Our Man in Nirvana

Overthrow: America's Century of Regime Change

Last week I attended a talk by Stephen Kinzer, former foreign correspondent for the New York Times and recent author of Overthrow: America's Century of Regime Change at the World Affairs Council.  It's taken me a few days to write about because it unleashed a torrent of thoughts and questions.

His premise for the book is that President Bush's decision to go to war in Iraq for the purpose of regime change was, rather than a strategic departure from normal US government foreign policy, merely a continuation of "business as usual".  He went on to cite 14 instances over the past century when the US government either overtly or covertly replaced (or attempted to replace) the existing ruler or government.  Much of this history was not new to me given my reading of Colossus: The Rise and Fall of the American Empire.  However, Mr Kinzer drew three main conclusions from these 14 regime changes which were new to me. 

First, they were all driven initially by business interests, which ultimately became cloaked in government interests.  Second, other countries have much longer collective memories than the US government and citizens.  Third, America wanted to install leaders who were sympathetic to the US and popular with their populace, but by definition this was almost always mutually exclusive so the US installed tyrants rather than promoted democracy.  Thus, the long term effects of installing unpopular tyrants ultimately led to governments even more hostile to US interests.

The story behind the regime change in Iran was particularly enlightening.  In 1953, Prime Minsiter Mossadegh, head of a democratic government, was removed from power in a plot orchestrated by British and U.S.intelligence agencies to protect their oil interests.  The operation was conducted following the Prime Minister's temerity to re-nationalize the Anglo-Iranian Oil company. The US and UK reinstated the Iranian monarchy, handing power back to the Shah whose rule became increasingly dictatorial and with strong support from the US and the UK crushed the opposition Shia clergy.  This resulted in Ayatollah Khomeini gaining tremendous popularity among the Iranian people which led to the Iranian revolution in 1979 and ultimately the current escalation of the nuclear crisis.

So given this history, imagine how hollow the exhortations that "freedom is on the march" from the US government sound to the people of Iran.  Rather depressingly, this evokes the President Truman quote "There is nothing new in the world except the history you do not know."

One final footnote.  Mr Kinzer deliberately does not address the regime changes of Germany and Japan which were not driven by economic interests and were truly far sighted and impressive acts of nation building.  I understand why he did this as he wanted to limit himself to acts of intervention where the US acted unilaterally without a broad coalition.  However, if we want to avoid falling foul of Truman's observation we should study both forms of intervention.

Gary Hart - more than a scandal hit former Presidential candidate and 9/11 prophet

Yesterday my wife and I discovered a wonderful local resource after almost 2 years of living in the neighborhood.  The local independent bookstore Booksmith hosts readings and book signing events and yesterday's guest was former Senator Gary Hart promoting his new book "God and Caesar: An Essay on Religion and Politics".

Before the talk I only knew two things about Gary Hart.  First, he had been a Democratic Presidential candidate in the running to win his party's nomination in 1988 before press allegations of an extra marital affair fueled by a memorable photo of him cavorting with Donna Rice on a boat euphemistically called "Monkey Business".  Second, he had co-chaired bipartisan National Commission on Terrorism which issued several findings calling for broad changes to security policy, but many were not heeded until 9/11.

During his talk I learned two new things about Gary Hart.  First, he had a very strict religious upbringing in the Church of the Nazarene (they split off from the Methodists for being too liberal) and later graduated from the Yale Divinity School, so he is a man of some religious knowledge.  Second, he is passionate about reigniting the Democratic party because the fundamental Protestant church has taken over the political machinery of the Republican party and he believes democracy is under threat from theocracy today.

He made a number of points which resonated with me

- Is not the threat of theocracy very real when Karl Rove calls church leaders to ask for their approval of  Supreme Court nominee?

- Republicans have very successfully become the party of "faith and values", but he encouraged all thinking citizens to examine "what faith" and "what values" these truly are and whether they match with their own.

- For Democrats to become a viable alternative to the Republicans, they first have to build credibility in foreign policy and defense.  All other issues are secondary.

- The real reason the Bush administration went to war in Iraq was the need to establish a military base in the Middle East and be able to project power throughout the region.

- The four outstanding presidents of the 20th century each focused on key principle: FDR - "as a country we are all in this together"; Truman "we need to be part of the global community and build alliances and institutions for the betterment of all"; JFK "we are a republic where the duty is on the citizen not the country" ;and LBJ " social justice for all".  He believes these four principles can the rallying cry for the Democratic party to rebuild their identity.

We bought the book and I look forward to the essays.

Rate of Innovation Part II

As a child I was a keen chess player but I have not played regularly for over 20 years.  That has changed recently with technology giving me two new ways to play and practice.  First, I have bought a chess computer game on my Sidekick II.  I can now play a game in 5 minutes against a computer during idle times such as waiting for MUNI.  Second, Auren Hoffman invited me to play online at Red Hot Pawn where you can play multiple asynchronous games against other people over the web.  I am still playing my first game with Auren which started on February 19th.  I must admit I am finding the lack of rhythm a challenge with a game spread out over several weeks but it's good to be playing a human being rather than a computer

Speaking of human beings vs computers, as I have been laid up in bed for a couple of days trying to shake off a virus, so in between sleeping and drinking lots of water I took the opportunity to watch the DVD Game Over about Gary Kasparov's chess match against IBM's Deep Blue in 1997.  The premise of the documentary is intriguing - IBM cheated to beat Kasparov to bolster their flagging image - but the execution and evidence presented is circumstantial and hearsay at best.  Putting aside the premise and just examining the trends - Kasparov beats computer in 1996, Kasparov loses to computer in 1997, Kasparov draws to computer in 2003 - the seemingly slower rate (backwards?) of innovation is in marked contrast to that shown in the DARPA Grand Challenge.  Why is this?

The reason that first comes to mind is that the tasks differ in their complexity.  My gut instinct is that the task of getting a car to autonomously drive from A to B on a known course is less complex than defeating the world's greatest chess player with more playing permutations than there are atoms in the universe.  However, upon further reflection it's not clear that the number of known permutations is the best measure of complexity.  The number of chess permutations is enormous (10 to the power of 120) but there is no element of randomness, unlike the DARPA Grand Challenge where the cars have to deal with other cars, weather conditions, changing gradients, etc.

I shall noodle on this some more, but it's a cautionary tale on extrapolating from just a few data points to a wider conclusion.

Rate of Innovation

This past week I attended the 4th Annual MediaX Conference at Stanford.  MediaX is the organization that strives to connect industry with the interdisciplinary research on interactive media going on at Stanford in 18 different schools and research centers.

There were many interesting ideas on show during the day and a half event, but  the presentation that stood out was by Computer Science Professor Sebastian Thrun when he told the story of Stanford's participation and victory in the 2005 DARPA Grand Challenge.  In 2004, DARPA (ie the US military) had set a challenge for an autonomously driven car (ie no human driver either within the car or by remote control) to complete a 100 mile course across the dessert.  The participants would be given GPS coordinates 2 hours before the race to input into their systems after which they would have no direct control over the vehicle.

In 2004, the best performing car completed 5% of the course.  In 2005, 5 teams completed the entire course.  So in one year performance was improved by 20X (not the boring 2x we are used to under Moore's Law) and this was achieved by a group of undergraduates!  That's a sobering thought when we are trying to extrapolate from now to the future.  Even more impressively, Professor Thrun has set his team the challenge of successfully having an autonomously driven car from downtown San Francisco to downtown Los Angeles by October 7th, 2007.

Bush Almost Made Me Crash My Car

A few weeks ago at a debate on Nuclear Power at the Long Now Foundation, I had posed the question that "did not France's support for nuclear power make it a political non-start for the Bush administration, regardless of its economic or social merits?".

So imagine my surprise when driving along listening to NPR I hear President Bush extolling the virtues of nuclear power and hailing the French as an example to follow!  As I had watched "The Manchurian Candidate" on DVD the night before, this seemed like too much of a coincidence...

Moving On

After almost 6 years with Mobius Venture Capital, the time has come for me to move on to my next challenge.  It is with mixed emotions, saddened as I leave behind some very strong relationships within both Mobius and my portfolio companies forged in the crucible of great change, while at the same time energized by the opportunities that lie ahead for me.

When I joined Mobius back in 2000, no one could articulate to me what I would actually be doing (reading business plans?) but I joined because Gary Rieschel seemed like he would be a great mentor.  It was supposed to be a two year gig before spinning out and doing a "real" job.  After my two years were up I was fortunate enough to be promoted to Principal and given the opportunity by the partnership to source and manage my own investments.  Three and a half years, four investments (Atreus, Clarus, Sendia, Visage) and $35M paid in capital later I have learned a great deal and have a renewed respect for the entrepreneurs who take the leap of faith to start something new and strike out for unchartered territory.

So what's next for me?  The short answer is that I am definitely staying within the world of innovation.  Right now it's  a question of looking at a number of options and evaluating where my skills, experience and perspectives best fit.  It's an exciting time for value creation with Web 2.0 reducing the cost of launching a business, the emergence of MVNOs unleashing some creativity into mobile applications, and a generation of users who have grown up on the Internet and continue to experiment and integrate its use into daily life.

So for now let me say a big "thank you" to the team at Mobius.  I couldn't have wished for a more supportive and passionate group to launch me on my venture career.

China: Forcing the World to Rethink its Economic Future

Monday night saw Rachel and I attending our second World Affairs Council talk this year.  After the auspicious beginning with Lord Patten's talk, our hopes were high.  We were not disappointed.  The speaker was Lester Brown who is most famous for founding the Earth Policy Institute, an organization whose mission is to educate the public on the Earth's global health.  For example, here is their chart on global warming.

Lester was there primarily to promote his latest book Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble.  His speech in classic style had three main parts.  First, he shared the analysis of why China was forcing us to understand the impact of our unsustainable fossil fuel, throw away economy much sooner given their rate of growth.  For example, within 25 years China will reach the same level of GDP per capita as the US.  If they follow the same trend of having 3 cars for every 4 people, then that will equate to 1.1 billion cars.  The total number of cars in the world today is 800 million.  Second, he talked about some of the rays of hope both in terms of government attitudes and activities within renewable energy.  For example, he praised the China government when after a major flood back in 1998 they went and analyzed the value of a tree left standing compared to a tree cut down and concluded that it was worth 3x more left standing than cut down.  He also talked about the potential for wind energy and Goldman Sachs investment in Horizon who would shortly be delivering 5000 Megawatts or the equivalent of 17 average coal fired power plants.  Finally, he talked about the three elements of his "Earth get well" plan: restructuring the economy so markets tell the ecological truth; reducing poverty and stabilizing populations; and earth restoration.  In aggregate this plan would cost some $161 BN annually which is about one third of the US military.

Serious food for thought...

Big day for Visage

The Superbowl wasn't just a big day for the Steelers.  It was also a very big milestone for Visage Mobile, one of my investments and a group with whom I am immensely proud to have been associated during its formative years.  Mobius led Visage's Series A round back in late 2002, so we have had a front row seat on the emergence of the MVNO market in the US for the past 3 and 1/2 years.

So what was the milestone?  It was the nationwide launch of the ESPN post paid service with an ad during the Superbowl.  For those that missed it, click over to the Mobile ESPN site and in the center bottom section titled "Sports Heaven Unveiled" click on the "Check out the commercial now" link.  ESPN are placing a big bet that they can offer a truly differentiated experience to the sports fan wanting a more absorbing data experience than is currently available from Verizon and Cingular.  They have inverted the carrier-content provider and taken control of the user experience in terms of handset selection, user experience and pricing.  Visage are providing the flexible back office operational support that enables this customized front end experience.

Why is this important?  I addressed this issue when I presented alongside Manish Jha, General Manager of Mobile ESPN at the MVNO Strategies and Market event hosted by Informa in New York back in September last year.  My central thesis was that MVNOs are not a fuzzy marketing concept, but one that speaks to the fundamental economic realities of the wireless market and as such will have a profound effect on the entire industry.  If you want to work through the full argument, here is the presentation. Download understanding_mvnos_in_the_mobile_value_chain.pdf

Now if only Mobile ESPN could provide me with rugby and cricket results...

Cousins & Strangers: America, Britain and Europe in the New Century

When my wife pointed out that Lord Patten was coming to town to promote his new book Cousins & Strangers, it was time to part with $125 for an annual household membership to the World Affairs Council who were hosting Lord Patten.  After all this was the man who had held, not one, but three of the toughest political jobs over the past decade.  First, he had been the last Governor of Hong Kong presiding over the handover of a liberal state to a communist government.  Second, he oversaw the reconstruction of the Irish Police Force following the entry of the IRA/Sinn Fein into the political process.  Third, he was European Commissioner for Foreign Affairs during a time of membership expansion and sharp disagreement, both internally and externally, over the invasion of Iraq. 

But it wasn't just his wealth of experience that attracted us, but his chosen subject matter too.  He was speaking on the history and future of the transatlantic relationship between America, Britain and Europe.  His central thesis is that America and Europe has greatly benefited from the world order America created after WW2 through a rules based approach and a believe in markets and democracy enacted through vehicles such as the Marshall Plan, IMF and United Nations, and that for both to prosper in the future they both need to return to this balance and work as partners not as competitors.  As an optimist he hopes that the current administration's unilateral tendencies are a mere blip, and that America will return to their previous role of gracious leadership.

Lord Patten's wit and eloquence made the 90 minutes fly by.  One piece of rhetorical magic sticks in the mind when he juxtaposed the mighty political impact made by Pope John Paul II in helping to bring down communism, with the feeble social impact made by Pope John Paul II as the fertility rates in all the predominantly Catholic countries were on the decline, for dramatic impact.

I look forward to downloading the podcast and reading the book.

Google Books: Do No Evil

I attended my second Commonwealth Club event this year on Wednesday for a discussion on the impact of Google Books on the future of the publishing industry.  The five participants were Google lawyer, author, Internet archivist (working with libraries and universities in the Open Content Alliance), IP lawyer, and independent bookstore owner.  So the only stakeholders missing from the debate were i) consumers (but we were in the audience) and ii) publishers.

I was particularly looking forward to the debate because it encompassed both mundane/ everyday issues (how will this impact and how and where I buy/read books?) and esoteric societal issues (what does this mean for knowledge creation and the maintenance of diversity in books?)

The first part of the debate was focused on the "what", getting to what Google Books actually does.  Cutting through the lawyer speak and the media confusion, the essential point is that Google Books attempts to put the contents of books online and therefore make them discoverable, but not to sell them online.  They do this by scanning the books, then presenting the thumbnail and snippet, and links to retailers (predominantly Amazon).  .  This has led to lawsuits from copyright holders claiming massive copyright infringement at the expense of the rights of individual writers.  Hardly surprising given Google's cash hoard.

The second part of the debate was focused on the "so what", assessing the impact of Google Books on the other players in the industry. There has been a great deal of concern that Google Books would put books online and therefore deprive publishers, authors and retailers of their revenues.  The two most interesting comments were from the author and the bookstore owner.  The author was actually hopeful that Google would ultimately, if not immediately, benefit him because it would connect new potential readers to his otherwise hard to find.  For example, his dearly beloved book on the great African American pitcher Leroy "Satchel" Page would now be discoverable, even if it went out of print.  He could also envision one day selling his books directly over the web and bypassing the publishers, although he believes he would need to make more money from appearances given the inevitable losses from copying.  The bookseller was more pessimistic and made the point that the nature of the books produced is inextricably connected to the nature of the distribution.  If Safeway stopped selling books, then the formulaic romance and thriller novels would disappear; if independent local bookstores disappeared, then edgy, vibrant, innovative books would disappear.  He laid claim to being the canary in the coalmine.

The Google lawyer concluded by saying that Google loves authors, publishers and booksellers and their only goal is to make books more accessible to a wider audience.  I would be a little more convinced  by his argument if Google Books was linked to Google Local, thus encouraging potential readers to find books at their local bookstore, rather than primarily directing them to Amazon.  But then again Google make less money on Google Local...

Another $18 well spent.  Maybe it's time to become a member of the Commonwealth Club.