3.18.11 Tim Clark’s talk notes

Today’s lecture covers a broad range of topics: Paypal mafia

a. Paypal – payment system you can use onlineb. Mafia – original meaning is organized crime, but here it means a tightly-knit

community that formed from original founding members at paypalc. All of these people in paypal have moved into many different things

Important elements of working in silicon valley – being mobile and mixing with different people

Mixing models Green companies Trends

Factpoint – does market research for technology companies -- including Hitachi

Web 2.0 uses content that users are creating.Cheaper for companies, since use creates the content

Social Entrepreneurship covers many areas: Microfinance – kiva/microplace Cleantech Cooperatives – social sector in japan using organic foods – buyer cooperative, brings

together different buyerso Old kind of organizationo Seller cooperativeso (selling raisins – sunmaid)

Question (Seikun): Social media – each social media has to win in the market. How do they do this?

1. Some are just lucky2. Some have a great idea which becomes VIRAL – spreads like crazy

Eg, google3. Must have very solid technology – if you have millions of users, this can crash the

system

Entrepreneur starts with idea. The money and people are second.

Question (Kenichi): Definition of social – in social media?

1. Social media is still so new, a clear definition is just being worked out now.2. Situation is similar to Cloud computing, not too long before, people were not sure

how to define it. Now, people have more of an idea now than they did before3. Some day soon, people will understand social media better too

Use technologyScalable – start with something small (like a demonstration) and keep going up and up

Business models also need to be scalable.A few VIA alumni now working in socialTom Lo – Yahoo to Ebay to Microplace -- is working to make microfinance scalableAndy Cohen - Success factors (hr software) to Caring.com

Started from living in bay area, when mother became ill/elderly in Chicago Using the web to connect people in same situation that he was in – in need of

information to make a better informed decisionTom Fricke – Green Mountain Coffee – one of biggest fair trade coffee in the US

fair trade connects to social enterprise

Recipe for Silicon Valley – A. Brainpower - start with intellectual capital

Early contributors were Stanford (Santa Clara, Berkeley too)

B. Venture capital – 3000 Sand Hill Road – bring money to start-ups. As 1 in 10 fail, in order for venture capitalists to get wealthy, there needs to be

a BIG return on investment

C. People: innovative, talented, risk-takers Technical, marketing, business skills (around finance)

A few Companies that started out of Stanford,1. HP – one of biggest IT 2. Cisco – originally started running the on-campus network at Stanford – the

technology became available to the commercial field3. Netscape – first real internet company. Used popular web-browser. Company lasted

6 years. Directly challenged Microsoft… not a good idea. Eventually sold to America Online.

4. Jerry Yang – grad student at Stanford – started Yahoo5. No one knew about google for 5 years.

What do these people have in common??All were born outside of the U.S. and chose to come here to be absorbed into the silicon valley culture

Openness to outside talent is important part

Waves of innovation Tablet computers, using touchscreen – has been around for 20 years, but

nobody knew how to make it profitable, until apple

Question (Lihan) – common point among many of the investors is they are outside the U.S. People in the U.S. are also very successful, so what is unique about those coming from elsewhere.

1. Silicon Valley has a Mystique – interests a lot of talented people

Question: Why do so many companies fail? 1. Can be struggling with technology, heavy competition, decline in performance

(people lose interest quickly, start moving to other companies)

Question: Why is silicon valley so successful (compared to boston)1. Big reason why? Some suggest that it is the weather – easier to live here. Less

diversity in the boston area, more rigid social structure – much more diverse in California – nobody comes from California.

2. New York – may be cost of living, makes it hard to live there?

Question: Much great rate of failure in business – what do people do after they fail?1. Try again. Failure is not a disgrace.2. Learn from the failure

question to ask – when something does not work, is it because it is a bad idea or the market was not ready for it?

Paypal mafia – out of paypal – knew each other and went on to start their own successful companiesSix apart – software behind wordpressZynaga – biggest game company

What are trends in silicon valley?

Oracle – has done 40-50 acquisitions in last several yearscloud computingopen source – not selling the code for a profit

Green ITWeb meetings – why are these green? Cut-down on amount of spending on travel necessary.Power management software – companies that use a lot of energy – can control the amount that gets usedAutomated systems management – device costs less than peopleDigitizing paper processes

Telework – helps make work from home more secureHelps with electronic work-flow

Question (lihan) – why did you join VIA?1. Really fascinated by stories that I was hearing about Indonesia.

2. During coldwar, anti-government sentiment at that time was becoming very strong.

Question (misako) – some negative impact of telework – ie, less face-to-face contact1. Not necessarily substituting, but is another way to contact people

Airline called Jet-blue – when you call them, you are contacting them at there home. This works great for people with children, with disabilities

Question (Kenichi): In U.S., how long does it take for telework to become common?

Silicon Valley goes green and social – how?Software engineering talent – Financing from venture capital – doesn’t help all companies (those that are not aiming to be big and successful, just small and successful)Entrepreneurial talentUnderstanding of politics and governmentGlobal market

Barriers – high costs of livingIncreasing competitionManufacturing (labor cost, supply chain)Tesla – concern about where they get their supply

Silicon Valley goes socialHewlett, Packard, Moore FoundationsGoogle.org – is it csr, or philanthropy, or with regard to energy (may just be for own savings)Omidiyar Foundation – does investing and grant fundingCypress Semiconductor – spun out Sunpower Applied materials

Lessons from Silicon ValleySerial entrepreneurs are valuable and pampered – you are much more likely to get funding once you’ve successfully led a start-upReally a small community – connections are very important

Doing well (making a lot of money) v doing good (making world better) – sometimes these two goals are in conflictLocation matters

Question about involvement of government (ken)1. centers for study of innovation in applied research2. in energy, may tax breaks and incentives for start-ups in green/clean technology3. bulk purchase of hybrid vehicles

Question: for cleantech – really needs a system that supports it – is this necessary?

1. Tax credits and investments are mostly federal government.

Questions for ESI participants:1. Is failing in a social enterprise a negative?

2. Where do you find personal connections for social enterprises?