During the referendum on Brexit while vacationing in Italy, I do remember watching the TV news at 11 pm. My wife and I felt asleep under the impression that UK will stay within Europe. Than at 7 am, checking the news again, we discovered that all the medias and the polling companies agencies were wrong. I spent then a fair amount of time reading and trying to understand the reasons of this vote and also why the “informed” elite and medias could be so wrong.
Flying back to San Francisco early July 2016, I could not stop developing a strong concern that USA could face a similar surprise. All the “informed” elite of the West coast and East coast was forecasting Mrs. Clinton as our next president.
I had just finished a fabulous book called Superforecasting, the art and science of prediction by Philip E.Tetlock and Dan Gardner. All of us are making decisions for any event of our life such as changing jobs, buying a house, getting married, making an investment but when big events happen such as market crash, wars, economical and political crisis, we turn to experts, those in the know. This book demonstrates that a lot of educated citizens will deliver better forecast then “experts” backed by years of survey and data gathering done by the authors. These citizens described as Super forecasters spend time analyzing data on a regular basis and avoid biases of experts. Why? Expert has pre-conceived ideas: it cannot happen; it will not happen… these assumptions create an intellectual filter rejecting the data that would indicate a different outcome.
The day of the election, I was driving home after work listening to the news on the National Public Radio (NPR). I heard for the first time about the difficulties of Hillary Clinton in Western Virginia at 5h30 pm PST. It was a state due to be Blue (Democrat) according the polls and media consensus. Immediately, I became convinced that the “experts” got it wrong again. Then everything went downhill for her campaign and Mr. Trump will be sworn the 45th president of USA on January 20th 2017.
Both campaigns were using an enormous amount of data and analytical algorithm to understand their voters based and target speaking location and timing to maximize the change of making a state swing in their favor. Silicon valley loves these data analysis and these projections. All the computing technologies, software algorithms experts, data scientist building the “new economy” turned to be wrong. Artificial intelligence and predictive analytics that should avoid the mistakes made by human were wrong.
On Nov 9th, Silicon Valley woke up with a terrible hang over… The strongest democratic state after Washington DC, center of the redefinition of the new economy with Uber and AirBnB will have a new president elected by the “old” economy. Voters from the Midwest, the Rusty Belt left aside since the 2008 crisis by the economic recovery claimed their rights to be listened and voted against the Washington establishment. They endorsed the vision of Donald Trump of more nationalistic policies, limitations to the globalization and free trade combined with a strong reduction and control of the immigration. The pro Trump voters forgave his verbal excess against woman, Mexican, immigrants, and the gay community and in the hope of getting of renewed consideration in the American society.
One month after the shockwave, the Silicon Valley eco system is challenged in its most fundamental beliefs:
- Globalization, free trade, no government interference is good for the Tech Business.
- Free immigration is the engine of Silicon Valley. A large proportion of the smart engineers in the world want to come and leave here to build the next Google, Tesla or Facebook.
- Inclusion and political correctness is the cement of the multicultural communities (Chinese, Indian, Mexican, Taiwanese, Korean, French, Swiss, German).
- Keep as far away from Washington and its policies
- Smart and motivated engineers can fix any world problem
- Open and free to use social media platform such as Facebook, Twitter is good for democracy.
- Money is not an issue due to the large amount of capital ready to take outsized business risks.
Since the 2008 recovery, a certain form of isolation and arrogance has developed amongst the elite living in a protected bubble. A large proportion of leaders of Silicon Valley are discovering the real live of real people since Nov 8th. The Silicon Valley “bobo” driving their Tesla between San José and San Francisco never visited Central Valley major agricultural region or the northern part of the State living on fishing and logging. The same people very proud of the success of AirBnb and the new shared economy forgot that a lot of people are renting bedrooms or their home to get an income to complement mediocre salaries and not because it is “cool”.
Silicon Valley is perceived now as the “establishment”, the rich capitalists and no more the creative minds challenging the status quo in the rest of the country.
Point by point, Silicon Valley will have to address the following issues
- The winner take it all outcome of the technology capitalism accumulate huge amount of cash (Apple has a cash reserve of $216B) outside the country. How and when to bring back these massive reserves. Where to invest them? How will the tech company’s profits evolve with more commercial tensions between partners?
- Immigration will become more difficult. Young students admiring USA and its model may have some reserves to come and immigrate to country led by Mr. Trump. A slow down of immigration happened during the mandates of Mr. Bush both due to a limitation of the visa and a poor international image. How will the tech companies continue to access the best talents in the world?
- Will the policies of Mr. Trump create tensions between communities? Illegal immigrants are maintaining the garden or building the homes of tech entrepreneurs and venture capitalists, cooking and serving in restaurant and are picking up fruits and vegetables in Central Valley. Given its strong stance on China, how will the tech industry fully dependent of Chinese manufacturing re balance its manufacturing sites? How will the Chinese community and government react? The majority of the semi conductor components used to build data center computers; smartphones and tablets are imported from Taiwan, China, and Korea.
- Well. Washington will come to Silicon Valley. The administration of Mr. Trump will define policies to bring back jobs in the country. The technology industry will be part of his agenda. The tech industry is certainly one of the most globalized industries in USA. How will tech leaders behave in personal meetings with Donald Trump? They want to change the World; he wants to make America Great Again. Any convergence?
- The failure of the polls, the failure of the prediction will challenge the advocates of big data, analytics and artificial intelligence. A more realistic assessment of the state of the art of the technology and its capability is in order after such a fiasco.
- Facebook, Twitter claim they are independent social media platform. But extremists to push their agenda and diffuse false information more and more use them very astutely. Will these companies apply limitations to politically inappropriate content? Will they face some kind of regulation?
- This last point will not change. Venture capitalists will always take risks and fund new start up. In the short terms, the financial market is reacting very positively at the removal of the Dodd Frank regulations for the financial sector.
Optimism is the engine of Silicon Valley … Some virulent anti Trump are working now on finding the positive outcome of its policies. They hope that pragmatism and reason will prevail and that the power of the USA institutions and democracy will force him to re assess some of his campaign claims. I am European and history has taught me that democracy is a fragile system, What if the “experts” of Silicon Valley get it wrong again? Let’s behave as super forecaster and analyze the facts and data objectively without any bias.
