HBS Tech Panel: Valley of Destiny or Valley of Doom ?

I had a bit of a bard time getting out of bed this morning after last night's TechCrunch/Riya party (where is that headache coming from ?), but I wanted to attend the end of the HBS Tech conference organized by my friend Chris Yeh. Particularly, the panel “Valley of Destiny or Valley of Doom” looked promising, and gathered (from left to right in the picture): eSilicon's Jack Harding, Dave Winer, Mike Arrington and Bayosphere's Dan Gillmor. The question at hand was the position of Silicon Valley in this next economic cycle, the effect of off-shoring and whether we are in a bubble or not. An ambitious program...

Jack started by defining the terms off-shoring (building abroad) and outsourcing (sourcing from someone else), and explains that companies now support the global delivery of technology to a global market - which means that the concept of off-shoring in a global economy is very relative and “passe”.

Dave asked whether Silicon Valley deserves to be at the center of the technology world, as it has been for the past 30/40 years. After living here for 22 years, Dave left because he felt that the Valley had lost its technology focus to get into marketing or retail opportunities, and lost its focus on creating great technology and rewarding the engineers responsible for these innovations.
For Mike, who sees almost all new Web 2.0 companies coming to his door step (literally) in order to get coverage on TechCrunch, people start companies in Silicon Valley because of the confluence of talent (experience, capital, powerful support networks). However in a global market, companies are seeking engineering and product talent wherever it can be found. He mentions the example of his own stealth startup, edgeio, whose lead engineer is based in London and lead designer is based in Portugal.
For Dan, the major differentiator of the Valley was the culture of risk: this tendency of people to quit their job and start new companies. However the Valley is so expensive that it has priced itself out as many people can no longer afford living here. He ventures that company will only afford to have their headquarter here and will have engineering and operations in other parts of the country/world.

The panel then debated whether the point that whilst the Valley is the center of the technology world, it is not the center of intellectual life - Dan pointing out that there is no art institute of international renown. People in the audience chimed in to explain that cultural diversity is a key building block of the culture of the Valley - and that it did not matter per se that San Francisco/the Valley was not a major cultural backbone. Dave went on a rant about Google and other leading companies are not mature enough to go beyond appearing to the world as arrogant bullies, which has an impact on the image of all companies coming from the area.

Chris used the example of Riya being reportedly acquired by Google before launching is a sign of a new bubble, and asked panelists for views. Dan made the point that the previous bubble was led by the public markets, that lost hundred of billions of dollars when the bubble burst. In this new cycle, innovation is funded by angel investors and venture capitalists - as it should be - and the public markets are very challenging to enter, especially in the new regulatory environment. Mike states that there is no bubble because VCs are not funding companies that are not worthy: these only producing feature sets, addressing too small or unproven markets, and they remain “reasonable” at large. I certainly agree with Mike.

Jack stated that in his world (semi-conductors), entrepreneurs, VCs and the rest of the ecosystem is maturing and is getting better at its trade. The issue however is government recessing in its ability to execute on its duties.

Dan had the final word on the risk generated by the housing bubble currently underway, and the fact that education in this country is falling behind other countries, even if US universities are still recognized as leading ones. Seeing California schools tank in the ranking is certainly a great concern of parents, who might not be able to afford sending their to higher quality private institutions, and might lead them to leave the area.

Note that I only captured a subset of the panel which got into heated discussions on certain topics - and it is regrettable as Dave said that the end that there won't be a podcast produced out of that session.

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Comments

[Andy English]

See my latest article "Valley of Destiny or Valley of Bloom" printed recently in various newspapers around the world:
http://base.google.com/base/items?oid=15998228947839104008