Venture Cap Reading

Here’s a witty read from Bessemer Venture Partners, speaking to the woulda should coulda in all of us. Some highlights:

“Bessemer Venture Partners is perhaps the nation’s oldest venture capital firm, carrying on an unbroken practice of venture capital investing that stretches back to 1911. This long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up.

eBay
“Stamps? Coins? Comic books? You’ve GOT to be kidding,” thought Cowan. “No-brainer pass.”

Federal Express
Incredibly, BVP passed on Federal Express seven times.

Google
Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?””

Social Capital and Katrina

Low social capital in Louisiana in general and New Orleans in particular had a lot to do with the poor preparation, poor planning, poor response, poor law-enforcement and overall poor performance in response to Katrina. It is not so much “America’s shame”, as the Europeans so gloatingly claim as it is Louisiana’s historical baggage. However bad FEMA may have performed, the local first-responders performance was rotten, and the Feds did not even have local channels of authority to support and work with. Peter St. Andre had a good post on the Anglosphere blog, linking to an excellent piece entitled Social Capital: De Tocqueville, Putnam, and the Future of New Orleans by Stowe Boyd — a person I had not previously heard of, but whom I will pay attention to in the future. He has a lengthy quote from Robert Putnam’s Bowling Alone, which add more detail to the extreme, pathological lack of social capital in Louisiana, which Michael Barone referred to here, and which I discussed here.

Stowe Boyd offers this un-PC thought:

Just as any sensible military commander knows that morale is just as important as weaponry, our leaders need to move beyond a superficial and potentially catastrophic attitude about social capital. People in different parts of the country may respond radically differently to similar sorts of emergencies, based on social trust, affiliation, and other factors. And I am explicitly not singling out the poor or Blacks; the region as a whole is the question.

As we turn our thoughts to rebuilding the fallen buildings, removing the debris, and burying our dead, it will be insufficient to only look to the physical infrastructure necessary to make a city alive. We have a much larger and potentially longer-term project ahead of us: to increase social capital in a region that has been starved for centuries.

I suspect that no one in political authority will have the courage to refer to the existence of these factors. Even though Mr. Boyd’s disclaims that he is not singling out the poor and Blacks, any attempt to refer to a deficiency of social capital would be decried as “blaming the victim”. The question of how you go about “increasing social capital” is an interesting and important one, and I haven’t read Putnam, so I don’t know what he has to say about it. I suspect that the Government cannot do much to increase social capital. People need to do it themselves, but if they lack social capital they won’t do it, and that is a chicken-and-the-egg problem. No one ever said centuries-old patterns can be changed easily, if at all.

Update: Note also this very thoughtful post by Mr. Boyd about decentralized responses to disaster, which is very consistent with the Aaron Wildavsky quote in my previous post. He calls for a “stupid network” that will be disaster-proof. Worth reading.

Aaron Wildavsky on Resilience

We see a lot of people talking about the inadequacy of planning prior to Katrina. Whatever merits this critique may have, it is not possible to foresee everything and to plan for everything. So, what is it that mitigates disaster? Resilience:

A strategy of resilience … requires reliance on experience with adverse consequences once they occur in order to develop a capacity to learn from the harm and bounce back. Resilience, therefore, requires the accumulation of large amounts of generalizable resources, such as organizational capacity, knowledge, wealth, energy, and communication, that can be used to craft solutions to problems that the people involved did not know would occur. Thus, a strategy of resilience requires much less predictive capacity but much more growth, not only in wealth but also in knowledge. Hence it is not surprising that systems, like capitalism, based on incessant and decentralized trial and error accumulate the most resources. Strong evidence from around the world demonstrates that such societies are richer and produce healthier people and a more vibrant natural environment.

(From here.)

The Architecture of Repression

Instapundit cites to an article by Dave Kopel which describes how U.S. technology companies are assisting the Chinese Government to oppress its people and crush free speech.

Too often libertarians defend this collaboration with tyranny because they apparently believe either that (1) private businesses should be allowed to do anything which is profitable, or (2) technology is per se liberating and that the Chinese government’s attempt to be repressive will inevitably be futile. The first is a moral judgment I disagree with, the second is a prediction based on historical evidence which I also disagree with.

Neither of these rationales can justify American firms creating and installing for a profit what Kopel accurately calls the “architecture of repression.”

If Ma Bell had installed phones in Russia during the Cold War, and in the process helped the KGB wiretap the Russian people to round up dissidents, there would have been howls of anger. What is happening now is no different.

China today is not as bad as the USSR was, and we do not want or need a new Cold War against China. But when the Chinese government behaves oppressively Americans should not make excuses for it, or worse, profit from it. They should complain about it, loudly and publicly. If this embarrasses the Chinese government, good. When someone does reprehensible things, public disgrace may be a way to stop or limit the conduct. If this means that the Chinese will retailiate in some way, so be it.

Assisting the Chinese Government to create a state-of-the-art tyranny does not hasten the day when China will be a “normal” country which allows basic human rights like free political speech. Establishing principles and insisting that they be met will work much better.

Why this is not provoking more outrage is an interesting question. Business-minded Republicans don’t want to do anything which will risk trade with China. Why liberals say little about such bad behavior is less obvious. Possibly it is simply that opposing China in any way is a position which is associated with the hawkish wing of the GOP and with the religious right, so by a process akin to magnetic repulsion, liberals cannot bring themselves to protest human rights abuses in China too often or too loudly, since to do so they would be have to be seen agreeing with people they hate.

Nonetheless, I hope we will see more activism to publicize, protest and punish this disgraceful conduct by private businesses as vendors to tyrants.

(We had a good argument in the comments to this post on this very issue.)