Leading tech investors warn of bubble risk ‘unprecedented since 1999′

Snapchat CEO Evan Spiegel
Snapchat CEO Evan Spiegel, whose company was valued at $10bn despite having never turned a profit. Photograph: Jae C. Hong/AP

Two of the world’s leading tech investors have warned the new wave of tech companies and their backers are taking on risk and burning through cash at rates unseen since 1999 when the “dotcom bubble” burst.

Bill Gurley, partner at Silicon Valley-based investor Benchmark, sounded the horn of doom on Monday warning that “Silicon Valley as a whole or that the venture-capital community or startup community is taking on an excessive amount of risk right now.”

In an interview with the Wall Street Journal Gurley, whose investments include OpenTable, Uber and Zillow, said startups were taking on risks in a way “unprecedented since ‘99”.

Gurley said that “more humans in Silicon Valley are working for money-losing companies than have been in 15 years”, and they’re burning through huge piles of cash.

“In 01 or 09, you just wouldn’t go take a job at a company that’s burning $4m a month. Today everyone does it without thinking,” he said.

His comments were backed up Tuesday by Fred Wilson, the New York-based co-founder of Union Square Ventures who has backed companies including Twitter, Tumblr and Zynga.

Burn rates – the amount of money a startup is spending – are “sky high all over the US startup sector right now”, he wrote in a blog post.

“We have multiple portfolio companies burning multiple millions of dollars a month. Thankfully its not our entire portfolio. But it is more than I’d like and more than I’m personally comfortable with,” he wrote.

“I’ve been grumpy for months, possibly for longer than that, about this. I’ve pushed back on long term leases that I thought were outrageous, I’ve pushed back on spending plans that I thought were too aggressive and too risky, I’ve made myself a pain in the ass to more than a few CEOs.”’

The comments come after a new generation of tech companies have attracted record levels of investments at levels that give the profitless businesses eye-watering valuations.

In August Snapchat, the social messaging service, was valued at $10bn after a new round of funding. The free service’s fans send 500m self-deleting messages a day, but Snapchat has yet to declare how it intends to make money. Among the other big tech valuations in recent months are Uber, the taxi app service, which was valued at $18bn after its last round of funding in June, and Airbnb, the short term rentals service, which was valued at $10bn in April.

But the valuations are not the immediate issue, according to the sceptical tech investors. “Valuations can be fixed. You can do a down round (investing at a lower valuation), or three or four flat ones, until you get the price right,” writes Wilson. “But burn rates are exactly that. Burning cash. Losing money. Emphasis on the losing.”

Asked if investors, and the people working for the companies, were distracted by the potential for reward, Gurley said: “Yeah, it’s a whole bunch of things. But you just slowly forget, and half of the entrepreneurs today, or maybe more – 60% or 70% – weren’t around in ‘99, so they have no muscle memory whatsoever.”

http://www.theguardian.com/technology/2014/sep/16/tech-bubble-warning-investors-dotcom-losing-money

David Lowery: Here’s how Pandora is destroying musici

 Cracker and Camper van Beethoven’s David Lowery tells Salon how streaming services might end true avant garde music

David Lowery: Here's how Pandora is destroying musicians
David Lowery (Credit: davidlowerymusic.com/Jason Thrasher)

David Lowery has become both beloved and notorious over the last year as one of the musicians most critical of the ways musicians are paid in the digital era. The Camper van Beethoven and Cracker singer brings an artist’s rage and a quant’s detached rigor to his analysis of the music business.

He’s currently fired up about a federal lawsuit filed in New York in which several record labels have sued Pandora (and before that, Sirius FM) for neglecting to pay royalties for songs recorded before Feb. 15, 1972. Here’s how Billboard summarizes the suit: “The labels say both digital music services take advantage of a copyright loophole, since the master recording for copyright wasn’t created federally until 1972. … But the labels claim that their master recordings are protected by individual state copyright laws and therefore deserve royalty payments.”

Lowery thinks the loophole provides a way for Pandora to simply not pay older musicians for their work — while profiting from it themselves. The case could get bigger and change in strange ways, with broad implications.

And he’s similarly frustrated with the rise of streaming services, which are in part owned by the major labels. “For us, it’s the worst-case scenario,” he says. “The old boss and the new boss have joined hands, they’re singing ‘Kumbaya,’ and they’ve changed the words to, ‘Fuck the songwriters! Fuck the performers!’ ”

We spoke to Lowery from a studio in Wisconsin, where he was recording a new Cracker record.

There’s a sort of complicated and technical case in New York right now, involving musicians’ royalties from before 1972: It’s a lawsuit that the general public doesn’t know that much about, but it’s important for musicians, especially for older musicians. Tell us what’s going on.

Back in 1971, there was a series of legislative actions. Before 1972, copyrights for the sound recording weren’t federal, they were [handled at the state level]. So we had some copyright reforms in the ‘70s, which adjusts for technology and things like that. They basically created a federal copyright for sound recordings. And for many, many years people just had assumed — and many of these services had acted as if — the intention of the act was to federalize all sound recordings, not really making a distinction in 1972. But somehow, in the last few years, probably starting in 2009, a few of the digital services have decided that there is no federal copyright for sound recordings created before 1972 — so they’ve just stopped paying these artists.



That includes a lot of legacy artists, like Otis Redding, Aretha Franklin — the writer and main performer of “Respect.” So you have these services that — not all of them, but some of them — just decided that they weren’t going to pay royalties on this. The general public might look at this and go, “This is just companies, and this is how they work, and they try to save money, and so they’re just doing what they can do.”

“They’re just doing what corporations always do.”

They’re just trying to minimize their expenses and stuff like that … But if you really look at this, you’ll see that it’s much, much more complicated than that. They’re making a very weird argument, right? Because ultimately, they lose either way.

The digital services, so Pandora, Sirius, Clear Channel, Digital Operations, whatever they may be. It’s not really clear — it’s definitely Sirius and Pandora — but it’s not really clear which other ones are there. But it’s a strange argument because they lose either way. Because if it’s not covered by federal law then it’s covered by state law. So if they win, and it’s covered by state law and suddenly these very large companies need a license from each individual state, essentially. Which would require them to negotiate with each copyright owner individually. And so there are a lot of people scratching their heads on this one, because why would they pursue a strategy like this? They lose either way. And they could lose really big on this.

So you look at this stuff and like a lot of things that happen with companies that are Wall Street-backed, there’s an incentive to keep the stock price high. And certainly in the case of Pandora — they’re kind of my bête noire, but you know, I feel like they deserve it — but you wonder if a lot of the time these kind of moves, they’re just sort of designed to keep the stock price high in the short-term. And in the long-term they’re creating these enormous liabilities that will just … They’re not only screwing song owners, to me this is one of the most important issues that I’ve come across since I’ve been advocating for artists’ rights. Because it ends up not only screwing songwriters but it could create these huge liabilities that ultimately cost pensions, and little old ladies their savings and stuff like that.

You say it could contribute to these digital-music companies collapsing? Because there’s been a lot of speculation that webcasters don’t have the business model that allows them to earn profits. There’s been speculation that they won’t be around along despite the conventional wisdom that they are saving the music business.

Exactly, and that’s kind of what I’m getting at; in a way, this is much bigger than songwriters’ rights. They don’t really win either way, in my opinion. I mean, yeah, it’s possible that they eke out some kind of financial advantage, but if federal law did not federalize sound recording copyrights, then we revert to state law. And that’s going to be a nightmare for everybody; it’s going to be a nightmare for artists, even your old AM/FM radio station.

Another funny thing: We are one of the only democracies in the modern world that doesn’t pay royalties to performers on terrestrial radio. We’re one of six countries in the world, and the only modern democracy, that doesn’t pay performers royalties for getting played on the radio. I’m a songwriter, too, so I get royalties as a songwriter, but I don’t necessarily get royalties as a performer for terrestrial radio. Anyway, to me, this is just corporate sleaziness. It’s, “We’re going to fight this case that we’re going to lose, to basically save 6 or 10 percent of our expenses, and stick our shareholders, possibly, with these huge liabilities down the road.” Because if they create the situation by which they do not have the copyrights for thousands of songs that they’re streaming, theoretically, they could be charged $150,000 in damages each time it plays one of these songs. So that’s the story that goes all the way down in the weeds of what is going on.

You’re saying this could be a real time bomb.

Yes.

Let’s go back to the artists for a second. I think a lot of consumers might look at this and say, “Well, the Beatles and the Stones don’t need more royalties, and Otis Redding is dead. Why does this matter? Who’s really going to suffer if just songs from before 1972 don’t produce royalties for the artists?”

Well, yeah, that’s what Chris Harrison from Pandora said. I think he said something like that, “These people never expected to get royalties.” I mean, really? Plenty of those artists are not rich, you know? I just saw Wanda Jackson play —she’s almost 80 and she’s out touring. And she made these iconic rock ‘n’ roll recordings.

Some of the first rockabilly records.

I mean, if Pandora is going to stream these things and if Sirius is going to broadcast these things, why shouldn’t they get paid? We’re America, we’re a fair country. We’re not a country like China, where we just go, “Here’s a politically well-connected elite, we’re just going to hand them the rights to something that somebody created.” Just so the politically well-connected can get richer. It’s really funny to me — look, I’m not really a lefty or liberal, I’m basically a little right of center in my politics — and it’s just funny to see consumers sort of rallying around the rights of corporations and against the rights of individuals.

Well, that is what’s happening.

It is! It would have been like the students in the late ‘60s and early ‘70s protesting for the war. Or for the defense contractors … You know what I mean? “We still need that rice from the Mekong Delta. We need cheap rice from the Mekong Delta, let’s protest against these draft dodgers.” On behalf of … I don’t know—

Dow Chemical or something.

That’s literally what the public is doing now. I’ve said this before, and I don’t think people quite get it.

The Internet has become cargo cult. People worship the Internet like a cargo cult. It’s this thing that they have that brings them free stuff, and they think it’s magic. It’s beyond rational thought and reason, right? And they have no sense that behind all that free stuff are the drowned ships and sailors. They don’t want to hear that behind the way you get this free stuff, some really actually fucked-up things have happened to individuals and their individual rights.

And that there are people getting rich off this stuff. Look, people used to go crazy and you’d always hear people talk about how the record labels were so bad to artists back in the ‘50s. They paid them really minimal royalties and stuff like that. But look, these guys are even worse. It’s way, way worse.

Well, let’s extend that a little bit. Since the last time we spoke, it seems like there’s been a dozen new streaming services launched. And streaming is now discussed as the savior of the record industry. We have a new Amazon service, Google has announced one, and Beats service was bought by Apple. There’s surely going to be others by the end of the month. Do these new services seem to be, from an artist’s point of view, an improvement? Or do we just not know?

Well, it’s going to depend on what kind of artist you are. First of all, let’s just take that face-value statement, that streaming will save the music industry. Well, it will if the music business is the kind of music business that’s basically just built around Top 40 songs.

Blockbuster artists.

If you don’t want to ever have Captain Beefheart and Miles Davis and — one of my favorite bands — the gloom-stoner, doom-metal band Sleep. If you don’t ever expect to have those kind of bands anymore. And the reason is because streaming flattens and commoditizes the spin. So you just have one price for every spin of a song across the entire spectrum, whether it’s some kind of avant-garde classical work or whether it’s a Miley Cyrus song. So that will work if you have lots and lots of spins. But it won’t work if you have just a few spins. So what that will do is push out — and you already see that happening — it will push out any sort of niche or, you know …

Any specialty genres.

Specialty genres. Because people might have gone into the stores and gone, “Well, all the albums are between $9.99 and $17.99, they sort of all hover around $12.99, or whatever. It’s always been that way.” Well, yes and no, because something like a Miley Cyrus song might get spun a whole bunch — you might play that record a whole bunch until you’re sick of it whereas an Art Blakey record you might play four times a year. Those, in effect, were more expensive, and when you look at the normal, real, non-magical unicorn part of the economy, niche products cost a lot more than mass-market products.

Maybe we could look at food: Fast food costs less, going to the farmer’s market costs more. But people have decided, increasingly, that it’s worth paying a little more for healthier, fresher, local, whatever food. What you’re saying, I think, that the economic structure of streaming means that everybody’s —

Everything is the same price.

Well, there’s no incentive to make anything besides mass-market —

The most mass-market stuff, exactly. It’s as if all T-shirts — my analogy is like it’s as if the government mandated that all T-shirts were going to cost $3. We would all be wearing semi-ironic, American flag T-shirts from Wal-Mart because nobody would make anything else. Because it has to appeal to the mass market. And yeah, you may not see it right now, but I don’t know what you’ll see 20 years from now. Maybe other systems will come up to fix it but I don’t think it bodes very well for anything other than the most mass-market kind of music.

Anyway, since when does the federal government basically step in and say, “You entire class of people who do this one thing — people who write poetry to music — this one class of Americans who write songs. We’re going to make it so that your songs have to appear on these services. You can’t really get out. You have to sell these songs on your services.” It’s a weird thing we’ve done as a country.

You’re unusual in some ways in your sentiments. A lot of the people fighting for artists’ rights are on the political left. Your argument, I think, is that what we have now is a kind of unpleasant combination of the marketplace and government regulation — kind of a worst of both worlds?

Yeah, it’s like some sort of corporate socialism, yeah. We basically mandate that individuals give their songs to these companies. I really feel like this is a simple problem to fix. There should just be an opt-out. You should just be able to serve notice with the copyright office that six months in advance, as of 2015, I’m the owner of these songs, I am opting out of all of these services.

And why can’t musicians opt out so easily?

There’s no way for songwriters really to opt out. There have been a couple of people who have pulled these really weird tricks where essentially their songs are not really published so therefore, they’re sort of not public and then they forgo performance fees but that’s really complicated, how they did that.

Performers, if you own your own recording, you can opt out of streaming services which are on-demand, but you can’t opt out of webcasting services which are not quite on-demand. You can opt out of Spotify but not Pandora. You can opt out of Spotify on the on-demand side, but you can’t opt out on the — you know how they have a Pandora-like radio service too? Your songs will still be played in there.

As a performer, you have this really narrow place where you can opt out. But as a songwriter that’s not possible anywhere.

Right. And if you have a deal with the label it’s even more complicated …

Yeah, because the label will just put your stuff in there. But I want to tell you this. I know for a fact that one of the heads of one of the major labels is freaking out on streaming and realizing that what his/her underlings told them about what was going to happen with streaming is not in fact true. And they are very pissed off about that. I can’t disclose my source, but they’re one of the major labels. They completely have buyer’s remorse right now. In fact, you could describe them as being in emergency management mode right now over what they’re going to do about streaming because of the streaming revenues. Because streaming is clearly cutting their sales but it’s not making up the difference in revenues. So even for the record labels — I mean, it’s terrible for artists, but even the record labels are realizing they have fucked themselves; at least one of the major labels has realized that they fucked themselves.

Which, actually, I take some delight in. I can’t help it. They got into this.

Because the deals are opaque, we’ve had to speculate, and I guess we still have to speculate on what the deals between the streaming services and the labels were. That isn’t public so we don’t know what kind of sweetheart deals were made between them. We do know that the artists have been largely left out of the process.

Let’s look at it this way. Say we own an apartment together, and we’re going to split whatever money we make off this apartment when we rent it out to somebody. But I go out to this renter and I say, “I tell you what, instead of you giving me $1,500 a month for this little studio apartment, we’ll charge you $750 rent but you basically give me $8,000 per year personally off the book and I’ll give you this cheap rent under the table.”

And then you’re splitting with me just that $750 and keeping the eight grand for myself. That’s what happened when the record labels traded equity for lower royalty rates. And I don’t know how long it’ll take, but there will be a class action eventually over that, but it may be too late.

Is it your sense that the streaming services will survive? There’s some worry that most of them haven’t turned a profit and that they don’t have a working business model.

I think they’ll survive but they’ll be part of Apple, part of Google, part of Amazon. They’ll be part of other services that make money in other ways. I think the same sense for the webcasters too as well. I just don’t see how they can really get the ship righted. They’ll need to charge more for their services.

On the other hand, I’m not necessarily against the streaming services. I think something like Spotify is useful and it’s kind of a good deal under certain circumstances. If I put my sound recording of “Low,” and if it was only behind the paywall, the premium-paying wall, I would get more than a penny and a half per spin. So for that song, I think having it on Spotify makes a lot of sense — if it was behind the paywall. It’s just that I don’t want my entire catalog, the entire album, for free on the service.

And you don’t have a choice right now as to whether you do?

We don’t have a choice. There are technicalities and there are ways certain artists can remove their recordings but you have to not have a record deal and frankly, I was part of the first wave of indie musicians in the 1980s. We had our own label — Pitch Tent Records. We are one of the pioneers of indie rock. And, you know, I’ve had this happen before in my 30-year career of being an independent and being on my own label and a major label. Because sometimes frankly it’s like “I don’t want to do the promotion on my own record.”

There’s an advantage to being on a label sometimes. It’s just really interesting to me. I don’t really see labels totally going away. Some people say, “Well, the labels will figure it out, they’ll figure out when it makes sense for artists.” Some people on the record side of the business are like, “Well, when we aggregate all these rights together we’ll know the best way to exploit these recordings and these copyrights.” I don’t necessarily see that happening and that’s why I just feel like there should be a right for artists to opt out of these services.

We’ve spoken a little about the government. We’ve spoken a little about these big corporations — Google, Amazon — who either own streaming services or webcasters or whatever. Let’s bring it together for a second. Part of what we’re describing is a kind of monopoly capital. We do have part of the federal government that’s supposed to be on the lookout for monopoly behavior — the Department of Justice.

And they are. They’re very vigilant on that. They’ve put the songwriters under monopoly supervision since 1941! They completely have monopoly backwards.

I’m gonna do something that breaks the law right now. I’m a songwriter who has my own publishing company. I think all songwriters should hold out for 10 percent of revenue from Pandora. I urge all songwriters to hold out for 10 percent of revenue from Pandora. I have just violated the consent decree. I am in contempt of court. Someone arrest me!

Because the DOJ doesn’t let songwriters do that. We’re under anti-trust supervision. But look at the companies that we’re [supposedly] colluding against — against Pandora which is 77 percent of the market for streaming. We might collude against Google and YouTube, right? There’s nobody close to them on online video. Let’s see, Spotify is [huge] as far as streaming goes.

Basically, the federal government has monopoly backwards. So you have the monopolies getting together on Capitol Hill and calling for Congress to not only keep the consent decree, but to expand it. It’s pretty crazy. It’d be funny if it wasn’t Kafka-esque. 

Since Reagan, the Department of Justice has focused on what they see as defending consumers, keeping prices low — and they’ve gone pretty easy on big corporations, music and technology corporations included. Do you think the DOJ, for instance, will start paying attention to the effect Amazon and Google are having on the making of culture?

I think they will once somebody sues them and it goes to the Supreme Court. This is a thing I am very seriously considering. I think the consent decree acts as what’s called a writ of attainder. Because essentially, as soon as I write my first song, I’m guilty. There’s no court proceedings. I’m under Department of Justice supervision. There’s no court proceeding. There’s no legislation. My rights are limited by extrajudicial, extra-legislative [rules] … Our Founding Fathers were very, very, very much against this thing. I think the point is that somebody has to sue the Department of Justice for violation of our constitutional rights, and then they’ll stop.

I think it’ll have to go to court. If you look at it, if a judge really looks at it, they’ll go — essentially the way the consent decree works is that it’s a court case that’s been open since 1941. It hasn’t been closed. And as soon as I wrote a song, I’m part of that court case. I demonstrated the limitation of my rights by showing how I’m in contempt of court by saying I think songwriters should hold out for 10 percent for Pandora.

When did I ever get a hearing, right? I never got a hearing on that. When was the law ever passed? The judicial branch can’t make law? They’re making law, by that consent decree they’ve created essentially a statutory right for broadcasters to have our songs.

And really, people are like, “Songwriters, I understand they’re being screwed, but it’s just a small portion of Americans.” If they can do this to our songs, they can do this to your photos that you post on the Web. There’s a law, there are proposed laws that generally fall under the title “orphan works” for photographs that essentially would allow that.

Once people start thinking that, well, if songwriters songs can be collectivized for the good of these for-profit corporations without a trial or legislation or anything like that, they can do the same thing with what you write on your Facebook account or the photo you post on Twitter. You know what I’m saying? It’s eventually going to get to everybody.

 

Scott Timberg, a longtime arts reporter in Los Angeles who has contributed to the New York Times, runs the blog Culture Crash. His book, “Culture Crash: The Killing of the Creative Class” comes out in January. Follow him on Twitter at @TheMisreadCity

http://www.salon.com/2014/08/31/david_lowery_heres_how_pandora_is_destroying_musicians/?source=newsletter

K Street Black Rock: Burning Man’s Billionaires Row

There was a certain point last night — when a six-foot-tall private-party planner in a bustier and feather headdress was clenching my shoulder and threatening me — that I wondered why I ever even wanted to follow along a tour of the fancy camps of Burning Man.

Burning Man is, after all, about building a city, which they call Black Rock. In that city, some people were building walled-off empires on its outer rings. Rich people do as rich people do.

But there is something about the way a new fleet of wealthy have descended on Burning Man that is inducing anxiety among Burners, a community that bans all money and branding (people tape over even small logos). The so-called “turnkey camps” — tight circles of trailers, or sometimes just large black-tarp walls that hide overstaffed luxury playpens — are distinctly different from the rest of Burning Man, a festival with a heavy emphasis on giving and work.

During a five-minute walk this morning, Burners in various camps offered me plums, coffee and homemade pita-and-cheese sandwiches. Campers constantly brag about how much work they put into their decor, erecting full bars or elaborate hammock-atop-hammock arrangements on site. Many of this year’s new camps are both private and prefab, and that is very difficult for some Burners to accept. It has been part of the conversation here all week.

Let it be said: All of Burning Man is a show of wealth. Tickets are $380, sure, but many of the art cars — immensely decorated buses and trucks — cost hundreds of thousands of dollars. Not to mention the neon furs, the metallic leggings, the lights (there were side-of the-road hawkers at the gate who tried to sell me a rainbow stole for $80).

Standing near a party bus one night around midnight, Ryan Parks, a young entrepreneur covered in LEDs, explained the situation: “This is the height of excess,” he said, indicating the neon and fire-spewing art cars around us. “We go to the desert, where people die, to build shit we burn. The Maslow hierarchy of needs has been met by our ancestors — so we can make art cars.”

It’s not about tech money, because that’s nothing new. Annie Harrison — an early Burner and former writer for Wired magazine — told me, “I came out here in ’95 to cover the tech scene. It was tech-reporter catnip! Mostly stories about the lasers from Lawrence Livermore. I took a picture of a guy lighting a cigarette off a laser that my editor loved.”

But something new is happening at Burning Man: There’s now a rich neighborhood.

While some power players, like Bob Pittman, station their camps openly at the center of the fray, others have created a fascinating ring of power: K Street Black Rock.

K Street Black Rock is at the perimeter of the city, which is built in the form of concentric semicircles. A long, obscure stretch far from the center, no one bikes all the way out there unless they have to.

“We’ve put our hand out to the turnkey camps and asked them to live by the principles. We can’t force them. But we asked, and I think they understand,” said Burning Man co-founder Will Rogers, who sat in a folding chair by his RV, a tattered bandana around his head. “After the first dust storm, we’re all the same color.”

In my event calendar, I noticed something called “Turnkey Camp Invasion,” described as a parade to test the hospitality of the fanciest camps. When I arrived at the meeting spot, a funky bar in a quiet neighborhood along E street, the bartenders told me the organizer hadn’t been able to make it to Burning Man because he couldn’t take the time off from work.

But the group — a dentist, a Google employee, a lawyer, some eccentrics — still gathered. They figured that, no matter what, it was a nice night for a bike ride.

“Okay, we want to make sure we don’t get the people who fund the art, though,” said a blonde woman wearing a headscarf and a sash of fake ammo. “How can we tell which is turnkey and which isn’t?”

“Listen, we’re not burning down their RVs, for god’s sake,” said David Grosof, who wore glow sticks fashioned into glasses. “If we’re friendly, they’ll invite us in. It’ll be fun.”

I stood next to a Google employee named Greg: “”The nanosecond I heard about this turnkey tour, there was no way I wouldn’t do it.”

What if it’s Google co-founder Sergey Brin’s camp?

“That’d be awesome! We’d sip a martini and have some caviar, no doubt,” Greg said.

Grosof had a more philosophical take.

“We are so very careful, no one can sell a hot dog for money, but it’s okay to have a staff and bodyguards and cooks?” he said. “What is the difference between commodity product and commodity service?”

When we reached K Street, one of the “invaders” asked a man who was walking by whether he had seen these fancy camps. Oh yes, he had, he said. Many. They set up 20 matching RVs here or there, and there’s one just right up the street.

We got to the escarpment, a daunting wall of RVs. The entry was covered by gauzy drapes. As they billowed in the wind, we could see inside: A crystal chandelier, glass refrigerators full of champagne, a dining-room table to seat maybe 16, and half a dozen very beautiful women in lingerie, serving cocktails. One of them saw the group.

She stormed outside, furious. The invaders responded defensively, saying they had just wanted to see. Some wanted to debate. She wanted everyone to keep walking. The group milled outside, debating whether to try again, or give up and go to a normal camp for a drink.

One of the turnkey residents, red-haired and slightly overweight, came out in a white shirt and cargo shorts. The party planner quickly ran back inside, brought him a red-silk Chinese robe, and helped him put it on. He thought someone’s headlamp was a camera, and started to scream at them. The event planner saw me taking notes and a picture of the scene, and came at me. “I don’t like you,” she said loudly, grabbing my shoulder. Someone next to me told her that she didn’t need to be a bitch. The man in the silk robe started jumping up and down, ready to throw a punch.

A momentary flare-up of culture clash on the dark, wealthy outskirts of Burning Man.

And then, because no one really wanted a fight, and the whole scene was ridiculous, it calmed. The Googler hopped on his bike and sped off. The dentist shook his head and adjusted his EL-wire. And I went off with a friend to a fire-dancing camp run by some Santa Cruz Burners — I gave them the ginseng candies that I carry in my bag. We ordered vodka and orange juice, but they poured us Coke and Fireball.

http://recode.net/2014/08/29/k-street-black-rock-burning-mans-billionaires-row/?utm_source=facebook&utm_medium=social

Why Burning Man is not an example of a loosely regulated tech utopia

The rules are important at Burning Man. But being rich means you get to do what you want, just like anywhere else

Why Burning Man is not an example of a loosely regulated tech utopia
El Pulpo Mecanico, at the Burning Man 2012 “Fertility 2.0″ arts and music festival, August 29, 2012. (Credit: Reuters/Jim Urquhart)

“Burning Man culture,” writes Gregory Ferenstein in Vox, “discourages money or bartering; the entire economy is a gift economy.”

Ferenstein, a regular attendee at the Nevada desert counterculture festival so beloved by Northern California’s tech-hipsters, is defending Burning Man from critics like the New York Times’ Nick Bilton, who have noted that in recent years, rich attendees have been setting up their own luxury camps within the confines of Black Rock City. Ferenstein makes some good points explaining why tech billionaires love Burning Man, but it’s still difficult to square his point on “burning man culture” with the details reported by Bilton.

“We used to have R.V.s and precooked meals,” said a man who attends Burning Man with a group of Silicon Valley entrepreneurs… “Now, we have the craziest chefs in the world and people who build yurts for us that have beds and air-conditioning.” He added with a sense of amazement, “Yes, air-conditioning in the middle of the desert!”

His camp includes about 100 people from the Valley and Hollywood start-ups, as well as several venture capital firms. And while dues for most non-tech camps run about $300 a person, he said his camp’s fees this year were $25,000 a person. A few people, mostly female models flown in from New York, get to go free, but when all is told, the weekend accommodations will collectively cost the partygoers over $2 million.

Such camps, reports Bilton, also included “Sherpas” that serve as servants.

Ferenstein writes that the tech execs have basically the same experience as everyone else. But he appears to be tone-deaf to the enormous offense of labeling paid employees “Sherpas” and doesn’t bother to mention the female models flown in from New York. That’s not the gift economy, and it’s not the sharing economy. And it’s surely not something that anyone even imagined possible when tripping around a very big bonfire on Baker Beach in the early ’90s.



Ferenstein also wanders into a self-combusting contradiction, of the sort that would look pretty good exploding  in the desert night. Burning Man, he writes, “is an experiment in what a city would look like if it were architected for wild creativity and innovation…. At Burning Man, sharing is the economy. It’s rather appealing to the Silicon Valley elite to see an entire city function on an economic idea that is at the heart of the knowledge economy. It’s an important glimpse of why the founders are so optimistic that a loosely regulated field of tech startups can outweigh the potential downsides of unregulated sharing.”

But Burning Man is intensely regulated. It’s got its own police force. Gun control is absolute. Attendance is limited to a set number of people who can afford the not-cheap tickets. The very layout of Black Rock City is a paean to planning and organization. Central control is as much the essence of Burning Man as is hedonism and fire.

We can argue about the proper extent of regulation. Is Burning Man more like Houston, which scoffs at zoning restrictions, or San Francisco, where plastic bags are outlawed? (The rules on trash at Burning Man might come off as pretty extreme to your typical happy-go-lucky free market polluter, after all.) But to use Burning Man as a model for what tech billionaires want for a greater society is to actually argue that rules are extremely important, and anarchy is a failure!

The key point made by Nick Bilton is that the very existence of a camp inside Burning Man where tickets cost $25,000 and female companionship is imported is a demonstration that Burning Man, far from being an alternative to society, is business as usual.

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

http://www.salon.com/2014/08/22/why_burning_man_is_not_an_example_of_a_loosely_regulated_tech_utopia/?source=newsletter

How Google and the Big Tech Companies Are Helping Maintain America’s Empire


Military, intelligence agencies and defense contractors are totally connected to Silicon Valley.

Silicon Valley has been in the media spotlight for its role in gentrifying and raising rents in San Francisco, helping the NSA spy on American citizens, and lack of racial and gender diversity. Despite that, Silicon Valley still has a reputation for benevolence, innocence and progressivism. Hence Google’s phrase, “Don’t be evil.” A recent Wall Street Journal/NBC News poll found that, even after the Snowden leaks, 53% of those surveyed had high confidence in the tech industry. The tech industry is not seen as evil as, say, Wall Street or Big Oil.

One aspect of Silicon Valley that would damage this reputation has not been scrutinized enough—its involvement in American militarism. Silicon Valley’s ties to the National Security State extend beyond the NSA’s PRISM program. Through numerous partnerships and contracts with the U.S. military, intelligence and law enforcement agencies, Silicon Valley is part of the American military-industrial complex. Google sells its technologies to the U.S. military, FBI, CIA, NSA, DEA, NGA, and other intelligence and law enforcement agencies, has managers with backgrounds in military and intelligence work, and partners with defense contractors like Lockheed Martin and Northrop Grumman. Amazon designed a cloud computing system that will be used by the CIA and every other intelligence agency. The CIA-funded tech company Palantir sells its data-mining and analysis software to the U.S. military, CIA, LAPD, NYPD, and other security agencies. These technologies have several war-zone and intelligence-gathering applications.

First, a little background to explain how the military has been involved with Silicon Valley since its conception as a technology center. Silicon Valley’s roots date back to World War II, according to a presentation by researcher and entrepreneur Steve Blank. During the war, the U.S. government funded a secret lab at Harvard University to research how to disrupt Germany’s radar-guided electronic air defense system. The solution — drop aluminum foil in front of German radars to jam them. This birthed modern electronic warfare and signals intelligence. The head of that lab was Stanford engineering professor Fred Terman who, after World War II, took 11 staffers from that lab to create Stanford’s Electronic Research Lab (ERL), which received funding from the military. Stanford also had an Applied Electronics Lab(AEL) that did classified research in jammers and electronic intelligence for the military.

In fact, much of AEL’s research aided the U.S. war in Vietnam. This made the lab a target for student antiwar protesters who nonviolently occupied the lab in April 1969 and demanded an end to classified research at Stanford. After nearly a year of teach-ins, protests, and violent clashes with the police, Stanford effectively eliminated war-related classified research at the university.

The ERL did research in and designed microwave tubes and electronic receivers and jammers. This helped the U.S. military and intelligence agencies spy on the Soviet Union and jam their air defense systems. Local tube companies and contractors developed the technologies based on that research. Some researchers from ERL also founded microwave companies in the area. This created a boon of microwave and electronic startups that ultimately formed the Silicon Valley known today.

Don’t be evil, Google

Last year, the first Snowden documents revealed that Google, Facebook, Yahoo!, and other major tech companies provided the NSA access to their users’ data through the PRISM program. All the major tech companies denied knowledge of PRISM and put up an adversarial public front to government surveillance. However, Al Jazeera America’s Jason Leopold obtained, via FOIA request, two sets of email communications between former NSA Director Gen. Keith Alexander and Google executives Sergey Brin and Eric Schmidt. The communications, according to Leopold, suggest “a far cozier working relationship between some tech firms and the U.S. government than was implied by Silicon Valley brass” and that “not all cooperation was under pressure.” In the emails, Alexander and the Google executives discussed information sharing related to national security purposes.

But PRISM is the tip of the iceberg. Several tech companies are deeply in bed with the U.S. military, intelligence agencies, and defense contractors. One very notable example is Google. Google markets and sells its technology to the U.S. military and several intelligence and law enforcement agencies, such as the FBI, CIA, NSA, DEA, and NGA.

Google has a contract with the National Geospatial-Intelligence Agency (NGA) that allows the agency to use Google Earth Builder. The NGA provides geospatial intelligence, such as satellite imagery and mapping, to the military and other intelligence agencies like the NSA. In fact, NGA geospatial intelligence helped the military and CIA locate and kill Osama bin Laden. This contract allows the NGA to utilize Google’s mapping technology for geospatial intelligence purposes. Google’s Official Enterprise Blog announced that “Google’s work with NGA marks one of the first major government geospatial cloud initiatives, which will enable NGA to use Google Earth Builder to host its geospatial data and information. This allows NGA to customize Google Earth & Maps to provide maps and globes to support U.S. government activities, including: U.S. national security; homeland security; environmental impact and monitoring; and humanitarian assistance, disaster response and preparedness efforts.”

Google Earth’s technology “got its start in the intelligence community, in a CIA-backed firm called Keyhole,” which Google purchased in 2004, according to the Washington Post. PandoDaily reporter Yasha Levine, who has extensively reported on Google’s ties to the military and intelligence communitypoints out that Keyhole’s “main product was an application called EarthViewer, which allowed users to fly and move around a virtual globe as if they were in a video game.”

In 2003, a year before Google bought Keyhole, the company was on the verge of bankruptcy, until it was saved by In-Q-Tel, a CIA-funded venture capital firm. The CIA worked with other intelligence agencies to fit Keyhole’s systems to its needs. According to the CIA Museum page, “The finished product transformed the way intelligence officers interacted with geographic information and earth imagery. Users could now easily combine complicated sets of data and imagery into clear, realistic visual representations. Users could ‘fly’ from space to street level seamlessly while interactively exploring layers of information including roads, schools, businesses, and demographics.”

How much In-Q-Tel invested into Keyhole is classified. However, Levine writes that “the bulk of the funds didn’t come from the CIA’s intelligence budget — as they normally do with In-Q-Tel — but from the NGA, which provided the money on behalf of the entire ‘Intelligence Community.’ As a result, equity in Keyhole was held by two major intelligence agencies.” Shortly after In-Q-Tel bought Keyhole, the NGA (then known as the National Imagery and Mapping Agency or NIMA) announced it immediately used Keyhole’s technology to support U.S. troops in Iraq at the 2003-2011 war. The next year, Google purchased Keyhole and used its technology to develop Google Earth.

Four years after Google purchased Keyhole, in 2008, Google and the NGA purchased GeoEye-1, the world’s highest-resolution satellite, from the company GeoEye. The NGA paid for half of the satellite’s $502 million development and committed to purchasing its imagery. Because of a government restriction, Google gets lower-resolution images but still retains exclusive access to the satellite’s photos. GeoEye later merged into DigitalGlobe in 2013.

Google’s relationship to the National Security State extends beyond contracts with the military and intelligence agencies. Many managers in Google’s public sector division come from the U.S. military and intelligence community, according to one of Levine’s reports.

Michele R. Weslander-Quaid is one example. She became Google’s Innovation Evangelist and Chief Technology Officer of the company’s public sector division in 2011. Before joining Google, since 9/11, Weslander-Quaid worked throughout the military and intelligence world in positions at the National Geospatial-Intelligence Agency, Office of the Director of National Intelligence, National Reconnaissance Office, and later, the Office of the Secretary of Defense. Levine noted that Weslander-Quaid also “toured combat zones in both Iraq and Afghanistan in order to see the tech needs of the military first-hand.”

Throughout her years working in the intelligence community, Weslander-Quaid “shook things up by dropping archaic software and hardware and convincing teams to collaborate via web tools” and “treated each agency like a startup,” according to a 2014 Entrepreneur Magazine profile. She was a major advocate for web tools and cloud-based software and was responsible for implementing them at the agencies she worked at. At Google, Weslander-Quaid’s job is to meet “with agency directors to map technological paths they want to follow, and helps Google employees understand what’s needed to work with public-sector clients.” Weslander-Quaid told Entrepreneur, “A big part of my job is to translate between Silicon Valley speak and government dialect” and “act as a bridge between the two cultures.”

Another is Shannon Sullivan, head of defense and intelligence at Google. Before working at Google, Sullivan served in the U.S. Air Force working at various intelligence positions. First as senior military advisor and then in the Air Force’s C4ISR Acquisition and Test; Space Operations, Foreign Military Sales unit. C4ISR stands for “Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance.” Sullivan left his Air Force positions to work as Defense Director for BAE Systems, a British-based arms and defense company, and then Army and Air Force COCOMs Director at Oracle. His last project at Google was “setting up a Google Apps ‘transformational’ test program to supply 50,000 soldiers in the US Army and DoD with a customized Google App Universe”, according to Levine.

Google not only has a revolving door with the Pentagon and intelligence community, it also partners with defense and intelligence contractors. Levine writes that “in recent years, Google has increasingly taken the role of subcontractor: selling its wares to military and intelligence agencies by partnering with established military contractors.”

The company’s partners include two of the biggest American defense contractors — Lockheed Martin, an aerospace, defense, and information security company, and Northrop Grumman, an aerospace and defense technology company. Both Lockheed and Northrop produce aircraft, missiles and defense systems, naval and radar systems, unmanned systems, satellites, information technology, and other defense-related technologies. In 2011, Lockheed Martin made $36.3 billion in arms sales, while Northrop Grumman made $21.4 billion. Lockheed has a major office in Sunnyvale, California, right in the middle of Silicon Valley. Moreover, Lockheed was also involved in interrogating prisoners in Iraq and Guantanamo, through its purchase of Sytex Corporation and the information technology unit of Affiliated Computer Services (ACS), both of whom directly interrogated detainees.

Google worked with Lockheed to design geospatial technologies. In 2007, describing the company as “Google’s partner,” the Washington Post reported that Lockheed “demonstrated a Google Earth product that it helped design for the National Geospatial-Intelligence Agency’s work in Iraq. These included displays of key regions of the country and outlined Sunni and Shiite neighborhoods in Baghdad, as well as U.S. and Iraqi military bases in the city. Neither Lockheed nor Google would say how the geospatial agency uses the data.” Meanwhile, Google has a $1-million contract with Northrop to install a Google Earth plug-in.

Both Lockheed and Northrop manufacture and sell unmanned systems, also known as drones. Lockheed’s drones include the Stalker, which can stay airborne for 48 hours; Desert Hawk III, a small reconnaissance drone used by British troops in Iraq and Afghanistan; and the RQ-170 Sentinel, a high-altitude stealth reconnaissance drone used by the U.S. Air Force and CIA. RQ-170s have been used in Afghanistan and for the raidthat killed Osama bin Laden. One American RQ-170 infamously crashed in Iran while on a surveillance mission over the country in late 2011.

Northrop Grumman built the RQ-4 Global Hawk, a high-altitude surveillance drone used by the Air Force and Navy. Northrop is also building a new stealth drone for the Air Force called the RQ-180, which may be operational by 2015. In 2012, Northrop sold $1.2 billion worth of drones to South Korea.

Google is also cashing in on the drone market. It recently purchased drone manufacturer Titan Aerospace, which makes high-altitude, solar-powered drones that can “stay in the air for years without needing to land,” reported the Wire. Facebook entered into talks to buy the company a month before Google made the purchase.

Last December, Google purchased Boston Dynamics, a major engineering and robotics company that receives funding from the military for its projects. According to the Guardian, “Funding for the majority of the most advanced Boston Dynamics robots comes from military sources, including the US Defence Advanced Research Projects Agency (DARPA) and the US army, navy and marine corps.” Some of these DARPA-funded projects include BigDog, Legged Squad Support System (LS3), Cheetah, WildCat, and Atlas, all of which are autonomous, walking robots. Altas is humanoid, while BigDog, LS3, Cheetah, WildCat are animal-like quadrupeds. In addition to Boston Dynamics, Google purchased eight robotics companies in 2013—Industrial Perception, Redwood Robotics, Meka, Schaft, Holomni, Bot & Dolly, and Autofuss. Google has been tight-lipped about the specifics of its plans for the robotics companies. But some sources told the New York Times that Google’s robotics efforts are not aimed at consumers but rather manufacturing, such as automating supply chains.

Google’s “Enterprise Government” page also lists military/intelligence contractors Science Applications International Corporation (SAIC) and Blackbird Technologies among the companies it partners with. In particularly, Blackbird is a military contractor that supplies locators for “the covert ‘tagging, tracking and locating’ of suspected enemies,” according to Wired. Its customers include the U.S. Navy and U.S. Special Operations Command. SOCOM oversees the U.S. military’s special operations forces units, such as the Navy SEALs, Delta Force, Army Rangers, and Green Berets. Blackbird even sent some employees as armed operatives on secret missions with special operations forces. The company’s vice president is Cofer Black, a former CIA operative who ran the agency’s Counterterrorist Center before 9/11.

Palantir and the military

Many others tech companies are working with military and intelligence agencies. Amazon recently developed a $600 million cloud computing system for the CIA that will also service all 17 intelligence agencies. Both Amazon and the CIA have said little to nothing about the system’s capabilities.

Palantir, which is based in Palo Alto, California produces and sells data-mining and analysis software. Its customers include the U.S. Marine Corps, U.S. Special Operations Command, CIA, NSA, FBI, Defense Intelligence Agency, Department of Homeland Security, National Counterterrorism Center, LAPD, and NYPD. In California, the Northern California Regional Intelligence Center (NCRIC), one of 72 federally run fusion centers built across the nation since 9/11, uses Palantir software to collect and analyze license plate photos.

While Google sells its wares to whomever in order to make a profit, Palantir, as a company, isn’t solely dedicated to profit-maximizing. Counterterrorism has been part of the company’s mission since it began. The company was founded in 2004 by investor Alex Karp, who is the company’s chief executive, and billionaire PayPal founder Peter Thiel. In 2003, Thiel came up with the idea to develop software to fight terrorism based on PayPal’s fraud recognition software. The CIA’s In-Q-Tel helped jumpstart the company by investing $2 million. The rest of the company’s $30 million start-up costs were funded by Thiel and his venture capital fund.

Palantir’s software has “a user-friendly search tool that can scan multiple data sources at once, something previous search tools couldn’t do,” according to a 2009 Wall Street Journal profile. The software fills gaps in intelligence “by using a ‘tagging’ technique similar to that used by the search functions on most Web sites. Palantir tags, or categorizes, every bit of data separately, whether it be a first name, a last name or a phone number.” Analysts can quickly categorize information as it comes in. The software’s ability to scan and categorize multiple sources of incoming data helps analysts connect the dots among large and different pools of information — signals intelligence, human intelligence, geospatial intelligence, and much more. All this data is collected and analyzed in Palantir’s system. This makes it useful for war-related, intelligence, and law enforcement purposes. That is why so many military, police, and intelligence agencies want Palantir’s software.

U.S. troops in Afghanistan who used Palantir’s software, particularly the Marines and SOCOM, found it very helpful for their missions. Commanders liked Palantir’s ability to direct them at insurgents who “build and bury homemade bombs, the biggest killer of U.S. troops in Afghanistan,” the Washington Times reported. A Government Accountability Office report said Palantir’s software “gained a reputation for being intuitive and easy to use, while also providing effective tools to link and visualize data.” Special operations forces found Palantir to be “a highly effective system for conducting intelligence information analysis and supporting operations” and “provided flexibility to support mobile, disconnected users out on patrols or conducting missions.” Many within the military establishment are pushing to have other branches, such as the Army, adopt Palantir’s software in order to improve intelligence-sharing.

Palantir’s friends include people from the highest echelons of the National Security State. Former CIA Director George Tenet and former Secretary of State Condoleezza Rice are advisers to Palantir, while former CIA director Gen. David Petraeus “considers himself a friend of Palantir CEO Alex Karp”, according to Forbes. Tenet told Forbes, “I wish I had Palantir when I was director. I wish we had the tool of its power because it not only slice and dices today, but it gives you an enormous knowledge management tool to make connections for analysts that go back five, six, six, eight, 10 years. It gives you a shot at your data that I don’t think any product that we had at the time did.”

High-tech militarism

Silicon Valley’s technology has numerous battlefield applications, which is something the U.S. military notices. Since the global war on terror began, the military has had a growing need for high-tech intelligence-gathering and other equipment. “A key challenge facing the military services is providing users with the capabilities to analyze the huge amount of intelligence data being collected,” the GAO report said. The proliferation of drones, counter-insurgency operations, sophisticated intelligence-surveillance-reconnaissance (ISR) systems, and new technologies and sensors changed how intelligence is used in counterinsurgency campaigns in Iraq and Afghanistan and counterterrorism operations in Pakistan, Somalia, Yemen, and other countries.

According to the report, “The need to integrate the large amount of available intelligence data, including the ability to synthesize information from different types of intelligence sources (e.g., HUMINT, SIGINT, GEOINT, and open source), has become increasingly important in addressing, for example, improvised explosive device threats and tracking the activities of certain components of the local population.” This is where Palantir’s software comes in handy. It does what the military needs — data-mining and intelligence analysis. That is why it is used by SOCOM and other arms of the National Security State.

Irregular wars against insurgents and terrorist groups present two problems— finding the enemy and killing them. This is because such groups know how to mix in with, and are usually part of, the local population. Robotic weapons, such as drones, present “an asymmetric solution to an asymmetric problem,” according to a Foster-Miller executive quoted in P.W. Singer’s book Wired for War. Drones can hover over a territory for long periods of time and launch a missile at a target on command without putting American troops in harm’s way, making them very attractive weapons.

Additionally, the U.S. military and intelligence agencies are increasingly relying on signals intelligence to solve this problem. Signals intelligence monitors electronic signals, such as phone calls and conversations, emails, radio or radar signals, and electronic communications. Intelligence analysts or troops on the ground will collect and analyze the electronic communications, along with geospatial intelligence, of adversaries to track their location, map human behavior, and carry out lethal operations.

Robert Steele, a former Marine, CIA case officer, and current open source intelligence advocate, explained the utility of signals intelligence. “Signals intelligence has always relied primarily on seeing the dots and connecting the dots, not on knowing what the dots are saying. When combined with a history of the dots, and particularly the dots coming together in meetings, or a black (anonymous) cell phone residing next to a white (known) cellphone, such that the black acquires the white identity by extension, it becomes possible to ‘map’ human activity in relation to weapons caches, mosques, meetings, etcetera,” he said in an email interview. Steele added the “only advantage” to signals intelligence “is that it is very very expensive and leaves a lot of money on the table for pork and overhead.”

In Iraq and Afghanistan, for example, Joint Special Operations Command (JSOC) commandos combined images from surveillance drones with the tracking of mobile phone numbers to analyze insurgent networks. Commandos then used this analysis to locate and capture or kill their intended targets during raids. Oftentimes, however, this led to getting the wrong person. Steele added that human and open source intelligence are “vastly superior to signals intelligence 95% of the time” but “are underfunded precisely because they are not expensive and require face to face contact with foreigners, something the US Government is incompetent at, and Silicon Valley could care less.”

Capt. Michael Kearns, a retired U.S. and Australian Air Force intelligence officer and former SERE instructor with experience working in Silicon Valley, explained how digital information makes it easier for intelligence agencies to collect data. In an email, he told AlterNet, “Back in the day when the world was analog, every signal was one signal. Some signals contained a broad band of information contained within, however, there were no ‘data packets’ embedded within the electromagnetic spectrum. Therefore, collecting a signal, or a phone conversation, was largely the task of capturing / decoding / processing some specifically targeted, singular source. Today, welcome to the digital era. Data ‘packets’ flow as if like water, with pieces and parts of all things ‘upstream’ contained within. Therefore, the task today for a digital society is largely one of collecting everything, so as to fully unwrap and exploit the totality of the captured data in an almost exploratory manner. And therein lies the apparent inherently unconstitutional-ness of wholesale collection of digital data…it’s almost like ‘pre-crime.'”

One modern use of signals intelligence is in the United States’ extrajudicial killing program, a major component of the global war on terror. The extrajudicial killing program began during the Bush administration as a means to kill suspected terrorists around the world without any due process. However, as Bush focused on the large-occupations of Iraq and Afghanistan, the extrajudicial killing program was less emphasized.

The Obama administration continued the war on terror but largely shifted away from large-scale occupations to emphasizing CIA/JSOC drone strikes, airstrikes, cruise missile attacks,proxies, and raids by special operations forces against suspected terrorists and other groups. Obama continued and expanded Bush’s assassination program, relying on drones and special operations forces to do the job. According to the Bureau of Investigative Journalism, U.S. drone strikes and other covert operations have killed nearly 3,000 to over 4,800 people, including 500 to over 1,000 civilians, in Pakistan, Yemen, and Somalia. During Obama’s five years in office, over 2,400 people were killed by U.S. drone strikes. Most of those killed by drone strikes are civilians or low-level fighters and, in Pakistan, only 2 percent were high-level militants. Communities living under drone strikes are regularly terrorized and traumatized by them.

Targeting for drone strikes is based on metadata analysis and geolocating the cell phone SIM card of a suspected terrorist, according to a report by the Intercept. This intelligence is provided by the NSA and given to the CIA or JSOC which will then carry out the drone strike. However, it is very common for people in countries like Yemen or Pakistan to hold multiple SIM cards, hand their cell phones to family and friends, and groups like the Taliban to randomly hand out SIM cards among their fighters to confuse trackers.

Since this methodology targets a SIM card linked to a suspect rather than an actual person, innocent civilians are regularly killed unintentionally. To ensure the assassination program will continue, the National Counterterrorism Center developed the “disposition matrix,” a database that continuously adds the names, locations, and associates of suspected terrorists to kill-or-capture lists.

The Defense Department’s 2015 budget proposal requests $495.6 billion, down $0.4 billion from last year, and decreases the Army to around 440,000 to 450,000 troops from the post-9/11 peak of 570,000. But it protects money — $5.1 billion — for cyberwarfare and special operations forces, giving SOCOM $7.7 billion, a 10 percent increase from last year, and 69,700 personnel. Thus, these sorts of operations will likely continue.

As the United States emphasizes cyberwarfare, special operations, drone strikes, electronic-based forms of intelligence, and other tactics of irregular warfare to wage perpetual war, sophisticated technology will be needed. Silicon Valley is the National Security State’s go-to industry for this purpose.

Adam Hudson is a journalist, writer, and photographer.

http://www.alternet.org/news-amp-politics/how-google-and-big-tech-companies-are-helping-maintain-americas-empire?akid=12149.265072.iCZIs-&rd=1&src=newsletter1016284&t=6&paging=off&current_page=1#bookmark

Not Content To Ruin Just San Francisco, Rich Techies Are Gentrifying Burning Man Too

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Artist Dadara‘s Facebook like altar from Burning Man 2013. Photo: Bexx Brown-Spinelli/Flickr

This will come as news only to people who have not attended Burning Man in the last couple of years, but the New York Times has just caught on to the fact that Silicon Valley millionaires (and billionaires) have been attending the desert festival in greater numbers and quickly ruining it with their displays of wealth. While we used to call Coachella “Burning Man Lite for Angelenos,” Burning Man itself is quickly becoming Coachella on Crack for rich tech folk who want to get naked and do bong hits with Larry Page in Elon Musk’s decked-out RV.

Burners won’t just be sharing the playa with Larry and Sergey, Zuck, Grover Norquist, and at least one Winklevoss twin this year. There will also be a legion of new millionaires, most of them probably Burning Man virgins, who will be living in the lap of luxury and occasionally dropping in on your parties to ask for molly.

Per the Times piece:

“We used to have R.V.s and precooked meals,” said a man who attends Burning Man with a group of Silicon Valley entrepreneurs. (He asked not to be named so as not to jeopardize those relationships.) “Now, we have the craziest chefs in the world and people who build yurts for us that have beds and air-conditioning.” He added with a sense of amazement, “Yes, air-conditioning in the middle of the desert!”His camp includes about 100 people from the Valley and Hollywood start-ups, as well as several venture capital firms. And while dues for most non-tech camps run about $300 a person, he said his camp’s fees this year were $25,000 a person. A few people, mostly female models flown in from New York, get to go free, but when all is told, the weekend accommodations will collectively cost the partygoers over $2 million.

“Anyone who has been going to Burning Man for the last five years is now seeing things on a level of expense or flash that didn’t exist before,” said Brian Doherty, author of the book “This Is Burning Man.” “It does have this feeling that, ‘Oh, look, the rich people have moved into my neighborhood.’ It’s gentrifying.”

The blockaded camps of the tech gentrifiers have tended to be in the outer rings of Black Rock City, as was previously reported in 2011 when a guest of Elon Musk’s spoke to the Wall Street Journal. “We’re out of the thick of it,” he said, “so we’re not offending the more elaborate or involved set ups.”

But as Silicon Valley assumes more and more of a presence on the playa, what’s to stop them from claiming better and better real estate, closer to where the action is?

You won’t see any evidence of this on Facebook, though. All of this happens without the tech world’s usual passion for documentation, since they do abide by at least that one tenet of Burning Man culture that frowns on photography. And at least, as of 2014, they seem to understand that their displays of wealth aren’t all that welcome, and should probably be kept on the down-low.

But seriously? Models flown in from New York? Gross.

[NYT]

 

http://sfist.com/2014/08/21/not_content_to_ruin_just_san_franci.php

Israel’s Most Important Source of Capital: California

The New Gold Rush

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by DARWIN BOND-GRAHAM

 

Last Saturday between one and two thousand protesters marched on the Port of Oakland to blockade one of its busy marine terminals and prevent an Israeli ship from docking. After confronting a line of police guarding the waterfront the protesters declared victory; the Zim Lines vessel hovered offshore, afraid to dock, they said, and port workers wouldn’t be unloading its cargo.

One protester, looking beyond the line of police guarding the port, explained that the purpose of the action was to “impede the flow of capital.” Stopping one of Zim’s ships—the company’s vessels arrive in Oakland about four times a month, according to Zim’s web site—was a small, but real economic blow against Israel.

But if it’s a matter of stopping the flow of capital, the ports are a relatively small conduit of trade between California and Israel. For over 20 years California’s technology industry has been channeling billions of dollars to finance the growth of Israeli tech firms. In that time, tech has become a key sector for Israel’s economy. The flow of capital between California and Israel is digital, transmitted as currency and intellectual property. And this flow of capital occurs mostly through the decisions of a small number private equity firms and perhaps as few as a dozen large corporations. These flows of capital supporting Israel’s economy are less susceptible to social movement pressure.

The amount of support of for Israel’s economy originating from Silicon Valley’s private equity firms is especially large. In 2001, during the first year of the Second Intifada, Sequoia Capital Partners, a private equity company headquartered in Menlo Park, raised $150 million to invest in Israeli technology companies. This was Sequoia’s second Israel-focused venture capital fund. Last year Sequoia raised its fifth Israel-dedicated fund, totaling $215 million. Since 1999 Sequoia Capital has injected over $789 million into Israel’s software and electronics industries. Much of this money managed by Sequoia Capital was contributed by California investors, including major tax-exempt institutions like the J. Paul Getty Trust, and the Gordon and Betty Moore Foundation.

Accel Venture Partners, another one of the giants of Silicon Valley private equity, set up its first Israel-focused investment vehicle in 2001. Joseph Shoendorf of Accel told the Haaretz newspaper in 2007 that Accel has invested over $200 million in 20 Israeli companies. He added that many of Accel’s investments in Israel are not the run-of-the-mill consumer apps and gadgets that are so popular in the Bay Area’s tech scene. Although Israeli engineers produce plenty of that, Shoendorf said, “the world’s security situation is expected to get worse, and as a result, inventiveness will increase. The armies of the world are seeking solutions to a problem, and will encourage technological answers.”  Last March, Accel successfully raised $475 million for a fund that will burn a lot of its powder supporting Israeli tech companies.

You’re starting to get the picture. Billions flow from California’s Bay Area into Israel to support chip manufacturers, Internet startups, and telecommunications companies.

A lot of California’s venture capital has been exported to Israel to fund military and cybersecurity startups. Israeli society, constantly mobilized for a counter-insurgency war and occupation, creates an environment in which the nation’s hi-tech firms see their main role as contributing to the security of the Jewish state.

But the U.S. tech industry is also steeped in surveillance and weapons companies, and even the big consumer and enterprise brands like Google, Microsoft, and Cisco produce militarized software and hardware for use in the “homeland” and abroad. The contributions of Hewlett Packard in creating Israel’s biometric tracking system to control the movements of Palestinians is well known. Hewlett Packard also maintains the Israel Defense Ministry’s server farms, a job IBM previously held.  What makes the California-Israel economic connection powerful, however, isn’t so much the nature of the technologies being traded, and the capabilities they provide the Israeli state and military, but more so the sheer economic value of these transactions.

According to the Organization for Economic Cooperation and Development (OECD) Israel received $1.846 billion in direct investment from U.S. investors in 2012, the most recent year for which statistics are available. This is about two thirds of the total military aid the U.S. government provided Israel the same year.

U.S. investors have built up large positions in Israel’s economy, mostly through ownership of stock in Israeli corporations. In 2012 U.S. investors held a $19.7 billion stake in Israel’s economy, more than double the interest owned by all European countries combined. And corporations registered in the Cayman Islands, a tax shelter where thousands of American investors establish offshore funds, owned another $8.6 billion of Israel’s economy. For example, the Sequoia Capital Partners venture firm of Menlo Park raised $215 million last August to invest entirely in Israel. The legal place of incorporation for this fund? The Cayman Islands.

California investors own and manage stakes in Israeli companies like Mellanox Technologies, Ltd.. In 2002 Silicon Valley venture capital firms and several U.S. tech companies provided Mellanox with $64 million in funding. The American investors included three Menlo Park private equity firms, Sequoia Venture Partners, U.S. Venture Partners, and Bessemer Venture Partners, as well as technology giants IBM and Intel. Using this capital, Mellanox, headquartered in Yokneam, Israel, grew from a small company into a transnational technology giant valued today at $1.8 billion. It’s a key supplier of hardware to Hewlett Packard, IBM, and Intel. It’s main office in Yokneam looks like any other tech campus you can see in San Mateo County off the 101 Highway with gleaming glass mid-rise buildings tucked among trees and grass.

Yokneam is in the heart of Israel’s Silicon Wadi (“wadi” being a dry stream bed in Arabic, meaning “valley” in colloquial Hebrew). Prior to 1948 Yokneam was called Qira, the site of a Palestinian village and farms, but the area was “depopulated” and occupied by Israeli forces, and later settled and transformed into one of Israel’s most affluent cities.

Lots of Silicon Valley venture capital firms have set up offices in Israel. The location of choice for California investors seems to be Herzliya Pituach, a posh ocean side district of the city of Herliya. North of Tel Aviv, Herzliya is named after Theodor Herzl, considered by many to be the intellectual father of Zionism. The Herzliya Pituach is one of the wealthiest spots in all of Israel, home to many of the nation’s elite families. Bessemer Venture Partners’ Israel office is located just a few blocks from the Marinali Marina yacht harbor, and a short drive from million dollar beachfront homes. Sequoia Venture Partners maintain an office on Ramat Yam in one of the high rise towers with views of the azure Mediterranean Sea.

The business links between Silicon Valley and Israel aren’t apolitical. Many of California’s venture capital investors and technology executives are staunch supporters of pro-Israel causes. They have established numerous nonprofit organizations to strengthen economic and political ties between California and Israel.

The California-Israel Chamber of Commerce, located in Sunnyvale in an office park filled with software firms, is funded by Silicon Valley investors, corporations and law firms including Intel, Paypal, Silicon Valley Bank, and Morrison Foerster. Executives from these companies sit on the Chamber’s board of directors. Their ties to pro-Israel political groups are numerous.

Zvi Alon, a director of the California-Israel Chamber, runs a family foundation out of his Los Altos Hills home. Alongside a donation of $9,900 in 2011 to the California-Israel Chamber, Alon also made donations worth $36,000 to the Friends of Israeli Defense Forces. Alon is also credited as being a founder of Israel21C, an “online news magazine offering the single most diverse and reliable source of news and information about 21st century Israel to be found anywhere.”

Operating out of offices on Montgomery Street in downtown San Francisco, across the Street from Israel’s consulate, Israel21C produces media promoting Israel’s technology companies. Recent articles published by the group include “20 top tech inventions born of conflict,” and a profile of the “maverick thinker” behind the creation of Israel’s Iron Dome missile defense system. A recent film produced by the organization promotes Tel Aviv as a startup epicenter similar to San Francisco.

The General Consul of Israel in San Francisco, Andy David, is a board member of the California-Israel Chamber, as is the president of Silicon Valley Bank.

Nir Merry, another board member of the California-Israel Chamber, was born and partly raised in Israel in the Ma’agan Michael kibbutz. His father worked in a hidden underground ammunition factory making armaments used by Jewish commandoes in the battles that created the state of Israel. In a talk to students at the University of California, Santa Barabara, Merry elaborated on the links between Israel’s technology companies and its military.

“I volunteered to become a commando. It’s quite related to the topic of innovation,” said Merry. “Because to be a commando we have to be very innovative.”

Silicon Valley’s financial and technological assistance to Israel is by no means only a private sector effort. In March of 2014 Governor Jerry Brown signed a memorandum of understanding with Israeli Prime Minister Benjamin Netanyahu promising to promote economic links between California and Israel. The setting for the signing ceremony, Mountain View’s Computer History Museum, underscored the centrality of the tech industry in the agreement.

On the same trip Netanyahu visited Apple’s Cupertino headquarters where he was ushered into the executive board room for a chat with the company’s leaders. He also toured Stanford University.

Netanyahu’s California appearance was designed to beat back the Palestinian solidarity movement’s boycott, divest and sanction campaigners who, in recent years, have increased pressure on California’s universities and other public institutions to divest from companies that do business with Israel. During the signing ceremony for the MOU that would give Israeli companies access to California’s technology infrastructure, Netanyahu thanked Governor Brown for California’s divestment from Iran. In 2012, California virtually barred insurance companies from owning Iranian assets. Earlier the state passed legislation requiring its pension funds to divest from Iranian companies. As a result of these laws, the state’s teachers retirement fund CalSTRS even consults with the American Israel Public Affairs Committee regarding its investments.

Netanyahu also thanked Brown for the economic benefits that California’s giant public employee pension funds, CalPERS and CalSTRS, provide to Israel. Both are major investors in Israel’s economy.

The California-Israel MOU originated from California assembly member Bob Blumenfield’s office. Blumenfield, the sponsor and author of several Iran sanctions bills, is now a city council member in Los Angeles. Blumenfield is a staunch ally of Israel, and has used his political offices, from Sacramento to the state’s largest city, to strike back against the boycott, divest, sanction movement aimed against the Israeli military occupation of Palestine. Most recently Blumenfield organized LA’s top elected officials, including mayor Eric Garcetti, to make a public statement in support of Israel.

“We stand with Israel against a Hamas regime that terrorizes Israelis from the skies and now, from beneath the ground,” Blumenfield told the public.

Mayor Garcetti called Israel “our strongest ally in a tumultuous region.”

Palestinian solidarity activists inside Israel’s biggest economic and military partner, the United States, and inside one of its biggest investors, California, have struggled for years to build a boycott, divest and sanction movement. They’ve asked pension funds and universities to divest from companies that do business with the state of Israel, and they’ve asked academics and musicians to boycott Israel by canceling concerts and shunning conferences. They’ve had some success, but as California’s continuing links to Israel show, their task is a difficult one.

Their struggle will continue long after Zim’s ship pulls anchor and leaves Oakland’s harbor. Supporters of Israel will be working to strengthen California’s ties to their cause and prevent any economic protest movement from gaining traction. This coming October the California-Israel Chamber of Commerce will be hosting an international business summit at the Microsoft Campus in Mountain View where innovation and investment will be among the topics of discussion. And between now and then another six to eight Israeli vessels will probably also moor along Oakland’s waterfront trading millions in goods.

Darwin Bond-Graham is a sociologist and investigative journalist. He is a contributing editor to Counterpunch. His writing appears in the East Bay Express, Village Voice, LA Weekly and other newspapers. He blogs about the political economy of California at http://darwinbondgraham.wordpress.com/

 

 

http://www.counterpunch.org/2014/08/20/israels-most-important-source-of-capital-california/