14 ms·

Peak Valley?

132 points by raleighm 8y ago

api 8y ago
I also think peak valley was the 'oughts. Seems like the valley has not been producing the same number of world shattering things since then. Part of what is driving the valley's decline is its constrained size (both by geography and NIMBYism) coupled with its past success. The valley / bay area is now full of mega-corps that suck up most of the top talent and inflate wages and thus costs to levels startups and bootstrappers can't afford. There is no space to let off the pressure because its constrained by mountains, ocean, a fault line, and politics. If the city were both able and willing/allowed to grow like New York, Chicago, or Tokyo did in their heyday of growth the engine might run a lot longer but as it stands the pressure is going to force the industry into diaspora. Compare Shenzhen, new global HQ of the electronics industry. SV should have grown like that, but politics would have none of it. California liberals are anti-construction and California conservatives are anti-infrastructure.
- mathattack 8y ago
  It can take 7-10 years for a great company to emerge. In Apple’s case it took 30 years to bring out the iPhone. (Yes they had some success in the interim, but their true breakout was slower coming)
  - api 8y ago
    That makes it a lot worse, since the high costs mean companies that don't go vertical instantly die.
    - mathattack 8y ago
      My point is that it’s premature to say “Nothing great has happened from recent companies.” It takes a longer time horizon. The high cost does put pressure on companies though. Most startups quickly branch out of the Bay Area for their Sales and Services. The economics of founding (premium for access to capital and talent that isn’t risk-averse) is different than mature companies (premium on margins).
  - deleted 8y ago
    [deleted]
- baybal2 8y ago
  Another side to this, I myself have a feeling that software industry in developed counties is becoming more and more dependent on overseas "captive RnD centres" (yes, that's how they are called in pro manager lingo,) and more and more work in places like the Valley is about assembling code from knockdown kits made to spec by mule workforce abroad. The few people from SV crowd I can speak frankly with, said "saying that will certainly not make you more popular here." Do people realise that these "mules" are the real heroes here who do all the hard work on algorithmics. In a decade or so, USA based companies will certainly begin to scratch their heads.
  - projectramo 8y ago
    Please give some examples. I don’t know what you’re referring to.
  - HillaryBriss 8y ago
    Very interesting. I think you may be right. But, how can this argument be made more compelling? I mean, for example, is there an example of a knockdown kit from abroad you might point to?
    - HillaryBriss 8y ago
      why a downvote for asking this question? is this a bad question or something? is this rude or offensive to someone? not quite sure...
    - baybal2 8y ago
      To my own knowledge, the "to spec" outsourcing grew quite a lot. Deutsche bank, Credit Suisse, Swiss railways, TMobile are few I knew myself when I laboured in few outsourcing shops for few months after I got a boot from Canada. To my biggest surprise, when I left a minor outlet (epam) for Luxoft for a 3 month gig, I was very surprised to see the same TMobile, with the very same project, but similar specs. Lib A should do that and this, method C and D, must pass test, E and F. Back in 2009, the few Google Russia people I knew told that task they get from HQ were almost like competitive coding tasks, pull record A from using hash table index B, do that under N cycles under worst case scenario C,D, and E. And all with near nil human contact. Nobody could've said it for sure if the task is even physically doable. And for that particular task, they laboured for half a year of trial and failure, after exhausting every trick from computer science textbooks. In the end they did make an index traversal algo that did it. What was unsettling them was the seemed disregard for the amount of resources spent, and no concern for "if it is really doable?," as they were getting from supervisors the same answer all the time: "if you think it's impossible, not you, but somebody else eventually will do it, I am 100% sure"
- throwaway5752 8y ago
  Look, I know there's a recency bias to life, but the 00's were nothing compared to the 90's, and that was probably nothing compared to the 70's. I doubt we know what the next technology cycle that's going to spur the next boom in SV is, but it's going to happen. Otherwise, it's impolite and barely relevant to bring politics into it.
  - automoton1 8y ago
    How do you know the next boom is going to be in SV? Whose to say the conditions for the next boom aren't riper somewhere else?
    - nostrademons 8y ago
      The web wasn't, and yet Silicon Valley was the region that got rich off of it, and ended up with its name associated with it. The web started at CERN in Switzerland. Mosaic came out of UIUC, as did Apache. Early web successes came from all over - Amazon from Seattle, Geocities from LA, ViaWeb and Akamai from Boston, WikiWikiWeb from Portland, Yahoo and EBay from Silicon Valley. Many of the most prominent Web 2.0 companies - FaceBook, Reddit, DropBox, and YCombinator - all started in Boston and later moved to San Francisco. Flickr was in Vancouver, LiveJournal in Seattle, and del.icio.us in NYC. A number of Silicon Valley companies didn't actually start in Silicon Valley - they started elsewhere and moved there early on. Silicon Valley ended up co-opting them because of two factors: capital and engineering talent. Unlike in most places, it's possible to make a market in venture capital in Silicon Valley - you can setup meetings with a hundred firms all down the peninsula and have them bid against each other. That means that if you do have a good idea, you can get hundreds of millions of dollars to grow it, and then spend that money hiring people who actually know what they're doing and have done it before. If all that fails, you can either acquire companies that have an actual good idea, or be acquired by a company with capital and an ability to execute. Silicon Valley has never really been a great place to start a company, unless you just happen to live here and have a job at one of the previous tech giants. It was, and remains, a great place to scale a company. None of the factors that led to its dominance in the last few technology waves have really changed, except possibly more restrictive U.S. immigration policy and a greater chance that the next big idea comes from outside the U.S.
limeho 8y ago
It might be that we are heading towards the next evolution cycle.
projectramo 8y ago
Really the question is not if or even why other places are rising up to compete with Silicon Valley. The question is why has SV been so uniquely successful for so long. I know we have our favorite theories — perhaps the density theory in the article is correct — but the debate rages on. And till we know why SV dominated we won’t know why it stops dominating.
- abakker 8y ago
  Nice weather. At a personal level, every other place trades off the year round nice weather for something worse, and I’d bet that that factors into most individual calculations even if the company doesn’t explicitly consider it.
  - eganist 8y ago
    This is important. One of the reasons I don't really have any desire to move to the Bay (unless the right role comes along which changes the math) is the abundance of geological risks, but this doesn't even remotely register for most people who move to the area. I'm willing to make a trade for worse weather (DC) if it means much more certainty with regards to whether the ground will move less violently... but I'm the rare case who assigns that much weight to this particular risk. Two of my favorite cities on the west coast (Seattle and San Diego) still lose out to DC for this very reason.
    - skybrian 8y ago
      It seems like the wildfire risk in much of California might even outweigh the earthquake risk? By one estimate [1] 15% of homes in California are in high or extreme risk areas. Earthquakes seem easier; it's mostly a matter of good building design. [1] https://www.sacbee.com/news/state/california/fires/article216076320.html https://www.sacbee.com/news/state/california/fires/article21...
    - anothergoogler 8y ago
      I'd wager that you're as likely to die during a major earthquake while living in one of those west coast cities as you are from a terrorist attack in DC or at the hands of the massive police apparatus there. That is, quite unlikely.
deleted 8y ago
[deleted]
drewmassey 8y ago
I don't disagree that the cost of living and FAANG brain drain will likely challenge the hegemony of Silicon Valley in the short term. What interests me is whether software engineering companies will continue to focus on geographical centers, or if the future is perhaps more distributed. Obviously this doesn't work in other industries like hardware, biotech, etc., where physical presence is baked in to doing business.
- flyinglizard 8y ago
  A winning model is raising in SV and spending elsewhere, but this requires distribution inside the company. For better or worse, remote and in-person are not yet interchangeable experiences. The technology to enable the same depth of engagement has not yet been developed (and VR/AR won't solve it either). I ran a distributed team across three sites (all onsite) for few years and when you really wanted to talk things through, you'd hop on an airplane.
- djrogers 8y ago
  > FAANG brain drain SV has been dealing with brain drain since loooong before FAANG was even a thing. HP, Intel (remember why it’s called silicon valley?), and Oracle used to be heavyweights - and in the midst of that there was still a very very successful startup culture. I’ve asked founders why they start their companies here, and the reason is almost universally ‘this is where the biggest pool of engineers I need for X are’.
- deleted 8y ago
  [deleted]
pm90 8y ago
I was having a conversation with a friend living in Austin about what it would take for SF to not be the center of Tech. And the answer seems to be: an actual devastating earthquake. And even then, If it was mostly property damage (and not human lives lost) the tech sector would probably rally and see it as a huge opportunity to rebuild SF the way they want it rather than move away. When I see articles like this, I wonder what it would take for other cities to change similarly. What would it take for another city to be the finance hub (replace NYC) or the new entertainment hub (replace LA) and I really can't think of other cities becoming that. So I am similarly skeptical of Tech moving out of SF anytime soon. And Fred makes a great point: Tech startups still have an outsized impact and stellar returns that justify the skyrocketing expenditures in the Valley. When this stops being the case is perhaps when things would change.
- humanrebar 8y ago
  The problem is that "tech" isn't an industry. It's a set of tools used by other industries. John Deere is "tech". As is Two Sigma. And Wal-Mart and UPS (logistics). See also NYC quantitative trading firms. And East Coast biotech. Silicon Valley tech is mostly centered around specific types of consumer products, especially fremium and ad based internet businesses. That's not even close to being the only kind of technology or software out there.
  - djrogers 8y ago
    > Silicon Valley tech is most a specific type of consumer tech, mostly focusing on fremium internet centric businesses. Not even close to being true. There are a handful of big companies in that area, but there are tons of others that aren’t. Enterprise startups flourish in SV - SFDC, Workday, Palo Alto Networks, ServiceNow, Splunk... Just a handful very successful startups that are all uber-unicorns.
    - humanrebar 8y ago
      The point wasn't to typecast SV as much as broaden what counts as tech. Defense contractors make lasers mounted on jets. It's absolutely "tech" and not something we wonder about being exclusive to Northern CA.
justinzollars 8y ago
I encourage everyone who lives in San Francisco to join YIMBY. http://www.sfyimby.org/ http://www.sfyimby.org/ The fundamental problem in the Bay Area is a lack of affordable housing. This pushes us into higher paying tech jobs, when we may prefer to start a company. Its my dream to start a company but paying bay area rent is expensive! This is what you can do to help: - Housing Costs (Our SF politicians lack focus: Think tech cafeterias and Social Engineering vs Building Housing) What can you do: unseat Supervisors Aaron Peskin, Jane Kim, Hilary Ronen and Sandra Lee Fewer. This group votes against housing every chance they get. Aaron has introduced the silly tech cafeteria legislation. - Demand infrastructure. We must demand it. I do not want to lose our dynamism, so lets change SF
- pfarnsworth 8y ago
  Sorry but I disagree that affordable housing is the problem. Housing is a symptom of the problem, just like how inflation in the Bay Area is rampant over everything. Day care costs are exorbitant. Groceries, gas prices, inflation is across the board because well paid tech workers are driving up the costs. Even costs to get work done on your house or property has doubled in 6 years. The real reason is that there are too many tech companies that refuse to build equivalent headquarters in other cities. It's concentrating the wealth of companies that gather money from around the world in a tiny area, and that by definition will create inflation. If Google, Facebook, etc, created equivalent headquarters in Kansas City, in Cleveland, etc (as in, they have equal say as the main HQ and just as good projects), then I believe the wealth could be spread over the entire country or globe, and everyone would benefit. People NEED to move away from Silicon Valley. Having so many rich, tech workers living in a small area is toxic, just like Wall Street and Manhattan is toxic. Once the pressure of adding thousands of 6 figure engineers coming to the Bay Area recedes, then housing will fall to a more rational level. I've been living the in Bay Area since the dot com boom. Housing prices were always high, but never this toxic, until frankly the FANG stocks started breaking out in around 2011/2012. You can see this in the stock market as well. When these global internet companies started consolidating their power and consequently their wealth, it created a mass migration to the Bay Area of tech workers who were paid well above the average, and caused massive inflation. You want to start a company? Go somewhere else. Be a part of the solution, not part of the problem.
neom 8y ago
3-4 years ago I used to have no trouble recruiting great engineers to move from SF to NYC. Provided you pay well and help relocate, finding engineers who are 5 or so years out of college from somewhere like RIT or Georgia Tech that went straight to SF out of college and want to try a new "big city" isn't difficult. These days, I think there are enough engineers here now you can hire locally first.
dmode 8y ago
I have been reading about these predictions of tech moving out of SV for the last 10 years, but the reality is that tech investment in the valley continue to rise, with 45% of all VC investment going to SV companies in 2017. Compared to only 1.5% to Austin, which really continues to lose its shine as a serious tech hub. https://www.citylab.com/life/2018/03/the-extreme-geographic-inequality-of-high-tech-venture-capital/552026/ https://www.citylab.com/life/2018/03/the-extreme-geographic-...
- drb91 8y ago
  What’s the connection between investment money and location?
joefranklinsrs 8y ago
People have been proclaiming the death of silicon valley since the late 80s, when tech IPOs peaked in 1983, and the video game crash of 1983. But then silicon valley produced several more innovative booms - PC, internet, social, and mobile, making the local economy 1 trillion dollars and surpassing its cousin, LA economy. Whereas LA economy stagnated after the 90s after aerospace and manufacturing moved out, silicon valley kept its dynamism, innovativeness, and of course venture capital. There are several hard-to-replicate formulas for silicon valley 1.) Money likes to stay in silicon valley: Other money is in silicon valley. Stanford, Berkeley, and Santa Clara university. Existing networks. Beautiful weather (26c today in san jose), low humidity. Gorgeous landscape. Great wine and michelin restaurants. World class cuisines in American, Japanese, French, Italian, Indian, Chinese, Vietnamese in Bay Area. Many activities to do year round. Beaches, mountains, coastlines, deserts, and forests. Vibrant immigrations. Good infrastructure. Close proximity to Seattle, Las Vegas, Hawaii, and Los Angeles. 2.) Talents are already in silicon valley, and their million dollar houses are in silicon valley. Easy to interview with various companies when they are all near where you work and live. Safe neighborhoods. Engineers that you can meet one another in meetups. Existing networks. 3.) California is the 5th largest economy in the world. And Silicon Valley is the fastest growing economy within it. Lack of regulations to start a startup, raise money, sell to other states in US, which is the largest economy in the world and has the largest consumer market in the world - 1/3 of the world's consuming power. the next closest consumer market that shares the same language and culture is Japan at 1/3 of US's size. And US economy is fast growing, whereas Japan and China are stagnating. 4.) Inherited knowledge is in Silicon Valley. How to bootstrap better. How to invest better. How to run teams better. How to produce software better. How to innovate faster. Everyone knows a little bit of the piece of the puzzle, and have been practicing it for 40 years.
- adventured 8y ago
  The most likely outcome is that Silicon Valley once again broadens geographically, rather than dies. It has been doing that in bursts basically since HP was founded in 1939. The YIMBY forces are not going to succeed in fundamentally changing San Francisco. They've been failing at that for two decades. Instead, the money and start-ups will push further out. When people talk about Silicon Valley today, they mean a much larger geographic area than what that would have meant just 30 years ago. 30 years from now, the name will have grown to encompass a far larger area.
Finbarr 8y ago
My prediction is that money will keep flowing into SV companies, but the teams will all start going remote. Shogun is fully distributed and it's incredible. We're able to pay amazing salaries to everyone outside of the Bay Area, for way less than we'd pay in the Bay Area. The result is happy employees/contractors with no sense of entitlement. They're also not all getting hounded by recruiters constantly because they don't have "San Francisco" as their location. It doesn't make any sense to raise investment in SV and spend it here. Your runway will be 3x or more longer if you hire outside the Bay Area. Also, there are smart people everywhere! There's a pervasive viewpoint in SV that the world's smartest people all come here. It's true that there are a ton of smart people here, but there are way more equally smart people who don't want to deal with the crazy immigration and politics of the US, and the sky high cost of living in SV.
- yumraj 8y ago
  Innovation is driven when smart people interact with other smart people, and that is the value of SV and its ecosystem. Obviously I'm generalizing, but your (or anyone else's) remote employees may be the smartest of the bunch or even in the world, but if they are not exposed to outside influences and are satisfied in their own locales, they will remain good/great loyal employees but will never (again generalizing) become entrepreneur. Otherwise, why would you be in the SV if you could do it remotely. So, if this remote model keeps on evolving, then obviously it will have a negative impact in the long run on SV ecosystem, since these smart loyal employees remain just then and never become entrepreneurs. However, I think this model only works till companies reach a certain size and I do not believe that companies can scale beyond a point on a purely remote workforce. So, overall I think SV and its ecosystem is safe.
  - Finbarr 8y ago
    I agree with your statement about innovation. The remote workers are getting exposed to outside influences by working for SV companies and with other remote workers. In fact, I think they benefit from exposure to a wider range of opinions than one typically encounters in SV. They also travel a lot because being fully remote gives them a ton of flexibility. I think many of them will try to become entrepreneurs at some point. The challenge for people outside SV is always going to be funding. But starting tech companies is constantly getting cheaper. It remains to be seen whether there is a breaking point in scale for remote teams. Zapier is now in the hundreds and it still seems to be working well for them. To be clear, I do think people will continue to move here to start companies for the foreseeable future, and so SV is safe in that respect. Reputation and momentum count for a lot. However, I'm guessing the workforces will start to shift outside of the Bay Area.
jackcosgrove 8y ago
I believe innovation may be peaking because the Chinese young worker population has already peaked: https://upload.wikimedia.org/wikipedia/commons/6/68/Population_pyramid_of_China_2015.png https://upload.wikimedia.org/wikipedia/commons/6/68/Populati... India's youth population is still larger than its adult population but TFR is down to 2.18, very near break even, and TFR has fallen by half in the past 30 years. Without young people innovation stalls.
tvural 8y ago
I think the decline of Silicon Valley will have much more to do with the end of Moore's Law than any kind of social or political trend. The name is very predictive - if there will be nothing left to do with Silicon, maybe there will be nothing left to do in Silicon Valley, and the computer industry generally.
AYBABTME 8y ago
What's crazy to me is that clearly, the Bay area's housing problems are just a symptom. If you have a hard time finding affordable apartments, think about all those that have been displaced by exploding prices. Rent rose, food prices rose, services rose. Everything is pricier. Look around the streets and it's clear gentrification, combined with a lacking social net, has messed up a lot of people's life. But SV startups are looking to hire people to commute and sit in chairs, in office. I've been working remotely for years and I make a point to respond to each recruiter contacting me. I'm not really looking for a job, but I'm just trying to collect data on remote work. So I try asking if the opportunity is remote. It never is. All y'all's Silicon Valley startups want people sitting and warming up seats in your SV offices. The argument is always "to foster company culture", which I guess translates to Friday evenings playing with Nerf guns. Which I guess is more important than things like not contributing to local social problems. The dichotomy is so weird. They want to change the world in some weirdly contrived way. But there's no way in hell this can be done if you don't move to SF to warm up their chairs. Too bad for the rising housing market. Last week, a video chat startup that doesn't do remote. Seriously. Anyways... If your company culture is held together by Nerf guns.
- rightbyte 8y ago
  I wonder how the people working at Inn'n'Out burger in SF actually make a profit from working there. Maybe it is like Uber drivers. They quit after noticing that they are losing money but the supply of new workers is so high it works out for the company anyway. I mean geocery stores and fast food joints etc are not that much more expansive than the rest of the country. A burger at McDonalds should really cost twice the national average or something to cover the living costs for the workers. But it doesn't ... and I suppose churn ratio is the answer?
jondubois 8y ago
The centralization of the tech industry in Silicon Valley never made any sense to begin with. To say that all the top talent was/is in Silicon Valley is a gross overstatement. There has always been much more talent outside of SV than inside SV; simply because the world is a very big place. People who live in Silicon Valley don't have access to much more knowledge than people who live in remote places around the world; thanks to the internet, knowledge is decentralized. There are only two things that people in Silicon Valley had better access to than everyone else; 1. Venture capital and 2. Tech media coverage - These two things helped SV to better capitalize on their innovations but now is the point where reality starts to catch up with the hype.
kenneth 8y ago
As an investor based in the valley, I've been thinking about this for a long long time. I've traveled most of the world, and always made an effort to meet the local ecosystem. For the past few years, it's been hard for me to make investments outside of the USA (most of my portfolio is SF-based, with the remainder sprinkled around the US). I have been working on this for a few years, and have finally come to a thesis around international investments. I believe that as an investor with a SV background, the two areas of opportunities are in Southeast Asia and Latin America, specifically. Both regions have significant benefits over others in the world. China and the rest of East Asia has too much of an ingrained culture. Africa is still too poor. Europe is too traditional and doesn't embrace new things. The middle east is a mess. Oceania is too remote and expensive. SEA and Latin America have a rapidly developing economy and middle class (i.e. demand), with an endless supply of cheap labor (i.e. supply). Money goes 10x as far as it does in SV. Both regions are reasonably Westernized and receptive to innovation. I've started making a couple investments in those regions in recent years, and will likely shift some of the portfolio that way long term.
- nradov 8y ago
  Could you be a little more specific about which countries in Latin America seem promising? Some countries are on the right track, but Venezuela and Argentina are self destructing which could cause nasty spillover effects on their neighbors.
  - kenneth 8y ago
    I'm particularly excited about the prospects in Colombia and Mexico. Brazil has large potential too. What works well in Colombia easily translates to the whole Andes region (Ecuador, Peru, Chile). Note some large startup successes in the region already. Cabify and Rappi, (both of which I passed on and now regret) have created massively valuable companies.

132 points by raleighm 8y ago

api 8y ago

I also think peak valley was the 'oughts. Seems like the valley has not been producing the same number of world shattering things since then. Part of what is driving the valley's decline is its constrained size (both by geography and NIMBYism) coupled with its past success. The valley / bay area is now full of mega-corps that suck up most of the top talent and inflate wages and thus costs to levels startups and bootstrappers can't afford. There is no space to let off the pressure because its constrained by mountains, ocean, a fault line, and politics. If the city were both able and willing/allowed to grow like New York, Chicago, or Tokyo did in their heyday of growth the engine might run a lot longer but as it stands the pressure is going to force the industry into diaspora. Compare Shenzhen, new global HQ of the electronics industry. SV should have grown like that, but politics would have none of it. California liberals are anti-construction and California conservatives are anti-infrastructure.

mathattack 8y ago
It can take 7-10 years for a great company to emerge. In Apple’s case it took 30 years to bring out the iPhone. (Yes they had some success in the interim, but their true breakout was slower coming)
- api 8y ago
  That makes it a lot worse, since the high costs mean companies that don't go vertical instantly die.
  - mathattack 8y ago
    My point is that it’s premature to say “Nothing great has happened from recent companies.” It takes a longer time horizon. The high cost does put pressure on companies though. Most startups quickly branch out of the Bay Area for their Sales and Services. The economics of founding (premium for access to capital and talent that isn’t risk-averse) is different than mature companies (premium on margins).
- deleted 8y ago
  [deleted]
baybal2 8y ago
Another side to this, I myself have a feeling that software industry in developed counties is becoming more and more dependent on overseas "captive RnD centres" (yes, that's how they are called in pro manager lingo,) and more and more work in places like the Valley is about assembling code from knockdown kits made to spec by mule workforce abroad. The few people from SV crowd I can speak frankly with, said "saying that will certainly not make you more popular here." Do people realise that these "mules" are the real heroes here who do all the hard work on algorithmics. In a decade or so, USA based companies will certainly begin to scratch their heads.
- projectramo 8y ago
  Please give some examples. I don’t know what you’re referring to.
- HillaryBriss 8y ago
  Very interesting. I think you may be right. But, how can this argument be made more compelling? I mean, for example, is there an example of a knockdown kit from abroad you might point to?
  - HillaryBriss 8y ago
    why a downvote for asking this question? is this a bad question or something? is this rude or offensive to someone? not quite sure...
  - baybal2 8y ago
    To my own knowledge, the "to spec" outsourcing grew quite a lot. Deutsche bank, Credit Suisse, Swiss railways, TMobile are few I knew myself when I laboured in few outsourcing shops for few months after I got a boot from Canada. To my biggest surprise, when I left a minor outlet (epam) for Luxoft for a 3 month gig, I was very surprised to see the same TMobile, with the very same project, but similar specs. Lib A should do that and this, method C and D, must pass test, E and F. Back in 2009, the few Google Russia people I knew told that task they get from HQ were almost like competitive coding tasks, pull record A from using hash table index B, do that under N cycles under worst case scenario C,D, and E. And all with near nil human contact. Nobody could've said it for sure if the task is even physically doable. And for that particular task, they laboured for half a year of trial and failure, after exhausting every trick from computer science textbooks. In the end they did make an index traversal algo that did it. What was unsettling them was the seemed disregard for the amount of resources spent, and no concern for "if it is really doable?," as they were getting from supervisors the same answer all the time: "if you think it's impossible, not you, but somebody else eventually will do it, I am 100% sure"
throwaway5752 8y ago
Look, I know there's a recency bias to life, but the 00's were nothing compared to the 90's, and that was probably nothing compared to the 70's. I doubt we know what the next technology cycle that's going to spur the next boom in SV is, but it's going to happen. Otherwise, it's impolite and barely relevant to bring politics into it.
- automoton1 8y ago
  How do you know the next boom is going to be in SV? Whose to say the conditions for the next boom aren't riper somewhere else?
  - nostrademons 8y ago
    The web wasn't, and yet Silicon Valley was the region that got rich off of it, and ended up with its name associated with it. The web started at CERN in Switzerland. Mosaic came out of UIUC, as did Apache. Early web successes came from all over - Amazon from Seattle, Geocities from LA, ViaWeb and Akamai from Boston, WikiWikiWeb from Portland, Yahoo and EBay from Silicon Valley. Many of the most prominent Web 2.0 companies - FaceBook, Reddit, DropBox, and YCombinator - all started in Boston and later moved to San Francisco. Flickr was in Vancouver, LiveJournal in Seattle, and del.icio.us in NYC. A number of Silicon Valley companies didn't actually start in Silicon Valley - they started elsewhere and moved there early on. Silicon Valley ended up co-opting them because of two factors: capital and engineering talent. Unlike in most places, it's possible to make a market in venture capital in Silicon Valley - you can setup meetings with a hundred firms all down the peninsula and have them bid against each other. That means that if you do have a good idea, you can get hundreds of millions of dollars to grow it, and then spend that money hiring people who actually know what they're doing and have done it before. If all that fails, you can either acquire companies that have an actual good idea, or be acquired by a company with capital and an ability to execute. Silicon Valley has never really been a great place to start a company, unless you just happen to live here and have a job at one of the previous tech giants. It was, and remains, a great place to scale a company. None of the factors that led to its dominance in the last few technology waves have really changed, except possibly more restrictive U.S. immigration policy and a greater chance that the next big idea comes from outside the U.S.

limeho 8y ago

It might be that we are heading towards the next evolution cycle.

projectramo 8y ago

Really the question is not if or even why other places are rising up to compete with Silicon Valley. The question is why has SV been so uniquely successful for so long. I know we have our favorite theories — perhaps the density theory in the article is correct — but the debate rages on. And till we know why SV dominated we won’t know why it stops dominating.

abakker 8y ago
Nice weather. At a personal level, every other place trades off the year round nice weather for something worse, and I’d bet that that factors into most individual calculations even if the company doesn’t explicitly consider it.
- eganist 8y ago
  This is important. One of the reasons I don't really have any desire to move to the Bay (unless the right role comes along which changes the math) is the abundance of geological risks, but this doesn't even remotely register for most people who move to the area. I'm willing to make a trade for worse weather (DC) if it means much more certainty with regards to whether the ground will move less violently... but I'm the rare case who assigns that much weight to this particular risk. Two of my favorite cities on the west coast (Seattle and San Diego) still lose out to DC for this very reason.
  - skybrian 8y ago
    It seems like the wildfire risk in much of California might even outweigh the earthquake risk? By one estimate [1] 15% of homes in California are in high or extreme risk areas. Earthquakes seem easier; it's mostly a matter of good building design. [1] https://www.sacbee.com/news/state/california/fires/article216076320.html https://www.sacbee.com/news/state/california/fires/article21...
  - anothergoogler 8y ago
    I'd wager that you're as likely to die during a major earthquake while living in one of those west coast cities as you are from a terrorist attack in DC or at the hands of the massive police apparatus there. That is, quite unlikely.

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drewmassey 8y ago

I don't disagree that the cost of living and FAANG brain drain will likely challenge the hegemony of Silicon Valley in the short term. What interests me is whether software engineering companies will continue to focus on geographical centers, or if the future is perhaps more distributed. Obviously this doesn't work in other industries like hardware, biotech, etc., where physical presence is baked in to doing business.

flyinglizard 8y ago
A winning model is raising in SV and spending elsewhere, but this requires distribution inside the company. For better or worse, remote and in-person are not yet interchangeable experiences. The technology to enable the same depth of engagement has not yet been developed (and VR/AR won't solve it either). I ran a distributed team across three sites (all onsite) for few years and when you really wanted to talk things through, you'd hop on an airplane.
djrogers 8y ago
> FAANG brain drain SV has been dealing with brain drain since loooong before FAANG was even a thing. HP, Intel (remember why it’s called silicon valley?), and Oracle used to be heavyweights - and in the midst of that there was still a very very successful startup culture. I’ve asked founders why they start their companies here, and the reason is almost universally ‘this is where the biggest pool of engineers I need for X are’.
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pm90 8y ago

I was having a conversation with a friend living in Austin about what it would take for SF to not be the center of Tech. And the answer seems to be: an actual devastating earthquake. And even then, If it was mostly property damage (and not human lives lost) the tech sector would probably rally and see it as a huge opportunity to rebuild SF the way they want it rather than move away. When I see articles like this, I wonder what it would take for other cities to change similarly. What would it take for another city to be the finance hub (replace NYC) or the new entertainment hub (replace LA) and I really can't think of other cities becoming that. So I am similarly skeptical of Tech moving out of SF anytime soon. And Fred makes a great point: Tech startups still have an outsized impact and stellar returns that justify the skyrocketing expenditures in the Valley. When this stops being the case is perhaps when things would change.

humanrebar 8y ago
The problem is that "tech" isn't an industry. It's a set of tools used by other industries. John Deere is "tech". As is Two Sigma. And Wal-Mart and UPS (logistics). See also NYC quantitative trading firms. And East Coast biotech. Silicon Valley tech is mostly centered around specific types of consumer products, especially fremium and ad based internet businesses. That's not even close to being the only kind of technology or software out there.
- djrogers 8y ago
  > Silicon Valley tech is most a specific type of consumer tech, mostly focusing on fremium internet centric businesses. Not even close to being true. There are a handful of big companies in that area, but there are tons of others that aren’t. Enterprise startups flourish in SV - SFDC, Workday, Palo Alto Networks, ServiceNow, Splunk... Just a handful very successful startups that are all uber-unicorns.
  - humanrebar 8y ago
    The point wasn't to typecast SV as much as broaden what counts as tech. Defense contractors make lasers mounted on jets. It's absolutely "tech" and not something we wonder about being exclusive to Northern CA.

justinzollars 8y ago

I encourage everyone who lives in San Francisco to join YIMBY. http://www.sfyimby.org/ http://www.sfyimby.org/ The fundamental problem in the Bay Area is a lack of affordable housing. This pushes us into higher paying tech jobs, when we may prefer to start a company. Its my dream to start a company but paying bay area rent is expensive! This is what you can do to help: - Housing Costs (Our SF politicians lack focus: Think tech cafeterias and Social Engineering vs Building Housing) What can you do: unseat Supervisors Aaron Peskin, Jane Kim, Hilary Ronen and Sandra Lee Fewer. This group votes against housing every chance they get. Aaron has introduced the silly tech cafeteria legislation. - Demand infrastructure. We must demand it. I do not want to lose our dynamism, so lets change SF

pfarnsworth 8y ago
Sorry but I disagree that affordable housing is the problem. Housing is a symptom of the problem, just like how inflation in the Bay Area is rampant over everything. Day care costs are exorbitant. Groceries, gas prices, inflation is across the board because well paid tech workers are driving up the costs. Even costs to get work done on your house or property has doubled in 6 years. The real reason is that there are too many tech companies that refuse to build equivalent headquarters in other cities. It's concentrating the wealth of companies that gather money from around the world in a tiny area, and that by definition will create inflation. If Google, Facebook, etc, created equivalent headquarters in Kansas City, in Cleveland, etc (as in, they have equal say as the main HQ and just as good projects), then I believe the wealth could be spread over the entire country or globe, and everyone would benefit. People NEED to move away from Silicon Valley. Having so many rich, tech workers living in a small area is toxic, just like Wall Street and Manhattan is toxic. Once the pressure of adding thousands of 6 figure engineers coming to the Bay Area recedes, then housing will fall to a more rational level. I've been living the in Bay Area since the dot com boom. Housing prices were always high, but never this toxic, until frankly the FANG stocks started breaking out in around 2011/2012. You can see this in the stock market as well. When these global internet companies started consolidating their power and consequently their wealth, it created a mass migration to the Bay Area of tech workers who were paid well above the average, and caused massive inflation. You want to start a company? Go somewhere else. Be a part of the solution, not part of the problem.

neom 8y ago

3-4 years ago I used to have no trouble recruiting great engineers to move from SF to NYC. Provided you pay well and help relocate, finding engineers who are 5 or so years out of college from somewhere like RIT or Georgia Tech that went straight to SF out of college and want to try a new "big city" isn't difficult. These days, I think there are enough engineers here now you can hire locally first.

dmode 8y ago

I have been reading about these predictions of tech moving out of SV for the last 10 years, but the reality is that tech investment in the valley continue to rise, with 45% of all VC investment going to SV companies in 2017. Compared to only 1.5% to Austin, which really continues to lose its shine as a serious tech hub. https://www.citylab.com/life/2018/03/the-extreme-geographic-inequality-of-high-tech-venture-capital/552026/ https://www.citylab.com/life/2018/03/the-extreme-geographic-...

drb91 8y ago
What’s the connection between investment money and location?

joefranklinsrs 8y ago

People have been proclaiming the death of silicon valley since the late 80s, when tech IPOs peaked in 1983, and the video game crash of 1983. But then silicon valley produced several more innovative booms - PC, internet, social, and mobile, making the local economy 1 trillion dollars and surpassing its cousin, LA economy. Whereas LA economy stagnated after the 90s after aerospace and manufacturing moved out, silicon valley kept its dynamism, innovativeness, and of course venture capital. There are several hard-to-replicate formulas for silicon valley 1.) Money likes to stay in silicon valley: Other money is in silicon valley. Stanford, Berkeley, and Santa Clara university. Existing networks. Beautiful weather (26c today in san jose), low humidity. Gorgeous landscape. Great wine and michelin restaurants. World class cuisines in American, Japanese, French, Italian, Indian, Chinese, Vietnamese in Bay Area. Many activities to do year round. Beaches, mountains, coastlines, deserts, and forests. Vibrant immigrations. Good infrastructure. Close proximity to Seattle, Las Vegas, Hawaii, and Los Angeles. 2.) Talents are already in silicon valley, and their million dollar houses are in silicon valley. Easy to interview with various companies when they are all near where you work and live. Safe neighborhoods. Engineers that you can meet one another in meetups. Existing networks. 3.) California is the 5th largest economy in the world. And Silicon Valley is the fastest growing economy within it. Lack of regulations to start a startup, raise money, sell to other states in US, which is the largest economy in the world and has the largest consumer market in the world - 1/3 of the world's consuming power. the next closest consumer market that shares the same language and culture is Japan at 1/3 of US's size. And US economy is fast growing, whereas Japan and China are stagnating. 4.) Inherited knowledge is in Silicon Valley. How to bootstrap better. How to invest better. How to run teams better. How to produce software better. How to innovate faster. Everyone knows a little bit of the piece of the puzzle, and have been practicing it for 40 years.

adventured 8y ago
The most likely outcome is that Silicon Valley once again broadens geographically, rather than dies. It has been doing that in bursts basically since HP was founded in 1939. The YIMBY forces are not going to succeed in fundamentally changing San Francisco. They've been failing at that for two decades. Instead, the money and start-ups will push further out. When people talk about Silicon Valley today, they mean a much larger geographic area than what that would have meant just 30 years ago. 30 years from now, the name will have grown to encompass a far larger area.

Finbarr 8y ago

My prediction is that money will keep flowing into SV companies, but the teams will all start going remote. Shogun is fully distributed and it's incredible. We're able to pay amazing salaries to everyone outside of the Bay Area, for way less than we'd pay in the Bay Area. The result is happy employees/contractors with no sense of entitlement. They're also not all getting hounded by recruiters constantly because they don't have "San Francisco" as their location. It doesn't make any sense to raise investment in SV and spend it here. Your runway will be 3x or more longer if you hire outside the Bay Area. Also, there are smart people everywhere! There's a pervasive viewpoint in SV that the world's smartest people all come here. It's true that there are a ton of smart people here, but there are way more equally smart people who don't want to deal with the crazy immigration and politics of the US, and the sky high cost of living in SV.

yumraj 8y ago
Innovation is driven when smart people interact with other smart people, and that is the value of SV and its ecosystem. Obviously I'm generalizing, but your (or anyone else's) remote employees may be the smartest of the bunch or even in the world, but if they are not exposed to outside influences and are satisfied in their own locales, they will remain good/great loyal employees but will never (again generalizing) become entrepreneur. Otherwise, why would you be in the SV if you could do it remotely. So, if this remote model keeps on evolving, then obviously it will have a negative impact in the long run on SV ecosystem, since these smart loyal employees remain just then and never become entrepreneurs. However, I think this model only works till companies reach a certain size and I do not believe that companies can scale beyond a point on a purely remote workforce. So, overall I think SV and its ecosystem is safe.
- Finbarr 8y ago
  I agree with your statement about innovation. The remote workers are getting exposed to outside influences by working for SV companies and with other remote workers. In fact, I think they benefit from exposure to a wider range of opinions than one typically encounters in SV. They also travel a lot because being fully remote gives them a ton of flexibility. I think many of them will try to become entrepreneurs at some point. The challenge for people outside SV is always going to be funding. But starting tech companies is constantly getting cheaper. It remains to be seen whether there is a breaking point in scale for remote teams. Zapier is now in the hundreds and it still seems to be working well for them. To be clear, I do think people will continue to move here to start companies for the foreseeable future, and so SV is safe in that respect. Reputation and momentum count for a lot. However, I'm guessing the workforces will start to shift outside of the Bay Area.

jackcosgrove 8y ago

I believe innovation may be peaking because the Chinese young worker population has already peaked: https://upload.wikimedia.org/wikipedia/commons/6/68/Population_pyramid_of_China_2015.png https://upload.wikimedia.org/wikipedia/commons/6/68/Populati... India's youth population is still larger than its adult population but TFR is down to 2.18, very near break even, and TFR has fallen by half in the past 30 years. Without young people innovation stalls.

tvural 8y ago

I think the decline of Silicon Valley will have much more to do with the end of Moore's Law than any kind of social or political trend. The name is very predictive - if there will be nothing left to do with Silicon, maybe there will be nothing left to do in Silicon Valley, and the computer industry generally.

AYBABTME 8y ago

What's crazy to me is that clearly, the Bay area's housing problems are just a symptom. If you have a hard time finding affordable apartments, think about all those that have been displaced by exploding prices. Rent rose, food prices rose, services rose. Everything is pricier. Look around the streets and it's clear gentrification, combined with a lacking social net, has messed up a lot of people's life. But SV startups are looking to hire people to commute and sit in chairs, in office. I've been working remotely for years and I make a point to respond to each recruiter contacting me. I'm not really looking for a job, but I'm just trying to collect data on remote work. So I try asking if the opportunity is remote. It never is. All y'all's Silicon Valley startups want people sitting and warming up seats in your SV offices. The argument is always "to foster company culture", which I guess translates to Friday evenings playing with Nerf guns. Which I guess is more important than things like not contributing to local social problems. The dichotomy is so weird. They want to change the world in some weirdly contrived way. But there's no way in hell this can be done if you don't move to SF to warm up their chairs. Too bad for the rising housing market. Last week, a video chat startup that doesn't do remote. Seriously. Anyways... If your company culture is held together by Nerf guns.

rightbyte 8y ago
I wonder how the people working at Inn'n'Out burger in SF actually make a profit from working there. Maybe it is like Uber drivers. They quit after noticing that they are losing money but the supply of new workers is so high it works out for the company anyway. I mean geocery stores and fast food joints etc are not that much more expansive than the rest of the country. A burger at McDonalds should really cost twice the national average or something to cover the living costs for the workers. But it doesn't ... and I suppose churn ratio is the answer?

jondubois 8y ago

The centralization of the tech industry in Silicon Valley never made any sense to begin with. To say that all the top talent was/is in Silicon Valley is a gross overstatement. There has always been much more talent outside of SV than inside SV; simply because the world is a very big place. People who live in Silicon Valley don't have access to much more knowledge than people who live in remote places around the world; thanks to the internet, knowledge is decentralized. There are only two things that people in Silicon Valley had better access to than everyone else; 1. Venture capital and 2. Tech media coverage - These two things helped SV to better capitalize on their innovations but now is the point where reality starts to catch up with the hype.

kenneth 8y ago

As an investor based in the valley, I've been thinking about this for a long long time. I've traveled most of the world, and always made an effort to meet the local ecosystem. For the past few years, it's been hard for me to make investments outside of the USA (most of my portfolio is SF-based, with the remainder sprinkled around the US). I have been working on this for a few years, and have finally come to a thesis around international investments. I believe that as an investor with a SV background, the two areas of opportunities are in Southeast Asia and Latin America, specifically. Both regions have significant benefits over others in the world. China and the rest of East Asia has too much of an ingrained culture. Africa is still too poor. Europe is too traditional and doesn't embrace new things. The middle east is a mess. Oceania is too remote and expensive. SEA and Latin America have a rapidly developing economy and middle class (i.e. demand), with an endless supply of cheap labor (i.e. supply). Money goes 10x as far as it does in SV. Both regions are reasonably Westernized and receptive to innovation. I've started making a couple investments in those regions in recent years, and will likely shift some of the portfolio that way long term.

nradov 8y ago
Could you be a little more specific about which countries in Latin America seem promising? Some countries are on the right track, but Venezuela and Argentina are self destructing which could cause nasty spillover effects on their neighbors.
- kenneth 8y ago
  I'm particularly excited about the prospects in Colombia and Mexico. Brazil has large potential too. What works well in Colombia easily translates to the whole Andes region (Ecuador, Peru, Chile). Note some large startup successes in the region already. Cabify and Rappi, (both of which I passed on and now regret) have created massively valuable companies.