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Westlake Legal Group > Posts tagged "Silicon Valley (Calif)"

The Hot New Thing in Clubby Silicon Valley? An App Called Clubhouse

SAN FRANCISCO — Marc Andreessen, a Silicon Valley investor, published a rallying cry last month that quickly ricocheted around the tech industry. In it, he placed the blame for America’s dismal response to the coronavirus on “smug complacency, this satisfaction with the status quo and the unwillingness to build.”

He proposed a solution that fit squarely into Silicon Valley’s ethos of ingenuity. It was time to build things, he said, like universities, hospitals, skyscrapers, zero-emission nuclear reactors, delivery drones, hyperloops and even Elon Musk’s “alien dreadnoughts.”

“Building is how we reboot the American dream,” Mr. Andreessen wrote in his post, which he titled “Time to Build.”

It was an inspirational call to arms. But one of the first things Mr. Andreessen and other Silicon Valley venture capitalists have since rushed to help build was something else entirely: an app called Clubhouse.

Clubhouse is a social media app where venture capitalists have gathered to mingle with one another while they are quarantined in their homes. The app is, for now, invite-only, and buzzy: Seemingly everyone who has been allowed to join the early test version, from celebrities like MC Hammer to activists like DeRay Mckesson, has tweeted about it. And it has recently been one of the hottest deals on Sand Hill Road, Silicon Valley’s venture capital nexus.

Last week, Mr. Andreessen’s venture firm, Andreessen Horowitz, won the deal to invest in Clubhouse. Andreessen Horowitz agreed to put in $10 million, plus pay $2 million to buy shares from Clubhouse’s existing shareholders, said a person with knowledge of the funding, who declined to be named because the details were confidential.

The financing valued Clubhouse, which started this year and has two employees, at nearly $100 million. The deal was reported earlier by Forbes.

Andrew Chen, a partner at Andreessen Horowitz, said on Twitter that he interpreted Mr. Andreessen’s “Time to Build” as building more of everything, including “new gaming cos, social apps, fitness and more!”

The rush to invest in Clubhouse reflects the way Silicon Valley works. While cutting-edge technology and a change-the-world mission are paramount, much of the big money in recent decades has ultimately been made from addictive social media apps. So when it comes to building new things, Silicon Valley often turns to what it knows — and that is more social networks.

Jeremy Liew, an investor at Lightspeed Venture Partners, said his firm, along with “most of Silicon Valley,” had spoken to the founders of Clubhouse in recent weeks. The app “got some early traction with V.C.s and entrepreneurs, and no doubt that is why some firms leaned in,” he said, adding that Lightspeed did not pursue an investment. “They generalized from their own positive experiences.”

Andreessen Horowitz declined to comment on Mr. Andreessen’s essay and any connection to the Clubhouse investment. Mr. Andreessen, Mr. Chen and their partner, Ben Horowitz, have been frequent faces in the app. Last week, Mr. Horowitz answered questions from Clubhouse’s users about his barbecue techniques and favorite dining spots, adding how impressed he was with what the app’s founders had built.

ImageWestlake Legal Group merlin_55025698_4795bc99-1410-428a-bc48-d3df43563626-articleLarge The Hot New Thing in Clubby Silicon Valley? An App Called Clubhouse Venture Capital Start-ups Social Media Silicon Valley (Calif) Quarantines Mobile Applications Entrepreneurship Davison, Paul (Entrepreneur) Coronavirus (2019-nCoV) Computers and the Internet Clubhouse (Mobile App) Andreessen, Marc L Andreessen Horowitz
Credit…Peter DaSilva for The New York Times

Paul Davison, who founded Clubhouse with Rohan Seth, a former Google engineer, declined to comment. Mr. Davison is a well-known Silicon Valley entrepreneur, having made the social media app Highlight in 2012. That app, which allowed people to share their location with others to create serendipitous in-person connections, shut down in 2016.

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With just a few thousand people using Clubhouse as part of an early test, the app is far from a hit and has not been publicly released. But many of those who have it are already addicted. One woman recently discussed spending more than 40 hours a week on it; others have tweeted similar statistics.

Clubhouse works by letting people join pop-up audio chat rooms that disappear when they end. Once in the rooms, users are segmented into tiers determined by moderators. Users can join any chat room, see who is speaking or listening, click into a profile page and follow others.

Some said Clubhouse had brought back the spontaneity of real-life interactions, which vanished with the coronavirus. Gillian Morris, founder of Hitlist, a flight booking app, said logging in to the app felt like bumping into people and striking up a conversation at a coffee shop.

“It’s like walking into a party where you know people are ready to mingle,” said Sonia Baschez, 33, a digital marketing consultant in San Francisco who was invited to use Clubhouse.

Since joining the app a week and a half ago, Ms. Baschez said, she has spent three to five hours a day on it. “Sure, you could be talking to people on the phone, but that just seems so weird,” she said. “You’re not forced to be part of the conversation the entire time on Clubhouse. You can just listen to other people talking about interesting subjects and jump in when you want.”

Last weekend, the author Shaka Senghor and Mr. Mckesson, the activist, each spent hours on the app discussing prison reform, police brutality and other topics related to their interests. A former FBI hostage negotiator, Chris Voss, recently held an open Q. and A. on Clubhouse. Jared Leto and Ashton Kutcher are users; Kevin Hart also showed up one time.

Leo Polovets, an investor at Susa Ventures, a venture capital firm, said Clubhouse sometimes felt like a tech conference, with discussions on tech-related topics and appearances from prominent techies. “It’s almost like a podcast with audience participation,” he said.

That’s during the day. After hours, Clubhouse is more like a rowdy dive bar. At around 10 nearly every night, 30 to 50 people form a room on the app where everyone is a host, moderator privileges are given freely, microphones are mostly unmuted and users swap their profile pictures in real time to memes and images related to the conversation.

They call themselves the “Back of the Bus.” Ryan Dawidjan, 28, an account executive at a tech company, holds court and ensures everyone in the room follows the rules: no boring tech talk and no talking about Clubhouse. He playfully boots people from host roles for violating these sacred terms.

The format of “Back of the Bus” is fluid. Sometimes there is a tarot card reader critiquing a member’s Instagram account; sometimes it is a dating advice show; sometimes bored people sound off about anything that pops into their mind.

Clubhouse has already minted its first influencer: Sheel Mohnot, 38, founder of Better Tomorrow Ventures, another venture firm. Mr. Mohnot, a staple in “Back of the Bus,” has been a contestant on the Zoom Bachelorette, a pop-up online dating event for which fans hosted a live discussion party on Clubhouse. After connecting through the app with Scooter Braun, an entrepreneur and record executive, Mr. Mohnot was featured in a recent Justin Bieber and Ariana Grande music video.

Clubhouse is “like a mystery box every night,” Mr. Dawidjan said. “You don’t know what you’re going to get, but it’s always good.”

Credit…David Paul Morris/Bloomberg

Alex Taub, 32, a co-founder of Upstream, a professional networking platform, who is on the app, said, “You don’t want to leave Clubhouse because you feel like when you leave, something crazy is going to happen.”

All of that has whetted the appetite of venture capitalists. Apart from the Andreessen Horowitz investors, others from top Silicon Valley firms like Benchmark and Greylock Partners are also in the app. Many have offered product feedback in Clubhouse and declared that it was the future of audio. Some have wrangled celebrity connections to try it.

Yet even before Clubhouse launches, it has encountered issues that larger social media companies struggle with. On Sunday, the entrepreneur Sriram Krishnan changed his name on the app to Tim Cook, Apple’s chief executive, as a prank. More than 100 people immediately joined the room.

Clubhouse also faces competition. Over the weekend, an app that mimics the Clubhouse interface called Watercooler was released. It even used a photo of Mr. Davison in its promotional images.

Erin Griffith reported from San Francisco, and Taylor Lorenz from New York.

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Silicon Valley Leaders’ Plea to Democrats: Anyone but Sanders

Westlake Legal Group merlin_169866258_27a3c984-3da4-42f3-9116-ccf97aa39e87-facebookJumbo Silicon Valley Leaders’ Plea to Democrats: Anyone but Sanders Venture Capital United States Politics and Government Silicon Valley (Calif) Sanders, Bernard Primaries and Caucuses Presidential Elections (US) Presidential Election of 2020 Computers and the Internet Alphabet Inc

SAN FRANCISCO — The Silicon Valley venture capitalist Keith Rabois, onstage in January at a tech conference, said his first choice for president was a Democrat, Pete Buttigieg.

And, sure, it would be a close call for Joseph R. Biden Jr. over President Trump. But Bernie Sanders?

At that, Mr. Rabois, who has been a top executive at or invested in LinkedIn, Square, Yelp and PayPal, balked. Speaking to the crowd, he drew the line at democratic socialism. (Mr. Buttigieg ended his campaign on Sunday night.)

“I would certainly vote for Trump over Sanders,” Mr. Rabois declared.

When it comes to the 2020 Democratic primaries, with California poised to allocate hundreds of delegates this week on Super Tuesday, many tech leaders in Silicon Valley have a plea: Anyone but Sanders.

From venture capitalists to chief executives, the tech elite are favoring moderates like Mr. Buttigieg and Michael R. Bloomberg. And with Mr. Sanders, the independent senator from Vermont, leading the field in California and looking like the front-runner for the nomination, the tone among the leadership is growing more urgent. Few tech executives want to end up stuck choosing between Mr. Sanders and Mr. Trump. Meanwhile, tech company workers are gathering en masse for Mr. Sanders.

While Silicon Valley has long leaned blue, the chasm between centrist Democrats and an animated left wing has created uncertainty. And now two other things are happening. California Republicans see an opportunity. And a new moderate party in the state — the Common Sense Party — is rising.

“I’m trying to balance what socialism means versus four more years of Trump, and honestly it feels like which is the worse of two evils?” said Venky Ganesan, a partner at the venture capital firm Menlo Ventures, whose disaffection with the presidential field has led him toward the Common Sense Party.

He said the vast majority of his venture capital industry colleagues had the same dilemma. “Eighty percent are thinking the same thing, but many do not speak out,” Mr. Ganesan said.

It is not a huge surprise that the big winners of the tech boom would be wary of Mr. Sanders and his rival Elizabeth Warren, the senator from Massachusetts, who have both taunted Silicon Valley’s elite. But the technorati are training their animus on Mr. Sanders as he has surged in the early states that have voted.

Mr. Sanders has said broadly that “billionaires should not exist” — and in Silicon Valley, there are a lot of billionaires. He has also called for Google to be split up and criticized it for being antiworker. He has told Apple that it does not pay enough in taxes, and he has tapped Amazon employees to appear in a video criticizing the company’s environmental record.

Mr. Sanders also wants to raise the corporate tax to 35 percent. And in perhaps his most aggressive attack on the tech industry, he has proposed earlier taxation on stock options, the equity that has fueled the wealth of many in Silicon Valley.

“If your goal was to destroy the Silicon Valley ecosystem of creating new companies, this would be an effective way to do it,” Adam Nash, a tech investor and former executive at Dropbox, wrote on Twitter last week, referring to Mr. Sanders’s stock options proposal.

Ramesh Srinivasan, who is part of Mr. Sanders’s campaign and is focused on tech issues, said the senator was “not the foe of tech entrepreneurs.” He said that the policies would encourage job growth and support small businesses and that the campaign was about “just restoring balance.”

But Silicon Valley’s leadership suspects a coming war.

Among the donors to Mr. Buttigieg’s campaign in the last year were Reed Hastings, the chief executive of Netflix; Ben Silbermann, the chief executive of Pinterest; Reid Hoffman, a co-founder of LinkedIn; and John Doerr, a prominent venture capitalist, according to Federal Election Commission filings. Mr. Hoffman also donated to Senator Amy Klobuchar of Minnesota. And Eric Schmidt, Google’s former chief executive, donated to Mr. Biden.

Not only are Silicon Valley’s leaders giving money to Mr. Sanders’s competitors, they are lending their muscle to the campaigns.

Mr. Buttigieg’s national investment chair was Swati Mylavarapu, a former partner at the venture capital firm Kleiner Perkins Caufield & Byers. The Bloomberg campaign’s digital ad firm, Hawkfish, is being run by a former chief marketing officer of Facebook, Gary Briggs.

Chamath Palihapitiya, a former Facebook executive who is now a venture capitalist, said he would like to see Mr. Bloomberg at the top of the ticket, paired with Ms. Klobuchar or Ms. Warren.

“Bernie is validation of an important wing in the party, but at the top of the ticket he would probably be McGovern 2.0 and Trump will win in a landslide,” he said, referring to the liberal 1972 Democratic nominee, George McGovern.

How Silicon Valley votes matters because it leans overwhelmingly Democratic and there is a tremendous amount of capital. What is striking about this primary cycle is the schism between the people who run the companies and their workers.

Consider that employees of Alphabet gave $499,309 to Mr. Sanders for the 2020 cycle, his second-largest total donations from one employer after University of California employees, according to data compiled by the Center for Responsive Politics. By comparison, Mr. Buttigieg’s 2020 run had raised $294,860 from Alphabet employees.

“There’s a massive split between leadership and rank and file,” said Luis Zamora, a co-president of the San Francisco Young Democrats. “Bernie wants employees to be able to take over some of the ownership of the company, and that’s not going to fly.”

For a group of California technologists dismayed by what they see as the populist turn of both national parties, the solution — albeit only a statewide one — is to ditch the two-party system altogether.

On a cool evening in Palo Alto, at the Stanford University Faculty Club in September, those technologists and activists launched the Common Sense Party.

It was a response, they said, to what they call the one-party monopoly in the state. They hoped to carve out Democrats who feel isolated from their party’s leftward lurch.

“One party is the puppet of the public unions and wants government to run everything, and the other party is the puppet of the religious autocrats who want us all to act in a certain manner,” said Tim Draper, a venture capitalist and a Common Sense supporter. “No party is supporting a moderate agenda of someone who wants freedom to prosper and freedom to act.”

The Faculty Club is a low-slung building, popular for weddings on the manicured Stanford campus.

“Many C.E.O.s are a little off-put by some of the current crop of candidates for president,” said Julie Meier Wright, one of the Common Sense Party organizers and formerly California’s first secretary of trade and commerce.

Common Sense has close to 20,000 signatures. To qualify as a new party on the ballot, they hope to get 67,000 by the summer.

Republicans see a different way through this morass — turning the disaffected moderates into full-fledged members of the G.O.P.

“California Democrats just really haven’t been good friends to Silicon Valley,” said Jessica Millan Patterson, chairwoman of the California Republican Party.

For a long time, she said, many local conservatives felt despondent about the state’s politics. Now they find themselves surprisingly optimistic.

The state party raised more money online in 2019 than it did in 2017 and 2018 combined, rising from a few thousand dollars a month in 2018 to tens of thousands of dollars a month in 2019, Ms. Millan Patterson said.

“Darkness has turned into hope,” she said.

Republicans are making inroads in the tech world, Ms. Millan Patterson added. She cited state laws like A.B. 5, which went into effect on Jan. 1 and put strong regulations on freelancers, as another reason Republicans are gathering momentum. The goal behind the legislation was to push employers to hire full-time workers instead of contractors, but many freelancers have lost work.

Peter Thiel, the venture capitalist, has long been the tech industry’s dissident Republican voice. He spoke at the 2016 Republican National Convention to support Mr. Trump, but few tech executives held high-profile fund-raisers for the president in the last election cycle.

That may be changing. In February, Larry Ellison, Oracle’s chief executive, hosted a fund-raiser for Mr. Trump in Palm Springs, Calif. Some Oracle employees wrote a petition, which garnered nearly 10,000 signatures online, asking Mr. Ellison to cancel the event. When he did not, about 300 walked out of the office or logged off from work, a protest organized by the Oracle group Employees for Ethics.

Some tech employees are getting ready to be at odds with their bosses. In a crowded piano bar in San Francisco’s Tenderloin neighborhood recently, a few dozen young Democrats gathered to watch the candidates debate. Organizers tried to think if anyone in the room that night or in their group more broadly supported the two tech leader favorites at the time, Mr. Buttigieg or Mr. Bloomberg. It was hard.

“I’m hard pressed to even think of a young person who I know who is supporting one of those,” said Zhihan Zou, 25, executive director of the San Francisco Democratic Party. “I’m struggling seriously.”

“I know — me, too,” said Adam Miller, 28, who recently left a job at LinkedIn to run a start-up to sell tech tools to political campaigns. “Can’t think of one.”

The tech workers cited a geographic divide: Many employees live in San Francisco, while industry leaders tend to live in extremely wealthy enclaves like Los Gatos and Atherton, where homes often have gates and long driveways.

“They’re physically removed,” Mr. Zou said of the bosses.

Alek Chakroff, 35, a user-experience researcher at Google, said it came down to who has the most to lose from a wealth tax, which both Mr. Sanders and Ms. Warren support.

He brought up Alphabet’s top boss, Sundar Pichai. He does not know how Mr. Pichai plans to vote, but guessed it would not be Mr. Sanders.

“How much stock did Sundar just sell? $500 million?” he said.

The group said they were excited about Mr. Sanders’s odds for winning the majority of California’s delegates on Tuesday.

Mr. Zamora was greeting people at the door of the piano club.

“It’s very much a young folks versus the old folks,” he said.

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Maybe Information Actually Doesn’t Want to Be Free

Westlake Legal Group 07JESSICALESSIN-01-facebookJumbo Maybe Information Actually Doesn’t Want to Be Free Zuckerberg, Mark E Wall Street Journal Venture Capital Start-ups Silicon Valley (Calif) San Francisco (Calif) Newspapers News and News Media Murdoch, James R Mergers, Acquisitions and Divestitures Lessin, Jessica E Jobs, Laurene Powell Hoffman, Reid Garrett High Net Worth Individuals Harvard University Freedom of the Press Financial Times Facebook Inc Entrepreneurship Ek, Daniel Computers and the Internet Chesky, Brian Caldbeck, Justin Binary Capital airbnb 21st Century Fox

SAN FRANCISCO — Jessica Lessin thinks the biggest story of the moment — how tech is swallowing the universe — is hopelessly under-covered by the news media. The issue is “massive,” she said not long ago in her spare, cube-like office here, and “no one is paying attention.”

Of course, it can be hard to see the forest for the tweets. From analysis of Trump’s utterances to conspiracy-peddling publishers amplifying themselves on Facebook and YouTube, tech stories increase exponentially every day. But Ms. Lessin, founder of The Information, an influential Silicon Valley publication, thinks most reporters are still focusing on the wrong topics: glamorous cryptocurrency, for example, rather than the blockchain looming over bank loans and stock trades; or the number of cars sold, rather than the artificial intelligence and driver networks that threaten to make that number obsolete.

She has focused her site on the larger picture, pursuing industry scoops and keeping the publication ad-free, instead charging $399 a year for complete access. The Information achieved profitability in 2016, Ms. Lessin said, three years after she left The Wall Street Journal to start it. She added that she expected $20 million in sales by the end of 2020, and for her staff of two dozen reporters and editors in the Bay Area, Seattle, Los Angeles, New York, Washington and Hong Kong to grow. “The fact that we have a business that’s scaling makes me excited,” she said.

This sense of hope is discordant with the rest of online media, which seems in grim shape — last year, more than 1,000 people were laid off at BuzzFeed, AOL, Yahoo, HuffPost and Vice Media. (BuzzFeed is now back on more solid footing and could be headed for a sale.)

As other online organs have bloated and intermittently fasted, The Information’s reporters have become known in Silicon Valley for sniffing out the industry’s misdeeds and tweaking its powerful. A 2017 story revealed sexual harassment allegations against a venture capitalist that led to the shutdown of his firm. A recent article revealing hidden financial data at Quibi, a new streaming service, prompted its chief executive, Meg Whitman, to compare reporters to sexual predators. (She later apologized.)

The Information is sparely, almost clinically designed and frequently refreshed. Subscribers include Amazon’s founder, Jeff Bezos, and the media investor James Murdoch (“Please write nice things about her,” he said of Ms. Lessin), corporate clients like Google and Goldman Sachs, and most of start-up royalty. Laurene Powell Jobs, the world’s seventh wealthiest woman and an influential philanthropist who also owns The Atlantic, finds the site useful. It covers “an ecosystem and an industry I care about,” she said, adding, “I’ve followed Jessica’s byline since The Journal.”

Ms. Lessin, 36, is the rare editor to have risen from ink-stained wretch to a player, much like Peter Bart when he ruled Variety, or Anna Wintour of Vogue. But her success, unlike the editors’ of an earlier time, owes as much to the data-driven discipline of her business as her editorial tastes. In an era when many pay walls, if they exist at all, are easily scaled, Ms. Lessin is fiercely guarding the fortress.

“I’ve said this from the beginning,” she said, “and I continue to say this, but you can’t give away what you expect the reader to find valuable.”

Ms. Lessin’s instinct for tradecraft showed up before the internet was ubiquitous, when she was editor of The Greenwich Academy Press, the half-size broadsheet of her private high school, and wanted to publish it in full color. To raise the money, she persuaded the school to allow her to auction off parking spots. “I just really wanted it to look as big and professional as possible,” she recalled.

While attending Harvard, she scored the coveted faculty beat at the Crimson newspaper. “It was like covering Congress,” Ms. Lessin said. “It’s fun because you get the bickering and the politics.” Lauren Schuker Blum, a friend who worked with her there and later at The Journal, remembered Ms. Lessin’s work habits. “We all had these reporter notebooks and most of us would use like half of it, or lose it, but she had like 30 of them, impeccably detailed,” Ms. Schuker Blum said. “She was like a libel lawyer’s dream.”

After graduating in 2005, Ms. Lessin completed an internship at The Journal, then kept coming back into the office to pitch stories. Eventually, she landed a full-time job covering personal tech, one of the least popular beats at the time. The year was 2005. BlackBerrys were the gold standard of smartphones and Facebook was just an online phone book for college students.

In 2008, Ms. Lessin moved to San Francisco to cover the tech industry — and regularly broke stories. “I was like, ‘Who the hell is this girl?’” said Paul Steiger, the Journal’s managing editor at the time. “I kind of followed her work and asked people, ‘Is she as good as this looks?’ And they said yes.”

But it was also around this time that some people began to whisper about Ms. Lessin’s possible conflicts of interest. Through Harvard, she had become friends with start-up founders or fast-rising executives at places like Google and Facebook, ostensibly her key subjects. She was also dating another graduate, Sam Lessin, who had started a company that would later be acquired by Facebook. (The two married in 2012.)

A holiday excursion in 2008 resulted in a scolding for Ms. Lessin. As the economy was plummeting, she and Mr. Lessin jetted off to the vacation home of his family on the island of Cyprus with friends of theirs from the start-up scene.

The group passed the time as many people do on vacation, drinking and lounging around the pool. And before filming such activities and sharing them with strangers would become commonplace on Instagram, they posted footage online, including the women wearing matching black-and-white checkered swimsuits, lip-syncing to Journey’s “Don’t Stop Believing.”

The Cyprus travelers were blasted for their stunning lack of self awareness as the nation’s economy teetered toward crisis and tech companies were laying off employees. Ms. Lessin was singled out by Valleywag, the now-defunct tech site, in a post headlined, “WSJ reporter parties in Cyprus with people she covers.”

“Oh, that never made sense to me,” she said. “These were not people I wrote about. These were friends.” (A scan of Journal articles from the period shows she interviewed at least one Cyprus attendee in an article — Mike Hudack, the head of Blip.tv, a video start-up that has since shut down. Ms. Lessin says they were not friends when she wrote the article.) Still, her vacation drew disapproving scrutiny from higher-ups at The Journal, though not an official reprimand.

Ms. Lessin, in turn, was beginning to chafe at how newsrooms were covering tech — from a cool remove, she thought, never going deep. In contrast were the many bloggers who could delve into the industry’s every incremental move, but who had become so close to subjects the stories read like ad copy. Ms. Lessin said she thought: Couldn’t you do both? In-the-know reporting that still held subjects to account?

“I knew if I didn’t do it, someone else would, and I’d be kicking myself,” she said.

Valley underminers like to snipe that Ms. Lessin never had to persuade investors to back her plan. She had her own money. Her father is Jerome C. Vascellaro, a partner at the private equity giant TPG, which is a significant investor in tech and media businesses like Uber, Vice and Airbnb. Her husband, a son of the late tech investor Robert H. Lessin, made a fortune from the Facebook stock he received as part of the company’s acquisition of his start-up years ago.

Ms. Lessin said she tapped her own bank account, using “less than $1 million,” to start The Information, and continues to own and control it wholly. She pays competitive salaries (albeit without equity) — as much as $180,000 or more for some top reporters. She refuses to spend more than she grosses, she said.

So far, this strategy seems to be paying off. A 2016 article on Tony Fadell, then the head of Google’s Nest division, exposed how the executive’s last-minute decrees and slow decision making had crippled the company’s hardware efforts. The story was so in demand it converted over 600 new subscribers in the first day, recalled the reporter who wrote it, Reed Albergotti, who worked at The Information from 2015 to 2019. “It blew up,” he said. “That was proof of the model.”

But is The Information — whose title anticipates an interest in nothing short of everything — just a trade publication, like Advertising Age or Publishers Weekly? (One heavily trafficked section features richly detailed organizational charts that executive recruiters mine for leads.)

Ms. Lessin, seeming a little annoyed by the question, tilted her head and widened her eyes as she computed her reply. “I think that misses the point,” she finally said. “There’s so much hunger for what we produce.”

In December, she introduced a consumer-friendly version of the site, an app called The Tech Top 10, priced at $30 a year. Instead of a dense story on Netflix’s debt structure, the app might publish a short explainer on Netflix’s price increase. “You’re matching the reader with the level of expertise they want,” Ms. Lessin said. “That’s what subscriptions allow you to do.”

She won’t say how many subscribers The Information has, but some back-of-the-envelope math suggests she’ll have to hit 40,000 paying readers by this year to reach her sales objective, which could be a significant challenge. According to three people familiar with the business, the publication surpassed 20,000 subscribers only around the middle of last year. “I can confirm we have more than that,” she said, declining to be more specific.

Her publication’s success has attracted suitors. Some time last year, John Ridding, the chief executive of The Financial Times, Britain’s pre-eminent business publication, met with Ms. Lessin in San Francisco. The salmon-colored broadsheet was interested in a possible takeover, three people familiar with the matter said. Mr. Ridding declined to comment, and Ms. Lessin said The Information was not for sale.

As at any start-up, the vibe at The Information’s open-plan offices is like a college dorm room that’s in the middle of being cleaned up ahead of Parents’ Weekend. A large part of the staff hails from The Journal, including Martin Peers, who used to be Ms. Lessin’s editor. Now, she’s his boss.

Mr. Peers, 59, is famous within journalism circles for his cantankerous nature and deep skepticism of Silicon Valley — and yet he came west. “I had been at the Journal for 15 years,” he said. “I was exhausted and what Jessica was proposing was the perfect antidote, and I thought, ‘Why not?’”

In June 2017, the site landed one of its biggest scoops: a feature that revealed sexual harassment allegations against one of Silicon Valley’s most well-connected venture capitalists. Six women had accused Justin Caldbeck, a partner at Binary Capital, of unwanted sexual advances, with three of them speaking to the reporter, Mr. Albergotti, on the record.

The story exposed a pervasive culture of misogyny and harassment within tech, immediately raised The Information’s profile and was a precursor of the broader #MeToo movement. But Mr. Albergotti, who now works at The Washington Post, remembered the staff’s anxiety as they got closer to publishing. They were keenly aware of what had happened to Gawker, which was sued for invasion of privacy by Hulk Hogan. The suit, which was financed by the venture capitalist Peter Thiel, drove Gawker into extinction and stoked a fear among publishers that anyone with enough money and willpower could vaporize a news outlet.

As the Caldbeck story was about to go to press, Ms. Lessin was in Italy attending a conference. She consulted the company’s liability insurance, which she had printed out, in her hotel room before heading to a dinner where she would be seated with Jeff Bezos. “I don’t remember if I vomited or not,” she said. “But I was very nervous.” She gave the green light.

Mr. Caldbeck didn’t sue. Instead, he resigned. A short while later, his venture firm collapsed. As a female entrepreneur, Ms. Lessin felt The Information’s work was “deeply personal,” especially as several men in the industry, who had heard the piece was in the works, contacted her to suggest the claims were overblown. These were “men I respect, who I was close to,” she said.

She wouldn’t name them. Ms. Schuker Blum, who worked with her at The Journal, said Ms. Lessin is not a gossip, like many reporters. “She’s not the journalist who’s always complaining,” Ms. Schuker Blum said. “She’s not a conspiracy theorist. She sees the best in people.”

Daniel Ek, the chief executive of Spotify, said he found the occasional, critical story on his company “not unfair.” But he added that Ms. Lessin “has to walk a tightrope given the level of access that she has. That’s got to be tough.”

Ms. Lessin’s connections continue to raise eyebrows, particularly those to Facebook. She and her husband are friends with their Harvard classmates Mark Zuckerberg, the company’s chief executive, and his wife, Priscilla Chan, who runs the couple’s philanthropy efforts. They attended each other’s weddings and both have young children. (Ms. Lessin’s two boys, Lion and Maverick, are both under the age of 3.) Mr. Zuckerberg was at The Information’s launch party, where she joked that for the super-high subscription rate of $10,000 a story could be killed (but just one). Recently, Ms. Chan was a speaker at an Information event.

The Information has published tough stories on Facebook, including a 2016 piece that revealed a weakness in its business. A more recent article exposed tensions between Chinese employees and Facebook’s leaders. But so far, it has only taken smaller swipes at the tech giant.

So how does The Information write about a company run by a friend of the site’s owner, one that is also perceived as having failed democracy, if not the universe?

Ms. Lessin was circumspect, her contralto voice echoing slightly off the glass walls of her office. “I’m very careful to draw lines around my personal life,” she said. “We have very clearly defined our culture around getting the best, most accurate story possible.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Where Are the Tech Zillionaires? San Francisco Faces the I.P.O. Fizzle

Westlake Legal Group 18FIZZLE-facebookJumbo Where Are the Tech Zillionaires? San Francisco Faces the I.P.O. Fizzle Venture Capital Stocks and Bonds Start-ups Silicon Valley (Calif) San Francisco (Calif) Real Estate and Housing (Residential) Organized Labor Luxury Goods and Services Initial Public Offerings High Net Worth Individuals Computers and the Internet

SAN FRANCISCO — Seven months ago, the Four Seasons in San Francisco sent out a news release announcing the glad tidings that would come soon: New residences for the new money.

Builders were hoisting glass and steel into a 43-story tower where residents would have their own on-staff wine concierge, plus Blue de Savoie French marble, German milled Poggenpohl cabinetry and Dornbracht fixtures. The building’s $49 million penthouse would be the most expensive in San Francisco.

“Just in time for the coming wave of I.P.O. millionaires in San Francisco,” the Four Seasons said, promising “an elevated sales experience” to cater to “this new class of buyers.”

But then the wave of tech initial public offerings — the one that was supposed to mint San Francisco’s new ultra rich — fizzled. The stock of Uber, the ride-hailing giant, has dropped nearly 30 percent since the company went public in May. Lyft shares are down nearly 40 percent. Pinterest and Slack have declined, too.

San Francisco has been left as a slightly more normal town of tech workers who got rich-ish, maybe making a few hundred thousand dollars. But that doesn’t go far in a city where the median cost of a single family home is about $1.6 million.

“Everyone that came back post-I.P.O. seemed to be the same person. I didn’t see any Louis Vuitton MacBook case covers or champagne in their Yeti thermos,” said J.T. Forbus, a tax manager at Bogdan & Frasco in San Francisco.

Private wealth managers are now meeting with a chastened clientele. Developers are having to cut home prices — unheard-of a year ago. Party planners are signing nondisclosure agreements to stage secret parties where hosts can privately enjoy their wealth. Union organizers are finding an opportunity.

Everyone had gotten too excited, and who could blame them? The money was once so close: A start-up that coordinated dog walkers raised $300 million. The valuations of the already giant ride-hailing behemoths had nearly doubled again. WeWork, a commercial real estate management start-up that owned very little of its own real estate, was valued at $47 billion.

Towers rose across San Francisco to house the money. The marble was polished. The bathroom floors were warm. The private pools were being filled.

“The world has changed in a year,” said Herman Chan, a real estate broker with Sotheby’s International. “We expected an upward trajectory at least, and it really kind of deflated. These companies aren’t dying but the cultural zeitgeist, that momentum of I.P.O.s, is gone. You don’t even hear anyone talking about it anymore.”

The developers who had fought the odds of regulation and zoning to build their glass residences in the sky had timed their units to the I.P.O.s. But on a recent visit with the Four Seasons sales team, they acknowledged that techie wealth was not what they were seeing. Interest was mostly coming from overseas buyers, young heirs to foreign fortunes and older executives looking for city pieds-à-terre, they said.

Also in time for the wave that was not a wave are more luxury towers: The Avery, The Harrison, 181 Fremont, The Mira.

“The definition of luxury is scarcity, and there’s so many now,” Mr. Chan said. “Nowadays, my buyers are getting a contingency period and inspectors. Things you would never ask for before. There’s not 10 offers on a house anymore.”

Case in point: A full-floor apartment in San Francisco’s poshest neighborhood of Pacific Heights was listed at $21.6 million and advertised that “a sommelier-worthy wine cellar awaits 1,500 of your most prized bottles.” But more than a year later and after a $5 million price cut, it is still on the market.

Prices for the top 5 percent of San Francisco area real estate listings — the cream of the crop — rose 7 percent between 2017 and 2018. This year, they have fallen more than 1 percent, according to data prepared for The New York Times by the real estate listing service Zillow.

The malaise has spread south into Silicon Valley. A $10.8 million home listing in the town of Portola Valley, Calif., was slashed to $5.7 million. The median sale price for a nearby home in San Jose, Calif., has dropped 10 percent in a year to just under $1 million, according to data from the real-estate listing site Zillow.

Before the tech I.P.O.s, Deniz Kahramaner, then a real estate data analyst with the property brokerage Compass, had rallied packed rooms of real estate agents and investors about the bonanza that lay ahead. He had charts and estimates of thousands of new millionaires raising the average price of single family homes in San Francisco above $5 million.

Now, he is more muted. “The I.P.O. cash-out hasn’t played out as I mentioned in my original presentation,” he said.

Mr. Kahramaner added, hopefully, that it was still early. “People need more time,” he said.

Instead of yachts, tech workers are funding more mundane ventures like college savings plans.

“This year brought a lot of people back to reality,” said Ryan S. Cole, a private wealth adviser at Citrine Capital, a wealth management firm in San Francisco. “We’ve had a lot of people fund 529 plans for their kids. Pretty boring stuff.”

Some private wealth managers said they were actually somewhat relieved.

“At the end of the day, it’s funny money until it’s realized,” said Jonathan DeYoe, another private wealth adviser. “I’ve got Uber and Lyft clients that are disappointed. It’s a different house now. It’s a different school situation for the kids. But they’re still by and large in good places. No one’s impoverished.”

And so workers who thought they would upgrade from Allbirds to Berluti shoes are remaining, after all, in the Allbirds.

As some rank-and-file tech workers realize they might not get rich from company stock, the allure of working long hours without comparable real money pay is also wearing thin, said labor organizers. They have found traction this year in an industry long resistant to unions.

“The incentives to take the licks that you do are in the hope of some sort of big payoff down the road,” said Paul Thurston, who focuses on unionizing San Francisco tech workers and is the organizing director at the International Federation of Professional and Technical Engineers.

Now, “the engineers and the app designer and the developers are going to be treated a lot more like the employees that they are rather than like partners, which is what they’re told pre-I. P. O.,” he said.

Jonathan Wright, the organizing director of Engineers and Scientists of California, said he was in talks to unionize the workers of several big tech companies.

“There’s a promise: you work 100 hours a week, you sleep under your desk, and then you’ll be rewarded with the wealth of Bezos,” Mr. Wright said. “That mythology has been fading for years. The day of the unicorn is over.”

Where there is new wealth, it’s coming from the older tech companies like Apple and Alphabet, whose stocks this year have soared. And some fortunes are still being made from the I.P.O.s. While Uber’s shares have fallen, the company’s co-founder, Travis Kalanick, has sold off more than $2 billion in stock, according to securities filings.

“Especially with things like Uber, almost all the I.P.O. wealth was going to a couple of people,” said Kalena Masching, a Redfin agent in San Jose. “They are not looking to buy a standard house here.”

Another bright spot: female-led companies, with more becoming unicorns in 2019 than any other year, according to Aileen Lee, the venture capitalist who coined the phrase “unicorn” to refer to a private company valued at $1 billion or more.

And post-I.P.O. parties are happening. They are just secret — and phone-free.

“We’re signing a lot more nondisclosures,” said Jay Siegan, who curates party entertainment for corporate tech clients. “A year ago, people would set up social media stations at the party, signs with the hashtag for Instagram. Now we have clients asking guests to check their phones at the door or using those Yondr bags.

These are pouches used to lock phones en masse at concerts and events where someone might be tempted to record.

However, in public, the tech world is all about reflection and self-critiquing after the year that was.

The I.P.O. disappointment has gotten so extreme that two Silicon Valley techies are setting out to do what few have done before: Make fun of themselves.

David Cowan, a venture capitalist with Bessemer Venture Partners, which invested in Lyft, and Michael Fertik, the founder of Reputation.com, are launching an online talk show called “The Bubble Report.” It will feature interviews with other tech executives. The point, they hope, is to poke fun at Silicon Valley from within Silicon Valley.

Mr. Cowan, either in character or just being very honest, decried the falling stock prices of newly public tech companies as victims of cruel Wall Street analysts.

“It should be against the law for unscrupulous analysts to assess stocks based on cash flow and profit, to impugn a company based on eight lines of a financial report,” he joked. “Imagine how much more value we’d have in the stock market if we got rid of that arcane thinking.”

Mr. Fertik said his inspiration to mock his industry came in part from realizing how far from reality it had all gotten.

“I want people to understand that Silicon Valley is a deeply religious place that thinks of itself as agnostic,” he said. “It has some of the strengths and many of the frailties of organized religion.”

For now, most people are waking up to find they are still on Earth. This is good news for those in San Francisco who mostly viewed the tech exuberance as bad news: housing rights activists, first-time home buyers, and renters.

“We are excited by any resetting of Bay Area rents that bring them down from their artificially inflated high,” said Fred Sherburn-Zimmer, the executive director of Housing Rights Committee, which fights against evictions. “Eventually all bubbles burst.”

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Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

A Hard Lesson in Silicon Valley: Profits Matter

Westlake Legal Group 08valley-facebookJumbo A Hard Lesson in Silicon Valley: Profits Matter Wilson, Fred (1961- ) WeWork Companies Inc Venture Capital Union Square Ventures Start-ups Silicon Valley (Calif) Initial Public Offerings Entrepreneurship Computers and the Internet Bird Rides Inc Benchmark Capital

SAN FRANCISCO — Fred Wilson, a venture capitalist at Union Square Ventures, recently published a blog post titled “The Great Public Market Reckoning.” In it, he argued that the narrative that had driven start-up hype and valuations for the last decade was now falling apart.

His post quickly ricocheted across Silicon Valley. Other venture capitalists, including Bill Gurley of Benchmark and Brad Feld of Foundry Group, soon weighed in with their own warnings about fiscal responsibility.

At some start-ups, entrepreneurs began behaving more cautiously. Travis VanderZanden, chief executive of the scooter start-up Bird, declared at a tech conference in San Francisco last week that his company was now focused on profit and not growth. “The challenge is to try to stay disciplined,” he said.

The moves all point to a new gospel that is starting to spread in start-up land. For the last decade, young tech companies were fueled by a wave of venture capital-funded excess, which encouraged fast growth above all else. But now some investors and start-ups are beginning to rethink that mantra and instead invoke turning a profit and generating “positive unit economics” as their new priorities.

The nascent change is being driven by the stumbles of some high-profile “unicorns” — the start-ups that were valued at $1 billion and above in the private markets — just as they reached the stock market.

The most visible of those was the office rental start-up WeWork, which dramatically ousted its chief executive and withdrew its initial public offering last month. At the same time, shares of Peloton, a fitness start-up, and SmileDirectClub, an online orthodontics company, immediately cratered after the companies went public. And Uber, Lyft and Slack — which also listed their stocks this year — have similarly dealt with falling stock prices for months.

The lackluster performances have raised questions about Silicon Valley’s start-up formula of spending lots of money to grow at the expense of profits. (All of those companies lose money.) Public market investors, it seemed, just weren’t having it.

“A lot of these highly valued companies have run into the buzz saw of Wall Street, where they’re questioning or reminding us that profitability matters,” said Patricia Nakache, a partner at Trinity Ventures, a Silicon Valley venture capital firm.

She added that she anticipated a “ripple effect” on private start-up valuations that would start with the largest, most valuable companies and trickle down to the smaller, younger ones.

For start-ups and investors that were used to heady times and big spending, that means it may be time for a reset.

Aileen Lee, an investor at Cowboy Ventures, a venture capital firm in Palo Alto, Calif., said she considered dusting off a four-year-old “winter is coming” email she had sent to start-ups in 2015, telling them to prepare for a downturn. She hasn’t revived the warning yet, she said, because “I worry about becoming the boy who cried wolf.”

Other venture capitalists are being more forward. At Eniac Ventures, a venture firm in New York and San Francisco, the partners recently combed through their companies and identified the “gross margins” — a measure of profitability — for each one, said Nihal Mehta, general partner of the firm. This was not something the firm regularly looked at, he said, but they were inspired by Mr. Wilson’s cautionary blog post.

They ultimately decided that in future meetings with entrepreneurs, they would push for more detailed financial models, even though the companies are very young, Mr. Mehta said. While Eniac had looked at this when making investments before, “now it’s more important,” he said.

Tech start-ups have long gone through different cycles of fear and loathing. When the 2008 recession began, Sequoia Capital, one of the highest-profile venture firms, called a mass meeting with its start-ups and presented a slide deck, titled “R.I.P. Good Times,” that featured a graphic of a “death spiral” and a skull.

The event was intended as a way to shock the start-ups into reining in costs to survive the downturn. Sequoia’s presentation quickly became the talk of Silicon Valley, which did not fall into as deep an economic funk as other parts of the United States.

Yet other alarms about the state of the start-up economy fell on deaf ears.

In 2015, as unicorn start-ups sucked in billions of dollars in funding and soared to stratospheric valuations, Mr. Gurley of Benchmark bemoaned “the complete absence of fear” in Silicon Valley and said “dead unicorns” would soon appear. In 2016, Jim Breyer, a venture capitalist who was an early Facebook investor, also predicted “blood in the water” for the unicorns.

But the money continued to flood into tech start-ups from overseas investors, private equity firms, corporations and SoftBank’s behemoth Vision Fund. That allowed founders to command higher valuations and delay going public. By the end of 2018, start-ups in the United States had raised a record $131 billion in venture funding, surpassing the amount collected during the late 1990s dot-com boom, according to Pitchbook and the National Venture Capital Association.

Mr. Gurley gave up on his warnings of excess. “You have to adjust to reality and play the game on the field,” he said in an interview last year.

(Complaining about high valuations is a longstanding pastime among venture capitalists, of course, since most prefer to invest their money in cheaply priced start-ups rather than expensive ones.)

This year, the warnings are being revived. In his recent blog post, Mr. Wilson wrote that many of today’s start-ups were focused on traditional physical industries like real estate, exercise or transportation. They should not command the high valuations that pure software companies — which tend to have less overhead — have, he wrote.

In several message exchanges, Mr. Wilson said he had already seen that as criticism of WeWork mounted over the last month, some start-up fundings were taking place at lower valuations and with stricter terms than the companies had hoped for.

“What I would like to see is a bit more rationality, and I’m hopeful we are going to get it,” he said.

By last week, his words appeared to be sinking in elsewhere.

At a start-up conference held by the tech publication TechCrunch at a San Francisco convention center, around 10,000 founders, investors and “innovators” watched interviews with slightly more famous founders, investors and “innovators” from a dark, cavernous room. Onstage, entrepreneurs lamented the unforgiving stock market and challenging investment environment.

Postmates, a food delivery start-up that confidentially filed to go public in February, attended the confab. The company has not yet gone public because the markets have been “choppy when it comes to growth companies,” said Bastian Lehmann, Postmates’ chief executive, at the event.

Bird, the scooter start-up, announced $275 million in fresh funding at the conference. But its chief executive, Mr. VanderZanden, said he had been able to raise that money only because his unprofitable company had taken steps this year to shore up its losses. Many scooter companies have lost their shine this year because of regulatory pushback and safety issues.

The shift toward making a profit wasn’t easy, Mr. VanderZanden said. “I’m an ex-growth guy, and sometimes it’s painful for me,” he said.

But spending fast to grow fast was just no longer feasible, he added. It is now difficult for “a growth-at-all-costs company burning hundreds of millions of dollars with negative unit economics” to get funding, he said. “This is going to be a healthy reset for the tech industry.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing

Westlake Legal Group 08valley-facebookJumbo Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing Wilson, Fred (1961- ) WeWork Companies Inc Venture Capital Union Square Ventures Start-ups Silicon Valley (Calif) Initial Public Offerings Entrepreneurship Computers and the Internet Bird Rides Inc Benchmark Capital

SAN FRANCISCO — Fred Wilson, a venture capitalist at Union Square Ventures, recently published a blog post titled “The Great Public Market Reckoning.” In it, he argued that the narrative that had driven start-up hype and valuations for the last decade was now falling apart.

His post quickly ricocheted across Silicon Valley. Other venture capitalists, including Bill Gurley of Benchmark and Brad Feld of Foundry Group, soon weighed in with their own warnings about fiscal responsibility.

At some start-ups, entrepreneurs began behaving more cautiously. Travis VanderZanden, chief executive of the scooter start-up Bird, declared at a tech conference in San Francisco last week that his company was now focused on profit and not growth. “The challenge is to try to stay disciplined,” he said.

The moves all point to a new gospel that is starting to spread in start-up land. For the last decade, young tech companies were fueled by a wave of venture capital-funded excess, which encouraged fast growth above all else. But now some investors and start-ups are beginning to rethink that mantra and instead invoke turning a profit and generating “positive unit economics” as their new priorities.

The nascent change is being driven by the stumbles of some high-profile “unicorns” — the start-ups that were valued at $1 billion and above in the private markets — just as they reached the stock market.

The most visible of those was the office rental start-up WeWork, which dramatically ousted its chief executive and withdrew its initial public offering last month. At the same time, shares of Peloton, a fitness start-up, and SmileDirectClub, an online orthodontics company, immediately cratered after the companies went public. And Uber, Lyft and Slack — which also listed their stocks this year — have similarly dealt with falling stock prices for months.

The lackluster performances have raised questions about Silicon Valley’s start-up formula of spending lots of money to grow at the expense of profits. (All of those companies lose money.) Public market investors, it seemed, just weren’t having it.

“A lot of these highly valued companies have run into the buzz saw of Wall Street, where they’re questioning or reminding us that profitability matters,” said Patricia Nakache, a partner at Trinity Ventures, a Silicon Valley venture capital firm.

She added that she anticipated a “ripple effect” on private start-up valuations that would start with the largest, most valuable companies and trickle down to the smaller, younger ones.

For start-ups and investors that were used to heady times and big spending, that means it may be time for a reset.

Aileen Lee, an investor at Cowboy Ventures, a venture capital firm in Palo Alto, Calif., said she considered dusting off a four-year-old “winter is coming” email she had sent to start-ups in 2015, telling them to prepare for a downturn. She hasn’t revived the warning yet, she said, because “I worry about becoming the boy who cried wolf.”

Other venture capitalists are being more forward. At Eniac Ventures, a venture firm in New York and San Francisco, the partners recently combed through their companies and identified the “gross margins” — a measure of profitability — for each one, said Nihal Mehta, general partner of the firm. This was not something the firm regularly looked at, he said, but they were inspired by Mr. Wilson’s cautionary blog post.

They ultimately decided that in future meetings with entrepreneurs, they would push for more detailed financial models, even though the companies are very young, Mr. Mehta said. While Eniac had looked at this when making investments before, “now it’s more important,” he said.

Tech start-ups have long gone through different cycles of fear and loathing. When the 2008 recession began, Sequoia Capital, one of the highest-profile venture firms, called a mass meeting with its start-ups and presented a slide deck titled “R.I.P. Good Times” that featured a graphic of a “death spiral” and a skull.

The event was intended as a way to shock the start-ups into reining in costs to survive the downturn. Sequoia’s presentation quickly became the talk of Silicon Valley, which did not fall into as deep an economic funk as other parts of the United States.

Yet other alarms about the state of the start-up economy fell on deaf ears.

In 2015, as unicorn start-ups sucked in billions of dollars in funding and soared to stratospheric valuations, Mr. Gurley of Benchmark bemoaned “the complete absence of fear” in Silicon Valley and said “dead unicorns” would soon appear. In 2016, Jim Breyer, a venture capitalist who was an early Facebook investor, also predicted “blood in the water” for the unicorns.

But the money continued to flood into tech start-ups from overseas investors, private equity firms, corporations, and SoftBank’s behemoth Vision Fund. That allowed founders to command higher valuations and delay going public. By the end of 2018, start-ups in the United States had raised a record $131 billion in venture funding, surpassing the amount collected during the late 1990s dot-com boom, according to Pitchbook and the National Venture Capital Association.

Mr. Gurley gave up on his warnings of excess. “You have to adjust to reality and play the game on the field,” he said in an interview last year.

(Complaining about high valuations is a longstanding pastime among venture capitalists, of course, since most prefer to invest their money in cheaply priced start-ups rather than expensive ones.)

This year, the warnings are being revived. In his recent blog post, Mr. Wilson wrote that many of today’s start-ups are focused on traditional physical industries like real estate, exercise or transportation. They should not command the high valuations that pure software companies — which tend to have less overhead — have, he wrote.

In several message exchanges, Mr. Wilson said he has already seen that as criticism of WeWork mounted over the last month, some start-up fundings were taking place at lower valuations and with stricter terms than the companies had hoped for.

“What I would like to see is a bit more rationality and I’m hopeful we are going to get it,” he said.

By last week, his words appeared to be sinking in elsewhere.

At a start-up conference held by the tech publication TechCrunch at a San Francisco convention center, around 10,000 founders, investors and “innovators” watched interviews with slightly more famous founders, investors and “innovators” from a dark, cavernous room. Onstage, entrepreneurs lamented the unforgiving stock market and challenging investment environment.

Postmates, a food delivery start-up that confidentially filed to go public in February, attended the confab. The company has not yet gone public because the markets have been “choppy when it comes to growth companies,” said Bastian Lehmann, Postmates’ chief executive, at the event.

Bird, the scooter start-up, announced $275 million in fresh funding at the conference. But its chief executive, Mr. VanderZanden, said he was only able to raise that money because his unprofitable company had taken steps this year to shore up its losses. Many scooter companies have lost their shine this year because of regulatory pushback and safety issues.

The shift toward making a profit wasn’t easy, Mr. VanderZanden said. “I’m an ex-growth guy and sometimes it’s painful for me,” he said.

But spending fast to grow fast was just no longer feasible, he added. It is now difficult for “a growth at-all-costs company burning hundreds of millions of dollars with negative unit economics” to get funding, he said. “This is going to be a healthy reset for the tech industry.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing

Westlake Legal Group 08valley-facebookJumbo Silicon Valley’s Mantra of Spend Big, Grow Fast? It’s Changing Wilson, Fred (1961- ) WeWork Companies Inc Venture Capital Union Square Ventures Start-ups Silicon Valley (Calif) Initial Public Offerings Entrepreneurship Computers and the Internet Bird Rides Inc Benchmark Capital

SAN FRANCISCO — Fred Wilson, a venture capitalist at Union Square Ventures, recently published a blog post titled “The Great Public Market Reckoning.” In it, he argued that the narrative that had driven start-up hype and valuations for the last decade was now falling apart.

His post quickly ricocheted across Silicon Valley. Other venture capitalists, including Bill Gurley of Benchmark and Brad Feld of Foundry Group, soon weighed in with their own warnings about fiscal responsibility.

At some start-ups, entrepreneurs began behaving more cautiously. Travis VanderZanden, chief executive of the scooter start-up Bird, declared at a tech conference in San Francisco last week that his company was now focused on profit and not growth. “The challenge is to try to stay disciplined,” he said.

The moves all point to a new gospel that is starting to spread in start-up land. For the last decade, young tech companies were fueled by a wave of venture capital-funded excess, which encouraged fast growth above all else. But now some investors and start-ups are beginning to rethink that mantra and instead invoke turning a profit and generating “positive unit economics” as their new priorities.

The nascent change is being driven by the stumbles of some high-profile “unicorns” — the start-ups that were valued at $1 billion and above in the private markets — just as they reached the stock market.

The most visible of those was the office rental start-up WeWork, which dramatically ousted its chief executive and withdrew its initial public offering last month. At the same time, shares of Peloton, a fitness start-up, and SmileDirectClub, an online orthodontics company, immediately cratered after the companies went public. And Uber, Lyft and Slack — which also listed their stocks this year — have similarly dealt with falling stock prices for months.

The lackluster performances have raised questions about Silicon Valley’s start-up formula of spending lots of money to grow at the expense of profits. (All of those companies lose money.) Public market investors, it seemed, just weren’t having it.

“A lot of these highly valued companies have run into the buzz saw of Wall Street, where they’re questioning or reminding us that profitability matters,” said Patricia Nakache, a partner at Trinity Ventures, a Silicon Valley venture capital firm.

She added that she anticipated a “ripple effect” on private start-up valuations that would start with the largest, most valuable companies and trickle down to the smaller, younger ones.

For start-ups and investors that were used to heady times and big spending, that means it may be time for a reset.

Aileen Lee, an investor at Cowboy Ventures, a venture capital firm in Palo Alto, Calif., said she considered dusting off a four-year-old “winter is coming” email she had sent to start-ups in 2015, telling them to prepare for a downturn. She hasn’t revived the warning yet, she said, because “I worry about becoming the boy who cried wolf.”

Other venture capitalists are being more forward. At Eniac Ventures, a venture firm in New York and San Francisco, the partners recently combed through their companies and identified the “gross margins” — a measure of profitability — for each one, said Nihal Mehta, general partner of the firm. This was not something the firm regularly looked at, he said, but they were inspired by Mr. Wilson’s cautionary blog post.

They ultimately decided that in future meetings with entrepreneurs, they would push for more detailed financial models, even though the companies are very young, Mr. Mehta said. While Eniac had looked at this when making investments before, “now it’s more important,” he said.

Tech start-ups have long gone through different cycles of fear and loathing. When the 2008 recession began, Sequoia Capital, one of the highest-profile venture firms, called a mass meeting with its start-ups and presented a slide deck titled “R.I.P. Good Times” that featured a graphic of a “death spiral” and a skull.

The event was intended as a way to shock the start-ups into reining in costs to survive the downturn. Sequoia’s presentation quickly became the talk of Silicon Valley, which did not fall into as deep an economic funk as other parts of the United States.

Yet other alarms about the state of the start-up economy fell on deaf ears.

In 2015, as unicorn start-ups sucked in billions of dollars in funding and soared to stratospheric valuations, Mr. Gurley of Benchmark bemoaned “the complete absence of fear” in Silicon Valley and said “dead unicorns” would soon appear. In 2016, Jim Breyer, a venture capitalist who was an early Facebook investor, also predicted “blood in the water” for the unicorns.

But the money continued to flood into tech start-ups from overseas investors, private equity firms, corporations, and SoftBank’s behemoth Vision Fund. That allowed founders to command higher valuations and delay going public. By the end of 2018, start-ups in the United States had raised a record $131 billion in venture funding, surpassing the amount collected during the late 1990s dot-com boom, according to Pitchbook and the National Venture Capital Association.

Mr. Gurley gave up on his warnings of excess. “You have to adjust to reality and play the game on the field,” he said in an interview last year.

(Complaining about high valuations is a longstanding pastime among venture capitalists, of course, since most prefer to invest their money in cheaply priced start-ups rather than expensive ones.)

This year, the warnings are being revived. In his recent blog post, Mr. Wilson wrote that many of today’s start-ups are focused on traditional physical industries like real estate, exercise or transportation. They should not command the high valuations that pure software companies — which tend to have less overhead — have, he wrote.

In several message exchanges, Mr. Wilson said he has already seen that as criticism of WeWork mounted over the last month, some start-up fundings were taking place at lower valuations and with stricter terms than the companies had hoped for.

“What I would like to see is a bit more rationality and I’m hopeful we are going to get it,” he said.

By last week, his words appeared to be sinking in elsewhere.

At a start-up conference held by the tech publication TechCrunch at a San Francisco convention center, around 10,000 founders, investors and “innovators” watched interviews with slightly more famous founders, investors and “innovators” from a dark, cavernous room. Onstage, entrepreneurs lamented the unforgiving stock market and challenging investment environment.

Postmates, a food delivery start-up that confidentially filed to go public in February, attended the confab. The company has not yet gone public because the markets have been “choppy when it comes to growth companies,” said Bastian Lehmann, Postmates’ chief executive, at the event.

Bird, the scooter start-up, announced $275 million in fresh funding at the conference. But its chief executive, Mr. VanderZanden, said he was only able to raise that money because his unprofitable company had taken steps this year to shore up its losses. Many scooter companies have lost their shine this year because of regulatory pushback and safety issues.

The shift toward making a profit wasn’t easy, Mr. VanderZanden said. “I’m an ex-growth guy and sometimes it’s painful for me,” he said.

But spending fast to grow fast was just no longer feasible, he added. It is now difficult for “a growth at-all-costs company burning hundreds of millions of dollars with negative unit economics” to get funding, he said. “This is going to be a healthy reset for the tech industry.”

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Silicon Valley Goes to Therapy

Westlake Legal Group 20Therapy-illo-facebookJumbo Silicon Valley Goes to Therapy Venture Capital Therapy and Rehabilitation Start-ups Silicon Valley (Calif) Mental Health and Disorders Anxiety and Stress

SAN FRANCISCO — Silicon Valley told itself a good story, the best one, really: It was saving the world. For nearly a decade, this gave the modern tech worker purpose, optimism and self-confidence.

Then came the bad headlines, followed by worse headlines — about the industry, about the country, about the world. In search of reassurance, tech workers commandeered the old hippie retreat Esalen, co-opted Burning Man, got interested in psychedelics and meditation. It wasn’t enough.

Now, across Silicon Valley, anxious tech workers are finally admitting they have a problem. And they are going to therapy.

“The questions that are percolating in the national consciousness are making tech work not as glamorous or as noble as it was,” said Meredith Whittaker, a Google researcher who resigned in June, in part to protest the company’s military contracts and its ethics around artificial intelligence. “There’s a lot of anxiety. How could you not have that? Tech companies are fueling some of the most egregious human-rights abuses.”

Silicon Valley is approaching its anxiety the way it knows best. So now there is on-demand therapy. Therapy metrics. Therapy R.O.I. Matching therapists with clients using the tools of online dating.

Even therapy start-ups offering the familiar elements of care — talking with a licensed person in an office, surrounded by succulents — emphasize streamlined paperwork, a data-driven approach and happiness analysis. The cure for tech’s ills, they hope, is more tech.

“The best therapists get you better 10x faster than average ones,” promises one such start-up, Kip. “We took world-class providers, supercharged them (and you) with our smart software tools, and designed a seamless experience for both clients and providers.” Another recent venture, Reflect, calls therapy “the gym for your soul.”

The language the companies use is aggressive for something quiet and personal like therapy. But in the Bay Area, founders see little virtue in applying a measured response to a market opportunity.

“What we’re out to build is a new mental health system,” said Alex Katz, the founder of Two Chairs, a therapy start-up that has six clinics in the Bay Area. The company raised $21 million in August.

Traditional therapists scribble notes and review them later, possibly with a mug of chamomile. In the Kip system, notes quickly turn into data. Weeks of therapy are broken down with quizzes to determine exactly how happiness and anxiety levels are progressing, and how quickly.

Kip offers an app that encourages clients to record their moods in real time, prompted by questions that a therapist can choose to have pop up throughout the day. “That way they’re not subject to recency bias,” said Ti Zhao, the company’s founder.

The new data could provide insights that typical therapists would not come up with on their own. But there are risks. Elizabeth Kaziunas, a postdoctoral researcher at New York University, studies mental health tech and privacy. She noted that these apps gathered and organized data that you might not want gathered.

“There’s no guarantee or legal protections built in,” Ms. Kaziunas told me. “This mental health data could be bought or sold.”

For example, an anxiety diagnosis could raise my life insurance rates, she said, adding something new for me to be anxious about. “It’s kind of scary, isn’t it?” she said. “Like when you think about it?”

Recently, I downloaded Stoic, a new mental health tracker app. It promised that after a few days of logging my moods, I would get “charts and insights.” I did a fear-setting exercise, based on a TED Talk by the life-hacking guru Tim Ferriss. The app asked me to pick a fear (the oceans rise and create an uninhabitable world for my unborn children), then imagine the worst that can happen (we all die) and decide what I can do to prevent it (nothing) and repair it (again, guys, I’m dead). I closed the app.

Those funding the therapy start-ups see an entire cohort of tech employees who long ago fused their sense of self-worth to their work, and who are emotionally adrift now that the industry is under assault.

“It’s one thing to be grinding for a big tech company that you believe in, but once you start questioning that company’s motivations, that can make the eight hours a day that you work not feel as fulfilling,” said Michael Seibel, the chief executive of Y Combinator, the start-up investment fund and adviser.

Others feel anxiety or even despair about the environment, democracy, or just the everyday crucibles of work and status-mongering.

“In Silicon Valley,” Mr. Seibel added, “we did not talk this much about mental health even three years ago.” He estimates that more than 50 related start-ups are coming onto the scene. His firm just funded three: Stoic; Quirk, an app that uses cognitive behavioral therapy to treat people with anxiety and depression; and Mindset Health, which creates hypnotherapy apps that it says can treat anxiety, depression and irritable bowel syndrome.

Mindset Health was founded by two brothers, Alex and Chris Naoumidis, who previously created a peer-to-peer dress-sharing app for women. When that app failed, the brothers felt overcome with anxiety.

“We fell into this period of mental health problems,” said Alex Naoumidis, 24.

The brothers tried some of the existing wellness apps — meditation products, mindfulness tools — but remained unmoored. Their father suggested in-person hypnotherapy. It gave them the idea for Mindset.

I downloaded their app ($64 for an annual membership), clicked into the Calm Down section and started a session called Change as a Process. As a first step, the app suggested that I text a friend or tweet to the public the quote “He who conquers himself is the mightiest warrior.” For the next 19 minutes, a soft male voice told me that my mind can slow down. It can convert concerns to decisions. The process can even become second nature. And if it does, I can be a person of action. A person of action.

I did another module, Increase Productivity, which is voiced by a peppy younger man — a start-up bro right in my ear asking me to repeat after him: “I give myself permission to know what I want to be and what I want to do and do it efficiently.”

Somewhat more motivated, I contacted a bunch of the San Francisco area’s traditional therapists and life coaches to ask if anything was changing among their clients. Several told me that a couple of years ago, clients were coming in mostly because of personal issues, but that now they were reporting anxiety about global trends, like climate change and the rise of dictatorships.

In response, some old-line therapists are shifting toward the new market.

“I have seen an increase of people in tech feeling more hopeless. They often say, ‘I don’t know if my job is helping anybody,’” said Krista Regedanz, a psychologist in Palo Alto. “People who want to change the world and have good energy around it — I’m seeing a lot of them come in saying: ‘I don’t know. Does it matter?’”

Last year, May Bartlett, a life coach, started Global Impact Coaching to answer questions about how one’s work might be helping or hurting the world.

“They come in and say, ‘I feel like I’m floating in this vast universe, alone, with no purpose,’” Ms. Bartlett said. “And there’s a lot of this existential dread.”

She designed the program for clients who feel overwhelmed by the news. They wake up to push alerts about obscene actions at the border followed by alerts about species that are dying off, then alerts about people being denied the vote. They are unsure whether they need to quit their jobs.

“One of the most detrimental things is knowing all this information and not knowing what to do about it and feeling helpless,” Ms. Bartlett said. “It’s hard to feel good every day when things seem to be getting worse.”

The fire hose of information about the world is constantly demanding empathy. Ms. Bartlett said she often had her clients think about themselves and their work or mistakes in “the vastness of history.”

“Yes, stuff is hitting the fan right now, and the world is terrible, but if you look at it through 13 billion years, you see: O.K., this is a tiny blip,” she said. “There have been other times of chaos and destruction.”

The tipping point for my own bleak terror began when — I know it’s dumb but — Bitcoin fell. That was the last great fun we all had, and it turned out to be a bust almost beyond measure. The days of goofiness were done, I felt. The news alerts were getting to be a lot. I had, as they say, feelings of powerlessness.

And I had no idea, really, how to find a therapist. The last one I saw I had discovered by searching on Yelp: “best therapist + gay + five stars.” So who am I to judge efforts at smarter matching than that? When I started to notice the raft of therapy start-ups, it struck me as a reasonably healthy trend.

As Allie Stark, a wellness coach in the region, said: “There’s a beauty in existentialism. It’s also very paralyzing.”

Tech workers are starting to be more open about mental health in their own industry. Justin Kan, the chief executive of Atrium, a law-tech company, has been vocal over the last year about his personal struggles and the pleasures of therapy. He found he felt better when he stopped getting so much new information.

“Something that helped me was I deleted all the news off my phone,” Mr. Kan said. “I don’t have the stock market app or Twitter anymore. And that did improve my mood.”

This being San Francisco, there is a longstanding local group for existentialism. The Existential-Humanistic Institute, founded in 1997, is a collective of therapists and philosophers who have been puttering along in mostly quiet private practice for years, working with clients who are struggling not only with relatively ordinary issues but with their very purpose on earth. Interest in their approach appeared to spike along with the rise of Donald J. Trump.

In June, their movement published a textbook: “The Wiley World Handbook of Existential Therapy,” with esoteric chapters on theory but also more practical sections on how to find meaning. “It’s a big revival,” said the organization’s leader, Kirk Schneider.

Dr. Schneider, 63, cited technology itself as one reason for ambient emotional chaos. But he said clients were also suffering from broader social forces — a fear that inequality will lead to violent uprisings, a panic over global authoritarianism, a sense that they are not contributing to the common good.

“The goal is to move from a sense of abject terror and paralysis,” Dr. Schneider said, “to a gradual sense of intrigue and eventual wonder.”

New clients want help unplugging. Amy Eliza Wong, an executive and life coach in San Francisco who sees a steady stream of tech workers, said most of them came to her wanting to tune out despair-inducing headlines and to get back to the business of crushing it.

“There’s a feeling of ‘Let me just turn it off,’” Ms. Wong said. “‘I don’t need this white noise. It’s not helping.’”

This is not to say, of course, that the entire region is mentally imploding. San Franciscans still go to work and read the news. The big tech companies are still attracting eager job applicants. Google is not disbanding because everyone has gone to learn the cello.

There is even a countermovement pushing back on too much self-reflection and news-driven self-flagellation. Its leaders argue that the old optimism worked just fine and that Silicon Valley must march forward.

Followers can be found rallying tightly behind the militant sunniness of venture capitalist Twitter. There, the old fathers of the industry send out a constant stream of start-up bromides. This is the tech positivity movement.

“Optimism, ambition, and recruiting. Will this recipe work for your start-up too?” Paul Graham, a co-founder of Y Combinator, wrote on Twitter last month, in a typical missive. “Yes.”

“Founder-mentality means not caring who gets the credit,” Naval Ravikant, a co-founder of AngelList, tweeted this month. The koan has basically nothing to do with my life, but I found myself nodding.

Still, I was curious what start-up therapy really looked like, and I signed up for a session with Kip. The app prompted me to take something called a DASS-21 before my session. The first question: How often have I found it hard to wind down this week? (“A considerable degree.”)

When I got to the office of Anja Schmitz, one of the Kip therapists, it was completely normal. There was a sofa, a chair and a sandy Zen garden with rakes.

We talked.

Afterward, before I was even out of the building, I got an in-app assignment — a self-assessment to do during a period of anxiety.

I headed to catch the train home. The station had been taken over by a promotional campaign for Twitter. Giant ads with blown-up tweets wrapped around every column, covered the walls, blanketed the floors. “Twitter is a mosaic of madness,” read one of the messages under my feet. Another: “Twitter is garbage and I am a raccoon.”

The crowd was the usual — extremely technical-looking laptop backpacks, a lost young man with a plastic bag leaking beer that a tunnel gust sprayed into my mouth, which had been agape. Almost everyone was staring at the walls. I tapped into the Kip app.

“Was the trigger internal (like a thought) or external (something happening around you) or both?”

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The World’s First Ambassador to the Tech Industry

COPENHAGEN — Casper Klynge, a career diplomat from Denmark, has worked in some of the world’s most turbulent places. He once spent 18 months embroiled in reconstruction efforts in Afghanistan. For two years, he led a crisis management mission in Kosovo.

Yet Mr. Klynge, 46, says his toughest foreign posting may be the one he has now: as the world’s first foreign ambassador to the technology industry.

In 2017, Denmark became the first nation to formally create a diplomatic post to represent its interests before companies such as Facebook and Google. After Denmark determined that tech behemoths now have as much power as many governments — if not more — Mr. Klynge was sent to Silicon Valley.

“What has the biggest impact on daily society? A country in southern Europe, or in Southeast Asia, or Latin America, or would it be the big technology platforms?” Mr. Klynge said in an interview last month at a cafe in central Copenhagen during an annual meeting of Denmark’s diplomatic corps. “Our values, our institutions, democracy, human rights, in my view, are being challenged right now because of the emergence of new technologies.”

He added, “These companies have moved from being companies with commercial interests to actually becoming de facto foreign policy actors.”

But after two years in the job, Mr. Klynge is under no illusions of where Denmark’s concerns figure in the minds of Silicon Valley executives. Denmark’s population of 5.8 million is smaller than that of the San Francisco Bay Area. Fewer than 0.3 percent of Facebook’s 2.4 billion global users live in the Scandinavian country.

Silicon Valley companies and their leaders have given Mr. Klynge a mixed reception. He has never met with Mark Zuckerberg of Facebook or Sundar Pichai of Google or Timothy D. Cook of Apple. Danish officials said it was like dealing with an opaque new world superpower.

“We’ve been too naïve for too long about the tech revolution,” said Jeppe Kofod, Denmark’s minister for foreign affairs.

So Mr. Klynge’s position is part of an effort “to make sure that democratic governments set the boundaries for the tech industry and not the other way around,” Mr. Kofod said.

Denmark is emblematic of the many small countries that are grappling with technology’s effects on their societies and are frustrated by an inability to meet with, let alone influence, the companies causing that disruption.

Danish officials have been particularly concerned by how technological change is causing challenges that have afflicted other Western democracies: the spread of false and politically divisive content on social media, questions about privacy and data-hungry services, cybersecurity and the low taxes the companies pay outside the United States.

Andrew Cooper, a political-science professor at the University of Waterloo who studies diplomacy, said smaller countries had long needed novel ways to get attention from nations with more power.

ImageWestlake Legal Group merlin_30940718_80798471-96da-41ac-8eb8-3892a9d6cf53-articleLarge The World’s First Ambassador to the Tech Industry Social Media Silicon Valley (Calif) Rumors and Misinformation Politics and Government Facebook Inc Cyberwarfare and Defense Corporations Corporate Taxes COPENHAGEN, Denmark Computers and the Internet Casper Klynge

Ibrahim Didi, the Maldives minister of fisheries and agriculture, right, at an underwater cabinet meeting to highlight the threat of global warming. CreditMohammed Seeneen/Associated Press

The Maldives, for instance, has hosted underwater cabinet meetings to raise awareness about climate change, while Sweden created an embassy in the virtual-world video game Second Life. What’s surprising, Mr. Cooper said, is the extent to which Denmark is applying the strategy to private companies.

“Denmark has to play a different game,” he said.

But the obstacles Mr. Klynge has faced in Silicon Valley have been humbling. He said it had taken nine months to sit down with a senior executive at one of the biggest tech companies, which he declined to name. He arrived expecting a frank conversation on issues agreed on beforehand, including taxes, cybersecurity and internet misinformation — only to be offered a headquarters tour, he said.

When the executive arrived later, he began a brief rant against European regulations of the tech industry, before saying he did not have time for the meeting, Mr. Klynge said. Then the executive left.

As Mr. Klynge was exiting the building, the executive called his mobile phone to ask him to wait. Mr. Klynge thought there had been a change of heart.

Not so.

“When I got back to the conference room he gave me a goody bag with a T-shirt and cap of the particular company,” he said. He said Danish officials “laughed about this incident a lot afterward, but it says a lot about the mind-set of some of the companies in Silicon Valley.”

Some tech companies said they were beginning to better understand Mr. Klynge’s job.

Brad Smith, president of Microsoft, said he spoke regularly with Mr. Klynge, whose appointment he said gave Denmark “outsized influence.”

“If I want to compare notes on technology issues, he’s one of the best-informed people possible,” Mr. Smith said.

Peter Münster, a spokesman for Facebook, said, “It did take a few meetings before we understood the scope and intentions embedded in Klynge’s role.” Now, he added, “we have a good and constructive dialogue with the Danish tech ambassador, who speaks frankly, expressing both criticism and positive feedback.”

Google and Apple declined to comment, while Amazon did not respond to requests for comment.

Mr. Klynge said Denmark should not be overlooked. As a European Union member, it can influence regulations on privacy, competition, content moderation, taxes and misinformation. (He said he often had to clarify to tech executives that he worked separately from one of Denmark’s better-known officials, Margrethe Vestager, the European Union’s top antitrust enforcer, who has levied billions of dollars in fines against the tech industry.)

Mr. Klynge said Denmark should not be overlooked. As a member of the European Union, the country can influence regulations. CreditLaerke Posselt for The New York Times

Denmark has faced some criticism for putting corporations on the same level as sovereign governments, but other countries are also dedicating diplomatic resources to the tech industry. France created an ambassador for digital affairs, and Australia, Britain and Germany, among others, have added tech-centric postings, often to help facilitate trade and investment. But Denmark said it was still the only country with a dedicated tech ambassador posted overseas.

Priya Guha, Britain’s former consul general in San Francisco, said that even as societal challenges grew as a result of giant tech platforms, economic ties were a top priority for diplomats sent to be liaisons with the industry.

“Diplomacy has shifted. We aren’t in the 1900s anymore; we’re not in a world where it’s all about bilateral relationship with other countries,” said Ms. Guha, now a partner at Merian Ventures, a venture capital firm. “Countries need to adapt their view of diplomacy to counter that. The companies will have significant influence on the world, and you can either step back and watch that happen or you can work with that.”

About 55 people in Denmark applied for Mr. Klynge’s job when it was created. He now has a team of about 11, with seven in California, three in Denmark and one in China. His office is in Palo Alto, Calif., not far from the headquarters of many tech companies.

Mr. Klynge maintains some Danish traditions, like cycling to work every morning. But other aspects of living in California remain a shock.

“Despite probably being one of the places with the highest density of millionaires, every single day I meet homeless people on the streets,” he said. He added that there was no way he could afford to live in Silicon Valley, where fixer-uppers regularly cost more than $1 million, if housing was not provided by the Danish government.

Mr. Klynge said he had approached the tech companies as if they were countries, building relationships and networks. In lieu of often frustrating attempts to meet with senior officials, he spends time with lower-ranking workers, former employees, people from smaller competing companies, civil society groups and government officials.

His team sends intelligence cables to government leaders on what is going on within the companies, as well as reports on issues like cybersecurity, the growing use of health data and autonomous vehicles. Danish officials can then use those to inform policymaking.

Mr. Klynge said he traveled to other tech hubs about half the year, visiting China, India and countries in Europe. He said he was surprised that Chinese companies were more open to discussing political issues than those in the United States.

He counts some successes. Last year, when a Danish citizen was killed by an Islamic terrorist while traveling in Morocco, Mr. Klynge quickly spoke with representatives from Facebook and Google to get them to remove the video of the grisly attack.

“Diplomacy is by nature a long-term business where you don’t necessarily see goals being fulfilled from one day to the next,” he said.

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Former Star Google and Uber Engineer Charged With Theft of Trade Secrets

SAN JOSE, Calif. — Anthony Levandowski, one of Silicon Valley’s foremost technologists on self-driving cars, was charged by federal prosecutors on Tuesday with 33 counts of theft and attempted theft of trade secrets from Google.

The criminal charges from the United States Attorney’s Office of the Northern District of California open a new chapter in a legal battle that has embroiled Google, its self-driving car spinoff Waymo and rival Uber in the high-stakes contest over autonomous vehicles. The case also highlights Silicon Valley’s no-holds-barred culture, where gaining an edge in new technologies versus competitors can be paramount.

It is not uncommon for tech companies, which fiercely guard their intellectual property, to sue former employees or the firms they join after they leave. But criminal charges against a senior executive for theft is unusual.

According to the complaint, Mr. Levandowski, who worked on self-driving cars at Google, downloaded more than 14,000 files containing critical information about Google’s autonomous-vehicle research before leaving the company in 2016. He then made an unauthorized transfer of the files to his personal laptop, the complaint said. Mr. Levandowski joined Uber later that year when the ride-hailing firm bought his new self-driving trucking start-up, which was called Otto.

Some of the files that Mr. Levandowski took from Google included private schematics for proprietary circuit boards and designs for light sensor technology, known as Lidar, which are used in self-driving cars, according to the complaint.

“The Bay Area has the best and brightest engineers, and they take big risks,” said John Bennett, the F.B.I. special agent in charge of the San Francisco Division, at a news conference on Tuesday. “But Silicon Valley is not the wild West. The fast-paced and competitive environment does not mean federal laws do not apply.”

The U.S. attorney’s office said Mr. Levandowski, 39, turned himself in at the federal courthouse in San Jose this morning. If convicted, Mr. Levandowski could face a maximum of 10 years in prison, a $250,000 fine for every count and additional restitution.

“All of us are free to move from job to job,” said David L. Anderson, United States attorney in the Northern District of California. “What we cannot do is stuff our pockets on the way out the door.”

Mr. Levandowski’s lawyers, Miles Erlich and Ismail Ramsey, said in a statement that he didn’t steal anything from anyone.

“This case rehashes claims already discredited in a civil case that settled more than a year and a half ago,” they said. “The downloads at issue occurred while Anthony was still working at Google — when he and his team were authorized to use the information. None of these supposedly secret files ever went to Uber or to any other company.”

ImageWestlake Legal Group merlin_133533068_13c3d0f3-142e-47d1-a50b-d5a9c7fa63e9-articleLarge Former Star Google and Uber Engineer Charged With Theft of Trade Secrets Waymo Uber Technologies Inc Suits and Litigation (Civil) Start-ups Silicon Valley (Calif) Page, Larry Levandowski, Anthony Kalanick, Travis Google Inc Driverless and Semiautonomous Vehicles Computers and the Internet Car Services and Livery Cabs Automobiles Alphabet Inc

Former Uber chief executive Travis Kalanick leaving federal court in San Francisco last year during the trial over trade secrets with Waymo.CreditJeff Chiu/Associated Press

Uber said in a statement that the company “has cooperated with the government throughout their investigation and will continue to do so.”

Suzanne Philion, a spokeswoman for Waymo, said the company has “always believed competition should be fueled by innovation, and we appreciate the work of the U.S. Attorney’s Office and the F.B.I. on this case.”

The charges follow a settlement between Waymo and Uber in a trade secrets case. In February 2017, Waymo had accused the ride-hailing firm, Mr. Levandowski and others of stealing self-driving car technology. That case went to trial in San Francisco in February 2018, riveting the tech industry with testimony about the inner workings of technology companies, rivalries among billionaire tech entrepreneurs and the cutthroat competition for engineering talent.

Four days into the trial, Uber and Waymo settled, with Uber agreeing to provide 0.34 percent of its stock to Alphabet, the parent company of Waymo and Google. But Mr. Levandowski’s situation was not resolved by the settlement. The federal judge in the case referred it to the United States Attorney’s Office for a possible criminal inquiry into Mr. Levandowski’s behavior.

Mr. Levandowski was a pioneer in autonomous-vehicle research. He became known for the technology as a graduate student at the University of California, Berkeley, in 2004, when he designed a self-driving motorcycle that was entered in the Pentagon’s first contest for autonomous vehicles.

At Google, which Mr. Levandowski joined last decade, he was a confidant of Larry Page, one of the company’s co-founders. Mr. Levandowski ended up leading many aspects of the self-driving program inside the company’s clandestine “Google X” division. Google’s self-driving car unit was later spun off into Waymo.

In 2016, Mr. Levandowski left Google to form Otto, a self-driving trucking start-up. He took a small army of Google engineers along with him. Otto was quickly acquired by Uber for nearly $700 million. The deal was driven by Travis Kalanick, Uber’s chief executive at the time, who had a vision of building a fleet of self-driving robotaxis that would replace Uber’s hundreds of thousands of human drivers.

In 2017, Waymo sued Uber, Mr. Levandowski and Otto for theft of trade secrets.

“Otto and Uber have taken Waymo’s intellectual property so that they could avoid incurring the risk, time and expense of independently developing their own technology,” Waymo said in its suit.

The relationship between Uber and Mr. Levandowski quickly went south. After invoking his Fifth Amendment right to avoid self-incrimination in the Waymo case, Mr. Levandowski was terminated by Uber in May 2017.

“Uber regrets ever bringing Anthony Levandowski on board,” one of Uber’s lawyers said during the trial last year. “All Uber has to show for Anthony Levandowski is this lawsuit.”

Mr. Levandowski, who made millions of dollars from his work and through sales of his start-ups, has not stepped back. In December, he gave an interview to The Guardian about his new self-driving start-up, Pronto.AI, in which he claimed that he built a car that had driven from San Francisco to New York without human intervention.

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