By Michael S. Malone
The release of the new Silicon Valley Competitiveness and Innovation Project report by the Silicon Valley Leadership Group and Silicon Valley Community Foundation presents the perfect moment to look at this remarkable region, our home, from a new and fresh perspective. It is time to ask ourselves where the Valley – from San Francisco to San Jose to Oakland and beyond – goes from here.
I’d like to begin with some good news. I don’t have to tell you that over the last few years, despite a stagnant national economy, Silicon Valley has had an amazing run – one of the greatest in its history. I assumed, as I suspect many of you did as well, that the nation’s other tech centers were enjoying a similar success – that, indeed, they might be gaining ground on the Valley.
But, the new report tells a very different story. Amazingly, what the researchers – Collaborative Economics - has found is that our region, already dominant in the world of high tech, has begun to pull away from most of our regional counterparts.
This is an astonishing, even historic achievement. After fifty years as the capital of the digital world, Silicon Valley – now extending from San Francisco to San Jose – has found a way to not just stay vital through waves of innovation, but to renew itself, and to accelerate into the future. This news is the perfect capstone to an epoch, a valedictory to what Collaborative Economics’ Doug Henton calls the ‘Fifth Wave’ of the Valley story: the Social Media era.
But if the story of the Valley teaches us anything it is that you should never linger on current successes for long, because it is no guarantee of similar success in the future. We can, and should, celebrate what we have, against all odds, just accomplished. But we should also remember as we study these pages that they are a record of an era that is now ending – and that a whole new electronics age is being born . . . and that there is no guarantee that we will win that one.
I don’t have to tell you that, for all of its strengths, the Valley also exhibits a number of crucial weaknesses, from the growing footprint of tech companies on San Francisco to the exorbitant cost of living on the Peninsula to traffic in the South Bay. Our R&D spending has begun to slip compared to our counterparts. The federal government, which loves to fund-raise in the Valley, isn’t quite so interested in fund-awarding here. And while the Valley has done a brilliant job of assimilating new arrivals in this most multi-cultural of communities, the number of new Valley companies founded by those immigrants has strangely slipped.
But perhaps the most disturbing piece of news is that we haven’t done a very good job for our children. The Valley can’t just depend upon new arrivals to create and lead our next generation of companies; we need to grow our own. And so far, we have largely failed. We are not adequately preparing the young people of our area to be part of the technology revolution as adults. If the glory of Silicon Valley is that it holds out the brass ring to anyone; the tragedy is that too few of our children are in a position to take it.
And we will need that next generation and many more new arrivals to the Valley if we are to retain our leadership through the next, Sixth, Wave. What will characterize that wave? We already have some clues. We only have to look around us at the massive construction taking place in the South Bay, at the autonomous vehicles being tested on our highways, and at the Millennials who care less about code than they do drones and artificial intelligence , 3D printing, and mobile health monitoring.
The longest cycle in Silicon Valley is that between software and hardware – we have lived under the regime of the former now for twenty years. Now the pendulum is swinging back. The center of gravity of Silicon Valley is now again moving south, back to where it began. Are we prepared for that shift? Can we cultivate the new companies and the increased capital and infrastructure demands of this emerging new tech reality of intelligent devices and the Internet of Things?
I believe we can – as we always have. We’re Silicon Valley, after all. And no place on earth has proven more adaptive to technological revolutions. But it gets harder each time – not just because of the legacy we carry with us, but also because the competitors continue to grow in numbers. We will triumph because we are Silicon Valley and we do the impossible. But it won’t be easy. It will take planning, execution, and most of all, leadership. We don’t yet know exactly what this next Wave will be like, but we already have some clues. Better yet, we have a head start. And now, thanks to the report, we know where to focus our attention.
And ‘focus’ should be our hallmark – today and in the months to come. It has been a long time since the companies and populations of Silicon Valley worked together. I don’t have to tell you that today, the Valley is less an single entity than ten thousand separate fiefdoms, each pursuing its own destiny, each zealously guarding its own turf, and each clamoring for special attention. In many respects that is a good thing – it is what enables the Valley to turn on a dime to pursue the Next Big Thing, it is what propels great ideas to the surface, and it keeps us from growing old and complacent.
But there are times when we do need to come together and think about our common interests and our common future. As we transition from one tech wave to the next, this is one of those moments. Let us figure out together where we go from here. Let’s get the field ready and the chalk lines drawn. Let’s fill our war chests and establish a battle plan. And then, once all of that is in place, let us unleash the creative, chaotic and competitive power that makes our community unique in the world and in history.
Raised in Silicon Valley, Michael S. Malone was the world’s first daily high tech journalist. This essay was adapted from a January 16th speech he delivered before 100 Silicon Valley elected and community leaders upon the release of the 2015 SVCIP report.