Has Silicon Valley lost its Golden Touch ?
For the longest time, the entire ecosystem that was required for a successful start up was in the Valley. The Venture Capitalists, the risk taking entrepreneurs and the best and brightest willing to put in long hours. Given the Valley’s mentality, employees at start ups were paid average wages and loaded up on stock options. In the good ole days, that was the perfect mix. Young start ups with little or no revenue were bought out for huge sums or went public. Enough that Silicon Valley became the playground for the young, rich and famous.
That tide is slowly changing. The economy is battering everyone – very evident from the layoff tracker on our site as well as news media everywhere. What is lost in all this melee is the fact that Silicon Valley is losing its golden touch. Below are a few reasons.
Burghers of Calais at Stanford University
Getting Connected : The advent of LinkedIn, Facebook and other social media sites has made it easier to get connected. Not longer is it necessary to be physically present in the valley to know the right people.
Less need for Venture Capital: Just ask the founder of Facebook what king of capital he needed before he started ? Not much. It was the idea that had wings. With technology getting cheaper by the day, it is now easier than ever to bootstrap. Check out our “How to Bootstrap a business” blog for more.
Immigrants Leaving: While this is not an immigration discussion, Silicon Valley thrived on the best and the brightest of the world coming here to study and then work. The severe economic contraction means a lot of start ups are folding and employees working there on work visa’s will have to return back to their home countries.
Economic Epicenter has moved: While USA is still the biggest economy in the world, the economic epicenter has moved to the BRIC Nations ( Brazil, Russia, India and China). The new new rich are based in these countries now and it is just as worthwhile to have connections in Bangalore or Shanghai.
Communications: The Internet crash of 2001/2002 had a silver lining. Technology Companies invested billions in Infrastructure and created seamless communications worldwide. It created enormous opportunities for Indian Offshore companies to take on work, Chinese Manufacturers to bid on auctions and Stock traders in Sao Paolo to work on currency trades in real time. End Result – don’t need to be in the valley to get work done.
What this means for Silicon Valley ? We are in a truly Global economy and for the first time we will have innovative companies that are just as cool and based in Singapore or elsewhere. With innovation and start ups leaving these shores, we will also lose some of the best and brightest of the world. Surprisingly, nowhere in the Federal Government’s stimulus plan is a proposal to help young companies innovate and grow. Isn’t that what America was all about ? Share your thoughts by commenting below.
PS: The picture is very unique given this particular post. The Burghers of Calais, bronze sculptures by Rodin. Inside Main Quad courtyard at Stanford University – the epicenter of Silicon Valley.
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While Silicon valley may have lost some Glitz. it is way ahead of everyone else. All the innovative people congregate in the valley …. Money is an afterthought. It will be a long time before Asia catches up.