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LA Times Examines Silicon Valley
Richard Finney writes "The Los Angeles Times has a special section on Silicon Valley. Most of the stories focus on the 'survivors struggling through the toughest stretch in tech industry history.' There's also a story on
Five Reasons to Hope -
New technologies that may help Silicon Valley rise again: Biotech, microsensors, nanotechnology, flexible electronics and data mining. We'll see."
A mate of mine lives in San Jose, and as far as he's concerned the valley is dead, and will stay that way for a long time yet(3-5years), he's a very good coder and has everything from mcse to cisco certs.. yet he's still to find a job after the .com crash.. it would be very interesting to hear from other /.'ers that are from the area to comment on this..
moo
You have to realize that the PC boom didn't segway immediately into the Internet boom. Nor was the period between the two a time of consolidation before change in focus. Indeed there was no directed change in focus at all, it was an organic market driven shifting toward e-tech.
The difference between the period of time between the PC boom and the Internet boom, was that the hardware of the PC boom was a springboard for the Internet boom.
I'd be hard pressed to come up with more then a handful of examples where new types of hardware was needed to drive the boom. Of course the increase in processor speeds, and other changes in the tech can't be dismissed out of hand, but these were incremental increases in technology, not true advances.
But with the five items mentioned in the article, with the exception of datamining, require great strides in research before they become truely feasible as the focus of a new boom. Nanotech is still five to ten years away before it's first truely practical uses, as even the most ardent proponent will admit when pressed.
These are hardware advances, and thus we face a slow march toward the next boom, waiting for advances in research and technology.
http://www.santacruzbynight.com/index.shtml Santa Cruz By Night Vampire Larp
In spite of the downturn, the cost of living in Silicon Valley is still way too high. A typical mortgage on a modest three bedroom house (typical middle-class, nothing fancy, under $200K in Omaha) can easily run well over $3000/month in Mountain View. There is absolutely no affordable housing within reasonable commuting distance. The bottom line is that anybody who would consider re-locating to Silicon Valley for fewer than six figures is insane.
Is it important? Is it relevant? Haven't we learned that the power of the Internet is that a design team can be geographically dispersed and still productive? There is still the issue of multi-billion Fabs in the valley, but the people can be anywhere. (probably for less money in Iowa, than in San Jose)
'ta
One of the quotes mentioned above was "survivors struggling through the toughest stretch in tech industry history" - and frankly, this is the wrong way of looking at it.
When I first became interested in Silicon Valley was back in 1980 - back when the valley was a syntonym for technical innovation, the idea was
1). go to the valley
2). make an innovative product
3). Sell product to VC for millions
4). Start all over again.
But the principle here is that it was driven by technical innovation - and turning this innovation to product. Heck, my idea, which was revolutionary 23 years ago was the idea of creating a color lcd TV (Hey, don't laugh, back then, we only had black on silver lcd's, and they bled if you touched them).
But once the internet took off and became what it is today (which was helped by some the valley innovation), people started to look at the valley differently. First - way too many people saw the valley as only internet and computer technology. Second - they viewed running a web site as technology. Having a bunch of dot com startups all based on running web sites and services is not technologically innovative. Third - people fell into the falacy that because there are millions of computer users/internet users, that if they could create something and sell it to 1% of that market, they would make millions.
At this point, it was not about technical innovation or creating interesting and useful products, but it because how fast can we whip something together. It is easy to see why so many dot coms failed. What is really surprising is that so many VC's fell for the trick.
The 'natives' of the valley are still doing the same thing that they have done for years - innovative research and product development. And the products that are eventually produced from this research will be revolutionary. The biotech and nanotech products that people are working on will be revolutionary.
But all of those pretenders that jumped on the internet bandwagon AFTER the techology was already out and in use were just the pretenders that never belonged their in the first place.
Now that they are gone (well, most of them at least), the valley will continue to do what it has done for decades.
"Microsoft has made computing accessible to a population who would otherwise not be able to use computers" - B. Kernigha
And the economic results of a bubble are devastation -- at least, they always have been. Japan went through a bubble in the late 80s. It started to pop in around 1990. 13 years later, they are still suffering; in fact, their stock market, the Nikkei, just hit a TWENTY-YEAR LOW and it's STILL going down. Bubbles create hangovers that are far worse than their preceding highs, and EVERYONE suffers from them, not just the people who benefited from the bubble. The last bubble we had was in the late 1920s, and its bursting resulted in the Great Depression.
Folks, Silicon Valley will not return to what it was. In terms of real purchasing power, salaries will not return to what they were in your working lifetimes, and maybe never. Tech is already suffering from a true Depression, and the rest of the economy is most likely headed there too. We had the biggest bubble in the history of mankind, and if past experience is a guide, we will go through the biggest bust in history as well.
The Fed has cut rates faster and farther than they ever have in their 90-year history. Money is flooding the system via easy credit and a bubble in mortgage finance. We are at 40-year lows in interest rates..... and STILL the economy is failing. States are in the worst fiscal crisis "since the Great Depression" (their words, not mine.) Layoffs are rampant, stores are closing, bankruptcies are steadily rising -- and that's BEFORE the spigot of much-too-easy credit is closed.
The Great Depression left deep scars in this country, and a profound fear of credit and debt. Unemployment rates were around 30%. Healthy, strong men were living in cardboard shacks in great numbers. (which were called Hoovervilles, as people blamed Hoover for the Depression. This wasn't even remotely the case; the Depression was caused by the vast excess and waste of the 20s, not the little bit of nothing that Hoover did.)
The bubble we had this time was far larger, and encompassed much more of the economy... in fact, it sucked the whole world in. Likely results of the ensuing bust left as an exercise for the reader. Hint: it's not going to be fun.
A final suggestion: "buy and hold" is a good recipe for going broke in this environment. Wall Street has indocrinated everyone about 'buy and hold', but remember that they are trying to sell you something. These were the clowns giving you $500 price targets on Amazon. Do you REALLY trust them to manage your retirement savings?
From 1930-1932, the Dow lost over 90% of its value. The Nikkei, from 1990 until now, has lost about 70%. This is not a good way to save for retirement.
You want chip specs? You download them as .PDFs whether the company is in Sunnyvale or Moscow. You need to ask a development engineer something? You email or phone her whether she's in Santa Clara or Austin, TX. You want programmers? Start here or anywhere.
You want industrial capability near a major university campuses? Lots of that going around these days.
What's left in the Valley for us other than overcrowding and expensive real estate? A chance to hang with over-the-hill high-tech zillionaires? A chance to see industrial parks that look like ghost towns? (no URL, this is based on a friend's e-mail from 2 days ago) All I can really think of is tradition, and that's not something that will help anyone crank out code or improve ROI.
It has some cool high-tech museums. Perhaps the whole area should be declared a "historical monument" to make it official that progress will be coming from somewhere else from now on.
The place for a startup (unless you really are doing nanotech, in which case, why are you here?) is where there's cheap high-quality bandwidth available. The way that gets delivered these days is via CitiLEC... the window on this was closed by the state legislature in exchange for campaign cash from cable companies and telcos, the local power company had their chance to do it themselves and blew it. If I wanted to do a startup in California, I'd look at the City of Alameda (next to Berkeley and across from SF), whose muni power company has rolled out fiber to the home/business... or even the part of LA served by Los Angeles Water and Power.
I'm an ex-resident, I left after the high-tech boom led by the Commie 64 and Apple II... and I can't think of any reason why I'd ever start a company there.
Tech Public Policy stuff
War worked because the economy was strong and we didn't know it.
Huh? Let me explain: economies gain strength in recessions and in depressions, though a deep enough depression can do true and long-lasting damage. The reason they gain strength is because waste is eliminated. As companies struggle to survive, they become very efficient.
The big problem is that it's hard to convince people to start spending money again after they've been saving so hard for so long. Our economy was extremely efficient by 1939, but we weren't spending money yet, so we didn't really realize it. Along came the war, and afterward, boom.... things took off like a rocket.
But note that the value of the dollar dropped by about half during the war, and that about 40% of the total economic output of the WHOLE COUNTRY was devoted to war production. People who had saved a lot of dollars prior to 1939 probably weren't too happy about their savings, after.
Right now the economy is terribly sick, from unrelenting dollar injection from Sir Prints-A-Lot (Greenspan), the bubble, and then desperate attempts by the Fed to prop up the bubble. This has caused huge distortions in the economy, moving wealth into 'sexy' projects like telecoms and dotcoms (where it was wasted and destroyed), and pulling it away from places where it was actually needed (like powerplants and oil exploration), to use two simple and obvious examples.
If we get into a war now, it might have some temporary effect, but it would be more propping-up. It will just make the problem WORSE, not better. We might feel better for a year or two, but ultimately the liquidity injections caused by the borrowing for a war are just another form of the liquidity injections by Greenspan at every crisis point over the last 12-13 years. It would be more of the same stuff that's making us sick -- prescribing more booze for the alchoholic. The alchoholic may feel great for awhile, but he/she will be sicker than ever shortly.
In any case, the effects of the Iraq war aren't likely to be profound, positive OR negative. Keep in mind that current expense projections are at about 0.1% of the GDP.... ie, pretty much a non-event. We might get a sense of euphoria if we beat them easily, and if we see ensuing cheap oil that WOULD be good for the economy -- but things are so badly damaged that cheap oil alone won't make that much of a difference, and euphoria can only last so long.
Apple was founded by two people with remarkable talents, but they needed highly skilled people to help them fulfill their vision. Companies are built by people with a vision and drive to see that vision come to fruition. They must have a great team of people to help with the building.
What the Valley and tech sector in general are missing is... wait for it... Vision! Microsoft has kicked real innovation in the nards. Microsoft is completely into innovating Microsofts stranglehold on the consumer and business computing environments. What innovations are coming in the near future? Maybe another niche product that runs on Windows you say? The problem here is that too many "tech" people now have windows-tunnel-vision. Their products are conformist with the Microsoft vision and increasingly drab. Very little that is new and exciting, which is what makes people want to spend their money and therefore create jobs for those tech people to work in.
This is just a brief summary of what is currently wrong in the American tech sector, so pick away. It is by no means complete.
Kindness is the language which the deaf can hear and the blind can see. - Mark Twain
My cynical predictions:
1) Bush continues buildup.
2) Bush does quick + fairly clean war. A few Americans die. Iraq is offically 'cleaned up'.
3) Bush rises in polls. The (US, short-term) economy recovers on the positive effects of the war. (Long term world economy predictions are nebulous.)
4) Bush is voted to another term.
5) Midway through next term, Bush proposes war against another country.
6) World condems attack. World pressures said country into capitulation.
7) Bush goes with world opinion and is praised for peaceful solution to problem.
8) Bush exists office, hailed as great leader in both times of war and peace.
9) Everybody else is pissed.
-Brett
I would agree with you...but you are only half right. I was in the middle of everything from before the boom, and still in it.
I know a hell of a lot of engineers that worked their asses off during the bubble. What I saw more of, however, was a lot of barely-got-my-mba types who wanted to drive their Ferrari's and schmooze and didn't know whack about managing a company, or what a business plan was.
It was this class of individual that ruined the economy, not the engineers. So, I would agree with you that the execs should be put in the circular file, but there are still some solid engineers out there looking desperately for work that do have proven track records marred by the dot.com bubble.
I would be careful of putting yourself on such a high pedistal...are you sure that you didn't profit from the bubble too?
Contrary to popular belief, life is not a bitch. It is far far worse.
Healthy, strong men were living in cardboard shacks in great numbers. (which were called Hoovervilles, as people blamed Hoover for the Depression.
New start-up idea. Sell boxes to all the umemployed techies in Silicon Valley: Bushvilles. They only need to have one perk: Net access.
Table-ized A.I.