Is the dotcom bubble about to burst (again)?


In Silicon Valley, millions of dollars change hands every day as investors hunt the next big thing – the ‘unicorn’, or billion-dollar tech firm. There are now almost 150, but can they all succeed?

Have you heard the story about the tip from the shoeshine boy, a Brit called James Pallot asks me on my last day at TechCrunch Disrupt. I have, I say, though later I Google it to get the facts straight.

It’s attributed to Joseph Kennedy, paterfamilias of the Kennedy clan who, in 1929, was getting his shoes shined by a young boy who was also making confident predictions about which stocks would rise. For Kennedy, it was a moment of revelation. He sold his portfolio. Not long afterwards, Wall Street crashed and the world was plunged into the greatest depression ever seen. So a tip from the shoeshine boy is a sign that the bubble is about to burst. That the wave of confidence will finally crash upon the shore. That the jig is up.

Pallot used to be the digital editorial director of Condé Nast in New York and now he has a startup. But then, we’re at the world’s biggest startup conference in San Francisco, a few miles down the road from Silicon Valley where the world’s greatest concentration of technology startups first started up.

His company is in the booming field of VR, or virtual reality, which is to 2015 roughly what Rubik’s Cubes were to 1982, though with rather bigger potential consequences. Pallot claims it’s the logical next step for journalistic content. In 20 years’ time, you won’t be reading this on the page, I’ll probably be leading you by the hand through a 3D rendering of a virtual TechCrunch conference floor. Or, more likely, you’ll be leading yourself and I’ll be claiming jobseeker’s allowance.

But anyway. In the meantime, Pallot asks me if I’ve heard of the tip from the shoeshine boy. I have, I say, and tell him it’s been on my mind. Because for three days, I’ve been hearing about “unicorns” – a Silicon Valley term for companies that have been valued at more than $1bn. When this usage was first coined, less than two years ago, there were 39 of them. Today, there are 147. Or as Matthew Wong, a senior analyst at CB Insights, tells me: “The funding is at levels that we haven’t seen since 2000.”

As those with longer memories will recall, that was the year the dotcom bubble burst. It needs explaining because there are an awful lot of people at TechCrunch whose memories simply don’t go back that far: the typical startup founder is male and in his 20s. Back in 2000, Google was less than 18 months old and Facebook wasn’t even a glimmer in Mark Zuckerberg’s eye – he was still at high school. (At 31, he’s now practically Silicon Valley’s elder statesman.)

Everything has changed. And is changing at an ever-faster pace. Eight years ago, TechCrunch launched its Disrupt conference with 45 startups. This year, there are 5,000 of them. Over three days I talk to founders of companies from San Francisco and Texas and Uruguay and Beirut and Stockholm and Tel Aviv and Warsaw. There are apps for crowdfunded mortgages and cheaper divorces and better sex. There’s “Expedia for golf” and “Facebook for cars” and “Nest for water” and “Tinder for dogs”. There’s a virtual reality teddy bear, a device that claims it will be able to read your emotions via a contact lens in your eye and another that will automate your home cannabis farm (marijuana is a big deal in Silicon Valley right now). I miss the panel on nuclear fusion startups but they’re around.

They’ve all paid upwards of $3,000 (£1,900) to be here and they’re all trying to attract the attention of Silicon Valley’s biggest beasts. The VCs – venture capitalists to you and me. The money guys.

“How do you spot them?” I ask Peter Becronis, the founder of a real estate startup called Owner’s Vault. “Oh, it’s easy,” he says. “They’re all men, older guys who are in jeans and brown boots and perhaps a blue jacket. Oh, and a good watch. They’re the ones who shuffle past you trying not to catch your eye.”

It’s a long shot for the likes of Becronis to be here, but not a total pipe dream. Because hundreds of startups are being funded each month. Vast sums of money are changing hands. Crunchbase, TechCrunch’s sister site, lists the deals that are being done on a daily basis. On the day I write this, I check it and find 24 companies that have just received funding, including Kreditech, which got $92m (it uses “big data and complex machine-learning algorithms to credit score everyone worldwide”) and Medium, which received $57m (it’s a platform that has found another new business model that seems to involve not paying journalists).

Every month the amount of money being invested in early-stage startups goes up. And every month, more and more people are starting to use the B-word. Bubble. The last time this amount of money was swilling around, we know how it ended. “Back then, a lot of websites launched but that’s all they were, websites,” Mike Butcher, TechCrunch’s editor-at-large, tells me. “Now in 2015, all those technologies that were predicted – AI, drones, VR – have all turned up. The innovation is real. And it just continues to get bigger and bigger. There are more VC firms here than you can poke a stick at.

“Is it a bubble?” he asks and then answers the question himself, vividly, if not entirely clearly. “It depends. How many unicorns can you fit through the eye of a needle? Anyway, unicorns are over. It’s all about decacorns now. Companies that are worth tens of billions of dollars.”

In 2000 the bubble was in publicly listed companies – organisations like the then upstart AOL, which bought Time Warner for $164bn, the largest merger in America business history, and then most spectacular blow-up. Or in Britain,, whose share price peaked at 511p before crashing to 80p a month later. Both companies survived, unlike many, but it was a long struggle back up for both of them. (In a neat bit of circularity, AOL bought TechCrunchalong the way.) In 2015, it’s private money flowing into companies that may or may not go public one day.

The shoeshine boy wouldn’t be tipping stocks in 2015, but what would he be doing? I ask Ned Desmond, the chief operating officer of TechCrunch. He thinks for a moment. “He would probably be an Uber driver who has his own angel investment line,” he says.

But James Pallot tops that. He’s flown in from JFK and had his shoes shined in the airport. “And the guy had a startup. I literally got a tip from the shoeshine boy! He was trying to find an investor for his national shoeshine franchise.” But then, in many ways, there has never been a better time to be a startup. Niko Bonatsos, a VC with General Catalyst Partners, tells me that the sheer number of companies at TechCrunch “speaks volumes about how the barriers to entry have been removed. It’s really easy to start a company. And lots of companies from other parts of the world see this as a lottery ticket. And for some of them, it will be. It’s the survival of the fittest. And the luckiest.”

Pallot and his co-founder are currently “bootstrapping” their company, Emblematic Group, which is creating virtual reality news content. “Bootstrapping” is Silicon Valley jargon. It means getting by with what you’ve got. It’s how people have set up companies since the dawn of capitalism. You start a business with a bit of money you already have and you try to attract customers and build it from there.

“Bootstrapping” is how you figure out if there’s a market and, if so, how you reach it. It’s also, like, totally 20th century. The reason 5,000 companies pay $3,000-plus to come to TechCrunch is because Silicon Valley has another model. People – strangers – will give you vast sums of cash to build your company into a global brand overnight. If you can deliver the killer pitch. The pitch that convinces the valley’s top VCs that you are the next Facebook, the next Uber, the next Airbnb.

“It doesn’t work like this in the rest of the world,” Ned Desmond tells me. “In Indonesia or Turkey or wherever, normal business culture demands collateral and security. Venture investing has none of that. You are investing in potential.” You’re gambling, basically. Silicon Valley, in 2015, is a giant casino. And the bets are so large because the potential payoffs are so huge. The next Google has to start somewhere.

So is it a bubble? “Everything is cyclical,” says Desmond. Does he remember the last crash? “I was there! I was in it. It was terrible. We had just launched a magazine, Business 2.0. Even the name sounds so cringeworthy now. We launched in May 2000 with a record number of advertisements. We had 150 ad pages. A year on, we had 15.”

This is not exactly an answer, so I try again. Is it a bubble? “We published a graph showing the unicorns. It’s a hockey stick. It’s near vertical growth.”



New App Lets You Rate and Review Actual Human Beings

Imagine all your worst ideas poured into an app and you’ve basically got it.

Photo Credit: Shutterstock / Chaikom

If there is one thing that absolutely no one has been asking for, it is a social media app that lets you rate people as if they were products or restaurants. But a Calgary-based company isn’t letting that major issue get in the way. Instead, it’s developed an app called Peeple, which allows anyone age 21 or over who has your phone number to rate you on a scale from 1 to 5, and to give you a review.

Sounds like just what the Internet needs, right? Another way for people to voice their unfiltered and unsolicited opinions on something — or someone, in this case — just because!

Here’s how this awful, no-good idea, which cofounders Nicole McCullough and Julia Cordray say will launch in November, will work: Users will log into Peeple via Facebook and enter their phone numbers to demonstrate they aren’t bots and to verify their identity. Then, to rate a person, they’ll have to pick a category that defines the nature of their shared relationship: personal, professional or romantic. From there, they can issue a rating and write a review, the way you might on Yelp or Amazon, only about a flesh-and-blood human being.

But wait, there’s more! Even if you don’t sign up for the app, someone else can create a profile for you. According to the Peeple site, “[i]f the person you are searching for is not in the app you can add their name, profile picture, and start their profile by rating them.” All you need is said person’s cell phone number. And once you have a profile in the Peeple app — even one you yourself didn’t create — it’s there for good.

Peeple co-founder Nicole McCullough, speaking to the Calgary Herald, said, “The aim of our platform is to showcase a person’s true character. I came up with this idea over a year and a half ago from wanting to find a good babysitter in my neighborhood. We tend to trust referrals and so we wanted to create a platform that allowed people to refer each other in several different ways.”

“People do so much research when they buy a car or make those kinds of decisions,” co-founder Julia Cordray told the Washington Post. “Why not do the same kind of research on other aspects of your life?”

The short answer is, because people are not cars or objects. Summing a person up on a scale of 1-5 seems irresponsible and overly simplistic, not to mention completely unnecessary. (You want to know what someone’s like? It sounds crazy, but you might try talking to that person.) If, as McCullough suggests, the company was simply interested in creating a means of vetting service providers — e.g., baby sitters — why not build a site like Healthgrades or Rate My Professor, which focus on rating a person in a capacity that it makes sense for a reviewer to comment on, or a potential customer to know? Why would anyone think that essentially inviting any acquaintance — from old lovers to former co-workers you mostly avoided — to weigh in with thoughts on a person is a good idea? Knowing what we know about the Internet, and how people behave online, who wouldn’t see this as a devolutionary step in social media? It’s all just so obviously made to go terribly awry.

What’s more, the Washington Post also notes that, even under the best of circumstances, rating sites and app users exhibit inevitable human biases:

[A]ll rating apps, from Yelp to Rate My Professor, have a demonstrated problem with self-selection. (The only people who leave reviews are the ones who love or hate the subject.) In fact, as repeat studies of Rate My Professor have shown, ratings typically reflect the biases of the reviewer more than they do the actual skills of the teacher: On RMP, professors whom students consider attractive are way more likely to be given high ratings, and men and women are evaluated on totally different traits.

McCullough and Cordray point to Peeple’s terms and conditions, which rule out things like bullying, abuse, hateful content, sexism and more, but I think we’ve all seen how effective that is in practice on any number of sites. Still, there may be one way to avoid the inevitable downsides of this whole thing. Positive ratings will post on a profile the instant they’re submitted, but negative ratings will be withheld for 48 hours while the parties involved attempt to settle the issue. If you aren’t registered for the site, you can’t engage in that process, and your page will therefore only display positive comments. (You can also respond to negative comments, Yelp-style, but I say not registering seems like the best route for everyone.)

Until their launch, McCullough and Cordray are speaking with angel investors and venture capitalists to raise funds. The Post estimates the company is currently valued at $7.6 million.

“Peeple will revolutionize the way an individual is seen in this world through their relationships,” Cordray said to the Calgary Herald. “When social graces are becoming lost to the past, we want to revive this forgotten manner and bring attention to how a person appears to others.”

It’s an ironic statement, considering the app seems to eschew the very social graces Cordray suggests it was created to promote.

The Myth of Trickle Down Innovation

Why is the world working on clickbait instead of going to Mars?

Here’s a tiny proposition: innovation is in danger of becoming a word that means something like making even more instant instant microwavable noodles


On-demand butlers, maids, chaffeurs, dog-walkers. Pet spas. Tap for a drone-delivered artisanally crafted designer taco. Swipe right for a date with a better profile pic. Swipe up for the economy’s next great, earth-shaking innovation…same day delivery of everything you had to wait two days for.

Let’s take a moment to be painfully honest. The above are fripperies, trivialities, a piffling of the human spirit. Let me present you with a list of great endeavors humanity’s boundless ingenuity should be devoted to. Reversing climate change. Curing cancer (and the like). Ending poverty. Fixing the ills of democracy. Giving every child a life-changing education.

So how did we end up with a generation’s brightest minds slaving furiously over the colossal, world-changing idea of…same day delivery? Right you are: largely, because of short-termism, growthism, and “shareholder” (read: hedge-fund bots programmed to earn a penny more profit even during the implosion of the known universe) pressure.

But those exist in the first place because of a great myth. The Myth of Trickle-Down Innovation. I’d bet that you’ve heard it before, often from venture capitalists high-fiving each other in congrulatory blog posts (“aww shucks, Bob. No, you’re the Thomas Edison of the twenty-first century!!”). It goes like this: today’s luxuries are tomorrow’s necessities. What the rich enjoy today, so the poor will enjoy tomorrow. Hey, presto! Innovate!! Rinse, apply, repeat, problem (aka all of humanity’s greatest and most pressing challenges, issues, and dilemmas) solved.

The problem is that the Myth of Trickle Down Innovation isn’t really true. Like all great myths, it hides a greater truth — and symbolizes an article of faith that we ritualistically repeat, mostly to comfort one another that we are moral, just beings. While it’s certainly true that the majority of innovations trickle downwards through the strata of the economy, to the very bedrock, it’s truer that many don’t — and they are often precisely the ones that should; or worse still, that on its voyage through the strata of the economy, what was once the pure, clean water of prosperity gets polluted into something more like toxic sludge.

I just bought a new TV. Wow! It’s the kind of miraculous gadget six year old me could only have dreamt of in his widest-eyed fantasies. It’s huge, paper-thin, and does wondrous things like making everything on it 3-D. Amazing, right? Right. Innovation trickling down to a humble nobody like me. But. If the hidden cost of my new TV is that I don’t enjoy stability, mobility, opportunity, retirement — which should I want? I know, it’s a tough choice.

Here are three more examples, to make my point. Cars. Everyone has one today. But because society invested heavily in a groundbreaking (at the time) set of highways. No highways — less cars. Lesson: innovation doesn’t trickle down in a magical, unstoppable alchemy —even when it does, it often requires help, a gentle nudge, a spark (read: investment, laws, social norms). Food. It’s true that people today enjoy a cornucopia in their local supermarket. But it’s truer that food deserts exist, and much food is riddled with additives and preservatives: sure, innovation trickled down — but the high-fructose-saturated-food-like products many can afford aren’t quite the pure, clean Whole Foods the rich enjoy. Education. If you’re very rich, you can send your kids to a liberal arts school, where they’ll enjoy careful, personalized one-on-one instruction in classes of a few dozen. But if you’re not…well, fear not, innovation’s trickling down. You might enjoy online classes (read: Powerpoint presentations with canned voice-overs) with thousands of other students, with maybe a scratchy Skype connection and a few multiple-choice quizzes to boot. Not quite the same thing, are they? What’s trickling down at the very bottom isn’t the pure, clean water of life at the top of the economic mountain.

Still don’t accept my tiny theory? Here are just a few things that the richest have, that the middle class doesn’t, and probably won’t in the foreseeable future. Wealth managers, private jets, members’ clubs, private islands, property portfolios, designer yachts. Some things are more like caviar than water: they don’t trickle down the economic mountain at all.

The converse is also true. If what’s trickling down from the top of the mountain is champagne, but the people at the bottom are thirsty for water…then you’re probably not innovating in any meaningful sense. We can make all the on-demand masseuses and pet spas and same-day delivered designer sheets in the world — but they’re not going to benefit people as much as high quality jobs, incomes, savings, rights, mobility, opportunity…happiness, meaning, a planet. While some innovations never trickle down, and some turn into sludge along the way — often, innovations that do trickle down are of little benefit in the first place. Doggy butlers trickling down when most Americans can’t afford $400 for an emergency expense is like smiling and giving a person dying of thirst a designer straw to suck air through.

The trickle-down theory of innovation is essentially the discredited ideology of trickle-down economics restated using gadgets instead of formulas. The latter argues that prosperity will trickle down (it hasn’t), and the former suggests that prosperity trickles down through goods magically getting cheaper (instead of turning toxic, pointless, or simply disappearing along the way). But just as trickle-down economics has been squarely debunked, repudiated even by the IMF, for example, so it’s time for us to update our tired, rusting mental models of innovation.

Rather than employing the illogic of trickle-down innovation, you and I should ask a wiser question: what are the long-term real social benefits of this product, service, idea, project? What does it add in human terms — does it make people smarter, fitter, wiser, closer, happier? Will it change anyone’s life, in even a small way, for the better, and how many lives can it realistically change thus — or is it just another coal in the bonfire of the vanities?

Why? Because the truth is that we don’t get too many shots at groundbreaking things — and it’s those shots that come to define the worthiness of our days. If we’re going to spend our time, effort, money, imagination, our best minds and our brightest spirits, on the grand challenge of…delivering stuff we don’t really need with money we don’t really have to impress people we don’t really like to live lives we don’t really want…a few microseconds sooner…we’re not surely not investing our veryselves wisely: spending our brief time on earth accomplishing things that truly matter. And lest you suggest I’m an idealist, the simple fact is: that is how great institutions, leaders, and lives, those that earn our respect, love, and admiration — and so lend our brief days a sense of greater meaning, higher purpose, and abiding worth — are built.

September 2015

Kids Who Use Computers Heavily in School Have Lower Test Scores

In top performing nations, teachers, not students, use technology.

For those of us who worry that Google might be making us stupid, and that, perhaps, technology and education don’t mix well, here’s a new study to confirm that anxiety.

The Organization for Economic Cooperation and Development (OECD) looked at computer use among 15-year-olds across 31 nations and regions, and found that students who used computers more at school had both lower reading and lower math scores, as measured by PISA or Program for International Student Assessment. The study, published September 15, 2015, was actually conducted back in 2012, when the average student across the world, for example, was using the Internet once a week, doing software drills once a month, and emailing once a month. But the highest-performing students were using computers in the classroom less than that.

“Those that use the Internet every day do the worst,” said Andreas Schleicher, OECD Director for Education and Skills, and author of “Students, Computers and Learning: Making the Connection,” the OECD’s first report to look at the digital skills of students around the world. The study controlled for income and race; between two similar students, the one who used computers more, generally scored worse.*

Home computer use, by contrast, wasn’t as harmful to academic achievement. Many students in many high performing nations reported spending between one to two hours a day on a computer outside of school. Across the 31 nations and regions, the average 15-year-old spent more than two hours a day on the computer. (Compare your country here).

Back in the classroom, however, school systems with more computers tended to be improving less, the study found. Those with fewer computers were seeing larger educational gains, as measured by PISA test score changes between 2009 and 2012.

“That’s pretty sobering for us,” said Schleicher in a press briefing. “We all hope that integrating more and more technology is going to help us enhance learning environments, make learning more interactive, introduce more experiential learning, and give students access to more advanced knowledge. But it doesn’t seem to be working like this.”

Schleicher openly worried that if students end up “cutting and pasting information from Google” into worksheets with “prefabricated” questions, “then they’re not going to learn a lot.”

“There are countless examples of where the appropriate use of technology has had and is having a positive impact on achievement,” said Bruce Friend, the chief operating officer of iNACOL, a U.S.-based advocacy group for increasing the use of technology in education. “We shouldn’t use this report to think that technology doesn’t have a place.”

Friend urges schools in the U.S. and elsewhere to train teachers more in how to use technology, especially in how to analyze real-time performance data from students so that instruction can be modified and tailored to each student.

“Lots of technological investments are not translating into immediate achievement increases. If raising student achievement was as easy as giving every student a device, we would have this solved. It’s not easy,”  Friend added.

In a press briefing on the report, Schleicher noted that many of the the top 10 scoring countries and regions on the PISA test, such as Singapore and Shanghai, China, are cautious about giving computers to students during the school day. But they have sharply increased computer use among teachers. Teachers in Shanghai, Schleicher explained, are expected to upload lesson plans to a database and they are partly evaluated by how much they contribute. In other Asian countries, it is common for teachers to collaborate electronically in writing lessons. And technology is used for video observations of classrooms and feedback. “Maybe that’s something we can learn from,” said Schleicher.

In addition to comparing computer use at schools with academic achievement, the report also released results from a 2012 computerized PISA test that assessed digital skills. U.S. students, it turns out, are much better at “digital reading” than they are at traditional print reading. The U.S. ranked among the group of top performing nations in this category. In math, the U.S. was near the worldwide average on the digital test, whereas it usually ranks below average on the print test.

The digital reading test assesses slightly different skills than the print test. For example, students are presented with a simulated website and asked to answer questions from it. Astonishingly, U.S. students are rather good at remaining on task, clicking strategically and getting back on track after an errant click. By contrast, students in many other nations were more prone to click around aimlessly.

Interestingly, there wasn’t a positive correlation between computer usage at school and performance on the digital tests. Some of the highest scoring nations on the digital tests don’t use computers very much at school.

In the end, 15-year-old students need good comprehension and analysis skills to do well in either the print or the digital worlds. This study leaves me thinking that technology holds a lot of promise, but that it’s hard to implement properly. Yes, maybe there are superstar teachers in Silicon Valley who never get rattled by computer viruses, inspire their students with thrilling lab simulations and connect their classroom with Nobel Prize-winning researchers. But is it realistic to expect the majority of teachers to do that? Is the typical teacher’s attempt to use technology in the classroom so riddled with problems that it’s taking away valuable instructional time that could otherwise be spent teaching how to write a well-structured essay?

Perhaps, it’s best to invest the computer money, into hiring, paying and training good teachers.

* In reading, students who used the computer a little bit did score better than those who never used a computer. But then as computer use increased beyond that little bit, reading performance declined. In math, the highest performing students didn’t use computers at all.

Jill Barshay, a contributing editor, is the founding editor and writer of Education By The Numbers, The Hechinger Report’s blog about education data. Previously she was the New York bureau chief for Marketplace, a national business show on public radio stations.

Robert Reich: How Silicon Valley Giants Are Destroying U.S. Capitalism

‘Saving Capitalism,’ Reich’s new book calls for sweeping anti-trust actions.

Photo Credit:

Throughout American history, whatever industries have dominated the economy have also had outsized control of the political system—until something shifted and their monopoly power was broken.

“Two centuries ago slaves were among the nation’s most valuable assets, and after the Civil War, perhaps land was,” wrote former Secretary of Labor Robert Reich in an excerptin the New York Times from his forthcoming book, Saving Capitalism. “Then factories, machines, railroads and oil transformed America. By the 1920s most working Americans were employees, and the most contested property issue was their freedom to organize into unions.”

Reich’s knows that government and the private sector are not separate entities, but deeply related. He notes the federal government has intervened over the decades to restrain and rebalance capitalism’s excesses. And he says that America is again at one of those moments when the economy is overrun by monopolies—with Silicon Valley’s giants as the top example.

Today, the most valuable asset in America is digitized information pulsing through the portals that Americans tap when sitting at a computer or using a phone, and the underlying infrastructure created by the Internet’s giants: Google, Apple, Facebook, telecoms, cable TV, etc.

“Now information and ideas are the most valuable forms of property,” Reich writes. “The most valuable intellectual properties are platforms so widely used that everyone else has to use them, too. Think of standard operating systems like Microsoft’s Windows or Google’s Android; Google’s search engine; Amazon’s shopping system; and Facebook’s communication network.”

Reich points out that Silicon Valley has a concentration of well-known monopolies. Google runs two-thirds of all Internet searches in the U.S., he notes. Amazon now sells almost half of all new books. Facebook has nearly 1.5 billion global monthly users. This, he said, is “where the money is.”

And just as the biggest slave owners found many ways to keep slavery growing in colonial America and a young nation, so too have high-tech giants convinced the government to keep its regulatory hands off.

“Antitrust laws used to fight this sort of market power,” Reich writes. “In the 1990s, the federal government accused Microsoft of illegally bundling its popular Windows operating system with its Internet Explorer browser to create an industry standard that stifled competition. Microsoft settled the case by agreeing to share its programming interfaces with other companies. But since then Big Tech has been almost immune to serious antitrust scrutiny, even though the largest tech companies have more market power than ever. Maybe that’s because they’ve accumulated so much political power.”

Reich believes the time has already come for the historic regulatory pendulum to start swinging the other way—that is, for the federal government to reign in monopolistic excess.

“As has happened before with other forms of property, the most politically influential owners of the new property are doing their utmost to increase their profits by creating monopolies that must eventually be broken up,” he writes. “Whenever markets become concentrated, consumers end up paying more than they otherwise would, and innovations are squelched. Sure, big platforms let creators showcase and introduce new apps, songs, books, videos and other content. But almost all of the profits go to the platforms’ owners, who have all of the bargaining power.”

Reich points to numerous economic statistics that show that since the late 1970s, “the rate at which new businesses have formed in the United States has slowed markedly.” This is especially true in Silicon Valley, he said, as “Big Tech’s sweeping patents, standard platforms, fleets of lawyers to litigate against potential rivals and armies of lobbyists have created formidable barriers to new entrants.”

Arcane areas of the federal government—such as U.S. Patent Office—helped make this so by assisting giants like Google and Apple acquire near-monopoly control over their respective profit centers. His prescription, of course, is for federal policymakers to reverse course and stand up for the little guy or gal.

“The underlying issue has little to do with whether one prefers the “free market” or government,” he writes, seeking to debunk the notion that these companies exist in a sphere immune from public accountability.

“The real question is how government organizes the market, and who has the most influence over its decisions,” Reich said. “We are now in a new gilded age similar to the first Gilded Age, when the nation’s antitrust laws were enacted. As then, those with great power and resources are making the “free market” function on their behalf. Big Tech — along with the drug, insurance, agriculture and financial giants — dominates both our economy and our politics.”

Reich says the time has come for federal power to break up the 21st centuries newest monopolies for the benefit of the rest of the economy. But it will take clear thinking to see the American economy for what its biggest actors have largely become—modern monopolies.

“Yet as long as we remain obsessed by the debate over the relative merits of the “free market” and “government,” we have little hope of seeing what’s occurring and taking the action that’s needed to make our economy work for the many, not the few.”


Steven Rosenfeld covers national political issues for AlterNet, including America’s retirement crisis, democracy and voting rights, and campaigns and elections. He is the author of “Count My Vote: A Citizen’s Guide to Voting” (AlterNet Books, 2008).

Airbnb And Uber Are Terrible For The Economy

Travis Kalanick Uber Cover Illustration_03

The “sharing economy” – typified by companies like Airbnb or Uber, both of which now have market capitalizations in the billions – is the latest fashion craze among business writers. But in their exuberance over the next big thing, many boosters have overlooked the reality that this new business model is largely based on evading regulations and breaking the law.

For the uninitiated, Airbnb is an internet-based service that allows people to rent out spare rooms to strangers for short stays. Uber is an internet taxi service that allows tens of thousands of people to answer ride requests with their own cars. There are hundreds of other such services that involve the renting or selling of everything from power tools to used suits and wedding dresses.

The good thing about the sharing economy is that it facilitates the use of underutilized resources. There are millions of people with houses or apartments that have rooms sitting empty, and Airbnb allows them to profit from these empty rooms while allowing guests a place to stay at prices that are often far less than those charged by hotels. Uber offers prices that are competitive with standard taxi prices and their drivers are often much quicker and more reliable – and its drivers can drive as much or as little as they like, without making a commitment to standard shifts. Other services allow for items to be used productively that would otherwise be gathering dust.

But the downside of the sharing economy has gotten much less attention. Most cities and states both tax and regulate hotels, and the tourists who stay in hotels are usually an important source of tax revenue (since governments have long recognized that a modest hotel tax is not likely to discourage most visitors nor provoke the ire of constituents). But many of Airbnb’s customers are not paying the taxes required under the law.

Airbnb can also raise issues of safety for its customers and nuisance for hosts’ neighbors. Hotels are regularly inspected to ensure that they are not fire traps and that they don’t pose other risks for visitors. Airbnb hosts face no such inspections – and their neighbors in condo, co-ops or apartment buildings may think they have the right not to be living next door to a hotel (which is one reason that cities have zoning restrictions).

Insofar as Airbnb is allowing people to evade taxes and regulations, the company is not a net plus to the economy and society – it is simply facilitating a bunch of rip-offs. Others in the economy will lose by bearing an additional tax burden or being forced to live next to an apartment unit with a never-ending parade of noisy visitors, just to cite two examples.

The same story may apply with Uber. Uber is currently in disputes with regulators over whether its cars meet the safety and insurance requirements imposed on standard taxis. Also, many cities impose some restrictions on the number of cabs in the hopes of ensuring a minimum level of earnings for drivers, but if Uber and related services (like Lyft) flood the market, they could harm all drivers’ ability to earn even minimum wage.

This downside of the sharing needs to be taken seriously, but that doesn’t mean the current tax and regulatory structure is perfect. Many existing regulations should be changed, as they were originally designed to serve narrow interests and/or have outlived their usefulness. But it doesn’t make sense to essentially exempt entire classes of business from safety regulations or taxes just because they provide their services over the Internet.

Going forward, we need to ensure that the regulatory structure allows for real innovation, but doesn’t make scam-facilitators into billionaires. For example, rooms rented under Airbnb should be subject to the same taxes as hotels and motels pay. Uber drivers and cars should have to meet the same standards and carry the same level of insurance as commercial taxi fleets.

If these services are still viable when operating on a level playing field they will be providing real value to the economy. As it stands, they are hugely rewarding a small number of people for finding a creative way to cheat the system.

This article originally appeared on






Reverse Engineering Ahmed Mohamed’s Clock… and Ourselves.

by Anthony – posted 1:23 pm, September 17, 2015








I have something in common with Ahmed Mohamed: as a youngster, I was also an electronics enthusiast. At his age and even earlier, I frequently took apart electronic devices – anything from my own toys, to broken things around the house, and even that dirty garbage-picked black and white TV my parents dragged home that they knew I’d have a blast playing with (I did.) I’d try and troubleshoot, repair, or sometimes just disassemble things and salvage components for future projects. I’d try and imagine how all those bits and pieces, lengths of wires, mazes of conductive circuit board traces all came together to produce an image, or a sound, or some other useful function. I wanted to know how it all worked.

Without dating myself – fast forward a bunch of years, and I’m the same way. I’ve even picked up an engineering degree over the course of those years. I don’t have to only imagine how things work anymore, I have a pretty good understanding now. When shopping for electronic devices, my first instinct is to see if there’s a way to build one myself (and, I frequently do!) When something of mine breaks, I don’t send it back, I take it as a personal challenge to get it working again. If I fail, I still salvage useful parts – they might come in handy to fix something else later. This aspect of myself – being both methodical, and curious – hasn’t changed a bit over the years.

High resolution police photo of Ahmed's clock. Click to enlarge.

So, this story about a 14 year old boy in Texas that was arrested on suspicion of creating a bomb hoax (who, apparently just wanted to show off his latest electronics project to his teachers) that has blown up (no pun intended) all over the news and social media, caught my attention immediately. Not because of his race, or his religion, the seeming absurdity of the situation, the emotionally charged photo of a young boy in a NASA t-shirt being led off in hand cuffs, the hash tags, the presidential response… no, none of that. I’m an electronics geek. I was interested in the clock! I wanted to figure out what he had come up with.

I found the highest resolution photograph of the clock I could. Instantly, I was disappointed. Somewhere in all of this – there has indeed been a hoax. Ahmed Mohamed didn’t invent his own alarm clock. He didn’t even build a clock. Now, before I go on and get accused of attacking a 14 year old kid who’s already been through enough, let me explain my purpose. I don’t want to just dissect the clock. I want to dissect our reaction as a society to the situation. Part of that is the knee-jerk responses we’re all so quick to make without facts. So, before you scroll down and leave me angry comments, please continue to the end (or not – prove my point, and miss the point, entirely!)

For starters, one glance at the printed circuit board in the photo, and I knew we were looking at mid-to-late 1970s vintage electronics. Surely you’ve seen a modern circuit board, with metallic traces leading all over to the various components like an electronic spider’s web. You’ll notice right away the highly accurate spacing, straightness of the lines, consistency of the patterns. That’s because we design things on computers nowadays, and computers assist in routing these lines. Take a look at the board in Ahmed’s clock. It almost looks hand-drawn, right? That’s because it probably was. Computer aided design was in its infancy in the 70s. This is how simple, low cost items (like an alarm clock) were designed. Today, even a budding beginner is going to get some computer aided assistance – in fact they’ll probably start there, learning by simulating designs before building them. You can even simulate or lay out a board with free apps on your phone or tablet. A modern hobbyist usually wouldn’t be bothered with the outdated design techniques. There’s also silk screening on the board. An “M” logo, “C-94” (probably, a part number – C might even stand for “clock”), and what looks like an American flag. More about that in a minute. Point for now being, a hobbyist wouldn’t silk screen logos and part numbers on their home made creation. It’s pretty safe to say already we’re looking at ’70s tech, mass produced in a factory.

So I turned to eBay, searching for vintage alarm clocks. It only took a minute to locate Ahmed’s clock. See this eBay listing, up at the time of this writing. Amhed’s clock was invented, and built, by Micronta, a Radio Shack subsidary. Catalog number 63 756.Image property of eBay seller curiosities_curios

The shape and design is a dead give away. The large screen. The buttons on the front laid out horizontally would have been on a separate board – a large snooze button, four control buttons, and two switches to turn the alarm on and off, and choose two brightness levels. A second board inside would have contained the actual “brains” of the unit. The clock features a 9v battery back-up, and a switch on the rear allows the owner to choose between 12 and 24 hour time. (Features like a battery back-up, and a 24 hour time selection seems awful superfluous for a hobby project, don’t you think?) Oh, and about that “M” logo on the circuit board mentioned above? Micronta.


clock6For one last bit of confirmation, I located the pencil box Ahmed used for his project. During this video interview he again claims it was his “invention” and that he “made” the device – but the important thing at the moment, at 1:13, we see him showing the pencil box on his computer screen. Here it is on Amazon, where it’s clearly labeled as being 8.25 inches wide. Our eBay seller also conveniently took a photo of the clock next to a ruler to show it’s scale – about 8 inches wide. The dimensions all line up perfectly.

So there you have it folks, Ahmed Mohamad did not invent, nor build a clock. He took apart an existing clock, and transplanted the guts into a pencil box, and claimed it was his own creation. It all seems really fishy to me.

If we accept the story about “inventing” an alarm clock is made up, as I think I’ve made a pretty good case for, it’s fair to wonder what other parts of the story might be made up, not reported factually by the media, or at least, exaggerated.

I refer back again to this YouTube video interview with Ahmed. He explains that he closed up the box with a piece of cord because he didn’t want it to look suspicious. I’m curious, why would “looking suspicious” have even crossed his mind before this whole event unfolded, if he was truly showing off a hobby project, something so innocuous as an alarm clock. Why did he choose a pencil box, one that looks like a miniature briefcase no less, as an enclosure for a clock? It’s awful hard to see the clock with the case closed. On the other hand, with the case open, it’s awful dangerous to have an exposed power transformer sitting near the snooze button (unless, perhaps his invention was to stop serial-snooze-button pressers by giving them a dangerous electrical shock!)

So again, I’m pointing all this out – about the specifics of the clock – not to pick on the poor kid. I’m picking on us, our culture, and our media. I don’t even care about the clock itself at this point.

If we stop and think – was it really such a ridiculous reaction from the teacher and the police in the first place? How many school shootings and incidents of violence have we had, where we hear afterwards “this could have been prevented, if only we paid more attention to the signs!” Teachers are taught to be suspicious and vigilant. Ahmed wasn’t accused of making a bomb – he was accused of making a look-alike, a hoax. And be honest with yourself, a big red digital display with a bunch of loose wires in a brief-case looking box is awful like a Hollywood-style representation of a bomb. Everyone jumped to play the race and religion cards and try and paint the teachers and police as idiots and bigots, but in my mind, they were probably acting responsibly and erring on the side of caution to protect the rest of their students, just in case. “This wouldn’t have happened if Ahmed were white,” they say. We’re supposed to be sensitive to school violence, but apparently religious and racial sensitivity trumps that. At least we have another clue about how the sensitivity and moral outrage pecking order lies.

Because, is it possible, that maybe, just maybe, this was actually a hoax bomb? A silly prank that was taken the wrong way? That the media then ran with, and everyone else got carried away? Maybe there wasn’t even any racial or religious bias on the parts of the teachers and police.

I don’t know any of these things. But I’m intellectually mature enough to admit I don’t know, and to also be OK with that. I don’t feel a need to take the first exist to conclusionville. But I do like to find facts where I can, and prefer to let them lead me to conclusions, rather than a knee jerk judgement based on a headline or sound bite.

I think the whole event – and our collective response, with everybody up to the President chiming in, says a whole lot about us. We don’t care that none of us were there and knows what happened, we jump to conclusions and assume we’re experts. We care about the story, but we don’t care about the actual facts. Headlines and click-bait are far more interesting than thinking for ourselves. We like to point out other any bit of perceived injustice or discrimination we can find – it’s practically a new national past-time. We like playing victim, and we like talking about victims – so much so we sometimes find victims where none really existed. We also like to find somebody to blame, even when there’s nobody at fault. We like to play social justice warrior on our Facebooks and Twitters, posting memes and headlines without digging in behind the sensationalism, winning bonus sensitivity points in the forms of likes and re-tweets. Once group-think kicks in, we rally around hash tags and start shouting moral outrage in a deafeningly loud national chorus. The media plays us like a fiddle, and we don’t even notice we’ve all been had.

As for me, I’m glad to apply the lessons I’ve learned as an electronics enthusiast to other aspects of life. There’s no emotion in troubleshooting a circuit, electricity doesn’t have morals. There’s just physics, and logic, and methodology. I think we could all benefit from applying a little more of that sort of thinking to these situations.

* Correction: A reader and commenter, Joe Donaldson, tracked down the clock in a Radio Shack catalog dated 1986. It’s likely that my guess of mid-to-late 70s was off by a bit, and it’s now obvious it was a model that was for sale in the mid 80s. Though it doesn’t really change the point, I want to post this correction here for accuracy sake and thank Joe for the heads up. (See the comment here, with link to the catalog page.)


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