Everything that needs to be said has already been said. But, since no one was listening, everything must be said again. — André Gide
Rather than writing something “new” about the state of Silicon Valley, I thought to share excerpts of some of my favorite articles written by people who offer fresh perspectives and counter narratives on the topic. Bottom line: It is time for a reckoning. Strap in!
Right now, however, the myth is in danger. We all know that in Silicon Valley, the tech boom has been matched by obstructionism to new housing, causing the cost of living to soar. Right here, in the epicenter of innovation, the free market has been squelched. If the situation doesn’t change soon the next generation of innovators will live elsewhere.
The End of the Silicon Valley Myth: The companies that define our digital lives have hit a wall (2022)
Having scaled to immense size, they [Big Tech] are unable or unwilling to manage the digital communities they’ve built. They’re paralyzed when it comes to product development and reduced to monopolistic practices such as charging rents and copying or buying up smaller competitors.
The stuckness we’re seeing is the result of some of the most ambitious companies of our generation succeeding wildly yet having no vision beyond scale — no serious interest in engaging the civic and social dimensions of their projects.
Silicon Valley has always been built on the mythology of the heroic founder, and few come more thoroughly shrouded in myth than Musk — and this was a year in which that mythology unraveled.
The Myth of Tech Exceptionalism: How tech uses the promise of endless innovation to ward off regulating even its present-day harms (2022)
This argument, properly labelled “tech exceptionalism,” is rooted in tech leaders’ ideological views both of themselves and government. This ideology contributes to the belief that those who choose to classify themselves as “tech companies” deserve a different set of rules and responsibilities than the rest of private industry.
An entire generation of “innovators” has grown up believing that technology is the key to making the world better, that founders’ visions for how to do so are unquestionably true and that government intervention will only stymie this engine of growth and prosperity, or even worse, their aspirational future innovations.
“For tech evangelists, ‘disruption’ has become a kind of holy grail, with ‘unintended consequences’ treated as an acceptable by-product of innovation.”
Silicon Valley came to maturity and dominance during this anti-regulation era and imbibed the swelling libertarian ethos that predominated from the 1980s onward. In this context, regulation became the enemy of “innovation,” which soon emerged as the byword for “tech” as a whole.
The term [Tech] implies that, for regulatory purposes, the social costs of these firms’ present activities should be weighed not against the benefits they currently produce, but those they promise in the future. Designating a firm as a “tech” company means that the future goods tech might produce (if unmolested by regulators) necessarily trump any harms the industry may be creating in the present.
Tech exceptionalism is an ideology that has served to give tech companies a competitive advantage by removing the regulatory burden that every other industry must accept. But this is nonsense.
What is crucial now is for the government to acquire the technological literacy that will allow it to effectively assess not only the harms caused by technologies, but also to design regulatory strategies as nimble as the technology companies that so clearly need to be regulated.
The collapse of Silicon Valley Bank is the latest indicator that the Valley — site of nothing less than an economic miracle in recent decades — is now in big trouble. Other signs include mass layoffs in the tech sector and a post-pandemic real estate downturn. The Valley, it seems, is entering a period of decadence that raises the prospect of long-term decline.
The start of this decline has coincided with a shift from the physical to the virtual. The Valley’s roots were in the old engineer-driven economy, one connected to the rest of the country, and to working-class America — somebody, it’s easy to forget, has to make the hardware. But the Valley has slowly left the industrial battlefield — it has lost over 160,000 manufacturing positions over the past two decades.
To be clear, the Valley is not done as a major tech centre. It still boasts a venture capital community, a remarkable concentration of engineering and other management talent, powerful universities and the headquarters of some of the biggest companies in the world. And it remains home to many of the tech giants that now exploit their monopolistic advantages. But that is not the same thing as being the place where the world looks for a vision of the future, as it once was.
The kinds of tech jobs being created in the Valley produce opportunities only for a narrow subset of highly skilled, well-connected or credentialed employees. The Bay Area has been described as ‘a region of segregated innovation.’
Silicon Valley’s Slaughterhouse: How venture capital fattened up startup culture to sell on the public markets — and brought out the bolt gun when things got tough (2023)
Silicon Valley’s leaders no longer write academic papers about the things they’re building or think about the societal implications of tech itself outside of whether it can raise venture funding or grow into something they can sell.
Venture capital turned the tech industry into a machine that took regular industries and turned them into vending machines — billions of dollars into direct-to-consumer mattresses, subscription boxes, unprofitable apps that used cheap labor to do stuff for you, and cryptocurrency, an industry that monetized financial desperation and religious dogma by dressing it in the clothing of decentralization.
Silicon Valley, despite being a supposed hub of innovation, one separated from the garish demands of regular industries, has culturally grown to resemble an open-air private equity firm where companies are incubated like animals bred for slaughter. While I’m not saying the Valley is entirely bereft of innovation, the modern tech ecosystem has become an alternative asset market built to enrich the very same people it once claimed to reject.
In 2013, there were 39 unicorns (tech companies worth a billion dollars or more). According to CBInsights, there are now over a thousand of them. And because [Marc] Andreessen and his fellow venture stooges forced so many lossy, unprofitable companies to go public, many of them are underwater (and they have been for some time), with the top 50 Tech IPOs since 2020 losing 59% of their market capitalization as of May 13 2023.
Without real, long-term change, Silicon Valley will remain a decrepit West Coast version of Wall Street where innovation fights to be heard above the endless white noise of valuations and venture’s vultures.
The public-facing ideology of Silicon Valley is at once potent and seductive. Through the merger of technology and unfettered markets, or so the story goes, a culture of ceaseless hustle and radical risk-taking drives endless innovation.
The main ingredient in this futurist cocktail is typically said to be a rare breed of exceptional individuals who rise to the top through a combination of eccentric genius and personal grit. The rise of these übermenschen contributes to the betterment of humankind, and their unfathomable wealth represents a reward commensurate with the social value they’ve created.
The Myth of the Tech God Is Crumbling: Believing that startup founders possess extraordinary powers harms wide swaths of society, particularly everyday workers and investors (2022)
Silicon Valley has long seemed to operate on a foundational myth that its leading lights, having mastered an alchemy of electronics, code and early stage investing, are not just a breed apart, but could also defy the gravitational laws of business and investment that apply to mere mortals. According to their articles of faith, their special powers of disruption could transform any industry, while generating outsize returns making them worthy of magazine covers and tremendous wealth.
Disruption and creative destruction are real, and marvelous new technologies are invented every day that transform the world. But we should lay to rest the myth that those who are best at articulating grand visions also possess the kind of universal competence required to create companies of lasting value.
How 2022 killed the myth of the tech genius: This year saw the great humbling of the Silicon Valley billionaire — from Elon Musk to Mark Zuckerberg
Regardless of how they try to regain what is left of their dignity, this year  has been a turning point for this generation of tech CEOs. The tragedy of these figures is that years of being praised for their “genius” have inflated their egos to an absurd size, large enough to obscure their view of reality — and their own errors. It seems likely that their failures will continue to evade their detection, and they will commit even more strongly to bad ideas until they are the only ones left who believe in them.
The “founder” myth begets a culture of superiority among the techno-elite that demands deference from the political system. Beyond mere paeans to entrepreneurship, Silicon Valley expects policymakers to accept without reservation its preferred blend of self-regulating markets and limited government. Theirs is the land of “permissionless innovation” and “failing fast,” and any public servant who dares intercede risks killing the golden goose.
Libertarians and fellow believers in market fundamentalism rely on the myth to advance their own, even bigger myth: that innovation, progress, and growth are the product of government’s absence.
Silicon Valley was the product of aggressive public policy. The key technologies of our digital age were not the happy accidents of “permissionless innovation” in the “self-regulating” market, but of deliberate and prolonged government action.
When the Valley was humming, it did so as a symbiosis of capitalist pursuit of profit and government pursuit of the public good. Left to its own devices, it has devolved into a “unicorn” hunting party while subsequent waves of innovation happen elsewhere.
The vision of the personal computer, including monitors, keyboards, and “electronic pointer controllers called ‘mice,’” was not first envisioned by Steve Jobs, but by ARPA officials in 1968. The agency would go on to fund research at Stanford University and MIT that would develop the first mouse-and-windows graphic user interface, single-user computer workstations, and Internet protocols.
As a second policy lever, public and military officials acted as a “collaborative first customer” for new technologies. In new fields where no commercial market existed and the capital requirements for scaling up manufacturing processes were prohibitive, federal procurement contracts were vital.
A core tenet of market fundamentalism is the practice of rejecting all evidence of effective government support, suggesting that things might have been even better if policymakers had stayed out of the way. But with Silicon Valley, the counterfactual is also on disastrous display.
The passage of the bipartisan CHIPS and Science Act this past summer is a sure sign that policymakers are beginning to realize that the “design here, make there” business model doesn’t work for America — especially when the business in question is in a critical sector. Though a necessary measure, its deficiencies underscore just how much more policymakers must do if the United States is to retain technological dominance, retake the lead in key sectors, and spur a new generation of innovation. As a first step, they should suspend whatever deference they have to the purported geniuses of Silicon Valley.
Tesla is a success because the federal government decided to subsidize electrical vehicles. SpaceX depends on NASA contracts — much as Fairchild once did. Musk is a subsidy farmer, but that phrase does not deserve its negative connotation. The government plants subsidies precisely in the hope that entrepreneurs like Musk will harvest them, thereby aligning the pursuit of profit with the public interest. All of us enjoy the bounty.
Silicon Valley Finally Figured Out People Don’t Like It: The country’s response to a Big Tech bank collapse reveals a harsh verdict (2023)
The region that once produced microprocessors, personal computers, internet search, and web browsers, kind of doesn’t really do that stuff as much as it used to, and people are noticing.
In her 2013 book The Entrepreneurial State, Mariana Mazzucato observed that the real source of American innovation has always been the government. Libertarian, anti-establishment Silicon Valley owes its entire existence to the federal government, whose contracts and grants have funded its companies, and whose deep coffers have funded the research and development of technologies that Bay Area companies figured out how to profit from.
But in the stories Silicon Valley tells, it is always some enterprising dropouts in a garage who are the innovative ones — pay no mind to the hundreds of millions of dollars and teams of researchers that preceded the suburban fantasy. It’s almost as if the real innovation was with advertising and mythmaking.
If you squint, yes, these products [Uber, Netflix, Spotify, etc] have changed the world — but they haven’t necessarily improved it. At best, they’ve re-sorted and spiffed-up things that already existed, making them more convenient. At worst, they’ve accelerated the process of contracting out worker-made value and contributed in creating an even more precarious gig underclass.
Silicon Valley Was Unstoppable. Now It’s Just a House of Cards: The bank debacle is exposing the myth of tech exceptionalism (2023)
When the bank [Silicon Valley Bank] — a major lender to the world of venture capital, and a crucial resource for about half of American VC-backed start-ups — suddenly collapsed after a run on deposits late last week, the losses looked staggering. By Friday, more than $200 billion were in limbo — the second-largest bank failure in U.S. history.
But the bank collapse is applying pressure across all corners of the industry, suggesting that tech is far from being an indomitable force; very little about it feels as certain as it did even a few years ago. Silicon Valley may still see itself as the ultimate expression of American business, a factory of world-changing innovation, but in 2023, it just looks like a house of cards.
Tech will continue its relentless churn, but the energy has changed; there’s no magic, no illusions about what’s going on behind the scenes. The conception of Silicon Valley as a world-conquering juggernaut — of ideas, of the American economy and political sphere — has never felt further off.
The End of Silicon Valley’s 20-Year Boom: An industry still chasing limitless growth doesn’t lay off legions of workers (2022)
But the internet is maturing, and as a result big tech companies don’t have the same growth potential today that they did in 2012 or 2002. Investors, recognizing that, are increasingly demanding that tech companies focus on profits rather than growth. And that means there could be even more pain ahead for Silicon Valley workers.
Until recently, companies like this bought into the idea that they should focus on growth now and worry about profits later. But this strategy only makes sense in a fast-growing industry, and that no longer describes a lot of Silicon Valley companies. Once growth slows, then profits matter more and companies will naturally look for ways to cut costs. So with a potential recession looming, we’ve started to see a bunch of technology companies announce layoffs.
For as long as it has existed, people have been trying to replicate the magic of Silicon Valley, to capture some of its ineffable ability to produce true innovation — inventions that have changed many people’s lives for the better. But despite its real claim to innovation, Silicon Valley has also come to represent something less tangible. Andrew Russell, professor of history and dean of the College of Arts and Sciences at SUNY Polytechnic Institute, and Lee Vinsel, a professor in the Department of Science, Technology, and Society at Virginia Tech, call it “innovation speak.”
The innovation delusion is the mistaken notion that the creation of new things, cloaked in the buzzwords of innovation, are the best and only path to resolve all kinds of problems that we face in society, from our personal lives to our businesses or universities to infrastructure at large.
People don’t really think about the consequences [of the Silicon Valley model], and they don’t really understand that the world has changed and that there are many, many different paths to successful innovation-based growth,” said Professor Breznitz.
Taiwan, Finland and Sweden have excelled in innovation without unleashing massive inequality by specialising in parts of the innovation process beyond the Silicon Valley stage, he argued. Germany is another nation concentrating on “second generation” rather than “novelty” innovation.
And those countries have done so without having “world leading” universities. Three of the big “common obsessions of innovation consultants worldwide — venture capital, science parks, and globally competitive research universities — very rarely played roles” in successful regions, Professor Breznitz writes.
Stanford is a one-off, and if your innovation policy relies on universities, then “you are barking up the wrong tree”, he said.
All across the Valley, the majority of big start-ups are actually glorified distribution companies that are trying, in some sense, to copy what Domino’s Pizza mastered in the 1980s when it delivered a hot pie to your door in 30 minutes or less. Uber, Lyft, Sidecar, Luxe, Amazon Fresh, Google Express, TaskRabbit, Postmates, Instacart, SpoonRocket, Caviar, DoorDash, Munchery, Sprig, Washio, and Shyp, among others, are really just using algorithms to deliver things, or services, to places as quickly as possible. Or maybe it’s simpler than that. As one technologist overheard and posted on Twitter, “SF tech culture is focused on solving one problem: What is my mother no longer doing for me?”
The problem with being a unicorn, indeed, is that there aren’t many exit strategies. Either you can go public, which is inadvisable without a lot of revenue, or you can sell, which is difficult given the paucity of companies that can afford to make such an offer. So, for many, the choice becomes fairly simple. You continue to raise more and more money, or you die.
The real difference may be that the biggest tech companies — Apple, Amazon, Facebook, and Google, among them — are indisputably now part of our social fabric. So perhaps this bursting won’t be as big and sudden and cataclysmic as the last one. Instead, things could simply slow down like a large tractor with a small hole in its tire.
The disruption con: why big tech’s favourite buzzword is nonsense: How one magic word became a way of justifying Silicon Valley’s unconstrained power (2020)
The concept of disruption is a way for companies, the press or simply individuals to think about questions of continuity and discontinuity — what lasts and what doesn’t, what is genuinely new and what is just the next version of something older. There is a lot at stake in how we think about these issues.
Disruption is possessed of a deep fealty to whatever is already given. It seeks to make it more efficient, more exciting, more something, but it never ever wants to dispense altogether with what’s out there. This is why its gestures are always radical, but its effects never really upset the apple cart: Uber claims to have “revolutionised” the experience of hailing a cab, but really that experience has largely stayed the same. What it managed to get rid of were steady jobs, unions and anyone other than Uber making money on the whole enterprise.
While “creative destruction” is a deeply ambivalent phrase, the word “disruption” is frequently positioned as something to be explicitly celebrated. It becomes something to be taught and striven for. And where Schumpeter’s view of the business cycle presumes a kind of Olympian view from above, disruption puts us in the trenches, and presumptively on the side of the attacker rather than the stalwart. While creative destruction was neutral on whether whatever was getting creatively destroyed deserved it, anything that is getting “disrupted” had it coming.
Public and private investors, along with the markets themselves, have become entirely decoupled from the concept of what “good” business truly is, focusing on one metric — one truly noxious metric — over all else: growth. “Growth” in this case is not necessarily about being “bigger” or “better,” it is simply “more.”
As my friend Kasey put it in a recent conversation, growth is a fire. If you build a nice, sustainable fire, it’ll keep you warm, cook food and sustain life. And if the only thing you care about is how big your fire is, then it’ll set fire to everything around it, and the more you throw into it, the more it’ll burn. Eventually, you’ll have nothing left, but if you desperately desire that fire, you will constantly have to find new things to burn at any cost. And we, societally, have turned our markets and businesses — private and public — over to arsonists. We have created conditions where we celebrate people for making “big” companies but not “good” companies.
Venture capital and the public markets don’t actually reward or respect “good” businesses or “good” CEOs — they reward people that can steer the kind of growth that raises the value of an asset.
Magicians of the Twenty-first Century: Enchantment, Domination, and the Politics of Work in Silicon Valley (2021)
What is the political theorist to make of self-characterizations of Silicon Valley as the beacon of civilization-saving innovation? Through an analysis of “tech bro” masculinity and the closely related discourses of tech icons Elon Musk and Peter Thiel, we argue that undergirding Silicon Valley’s technological utopia is an exploitative work ethic revamped for the industry’s innovative ethos. On the one hand, Silicon Valley hypothetically offers a creative response to what Max Weber describes as the disenchantment of the modern world. Simultaneously, it depoliticizes the actual work necessary for these dreams to be realized, mystifying its modes of domination.
I now believe that Silicon Valley represents a bunch of different things. But mainly, it has become the myth of where the opportunities are, the route to making lots of money, and how entrepreneurs should run their businesses.
It looks that now most entrepreneurs are building tech products or founding tech companies because they don’t want to be left behind the fast-pacing changes we’re living in today. So, what’s driving most of today’s tech scene is achieving a high financial return while there’s still a chance.
So, as I see it, we went from entrepreneurs chasing anomalies and finding solutions to change the world; to building products and companies that grow fast and exponentially — trying to hack their ways to get more attention from customers or persuade them in some form to sell more and keep growing.
One of the underlying problems of this new Silicon Valley attitude is that it generates a way of living that is not beneficial for the society in the long term. It suggests that we should speed up things to extreme levels, which puts pressure on areas with no need for it. It doesn’t let entrepreneurs reflect on their actions or even have time for themselves and their families. And this affects the founders but also the employees, customers, and providers.
PERC is launching its first thematic series, which will explore the phenomenon of Silicon Valley ideology. Each week for the next two months, experts from the fields of political economy, political science, economic history, cultural studies and law will share their research perspectives on the recent trends that have animated the Silicon Valley bubble.
Yet, despite the Valley’s economic downturn and growing unease with Big Tech’s monopolistic powers and its lack of respect for privacy rights and workers’ rights, the Silicon Valley ideology — the post-‘dotcom bubble’ inheritor of the ‘Californian Ideology’, characterised by its heterogeneous mix of techno-optimism, entrepreneurial zeal and libertarianism — persists. This is in part thanks to the power and influence that public figures like Jeff Bezos, Elon Musk, Mark Zuckerberg and Peter Thiel have accrued.
They have become staples of pop culture, incarnations of the mythical ‘founder’ — a label reverently described in Forbes as carrying “connotations of creativity and innovation, determination, native intelligence, and a sense of fearlessness”.
Although each of these contributions brings a distinct disciplinary perspective, the series as a whole is structured around two broad intersecting axes. The first ambition of the series is to provide critical reflections on recent — technological, ideological — trends that have taken hold in the Silicon Valley bubble, with the view of assessing the potential challenges they might represent for democratic governance.
The second ambition of the series is to enquire into the ways Silicon Valley functions as a dream factory. It produces self-serving myths that further consolidate and justify its ideological domination, like the myth of the heroic ‘founder’ I mentioned above. but the machine also borrows from other collective imaginaries — like myths of the American frontier, belief in the omniscience of AI, or a cybernetic vision of politics — that frame the way the actors of Silicon Valley see the world and attempt to transform it. Our conviction is that deconstructing and anatomising these different myths and promises will contribute to weaken their fantasmatic grip.
That said, these Promethean visions are of a specific kind. They are the grand projects of an ever more powerful billionaire class and of a highly concentrated industry: they are hyper-capitalist. In these market utopias, the road to the promised land is paved with market mechanisms, such as Big Tech R&D. But more than that, the utopian territory itself is imagined as a new arena of market relations, even by its most passionate proponents. The Metaverse will create new worlds for property speculation, for example. Crypto will enable individuals to sidestep state regulations and control. The voice-connected and data-harvested home, car, and body offer new opportunities for AI-enhanced advertising algorithms. Accordingly, today’s Prometheanism is essentially indistinguishable from creating new markets for capitalism.
Market Prometheans built their visions from a broad range of traditions and discourses, notably futurism, cybernetics, and complexity theory. They were not “market fundamentalists,” pure and simple. Nonetheless, classic neoliberal theorists and think tanks did play a major role in this ideology’s gestation and day-to-day life. While some gurus had links with the 1970s counterculture (and thereby with a kind of hippie-libertarianism), others were closely intertwined with mainstream American neoliberalism.
Silicon Valley’s Origin Story: The generational shift that made tech companies a cultural and political force (2018)
Not until 1971 did the area gain the name Silicon Valley, which the journalist Don Hoefler coined in an Electronic News article. The Valley itself was relatively bucolic, honeycombed with orchards and farms.
The inability of lumbering establishment firms to see opportunity sparked frustration, if not outright revolt, among some employees. Tracing the Valley’s history from the ’60s to the mid-’80s, Berlin describes the “generational hand-off” that took place when “pioneers of the semiconductor industry passed the baton to younger up-and-comers developing innovations that would one day occupy the center of our lives.”
In many cases, these defections — the courageous moments when a bootstrapping entrepreneur decided to break away from the comfort of an engineering job at Hewlett-Packard or IBM — acquire a mythos of their own. A group of Shockley Semiconductor employees who left to launch Fairchild Semiconductor were called the Traitorous Eight, while the other companies they eventually spawned, like Intel and AMD, came to be known as the Fairchildren.
A refusal to reckon with things as they are, to speak in plain language, continues to dog conversations about the inequalities produced by the tech industry. The assumption that technology is inherently a force for good and that the social changes it brings are inevitable and irresistible contributes to the power of multinational corporations, discouraging their users from demanding better protections and more regulation.
When tech leaders prophesy a utopia of connectedness and freely flowing information, they do so as much out of self-interest as belief. Rather than a decentralized, democratic public square, the internet has given us a surveillance state monopolized by a few big players. That may puzzle technological determinists, who saw in networked communications the promise of a digital agora. But strip away the trappings of Google’s legendary origins or Atari’s madcap office culture, and you have familiar stories of employers versus employees, the maximization of profit, and the pursuit of power. In that way, at least, these tech companies are like so many of the rest.
Steve Jobs is Not a Genius — Here’s Why: What he didn’t do, what he did do and why that doesn’t count as genius (2023)
If Jobs was blessed with any sort of genius, it is essential that we understand where his talents lay and where they did not. And for this, we need to do a little bit of whittling.
Jobs was neither a scientist nor an engineer nor a philosopher. He was not an inventor or creator of devices or technology. He did not come up with any theory or idea that helped to unravel the universe or better explain the workings of our species. He did not create the first Apple computer; that was Steve Wozniak. Neither Jobs nor Apple invented the graphical user interface (GUI) which makes a computer usable for the general public. This was the work of Xerox PARC in 1979 drawing from a number of earlier systems. Neither Apple nor Stevie Jobs had any hand in creating the smartphone. That was IBM in 1992. Jobs didn’t come up with the iPad; that was other folks at Apple, with Steve acting as the ‘visionary’ leading the orchestra on to ever loftier heights.
Steve Jobs — leader, innovator, tweaker, thief, inspired, ingenious? Yes. Genius? No, never.
Not only is Silicon Valley pretty much impossible to recreate as an innovation eco-system, it’s also no longer the only global paradigm for innovation. The world has changed — drastically. But our understanding of how innovation works, and who benefits, has failed to change with it.
The implication of these changes is that it is no longer clear to what degree the economic-growth benefits of an innovation remain in its birthplace. The global reorganization of production and services has produced a new logic of value creation, as well as a new set of specialization and innovative capacities. No longer can one country excel at all stages of product development and production. Therefore, we must rethink what innovation-based growth means and what the best strategies for investment might be.
The decomposition of production means that there are multiple ways for countries to achieve sustainable innovation-based growth. This should come as wonderful news to policy makers, because it means they no longer have to be slaves to a foreign economic model that will never work in their countries.
If the aim is continuous creation of good jobs for as many citizens as possible, then focusing only on invention might be the worst possible strategy. Countless studies have shown that most of the growth resulting from innovation happens in the next stages, when products and services are being produced, refined, developed, and sold.
‘They will learn nothing from this’: Tech leaders remain staggeringly oblivious to the true lessons of Silicon Valley Bank (2023)
The destruction wrought by the collapse of Silicon Valley Bank could be a moment for the tech industry to take a step back and reflect on its problems. But sadly, it won’t be.
In spite of this reality, there has been little self-reflection on the part of the industry that was so closely tied to Silicon Valley Bank. And in the midst of these immature excuses from VCs and shallow recriminations from billionaire investors, the seeds of the next bubble are being planted. Without some serious accounting about Silicon Valley’s culture and the tech industry’s role in SVB’s collapse, then something ugly like this is going to happen again.
In the long run, Silicon Valley’s unwillingness to reckon with this mess [collapse of Silicon Valley Bank] and its role in it means that its culture of mindless growth will endure. And alongside (or instead of) getting real innovation, we’ll get another bubble of chasing fads and nonsense. Given the lack of circumspection, I have no doubt the next one will be even bigger.
Do not expect any apologies from the leaders of Silicon Valley. They do not know what they have to apologize for. The culture they built told us they were here to “move fast and break things” and in the true spirit of caveat emptor, we should have listened. The destruction wrought by SVB could be a moment for Silicon Valley to take a step back and reflect on its relationship with growth, the way it raises capital, and how it nurtures companies. But it won’t be. Silicon Valley would rather blow itself up than go to therapy.
Silicon Valley is facing a moment of reckoning after over a decade of hubris, greed and general bollocksology. There is an end-of-days vibe to recent news reports from the tech world: round after round after round of job cuts; the collapse of the tech sector’s clubby Silicon Valley Bank; the unsettling vista of tech libertarians pleading for protection from the US Government; the tech world’s failure to predict that habits forged during a global pandemic were not sustainable; the background thrum of calls for antitrust regulations and tightening of data security, privacy and cybersecurity regulations.
Big tech is facing an existential crisis, and that may be no bad thing, especially as we teeter on the precipice of a digital revolution whose consequences are unknowable. The jury is still out on whether the massive technological advances of the past 15 years have represented a net positive for humanity, or the precise opposite.
So his recent op-ed about “Big Tech’s Lost Decade” is something we should take seriously. [Roger] McNamee points out that the enormous tech valuations — more than 1000 startups have been valued at over a billion dollars — is more due to a loose financial and regulatory environment than to significant innovation.
The conditions for increasing returns, however, only apply to a narrow swath of businesses, mostly limited to software and electronic gadgets. Nevertheless, entrepreneurs and their investors became convinced that they could apply the Silicon Valley model anywhere, leading to the high profile failures that have become endemic.
The digital revolution, in perspective, isn’t substantially different from any of these. It has followed the typical “s-curve.” It started rather slowly, then had a period of rapid expansion and now, with Moore’s Law ending, the technology is beginning to mature. We’re seeing consolidation, rent-seeking and regulatory capture — all signs of an industry in decline. At the same time evidence suggests that the billions wantonly plowed into massive failures are crowding out real businesses. Clearly, we need to do things differently.
Clearly, there is something afoot in Silicon Valley. The technology is maturing, the scandals keep getting bigger and, with information and communication technologies representing a mere 6% of advanced economies, we still have yet to see anything approaching the impact of earlier technology revolutions. Make no mistake, a reckoning is fast approaching.
What’s becoming clear is that we can’t just move fast and break things anymore. That might work for the digital world, but for mission-critical technologies that need to power billion-dollar factories, medical therapies that people’s lives depend on or agricultural techniques that need to feed the world, we need to be far more careful.
The billion-dollar tech unicorn is becoming rare again: The ultimate symbol of Silicon Valley wealth became commonplace. Then the economy shifted. (2022)
Meanwhile, investors have yet to find the next big technological innovation to transform the way we live. Unicorns in theory represent the moonshot ideas that will help Silicon Valley land on the next big thing, but crypto, Web3, and virtual reality have not yet taken off despite the billions funneled into them.
More than a decade ago, the $1 billion unicorn start-up became an aspirational marker of success in Silicon Valley. It reflected the exuberance and optimism of a near-mythical bastion of the economy where the boom times never seemed to end.
The term “unicorn” was adopted in 2013 by the venture capitalist Aileen Lee and was meant to denote the fact that a start-up that crossed that threshold was extremely rare. No other concept so neatly embodied the magical thinking that fueled sky-high valuations that were based not on real revenue or profit but simply on a company’s ability to keep growing.
Silicon Valley, that shining city on the hill of innovation, is moving into a different age.
Writers have seen fit to declare that the big tech companies who defined our era have hit a wall, even suggesting it is reckoning that may herald the end of big tech. The reality is much more complicated.
It is one of the great ironies of the counterculture that flourished in California in the sixties, that it came to be co-opted into one of the greatest wealth making machines in history. Sell out hippies were at the vanguard of welding the ideology with consumerism, but Silicon Valley was far more effective in blending together the different threads of ideology that were unleashed over that decade.
Emerging from its present crisis, Silicon Valley now finds itself forced to reckon with a different future.
Plans to create three UK “innovation accelerators” are seen as giving city regions and their universities the chance to foster inclusive innovation locally — but those regions have been urged to break free of a Whitehall vision that “swallows” the Stanford-Silicon Valley “myth”.
The innovation accelerator plan, seen as likely to be rolled out nationally if the pilots are successful, is described in the White Paper as aiming to “replicate the Stanford-Silicon Valley and MIT-Greater Boston models of clustering research excellence and its direct adoption by allied industries”.
Part of his argument is that low skill levels in a struggling local town like Rochdale are not a “supply side” problem to be remedied solely by more training — but that solutions must focus on helping local firms become more innovative to increase demand for higher skills, leading to higher productivity and wages.
However, there is concern that central government’s understanding of innovation appears limited to the venture-capital-funded, tech start-up Silicon Valley model that sprang up around Stanford University. The White Paper suggests the government has “swallowed hook and all the myth of Silicon Valley”, and it should “stop thinking this is the only model”, said Dan Breznitz, the Munk chair of innovation studies at the University of Toronto and co-director of its Innovation Policy Lab. University spin-offs and start-ups “create very little local employment” and “are not anchors for local regional growth”, he added.
The focus should instead, he continued, be on nations such as Germany or South Korea, where universities have been “intrinsic” to building innovation capacity in firms, to “connecting R&D and skills, which is where innovation capability comes from”.
Has the myth of Silicon Valley changed from creating a world-changing innovation to be the next person to make a billion dollars? Nowadays, it looks like companies are being built to focus on the latter.
One of the underlying problems of this new Silicon Valley attitude is that it generates a way of living that is not beneficial for society in the long term. It suggests that we should speed up things to extreme levels, which puts pressure on areas with no need for it. It doesn’t let entrepreneurs reflect on their actions or even have time for themselves and their families. And this affects the founders but also the employees, customers, and providers.
In the 80-year history of Silicon Valley there have been three major accelerants to the growth of the ecosystem. The first was the flood of research dollars provided by the Department of Defense during the 1960’s and 1970’s, the second was the greenfield internet and the lifting of H-1B visa caps during the 1990’s, and the third was the avalanche of cheap capital from 2010–2022. All three of those have now run their course. It definitely feels like we’re at the end of an era.
We’ve had a multi-decade run of success that made Silicon Valley the #1 global choice for investors and the #1 global choice for talent. When you put the world’s top talent and smartest capital together in one valley, amazing things happen.
Covid-19 has blown apart the myth of Silicon Valley innovation: The pandemic shows that the US is no longer much good at coming up with technologies relevant to our most basic needs. (2020)
The pandemic has made clear this festering problem: the US is no longer very good at coming up with new ideas and technologies relevant to our most basic needs. We’re great at devising shiny, mainly software-driven bling that makes our lives more convenient in many ways. But we’re far less accomplished at reinventing health care, rethinking education, making food production and distribution more efficient, and, in general, turning our technical know-how loose on the largest sectors of the economy.
Myth 1: Only the young can innovate
Myth 2: Entrepreneurs are born, not made
Myth 3: Higher education provides no advantage
Myth 4: Women can’t succeed in tech
Myth 5: Venture capital is a prerequisite for innovation
Silicon Valley Abandons the Culture That Made It the Envy of the World: Once upon a time, in the notorious start-up cradle, small was beautiful. (2020)
This is a full reversal of the language that tech promoters used to sell Silicon Valley–style innovation and competitiveness for decades. Saxenian has noticed the change in how the Valley describes itself, or at least in how the dominant firms do. “Advocacy of the small, innovative firm and entrepreneurial ecosystem is giving way to more and more justifications for bigness (scale economics, competitive advantage, etc.),”
For start-ups not on the unicorn list — and even for many that are — the chance that they will have an initial public offering and remain independent is small. That means the only way their investors will get their money out will be via an acquisition by one of the large companies. Google, Facebook, and their ilk “have become enormous by swallowing small companies, so the network is no longer the network but the octopus,” Margaret O’Mara, a historian at the University of Washington, told me.
To understand the enduring mythology of the Silicon Valley garage, you have to go back to the one that started it all: a converted shed in suburban Palo Alto, where in 1938 William R. Hewlett and David Packard began developing their first product.
The startup garage has become more than just a part of Silicon Valley’s folklore; it has transformed into an image, an exportable idea that reveals a set of strategies and theorems that continue to operate in post-Fordist immaterial modes of production and consumption. Its history reveals that mythmaking has become as central to sustaining our economy as profit making. The garage became the architectural symbol that would attract the right venture capital. Once the garage is dematerialized and mobilized by the characters, corporations, and technologies that emerged from the space, it becomes a doctrine stretching its existence beyond the private and intimate format of the house and goes on to reabsorb the public.
Sam Altman risks sounding ‘arrogant’ to explain what’s wrong with Silicon Valley — and why OpenAI has no road map (2023)
“I say this realizing it’s going to come across as arrogant, and I don’t mean it that way,” he said during a Wednesday episode of the In Good Company podcast. “There used to be great research that happened in companies in Silicon Valley…There have not been for a long time.”
One problem in Silicon Valley, he said, is that “it got so easy to make a super valuable company, and people got so impatient on timelines and return horizons that a lot of the capital went to these things that could just, you know, fairly reliably multiply money in a short period of time…That sucked up a lot of talent, very understandably.” Most big tech companies, he continued, start as a product company and eventually add “a research lab that doesn’t work very well.” OpenAI, by contrast, started as a research lab.
As their net worth has soared, billionaires have put upward pressure on the cost of living in cities like San Francisco, Oakland, Palo Alto, San Jose, and Mountain View. According to the 2023 Silicon Valley Index, “the San Francisco Bay Area is home to the greatest concentration of billionaires in the world.” The report also points out that Silicon Valley has the nation’s largest wealth gap, and, specifically, “the top 0.001 percent of Silicon Valley’s households [are] holding more wealth than the nearly 500,000 households in the bottom 50 percent.”
The billionaires are steeped in so much hubris and so little wisdom that they don’t see beyond their own noses. Their answer to the problems they have created is to start from scratch and pour billions into a fantasy project whose details are so murky they won’t even share them with democratically elected representatives, and whose manifestation will likely replicate the same mess it is claiming to fix.
“The Code”, Margaret O’Mara’s ambitious new history of Silicon Valley, can be read as a story of binaries, or at least of stark contrasts in terms of interpretative frameworks for understanding how Santa Clara Valley became “Silicon Valley.”
O’Mara also shows how hypocrisy combined with opportunism and myth-making in the speeches of prominent Silicon Valley executives-turned-community leaders like David Packard. By the mid-1960s, their speeches to regional and civic groups were already strenuously extolling the virtues of unfettered markets and free enterprise; they were, in other words, willfully obscuring the reality of federal support in order to create a certain image of American innovation. The reality: They accepted lavish federal contracts to make the chips, circuits, and computers needed to win the arms race, the space race, and an expanding war in Southeast Asia.
O’Mara offers an exciting tale of its transformation as fueled by federal interests and money, individual ambition, and the white heat of technology. But it is also a place steeped in self-delusion and permeated by an ideology of supposedly self-made entrepreneurs who succeeded on the basis of their own merit alone.
Are Innovators Moving Away From Silicon Valley? Has Silicon Valley really lost its culture of innovation or only Sam Altman feels this way? (2023)
When every interview of Sam Altman is bound to throw a few pearls of wisdom, a recent podcast made Altman blatantly talk about an underlying truth of Silicon Valley. “I hate to say this because it sounds so arrogant but, before OpenAI, what was the last really great scientific breakthrough that came out of a Silicon Valley company?” asked Altman …
What was believed to be the hot centre for tech innovation in the world, is now slowly changing owing to the global players. The rise of China’s prowess in the technology world has pushed the country as a worthy competitor to the US.
With VC firms seeking high returns with minimal risks, founders are often advised to focus on B2B markets over consumer markets. Furthermore, for more than a decade, the focus has been on building SaaS businesses, and the incentive has been on doing something simple that guarantees returns, rather than on thinking big to tackle challenging things.
Only in recent years have I come to more fully appreciate that Silicon Valley is a vast cultural ethos, aided and abetted by larger forces in an increasingly perverse political economy. Moreover, as the myth and magic of the silicon economy begin to fade, the more malignant of the deep-seated ideological elements are percolating up to the surface.
All the while, the mythology of Silicon Valley as paragon of social responsibility, creativity, and free enterprise continued to grow as the hidden reality undermined these fairy tales. The valley was national symbol of liberalism and rugged individualism, when it was actually rigged individualism and growing illiberalism.
All too soon financial manipulation was mistaken for innovation, and minor technological advances given astronomical valuations. P/E (price to earnings) ratios have gone off the scale. How else could a firm like Tesla be valued higher than all of the US car manufacturers together, and not yet turned a profit.
The term “unicorn” (a mythical creature whose overestimated potential justifies at least a billion-dollar valuation) was coined for this purpose. However, like Voldemort many a zombie firm has been sustained by unicorn blood. Beyond, the out & out frauds like Theranos, WeWork, and FTX, clever finance and banking can keep many a corporate corpse on display awaiting a “greater fool”, as well as gutting many a successful enterprise and/or force misbegotten mergers.
We are living in a long overdue moment of technological reckoning — a time of critically re-examining how social media, artificial intelligence, task-based work platforms, and many other technologies we’ve created are re-shaping our lives, our livelihoods, and our democracy.
We urgently need a generation of technology leaders with wide temporal bandwidths, those who can connect the visions and aspirations of their predecessors with the realities of today and best human-centered hopes for the future.