TIME Tech

Tech Firms Desert Powerful Right-Wing Group After Climate Change Spat

Silicon Valley distances itself from the American Legislative Exchange Council

Google wasn’t the first major tech company to leave powerful conservative activist organization the American Legislative Exchange Council (ALEC) over its position on climate change, but it seems to have been the one that set the other dominoes falling.

After Google Executive Chairman Eric Schmidt said Monday that the company would no longer support the group, which opposes environmental regulations and has said climate change could be “beneficial,” Yahoo, Facebook and Yelp all issued statements indicating that, for unspecified reasons, their memberships in the group would be allowed to expire.

Microsoft had already quit the organization in August, according to the liberal group Common Cause which monitors ALEC, after a Boston-based investment group raised questions about the company’s support in light of ALEC’s opposition to federal renewable energy programs.

The group is known for creating model legislation that promotes free market and conservative policies, which it then works to pass in state legislatures around the country. On energy policies, it has sponsored initiatives to curb the authority of the Environmental Protection Agency and opposed federal programs aimed at increasing the production of energy from renewable sources.

It has been extraordinarily effective at getting legislation passed, particularly in the last several years, and has become a favorite target of progressive groups, much like the billionaire industrialist Koch brothers, who are themselves reputed to be major ALEC supporters. ALEC did not respond to multiple requests for comment from TIME. In response to news that Google would be pulling its support, ALEC CEO Lisa Nelson said in a statement, “It is unfortunate to learn Google has ended its membership in the American Legislative Exchange Council as a result of public pressure from left-leaning individuals and organizations who intentionally confuse free market policy perspectives for climate change denial.”

The most recent wave of departing Silicon Valley companies haven’t explained their decisions to leave ALEC, but the news comes after intense lobbying from liberal and environmental organizations. “We reevaluate our memberships on an annual basis, and are in that process now,” Facebook said in a statement. “While we have tried to work within ALEC to bring that organization closer to our view on some key issues, like net neutrality, it seems unlikely that we will make sufficient progress and so will be unlikely to renew our membership in 2015.”

Similar spurts have happened in the past. According to records kept by ALEC watchdog The Center for Media and Democracy, in 2012 both Coca-Cola and Pepsi announced a parting of ways with ALEC. The same year McDonald’s announced it was revoking support for the group and Pepsi followed the next day with an announcement that it too had cut ties with the group.

The Guardian reported in 2013 that ALEC was facing a “funding crisis” following the departures of a number of member firms.

MONEY Tech

Why This “Tech Bubble” Isn’t Like the Last One

Sure, Silicon Valley is booming, but this isn't 1999

Venture capital investment—that is, money flowing into companies before they go public—is on a tear in the technology sector. At least in nominal terms, investments are at levels not seen since 1999. The comparison to the turn-of-the-millennium is a bit less impressive adjusted for inflation, but the recent trend remains boomy. (Hat-tip to Business Insider for pointing us to this data.)

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SOURCE: PwC/NVCA Money Tree Report

So how is this boom different from last one? To borrow from blogger Joshua Brown, if it’s a bubble, it’s “a rich man’s bubble.”

Not only are you and your friends (mostly) not getting into the excitement by chasing hot IPOs — such as this week’s public offering from the Chinese e-commerce giant Alibaba — you also aren’t sharing in the boom in a much more tangible way. The late-1990s boom was a pretty great time for job seekers.

fredgraph

Remember the last boom: The build-out of the Internet was part of a high-pressure economy with plentiful jobs. New web retailers were opening warehouses and distribution centers, and fiber optic cable was going in the ground (much too fast, it turned out). In my own little corner of the world, newspapers and magazines were setting up big digital newsrooms that ran alongside still staffed-up print teams. Information technology was raising productivity in surprising places—big-box retailers reaped many of the gains—and for a time business was so competitive that employers had to share more wealth with workers. Unemployment dipped below 4%.

The latest influx of cash, and the speed with which companies are burning through it, in Silicon Valley has a lot of people worried we’re in a new bubble, perhaps fueled by the Federal’s low interest rates. A few months back, BI’s Joe Weisenthal made the contrary case: Venture money isn’t flowing as strongly into other industries, so this isn’t only about cheap money burning holes in investors pockets. Rather, something’s going on specifically in tech: With a fairly small investment in resources and people, a tech company with a great idea can quickly scale up to be a huge business. Think Whatsapp, or for that matter Facebook, which become a giant media company by leveraging free content provided by its users. Investing in these ideas is a high risk lottery, but great for the investors who win it.

The flip side is that it doesn’t seem to be much of a jobs engine outside of the expensive parts of northern California, or unless you count odd jobs from Task Rabbit. Do we have a bubble? Maybe. Maybe not. Do we have a well-balanced economy? No.

TIME

Rich Guy Philosophers Hit Silicon Valley

Peter Thiel is only the latest in an old trend

For some time now, there’s been a tendency on Wall Street for rich guys to become philosophers – think George Soros and his reflexivity thesis, or Ray Dalio and his little red book of self-criticism. Now, that trend seems to be coming to Silicon Valley – witness PayPal founder and investor Peter Theil’s new book Zero to One, which, among other things advises young people to drop out of college to do tech start ups (this from a guy with double Stanford degrees). While I agree with Theil’s advice that people should think different (a la Steve Jobs) to really come up with ground breaking innovations, I fear that this book may herald a new era of tech gurus who imagine themselves public intellectuals simple because they’ve made a lot of money.

Joe Nocera and I discussed the topic on this week’s WNYC Money Talking, along with where the tech industry itself is headed in the wake of Apple’s new product announcements.

 

TIME technology

Net Neutrality Advocates Turn Up the Volume

Top Congressional Democrats join a coalition of Internet businesses and activists in fighting to ensure Internet service providers treat all web content the same

A vast coalition of Internet businesses and activists, as well as two top Congressional Democrats, launched a series of loud new public relations campaigns Wednesday in support of “net neutrality,” the notion that Internet service providers (ISPs) must treat all web content equally, no matter the source.

Senate Judiciary Committee Chairman Patrick Leahy (D-Vermont) and House Minority Leader Nancy Pelosi (D-Calif.) called on the Federal Communications Commission Tuesday to prevent ISPs, such as Comcast, Verizon or Time Warner Cable, from treating web content differently.

Their appeals came just a day before the Internet Association, Battle for the Net, and the American Sustainable Business Council launched new campaigns Wednesday calling for the FCC to pass new Open Internet protections.

While Leahy, Pelosi, and the advocacy groups are not all united behind one solution, all have slammed the FCC’s current proposed rules on net neutrality, which were first presented in April and may be finalized as early as this year. The public comment period ends Sept. 15.

The FCC’s proposed rules have been sharply criticized for allowing web companies to pay ISPs to deliver their content more quickly and in higher quality than companies that do not pay for faster service. Internet advocates argue that allowing such “paid prioritization”—widely known as Internet “fast lanes”—would give the richest incumbent companies, which can can afford to pay a premium, an unfair advantage over struggling start-ups and mom-and-pop operations that often operate on shoestring budgets.

Others worry that such fast lanes would fundamentally undermine the Wild West-style free market of ideas and commerce on the Internet, where you don’t have to be a billionaire to attract millions of new customers overnight to your site.

FCC Chairman Tom Wheeler has insisted repeatedly that paid prioritization would help vital new industries that rely on lightning-fast download speeds, particularly in the e-medicine and online education spaces, to make their way online. Leahy will hold a Congressional hearing next week on the subject.

The Internet Association, an umbrella group uniting Silicon Valley’s biggest, most powerful tech giants—including Google, Amazon, Facebook and Ebay—launched a new campaign Wednesday afternoon. It includes a video and an online comic demanding better net neutrality protections. The association also submitted formal comments (PDF) to the FCC warning the agency to ignore the “flawed arguments of broadband gatekeepers that seek to control speech on the Internet, censor content, and segregate the Internet into fast and slow lanes.”

The Internet Association’s position on net neutrality is particularly important in the public dialogue because its member companies are mainly large incumbents that could theoretically benefit from paid prioritization deals edging out their smaller competitors. Instead, these large companies have insisted that the Internet marketplace must remain friendly to the tiniest start-ups, which are often the source of “the next big thing.”

Meanwhile, another coalition of Internet advocates convened Wednesday behind a different, similar campaign, Battle for the Net, which is also critical of the FCC’s proposed rules and calls for better ones. Battle for the Net includes 27 progressive advocacy organizations, including the American Civil Liberties Union and MoveOn.org, as well as dozens of tech companies, including Twitter, Tumblr, Netflix, Kickstarter, Etsy, and Vimeo.

Those companies, along with thousands of smaller websites, took part in a “day of action” Wednesday in which they displayed on their home pages an icon symbolizing a slow-loading website. When visitors click on that icon, they are invited to sign the Battle for the Net’s letter to the FCC and to contact their member of Congress.

While the Battle for the Net coalition’s gripes are similar to those of the Internet Association, the Battle for the Net goes farther in pointing at a specific solution. It, along with Pelosi, asks that the FCC categorize ISPs as a “Title II” industry, a move that would give the agency legal jurisdiction to strictly regulate the companies that own the Internet “pipes” — or the fiber that the Internet runs on. The Internet Association, while leaving what is known as the “Title II option” on the table, has stopped short of actively advocating for that end.

The debate over net neutrality is at this point intrinsically intertwined with a discussion of the Title II option, which itself hinges on a rather arcane detail in administrative law. In January, the D.C. Circuit Court of Appeals overturned the FCC’s previous rules on net neutrality on the grounds that the agency does not have legal jurisdiction over ISPs since they do not fall under “Title II” of the regulators’ statute. Public advocacy groups, like Free Press, which organized Battle for the Net, argue that the FCC should simply fix that problem, since it’s up to the agency to decide how it categorizes different industries.

But here’s where the discussion really heats up. Big ISPs, like Comcast, Verizon and Time Warner Cable, as well as their trade associations, have said that the Title II option, which would allow the FCC to treat ISPs like telephone companies, would unleash a storm of suffocating regulation. They say that if they are regulated “like public utilities,” they would have no incentive to invest hundreds of millions every year in researching and developing new technologies, much less maintaining and improving the network of pipes and wires that connect American homes to the World Wide Web.

Advocates for the Title II option say the ISPs, which enjoy monopolies and duopolies in most American cities and towns, should be regulated strictly, but argue that categorizing ISPs under Title II would actually lead to fewer regulations. The categorization would allow the FCC to pass a simple, blanket, easy-to-enforce rule on net neutrality for all ISPs, they say, rather than going at it piecemeal. Some advocates say that by avoiding the Title II option, the FCC is wading into unnecessary red tape. The agency’s current proposed rules call for the formation of a special ombudsman office within the FCC where federal bureaucrats would manually review when web companies paid ISPs for premium service.

The issue of net neutrality rocketed into national headlines earlier this year after Netflix accused big ISPs, like Comcast and Verizon, of deliberately slowing down streaming speeds and causing streaming videos to buffer. After Netflix paid the ISPs a fee, the download speeds increased. ISPs say such deals are only fair now that a handful of companies, like Netflix and Google’s YouTube, dominate the majority of web traffic during primetime hours.

It’s unclear when exactly the debate surrounding net neutrality will end. The FCC could finalize its proposed rules on net neutrality in the next few months or, if public pressure mounts, it could be forced to return to the drawing board early next year. President Obama, who has been a vociferous advocate for net neutrality–and a critic of “fast lanes” on the Internet–has stopped short, but just barely, of condemning the FCC’s proposed rules.

With rising populist anger, a raft of new PR campaigns, and Silicon Valley tech firms set to be major political campaign contributors in 2016, something’s likely to break soon.

TIME Silicon Valley

Silicon Valley Is Not Happy About a Tax on Its Free Lunches

A Tour of Google's New York Headquarters
The Washington Post—The Washington Post/Getty Images

If the IRS has its way, tech employees would have to pay taxes on their free meals

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

By JP Mangalindan

For years, many tech workers in Silicon Valley have enjoyed free meals — one of several cushy perks offered the likes of Google, Facebook, and countless startups. But complimentary grub could become a thing of the past if the Internal Revenue Service has its way.

A report on Tuesday by the Wall Street Journal revealed the IRS is pushing to tax employees for their free meals. Companies would have to add in the value of free food when calculating employee tax withholding.

News of a potential tax on free meals has many worried in Silicon Valley, where all-you-can eat buffets are a basic recruiting tool. They’re also a subtle way to get employees to work longer hours by giving them no reason for them to leave the office except to sleep.

“Having food available or catered in is kind of expected of most tech firms, so this is a bit of a concern,” admits Steve Sarner, VP of Marketing, at the social networking site Tagged, where employees get at least one free meal a week cooked up by nearby restaurants in San Francisco’s Financial District.

Nathan Grady, a front-end engineer at Weebly, a service that lets users build web sites with custom software tools, called the idea of taxing free food awkward. The practice is a social catalyst that makes it easy for a company’s staff to talk to one another, he said. Weebly makes that easy enough by serving free catered lunch daily.

For the rest of the story, please go to Fortune.com.

TIME Tech

Reports Say Snapchat Is Valued at Roughly $10 Billion

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Lionel Bonaventure—AFP/Getty Images

If reports are true, this represents an enormous valuation for a company that has effectively no revenue source

Multiple news outlets are reporting that Snapchat is raising funds from investors based on a $10 billion valuation for the disappearing-messaging service.

The Wall Street Journal, citing unnamed sources, reports that the venture-capital firm Kleiner Perkins Caufield & Byers agreed to invest in the app maker at a valuation of nearly $10 billion. Bloomberg News, also citing unnamed sources, reports that the startup is in talks for a round of financing at a $10 billion value. TechCrunch is reporting a similar figure.

The valuation could not be confirmed by TIME and does not suggest that any single buyer intends to pay that amount. The company uses the valuation to determine the share of ownership it gives investors.

But if true, $10 billion would represent an enormous valuation for a company that has effectively no revenue source. The Snapchat app, which does not have ads, is the third most popular app among millennials after Facebook and Instagram, according to Bloomberg, and marketers see potential in using the app to reach out to millions of the coveted young-people demographic.

The Los Angeles–based tech firm was valued at $2 billion just one year ago, according to the Journal, and its owners reportedly turned down a $3 billion offer from Facebook last November.

“The valuation of our business and our capital requirements are the least exciting aspects of supporting the Snapchat community. We have no further comment at this time,” an unnamed spokesperson for Snapchat told the Journal. A spokesperson for Kleiner declined to comment to the Journal.

TIME Workplace & Careers

Yes, There Is Diversity in Silicon Valley — if You Know Where to Look

Google Celebrates 15th Anniversary As Company Reaches $290 Billion Market Value
Pedestrians walk past Google Inc. signage displayed in front of the company's headquarters in Mountain View, California, U.S., on Friday, Sept. 27, 2013. David Paul Morris—Bloomberg / Getty Images

Study finds many black and Latino workers toil in the tech scene's "invisible" workforce of cooks, cleaners and guards

A new report on the diversity of Silicon Valley’s workforce has found a preponderance of black and Latino workers relegated to the bottom rungs of the pay ladder.

Working Partnerships USA released a report on Tuesday that drew attention to an “invisible” legion of contracted workers who cook, clean and guard corporate campuses throughout the Valley.

While black and Latino workers comprise less than 5% of the workforce at prominent companies such as Twitter, Facebook, eBay and Google, their representation balloons to 41% among security guards and 75% among groundskeepers, according to employment data released by the companies and Santa Clara county.

Members of this contracted workforce make an average hourly wage of $11 to $14 an hour, or less than a fifth of the average software developer, the study found.

“These ‘invisible’ workers do not share in the success of the industry which they daily labor to keep running,” the study’s authors wrote. “As contracted workers, their employer of record is not Google or Apple, but a middleman, making them ineligible for most of the benefits and amenities offered on the campuses where they work.”

A growing number of tech companies have voluntarily released employment statistics as part of an effort to address gaps in diversity. “As CEO, I’m not satisfied with the numbers on this page,” Apple CEO Tim Cook wrote in a statement accompanying Apple’s release. ‘We’ve been working hard for quite some time to improve them.”

TIME Innovation

Five Best Ideas of the Day: August 5

1. The grinding stress of life in poverty – not the scarcity of healthy options – leads the poor to unhealthy eating.

By James McWilliams in Pacific Standard

2. Cutting out the middlemen: Loan servicers aggravate the college debt crisis.

By Chris Hicks in the Reuters Great Debate

3. We must treat addiction as a learning disorder.

By Maia Szalavitz in Substance

4. Stop trying to be the “next Silicon Valley.”

By Ross Baird and Rob Lalka in Forbes

5. A first step: The Ugandan Constitutional Court strikes down that country’s vicious anti-gay law, but more fight remains.

By James K. Arinaitwe and Adebisi Alimi from the Aspen New Voices Fellowship

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME gender

My Gender-Neutral Childhood: Lessons in Raising Girls Who Succeed in Tech

Kira Makagon as a child Courtesy Kira Makagon

The co-founder of several successful startups talks about her unusual upbringing and how to inspire a love of math and science

Raised as the only child of Ukrainian immigrants, I never thought much about my childhood. It was certainly different from the way most of the other American kids I met grew up, and in a lot of ways, it seemed harder. (Imagine the wardrobe dilemmas of an immigrant teenager in 1980s San Francisco coming from a Soviet-bloc country, for instance.)

Lately though, I’ve been getting a lot of pointed questions about my upbringing: Did you play with Legos? Did you always love math? Were you allowed to study art, history and literature? The reason for the curiosity is clear. As a female tech entrepreneur in a predominantly male industry, people are interested in how my environment encouraged my academic and professional path toward technical learning.

More than ever, parents of young children are concerned about how to enable their children to succeed in a world where traditional occupations and industries have been upended by technology. Parents of girls especially worry that the best jobs will go to graduates who master science, math and technology education (the so-called STEM disciplines), which tend to attract more boys. We’ve all seen the media stories about the unemployed philosophy majors.

Recognizing that every child is different, I do believe that there are certain elements of my unconventional upbringing that prepared me to be comfortable and happy building a career in a technical field. All parents pour their hopes and dreams into their children, but I now know my parents invested in me in the right ways. From early on, they provided me with the right tools to continue developing myself as an older child, teenager and into adulthood. Based on my experience, below are my top five takeaways on how to prepare a child (and especially a girl) to be prepared for a technical career.

1. Choose gender-neutral toys.

My parents did not encourage dolls, and I didn’t gravitate to them. I liked Legos and building things. My father was an engineer who designed toys in Russia. He and I would build miniature models of houses. We built whole cities with railroads and cars. The floor of my room was always crowded with our playthings.

2. Encourage sports, and not just girls-only teams.

I liked all kinds of sports. When I was younger, it was bicycles, badminton and ping-pong. I was always fast — faster than most boys early on. I loved ice skating, and because I was very fast, I could play hockey with boys. For this reason, I always had a lot of friends who were boys. I grew up comfortable around boys, confident in my natural ability and with very little fear.

3. Treat your sons and daughters as individuals, not as gender stereotypes.

As an only child, my parents gave me lots of attention and treated me purely as an individual — not like a stereotypical girl. My dad treated me the same as he would any son. We played hockey together, and he took me to sporting events.

4. Emphasize the importance of leadership at an early age.

My mother, a Russian-literature teacher, encouraged me to be a class leader and participate in class (even if I found the lessons boring). She and I had long talks about leadership. She impressed upon me the need to excel in school. Even a B was unacceptable. I became class president in elementary school and learned to enjoy leading others.

5. Pursue music, chess and logic problems.

I practiced piano for two hours a day, loved the math olympiad and enjoyed solving logic problems in my spare time. These weren’t treated as nerdy or antisocial, but as valid and valuable pursuits to develop my mind and capabilities.

READ MORE: Cracking the Girl Code — Tech Giants Are Betting on Coding Camps for Girls to Close Their Gender Gap

Makagon leads product, engineering and operations teams at RingCentral, the cloud-based business phone company, where she is Executive Vice President of Innovation. She is a Silicon Valley–based serial entrepreneur who has co-founded several technology companies, including Octane (acquired by E.piphany) and RedAril (acquired by Hearst). Follow her @kiramakagon

TIME Tech

eBay’s Surprising Diversity Figures

The eBay headquarters seen in San Jose, Calif., in 2011.
The eBay headquarters seen in San Jose, Calif., in 2011 David Paul Morris—Bloomberg/Getty Images

The online-auction site employs more women than its Silicon Valley peers. But men still dominate in technical and leadership positions

The tech industry is notoriously dominated by white and Asian men. But eBay’s first diversity report shows that it employs more women, blacks and Hispanics than its peers.

Forty-two percent of eBay’s staff of 33,000 workers is female, beating out LinkedIn’s 39%, Yahoo’s 37%, Facebook’s 31%, Twitter’s 30% and Google’s 30%.

eBay also reported that 7% of its U.S. employees are black and 5% are Hispanic.

But even though eBay as a whole may be more diverse than many other tech companies — it also had a female CEO, Meg Whitman, from 1998 through 2008 — there is still a huge gender gap in terms of tech jobs and leadership roles: only 24% of eBay’s tech workers are women.

And even though eBay says it has doubled the number of women promoted to leadership positions in the past three years, just 28% of those in leadership at eBay are women. (For comparison, 17% of Google’s engineers are women, and 21% of leaders are women.)

The same holds true for race. Of those working tech jobs, only 2% are black, 2% are Hispanic and 1% are multiracial. Meanwhile, 40% of those holding tech jobs are white, and 55% are Asian.

Similarly, only 5% of those in leadership positions are black, Hispanic or multiracial. A whopping 72% of the company’s leaders are white, and only 23% are Asian.

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