Google is moving to Moscow!

Google is moving to Moscow!

Google is moving to Moscow! Not really. But Mr. Sergey Brin, the founder of Google, was born in Moscow. How does Russia ensure that Sergey 2.0 will stay in Moscow – and not flee to Mountain View? You should care. Russia’s economy is over leveraged in the energy market. When oil prices drop, the Kremlin will be all the more desperate to do unwise deals for arms, among other things, to fill its coffers at the risk of longer term Russian — and American — stability. To keep Sergey 2.0, the Kremlin should take the following steps.

1. Encourage entrepreneurial risk taking

Who likes failing? Nobody does. But failing is a necessary part of being an entrepreneur in the tech space, and can be like compost for future successes. Numerous players, including Steve Jobs, failed miserably before they succeeded. He started Apple, was kicked out, started NeXT, that failed horribly, and created America’s largest capitalized company. There is a lesson to be learned from success stories like Apple for the Kremlin, whose oil and natural gas sales accounted for almost 70% of exports in 2013.

By failing to diversity its economic portfolio into the technology sector, Russia’s economy remains overly beholden to the volatile energy market. When oil prices drop, as they have recently, the Russian ruble suffers. This also makes the Russian economy subservient to good short term but bad long-term deals. To make Russia more economically robust in the long term, which ensures that America has a stable trading partner (Ford currently has a factory in Saint Petersburg), Kremlin policy makers should encourage more entrepreneurial risk taking among its inventive youth. This will make it more likely that a Russian version of Google will arise, employing numerous Russians and giving the country an alternative revenue source alternative to energy. This means going backwards and dismantling some of the centralized state control apparatus — whether under the Czar or under the Bolsheviks — that dominates Russia’s history.

Going backwards isn’t always bad. As any tech entrepreneur will tell you, including Mr. Jobs if he were alive, oftentimes you need to go backwards before you can leap forward. That’s why those who risk more get more. But most cultures – including Russian – look upon failing as being weak. While I am a California boy hailing from the City of Angels (Los Angeles), I have been living in New York City for twelve years now. And I can tell you first hand that the mentality here is less failure forgiving than in my Los Angeles birthplace, where, according to artists like Moby, there is “freedom to fail.” This explains why most of the top 50 venture backed companies in 2011 were located in California.

Like Californians, Russians are inventive, too. That’s why they were first to the moon, are the top rated chess players in the world, and are number 14 on Bloomberg’s list of most innovative countries in the world. But, as MIT points out, there is a difference between inventing and innovating. It’s one thing to invent something, like new ways of training for hockey, as recounted in Red Army, a documentary about the Soviet Union’s invincible Red Army hockey team. It’s another to take that invention and make it an innovation by packaging and marketing as a product that will disrupt the market. Part of the reason why there isn’t more innovation – as opposed to just invention – in Russia is the fear of commercial failure, as I have seen with Russian clients.

To temper this fear, Kremlin policy makers should encourage schools to teach Russian children about the benefits of trial and error so that they know that the risky path less taken isn’t necessarily the wrong one.

Otherwise, the world wouldn’t have Apple, Microsoft, or Google.

2. Create tech incubators

Some say “isolation is required” for creativity to flourish, as the famed Russian physicist Isaac Asimov says in his essay On Creativity. Others say that creativity is collaborative, as recounted in The Innovators by Walter Isaacson in telling about the starting of companies like Texas Instruments by a team of mavericks. Like with most things, the truth lies somewhere between these two poles.

Even Mr. Asimov says that cross-fertilization of ideas happens best when creative types are able to collaborate in an environment that encourages “ease, relaxation, and a general sense of permissiveness.” That’s because “the world in general disapproves of creativity, and to be creative in public is particularly bad. Even to speculate in public is rather worrisome. The individuals must, therefore, have the feeling that the others won’t object.” This means Russia needs to develop incubators and co-working spaces where collaborative creativity can thrive.

The benefits of such collaborative creativity can be seen throughout the United States. It can be seen in California or even New York skate parks, where kids make up new moves on their own, but try them in front of others to receive applause, pointers, or thumbs down. It can also be seen in tech incubators and co-working spaces located in both states – and in places like Cambridge, Massachusetts – where start-up companies work on their own inventions, but then can have practice pitch sessions in preparation for venture capital showdowns with other start-ups.

By mixing the collaborative and individualistic aspects of creativity, these innovators are able to get better feed back on their minimum viable products — a sample of the larger product to test — in preparation for either venture capital pitches or launching into the marketplace. This type of feedback is impossible in pure isolation. It would be like me testing out one of my new novels on a maple tree in Maine. The tree makes for an obedient audience, but I don’t want that when trying out new work. I want the good, bad, and ugly comments – stomach punches! – so that I can perfect my work for the real world.

The same type of culture can be encouraged in Russia by funding incubators or shared work spaces where entrepreneurs can find the environment they need to prosper.

3. Keep public hands off private intellectual property

Some products are produced and developed with government – taxpayer — money, and others with private money. To the extent I am developing a product using public money, then it is to be expected that the government – taxpayers – will own the the fruits of my labor. In that case, public copying isn’t theft. If, however, I receive private money for my development project, then the government should have less of a stake in the pot of intellectual property gold at the end of my entrepreneurial rainbow. In such a case, public copying is theft.

This risk reward relationship is one of the main drivers of innovation. Of course, some creators will make things regardless of the economic benefit. But these folks are usually hobbyists, not professionals. Those who seek to take a new product to market with their own — or borrowed private — money will expect to receive the financial spoils, and to have the state enforce their intellectual property rights, whether they be copyright, patent, or trademark. To the extent that the Kremlin is able to take away this pot of gold at the end of the rainbow from law-abiding citizens — not tax cheats — as a form of redistribution or retribution for challenging centralized power, then Russians like Mr. Brin will continue to flee to the West. This will further leverage the Russian economy into energy, and make job creating private tech innovation a pipe dream.

However, if the Kremlin makes the next Sergey Brin firmly confident that the gold at the end of his tech rainbow will not be seized, or otherwise taxed at 99%, then tech innovation will boom in Russia.

4. Ensure legal stability

Finally, there needs to be regulatory stability in Russia. This means that before I launch a new tech gadget product, the law might be settled concerning the patentability of a piece of hardware I developed, or copyrightability of source code. However, if the government is able to be lobbied by a larger competitor so that the law can swiftly change via regulatory diktat, smaller tech entreprenerus can no longer rely on the law being principled, which is what many smaller entrepreneurs in the U.S. feel about the legal system. Further regulatory uncertainty is created — which isn’t not good.

Such uncertainty is one of the biggest obstacles to creating and fostering an environment that encourages innovation. Sudden regulatory changes create a new factor that may go wrong after launching a product, or in the process of research and development. These types of regulatory changes also add another barrier to entry. In the United States, it makes it more costly for products to be developed by cash strapped start-ups without having expensive regulatory lobbying might in Washington D.C. so as to protect against well-connected competitors. This explains why so many companies from Silicon Valley now have lobbyists in the Capitol, whereas they didn’t before. The Kremlin can learn from Washington D.C. what to do — and not do — to enhance tech innovation in Russia.

Don’t be surprised to see a Silicon Moscow in the coming years. This will be beneficial to Americans since it will make it less likely that the Kremlin will do short term desperate arms deals that will be injurious to longer term Russian — and world wide — security and stability. It will also give American companies another fertile market in which to do business. And yet to get to this tech motherland, Russia will need to create the right type of environment. If it does, watch out for Sergey Brin 2.0 in Moscow.

Is your design inspired or stolen?

Is your design inspired or stolen?

Are you a crook? Jonathan Adler may consider you one when you use an edited, transformed, and artistically styled sample of his pillow design to create a custom-made wallpaper design for a client. But would he be right? These days, it is getting harder to tell, but there are still guidelines that can help you navigate the sometimes murky waters separating inspiration from infringement.

To make a custom-made wallpaper design for a client, assume you copy Mr. Adler’s black vine design that was inspired by an ancient Japanese kimono vine design, and that there are many types of this vine design in the pillow market. You then transform the vines by making them look shabby and worn out, use pink instead of black, and infuse the pink with the copies of the American flag. Imagine, then, that you combine the transformed Adler design with 9/10 other types of content from elsewhere, including a starry sky design pattern from Ralph Lauren Home to make your wallpaper.

Does your wallpaper infringe Mr. Adler’s copyright in the kimono vine inspired pillow design? Does it matter if you made up your own vine design that differed from Mr. Adler’s design, but which used his, among others, as inspiration?

The answer to these two questions depends on a number of factors. For the first question, given that you clearly copied Mr. Adler’s design, the question is whether the “fair use” defense would apply, part of which asks whether you sufficiently “transformed” Mr. Adler’s design to make it different enough from the original. The closer you get to a complete metamorphosis of Mr. Adler’s design – think the caterpillar becoming a butterfly – the safer you are. That’s because if your work and Mr. Adler’s are that different then people won’t think that Mr. Adler designed your pillow.

For the second question, you may not even need to get to the fair use defense. That only comes into play when you have actually copied another person’s expression. Because you merely used Mr. Adler’s expression of the Japanese vine design, among others in the marketplace, as inspiration to create your work, and your work differs from Mr. Adler’s, then there would in all likelihood be no infringement. That’s because copyright doesn’t protect the idea of the Japanese vine design, only Mr. Adler’s particular expression of it. Given that his expression isn’t original in the marketplace, it will most likely receive less protection than something truly off the wall – and original.

In the end, a completely original design is the best policy. That being said, designs are rarely completely original. The more your design exactly resembles another person’s work, the closer you are getting to the infringement line.

Michael Jordan was an MVP, but would he like the lean start up’s MVP?

Michael Jordan was an MVP, but would he like the lean start up’s MVP?

Michael Jordan. Ever heard of him? The winner of the Most Valuable Player five times, Mr. Jordan was one of my heroes growing up. While I am sure he loved winning the MVP all of these years, would he have liked the minimum viable product (“MVP”) of the lean start up methodology? What on earth is that anyway?

The MVP theory says that before you put your head down for months, or even years, developing a fancy business plan with the likes of Harvard, Chicago, or Stanford MBAs, you should first test the idea via an MVP. Say you are seeking to develop a social networking platform that will require retention of a large data base of names, and that the software you are creating will require much effort — and funding — to create. Before you create the whole network, you may want to make a sample that is big enough to get feedback from the marketplace as to functionalities that will be well received, and others that will not, before you create the whole.

When he entered the NBA, Mr. Jordan was criticized and cajoled for having larger shorts than anybody else in the NBA, and for also sticking his tongue out when he played. If he abided by the MVP method, would he have continued? Or what about Steve Jobs, when he sought to make your personal computers pretty, instead of the regular drab look that IBM was creating at the time? Would he have continued on his path if, after being ousted by the board of Apple for spending too much on hardware design, he sought approval from the market via an MVP?

Probably not. As I covered along with Silicon Valley Software Group in our first panel discussion, entitled Choosing the Right Technologies for Your Next Product, at San Francisco’s General Assembly on April 2, the MVP was created in reaction to the “build it and they will come” ideology. Einstein said “religion without science is blind” and so, too, building hardware or even software without any idea of what the market will or will not like is like flying in the dark with no radar.

But the reason why we call certain people innovators is that, in some ways, they can see in the dark. They are ahead of the market, close enough to get its energy, but not so close so as to be eaten up by it. The shortcoming of the MVP is that, if you are really looking to make a big bang, the positive relationship between risk and reward says that, in the end, you need to be aware of where the market is, but also have faith in your vision of where the market is going to be.

Now, most NBA players wear the larger shorts that Jordan sported when he first came into the league, and Apple is the largest company, in terms of capitalization, of the United States. MVP has its place in terms of spending scarce venture capital funds in an efficient way, but too much worshipping at its feet will make us all followers and diminish innovation.

Doth not a rose by any other name smell as sweet?

Doth not a rose by any other name smell as sweet?

Doth not a rose by any other name smell as sweet? Of course it does. The same is true of an isolated gene. It may have different uses and molecular characteristics once separated from the human genome. However, the genetic code within the gene remains the same. Because such code is found in nature, the isolated gene should not be patentable subject matter. And yet the United States Court of Appeals for the Federal Circuit recently ruled in The Assoc. for Molecular Pathology, et. al. v. Myriad Genetics, Inc. (“Myriad”) that such a gene is patentable.  In so holding, the Court went too far.

Myriad filed a patent over BRCA, which is an isolated gene from the human genome. Think of the BRCA as a link from a chain link fence. The company then used BRCA for various purposes, including the treatment for breast cancer. Indeed, the company filed a patent for such uses and applications. This patent was not the subject of the dispute.

Instead, the dispute centers on whether Myriad has the right to a government sanctioned monopoly over BRCA. A majority of the Federal Circuit held that it did. The majority’s reasoning: while the genetic code that underlies the BRCA is the same as the genetic code found in the human genome, the molecular nature of the BRCA changes once isolated from its chain. This is akin to saying that a link from a chain link fence can be heated and bent into forms that would not be possible if the link were still in the chain link fence.

However, the fact remains that the link still is made of the metal from which it came, just as the BRCA has the same generic code. Of course, Myriad should be — and was — rewarded with a patent for new and non-obvious applications or uses of the BRCA for the treatment of breast cancer. And the Court rightly upheld Myriad’s patent over a genetically modified gene that the company constructed in the laboratory and which did not naturally occur in nature.

In the end, allowing Myriad to monopolize the BRCA gene with a patent precludes others from experimenting with the gene in order to find new commercial and non-commercial applications that benefit society. In so doing, the Federal Circuit has placed too much undeserved power over a naturally occurring item in the hands of one company.