Silicon Valley Just Ain’t What It Used To Be—And That’s a Good Thing | Hacker News Reader

Silicon Valley Just Ain’t What It Used To Be—And That’s a Good Thing

techcrunch.com

25 pointsssclafani20 comments

Again and again, the things that fundamentally change our lives and our culture looked like toys when they first started. That doesn't mean every toy is worthy of our attention, but people in tech should know better than anyone that you simply can't tell which toys will be important.

When the radio transmission was in wide use, radio as we know it today (as a music box) didn't exist. When it was proposed, a potential investor asked of the inventor:

"The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?"

Fast forward a couple years later, the inventor of the radio music box said of the television:

"While theoretically and technically television may be feasible, commercially and financially I consider it an impossibility, a development of which we need waste little time dreaming."

So it is with software and hardware, and now social. If you're interested, I've written about it before: http://iamwil.posterous.com/who-would-pay-for-a-message-sent...

There are plenty of examples of the opposite though.

The creator said the Segway would change the world and it certainly hasn't.

I think people pull up these tales too often, those stories are famous because they are the exception, not the rule.

Everyone is so defensive that no one is really listening to what the author is saying. He's saying that SV used to be about driving innovation, not making money. Facebook, Twitter, and Zynga are all silly companies that won't be around in 10 years, and none make changes in improving our productivity. We don't do more with less because of these companies. The opposite, they provide us with entertainment. That's great, but it's not the core value that SV was founded on and it's not what's going to last.

It may be what people do on there is silly, but like this article says, the infrastructure software released by these companies have to deal with the number of users at scale is no easy feat.

I know facebook and twitter regularly release open source software for infrastructure. Thrift from facebook (and I think Cassandra). And FlockDB from Twitter, if I'm not mistaken. Every other startup's boats rise due to these companies dealing with silly things.

That definitely does happen, but there does seem to be a decrease in companies built on tech innovation as their product. Infrastructure innovation while scaling up a product is still great, but somewhat different from inventing a technically new thing as the product.

Not that classic Silicon Valley necessarily got the balance right, either: Xerox PARC is the canonical example of a place that was closer to 95% R&D, and 5% shipping profitable products based on that tech. But it seems at least possible that many companies are now swung towards the opposite side: 5% on inventing new tech, and 95% focus on productifying/monetizing existing tech by making nicely polished implementations, pushing it into new market segments, etc.

That might also be fine so long as there's a bunch of unexploited tech lying out there, waiting for someone to turn it into profitable products, but who's going to keep replenishing those stocks of unexploited tech? Will that kind of R&D come exclusively from academic research and a few big industrial labs like MSR?

I think this is just the pendulum swinging back and forth. you'll get these cycles, as first, we innovate on basic tech, and then polish it and tighten it up, before innovating on basic tech again.

Basic tech is still there. I think it's hard to know where to look, because like I said elsewhere, things that significantly change our lives in the future start off looking like toys, and not all toys end up significantly changing our lives.

It only seems like we have no basic tech because we're either not looking there, or we're writing it off.

Are you kidding? Facebook makes keeping in touch with old friends much more efficient. Twitter makes the distribution of ideas or links to news or ideas more efficient.

You're wrong and I'm happy to bet against you.

Proof points: 1. Tencent QQ is a Chinese social network for games. It's essentially Facebook+Zynga combined. Many of the top games on Facebook are ports of popular Chinese games, e.g., the farming genre. Tencent has been around for 12 years and did over $1Bn in revenue in 2009, representing a 61% increase in profits.

2. Over 500MM people use Facebook every month. That demand doesn't just disappear. The only way Facebook is going to lose is if someone comes along and gives people something better to do with their time.

3. Facebook has their pick of engineering talent in Silicon Valley. If you're an engineer looking ad a mid-sized startup, Facebook is the best place to work, hands down. Look at their open source projects (e.g., Cassandra.). How about their PHP compiler? Or their numerous patches to memcache? It's clearly an engineering-driven company.

4. Just because you think something is frivolous doesn't mean it isn't valuable. Was Atari frivolous? Electronic Arts? EA, obviously, is still around and immensely profitable. Moreover, the same VC that backed those companies also backed Apple, Oracle, and NVIDIA.

There are plenty of startups working on problems lower on the stack. One can innovate at any level -- why is Minecraft any less valuable than a video game that pushes the limits of modern 3D algorithms?

Was Facebook less innovative than PayPal? Oracle?

Personally, I think the attitude you show in your response is a defense mechanism. You feel like you're somehow "above" Facebook and therefore their success isn't valid.

At 1400 employees and four international headquarters, is Facebook really considered a mid-sized startup? To me that phrase evokes a few dozen people who took a sublet last year....

I don't want to trash any particular company. The thing about simple and obvious business models which satisfy a basic need is that they're easy to replicate. My view is that every so often one company hits on a mix of utility and accessibility that satisfies enough people's needs well enough that the firm becomes a giant of the industry...arguably, it becomes an industry unto itself, so well-known and well-liked that an entire ecosystem grows up around serving the needs of its users.

But the the frontier expands, and the very high integration which formerly proved such a huge advantage is now a source of inertia.

How many of us here have signed onto CompuServe or AOL lately? How many competitors did they leave dying in the dirt? They linger on, but as strange undead shadows of themselves. Apparently a few people are still willing to pay $199/year to sustain that pioneer feeling, but I doubt I'm missing anything: http://webcenters.netscape.compuserve.com/menu/

Zynga is about entertainment, yes. But where'd you get the idea that the entertainment industry won't stand the test of time? For as long as there's been currency, people have been paying to be entertained. This trend is only getting stronger with each passing decade, as technological improvements give us more free time to kill, and as the Earth's population grows. It's hardly a "silly" industry to be involved in as a business. As for innovation, just stop and consider the fact that the average social media gamers is a middle-aged woman[1]. Compare entertainment today to how it was 10 years ago, and you'll realize Zynga (well, the companies it steals from) innovates quite a bit.

Facebook and Twitter are less about entertainment and more about communication. Facebook lets me communicate and "share" with the people who've come and gone in my life in a way that's never been possible. And for those who use it well, Twitter is an invaluable source of relevant up-to-date information, straight from the mouths of the experts/authorities that you respect. As far as transforming the world goes, communication is a MAJOR area to innovate in, because it tends to bring people close together who were once far away and alien. This has profound effects on culture, government, etc (see: telegraph, radio, telephone, television, etc).

The way I see it, the web is a naturally advantageous platform for innovation in these industries and more, and now it's finally maturing. The startups blowing up today are merely the ones taking advantage of this fact.

[1] http://gigaom.com/2010/02/17/average-social-gamer-is-a-43-ye...

Zynga is about wasting time in a fantasy farm. What is innovative about it? Flash games have existed since more than a decade.

Hollywood is about wasting time in a fantasy story. What is innovative about it? Plays have existed since more than a couple centuries.

Zynga games have never really been played on a scale such as this before, leveraging social reciprocation as a way to entice the user to keep playing. I think if they're smart about it, they can find new game mechanics on this scale that wasn't available to games before.

Zynga successfully makes Flash games played by a) women b) over the age of 40 who c) use them with their friends in d) a social context to e) supplement existing social grooming rituals while f) being successfully, aggressively monetized by g) a well-oiled metrics machine with h) offline components.

I think you're just easily impressed, Patrick. :)

My point stands: their products decrease productivity, not increase it. That it's successful is great but it's not "innovative" in the stronger sense we're talking about here.

What's so innovative about the Internet? Means of communication have existed for many, many decades.

"Twitter is building a realtime communications platform that is exponentially more complex than, say, the telephone system (which is a one-to-one system, as opposed to many-to-many)"

Talk about not having a clue.

So writing a software program is "exponentially" harder than developing a working telephone, running a system of wires, inventing a way to switch calls automatically, the entire touch tone system, running cables under the ocean etc etc etc. Not to mention the telephone industry came up with some of the best inventions in computing - they weren't doing that for their own fun, it was useful because telephones were HARD.

Is Twitter hard? Yea, it has some good tech behind making it scale, but the basic functionality is pretty simple.

Most of the companies like Zynga and Foursquare are get rich quick schemes powered by snake oil.

They talk about changing life and solving world's problems.. yada.. yada.. BS!

When was the last time any of such silly companies helped you with your real life, I am not talking about a virtual fantasy farm.

Cloud Computing and iPhone are among the few useful innovations from Silicon Valley in recent times. Even products like Basecamp, Zoho suite and Google Apps are great.

*Hint hint, A bubble is in the making.

ICEBERG STRAIGHT AHEAD!

I hope people start to see the bigger picture when their virtual farms fail and their check-in mania subsides...

The 21st century is primetime for humans to step up and finally solve problems that have plagued our progress for centuries and here we have the masses switching from coach potatoes to facebook zombies...

The problem with this article is the focus on the most visible companies that generate the most revenue or grow the most quickly. There are significant innovations pioneered by silicon valley companies that demonstrate remarkable long term value. I'm also going to use Silicon Valley broadly to mean internet startups because the valley is now more of a culture and group of people than a region. Additionally, I'm choosing technically challenging problems instead of difficult execution challenges or marketing challenges (SMB SaaS companies, local advertising aggregators).

1. Media delivery shift: Netflix, OnLive, Pandora are now distributing previously physical media in ways that will disrupt their respective industries. Blockbuster is now bankrupt.

2. Communication: Skype is now the largest long distance carrier in the world. It's Scandinavian, yes, but give me some leeway!

3. Information processing: Palantir manipulates huge data sets for financial institutions and the government.

4. Financial markets: SecondMarket and TheReceivables Exchange are creating markets in previously illiquid markets.

5. Medical innovation: there are tens of companies working on EMR systems and building business intelligence applications for hospitals to increase quality of care while reducing costs

6. Big Data: Hadoop and other NOSQL databases have been built in the past 10 years to enable massive computation on commodity hardware. Not to mention the three storage companies that just sold for $1B+ each in the past 2 months.

7. Energy: Solar panels, fuel generating algae, carbon sequestration: Innovation is happening here in the valley using the techniques and science developed for semi-conductor fabrication and novel ways of processing.

The most recognizable startups may not be innovative in the sense the author is describing, but it's clear to me from an investment point of view that there is more innovation across more industries occurring today than ever before. And this innovation has just as much potential to dramatically impact lives as did the semiconductor.

@ttunguz

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