The end of Silicon Valley as we know it


The cloud has long been a harbinger of the end of Silicon Valley, and its demise will be a welcome blessing to innovators, technologists and users everywhere.

I've been saying this ever since I left California and headed back to the Rust Belt, and now it seems that others are chiming in with the same sentiment. As reported recently in TechCrunch, David Sacks, former CEO of Yammer, which recently sold to Microsoft for over a billion dollars, said the same thing in a Facebook post, noting, "I think Silicon Valley as we know it may be coming to an end." But while Sacks attributes the exodus to the lack of new and viable ideas, the reality may be a little more than that.

The sentiment in Sacks' post and the lengthy subsequent discussion thread is that, among other things, big companies are sucking up all the innovative ideas, and creating new companies is just too costly for entrepreneurs and startups. Refuting Sacks' proposition are numerous luminaries, including no less than Marc Andreessen, who noted that "human creativity is limitless."

Personally, if I had just sold a company to Microsoft for a cool billion, I wouldn't be complaining quite so loudly about the state of innovation. Sacks complains in his thread about assimilation of new ideas by large incumbent companies (strange complaint from someone who just sold his company to an incumbent for a BILLION DOLLARS).

But let's look at those incumbents—first of all, yes, they do eat innovative startups, but that's the nature of the business. Most entrepreneurs don't care so much about running a company once it gets successful, they are more interested in creating something from scratch. Once it gets successful, letting the incumbents take over is an appropriate response—and then move on to something new! And, second, as noted in my earlier column in this space, some of those big incumbents (most notably, Microsoft, with its new Bing Fund), are encouraging startups with incubator and accelerator programs. Sure, they're not doing it out of pure altruism; they hope to gain an equity stake in the next big thing. But these incubators pour fuel onto the fire of innovation, and nobody can argue against that.

It is, in fact, the end of Silicon Valley, but not for the reasons given by Mr Sacks. It's the end of Silicon Valley because there is more, not less innovation; and more, not fewer innovators and startups. That small piece of Central California is the birthplace of modern technology. But when a person—or in this case, an industry—comes of age, it flies the nest. In its youth, Internet companies had to be there. That's where the action was, that's where the innovators all hung out together. That's where the VCs threw their money. Success was a matter of connections and networking with the right people, and it still is—the difference is, today the "right people" are just as likely to be in South Bend, Indiana as they are in San Jose, California. And, because of cloud technology, the barriers to entry are lower, and connectivity and networking is easier across geographic boundaries.

In the end, Silicon Valley has rendered itself obsolete, and it has done so by design. The incredible technology that it has created has now made geographic boundaries irrelevant, and that is already giving rise to an incredible new wave of innovation and entrepreneurship—not just in Central California, but all over.

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