Back in 1999, Lou Gerstner, then chairman of IBM, prophesied (paywall) that pure internet companies were “fireflies before the storm.” Maybe, he said, “one or two of them will be profitable,” but it would be giants of industry like IBM, Ford, and Wal-Mart that would lead the charge in online commerce.
Gerstner, of course, was both right and wrong. Many dotcom firms were indeed fireflies. But a few (including Amazon, which he witheringly dismissed as “a very interesting retail concept”) have become behemoths, and many more are profitable, while IBM is struggling.
Gerstner’s words seem to echo now, as each week brings fresh bad news for Silicon Valley’s would-be “unicorns.” There are layoffs at LivingSocial, warnings about LinkedIn, and pivots at valet-parking startups. The “Uber for X” model rarely works except when X = Uber. Valuations are shrinking, funding is falling, and there’s ill-concealed glee at the signs that yet another tech bubble is, if not exactly bursting, at least looking distinctly deflated.
But that schadenfreude, just like the hype that preceded it, makes it easy to forget that there’s another Silicon Valley, away from the capricious world of dating and laundry apps. It’s the unsexy, stolid companies that build the hidden but immensely complex and costly infrastructure—cloud storage, AI, data analytics, and other things—of a digital world.
Those companies run the gamut from newish firms like Google and Facebook to “old” ones like Microsoft and perhaps even GE. It encountered bafflement when it set up a software-development arm in the Bay Area (what, no office nap rooms?). But it’s trying to build the computer systems—the “Internet of Really Big Things”—that will run 21st-century industry.
Whether GE succeeds or—like IBM—is overtaken by newer, nimbler peers, remains to be seen. Either way, long after “unicorn” has become as archaic a pejorative as “dotcom,” there’ll still be serious money in Silicon Valley, doing serious things.—Gideon Lichfield
Five things on Quartz we especially liked
“I am just one of millions of Syrians who have witnessed death.” Five years after the start of the uprising against Bashar al-Assad, Syria’s conflict has long since become too complicated, wearying, and insignificant for most of the world to understand or even care much about. Loubna Mrie explains what it feels like to belong to a country and people torn almost literally to shreds and abandoned by those who might once have helped.
Lush’s love affair with the radical left. The British company known for its soupily fragrant soaps and bath bombs also gives millions a year to direct-action protest groups. Aamna Mohdin profiles its founders and suggests that Lush is neither as radical nor as risk-taking as it might first appear.
The crumbling barriers to rising US drug prices. A slew of mergers in recent years between US pharmacy chains and pharmacy benefit managers have hardly made banner headlines. However, writes Brian Feldman, these deals are creating conflicts of interest that remove one of the few remaining checks on prescription drug prices spiraling out of control.
A technology revolution made by and for men. Tell a digital assistant like Siri you’ve had a heart attack, and it will suggest where to find help. Tell it you’ve been sexually assaulted, and it will likely reply, “I don’t know what that is.” Soraya Chemaly highlights how much of our technology is riddled with biases, because its mainly male developers and designers are blind to obvious needs of women.
Something rotten at the heart of Indian tech. Investors are starting to ask hard questions the performance of India’s e-commerce giants, Flipkart and Snapdeal, and that’s starting to squeeze funding for the entire tech sector, writes Itika Sharma Punit. But in Bengaluru as in the Bay Area, a little skepticism right about now is probably a healthy thing.
Five things elsewhere that made us smarter
On being an internet stalking victim. A determined troll can ruin your reputation and your life, and there is virtually no law or agency you can turn to for help. Dune Lawrence in Businessweek and Roni Jacobson in Medium describe the campaigns of hate against them and the walls of official indifference they encountered.
The magazine that designed your local coffee-shop. Racked’s Kyle Chayka tries to divine the meaning of the lifestyle magazine by telling the origin story of Kinfolk, which involves Mormonism, “cute little food,” and the creation of that artfully unfinished aesthetic that’s taken Brooklyn, Shoreditch, and all the world’s suitably tasteful neighborhoods by storm.
Who will run Brazil next? As scandals over corruption and influence-peddling threaten to bring down the government, the Americas Quarterly’s Brian Winter profiles the Brazilian Democratic Movement Party, “a shape-shifting,” “polymorphous” group that has acted as political kingmaker since the end of the dictatorship in the 1980s, but may now be angling for a spell on the throne itself.
The better off you are, the more you cry. Since Darwin, Western thinkers have framed strong sentiment as a sign of “savagery.” But as Matthew Sweet explains in his history of the science of emotion for 1843 (The Economist’s new lifestyle magazine), people in rich, cool countries actually weep more than in poor, hot ones. Where there is war, fear or famine, he writes, tears are “as superfluous as a pair of diamond earrings.”
The rise and fall of Babak Zanjani. The story of the Iranian billionaire sentenced to death earlier this month for corruption is the story of how Iran busted Western sanctions. Sune Engel Rasmussen spent months unraveling the network of companies through which Zanjani moved money for the Ahmadinejad regime, and examines his sudden transformation into national scapegoat.
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