The Fading Of Silicon Valley Innovation
prudentbear.com
prudentbear.com
The key point is that the author is comparing decades in other industries to years in this industry. Which we're apt to accept because we see things moving so much faster now. But some things don't move that fast. The reason we see such rapid innovation in this industry is that the low barriers to entry facilitate massive parallelism: There are a million teams implementing a million ideas all at once.
But parallelism doesn't resolve dependencies. You can't invent something until its time has come, all the prerequisites have to be there first. And the big things tend to have a lot of dependencies -- because otherwise they would have been done twenty years ago. This party is just getting started.
Revert your life to the standard it had at the 'end' of the innovation period (this guy would have to go back to 2000). Remove all of the things you couldn't do then, today. Convert your utilities to the same that you had then (for many that would mean going back to dial up Internet but I digress). Now spend a week in that life, come back and tell me that innovation has stopped since then.
Fundamentally, people seem to start 'seeing' innovation in their teens, which seems to be coming out of everything, and then by the time they hit their 30's they stop seeing it. My thesis is that it isn't because innovation and change has stopped happening, it is because they have become accustomed to it. Hence the exercise to 'see' what you couldn't see because you were in the middle of it.
I think in terms of traditional Silicon Valley tech (as it is today) his point is largely correct and natural. While software is increasingly ubiquitous, the pace/rate at which its able to be a driver of new innovation/change is increasingly less in my opinion - computing and the internet has been maturing over the last 50 years and we should expect to see less life altering changes as a whole. It doesn't mean the gig is up - it just means computing progress is now eating away at the fringes and that the delta in how much computing drives innovation will be somewhat less through 2010-2020 than it was from 2000-2010.
High speed internet, 4G, etc, isn't Silicon Valley. It's Japan (DoCoMo), San Diego (Qualcomm), Dallas (AT&T), New Jersey (Verizon), etc. No need to give up your Ivy Bridge CPU's (Portland/Haifa). Google was in place before 2002, and basically peaked at that time.
What would I be giving up? Facebook? Flash ads? Done! Go back to Photoshop 7.x? Even if you assert that Microsoft is more culturally associated with the Valley, despite being in Redmond, then you might be running Windows 2000 on your new Ivy Bridge processor. Sounds great! The hardest thing to give up would be my iPhone (Cupertino) and I guess Hacker News. Although Apple is arguably the last vestige of the "old" Silicon Valley. Think about it: they're basically making their money these days selling cool-looking RISC machines running UNIX...
Doing the exercise is one that helps you pull out the changes that you may have overlooked rather than highlight a specific location. Once you can see the changes you are in a much better position to evaluate both the relative innovation from a previous period, and the contribution to innovation.
You are required to make a choice between option A and option B. With option A you are allowed to keep 2002 electronic technology, including your Windows 98 laptop accessing Amazon, and you can keep running water and indoor toilets; but you can’t use anything invented since 2002.
Option B is that you get everything invented in the past decade right up to Facebook, Twitter, and the iPad, but you have to give up running water and indoor toilets. You have to haul the water into your dwelling and carry out the waste. Even at 3am on a rainy night, your only toilet option is a wet and perhaps muddy walk to the outhouse. Which option do you choose?
None of this is novel stuff, and anybody could have predicted them 10 years ago. Not innovation, IMO.
Another thing I would miss is the ubiquity of Craigslist. However, it was created in the 90's. The biggest improvement in Craigslist in the last 10 years is simply that more people use it (not that I feel it needs other enhancements)
The trouble with Eeyore's and Chicken Little's is they are always right. That is they become right if you wait long enough and then they are only right for a short time. That brief window is when they perk up all happy and smiling and point out, "Hey, you should've listened, I was right."
Never mind the opportunity cost of waiting for the right timing. It's a good thing the stock market charges interest on a short position so that there is a cost to not being right NOW.
With that aside, the Consumer Internet focus has resulted in tremendously less innovation in recent years. I've worked for 6 VC funded startups including 3 I founded. Not one of them could be funded today because they were all started with a slide show and a team.
The VC's of today want a product, happy customers, and even momentum before they put much in. It's literally harder to do much within that window. See my post:
http://smoothspan.wordpress.com/2012/09/13/you-cant-do-crp-w...
OTOH, it is possible to bootstrap like never before. Maybe there's innovation to be had there. And there is talk of the VC's going back to Enterprise. We'll see if anything big gets built or if they focus on the consumerization of IT (aka more Consumer Internet sold B2B).
As if nobody ever saw the numerous "Apple kicked me out of their store" sob stories on HN.
Switch to PC and Android, there's much to do.
I think where these analogies break down is the fact that computing has much wider applications even than something as fundamental as transportation. Well, necessarily so because computing can be applied to transportation and everything else. What "Silicon Valley" does is applicable everywhere for the foreseeable future. I mean software is certainly not a solved problem and it really won't be until the singularity is achieved.
First of all the author discusses Silicon Valley innovation vs. the steam engine and the automobile. Assuming 'Silicon Valley' is being used to equal 'technology', the author is comparing a market to a product.
Now, if the author had compared innovation in transportation (automobile) to innovation in energy (steam power), to innovation in technology, they'd be on to something.
Except that the thesis falls down when making this comparison. Sure the automobile was a massive shift in transportation technology, but that was followed up by the airplane, high-speed trains, massive public rail systems, etc. etc.
There is still constant innovation in all of these fields, but could you imagine what the world would be like if we had a new form of transportation created every 10 years? I don't think the world would be able to keep up.
Google seems to be the last tech innovator in the valley with the Goggles, self-driving cars, etc. I really see Google as the last actual technology company to come out of the tech boom of the 1990s. There hasn't been much since, at least not in the Valley.
Further South you have Tesla and SpaceX, and you have some ventures elsewhere.
"what" will happen but will it happen in the valley?
Will we ever have a major advance in SW development? If so I think it will require massive research & resources: perhaps somewhere in asia.
It's not that innovation has stopped, but rather that it has been focused in a very narrow niche as of late: the advertising niche. Everyone seems to be doing something in advertising, whether it's brokering ads or harvesting eyeballs. Most of these seem to be in the perennially doomed space of "we will invent something unrelated to advertising and try to shoehorn an ad-based business model into it".
This is also why when a not-ad-related web business starts up we fall all over ourselves - AirBnb, Square, etc.
Since most of these are e-commerce, social networks, media, and advertising companies, I'm not convinced we're doing a good job making new technology.
* What will be the geographic center of innovation?
* What industry will the innovation be in?
These are orthogonal. I can't answer either of these. I honestly have no clue. I'll make one solid prediction, though:
I don't know what the Big Thing of 2030 will be, but it will involve computation. It'll be far outside of traditional IT (the use of computers to implement 20th-century business ideas) and social media (same, but for 21st-century cultural experiments) but whatever is Big during 2030 will require a lot of skill when it comes to computation.
Of course, I have no idea whether this will happen in Northern California or some other corner of the world.
What I think is clear is that VC-istan innovation is over. The problem is that the VCs talk to each other and collectively decide who's hot and who's not. So, instead of getting true risk-taking, you have selection by committee in the funding process. That is starting to fail.
Maybe. Much as I'd like to believe it, there are some things that can't be bootstrapped. Actually there are many things. We just don't do them because the VC's aren't funding them either. Perhaps they'll go back to it.
OTOH, VC access is one big reason innovation gets centralized to places like Silicon Valley. Reduce that friction and it can spread out more. Still doesn't fix the issue of networking for talent which is another network effect that clumps innovation.
I did my first startup in Houston, Texas. It was great. Extremely cheap. Built a product and got to profitability on about $600K of capital. Moved the company to Silicon Valley before ultimately selling it to Borland (it became Quattro Pro).
Houston worked for development because I could get talent out of Rice University and Univ. of Houston. Infrastructure was cheap because they were having a real estate crunch at the time. You could get free rent for 2 years in exchange for signing a 5 year lease.
What was hard was the marketing and networking. After riding planes to go to the East and West Coasts to get the product reviewed, I decided we had to move the company.
In the Internet age, that may be a lot less true. No particular advantage to doing my current bootstrap (CNCCookbook) in Silicon Valley other than that's where I live. Houston would be a lot cheaper.
Funding is the art of boss-picking. Who gets to be a boss, and who has to implement someone else's idea and have a boss? Funding goes to a (Person, Idea) pair-- a 2-tuple, in other words.
Now, the problem. Person-picking is fairly useless. It's not that good management isn't important, but there's no correlation between being fundable (i.e. attractive to VCs, probably because one went to the same boarding school) and being a good executive. Idea-picking is important, but very hard to do.
Now, there are obvious Ideas that deserve funding. Cancer research, clean energy. The issue is that most of us who are intellectually honest know that we don't make a credible (Person, Idea) pair with the meatiest Ideas (because others know a lot more than we do). The higher the quality of Idea, the fewer Persons there are for whom there's a credible pair. (This social-media nonsense is mostly low-quality ideas that a 5-year-old could execute.)
So, what do you have in VC-istan? You have narcissists who say, "I don't care what the Idea is, but I deserve to be the Person because, goddamn it, I have an MBA." They continually pivot until they find something a VC will fund. Typically, they land on Ideas for which it's easy to have a (Person, Idea) match, which tend to be those that involve no vision or real technical meat except for "scaling", which isn't that hard if you're half-decent at hiring technical people.
Failures in Computation: 1) general artificial intelligence, this has been touted that it's just around the corner since 1970's; so far most practical AI has been just variants of expert systems. 2) Bioinformatics, this was touted in the early 2000's and by the Kurzeweil-crowd as the singularity moment that will bring advances to biotech; unfortunately, all of the mountains of data has not yielded any concrete results because it's too complex for simple statistical methods. 3) Quantitative finance: from the failure of stat arb funds in 2007 to the blind trust in BSM in derivatives risk management software, mathematical models have beautiful assumptions that the world is smooth whereas the real world is not.
Emergence of Hardware: Fab labs, 3D printers will enable delivery of real consumer products via CAD schema. Alternative energy research, medical robotics for remote surgical operations. Just look at the real trailblazers of Silicon Valley, SpaceX, Tesla and Google Driver-less cars. All hardward projects. Personally, I'd like to bone up EE, molecular biology lab protocols, CAD, MechE skills instead of RoR or Facebook APIz.
Also, you can't compare two things by comparing the failures of one to the successes of the other.
Hardware and software will interact more in the 2010s to '30s. What will people design all this awesome hardware with? Software. Taking the other direction, I do agree that the hardware world is becoming more interesting to people who might, a generation ago, have thought of themselves as "pure software" people. In 1985, you could "do AI" and never go outside of a garbage-collected language (Lisp). In 2013, it's hard to do high-performance machine learning without having some knowledge of all the neat things people can do with hardware (e.g. GPU programming). Also, the existence of continuing education options like Coursera is making people more Y-shaped than T- or I-shaped.
I agree with you that a lot of the "hot" work in the social media world (learning a bunch of damn APIs) isn't very hard, deep, or interesting. However, don't rule out software entirely.
Y-shaped: some breadth at intermediate levels. More depth in one's non-specialty areas than T-shaped. (The top of the T becomes a triangular funnel instead of a bar.)
One thing I've noticed is that many of the most successful people are multi-specialists, i.e., they have two (or more) "specialties" that combine in a rare and valuable way. Examples include the rise of the "growth hacker" or "data scientist", who are typically programmers applying their craft towards marketing or statistics respectively.
There's both a perception component and a real value component. If you're the best Marketer, other Marketers will frequently deny it, get jealous, or sabotage you. But if you're "the Marketer who also writes code", nobody feels threatened. You're competing in a different area, so people can support you and ask you for favors when they need help.
In terms of real value, a junior programmer with strong business skills in a company with no other programmers can contribute millions of dollars of value through basic automation-I've actually done this. The same programmer will have a much lower dollar value when surrounded by better programmers, at least initially, because all the low-hanging fruit has been taken.
Dimensionality is the rule, here. We suffer from it in hiring, where it's literally impossible to meet perfectly the requirement lists many companies put out (demanding 5 years of experience in a 3-year-old NoSQL database). This seems to be a part of why hiring is so hard on both sides.
Yet, once people are working together, if people aren't careful, they forget dimensionality altogether and attempt to form a total order, and it's this process that leads to the insecurity and sabotage.
actually, the most innovative companies today are in the social media space, on account of them being able to attract the most talented developers. ofcourse, what they do today on the outside may not be that innovative, but what goes on inside a facebook, twitter, google, linkedin, is certainly light years ahead of what goes on inside investment banks & bread-and-butter techshops ( my past employers ). you are assuming social media outfits will be forever doing social media, which is 100% wrong. social media is lucrative & network effects are huge => large money inflow => R&D into non-social-media products. Very similar to what Ma Bell did by overcharging everybody on phone calls & routing all the cash to Bell Labs R&D. There are entire new languages & systems for handling big data that were invented within social media companies. Just because the dataset for those is social content does not mean that's all they can handle. Social media companies, atleast the big 4, are definitely primed for handling cheap large scale computation on a massive scale, the exact problem that you think will dominate in 2030.
Technology becomes commoditized. It happened to steam engines, it happened to cars, it happened to PCs and it's happening to phones and tablets today. But it's a huge leap of faith to take that process and boldly state "Silicon Valley innovation will fade like the steam engine."
As things commoditize it seems design would shift to less costly areas.
Or related topic, are there any SV startups working on quantum computers (or just something which that has some of the quantum mechanical properties needed for quantum computing)?