Sunday, October 27, 2013

Will Success Ruin Silicon Valley?

Everywhere one looks, Silicon Valley seems ascendant.  Tech companies like Apple and Google are among the world's most valuable and admired, while tech titans like Larry and Sergey, and Mark and Sheryl are given the first-name-only treatment of offline celebrities.

Silicon Valley has even stuck its nose into broader society, helped by the fact that so many of its products are in the hands of the average consumer.  Sheryl Sandberg's book, "Lean In" became a national conversation point.  Efforts like Startup America, while fledgling, illustrate Silicon Valley and Washington DC's increasing efforts to court each other.

But along with these celebratory puff pieces, I've also read an increasing number of critical ones.  Longtime San Franciscans who are getting priced out of their own city are increasingly resentful of startup employees, many of whom seem to display the same sensitivity and modesty as the robber barons of the 19th century.  Sean Parker's over-the-top wedding, for example, wouldn't be out of place in Gilded Age America (or decadent Rome).

On one level, it's a matter of simple economics.  When the demand for housing exceeds the supply, and the supply is limited, prices will rise.  There's no easy way to wish away broad trends, and attempts to hold back the tide of progress are about as successful of King Cnut commanding the waves.  Efforts like rent control just cause worse problems.

But on the other hand, this isn't just a futile lament by the remnants of the counterculture, or the wistful musings of the privileged wealthy who don't want to give up the "ambience" of their city.

Silicon Valley's greatness comes from many factors, but there are several key factors that rising prices endanger.

1) Willingness to try new things.
It doesn't matter how cool you are, when you become rich, you prefer stability to change.  The great innovations in Silicon Valley have come from those who have nothing to lose.

2) Ability to live on nothing.
Bootstrapping a company requires the ability to survive on a shoestring.  Not easy when a 1-bedroom apartment rents for $3,000 per month.

3) Openness to outsiders.
The majority of companies in Silicon Valley are started by immigrants.  And even those who aren't immigrants to America are likely immigrants to the Valley (like me).  If people can't come here to pursue their dreams without first making a mint, we'll lose the hungry outsiders we need.

I don't hear many folks sounding the alarm about these issues.  Mostly, people seem content to treat the current issues as a temporary adjustment or the whining of a few.  Perhaps.  But if these issues have any chance of endangering the formula that drive's the Valley's success, I think it's worth sounding that alarm.

1 comment:

Engels Vargas said...

You raise very valid points. Silicon Valley is not really adapting to the growth. Zoning laws need to be change so more apartment complexes can be built so rent can go down a bit. And mass transportation is still a pain. Mass Transportation and Housing a very big issues that will continue to worsen once the population keeps growing.This area needs more walkable cities as well.