. In total, the film, which has a duration of three hours and nine seconds, is 17.7 kilometers long and weighs 272 kilograms. That's another entertainment experience than watching Love Island on your iPhone.

Nolan finds CGI "too safe, the image does not seem to contain the threat of, say, a real explosion, however small. He shoots on film because it most closely resembles the image the human eye perceives. That and more can be seen in this video in which Robert Downey Jr and Christopher Nolan answer the most frequently asked questions on the web about them.

For those of you who are going to see Oppenheimer in theaters next week; go to the IMAX and I'd love to hear how you liked it.

Happy Sunday!

Categories
AI technology

Amsterdam AI startup raises 50 million, Ajax wins only on Apple TV+

This is the web version of edition 3, April 23, 2023, of my weekly newsletter, subscribe here.

For a very brief moment over the past few days, Amsterdam took center stage in the online world, and it had nothing to do with Ajax. It made me think back to 2003, twenty years ago.

On Leidseplein in Amsterdam, a group of unknown American comedians stood on stage at Boom Chicago, the comedy theater that had to rely primarily on drunken tourists. In California, the first iLife suite, consisting of the cumbersome iTunes and iDVD, which allowed you to burn DVDs very slowly, was launched amid jeers by the moribund Apple. Steve Jobs was at the helm for over 5 years and on $6 billion in sales, Apple was loss-making.

Ted Lasso's unexpected star, Hannah Waddingham, gives bald men hope in the episode Sunflowers 

Anyone who would have predicted then that 20 years later a brilliant comedy show based on a cheap commercial created by these comedians would break all sorts of records on an Apple streaming service with as many as 52 Emmy Award nominations would have been instantly fooled. Ted Lasso, the brainchild of Boom Chicago alumni Jason Sudeikis, Brendan Hunt and Joe Kelly, won the Emmy Award for best comedy series two years in a row. Earlier, Apple TV+ was the first streaming service to win an Oscar for best film, with CODA, which led to strong growth in Apple TV+ subscribers.

It's comparing apples to potatoes, but it's nice to look at how another legendary company that preferred to make only hardware and no content fared during the same period: our own Philips, unlike Apple, did make a profit in 2003, even nearly €500 million on sales of €29 billion, almost five times the sales of Apple that year. Twenty years on, Philips is worth €15 billion on sales of €17 billion and Apple has a market value of €2.3 trillion. Forget all those zeros: that's 2,300 times a billion. Apple has become worth over 150 times as much as Philips in two decades and is on its way to annual sales of over $500 billion, $100 billion of which comes from its services division alone. Not bad for a company that, to the anger of Steve Jobs, was so bad at services that it couldn't yet provide a decent email service. Or does anyone still have a MobileMe address?

But I digress, because entirely in the spirit of Ted Lasso, I would like to be positive this Sunday. Last Wednesday's episode, Sunflowers, was the reason I was reminded of when the creative minds behind Ted Lasso lived in Amsterdam. Sunflowers is an hour-plus long paean from the creators to Amsterdam. Including André Hazes and even a snippet of Rob de Nijs. The only implausible moment of this episode was the beginning, Ajax's 5-0 victory in the Johan Cruijff Arena. When in reality Ajax's only scoring team was the media team, which unfurled a large banner at the pub in London where part of Ted Lasso is being shot.

Why is an Amsterdam "vector database" worth 200 million?

Bob van Luijt and Etienne Dilocker, co-founders of Weaviate

Who wouldn't laugh?

While all of Ted Lasso's protagonists in the Amsterdam episode experienced a direction-defining breakthrough, the same was true of a startup unknown to me that announced it had raised no less than $50 million in its third round of funding. Weaviate calls itself a "vector database" but as the last generation whose math wasn't in the required curriculum, I'm not helped by that. (I'm guessing the name stands for weav-iate, do something with weaving, and not for we-aviate, we fly). Searching for more information about Weaviate, until January still called SemI which does not provide more insight, I found this excellent explanation by CEO Bob van Luijt:

'First-generation database technology is often referred to by the acronym SQL [...] which are conceptually similar to spreadsheets or tables. In the 1980s, this technology was dominated by companies such as Oracle and Microsoft. The second wave of databases is called "NoSQL." These are the domain of companies like MongoDB (and Elastic, MF). They store data in different ways [...] but what they all have in common is that they are not relational tables. [...] The third wave of database technologies focuses on data that is first processed by a machine-learning model, where the AI models help process, store and search the data, as opposed to traditional ways.'

That's an excellent explanation, and it's smart to frame Weaviate this way. Without saying it, Van Luijt implies that Weaviate is solving a huge problem in a huge market, music to the ears of investors, referring to a number of industry peers whose "little ones" are even publicly traded and have a market value of $16 billion (MongoDB) and just under $6 billion (Elastic). Except that those are of the old generation, lisp Van Luijt actually says in passing, and Weaviate is better.

A few things strike me: 

  • $50 million on a $200 million valuation is a high amount for a relatively low valuation. That sounds absurd, but consider that a few weeks ago Character.ai raised $150 million on a valuation of over a billion. Still, this funding is a wise decision by Weaviate, because the fact remains that U.S. VCs invest less money in non-U.S. companies, and at lower valuations, than in U.S. companies. To stay in Ted Lasso spheres, an English Premier League club simply pays more for a player from another Premier League club, than for Jan Maas from the Eredivisie. (That character who always speaks the truth, however painfully at times, by the way, is named after Saskia Maas, the CEO and driving force behind Boom Chicago).
  • in total, Weaviate has now raised $67.7 million within three years, allowing the company to compete in the development of fundamental technology for an international market. What Weaviate is doing is similar to playing Champions League soccer with a Dutch club. Fortunately, Van Luijt et al. now have sufficient resources to attract good players. (This is the latest soccer comparison.)
  • ING already participated in the 2022 A round because it knew Weaviate, as a spin-out from ING Labs. It is commendable that a traditional major bank like ING made such a risky investment, provided the bank actually gets to work with Weaviate's technology. Otherwise, it is a normal venture capital investment, and those do not score better on average in the Netherlands than the AEX index. By the way, it's funny that Weaviate's name change has passed the administrator of ING Ventures' portfolio page by. There, the company is still simply called SemI.
  • Alex van Leeuwen participated in the seed round of Weaviate and in doing so made perhaps one of the best investments ever in the Netherlands. Investor Peter Thiel bought a 10% stake in Facebook in 2004 for $500,000 and sold his stake for a total of over $1 billion, as far as we know the best-yielding investment in venture capital. It may not be that happy (2000x) for Van Leeuwen, but I don't rule it out. Database companies, we've learned from those first- and second-generation oldies, can scale up quickly relatively easily without huge follow-on investments.

Fine links

  • The FD published this thorough article about Lightyear with the headline "How Holland's cuddly company went down by a hair. The disinterest of foreign technology investors in Lightyear (compare it to Weaviate) should have been a telling sign.
  • Master vlogger Casey Neistat intentionally made a terrible vlog based on a script written by ChatGPT4. His conclusion: AI lacks soul, lacks depth. I think ChatGPT4 mostly lacks context at this point, because not yet fed Casey's past, perspective and tone.
  • ChatGPT's CTO Greg Brockman gave this fascinating presentation on ChatGPT's capabilities, which go so much further than some "text and pictures" questions. The interview with TED founder Chris Anderson immediately following the presentation is also enlightening. Thanks to Michiel Schoonhoven of content marketing specialist NXTLI for the tip.

Spotlight 9

(ChatGPT4 coined this rubric name, see the p.s. below this newsletter).

Stock market sentiment determines much of our economy and in fact the tech sector is dominated by it. The idea behind this portfolio was simple. Say you want to invest, but don't want to buy and sell every day because that's time consuming and complicated and you can stand to lose a little; what do you buy? I chose the 5 biggest tech stocks (Amazon, Apple, Google/Alphabet, Meta and Microsoft) two index funds (S&P 500 and Dow Jones Index) and the two biggest cryptocurrencies (Bitcoin and Ethereum). Anyone who had made these nine purchases on Jan. 1 of this year, each for an equal amount, would have earned a return of 37.6% today. But compared to a year ago, the return is -8%. That's the nice thing about tracking a portfolio like this: the duration of the investment, your investment horizon, determines the definition of success. Those who look only at this week, in which only Amazon stands proudly, yearn for the old Silver Fleet account. Incidentally, the main reason Amazon shares rose seems to be the announcement that the company wants to play a prominent role in AI alongside Microsoft and Google, with Amazon Bedrock as its first asset. The setup of Bedrock is interesting because instead of developing everything itself, Amazon offers AWS customers the ability to use AI models from various vendors, including AWS itself.

For those more interested in AI, I recommend this conversation, started by NRC journalist Wouter van Noort who himself produces some of my favorite newsletters, Future Affairs and Transcend.

Happy Sunday,

-Michiel

The archive of past newsletters is here.

p.s. below the conversation with ChatGPT4 about the rubric name for tracking a small investment portfolio