A History of Silicon Valley

The Selfies (2011-16)

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Fintech

Financial transactions constituted a huge market: in 2014 they generated about $600 billion in fees in the USA alone, more than twice the GDP of a country like Israel. There was a huge opportunity for automating financial services.

Branch-less banking had become commonplace by the 2010s, but lending was still a complicated process. Kreditech (founded in Germany in 2012) represented the vanguard: it provided almost instant lending to individuals based on their credit score, a purely algorithmic solution. Peer-to-peer lending, pioneered by the likes of Prosper and LendingClub, became ever more popular. A newcomer was Upstart, founded in 2012 in Palo Alto by Google veterans Dave Girouard and Anna Mongayt with a Peter Thiel alumnus, Paul Gu.

Automated financial advisory was making strides in the mainstream financial world. In 2011 Wealthfront, founded in Palo Alto by Dan Carroll and Andy Rachleff (a co-founder of Benchmark Capital), joined the ranks of the algorithm-based financial advisors, and in 2014 Charles Schwab introduced Intelligent Portfolios.

The first major success fintech story in the world of real estate was Nestio, founded in 2011 in New York to help finding residential rentals and later repackaged as a platform for residential landlords. Point, founded in 2014 in Palo Alto by Eddie Lim, tried a new concept: a home equity marketplace that allowed people to divide their homes and trade their fractional equity just like it was done with vacation rentals.

Peer-to-peer payments, typically for mobile users, multiplied: Venmo, founded by Andrew Kortina and Iqram Magdon-Ismail in 2009 in New York (and acquired by PayPal in 2013); Square's own Square Cash (2013); Snapchat's Snapcash (2014), powered by Square; and Google's 2015 version of Wallet.

Venture capitalists themselves came into attack. Online collection of money from individuals to fund startups, as an an alternative to banks, angel investors and venture capitalists, was pioneered by EquityNet (founded in Arizona in 2005) that offered a social network for investors and entrepreneurs, but until 2012 investments by random individuals in businesses were not legal in the USA. Equity crowdfunding was legalized in the USA in 2012 with the "Jumpstart Our Business Startups" act. England already had Crowdcube (2011) and Seedrs (2012), and in 2011 two startups for equity crowdfunding had already opened in San Francisco: CircleU, founded by Ryan Caldbeck, and Wefunder, founded by Nick Tommarello, Mike Norman and Greg Belote. New form of online payments were introduced by Marqeta, founded in Oakland in 2010 by Jason Gardner (who had previously founded PropertyBridge to manage home loans), and by Affirm, founded in San Francisco in 2012 by Max Levchin (a member of the "PayPal mafia") and others.

Square's co-founder Jim McKelvey founded the most active of startup accelerators specializing in fintech, SixThirty (in 2013 in St Louis).

For the record, Israel became a major center of fintech in the 2010s thanks to its strong credentials in cybersecurity, big data and artificial intelligence. Ironically, the past investments in military applications such as computer vision, espionage and data security had turned Israel into a powerhouse for the very technologies needed by fintech. In fact, several fintech startups had their roots in 8200, the Israeli army's elite intelligence unit. By 2015 Israel had more than 400 fintech startups offering branch-less services for payments, crowdfunding, lending, insurance, wealth management, fraud detection, etc. and many were already experimenting with blockchain technology. Major Western banks established research labs in Israel. For example, in 2013 Citibank opened its Citi Innovation Lab in Tel Aviv.

Global social networking

Facebook, which in 2013 launched the project Internet.org with Samsung, Nokia and others, planned to beam the Internet from solar-powered drones. Also in 2013, Google launched Project Loon, and originally planned to use a world-wide network of high-altitude balloons to beam the Internet to the regions that have no Internet access yet, and in 2014 it announced that it wanted to build a system of 180 satellites to beam Internet around the planet.

The proliferation of videos, of live streaming, of video calls, of video conferencing and so on was testing the limits of 4G wireless technology. The problem was postponed when in 2010 the US government accepted to double the spectrum from 500 MHz to 1 GHz by 2020 (the "national broadband plan"). In addition, Qualcomm started using the unlicensed band (the band used by things like WiFi) and turned it into LTU. This tripled the capacity of 4G wireless. But that was still not enough to match the growing demand of mobile data. Another solution consisted in simply adding more "cells" per square kilometer. Unfortunately, there was a physical limit: when cells are too close, they start interfering and become useless. In 2016 San Francisco-based Artemis introduced a new technology that used that very interference to provide more capacity, and in fact could provide a dedicated cell to each mobile device user, each device getting the full spectrum capacity. Ironically, Artemis' project was yet another by-product of military research. In 1990 DARPA and the Air Force had launched a military project called SpeakEasy that pioneered Software Defined Radio (SDR), a technology to program wireless technology at a higher level instead of programming directly on ASIC.

In 2013 NSA employee Edward Snowden revealed details of a vast government operation to spy on citizens and on foreign allies and was then granted asylum in Russia. A Palestinian hacker, Khalil Shreateh, living under Israeli occupation, became a worldwide hero when he hacked into Mark Zuckerberg's Facebook page to show how easy it was to violate someone's privacy on social media. These events encouraged Internet users to look for protection from network surveillance. Protection came in the form of "dark nets" like TOR browser (introduced in 2008), the DuckDuckGo search engine (developed in Pennsylvania by Gabriel Weinberg in 2008), and the instant messenger Wickr with military-grade encryption (launched in 2012 in San Francisco by Nico Sell and others), tools that guaranteed worldwide anonymity to their users.

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