The Man Who Gave “Yo” $200,000

The Man Who Gave "Yo" $200,000


This week, a group of otherwise mentally sound adults agreed to go fucking insane all at once. The object of their manic episode was Yo, an app that sends the word “Yo” to other people with the app installed. It’s garnered over a million real dollars from investors. I talked to the one in charge.

Yo is exactly the kind of thing that techies adore. The story—intentionally stupid app nets $1.2 million in venture funding—is eminently bloggable. The app itself is clever on an 8th grade level, simple enough to tweet about, and proof that truly, money is a pastry puff, a trifle that can be scooped and bent and mushed around without any tethers to reality. On its own, Yo is just evidence of what we already know: that people are silly, and that TechCrunch is the kind of publication that will write an earnest essay on Yo. But Yo isn’t just another viral migraine—it’s an insincere idea, but it’s received very real money. If money still means anything anymore—and I’m not sure it does!—we need to insist that a million dollars is not a trifle, and that giving this amount of money to an app that does literally one thing is worth scrutinizing. We’re supposed to be talking about businesses here, right?

Israeli investor Moshe Hogeg is the CEO of Mobli, an Instagram clone, and led the $1.2 million angel investment round with $200,000 from his own pocket. He declined to list the other investors, but was nice enough to speak with me as I asked why someone would ever spend $200,000 on a joke app. The answer, basically, is why would you ever not?

“You need to be nuts to regard the numbers,” Hogeg tells me. “It’s crazy, it’s viral, the engagement is unbelievable.” This occult metric of “engagement” is something every startup craves more than Teslas and stock options, an end in itself that’s defined roughly as “how much are people clicking your shit instead of someone else’s shit?” In the case of Yo, it’s a lot: Hogeg says he’s literally never seen anything that’s engaged users more. But are people tapping single button that does one thing really “engaged” with anything? Is it a problem that this app doesn’t really do anything? Hogeg says I’m being shortsighted:

“I like to do things in the easiest way. We are always looking for the easiest way. My secretary, I love her, but I hate to tell her to come.” Now Hogeg can send her a message that says “Yo” instead, using a specialized app for this purpose alone. “My wife, she complains I don’t call her enough during the day. Now I can send a push notification anytime I want.” When I ask if this is enough to build an entire company on top of, Hogeg speculates about Yo’s future: he can imagine Starbucks baristas, McDonald’s cashiers, and Virgin America flight crews all getting your attention with Yo. Nevermind that many service companies have their own apps that send out their own push notifications. “Yo is more than a yo,” Hogeg says, like a software yogi. “I have no idea if it’s going to succeed.”

OK, so again, why invest so much money in this thing that took, by its founder’s admission, eight hours and zero dollars to code? “It’s a stupid app,” Hogeg admits. But “it’s not responsible to not give it a chance.” He cites its virality again, and points out that Marc Andreessen recently praised the app. Marc Andreessen is never wrong, right?

Hogeg demurs when asked if he thinks $200,000 is even a lot of money: “200 is a lot of money, but it’s not a lot of money at the same time.” But why does it need any money at all, if it took zero money to create? Hogeg points out that Yo now has a staff of five, and it’ll need office space. Office space for what, he doesn’t say. Will Yo make money? “Yeah, I guess.” He compares it to Google, which in its early days was doubted as a viable business.

But even if $200,000 isn’t a lot of money to you, is there any moral element to promoting a deliberately joke-y app when so many people are working—in vain—on software with a purpose?

Does Yo deserve a million dollars? What could someone more earnest have done with even Hogeg’s $200,000 slice? “The world doesn’t work on deserve,” replies Hogeg. He’s worked just as hard as his father back in Israel, he explains, and has far more money. So much for the glimmering Silicon Meritocracy. “I’m not a hater,” Hogeg elaborates. “I never was. But I can understand the criticism: I was a young engineer, I worked my ass off. If back then I could see an app like Yo getting a million, I would go nuts.” I feel like I’m on the verge of a moral breakthrough with Hogeg, but he drifts back into software zen-speak. “[Success] is not about the technology, it’s about the execution.” “Execution” here is a euphemism, I think.

To anyone struggling in Startupland who might wince at Yo’s 24 hour attention spree, Hogeg has a message of hope: “I hear you. We love you. You need to be creative, disruptive, think outside the box. You need to be a lover, not a hater. The energy you send into the world, you get back.”

So why not send $200,000 worth of energy into the world via charity, rather than investing in Yo? “Charity?” Hogeg bristles. “Who says I’m not? I choose my life, I choose to enjoy it.” For Hogeg, enjoying one’s life seems to include this sort of recreational investing, treating business ventures like parlor games, or a kind of thrilling diversion—Hogeg refers to his habit of buying lottery tickets. It’s all a very fun and giggly “maybe” for a man who can afford to play “what if” with large sums. The stakes sound low: “[Yo] is not making the world a better place…[and] I don’t think it’s too much money. It’s surprising we’re on the phone right now. If Marc Andreessen writes what he writes, we should all be very humble. Who knows, there might be something to it.” And even if there’s nothing to it, as there likely is not, Hogeg remains calm: “Don’t be so arrogant to think that Yo can’t make you eat your words. You can look at this interview, years from now. We will never eat our words. We already won.”

It’s easy to see where they’re making money with the app. This isn’t an app – It’s a wiretap.

Permissions requested:
This app has access to:

  • read your contacts
  • modify your contacts


  • reroute outgoing calls
  • directly call phone numbers
  • read call log
  • write call log

  • modify or delete the contents of your USB storage
  • test access to protected storage

  • record audio
  • take pictures and videos
Device ID & call information

  • read phone status and identity

  • full network access
  • change your audio settings
  • view network connections
  • prevent device from sleeping
  • run at startup
  • control vibration

Why Online Tracking Is Getting Creepier

The merger of online and offline data is bringing more intrusive tracking.

The marketers that follow you around the web are getting nosier.

Currently, many companies track where users go on the Web—often through cookies—in order to display customized ads. That’s why if you look at a pair of shoes on one site, ads for those shoes may follow you around the Web.

But online marketers are increasingly seeking to track users offline, as well, by collecting data about people’s offline habits—such as recent purchases, where you live, how many kids you have, and what kind of car you drive.

Onboarding: a ProPublica explainer of how online tracking is getting creepier. Follow ProPublica on Vine for more explainer shorts. (Icons courtesy of Lil Squid, André Renault, Gabriele Garofalo and Patrick Morrison, Noun Project)

Here’s how it works, according to some revealing marketing literature we came across from digital marketing firm LiveRamp:

  • A retailer—let’s call it The Pricey Store—collects the e-mail addresses of its high-spending customers. (Ever wonder why stores keep bugging you for your email at the checkout counter these days?)
  • The Pricey Store brings the list to LiveRamp, which locates the customers online when the customers use their email address to log into a website that has a relationship with LiveRamp. (The identity of these websites is a closely guarded secret.) The website that has a relationship with LiveRamp then allows LiveRamp to “tag” the customers’ computer with a tracker.
  • When those high-spending customers arrive at, they see a version of the site customized to “show more expensive offerings to them.” (Yes, the marketing documents really say that.)

Tracking people using their real names—often called “onboarding”—is a hot trend in Silicon Valley. In 2012, ProPublica documented how political campaigns used onboarding to bombard voters with ads based on their party affiliation and donor history. Since then, Twitter and Facebook have both started offering onboarding services allowing advertisers to find their customers online.

“The marriage of online and offline is the ad targeting of the last 10 years on steroids,” said Scott Howe, chief executive of broker firm Acxiom at a conference earlier this year.

Last month, Acxiom—one of the country’s largest data brokers, which claims to have 3,000 data points on nearly every U.S. consumer—agreed to pay $310 million to purchase onboarding specialist LiveRamp. Acxiom and LiveRamp declined to comment for this article, citing the need to remain quiet until the acquisition is complete.

Companies that match users online and offline identities generally emphasize that the data is still anonymous because users’ actual names aren’t included in the cookie.

But critics worry about the implications of allowing data brokers to profile every person who is connected to the Internet. In May, the Federal Trade Commission issued a report that found that data brokers collected information on sensitive categories such as whether an individual is pregnant, has a “diabetes interest,” is interested in a “Bible Lifestyle” or is “likely to seek a [credit-card] chargeback.”

Previously, data brokers primarily sold this data to marketers who sent direct mail—aka “junk mail”—to your home. Now, they have found a new market: online marketing that can be targeted as precisely as junk mail.

“Will these classifications mean that some consumers will only be shown advertisements for subprime loans while others will see ads for credit cards?” Federal Trade Commission Chairwoman Edith Ramirez said at a press conference. “Will some be routinely shunted to inferior customer service?”

The FTC has called for Congress to pass legislation requiring data brokers to allow consumers to access their information and to opt out of targeted marketing. Currently, many data brokers don’t offer people either one.

The Direct Marketing Association, which represents the data broker industry, doesn’t offer a specific opt-out for onboarding. It does offer a global opt-out from all of its members’ direct mail databases, but it only requires members to remove people’s data for three years after they opt-out.

Some companies offer their own opt-outs. Twitter allows users to opt out of onboarding by unchecking the “promoted content” button in their account settings. LiveRamp offers a so-called ” permanent opt-out” for users who do not want to be targeted via their e-mail address.

Facebook does not offer a specific opt-out for onboarding. Instead, it suggests users opt out of the data brokers themselves. A Facebook spokesman says that users who don’t like specific targeted ads can avoid seeing them again by clicking an ‘x’ on the top right corner of the ad and following the links to the advertisers’ opt-out page.

Julia Angwin is a senior reporter at ProPublica. From 2000 to 2013, she was a reporter at The Wall Street Journal, where she led a privacy investigative team that was a finalist for a Pulitzer Prize in Explanatory Reporting in 2011 and won a Gerald Loeb Award in 2010.

Uber is another unaccountable, massively powerful, transnational corporation

Andrew Ross Sorkin’s vision of the future is terrifying

Andrew Ross Sorkin's vision of the future is terrifying
Andrew Ross Sorkin (Credit: AP/Chris Pizzello)

Last Friday, Uber announced it had raised another $1.2 billion, which means the car service company is now worth a total of $18.2 billion — the highest-ever valuation for a venture-backed start-up. The news prompted a familiar cycle of bubble warnings and skepticism. $18.2 billion for a hopped-up taxi service?! How is it possible that Uber could be worth more than United Airlines, or Avis and Hertz, combined.

On Tuesday, the New York Times’ Andrew Ross Sorkin defended the valuation. If Uber ends up controlling a quarter of the world’s taxi market, he argues, “the investment is a home run.”

But then he goes on to note that the smart money says Uber isn’t just a taxi company — it’s “an extensive software platform for shipping and logistics.”

“Uber is creating a digital mesh — a power grid which goes within the metropolitan areas,” is how Shervin Pishevar, an early Uber investor, described the company last year. “After you have that power grid running, in everyone’s pockets, there’s lots of possibility of what you could build like a platform. Uber is incorporated in the empire-building phase.”

Andrew Ross Sorkin has a well-deserved reputation for seeing things the same way corporate CEOs like to see them, but he is not at all wrong about where Uber thinks it is headed. In December, CEO and founder Travis Kalanick made Uber’s ambitions clear:

“We need to stamp out an urban logistics fabric in every city in the world, then it’s figuring out other things we can do with that fabric,” he said, according to CNET. “It’s going to be interesting for us in 2014.”

Interesting, yes. Also, very scary. If Andrew Ross Sorkin is correct, and, judging by the blue-chip investors who contributed to Uber’s last round, he is hardly alone in his optimism, Uber is positioned to become one of the most powerful companies in the world. Think about it: a single company that controls the dominant logistics platform in every major city on the planet. A company that is to logistics what Google is to information. That’s a company that immediately becomes a major player in the transnational, globalized economy; a company that a pliant Congress ends up crafting legislation specifically for.

Obviously, there are other companies already in the logistics business: UPS and FedEx will not go quietly into the night. But Uber has some huge advantages over those companies; namely, it owns no fleets of trucks or airplanes. Its operating costs are a fraction of those of its competitors. And anyone who has tried out its app is well aware of how well it works. Press a button, and a car appears. Or maybe some takeout sushi. Or someone to pick up the package you need couriered across town. Or — well, who really knows? Christmas trees? Kittens? True love?

“Uber” is an appropriate name for a company with such built-in grandiosity. But let’s stop to think for a second about what we are trading in return for the convenience that Uber undeniably offers. We will be complicit in the creation of yet another massive corporation with immense economic and political influence. A company with such a huge global footprint would find it easy to outflank municipal regulators. Uber already gave us a sign of what it plans to do with its massive treasure chest when it hired a key New York city taxi and limousine regulator to join the company.

Big is not necessarily better when we are talking about the social fabric. An Uber that is worth $18.2 billion — or more — is an Uber unaccountable to local pressures, an Uber that, like Facebook, and like Google, knows too much.

And it could easily happen.

Who talks like FDR but acts like Ayn Rand? Easy: Silicon Valley’s wealthiest and most powerful people

Tech’s toxic political culture: The stealth libertarianism of Silicon Valley bigwigs

Tech's toxic political culture: The stealth libertarianism of Silicon Valley bigwigs
Ayn Rand, Marc Andreessen, Franklin D. Roosevelt (Credit: AP/Reuters/Fred Prouser/Salon)

Marc Andreessen is a major architect of our current technologically mediated reality. As the leader of the team that created the Mosaic Web browser in the early ’90s and as co-founder of Netscape, Andreessen, possibly more than any single other person, helped make the Internet accessible to the masses.

In his second act as a Silicon Valley venture capitalist, Andreessen has hardly slackened the pace. The portfolio of companies with investments from his VC firm, Andreessen Horowitz, is a roll-call for tech “disruption.” (Included on the list: Airbnb, Lyft, Box, Oculus VR, Imgur, Pinterest, RapGenius, Skype and, of course, Twitter and Facebook.) Social media, the “sharing” economy, Bitcoin — Andreessen’s dollars are fueling all of it.

So when the man tweets, people listen.

And, good grief, right now the man is tweeting. Since Jan. 1, when Andreessen decided to aggressively reengage with Twitter after staying mostly silent for years, @pmarca has been pumping out so many tweets that one wonders how he finds time to attend to his normal business.

On June 1, Andreessen took his game to a new level. In what seems to be a major bid to establish himself as Silicon Valley’s premier public intellectual, Andreessen has deployed Twitter to deliver a unified theory of tech utopia.

In seven different multi-part tweet streams, adding up to a total of almost 100 tweets, Andreessen argues that we shouldn’t bother our heads about the prospect that robots will steal all our jobs.  Technological innovation will end poverty, solve bottlenecks in education and healthcare, and usher in an era of ubiquitous affluence in which all our basic needs are taken care of. We will occupy our time engaged in the creative pursuits of our heart’s desire.

So how do we get there? Easy! All we have to do is just get out of Silicon Valley’s way. (Andreessen is never specific about exactly what he means by this, but it’s easy to guess: Don’t burden tech’s disruptive firms with the safety, health and insurance regulations that the old economy must abide by.)

Oh, and one other little thing: Make sure that we have a social welfare safety net robust enough to take care of the people who fall though the cracks (or are eaten by robots).

The full collection of tweets marks an impressive achievement — a manifesto, you might even call it, although Andreessen has been quick to distinguish his techno-capitalist-created utopia from any kind of Marxist paradise. But there’s a hole in his argument big enough to steer a $500 million round of Series A financing right through. Getting out of the way of Silicon Valley and ensuring a strong safety net add up to a political paradox. Because Silicon Valley doesn’t want to pay for the safety net.

* * *

The Valley is a Trough


Mike Judge, Clovis, and the coming wave of disillusionment

Three short years ago, a little movie called “The Social Network” won a pile of Oscars thanks in part to Sorkinistic mini-monologues like this one:

Mark Zuckerberg: “I think if your clients want to sit on my shoulders and call themselves tall, they have the right to give it a try, but there’s no requirement that I enjoy sitting here listening to people lie. You have part of my attention — you have the minimum amount. The rest of my attention is back at the offices of Facebook, where my colleagues and I are doing things that no one in this room, including and especially your clients, are intellectually or creatively capable of doing. Did I adequately answer your condescending question?

“Take that, Winklevi!” said everybody, simultaneously.

There’s nothing like the perfectly worded tell-off, is there? Especially one delivered on behalf of all the straight-A underdog nerds who were never invited to pledge Skull and Bones.

But that was then. Fast forward a few years and most audiences would gladly join the twins in tying Zuck’s hoodie strings to the nearest passing trolley car for giving such lip.

Of late, the public’s fawning praise for forward-thinking tech companies has turned to annoyed sneers and eye-rolls. Protestors are blocking Google transport buses. Tech luminaries—our Elon Musks and Marc Benioffs—have been outed as run of the mill Gordon Gekkos with Keen shoe-sandles (shandles?) and messiah complexes. Mike Judge has introduced the viewing public to Silicon Valley and, along with it, the special brand of disdain they should have for its deluded inhabitants (honorable mention goes to a recentVeep episode for accomplishing the same feat). It won’t be long before Grandma is using Andressen as a punchline.

In this author’s unqualified opinion, it all makes sense if you look at theHype Cycle, Gartner’s graphical tool. The IT research firm applies it to new technologies (smart glasses, facial recognition software), but I ran across it recently and think it applies to the Silicon Valley contingent pretty well, too.

We seem to have recently crested the hill of Stage 2: The Peak of Inflated Expectations. Scores of failures, few successes, and, obviously, inflated expectations. I don’t know what’s a better sign of that:Twitter’s wildly overvalued stockor companies offering billions to buy start-ups that have no actual way to make money (unless it’s all a tax shelter).

Knocking at our door is Stage 3: The Trough of Disillusionment. Experiments fail. Interest wanes. Producers shake out. Nobody wants to live in San Francisco anymore. Investors get pickier. Someone figures out that only robots and hired teams of Bangladeshis actually click on Facebook ads.

I feel the need to point all this out not because I’d like to watch overvalued tech burn, but because I’m a couple years out of school and am truly worried about my cohort. We’ve had a hard enough time as it is coming out of college jobless and debt-ridden. Now the whole world is telling the poor kids, lured by the sweet stench of VC money, to learn to code right as it’s all about to turn to shit?

It’s like some “Learn to Flip Houses!” huckster ad, except it’s a General Assembly guy in a North Face promising to tear your ticket to Silicon Valhalla for *just* twelve grand. Ping pong tables, yoga ball chairs, 60K starting salaries, kegs at the office—it can all be yours!

Except it won’t. Speculative bubbles aside, if everybody learns javascript, everybody will know javascript, including the experienced Odesk-ers from Lahore who will write it for US $9.73/hr. Companies will need one dev guy onshore for every five offshore, and that one guy is 10x more amazing at all things dev-y than you’ll ever be (sorry).

What you’ll be is a commodity—and you don’t want to be that. Just ask the journalists and lawyers furiously hunting for jobs at your nearest Starbucks. Same as the whole progressive techie company culture is looked upon less fondly by a society over-saturated with them, so too will certain easy(ish)-to-acquire skills be less valued by an over-saturated labor market.

So maybe it is high time for start-ups, and the kids of all ages who work around them, to mature along with the society and market they serve.

It’s scary, I know, but eventually you have to call yourself what you are: a small business. Eventually you have to shelve the ratty hoodie, move out of your Silicon Valley/Beach/Alley bubble, and make friends with people who’ve never taken Glass for a test run. It’s high time to say hello world.

Maybe then we can look ahead to the next phase of the Hype curve, the optimistically named Slope of Enlightenment. Here we find worthy newcomers charging out of the trough, greeted by cautious investors and a reasonable market. For those that have created a business for tried and true reasons—they’ve identified a market need and found a way to fulfill it profitably—this will be the time to shine.

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Why the ’90s are literally disappearing from history

As the 1990s recede from view, their most important cultural artifacts are collecting — and turning into — dust

Why the '90s are literally disappearing from history
(Credit: NBC/andrea crisante via Shutterstock/Salon)

A man whom it amuses me to call “The Last Stereo-Repairman Hero” rode his motorcycle to my house a couple of months ago. He brought with him a backpack full of tools and electronic parts: a soldering iron, some fuses, a jeweler’s loupe.

I had summoned him to work his magic on a turntable and an integrated receiver/amp, legacy hi-fi stereo components that had emerged from a couple of years of storage in a state of severe dysfunction. The local repair shop in Berkeley that I depended on for years for things like this had gone out of business. But their Web page pointed me to Gene, who looked to be pushing 70, but was still doing good business making house calls across the greater San Francisco Bay Area.

He took apart my receiver, socketed his loupe in his left eye, and started eyeballing the exposed circuit boards. He explained to me that he was looking for spots where the soldering welds were starting to crack — a frequent cause of degradation in aging stereo equipment, but something he could easily fix with some fresh solder or a judicious application of heat.

I marveled at the sight. There was something deliciously old-school artisanal in his ability to diagnose silicon woes simply by looking at circuit boards. Where I saw inscrutable mystery, he perceived the mundane.

Gene spent a couple of hours repairing my equipment. But even as he brought my hi-fi back to life, I felt as if I was witnessing the last nails in the coffin of a passing era. My amp wasn’t built to last forever; eventually its sustenance would be beyond human help. Gene too would be gone. Strive as I might to maintain my nostalgic atavism in the face of onrushing obsolescence, I know that this too shall pass. My children find the whole charade very quaint.

I was reminded of Gene’s visit earlier this week when I read a lovely essay in The Atlanticby Adrienne LaFrance investigating the relentless decay and degradation of our old compact disks. It’s true: The ’90s are already fading into dust! Too soon! Too soon!

LaFrance writes:

Yes, the ubiquity of a once dominant media is again receding. Like most of the technology we leave behind, CDs are are being forgotten slowly. Eventually, even the fragments disappear. No more metallic shards of broken discs glinting from the gutter. No more old strands of tape cassette tangled in tree branches like tinsel. We stop using old formats little by little. They stop working. We stop replacing them. And, before long, they’re gone.

Look on my CD collection, ye mighty, and despair! True enough. True enough. All things must go.

And yet: Vinyl record sales rose to a 15-year-high in 2013. In May, the largest vinyl pressing plant in the U.S. announced it was expanding operations.

The total dollar figure of vinyl sales in the U.S. in 2013 was only $177 million; which, in the context of the entire music industry, represents little more than hipster affectation. But here’s something to ponder: Will compact disks ever see a similar resurgence? I’m guessing no. There’s no point to it. CDs, as objects, have no cultural heft, no analog quirks to savor. They were merely the cheapest way, at the time, to deliver a package of ones and zeroes. Once you’ve ripped your old CDs, or switched to a streaming music service, there’s zero reason to keep them around.

I started feeling nostalgic for my old vinyl record albums the day I bought my first CD, and I’ve never been able to let go of them. But I feel nothing for the passing of the compact disk. I am immune to their decay. Let ‘em rot! I have a turntable and a cassette player connected to my receiver/amp — but no CD player. It’s entirely unnecessary. (It might even be broken, but I don’t want or need Gene to fix it.)

* * *

So what do we keep, and what do we let go? Much is made in Silicon Valley today of the notion that access is replacing ownership. We don’t need to own cars in the age of ride-sharing. The “cloud” will take care of all our computing needs. We don’t even have to employ full-time workers, we just grab them from TaskRabbit. We rent, we share, we outsource — this is the millennial way. Owning is just so feudal.

Much of this is rhetorical bullshit aimed at justifying $10 billion market valuations for the likes of Airbnb and Uber. But there is grist to it that can’t be dismissed. I felt the pang of a paradigm crashing just a couple of days ago when a random Tweet had encouraged me to sample Swedish chanteuse Lykke Li’s new album, “I Never Learn.” My son’s Spotify account is hooked up to the family stereo via Sonos, so I gave it a listen without committing to buy.

Somewhere around the third song I realized I was enjoying the album so much I wanted to own it. I wanted it to be part of my collection. But then I checked myself. Why pay $9.99 on iTunes for the album when I could listen to it, and virtually anything else, for seven bucks a month on Spotify? Actually owning those digits made no logical sense.

(I suppose we could have an argument about whether the income generated by streaming royalties will be enough to support the ongoing production of new music, but that’s an entirely different story!)

My struggle is partially an artifact of the creakiness of my generation. My kids will never wrestle with this transition. They won’t knock their heads against my nerdy paradox: Even as I hang on to the Neil Young triple-album anthology “Decade” that I purchased as a 13-year-old, and pay 70-year-old men to keep my record player humming, I am letting go of the notion that music is something that should even be owned.

But then again: Vinyl sales are rising, because those LPs are cool in a way that compact disks are not. Old formats don’t always fade away. We ascribe value to things for all kinds of reasons. It’s not just about access. It’s about connection and memory and visceral sensation. We keep what we want to keep, because these things help us define who we are.

A good Buddhist would likely tell us that those kinds of external definitions are nothing but illusion. But it raises a question: If the future does indeed turn out to be all about access, instead of ownership, how will we define ourselves? I look at my albums, and I feel anchored. Once we’re all just dust motes in the cloud, it will be all too easy to drift.

The NSA’s Corporate Collaborators

Willing Accomplices


Emails published by Al Jazeera America, in addition to showing hi-tech executives and senior intelligence officials interacting on a casual first-name basis, reference a government program referred to as the Enduring Security Framework (ESF) [1]. An NPR piece on the ESF back in 2012 offers a nutshell summary of what this initiative is all about [2]:

“For each session, the CEOs get special, top-secret clearances so they can be told about the latest in cyberweaponry. They can then go back to their companies and take steps to deal with the threats they hear about, threats they may not previously have taken seriously. In the words of one government participant: We scare the bejeezus out of them”

This description reinforces the notion that the big bad NSA somehow coerced hi-tech companies into collaboration. Since Ed Snowden’s documents have trickled out into public view companies like Google have tried to distance themselves from the NSA [3], to make public displays of anger [4], to create the impression that they were somehow strong-armed into helping government spies [5] and that they’ve been working to bolster their security against the NSA’s prying eyes [6]. Above all hi-tech companies want to look like they’re siding with their users [7].

These gestures are likely theater, being performed by executives on behalf of quarterly earnings. Such is the beauty of PR. Hi-tech companies don’t really need to fend off government spies but merely provide users with the perception of resistance.

Keep in mind that social media survives by selling user data. Spying is their business model. In padding their bottom lines executives have worked diligently to dilute privacy legislation [8] in addition to garnering a myriad of fines [9]. All of this data harvesting services a data broker industry which generates something in the neighborhood of $200 billion in revenue annually [10].

Those who resist government pressure like Nicholas Merrill, who was running an Internet service provider in New York called Calyx, and Ladar Levison, the former owner of Lavabit, are rare exceptions to the rule. For the big multinationals too much money is at stake to let something like civil liberties get in the way. Google’s Larry Page opines that [11]:

“There’s many, many exciting and important things you could do that you just can’t do because they’re illegal or they’re not allowed by regulation”

Though the Washington Post may imply otherwise [12], in reality as far as the National Security State is concerned there is very little dividing line between the public sector and the private sector. According to Heidi Boghosian, the executive director of the National Lawyers Guild [13]:

“People need to know that for all intents and purposes, the distinction right now between government and the corporate world is virtually nil. They are hand-in-hand working to gather information about Americans as well as people across the globe, to really be in a race to collect more information than any other country can, because I think in their eyes, having this information, storing it, and being able to access it for years on end is a symbol of power and control. So that you can’t really make that distinction anymore between big business and government.”

Glenn Greenwald echoed this point after the Polk Award ceremony [14]: ”There almost is no division between the private sector and the NSA, or the private sector and the Pentagon, when it comes to the American national security state. They really are essentially one.”

Despite Eric Schmidt’s vocal tirade over NSA spying [15], Google is linked tightly with the elements of the defense industry (e.g. SAIC, Lockheed Martin, Northrop Grumman, and Blackbird) [16] and is no stranger to covert
cooperation with the U.S. government. For example, in an e-mailed published by WikiLeaks Fred Burton, a former State Department official and a VP at Stratfor, described the director of Google Ideas, Jared Cohen, as involved in secret missions near the Iranian border with the support of the White House and the State Department [17]. Ostensibly Burton heard this from Eric Schmidt.

When a provider like Amazon is awarded a $600 million 10-year contract to provide the CIA with cloud services [18] do you suppose that Amazon is inclined to cater to government requests? Think of it this way: Roughly 70% of the intelligence budget goes to the private sector [19]. There are incentives for executives to go along.

Years ago the banking industry single-handedly used its resources to push through the Gramm-Leach-Bliley Act, effectively repealing the protections of Glass-Steagall, in addition to deregulating the market for derivatives with the Commodity Futures Modernization Act of 2000. If the moneyed elite don’t like certain laws, in the absence of a strong countervailing public opinion, they have the means to impose change. Their influence isn’t total but history has shown that it’s often sufficient.

Yahoo has been known to help Chinese officials identify citizens who make critical remarks about the Chinese government [20]. According to news reports from overseas, Microsoft has redesigned Skype so that government security forces in countries like Russia can tap into and monitor Skype traffic [21]. Companies like Microsoft (sitting on 60 billion in cash [22]) or Apple (sitting on $147 billion in cash [23]) aren’t exactly defenseless. Corporate spies choose to collaborate with government spies because the benefits outweigh the negative consequences.

Bill Blunden is an independent investigator whose current areas of inquiry include information security, anti-forensics, and institutional analysis. He is the author of several books, including The Rootkit Arsenal , and Behold a Pale Farce: Cyberwar, Threat Inflation, and the Malware-Industrial Complex. Bill is the lead investigator at Below Gotham Labs.


[1] Jason Leopold, “Exclusive: Emails reveal close Google relationship with NSA,” Al Jazeera America, May 6, 2013,

[2] Tom Gjelten, “Cyber Briefings ‘Scare The Bejeezus’ Out Of CEOs,” NPR, May 9, 2012,

[3] Craig Timberg and Tom Hamburger, “Tech executives visit White House to discuss online surveillance issues with Obama,” Washington Post, March 21, 2014,

[4] Andy Greenberg, “Zuckerberg Says He Called Obama To Express ‘Frustration’ Over NSA Surveillance,” Forbes, March 13, 2014,

[5] Dominic Rushe, “Zuckerberg: US government ‘blew it’ on NSA surveillance,” Guardian, September 11, 2013,

[6] Craig Timberg, “Google encrypts data amid backlash against NSA spying,” Washington Post, September 6, 2013,

[7] Craig Timberg, “Apple, Facebook, others defy authorities, notify users of secret data demands,” Washington Post, May 1, 2014,

[8] Melissa Eddy And James Kanter, “Merkel Urges Europe to Tighten Internet Safeguards,” New York Times, July 15, 2013,

[9] Claire Cain Miller, “F.T.C. Fines Google $22.5 Million for Safari Privacy Violations,” New York Times, August 9, 2012,

[10] Yasha Levine, “What Surveillance Valley knows about you,” Pando Daily, December 22, 2013,

[11] Claire Cain Miller, “Google Gives a Hint About Its Mystery Barges,” New York Times, November 6, 2013,

[12] Brian Fung, “NSA e-mails purport to show a ‘close’ relationship with Google. Maybe, maybe not,” Washington Post, May 6, 2014,

[13] “Segment: Heidi Boghosian on Spying and Civil Liberties,” Moyers and Company, November 8, 2013,

[14] “”We Won’t Succumb to Threats”: Journalists Return to U.S. for First Time Since Revealing NSA Spying,” Democracy Now! April 14, 2014,

[15] Deborah Kan, “Google’s Eric Schmidt Lambasts NSA Over Spying,” Wall Street Journal, November 4, 2013,

[16] Yasha Levine, “The revolving door between Google and the Department of Defense,” Pando Daily, April 23, 2014,

[17] Julian Assange, “Google and the NSA: Who’s holding the ‘shit-bag’ now?,” Stringer, August 24, 2013,

[18] Frank Konkel, “Sources: Amazon and CIA ink cloud deal,” FCW, March 18, 2013,

[19] “Digital Blackwater: How the NSA Gives Private Contractors Control of the Surveillance State,” Democracy Now! June 11, 2013,

[20] Yasha Levine, “Rentacops on desktops: Edward Snowden’s dismissal of Surveillance Valley is wrong, and dangerous,” Pando Daily, December 30, 2013,

[21] RAPSI, “FSB, Russian police could tap Skype without court order,” March 14, 2013, Moscow News,–court-order.html

[22] Juliette Garside, “Microsoft Windows performance helps cash reserves grow by $5bn in six months,” Guardian, January 24, 2013,

[23] Emily Chasan, “Apple Now Holds 10% of All Corporate Cash: Moody’s,” Wall Street Journal, October 1, 2013,



The truth inside the Google bus lawsuit: gentrification hurts the environment

Stop blaming poor people for pollution. When Silicon Valley’s class war prices out city workers and forces them to the suburbs, they become more eco-evil than Google

google bus
Street protests against the tech companies’ employee shuttles have turned to lawsuits in San Francisco. Photograph: Steven Rhodes / Flickr Vision

A new lawsuit brought by San Francisco activists against the city places blame squarely on Silicon Valley’s now infamous private tech-employee shuttle buses, claiming that they not only spew air pollution across the city and endanger cyclists and pedestrians, but also that they directly displace residents from their homes. But this lawsuit – and the city’s bypassing of a review process, and the buses themselves – isn’t really about the environment. It’s about class, and it could foretell big changes for how California’s cities grow in the future.

Activists filed suit against San Francisco and its transit agency for violation of the 1970 California Environmental Quality Act (CEQA), claiming that an environmental review of the tech shuttles’ impact on the city is necessary. (The city had skipped an environmental review of the bus program in its haste to resolve a painful political issue.) A CEQA lawsuit is a powerful procedural weapon in activists’ fight against more than just the buses. They are also appealing the city’s decision on the basis of residential displacement, as research has shown a strong correlation between the tech bus routes and rising housing costs.

But if that sounds like an unusual take on environmental impact, it is – and it’s brand-new.

Last fall, CEQA was updated in an effort to promote more dense, so-called “smart growth” in California’s cities. The old law prohibited the environmental judgment of a project based on socio-economic factors, and only considered “displacement” in any case in which houses would be knocked down and new ones would have to be built. But the new law calls for the state to write a set of review standards by which to judge developments that might destabilize neighborhoods and push out poor and middle-class residents.

This is the first high-profile lawsuit to appeal on the basis of displacement – and those state standards are still on the drawing board and there’s no case law to go on.

Gentrification does have environmental ripple effects. Dense city living is better for the environment, but given private conveniences, it’s becoming the exclusive realm of the rich. So, when San Francisco workers are forced to move out to cheap suburbs without mass transit, they become reluctant urban drivers – by some standards, more eco-evil than Google. The burden and the blame for urban pollution then often falls on the poor, who can’t afford the well-funded environmental measures of Google and Genentech.

But environmental stability in an age of climate change doesn’t just mean running buses instead of driving alone. Building and maintaining a resilient social infrastructure is arguably just as vital to surviving future crises as building flood-proof parks. It’s often neighborhood relationships “that might make the difference between life and death” in disasters, sociologist Eric Klinenberg told NPR.

Located on a volatile fault line and surrounded on three sides by rising sea levels, San Francisco is always planning for crisis. But as high rents and private transit tear up neighborhoods, city disaster networks will have to fill in for those broken relationships.

It’s clear that the buses absolutely play a role in reshaping San Francisco’s neighborhoods. One study found that, without shuttle access, nearly two-thirds of city-dwelling respondents said they would drive instead – and about 40% would move closer to work for convenience. Tech companies and San Francisco transit officials have argued that the buses are needed to take those hypothetical thousands of cars off the road each day. Google in particular promotes its eco-friendly company ethos and clean-running shuttles.

The old CEQA measures impact on roads by looking at traffic congestion, so projects that slow cars down – like bike lanes – often show a “negative” environmental impact. The new CEQA standards measure projects based on vehicle miles traveled. Depending on the details of model used to determine the impact, tech shuttles could be deemed positive under either standard, even if it means more diesel exhaust for San Francisco neighborhoods.

And either way, the law is often used more for political means than environmental ones.

San Francisco tries to scuttle environmental reports all the time, and activists constantly sue them for it, so, in a certain sense, this is business as usual. But if this group can make their case against the company shuttles, they might not just force a city drunk on the promise of technology to take stock of its values – they might impact development across the entire Golden State.

My Experiment Opting Out of Big Data Made Me Look Like a Criminal

The Latest Mobile Apps At The App World Multi-Platform Developer Show
The Facebook Inc. and Twitter Inc. company logos are seen on an advertising sign during the Apps World Multi-Platform Developer Show in London, U.K., on Wednesday, Oct. 23, 2013. Bloomberg/Getty Images

Here’s what happened when I tried to hide my pregnancy from the Internet and marketing companies.

This week, the President is expected to release a report on big data, the result of a 90-day study that brought together experts and the public to weigh in on the opportunities and pitfalls of the collection and use of personal information in government, academia, and industry. Many people say that the solution to this discomforting level of personal data collection is simple: if you don’t like it, just opt out. But as my experience shows, it’s not as simple as that. And it may leave you feeling like a criminal.

It all started with a personal experiment to see if I could keep a secret from the bots, trackers, cookies and other data sniffers online that feed the databases that companies use for targeted advertising. As a sociologist of technology I was launching a study of how people keep their personal information on the Internet, which led me to wonder: could I go the entire nine months of my pregnancy without letting these companies know that I was expecting?

This is a difficult thing to do, given how hungry marketing companies are to identify pregnant women. Prospective mothers are busy making big purchases and new choices (which diapers? which bottles?) that will become their patterns for the next several years. In the big data era of targeted advertising, detection algorithms sniff out potentially pregnant clients based on their shopping and browsing patterns. It’s a lucrative business; according to a report in the Financial Times, identifying a single pregnant woman is worth as much as knowing the age, sex and location of up to 200 people. Some of these systems can even guess which trimester you’re in.

Avoiding this layer of data detectors isn’t a question of checking a box. Last year, many people were shocked by the story of the teenager in Minnesota whose local Target store knew she was expecting before her father did. Based on her in-store purchasing patterns tracked with credit cards and loyalty programs, Target started sending her ads for diapers and baby supplies, effectively outing her to her family. Like the girl in the Target store, I knew that similar systems would infer my status based on my actions. So keeping my secret required new habits, both online and off.

Social media is one of the most pervasive data-collection platforms, so it was obvious that I couldn’t say anything on Facebook or Twitter, or click on baby-related link-bait. But social interactions online are not just about what you say, but what others say about you. One tagged photo with a visible bump and the cascade of “Congratulations!” would let the cat out of the bag. So when we phoned our friends and families to tell them the good news, we told them about our experiment, requesting that they not put anything about the pregnancy online.

Social media isn’t the only offender. Many websites and companies follow you around the Internet, especially baby-related ones. So I downloaded Tor, a private browser that routes your traffic through foreign servers. While it has a reputation for facilitating illicit activities, I used it to visit and to look up possible names. And when it came to shopping, I did all my purchasing—from prenatal vitamins to baby gear and maternity wear—in cash. No matter how good the deal, I turned down loyalty card swipes. I even set up an account tied to an email address hosted on a personal server, delivering to a locker, and paid with gift cards purchased with cash.

It’s been an inconvenient nine months, but the experiment has exposed harsh realities behind the “opt out” myth. For example, seven months in, my uncle sent me a Facebook message, congratulating me on my pregnancy. My response was downright rude: I deleted the thread and unfriended him immediately. When I emailed to ask why he did it, he explained, “I didn’t put it on your wall.” Another family member who reached out on Facebook chat a few weeks later exclaimed, “I didn’t know that a private message wasn’t private!”

This sleight of hand is intentional. Internet companies hope that users will not only accept the trade-off between “free” services and private information, but will forget that there is a trade-off in the first place. Once those companies have that personal data, users don’t have any control over where it goes or who might have access to it in the future. And unlike the early days of the Internet, in which digital interactions were ephemeral, today’s Internet services have considerable economic incentives to track and remember—indefinitely.

Attempting to opt out forced me into increasingly awkward interactions with my family and friends. But, as I discovered when I tried to buy a stroller, opting out is not only antisocial, it can appear criminal.

For months I had joked to my family that I was probably on a watch list for my excessive use of Tor and cash withdrawals. But then my husband headed to our local corner store to buy enough gift cards to afford a stroller listed on Amazon. There, a warning sign behind the cashier informed him that the store “reserves the right to limit the daily amount of prepaid card purchases and has an obligation to report excessive transactions to the authorities.”

It was no joke that taken together, the things I had to do to evade marketing detection looked suspiciously like illicit activities. All I was trying to do was to fight for the right for a transaction to be just a transaction, not an excuse for a thousand little trackers to follow me around. But avoiding the big data dragnet meant that I not only looked like a rude family member or an inconsiderate friend, I also looked like a bad citizen.

The myth that users will “vote with their feet” is simply wrong if opting out comes at such a high price. With social, financial and even potentially legal repercussions involved, the barriers for exit are high. This leaves users and consumers with no real choice nor voice to express our concerns.

No one should have to act like a criminal just to have some privacy from marketers and tech giants. But the data-driven path we are currently on, paved with heartwarming rhetoric of openness, sharing and connectivity, actually undermines civic values, and circumvents checks and balances. The President’s report can’t come soon enough. When it comes to our personal data, we need better choices than either “leave if you don’t like it” or no choice at all. It’s time for a frank public discussion about how to make personal information privacy not just a series of check boxes but a basic human right, both online and off.

Five Places Where Silicon Valley’s Bubble Could Pop

Soft Spots: Five Places Where Silicon Valley’s Bubble Could Pop

The main premise of J.J. Abrams’ Fringe—unquestionably one of the three best sci-fi shows made for television in this century, alongside Battlestar Galactica and Doctor Who—is that there’s a second, nearly identical universe coterminous with ours. The wall between the parallel worlds remains impenetrable until a grief-stricken scientist, Walter Bishop, figures out how to cross over in order to save his dead son Peter’s doppelgänger; Walter ends up kidnapping the other Peter and bringing him back. This infraction against physics opens up “soft spots” between the two universes, and wherever the spots become too thin, a vortex or micro-black hole arises, leading to untold destruction in both universes.

The soft spots came back to me when I was searching for a way to sum up my picture of Silicon Valley’s perilous state.

Yes, we’re in a tech bubble. Of course we are. When Facebook can use $19 billion in funny money to buy a startup with revenues of $20 million (WhatsApp) or spend $2 billion to buy another startup that doesn’t even have a product on the market (Oculus), that’s a bubble.

When the median rent for a two-bedroom apartment in San Francisco is $3,350—enough to pay the mortgage on an $800,000 house in any other city—that’s a bubble.

When investors have so much cash floating around, and keep buying into risky startups at ever-higher valuations because they can’t get a decent return on their money doing anything else, that’s a bubble.

This bubble may not look the same as the last one. But I’m not going to waste space here documenting its existence, which is only challenged by people who enjoy living in it.

The more interesting question, to me, is how the bubble will eventually pop. What are Silicon Valley’s most important flaws and weaknesses? Where is the membrane being stretched so thin that it’s in danger of tearing open and letting the outer reality rush in?

Of course, there isn’t any single, physical place where the bubble’s collapse will begin. Since a bubble is primarily an economic and psychological phenomenon, it can only be burst by a broad shift in attitudes and expectations. But there are plenty of real places where the tensions, imbalances, or injustices that could escalate into a show-stopping crisis are in evidence.

So I invite you to play along with me below as I tour a few locations around the San Francisco Bay Area that could be considered our soft spots. They’re symbolic of larger problems. You don’t want to be standing in one of these places when the vortex opens up.

By the way, that’s not an event I’m looking forward to, or that I would want to hasten in any way. People riding the bubble have been generating all sorts of important new ideas and capabilities that might not have emerged otherwise. But it’s wise to plan ahead. If we can identify the fractures that threaten to destroy the innovation machine, we might be able to patch them up and keep the system going for a while longer—and maybe even point it in a smarter direction.

1. 555 California Street, San Francisco: The Former Bank of America Tower 

This 52-floor skyscraper has a lumpy black granite sculpture at its base. It’s the creation of Nagasaki-born sculptor Masayuki Nagare and its actual name is “Transcendence,” but locals know it as the “Banker’s Heart.”

Bank of America, still a major tenant in this Financial District landmark, repaid the entire $45 billion it received from the federal government through the Troubled Asset Relief Program in 2009, with interest. But it was still the focus of protesters’ ire during the Occupy San Francisco movement in 2011: they stormed a branch office on Market Street, a few blocks away. And even today, the bank is struggling with the consequences of its $4 billion purchase of Countrywide Financial in 2007, which led to $40 billion in settlements and legal costs.

I choose this location because Bank of America’s troubles show how quickly boom can turn to bust. They remind us that a bubble is first and foremost a financial phenomenon fueled by easy money, whether that’s in the form of excess capital or subprime loans.

The former Bank of America Tower in San Francisco. Source: Mike Linksvayer/Flickr.

Because interest rates have been so low for so long and the global economy isn’t expanding very fast, investors are willing to put lots of money into any business that shows signs that it might actually grow. That’s what tech startups do—a small percentage of them, anyway. So there’s still a lot of money being allocated to high-risk venture and private equity funds. But as soon as another plausible investment opportunity comes along—when the Fed finally raises benchmark interest rates again, for example—the capital could flee.

The tech giants still have a lot of cash on hand, so the big acquisitions could continue for a while even after an economic shock. Apple has $160 billion and Google has $57 billion. Facebook has only $12 billion in cash, but has much greater purchasing power thanks to its sky-high $154 billion valuation. But if things really go south, there’s no net large enough to catch all of the late-stage tech companies that have been cashing huge venture checks lately, not because they need the money, but simply because it’s available ($500 million for Airbnb; $250 million for Lyft; $80 million for Quora; $60 million for Nextdoor).

2. Valencia Street and 24th Street, San Francisco: The Google Bus Stop 

This is one of at least 20 places around the city—many of them Muni bus stops—where Google shuttle buses pick up employees early every morning for the ride to the Googleplex in Mountain View. In December, protesters blockaded a Google bus here in a demonstration against what they saw as misuse of public resources by a commercial entity.

The feelings at work behind the Google bus protests are complex. But a key element is the perception that the big Silicon Valley tech companies are subsidizing their employees’ desire to live in San Francisco, one of the nation’s tightest housing markets. Because these well-paid software engineers are able to fork over $4,750 per month for a junior 2-bedroom in Noe Valley, and be chauffeured to work on a cushy Wi-Fi-equipped bus, rents in the city are becoming unaffordable for everyone else, or so the story goes. It doesn’t help matters that more and more San Francisco landlords are taking advantage of a California law, the Ellis Act, that allows owners of rent-controlled buildings to “go out of business,” evict their tenants, and sell their properties to developers, who replace them with more expensive units or condos.

Protesters blockade a Google bus near the corner of 24th and Valencia in San Francisco. Source: Chris Martin/Flickr

To my mind, Google employees are driving up rents, but no more than anyone else. At bottom, it’s a problem of supply and demand. The housing supply in San Francisco is extremely limited and unlikely to grow much in the near future, for reasons explained in an in an epic, masterful piece last month by TechCrunch writer Kim-Mai Cutler. Prominent angel investor Ron Conway is leading an effort to repeal the Ellis Act, but even if it works, it wouldn’t solve the problem. The truth is that as long as more people have their heart set on moving to San Francisco to seek their fortunes in the technology industry, rents will keep going up.

But there could come a time—possibly soon—when the entry-level or service workers every company needs are completely priced out of the region; or employers stop being so happy to subsidize their senior employees’ high rents through high salaries and bonuses; or young workers in San Francisco realize that there are perfectly pleasant cities, like Sacramento, where they could live for a fraction of the rent. Then the housing crunch will become a drag on the labor supply, and companies won’t be able to keep growing.

3. 3000 Hanover Street, Palo Alto: Hewlett-Packard Headquarters

The average age of employees at Hewlett-Packard is 39, according to PayScale, the salary database provider. At IBM and Oracle, it’s 38. The average employee at Google, Facebook, or Zynga, by contrast, is about 10 years younger.

It isn’t possible to explain this difference using factors like geography or training: all of these companies draw on the same population of highly educated Bay Area software engineers. The truth is that Silicon Valley has an ageism problem. The hot young companies are afraid that if they hire people older than 30 or 35, it’ll slow down the pace of innovation—the “move fast and break things” ethic espoused by Facebook’s Mark Zuckerberg, who also famously remarked in 2007 that “young people are just smarter.”

As several excellent journalistic reports have documented lately, interviewers at younger companies systematically weed out mid-career professionals, despite their years of experience, using excuses like “cultural mismatch.” What they’re really saying is that having a few grownups around might dampen the frat-house, brogrammer atmosphere they’ve brought with them from college.

Perhaps there’s an infinite supply of young rock-star engineers finishing their CS degrees at Stanford—or perhaps the big tech firms are shooting themselves in the foot by devaluing a huge group of valuable middle-aged workers. For a culture that claims to prize “pattern recognition” skills, it’s an odd omission. If you’ve been in the business for more than 10 or 15 years, you’ve probably seen everything before, and you know what to do about it—which will be an especially useful skill when the shiitake hits the fan.

I could go on and talk about the other poisonous forms of exclusion in Silicon Valley, namely racism and sexism. But you get my point. The putative hero in today’s Valley is the “full stack engineer”: someone familiar with server, data, networking, logic, UI, and UX tools. Whether someone has mastered those tools has absolutely nothing to do with their age, gender, or ethnic background. To keep innovating and growing, the technology industry will need to tap the full range of talent available to it.

4. 1757 Mountain Blvd., Oakland: Montclair Elementary School

This public school in Oakland, dating from 1925, has the distinction of sitting directly on the most dangerous seismic feature in the San Francisco Bay Area, the Hayward Fault. (The fault actually runs beneath the school’s baseball field, not the school building itself.) In 1868, the western side of this fault jumped six feet to the north, unleashing a magnitude-7 earthquake that, if it were repeated today, would leave 100,000 people homeless and cause $1 trillion in property damage, according to the U.S. Geological Survey. And such a quake is actually overdue: major temblors on the Hayward Fault occur every 140 years or so.

It’s been so long since the 1989 Loma Prieta quake hit the region that few people working in the tech industry today remember how deadly and disruptive an earthquake can be, and that one was just a 6.9. The fact is that if a major natural disaster were to strike, the boom times in Silicon Valley could come to a quick end. It could be an earthquake, but the Bay Area is also prone to drought, fires, storms, flooding, and tsunamis.

Then there’s the more gradual, but also more predictable, disaster of sea level rise due to global warming, which will likely inundate the land now occupied by several of Silicon Valley’s largest tech companies, including Facebook. This is a particularly insidious threat, because few people are yet willing to talk about it or deal with it.

Because so much commerce and communication now takes place in “the cloud” and on social networks, it’s easy to forget that the big institutions in Silicon Valley—not to mention their data centers—are rooted in the physical world. One good shake could provide a reminder.

5. 7th Street and Market Street, San Francisco: United Nations Plaza

The pedestrian mall and fountain at UN Plaza have been labeled “San Francisco’s most public theater of squalor, misery, and sickness” by one documentarian. Designed by famed architect Lawrence Halprin in 1975, the plaza was supposed to function as a grand formal entrance to Civic Center Plaza and City Hall, and it was originally hoped that its construction would lead to the rejuvenation of a down-at-the-heels section of Market Street. But that never happened, and by the late 1970s the plaza had become the seedy front porch to the Tenderloin, a six-block-by-10-block area that’s been preserved by the city as a haven of low-cost, SRO hotels and rooming houses for the city’s poorest residents. co-founder Gary Kamiya, pulling no punches, calls the Tenderloin San Francisco’s “last human wilderness,” a “radioactive core of junkies, drunks, transvestites, dealers, thugs, madmen, hustlers, derelicts, prostitutes, and lowlifes.” And while UN Plaza has been beautified in recent years—the fence that kept children from going too close to the needle- and feces-ridden fountain has been removed—it’s still a thoroughfare and gathering place for San Francisco’s poor and homeless population. That creates a striking contrast, now that the long stretch of Market Street passing the plaza, known as Mid-Market, is finally being gentrified. In June 2012, Twitter moved into a building two blocks away from the Plaza. Just over a year later, it went public, raising $1.8 billion and minting an estimated 1,600 new millionaires. Some of San Francisco’s richest citizens now work in close proximity to its poorest.

The Lawrence Halprin-designed fountain at UN Plaza. Source: Loren Javier/Flicrk.

And that’s by design. The city’s hope is that the generous payroll tax breaks it gave Twitter and other companies as an inducement to settle in Mid-Market will pay off in the form of increased traffic to other local businesses, volunteerism by company employees, and other community benefits, all of which is starting to happen. But the number of San Franciscans living on the street or in emergency shelters hasn’t budged in years, and the gulf of wealth and opportunity that separate neighborhoods like the Tenderloin from the rest of San Francisco is, if anything, growing wider. The question posed by places like UN Plaza is whether technology-driven economic growth can continue indefinitely when such a large portion of the citizenry is being left behind.

Obviously, inequality is the issue of the day. Economist Thomas Piketty’s finding that capitalism, in the absence of progressive taxation, tends toward oligarchy, is now cocktail-party conversation around the world. That’s a good thing—it’s far more useful than debating whether the big banks deserved to be bailed out in 2008-2009. What I’m saying is that technology isn’t necessarily a leveling force, as many of its successful purveyors would like us to believe; in fact, it probably contributes to inequality by undermining wage growth for less-skilled workers.

Without major social programs to provide lower-income, less-educated workers with skills and resources they need to participate in the workforce and act as consumers, our technology-driven economic boom probably isn’t sustainable. And in any case, it isn’t leading us somewhere we want to go. Sharply unequal societies end up either moribund, or riven by revolution and chaos.

*  *  *

The five soft spots visited here aren’t the only ones where circumstances could turn against Silicon Valley’s current success. When the bubble pops, it might be due to some other cause, or several at once. But if we know where the innovation system is weakest, we can work to make it stronger. And we can think ahead about how to handle the next downturn—a message we’ve been hearing lately from no less than California Governor Jerry Brown, who’s proposing a constitutional amendment that would create a rainy-day fund for the state.

“While there are few signs of immediate contraction, we know from history that another recession is inevitable,” Brown’s proposal sensibly observes. So let’s be grownups about it.


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