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Folks. There's no crisis of innovation. This would be a lot clearer if people understood how Silicon Valley has always worked: 1. Government pays for really bi
by abalone 13y ago
Folks. There's no crisis of innovation. This would be a lot clearer if people understood how Silicon Valley has always worked:
1. Government pays for really big long-term high-risk core technology development. Things like microprocessors, the internet, voice analysis, lasers, space rockets, highways, etc.
2. These are mostly done under the rubric of defense spending. (This is important.)
3. Private sector steps in to commercialize the projects that bear fruit.
Hyperloop falls under category #1. Those projects take billions invested over decades with very uncertain prospects. Usually supported by military procurement. Yes, even highways were built ostensibly for the military. And Siri on your iPhone? Funded by the CIA.
That kind of Really Big Fundamental innovation is funded by the government. It's never been VCs. They focus on the "last mile".
Space X is a good example of that: bringing a foundation of core tech developed by NASA to market, adding commercial-oriented innovation on the scale of a few years and a couple hundred million from the private sector. But even at this stage, there's still many more hundreds of millions in government procurement (prepaid launch contracts).
The reason Hyperloops don't get funded is that the government doesn't have a military application (or pretext) for it.
Now we could go on to ask why Silicon Valley's megabucks foundation is military spending and not, say, direct government investment in sustainable public services. But then we get to some uncomfortable issues, like how the public might feel more entitled to the fruits of those investments. Whereas if core science and tech is seen as a kind of "military surplus", free or cheap for the taking, then the VC private sector gets to keep the profits from commercialization.
- InclinedPlane 13y agoThe idea that "military development advances technology" is very popular but not entirely accurate. The micro-processor, for example, was invented while working on a handheld calculator project, and advanced through the consumer market. Sometimes military development advances technologies in ways that might not have happened otherwise but it's hard to compare to the way development would have gone otherwise. Take the development of aircraft from their invention through WWII. Unquestionably there was a rapid pace of development during, and due to, WWI and WWII. But there was also a rapid pace of development outside of the wars. The design of the iconic WWII fighters the Supermarine Spitfire and P51 Mustang owe much to the advancement of high performance aviation spurred by the entirely civilian Schneider Trophy competitions through the 1920s and '30s, for example.
- rjurney 13y agoHowever, the increasingly large-scale integrated circuits that led to microprocessors were largely defense driven: missiles, etc.
- InclinedPlane 13y agoNot "largely" but rather "initially". IC development was probably accelerated by missile development, but it's difficult to say by exactly how much.
- abalone 13y agoHere's a quick overview of the history of ICs. It gives many strong examples of how DARPA propelled their development and decisively rescued the U.S. industry from Japanese competition -- definitely a large role. There's really not a lot of controversy about the massive role that DARPA and other agencies play in American high tech. http://www.longviewinstitute.org/projects/marketfundamentalism/microchip http://www.longviewinstitute.org/projects/marketfundamentali...
- InclinedPlane 13y agoHold on, so you're arguing that DARPA "rescuing US industry from Japanese competition" is proof that the technology absolutely required government investment to advance it? Need I really demonstrate the fault in that logic?
- pyre 13y agoI don't know if it affects this case, but I know that the Japanese government was doing a lot to prop up their companies, so it's possible that "Japanese competition" isn't entirely private sector.
- abalone 13y agoYou just shifted the goalpost ("absolutely required"). The logically fallacy is yours. I merely claimed a "massive role," which is accurate.
- calibraxis 13y agoThank you. Explanations from people like Mariana Mazzucato are getting increasingly hard to ignore, with reviews in places like The Economist and FT. (http://www.ted.com/talks/mariana_mazzucato_government_investor_risk_taker_innovator.html http://www.ted.com/talks/mariana_mazzucato_government_invest...) Previously, it was common knowledge among the left, like Chomsky. (http://books.google.com/books?id=3VtILDSrZ7wC&pg=PA173&lpg=PA173 http://books.google.com/books?id=3VtILDSrZ7wC&pg=PA173&lpg=P...) Economic ideology is the religion of the age, where people are unable to see clear answers.
- hershel 13y agoBut there is a crisis of innovation. The hyperloop is not a good example of it, because all the reasons abalone mentions. Two examples: 1.Talk to people in the medical device community. There are plenty of good ideas , but they are hard to build and it's hard to raise money.[2] 2.Robotics: VC investments totaled in only $190 million in 2012[1] for a technology that is quite highly developed. [1]http://www.hizook.com/blog/2013/06/10/venture-capital-vc-funding-robotics-2012 http://www.hizook.com/blog/2013/06/10/venture-capital-vc-fun... [2]This is partly due to the difficulty of writing software in this highly regulated environment. Seems like some pre approved platform should help here.
- wslh 13y agoI think the root cause of the problem is that innovative projects/companies don't have marketing/sales skills. There are a lot of innovation in the world and in US in particular but it's difficult to plug into the business world.
- ThomPete 13y agoMedical world is troubled with legislation issues not innovation issues. The robotics world is getting there but it's hardware so it takes longer and is more risky and with less room for pivots.
- hershel 13y agoEven with the tight regulation(some of it surely needed and not just bureaucracy ), given more funding you'll see more profitable innovation. But sure, legislation could help immensely.
- danrice 13y agoAs a co-founder of an 'Instagram' business, I completely agree with everything in this article. In fact, it's one of the best things I've read in a long, long time. There is absolutely a crisis in innovation. Unfortunately, this is the way the ecosystem is at the minute and we can only hope that when the bubble bursts the people that have made exits from these types of startups can invest or found & fund real innovation themselves.
- lazyant 13y ago"Ride Hyperloop, the terrorist-safe speed train"
- kelvin0 13y agoIt will also make you skinnier :)
- snitko 13y ago> Government pays for really big long-term high-risk core technology development No, taxpayers do. Without consent. Government takes money from taxpayers and pays for those long-term things regardless of whether they agree with those things or not. Democracy and elections isn't consent - may I remind you that congress approval rating is now below 10%.
- dragonwriter 13y ago> No, taxpayers do. Well, given the degree to which spending exceed tax revenue, marginal changes in government expenses are actually paid for by bond purchasers, not taxpayers.