This week I had the privilege of recording a meeting with a friend and former Silicon Valley CEO to discuss the potential impact of Indian outsourcer Satyam’s fraud on the local business community and the people who live here. Although “Mike” (not his real name) doesn’t say much about the disgraced firm Satyam, he does offer a few unabashed insights about how the culture of corruption has permeated Silicon Valley and describes India’s “distinct culture of corruption” and its overall, negative impact on the downward spiral of Silicon Valley here:
“Andy Grove talked to Businessweek recently, and he indicated that Silicon Valley needs to innovate. Well, he got that part right. But what he didn’t say is how, over the past twenty years, Silicon Valley vc’s and executives have descended into a corrupt and soulless culture of literally selling out their greatest assest: the American scientist. Nowhere in that article did Andy mention how his colleagues turned against the American professional while a few greedy bastar$s befriended the morally bankrupt culture of India, by outsourcing our jobs to their population so they could personally profit. It is you know, no different than human trafficking, and they are ok with that. What Silicon Valley needs to do now is invest in sustainable, local talent and business plans that will make modest, sustainable ROI. The days of the fast IPO without a sound/working product or service are over. If Satyam’s fraud sends any kind of message at all to the public, let it be this: the days of using American livelihoods for bargaining chips to enrich a few global elites through Indian outsourcing firms are over. If they're not, welcome to the seventh circle of Hell.
Thirteen years ago, my venture backed, thirty-five person start-up was eventually sold to a larger U.S. corporation (a portfolio company of one of our lead investors). The company was founded three years prior, and although our technology was still in its early stages of development, there was no shortage of vc introduced “suitors” expressing interest in acquiring the technology. This was my first and last start-up, and I am now retired, occasionally working on a consulting basis or in an advisory capacity on referral. I used to sit in meeting and listen, with shock, really, how these vc’s had no compunction whatsoever to tell us how we didn’t really need the guys we had (computer scientists) on staff and that we needed to replace them with extra “IT guys” who could do “the same stuff for less!!” IT guys! Many vc’s I have dealt with do not even know the difference between computer scientists, engineers and “IT guys”, but they were ALL quick to instruct us to work with a predetermined list of legal/HR firms to “get the staffing ratios right.”
It is unfortunately pretty likely that the fallout of Satyam’s scandal will be minimal, since I do know there are executives and vc’s scrambling around to do “damage control” in order to protect the Sacred Cash Cow of outsourcing. Ever hear of Compete America? A powerful lot of lobbyists who will stop at nothing to keep cheap workers coming in here from India whether Tata, Satyam, Wipro or the rest of them. It’s hard to say if it will backfire, but it is long overdue that it does. This practice of hiring Indians to do the work of local professionals has been an obvious boondoggle from the get-go, and anyone from the boardroom to the cubicles who is the least bit honest will tell you the same thing. It has been a disaster. Most of them don’t even speak English, and are they are thrust anyway at the local scientists whom they are supposed to “help round out” product teams before having to “train them” right before they are laid off. Is this right? Of course not. Does it happen? Every day around here.
The practice of hiring Indians was the brainchild of Larry Ellison and Bill Gates who realized, without any conscience, they could wildly, wildly pad their personal profits by paying their workers less, and get away with creating a culture of indebted servititude to boot. This is no small coincidence that the quality of customer service and product development has continued to degrade with the onset of outsourcing. Twenty years ago, businesses cared about the customer experience. With Silicon Valley’s flood of Indian workers, came a rise in Indian elite executives who particularly emulated the culture of entitlement, seeking to entrench themselves on the financial side with the investment banks. This culture is poor, and by extension, seeks to take from others in order to survive.
By the way, it’s also no secret around here that the Goldman Sachs guys running the TARP are “appointed” to make sure a few well-connected elites from the local vc community are taken care of. You see, the collapse of technological innovation is the direct result of Silicon Valley’s venture capital community plying their start-up investments with sleazy MBA’s instead of seasoned technologists. (THERE HAS BEEN NO OVERSIGHT out here for so long, that it is a wonder Satyam even got the press coverage it has.) The number one goal is, of course, for any vc to make money. I have no argument here. But the emphasis upon the deliberate sacrificing of quality in exchange for a quick in-and-out IPO or acquisition established the precedent of “me first” corruption that the Valley is now stuck with.
Although an American business person’s handshake was/is supposed to mean your word, this is not -- nor has it ever been the case with the Indian businesspeople, a predominant culture of back stabbers, liars and cheats, and this is no secret. That’s the way it is. Sure, we have our share of corrupt Skillings (Enron) and Maddoffs; but these people are far worse. From my first and last business dealings with Indians, they have no qualm with lying and cheating and they operate on this level as if it were expected. And they use the people of their populations as human trafficking chips so that our vc and business community leaders can exploit them for personal profit. I know that the collective spirit of our population would find this reprehensible, if they only knew. The perpetual chokehold Bill Gates and Compete America has on the U.S. government to silence the atrocities of outsourcing through its payoffs to elected officials is staggering, and the American public is left with only propaganda about how wonderful outsourcing is while it destroys the lives of Americans. It is a globalists dream, not an American one.
Most people would be amazed by the aura of protection that these people are afforded by the local vc community here; but the demand for cheap labor and suppliers from India is their cash cow, as innovation dried up, it was and is their one tried and true line to personal profit. It is the only one they have left. There are comparatively not many of them, but these few insulated vc’s and associates hold enormous power to seek protections with D.C. inititiatives and paid off think tanks which shield them against the general public as they cook up business plans and seek tax incentives to keep them in positions of power, prestige, and “wealth creation.”
It’s no secret that venture capitalists will not fund start ups here who do not use questionable HR firms to hire H-1bs and other “preferred and/or recommended” Indian workers who are paid less than their American counterparts. It is also no secret that, with little exception (and there are a few exceptions, of course) the quality of the Indian workers is far inferior. What most people do not understand is that the vc’s structure of funding companies has changed considerably over the past twenty years. They now do not want a strong American base of support, but prefer to hold secretive parties amongst Indian elites to broker lucrative deals, (primarily labor and supplier related) that negatively impact the people here in the local community. This is going on all over the country, too. HR firms are wedged between start-up executives who are When Al Gore joined KPC&B (Kleiner Perkins, Caulfield & Byers) the stealth mode/secretive “need to know basis” climate has only increased, with the local press as well as the business community members finding themselves in a heighted “invitation only” business culture dominated by East Coast MBA’s. There is also this curious rise of republicans who seem to have forgotten what partisan politics are. Twenty years ago it was common for executives to donate to both parties somewhat equally, but today, there is no discernable distinction between loyalties and this is also what is different.
At any rate, start-ups are now finding it difficult to obtain funding from an increasingly anti-nationalistic funnel of money that simultaneously is being administered by the foxes guarding the hen house, Goldman Sachs. Obama takes his marching orders from them, and not vice-versa and Gore is the man behind the curtain. Funny, how Obama is talking about “IT spending.” The increase in IT health spending is no accident, and has his carbon footprint all over it. Do you really think IT health spending is going to cure cancer or expand access to quality healthcare? Hahahaha, the American public is duped again. That “IT healthcare” spending Obama is talking about is merely a giveway to a few wealthy people out here, (I’ll get you the list) just like all that TARP money is also.
Satyam is on of several corrupt, shameful organizations that should never have taken root in this country, just like the other outsourcing companies that have ruined the quality of our products and lives of our scientists and their families. Now the “productive sector” is all but exhausted by the burden of debt and the small, global wealthy elite (maybe there are six million, I don’t know) are desperately continuing their hording behavior to ensure that they buy the right politicians to keep that money all in the family. What Andy Grove didn’t mention, or certainly didn’t have the guts to say, is how the pre-czarist Russian mob M.O. has arrived here, right here, only in the form of a caste system. It will take some “act of God” to clean up the stench left from the embedded outsourcing culture of corruption and to return this business community to a semblance of integrity, if ever at all.
Ironically, I still must say, the next Silicon Valley will be…Silicon Valley.
I’m personally proud to have been a part of being one of the boring old technologists who managed to employ a few smart, talented computer scientists and engineers, some of whom I helped contribute to early retirement. I have no regrets being here, only to say that I wish my unpopular (by comparison) commitment to ethics and goodwill was more pervasive.
Maybe with a little luck, this next generation will throw all of these bums out. In the meantime, why isn’t the Indian government working with its own business community to get their people busy doing something sustainable for themselves in their country for a change? I know that question is on the minds of many people around here right now. It might not make Bill Gates horde as many billions as he desires, but just think of the re-emergent potential for innovation by returning to the roots of what made this place great: support of our own communities first.”