Something Wicked This Way Comes?

The United States recently held an election, and results are pending two weeks later. Regardless of the outcome, we must finally admit the American political scene isn’t something others want to emulate—at least not without substantial bribery. No longer confined to smoke-filled rooms with nondescript doors, today’s Pax Americana bribes take place at golf courses, academic institutions, and legislative bodies, culminating in an American national debt of 26 trillion dollars. 

Empire-building requires allies, and allies are apparently becoming more expensive. Though the inscription on the back of U.S. currency states “In God We Trust,” debt appears to be the undisputed binding agent. According to the Institute for International Finance, the coronavirus pandemic increased global debt to 272 trillion American dollars, adding symbiotic ballast to the more honest phrase, “In Debt We Trust.” Like all co-dependent relationships, momentum is key, and any well-traveled American has realized the momentum that made America great after 1991’s fall of the Soviet Union has shifted elsewhere. 

The United States was particularly vulnerable to political slogans due to its inability to recognize propaganda even as groups hardened around selectively-edited truth. (The world would be more decent were recruiting and advertising budgets called by their true name: propaganda.) Future historians will note entrenched divisions but are less apt to recognize its causes—and oh, the causes. Not only are they large, containing multitudes, Walt Whitman’s earlier words ne’er rang truer: “The past and present wilt--I have fill'd them, emptied them…” And for what? Lacking context, the abyss awaits once again, another empire ready to fall. 

My intent is not pessimism, but edification; namely, to show future generations the many-splendored ways a great nation can falter and never recover. Most astoundingly, though sources of political divisions are well-known to many Americans—gerrymandering plus local resistance to unfunded national mandates seeking reform—nothing can be done because once divisions encompass the weight of trillions of units of debt, everyone's interest is to go along. You'd think “going along” would coincide with “getting along,” but as it happens, the inevitable isn’t always certain. That’s our first lesson: knowledge is wonderful, but knowing the right path doesn’t mean anyone will follow you. Knowledge needs credibility to be meaningful in civil society, and credibility’s formula is complex and sometimes impervious to examination. 

We mentioned institutional bribery, but nothing fundamental has changed since at least the 18th century. Samuel Johnson may have said it best: “In civilized society, personal merit will not serve you so much as money will. Sir, you may make the experiment. Go into the street, and give one man a lecture on morality, and another a shilling, and see which will respect you most.” Americans would do well to remember governments can increase debt to win friends and placate enemies, but lasting loyalty is hard to find and even harder to buy. Lesson number two: unless institutions ensure they serve values of infinite duration and are able to reverse course when—not if—they go astray, nation-building and globalization are all for naught. 

If money and knowledge mean little in the long run despite their attraction, on what grounds shall we stake our claim? Locating suitable ground is difficult in every era because the future is always fragile. Money--a universal siren song--increases ego and power even if its possessor lacks wisdom and especially when debt is readily available. In this way, the greater the outward success, the more humility, a crucial element of all progress, cries out: Help!  To mitigate prosperity's unctuous byproducts, note the following: everything is incremental unless abject failure occurs. In other words, if you have succeeded, it is because you and your neighbors learned from others’ failures and benefited from time’s accumulative value. Note also that knowledge is neither good nor bad, neither positive nor negative. Its trajectory of success depends entirely on one’s ability to link personal knowledge to institutional knowledge useful to future generations. You have understood our third lesson when you realize it is the same as our second lesson.

Our fourth lesson is two-pronged: history and incentives. Growing up in the United States, I was inundated with the superiority of the Western capitalist system and believed it true not as an inherent economic matter, but because of its ability to absorb immigrants and thus new ideas. At the time, I had not traveled extensively, and I did not understand world history. I had no way of knowing USA’s most recent immigrants were present as a result of foreign policy mistakes and attempted coups rather than organic openness. A short summary may be useful: 

 White residents with Hispanic last names filled Miami, Florida after a failed CIA coup against Cuba’s Fidel Castro, ironically himself from noble Spanish lineage.

Seen in Sintra, Portugal

 Cupertino, California is home to residents who are Taiwanese and not Chinese because they were on the losing side of the Chinese Revolution, which rejected Western corruption. (Malcolm X called the Chinese who fled "Uncle Tom Chinese," i.e., people who betrayed their culture and country in service to American and European hegemony.)

 In southern California, Iranians live in Beverly Hills, California only because Western governments saw value in Iranian oil and natural gas.

 Meanwhile, in northern California, numerous Vietnamese restaurants exist because the Catholic Church, using Joseph McCarthy and Archbishop Ngo Dinh Thuc, successfully lobbied Congress to split north and south Vietnam into de facto Communist and Catholic countries. The two-state attempt was unsuccessful, forcing the United States to re-settle foreign agents, who were conveniently assisted by Catholic nonprofits receiving both taxpayer funding and tax exemptions.

Even America’s Olympic medals appear immoral when considering American Christians (and others once connected with Catholic Spain) were able to breed the strongest Africans because they were convinced of God-given racial differences within a context of global trade of tobacco, sugar, and cotton.

Now we may discuss incentives. Most people view incentives from the back-end—being nudged in a particular direction—rather than the front-end, i.e., marketing and mandates. In USA, one reason I am certain of near-term decline is because politics has been reduced to another marketing gimmick, a show where governments signal importance by reacting decisively to events while protecting image at the expense of authenticity. Some cauldrons should not mix together, and the aforementioned political dynamic places the witches’ recipe firmly in the hands of unaccountable third-parties, with politicians serving a pre-fabricated brew guaranteed to poison. An attorney might cite Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), as the date marketing received a license to overwhelm sense, but marketing, at its root, is merely a promise based on words and images. W.H. Auden, my favorite poet, aptly summarized the age-old conflict inherent in mammalian speech:

Not one of them was capable of lying,
There was not one which knew that it was dying 
Or could have with a rhythm or a rhyme 
Assumed responsibility for time. 

Let them leave language to their lonely betters 
Who count some days and long for certain letters; 
We, too, make noises when we laugh or weep: 
Words are for those with promises to keep.

Is a legislator’s time at the podium or media outlet an attempt to effectuate a promise? If so, how can this be possible unless we assume a one-party state or a paradigm lacking checks and balances? 

Is billionaire Warren Buffett an insurance salesman propped up by a banking system further propped up by an unaccountable Federal Reserve? Or has he singlehandedly changed the world by bringing together billionaires in search of the public good? 

Is the Catholic Church’s anti-abortion stance designed to more easily funnel government funding to Catholic-dominated voting districts, or genuine concern about society’s moral failings? 

Does a black American “welfare queen” represent personal failure or the failings of an economic system unable to correct racial segregation? If over 80% of African-American women are overweight because their ancestors were bred like animals by enterprising slave traders, should companies allow certain groups more gym time, or should some people more readily accept a manual labor position? On the flip side, when an African-American athlete proudly salutes the American flag, is he ignorant of his country’s history, or is he an optimist who believes in progress? 

All of the above questions have objectively correct answers, but none ascertainable in our lifetimes. Each answer begins with one of the two interpretations, and then depending on the time of analysis, ends somewhere at the other end. If we are lucky, we muddle in the middle as long as possible. By way of example, imagine the Alpha and the Omega or al'Awwal (الأول) and al'Akhir (الآخر), but in a quantum computing setting involving collective free will: the answer is ever-present and yet always changing. 

Perhaps a more concrete example would be instructive. Consider the now-unified country of Germany, once known as the Federal Republic of Germany (Bundesrepublik Deutschland) and the German Democratic Republic (GDR) aka the Deutsche Demokratische Republik (DDR). When we discuss Germany, which Germany are we entitled to use for analysis? The future and past are necessarily intertwined, so if we only take today’s Germany, will our analysis be complete? If our analysis is almost always incomplete, then do you now understand the “crucial element” we discussed earlier? 

Yes, the fourth lesson is indeed the same as the second and the third, but you could not see it because marketers and politicians have spent billions of dollars proselytizing the belief everyone can go wherever they like on the al'Awwal (الأول) and al'Akhir (الآخر) timeline—often at a cost exceeding selectively-blind allegiance. In reality, your life involves predetermination as well as free will, a fact evident to those who recognize history was always assigned a seat at your table, whether invited or not. Luckily for Americans, their table may wobble, but it is still vast, it still contains multitudes, and unlike Hong Kong or Singapore, there are many, many empty seats available. 

I will leave the last lesson to baseball player Peter “Yogi” Berra: “It’s tough to make predictions, especially about the future.” I am uncertain of our specific place in the nation’s timeline, but at this point, whether America’s table continues to wobble until it breaks is an outcome favoring free will over predetermination. In simpler terms, it is, once again, up to the youth, especially the builders, lovers, writers, and artists. Fix the table. There is time still. 

© Matthew Mehdi Rafat (November 2020) 

These are really the thoughts of all men in all ages and lands, they are not original with me, 
If they are not yours as much as mine they are nothing, or next to nothing, 
If they are not the riddle and the untying of the riddle they are nothing. 

– Walt Whitman 

And I know that the hand of God is the promise of my own, 
And I know that the spirit of God is the brother of my own, 
And that all the men ever born are also my brothers, and the women my sisters and lovers, 
And that a kelson of the creation is love... 

– Walt Whitman

The "rise of [American political conservatism in the 1980s] showed that hypocritical nostalgia for a kinder, gentler, more Christian pseudo-past is no less susceptible to manipulation in the interests of corporate commercialism and PR image. Most of us will still take nihilism over neanderthalism." -- David Foster Wallace

Interracial Marriage Stats

Interesting data on interracial marriage from the Pew Center:

http://pewresearch.org/pubs/1616/american-marriage-interracial-interethnic

Basically, according to the Pew Center report, 26% of Hispanic women, 9% of white and black women, and 40% of Asian women marry outside their race in America.

Santa Clara County's Diversity

Just some fun links re: immigration:

http://www.nytimes.com/interactive/2009/03/10/us/20090310-immigration-explorer.html?hp

http://projects.nytimes.com/immigration/enrollment/california/santa-clara

Rafat's Law of Diversity

Here is what I call "Rafat's Law of Diversity": 

1. One constant variable in life is that change will occur.

Jim Rogers, Street Smarts (2013)

2. The ability to keep up with change and adapt to changing environments provides a competitive advantage.

3. Entities and people who adapt the quickest to change will have an advantage and will be ahead of their competition. In economic terms, this is called the ability to adapt to "creative destruction" (See Joseph Schumpeter).

4. As of 2009, the world population is becoming and has become more and more inter-linked. Globalization is occurring rapidly, causing persons who would have never interacted fifty years ago to now interact and to engage in numerous economic and social transactions.

5. In short, due to globalization, countries and entities are becoming more diverse.

6. Entities that have the ability to interact on a positive basis with numerous cultures will have an advantage over entities that either lack this ability or have less of it.

7. Entities that lack diversity appear to be slower to adapt to change.

8. Entities lacking diversity as their surrounding local or non-local environment becomes more diverse show their internal culture is more resistant to change or that they are unable to gain talent from a diverse range of sources.

9. Entities unable to draw talent from a diverse range of places or resistant to change will be disadvantaged against more fluid, diverse entities.

10. As globalization increases, entities that are more diverse will have both tangible and non-tangible advantages over non-diverse entities.

11. Therefore, more diverse entities will be more competitive than non-diverse entities.

12. As of 2009, Asians are approximately 60% of the world population. As of 2009, persons of African descent are approximately 20% of the world population. As of 2009, the United States has only 5% of the world population. Mandarin and Spanish are more commonly spoken worldwide than English.

13. The United States is a consumer-based economy that relies on domestic and international consumption of its products to increase growth, profits, and influence.

14. To fully maximize one's successful interactions with worldwide entities, one must be fluent in more than one language and well-versed in several cultures.

15. Multinational entities that fully maximize their ability to engage with several cultures will maximize their ability to gain new customers and allies.

16. Entities that fail to maximize their ability to engage with several cultures will be disadvantaged against multinational entities.

17. Familiarity with different cultures and languages will maximize a multinational entity's ability to compete globally, providing it an advantage over entities that fail to maximize their ability to compete globally.

18. "Familiarity with different cultures and languages" may be called "diversity."

19. Multinational entities that favor diversity will be more competitive than entities that do not favor diversity.

© Matthew Rafat

Update on May 14, 2012: according to an April 2012 McKinsey Quarterly report ("Is there a payoff from top-team diversity?" by Thomas Barta, Markus Kleiner, and Tilo Neumann), U.S. companies with the highest executive-board diversity had returns on equity 95% higher and earnings margins 58% higher, on average, than those with the least executive diversity.

Bonus: Individuals or groups speaking on issues is not a free speech problem. Problems arise when individuals use their free speech to gang up on private individuals or politically-disconnected minorities. Such a "minority classification" will vary based on geography. A transsexual in SF would present a different analysis than one in rural Wyoming and still another in the college town of Bloomington, IN, depending on the reach and power of the group. To smooth out such differences in power, the fed gov may and should intervene when speech presents the likelihood of physical harm to an individual targeted by "gang speech." If physical harm is not likely but access to equal protection and provision of gov services is affected, there is still a role, albeit a lesser one, for the fed gov, though in such cases, a "restitution fund" allowing the individual to move elsewhere may be the best solution. "Gang speech" may take many forms, and may include unions, corporations, or any group of powerful individuals targeting a private individual because of the private individual's speech or non-violent but non-conformist behavior. If America is to continue building on diversity as one of its strengths, it must allocate resources to maintaining this unique advantage. Just as freedom is not free, neither is diversity.

Update on January 15, 2017: "When disagreement comes from a socially different person, we are prompted to work harder. Diversity jolts us into cognitive action in ways that homogeneity simply does not." -- Katherine W. Phillips

Update on June 2017: I have created another "law" here: https://willworkforjustice.blogspot.com/2017/04/rafats-law-inflation-elasticity.html 

Brocade Communications Shareholder Meeting (2009)

Brocade Communications Systems, Inc. (BRCD) had its 2009 annual meeting on April 15, 2009. The day after the meeting, Brocade announced closer ties to IBM. There was no informal presentation. 

Although the meeting itself was bare bones, Brocade's Shareholder Relations team did a fantastic job. I don't think I've ever praised a company's investor relations team before, but Brocade's team deserves special recognition. 

First, they used a portable miniature microphone. A company representative went around the room offering the microphone to whomever had the floor. You would be surprised at the number of companies which use no microphones at all, forcing shareholders to speak very loudly or requiring executives to repeat questions. Most large shareholder meetings have one or two standing microphones where people can stand to ask questions. This works well for larger meetings. For smaller meetings held in a conference room, a portable microphone works best. 

Second, the food was fantastic without being ostentatious. In these hard times, companies need to balance saving shareholder money with projecting a strong, healthy image. No food or coffee at the annual meeting indicates a company that either doesn't care about its shareholders or is trying to cut costs to the bone. Brocade had coffee and mineral water--the basics--but it also had some of the best chocolate chip cookies I've ever had. These cookies were so thick, they looked like scones. If my mother hadn't taught me basic manners, I would have stuffed about 20 of them in my pockets. I asked someone who made the cookies. She told me it was Gunther's Catering. 

I called Gunther's and confirmed they made the cookies. He said it was his mother's recipe, and they baked them fresh every day. The company has been around for 39 years and specializes in wedding receptions. If you like chocolate chip cookies, get thee to Gunther's. 

Lest you think it was just the cookies that won my heart, I assure you that's not the case. Shareholder relations personnel handled themselves professionally. They did not treat me or other shareholders like unwanted guests crashing an internal company party. You'd be surprised at how poorly many shareholder relations treat ordinary shareholders--read my Visa post, for example, where a shareholder relations person tried to stop me from taking a picture with the CEO, who was actually happy to have his picture taken, and then demanded my contact information. 

Lacking a presentation, the meeting would have been over had shareholders not asked questions. CalSTRS and CalPERS representatives appeared at the meeting to check on their shareholder proposals. Prior to voting, the company did not allow any comments to be made on their proposals. A shareholder attempted to make some comments, but Brocade's executives refused to allow him a microphone. Their refusal seemed unprofessional, because disallowing comments on specific proposals stifles the flow of potentially unbiased information to shareholders. Although most companies will tell you to make your comments at the end of the formal meeting, polls are closed by that time. Strike one against Brocade's management team. 

After the formal portion of the meeting concluded, the California representatives asked for a preliminary tally of the votes. Brocade didn't have one. I've never seen this happen before at any major company. Strike two against Brocade's management team. 

I asked a few questions. I asked how the company was managing the integration of Foundry Networks (FDRY). CEO Michael Klayko said the acquisition was going well. I asked what specific gap in Brocade's (BRCD) products the acquisition fulfilled. Many times, companies will acquire another company to boost revenue but will lack a real need for an acquisition. CEO Klayko said that Brocade found it cheaper to buy the company than to create the technology in-house. Foundry, he said, had "more connectivity products." Also, Foundry had just released a new chipset/product the prior Tuesday, showing that the acquisition was going smoothly. 

I asked what problems, if any, Brocade had discovered in the course of integrating Foundry. CEO Klayko said that Foundry Networks' distribution channels needed work, and its "marketing was suspect." Brocade's marketing, however, was very good, and that's why the two companies would work well together. 

I asked how Brocade expected to compete with Cisco (CSCO) and Nortel (NT). Here's where CEO Klayko shined. He said that Nortel might not be the best example to raise, because of its bankruptcy. As far as Cisco--Brocade's main competition--was concerned, CEO Klayko said that Brocade offers "cost advantages." In other words, Brocade offered similar products but at a lower cost. CEO Klayko also said the marketplace wants an alternative. Only near-sighted customers want to encourage a monopoly, because maintaining the status quo would allow Cisco to keep its high margins and relatively higher prices. Another shareholder, who worked for an investment firm, asked about analyst reports relating to IBM. 

CEO Klayko said there were lots of rumors out there and deflected the question. (The very next day, IBM and Brocade announced they would be working together on various products.) 

Another shareholder asked about Brocade's real estate strategy (buying vs. leasing property) and received a vague answer. 

Another shareholder was unhappy about the lack of a presentation. He also criticized the in-person absence of 50% of the directors. In what was the most memorable line of the day, he told Brocade's management, "Make us feel like you give a damn about us [small shareholders]." 

CEO Klayko responded that all the directors were present, but some were present by teleconference. He told this shareholder that he'd seen him present at various meetings throughout the year, so the company did communicate with its shareholders. I may have misheard the next response, but the shareholder responded that the only reason he was able to get access to those meetings was as a client of a brokerage firm. In my mind, if any company is restricting or selectively disclosing material information only to analysts or major shareholders, it would be violating Regulation FD. Please note: I do not have any information about whether any violation of Regulation FD is occurring, and I am not making any allegation of securities law violations. I would be very upset, however, if any company communicated relevant information only to major shareholders post-Regulation FD. 

I asked the CEO about complacency. I asked what the CEO was afraid of or concerned about. The CEO gave me a five item list: 

1. Access to capital. 

2. New technology (which makes current technology obsolete). 

3. Acquisitions that change the competitive landscape. 

4. Innovative quality (how to maintain quality). 

5. Cost (keeping costs low to attract customers). 

CEO Klayko also talked about the "entitlement mentality." He seemed to be channeling one of my favorite CEOs, Cypress Semi's (CY) T.J. Rodgers. 

I asked about various memorabilia in the room, which included a jersey from The City that Shall Not be Named (at least according to ESPN's Bill Simmons) and a signed Hootie and the Blowfish guitar. The CEO didn't know about the stories behind any of the memorabilia. 

Here's where things got a little interesting. I pointed out that Brocade had presented itself as an all-white, all-male company. All four persons at the front of the room representing Brocade appeared to be older Caucasian men. There's nothing inherently wrong with that, and diversity does not guarantee success. At the same time, almost all successful global companies present themselves as non-monolithic. (Pepsi (PEP) and Coke (KO) are way ahead of the game in this aspect.) I also said the executive team's lack of diversity was strange because the company was based in Santa Clara County, where 40% of the population is born outside the U.S. 

One of America's greatest attributes is its ability to project an open, tolerant image, which has attracted many ambitious, diverse people. As a result, we have the Blackberry (Canadian); Yahoo (Taiwanese); Google (Russian); eBay (French Iranian); and so on. Companies and countries that fail to project an open, tolerant image will be disadvantaged as world economies become more globalized, allowing talent and money to move elsewhere. In a nutshell, Brocade appeared to be violating Rafat's Law of Diversity. 

When I mentioned Brocade's appearance of having a 100% native-born Caucasian male executive team, the one and only female on the Board of Directors, Judy Bruner, raised her hand with a smile. Ms. Bruner is probably a great person. She received her MBA from Santa Clara University, my alma mater, and Santa Clara University strives to produce ethical, well-rounded graduates. However, when the only female on a company's Board happily raises her hand to demonstrate diversity, it's hard not to think that the corporate culture is irretrievably monolithic. From my perspective, having only one female on an entire Board is not cause for happiness or active disclosure. Even North Dakota's MDU Resources, Inc. (MDU) has more females on its board (25% of its directors are female) than Brocade. Thus, to me, Ms. Bruner's reaction--immediately identifying herself as the one and only non-male Director, instead of letting the CEO acknowledge the company's lack of diversity--felt strange. By the way, with the exception of perhaps three or four people in the entire room, everyone else present appeared to be native-born Caucasian also, which isn't an inherent problem, but still unusual in a diverse city like San Jose, California. 

CEO Klayko did not acknowledge his management team's lack of diversity. Instead, he said that we needed to create better educational opportunities here in the United States, and we were falling behind in science and math. He said Brocade was participating in the Tech Challenge, which encouraged children to pursue careers in math and science. In other words, Brocade was actively working at the local level to attract diversity. CEO Klayko joked that he was recruiting [minorities] at the 5th grade level. In response to my comment that we lived in a county that where 40% of the residents were immigrants, he said Brocade was a global company, not a local one. 

Unfortunately, his response confirmed my belief that Brocade's management culture is monolithic. Most studies show that Caucasians are only 20% of the world population. Assuming a 50/50 split in females and males, only 10% of the world contains Caucasian men--which indicates the CEO's response wasn't statistically sound. Again, there's nothing wrong with having 90% or 100% of any race on a management team. In fact, after the meeting, Investor Relations pointed out that of the 8 directors, one was a female and one was Indian--not a bad percentage. It's culture I am concerned with, not race. From what I saw at the meeting, Brocade's management team seems to lack cultural diversity. Strike three against Brocade's management team. After the IBM news was released publicly, I sold all but one of my shares. If Brocade works well with IBM, its shares may go higher in value; however, Brocade's relatively high debt load may inhibit its shares' forward progression. 

I really enjoyed listening to the CEO. He appeared energetic, strong-willed, charismatic, opinionated without being crass, diligent, goal-oriented, and knowledgeable--in other words, someone born to be a leader. I could immediately see why he ascended the corporate ranks. At the same time, passionate CEOs generally need a Board and executive team willing to speak up and provide a voice of caution. I'm not sure that's going to happen. Strong-willed leaders tend to unintentionally crowd out dissent, especially when their companies lack a substantial number of women in the upper ranks. With only one female and one Indian-American on the Board, I don't see Brocade's current management team as being sufficiently diverse. Perhaps I am wrong. On my way out, I passed by a room with many busy workers. Everyone in that room appeared to be of Indian descent. 

Note: Brocade has a blog. CEO Klayko's most recent post is here. The first line of his post is this: 

We are a nation and an industry curled up in the fetal position. 

It's hard not to like someone so direct, passionate, and intelligent.

Santa Clara County's Diversity

I've always thought the best way of learning was to listen to people. Living in Santa Clara County provides many opportunities for cross-cultural education. In my law practice, for example, I've had the opportunity to interact with people from all over the world.

The number of people in Santa Clara County who were born outside of the United States is around 40%. Most cities near ports or oceans tend to attract ambitious travelers, and San Francisco has attracted what appears to be some of the most ambitious Asians, who have brought their cultural values of education and family to California:

SJ Merc on Diversity

California may suffer from inept government--the budget crisis is still ongoing, for example--but the people who live here tend to be open-minded, which allows California government to make mistakes that would not be tolerated elsewhere. It remains to be seen whether California's signature open-mindedness and tolerant attitude will continue its status as a magnet for ambitious immigrants, or whether its high spending will cause a decline in competitiveness.

Cypress Semiconductor Smacks California Gov

Cypress Semiconductor's CEO, T.J. Rodgers, continues to impress me months after the company's shareholder meeting. So many CEOs lack knowledge of their own company's product, come from a sales rather than technical background, or are just slimey (e.g. Yahoo's Terry Semel, who released information to China leading to the arrest of a blogger).

T.J. Rodgers is the opposite of all of these CEO stereotypes. He is a plainspoken, knowledgeable man that inspires confidence and whose very presence seems to repel fluff (I had another word in mind, but wanted to keep this family-friendly). Here is a two-part interview with him:

http://news.cnet.com/8301-13578_3-9887435-38.html

http://news.cnet.com/8301-13578_3-9887436-38.html

T.J. Rodgers just had a letter published in the Wall Street Journal that serves as a warning to all Californians. Mr. Rodgers writes, "Except for our sales force, our company was 100% California-based as late as the mid-1990's...[Now] 7,000 of our 8,000 employees reside outside of California. And we are moving jobs out of California as rapidly as we can. Few people know it, but so-called Silicon Valley is not really Silicon Valley anymore--almost all of the wafer fabrication plants have been shut down due to the hostile business climate."

When was the last time you heard of a CEO openly criticizing the state government of his company's HQ? If Sacramento doesn't wake up soon, California will increase two types of jobs, lawyers and low-level service workers, while higher paying jobs move elsewhere.

Here is a paragraph from Mr. Rodgers' famous letter against quotas:

We simply cannot allow arbitrary rules to be forced on us by organizations that lack business expertise. I would rather be labeled as a person who is unkind to religious groups than as a coward who harms his employees and investors by mindlessly following high-sounding, but false, standards of right and wrong...

Cypress stands for personal and economic freedom, for free minds and free markets, a position irrevocably in opposition to the immoral attempt by coercive utopians to mandate even more government control over America's economy.

Read Mr. Rodgers' full letter here:

http://www.enterstageright.com/archive/articles/0996rodgers.htm

A friend of mine emailed me saying I was contradicting myself by advocating more diversity at McAfee and EA but supporting Mr. Rodgers. I told my friend she should realize that being anti-quota is not anti-diversity. Indeed, Mr. Rodgers has beefed up diversity in his company--a quick look at current (2008) executive management shows these names:

Dinesh Ramanathan
Ahmad Chatila
Shahin Sharifzadeh
Hal Zarem
Babak Hedayati

There's at least one Indian and one Iranian now in upper management. Contrast that with EA's executive ranks, and you'll see it's like night and day.

Also, read Mr. Rodgers' 1996 letter more carefully--he specifically states that the picture will change in "10 years," which is now here:

Unfortunately, there are currently [in 1996] few minorities and almost no women who chose to be engineering graduate students 30 years ago. (That picture will be dramatically different in 10 years, due to the greater diversification of graduate students in the '80s.)

In twenty five years, when most upper management in technology companies will be Indian and Chinese (that's where the growth markets are), I bet the same people advocating quotas for non-Caucasians will not be protesting on behalf of Caucasians.

Here is another letter from Mr. Rodgers, against government spying and patriotism:

http://www.commondreams.org/views05/1229-35.htm

NVIDIA Corporation Annual Shareholder Meeting (2015)

Jen-Hsun Huang reminds me of James Dean, if James Dean was a Silicon Valley tech founder and CEO.  As Nvidia’s President and CEO, Mr. Huang’s leather jacket, jeans, and cool demeanor are refreshing to see.  Whereas most CEOs and board members crumble when presented with a question requiring some thought, Mr. Huang not only relishes the questions, he enjoys displaying his prodigious intellect.  Perhaps that’s only natural when he’s led Nvidia for 20+ years and battled Intel (INTC) successfully. 

Nvidia’s 2015 annual meeting took place at the company's HQ in Santa Clara, CA.  About 50 people attended.  Unlike in past years, there was no “annual yearbook” or product displays, and sadly, the food options have dwindled to just a few pastries, a plate of fruit, and coffee and water.  If you come to the meeting, you’re coming to see Mr. Huang, who clearly takes deserved pride in the company he’s built.

He opened the meeting by talking up Nvidia and how it’s the “best in the world in our field.” He mentioned that Nvidia early on recognized video games would be tech-driven, a prediction which turned out to be “absolutely right.”  Looking forward, visual computing and game simulations will drive technological innovation for a few more decades as video games become even more complex. 

Despite being the leader in video game technology, Nvidia no longer wants to be known as a mere video game company.  It has branched out into virtual reality (the future of video gaming), self-driving cars, and deep learning (AI, image recognition, pattern recognition, etc.).  Nvidia’s sales to the auto industry are booming, with 85% growth from FY14 to FY15.  That’s more than cloud and HPC growth—53%—during the same time period.  Mr. Huang said that future cars are going to be “computers on wheels,” and “safer and easier to drive.”  Overall, “simulation work” is largely done on Nvidia technology, which allows people to “see the world around you in real time.” 

Nvidia has two women on its board, Dawn Hudson (CMO, NFL) and Persis Drell (Dean, School of Engineering, Stanford University).  I asked how Nvidia could become more diverse, as all the board members except for Mr. Huang appeared to be white, which is an unusual composition in the very diverse Silicon Valley, where about 40% of Santa Clara County residents are immigrants. 

Mr. Huang delivered a great response, unlike many other companies, which become defensive under the same line of questioning (I’m looking at you, San Jose Water Company (SJW), with your one female board member and not a single person of color in the front of the room at your 2015 shareholder meeting).  Mr. Huang responded that “through diversity, we get better answers,” and explained that it was difficult to attract board members when Nvidia was known only as a video game tech company.  Now, as Nvidia successfully branches out into several different areas, it is getting more and more attention and interest. 

I then asked what advice he had for a new entrepreneur starting out in Silicon Valley.  That’s when he delivered the line of the night—“Don’t go into video graphics,” which caused the entire room to laugh.  When the noise settled down, Mr. Huang said that success requires serendipity, and it’s never just one person—it’s the people you’re surrounded by.  As for how he’s managed to remain CEO for so long, Mr. Huang showed a bit of a Mark Cuban streak when he remarked that he and the company (have not been and) should not be complacent.  Today, in part because of his leadership and willingness to take calculated risks, Nvidia is succeeding on multiple platforms—PC, cloud, and mobile, while some other companies struggle with the shift to mobile, such as Intel (INTC). 

When the meeting ended, I wanted to talk to some board members.  I wasn’t impressed with board member Dawn Thomas—she seems standoffish and plastic—but I was honored to talk to Stanford’s Persis Drell.  I asked her how to increase diversity on the board and in Silicon Valley.  She said it would take time, but talking about the issue was the first step.  Also, diversity of experience matters, not just race or gender—she remarked that one of the best people she had on her team was a white gentleman who was ex-military, and because of his military experience, he was comfortable pushing to get things done when others might sometimes dither. 

As for why persons of color in America are underrepresented in the science and engineering fields, she said some of it has to do with resources.  Many kids have access to computers and other resources at an early age, but this access is not universal.  I couldn’t help but think of where Bill Gates might be had his parents not enrolled him in a school where a computer company provided computer time for the students.  In the 1970’s, having access to computers was not common, and Gates’ privileged access allowed him to become who he is today.  It was a pleasure speaking to Dr. Drell. 

Let’s start talking about diversity, complacency, and other difficult topics, folks.  The world ain’t gonna fix itself, but as long as there are people like Dr. Drell and Mr. Huang—intrepid pioneers who aren’t afraid to meet challenges head-on—I have a feeling things are going to be just fine.

(Originally published May 21, 2015, referring to NVIDIA's May 20, 2015 annual shareholder meeting.)