BOOM SPACE: What's Left After the Thrill is Gone?
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Each night it's a different hotel or country club, a different speaker. The script is always the same: Hang in there. Cycles are inevitable. The Valley will recover. It always has.
Tonight, the location is the Menlo Circus Club, which is not in Menlo Park but in Atherton, the toniest of the Valley's bedroom communities. Those wearing name tags are alumni of UC Berkeley's Haas School of Business. The speaker who takes the podium is the economist and former politician Tom Campbell, elected five times to Congress as the representative of Silicon Valley. He is now the dean of the Haas School.
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Eddie Opara (2×4)
Campbell's no fool. It's hard to find the shine today on what just yesterday was the shining new metropolis, our New Jerusalem. "I'm supposed to be happy and upbeat," he laughs, knowing he's got only crumbs to be upbeat about. "The recovery has been soft because the recession was soft." Unemployment isn't really so bad: 6.8 percent. Under the spell of his commanding confidence, the name tags forget that regional unemployment would double if one counted the legions who have either stopped looking for work or packed up and left the Valley in U-Hauls over the past two years.
"We need the Next New Thing," he admits. He believes biotech will drive the Valley's economy. Page Mill Road is now lined with biotech and medical-device companies. Campbell is calm and assured – and for a moment, the audience forgets that most of them can't get a job in biotech, because their degree is a master's in business, not a PhD in immunology.
When pressed, Campbell insists his optimism is a matter of faith in the underlying value system that hatched the Valley's many booms: "We believe in widely disseminated information," he says. "We believe in liberty. We're comparatively non-prejudicial – in the Valley, it's what you've done, not who you are. It's what you believe, not who your family is. We believe in the ability of the individual in a country that allows us to be free." In other words, give individuals with vision access to lots of capital, loosen the reins of bureaucracy, and they cannot help but build the future.
Of course, Campbell's right. The Valley simply overbuilt. It absorbed the hit, scaled back, and now quietly marches on. Cisco and eBay and Yahoo! and Oracle will continue to grow. Unemployment will drop a point or two. The freeways will be jammed soon enough. There'll be passengers on the direct flight from San Jose to Austin. Some startups will even get funded, and there'll be an IPO or two.
But what then?
What will life in the Valley be like then?
What is the paradigm for Valley 3.0?
When the tech economy recovers, will the area regain its stature in the national consciousness? Will it rank again with Washington, Hollywood, and Wall Street as one of the great power centers of the world? Will it once again be considered an exporter of the future – not just in terms of technology of the future, but of pop culture and business strategy?
I don't think so. As a regional economy, Silicon Valley will steam ahead splendidly; as an icon, however, it's over.
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Eddie Opara (2×4)
There has always been a Valley, but it only became an icon with the PC revolution and the arrival of Apple as a glamour company. Then the Internet exploded, and the Valley itself became glamorous and meaningful. The paradigm was creative destruction, or cannibalistic capitalism. To survive here, everyone needed to be mentally prepared to jump ship at a moment's notice. The basic building block of the economy was the entrepreneur, and every individual needed to think more like an entrepreneur and less like an employee. Jazzed by this new ethic, laid-back Generation X turned into the self-determinist Generation Equity. Average job tenure in 1999 was 15 months. We assumed that Moore's law applied to far more than chips. It applied to everything – bandwidth, user bases, even the Nasdaq doubled every 18 months. The result was beyond just an exciting new technology – it was a new culture that both captured the world's imagination and had it running scared. Rich people in New York felt poor. Smart people in Redmond felt stupid. Producers in Hollywood spoke a whole new lingo. Every Fortune 500 company felt vulnerable to itty-bitty startups. Silicon Valley was an argument in the form of a place. It argued for a new way to live, a new relationship between owners and employees, a new bond between work and play.
I told the Valley's story in those years, and ever since, people have felt comfortable telling me their thoughts about work. I'm seeing a very different type of culture emerging in Silicon Valley today. The new model is far more reminiscent of Valley 1.0 (the PC revolution of the '80s) than Valley 2.0 (the Internet revolution).
For the most part, workers are happy to have a life back. "It's just a paycheck now," said one woman I rode Caltrain with. "I'm all right with that." At San Jose's Tech Museum of Innovation, I got into a conversation with a former headhunter, now doing HR. "The subsector of the industry that profited from chaos isn't counting on a recovery. Ever." She used to eat at trendy restaurants; now the highlights of her week are a regular dinner with friends (alternating among their apartments) and the volunteer tutoring she does at an elementary school. She says, "The question 'What do you do?' now refers more to 'How do you pay the bills?' than 'What is your purpose?'"
As for the famous passion that used to motivate so many worker bees, a guy in the weight room at the Pacific Athletic Club in Redwood Shores said it best: "How many people can honestly say that they are really passionate about selling 'ERP software solutions to Fortune 100 enterprises'?" People are working, and working fairly hard, but most would rather be doing something else, if they weren't afraid of living on half the income. One Web developer told me, "I keep my dreams close, but as fantasies, not as ventures I'd ever pursue." There's a powerful desire to help others. A project manager says, "I dream about actually feeling connected to the community and to people around me – and being able to contribute to the greater good."
This attitude – Johnny Paycheck Smells the Roses – is prevalent not just among the worker bees. I interviewed a CEO who was resigning to become a venture capitalist, primarily so she wouldn't have to work such long hours. A VC I once wrote about now holds forth about his newborn son far more than about his portfolio of investments. Yet another has invested a lot of time improving his relationship with his two daughters – and very little time investing money.
Perhaps most telling is a newfound and poignant reluctance when it comes to startups. Says one San Francisco entrepreneur who founded three companies, "I never want to start another company again. I saw an ugliness in human character that destroyed my faith in the common man." And netted him $9 million. Most people's gains were far more modest, like this Netscape alumnus: "I made enough to pay off my student loans and buy a decent car. Was it worth it? Sure. Would I do it again? No way. I'm happier with a paycheck and knowing I'll be able to show up for my guitar lessons on Tuesday and Thursday nights." The other evening I met a woman at a Ben Kweller concert. She turned down job offers from two startups to stay at her "boring, no-upside" job at CBS MarketWatch. "I've been laid off too many times," she said. "I don't want to go through it again for a while."
I don't think this new attitude is temporary. I see a great deal of nesting going on. Despite the crash and the resulting disruption, more marriage licenses were granted in 2001 in San Francisco than any year prior. In Santa Clara County, more babies were born in 2002 than in any year of the boom, and house purchases have bounced back to near-record levels, despite the massive evaporation of wealth. The culture of shifting alliances and temporary agreements is out; permanence and settling down is in.
I doubt startups will ever become commonplace again. Most new products will be funded and developed through intrapreneur programs at well-established companies. Venture-funded startups will be reserved for only the rare great ideas. They'll be highly watched anomalies, a spectator sport for the average Highway 101 commuter.
The hype machine keeps puffing, but the truth is that the pace of change in Silicon Valley is no longer special or extraordinary. In the past few years, Hollywood has been transformed by reality television, which has created new fortunes and new stars. Washington has swapped out an administration of 24,000 Democrats and replaced it with 24,000 Republicans. Wall Street has been altered by new rules governing conflicts of interest. The music and book industries have far more new products running through their pipelines than the tech industry.
So while some might find Mr. Paycheck's workaday attitude disappointing, I think it's appropriate for a computer industry that's slowed down. Silicon Valley 3.0 needs people who are good at working a single problem for several years. The kind of people who don't find themselves saying, after only six months, "Enterprise server software has gotten old." People who don't mind that it takes two years to be promoted from Web engineer to bottom-rung manager.
Which is to say, what it doesn't need is people addicted to excitement -�experience junkies, boom wranglers, and other hunters of the vertical learning curve. If you need glamour and buzz, grab the next plane to somewhere else.
Debating the future has always been great conversational sport in the Valley. Lately, many prognosticators have warned that if the Valley doesn't return to its radical cannibal ways, we'll wake up one day and be living in a new Detroit. I'm suggesting that if you look around with fresh eyes, you'll see that we already do.
Automobiles are arguably the most disruptive technology of the past hundred years. They've changed the way we live. Changed how our cities are organized. Changed the climate of the entire planet. The fuel required for them shapes global politics. Detroit will keep on innovating at a manageable pace, putting out fresh models every year and new makes every few years.
But when you go to Detroit, you don't find a trend-bucking social culture. You find a conservative working-class society. So even though the Motor City's number-one export is still changing the world drastically (just wait till the middle classes of India and China start to buy cars), nobody looks to Detroit for answers on how to live, how to structure companies, how to define the relationship between work and play. In fact, with its sprawling suburbs and huge unions, Detroit has long been a counterexample for how to organize a society.
Silicon Valley will continue to export computer technology, much of which will continue to reshape the world. But the Valley itself won't be a role model for anything. While the rest of the world will use our technology, they won't want to live like us; they won't care what we talk about, they won't worship our CEOs as leaders, or get excited about the newest startup. Silicon Valley 3.0 will be an industrial force, minus the magic that spawns imitation – a success again, but not the One True Way.
All of this is OK. The limelight's not necessary. The economic growth of the next decade won't come disproportionately from those who are motivated by equity. It won't require hype and glory. It'll come the old-fashioned way – from scientists and engineers who continually extend what we know, until eventually the impossible becomes possible through their cumulative effort. They're as likely to work at universities as at startups, funded by government grants rather than venture capital. They won't need the promise of riches to conquer the unknown. They'll do it anyway. It's in their nature.
It's what they're trained to do.
It's their job.
