Tuesday, August 21, 2012

Silicon Valley Is Dying

I have to be careful about citing other Rust Belt boosters. I'm often preaching to the choir. Thoughts and ideas circulate in small circles, like an eddy closed off from reality. The echo chamber:

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. ...

... 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.

Dan Blacharski is waving the same pro-Rust Belt flag for South Bend that I am waving for Pittsburgh. At least he can claim intimacy with Silicon Valley. Indeed, Blacharski adds "a little more than that" to the conversation. Even TechCrunch's summary of the Sacks argument advances the concern:

... because major Internet companies (like um, Microsoft?) are on the prowl for innovative ideas, it’s too risky and costly for entrepreneurs to attempt to create successful new companies.

The Innovation Economy is shifting from divergence to convergence. The costs of innovation are hitting a ceiling that make Flat World Rust Belt cities attractive to companies such as Electronic Arts. I saw evidence of this yesterday in Sharpsburg, PA (near Pittsburgh) while touring RoData, which is housed in the old Fort Pitt brewery. I'll have more to say about that visit in a future post. Suffice to say for now that RoData is cashing in on the Rust Belt Chic dividend. Talent is ample and inexpensive. So are the gritty cool environs, where innovative talent wants to work. Leaving Silicon Valley for Pittsburgh never looked better.

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