Tuesday 17 September 2019

Conquering Silicon Valley with $500

Entrepreneur Tim O'Reilly rose up during tech's infancy, and says it has tough choices to make about its future, writes John Reynolds

O’Reilly Media founder Tim O’Reilly. Photo: Getty
O’Reilly Media founder Tim O’Reilly. Photo: Getty

John Reynolds

Kerry-born Tim O'Reilly lives up to the monikers he was given in 2010 by Inc. magazine - 'the Oracle of Silicon Valley' and its 'leading intellectual' - during an 80-minute meeting at his home in suburban Oakland, across the bay from San Francisco in California.

The founder of O'Reilly Media, a tech-related and e-books publisher that expanded into conferences and online learning, he has spent over 40 years in business, during which time he popularised the terms 'Web 2.0,' and 'open source'.

Softly spoken, with an easy-going California manner, O'Reilly sits in his light and airy living room, which overlooks a sunny back garden. He wears Ugg-like boots and a natty pink shirt and dark trousers. His firm, of which he owns 85pc, has annual revenues of $200m, and its Safari learning platform could be extremely valuable, judging by the valuations of similar firms Lynda.com - $1.5bn - and Pluralsight, valued at $2bn.

"What I really care about is finding people who are doing something new and interesting that I think other people want to know about and that they can learn from. My whole business has been built around that," he says.

"It [O'Reilly Media] makes significant money, and has grown slowly and steadily over 40 years. I've always been interested in doing interesting work, rather than making a lot of money."

Extremely well-read, and a keen tweeter (with 1.8 million followers) and writer, he refers to more than a dozen fellow writers and their work as he talks. The polymath also expounds some of his views on the state of America, Silicon Valley, policy-making and the economy, as well as a number of the ideas he talks about in his most recent book, WTF? What's The Future and Why It's Up to Us.

O'Reilly's Irish roots are on his father's side, who is buried near Killarney. He was a neurologist who was very religious, and grew up in Lissivigeen. The whole family moved to San Francisco when O'Reilly junior was a baby because of his father's work. His mother, who hailed from Yorkshire, reared him and six siblings - something which took up much of her time in the family home, he recalls.

His family retains a link to Kerry, as they're partially restoring Flesk Castle near Killarney. "It's a fun project that gets us all over there and gives us a bit of a focus back there, as I hoped it would. The views towards the lakes are amazing," he says.

Owning a castle was probably not something he imagined for himself when he started out as a writer. After he graduated from Harvard in 1975, a friend asked him to write a book about sci-fi writer Frank Herbert. He also got an arts grant to transcribe some notebooks of a friend that were translations of works by Greek philosophers.

Another friend, a computer programmer who he had met through the potential movement, then asked O'Reilly to help him write a manual in 1977. That was how he began writing about technology and computers in 1983, working with a small team in a converted Massachusetts barn.

"From very early on, I was adamant that I didn't want to work for anyone else. I resolved to carry on writing. I stayed in partnership with my computer programmer friend for four years, and then we went our separate ways and I continued the firm as a tech writing and consulting business.

"I told myself I'd do it for maybe five years, and then I'd be successful enough not to have to keep doing it. And, of course, here I am 40 years later.

"I described it as a lifestyle business that got out of control, providing interesting work for interesting people. My goal wasn't to build a big business. I wanted to have control over my life. It was started with $500, and we've always bootstrapped, and always been profitable."

The business, then called O'Reilly & Associates, expanded from printing manuals into early online publishing.

It became "a gathering place for creators of the open source software that we were writing about". A 1992 user guide and directory for the early internet that it launched as a web portal in 1993, Global Network Navigator, was sold to AOL in 1995.

Industry watchers including LinkedIn co-founder Reid Hoffman have observed that if O'Reilly had held onto GNN and "blitz-scaled it" it may have become what Google is today, but a lot sooner than Google did. Today Pearson is the biggest rival of O'Reilly's Safari online education platform, but is also a partner too. Customers include Nasa, BMW, Google, Nike, Microsoft, Bloomberg and their employees. He doesn't rule out floating it or selling it - only "to the right buyer" - when he feels the time is right, because his kids don't want to run it. He's "looked at options, but it's complicated".

He says the central idea of his book "is that our future is not inevitable. There's a pessimistic part and an optimistic one. What I'm trying to do is frame AI, tech, the economy and their impact on society. In the end, I'm optimistic."

He points to people's generosity with open source software, and Tim Berners-Lee putting the internet into the public domain, as well as how Google's search facility has improved over the past 20 years and keeps getting better because the internet giant has the right incentives to do that.

"Ultimately, I think Facebook and Google mean well. We should put the blame for some of this more squarely on what I call the master algorithm of our society, which is shareholder value. My book's fundamental message is that our financial system is profoundly based on the wrong incentives."

Germany, Scandinavia, and the priorities of post-WWII US capitalism point to a better approach, he says, adding that Fox News is as much to blame for the state of US politics as Facebook may be.

He concedes that if Facebook really wanted to be a force for good, it wouldn't accept any political advertising, and accepts that people are calling for it, Google and Amazon to be broken up. But he adds that their various impacts, including economic ones, need to be accurately measured, which he claims isn't being done.

Ultimately, he thinks the tech giants will continue to face heightened regulatory scrutiny, and perhaps actual robust regulation "which is probably needed urgently. People are turning against them. But the economy rewards Amazon and, say, Walmart, for making extractive profits.

"Financial markets have the wrong incentives. It's in the design of what is a bad system." Is he optimistic about artificial intelligence, or does he share the fears of the late Professor Stephen Hawking and Tesla boss Elon Musk, who said if used without great caution, it might end mankind? Other issues, such as of bias, uses of facial recognition, tech giants working on AI with the military, and the urgent need for transparency and dialogue with academia and civil society are rapidly emerging as well.

"I think it's possible to design systems that are optimised for the right thing. If they're fundamentally untrustworthy then that's wrong. And I do believe in the idea of the objective runaway function [where an AI could conclude that humans are an obstacle to its objectives and takes decisions that could be harmful to people]. I think there are going to be challenges for our society."

He cites Kate Raworth's Doughnut Economics, which talks about economic undershooting: people not having enough food, clean water, a home or healthcare access, and overshooting: climate change and environmental damage.

However, he is optimistic about increased automation, as long as robots are taxed. Workers closest to the work should be involved in automation - not consultants or CEOs. Robot taxes could pay people for things like childcare, caring for elders, doing community work and other socially useful work.

If robot owners and tech giants keep the spoils, "we'll have an even bigger populist backlash. There will be less work for people, less meaning and purpose for them, and less money circulating in the economy. We're in an age where finance is seen as the source of all value, that capital creates value and should get all of the returns and that's wrong," he adds, referencing Mariana Mazzucato's book The Value of Everything.

"I'd like Elon Musk to build some robots that will fix California's water system, or helping us build and improve other ageing infrastructure, maybe in transport. There's so much socially useful work like this to be done that robots and AI could be doing, helping to tackle some of the great problems we're facing. On one long term demographic view, we either need immigration or robots in our labour force."

He's also an advocate for software coding. His wife, Jennifer Pahlka - who worked on tech policy in the Obama administration - founded Code for America, which aims to improve government services in a digital age. "Coding gives you agency. It's a power tool for the mind, and you can see whether what you've written works," he affirms.

What does he make of Silicon Valley tech founders and CEOs buying land in New Zealand if they need to flee a disaster, or Jeff Bezos' and Elon Musk's forays into space, where they say humans might need to live? In relation to New Zealand, he says it's "destructive behaviour. But I love the space stuff though. However, I think we should get better at living here. The two aren't mutually exclusive".

He backs startups as a co-founder of VC firm O'Reilly AlphaTech Ventures (OATV). "Most VC funding goes into horse races where you'll only have one winner. Most of the rewards then go back to the VC investors. Some of them package up companies to sell on or take public and in some ways are not unlike the banks that caused the 2008 financial crash. I want to invest in firms that can only do well by doing good," he says, conceding that OATV does invest in more conventional fast-growing tech firms too.

One of his investments, in The Long Term Stock Exchange - founded by entrepreneur and The Lean Startup author Eric Ries - promotes long term share ownership and a move away from businesses' short termism. Another is Zipline, which is rebuilding infrastructure for healthcare in Africa and developing countries.

"You can tell very quickly whether a business is a real company or a financial play. Real firms' founders talk about their customers and revenues. The financial play guys emphasise how much money they've raised. Actually, some Silicon Valley social events are like that," he concludes with a laugh.

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