Thursday, May 19, 2011

Remember when this country was inventive?

During the Internet bubble of the 1990s, I used to run business cable news in the background of my day just to listen to the irrational exuberance.  My favorite moment came when CNN's Lou Dobbs asked an executive from Boeing about his Internet strategy.  Now I love the Internet about as much as anyone and it had been very good to me, but it never occurred to me that an exciting website would help Boeing build or sell better airplanes.  The Boeing guy answered politely but it was clear he thought Dobbs had gone insane.  And he was right--not long after, Dobbs left his cushy gig at CNN for an Internet start-up that soon crashed and burned.

I mention this because the main element of the Internet exuberance was the breathtaking insistence that this was the most innovative development in human history.  The Internet boosters had a point--the idea that all of human knowledge would soon be at the fingertips of anyone with the slightest interest WAS pretty exciting.  But the truth was that most of the Internet hype revolved around absurd ideas like  And while the potential for social and technological innovation in the Internet era was real, the actual innovation was far less than with previous developments like rural electrification or the coming of widespread refrigeration.

This Tech Bubble Is Different

Tech bubbles happen, but we usually gain from the innovation left behind. This one—driven by social networking—could leave us empty-handed

By Ashlee Vance April 18, 2011

As a 23-year-old math genius one year out of Harvard, Jeff Hammerbacher arrived at Facebook when the company was still in its infancy. This was in April 2006, and Mark Zuckerberg gave Hammerbacher—one of Facebook's first 100 employees—the lofty title of research scientist and put him to work analyzing how people used the social networking service. Specifically, he was given the assignment of uncovering why Facebook took off at some universities and flopped at others. The company also wanted to track differences in behavior between high-school-age kids and older, drunker college students. "I was there to answer these high-level questions, and they really didn't have any tools to do that yet," he says.

Over the next two years, Hammerbacher assembled a team to build a new class of analytical technology. His crew gathered huge volumes of data, pored over it, and learned much about people's relationships, tendencies, and desires. Facebook has since turned these insights into precision advertising, the foundation of its business. It offers companies access to a captive pool of people who have effectively volunteered to have their actions monitored like so many lab rats. The hope—as signified by Facebook's value, now at $65 billion according to research firm Nyppex—is that more data translate into better ads and higher sales.

After a couple years at Facebook, Hammerbacher grew restless. He figured that much of the groundbreaking computer science had been done. Something else gnawed at him. Hammerbacher looked around Silicon Valley at companies like his own, Google (GOOG), and Twitter, and saw his peers wasting their talents. "The best minds of my generation are thinking about how to make people click ads," he says. "That sucks."more
The following is from a religious site that worries about the morality of wasting so much potentially productive talent.
America Lacks Meaningful Innovation


Web 3.0 and the Future of Innovation

America has a problem: we’ve abandoned the spirit of innovation. In an attempt to get rich quick and create a steady stream of auto-pilot income, young entrepreneurs have turned to derivative businesses with no long term value – casting aside the spirit of innovation along the way. The result is a multitude of clever but generally meaningless businesses whose sole purpose is to entertain and advertise. Allowing this mentality to further penetrate the heart of entrepreneurship puts the economic future of our nation at risk.

To better understand this trend, look no further than the flow of college graduates to Silicon Valley. Top grads from top programs flock to hot startups, many of whom have no business model or intention of significantly impacting the human existence beyond insincere entertainment. Data scientists are finding huge paydays working for social apps like Color, who raised $41 million of Series A funding even before its product hit the market. With that kind of money and talent, you’d think Color was next in line to cure cancer. Not true – It’s a photo sharing app.

The other end of the spectrum includes a multitude of college students and fauxpreneurs who are busy hacking search engines, selling back links, and participating in affiliate marketing. Famous VC Mark Suster recently expressed a similar sentiment of disgust when he said, “When I see young men in their early 20s doing mom blogs, I don’t think they’re in it for the passion.”

The problem I have with both these groups is that they are all extremely intelligent, clever, and skilled people who are spending their time and energy on projects that are more or less meaningless. We have a whole generation of entrepreneurs who dedicated themselves to figuring out how to get you to click ads.  more
Others have noticed how industrially backward we have become.
The U.S.: Where Europe comes to slum

Its leading companies are investing in the U.S. because they can do things here they would never think of doing at home.

By Harold Meyerson May 15, 2011

The newest slumlord in Los Angeles is a pillar of German capitalism. Earlier this month, the city attorney's office filed suit against Deutsche Bank, the world's fourth-largest bank, for letting many of the more than 2,000 L.A. homes it has foreclosed on descend into squalor and decay.

A yearlong city investigation of the properties on which Deutsche Bank foreclosed turned up tenants compelled to live in crumbling apartments the bank would not fix, houses taken over by gangs, faucets from which water either wouldn't flow or wouldn't stop, and the occasional unidentified dead body. Nothing, in other words, that would be allowed to happen to bank holdings in Frankfurt, the neat-as-a-pin German city that is home to Deutsche Bank and much of the rest of German finance.

Deutsche Bank responded to the suit by blaming the loan servicers that were supposed to have maintained the bank's properties. But City Atty. Carmen Trutanich insisted the blame belonged with the owner. "We are not going to allow them to play the shell and nut game," he said.

But slumming in America is fast becoming a business model for some of Europe's leading companies, and they often do things here they would never think of doing at home. These companies — not banks, primarily, but such gold-plated European manufacturers as BMW, Daimler, Volkswagen andSiemens, and retailers such as IKEA — increasingly come to America (the South particularly) because labor is cheap and workers have no rights. In their eyes, we're becoming the newChina. Our labor costs may be a little higher, but we offer stronger intellectual property protections and far fewer strikes than our unruly Chinese comrades.

Don't take my word for it. Check out the study released this month by the Boston Consulting Group, which concludes that when you compare China's soaring wages and still-low levels of productivity with our stagnating wages and rising levels of productivity, the price advantage of manufacturing in China instead of the U.S. will shrink to insignificance by 2015. Investment in the U.S., says the group, "will accelerate as it becomes one of the cheapest locations for manufacturing in the developed world."

Those investments are well underway. The auto companies of Europe and Japan have opened factories in the nonunion South over the last couple of decades. Not one of them has agreed to refrain from waging a union-busting campaign should their workers wish to organize. Their stance could not be more different from their attitude toward workers and unions in their home countries.  more

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