Archive for the ‘Silicon Valley’ Category

Four Threats That Could Decay Silicon Valley


By Jeremiah Owyang, from Silicon Valley

In many respects, Silicon Valley sits atop the world. Its growth and influence has made it the globe’s top location for innovation, STEM jobs, IT patents, venture capital funding, and Internet and software growth, and Unicorn startups galore.

And yet there’s also been a shift in the Valley’s culture. Growing social and economic rifts have bred fraud, anger and protests. Where housing isn’t in high demand, neighborhoods lay abandoned. One-third of students in East Palo Alto, next to Facebook’s shining new HQ, for instance, don’t even have a home. The new administration poses many questions on the role of tech, labor, and regulation.

One could argue that there’s an emergence of signs that strikingly resemble Detroit in the glory days of the age of transportation. While Silicon Valley will no doubt enjoy many more years as the technology capital of the world, it has its own vulnerabilities.

In Detroit’s case, where I visited earlier this week, the Motor City reveled in its dominance in the 1950s, but growing social unrest soon culminated in a massive riot in the late 1960s. Foreign competition hit next, making the most of economic opportunities to steal market share in the 1970s. Underlying credit problems grew for decades and finally surfaced in the 1990s, and ultimately despite unprecedented bailouts, major bankruptcies hit in 2009, with the city itself declared officially bankrupt in 2013.

Here are four threats, aside from natural disaster, or whole scale physical attack for Silicon Valley today, along with a futuristic probing of their possible conclusions in the coming decades:

Threat One: Complacency and Competition
The byproducts of rampant success are beginning to take their toll on the Valley, especially in the escalating costs of doing business. A concentration of talent and vision that once was a tremendous advantage is now an ever-rising obstacle for new startups or collaborative partners looking to tap into those resources. To think Silicon Valley’s trajectory will continue unabated for much longer represents an arrogance that’s creating a tremendous blind spot for the region.

New tech oases are rising in places across the country — Austin, Texas, is a prime example — and around the world in places like China, India and Korea. In Detroit, Japanese carmakers gained their foothold when a global oil shortage spiked gas prices and opened a door to sell smaller, more efficient cars. Today, there are a lot of regions in the world where tech innovation can be accomplished for cheaper than Silicon Valley. Eventually someone may figure out how to do it faster or better too.

Threat Two: Lack of Economic Diversity Means Fragility
One industry in a single city is a risk. Stemming from that very same tech-obsessed culture comes the liability of being one-dimensional. The threat of a Silicon Valley bubble unplugging from the realities of the rest of America and the world could render its innovations out of touch and useless, whereas a more balanced economy where arts and humanities are also thriving is more likely to produce thinking outside the box.

Historically, iron and steel towns have faltered when global economic shifts happen — they have no backup, and the homes, stores, and businesses that all support that single industry may result in their shuttiner. Additionally, having a variety of industries only breeds a plethora of viewpoints, which can only aid in helping guide a better technology set for humans. Where Silicon Valley is strong with tech, it’s equally deficient in the humanities.

Threat Three: Disappearing Margins as Tech becomes Commoditized.
The open source movement and spread of tech knowledge are diminishing Silicon Valley’s advantage over the rest of the world. There’s an abundant supply of new software developers coming into the market, and technology has a way of democratizing at such a low price point that healthy margins are nearly impossible. And if energy technology succeeds in providing inexpensive renewables in the not-too-distant future, the threshold of entry for competitors will drop even lower. While the iPhone is able to maintain a high price point, China is on their heels with a $25 smartphone. Could other regions in Asia and Europe develop open source versions of technology that smash the price of technologies?

Threat Four: The Rise of AI, Silicon Valley build’s it’s own master
The race to develop artificial intelligence and machine learning could backfire on Silicon Valley if AI breakthroughs displace the need or abilities of its army of tech pioneers. Or the intense pursuit of that goal could unleash uncontrollable machines that wrest power away from the elites. Technology has proven to be a capable disrupter of businesses, industries and entire ways of life. Deliver that kind of disruption on an unprecedented scale and it becomes incredibly hard to predict the consequences.

Any one of these warning threats has the potential to morph into a serious threat to the future of Silicon Valley, and avoiding such eventualities begins with addressing their underlying issues.

Just remember, no industry is hot forever, they all have their own lifecycles the question is, is Silicon Valley just a teething youngster, or in it’s final stages?

Should Silicon Valley Fix Its Image Problem?


Screen Shot 2015-11-23 at 12.33.32 PM

Silicon Valley is known for a lot of positive things, but there’s clearly a negative sentiment from outsiders. The question is, does Silicon Valley want to fix this image problem?

Decades ago, before it was called “Silicon Valley,” it was an area abundant with fruit and flower farms, redwood harvesting, and scattered towns connected via dirt roads. This fruitful area has also blossomed into computer chips, hard drive platters, networking gear, devices, computers, and internet companies galore. Many have become famous, gathered many riches, and helped to change other people’s lives. Today, Silicon Valley is experiencing the second gold rush, where investors, entrepreneurs, workers, and more flock to this region to strike it rich and make a difference.

To understand perception, I asked my social media network of followers and friends who are NOT from Silicon Valley to chime in and leave three words about what their perceptions are of Silicon Valley, see the raw post on FB. The goal wasn’t to argue, or to judge, but to listen and learn what others think. We stripped out any answers from folks that I knew were from the area, and well, the findings are pretty surprising. There’s quite a bit of negative sentiment toward Silicon Valley, in addition to the adoration. Of course, this is not a truly scientific endeavor, these respondents are in my social graph, and I would make the assumption they’re familiar with the tech industry or business, which is my primary topic.

A few findings: There are 534 words submitted that are ‘stand alone’ words. We segmented the data by sentiment; 161 are positive, 192 are negative, 181 are neutral. It was difficult to classify some of the phrases or words, so we had to do some data massaging and remove synonyms. There were some clear trends, as ‘Expensive’ showed up 36 times and ‘Innovative/innovation’ showed up 38 times. All of those wonderful things come with some severe drawbacks, which are nicely illustrated in the tag cloud, first let’s explore the positive sentiment.

Below Word Cloud: Positive attributes provided from people who are NOT from Silicon Valley. 

The patterns are clear; Innovation scores the highest, then opportunity, exciting, optimism, and dreams. If I had to summarize it, this is a place to create and fulfill a dream. It’s arguable if young is a positive sentiment, as ageism is becoming rampant as investors favor the youth. It’s also interesting to see a variety of descriptions related to smart, ideas, and knowledge. I assume beautiful is related to the area, as the culture in Silicon Valley isn’t driven by physical beauty or fashion.



Below Word Cloud: Negative attributes provided from people who are NOT from Silicon Valley. 

Big trends are around the expensive cost of living (now the highest in the nation), arrogant, self-absorbed, delusional, and insular. Basically, if I had to summarize it up, it would be “Rich Asshole.” While the previous tag cloud shows a region where people are fulfilling dreams, you can see how this quickly results in terms like “overworked, entitled, inequality” for those that make it. This of course results in interesting terms like “hype, overinflated, and ethnocentric.”


Below Word Cloud: Both positive, negative and neutral attributes provided from people who are NOT from Silicon Valley. 

Putting all the data together, you can see how al the terms nicely come together, including some neutral terms like “Unicorn, Investment, Money, White” and other names of popular local companies. Together, this is a real indicator that this is a dynamic region filled with ups and downs and complexities in a fast moving environment.


Silicon Valley has an image problem, should they fix it?
Beyond all the positives of entrepreneurs chasing their dreams to change the world (while getting rich at it), Silicon Valley has a perception issue relating to an insular entitled group of rich assholes. A question I have for you is: Is Silicon Valley aware of this perception gap? Do they care? Should they do anything about it? Or is this just the natural state of an innovation area? Love to hear your thoughts in the comments.

Could you imagine the Santa Clara or San Mateo chamber of commerce funding a PR campaign to recast the stereotypes? Could you imagine cultural education and PSA emerging to billionaires to not flaunt it? Or just let it be.

Update: Francine Hardaway says that Chambers of Commerce in Silicon Valley area shouldn’t waste any resources on a PR campaign.