Silicon Valley Past Present Future Russell Hancock Joint
- Slides: 60
Silicon Valley Past, Present, Future Russell Hancock Joint Venture Silicon Valley Institute for Regional Studies Public Policy Program, Stanford University 3 August 2015
My Game Plan 1. A primer on Silicon Valley • • • What is it? How does it work? Why have we been so successful? 2. Silicon Valley today • • • Current patterns of growth Current strengths Current challenges 3. Silicon Valley tomorrow • • Important trends future projections
Part One What is Silicon Valley?
Common misperceptions NOT a place you can point to on a map NOT a place with a defined identity NOT a planned phenomenon No Silicon!
So, what is Silicon Valley?
So what is Silicon Valley? A remarkably enduring hotbed of innovation and entrepreneurship
Our most important characteristic: We keep re-inventing ourself Silicon Valley’s Waves of Innovation
Milestone Silicon Valley Innovations 1940 s 1950 s 1960 s Vacuum Tube 1970 s Integrated Circuit, Graphical User Interface Personal Computers, Workstations, Relational Databases, Biotechnology 1980 s 1990 s 2000 s Transistors Semiconductors, Defense Technology Network Computing, Packet switching, Internet Search Social media, Web 2. 0, sharing economy, clean tech
However, the Valley’s edge doesn’t stem from innovation alone …
… but also from entrepreneurship 1950 s 1960 s Defense Electronics Hewlett-Packard, Varian Semiconductors National Semiconductor, Fairchild, Intel, AMD 1970 s Biotechnology 1980 s Personal Computers, Workstations Genentech, Genencor Apple, Silicon Graphics, Sun Network Computing, Packet Switching 1990 s Cisco Systems, Sun Internet Netscape, Yahoo, e. Bay, Google Social Media 2000 s Facebook, You. Tube Sharing Economy Uber, Lyft, Air Bnb
The Valley also generates new business models Internet-based commerce (Netscape) Free search, supported by advertising (Google, Yahoo) Music downloads, streaming (Apple itunes) Social networking (Facebook, My. Space) A la carte television (Netflix) On-demand delivery (Door Dash, Uber, Google Express)
A permanent feature of Silicon Valley: CHURN
Largest Silicon Valley Employers 1982 2002 1. Hewlett-Packard 2. National Semiconductor 2. Intel 3. Cisco* 4. Memorex 4. Sun* 5. Varian 5. Solectron 6. Environtech* 6. Oracle 7. Ampex 7. Agilent* 8. Raychem* 8. Applied Materials 9. Amdahl* 9. Apple 10. Tymshare* 10. Seagate Technology 11. Palm, * Google, * Cadence, * Adobe, * Yahoo* *no longer existed in 2002 *didn’t exist in 1982 Source: Stanford Project on Regions of Innovation & Entrepreneurship
So what’s the secret?
A Habitat for Innovation Results-oriented meritocracy. Climate that rewards risks, tolerates failure Strong markets (capital, labor) Mobile, fluid workforce Favorable government policies University-industry collaboration Specialized infrastructure (venture funding, lawyers, executive search, accountancies) Quality of life
Part Two Silicon Valley today
Silicon Valley was the last region to succumb to the Great Recession The region was adding jobs through Q 4 2008
Today Silicon Valley is the first to emerge from the Recession
JOB GROWTH Annual change in Total Number of Jobs, 2008 -2014
JOB GROWTH Annual change in Total Number of Jobs, 2008 -2014
JOB GROWTH Annual change in Total Number of Jobs, 2008 -2014
JOB GROWTH Annual change in Total Number of Jobs, 2008 -2014
TOTAL NUMBER OF JOBS 9 -County Bay Area +119, 576 +3. 5%
MAJOR AREAS OF ECONOMIC ACTIVITY 2013 -2014 +40, 096 +18, 445 +12, 294 -491 +57, 951
AVERAGE ANNUAL EARNINGS
MEDIAN HOUSEHOLD INCOME
Innovation is thriving.
PATENT REGISTRATIONS
VENTURE CAPITAL
VENTURE CAPITAL BY INDUSTRY
INITIAL PUBLIC OFFERINGS
• • • Rapid job growth Young, well-educated workforce Accelerating patent registrations Thriving startup community Mega venture capital deals
San Francisco and Silicon Valley together: • $20. 2 billion in venture capital • $2. 8 billion in Angel investments • 16, 055 startups • 76, 000 new jobs
Is this a bubble? We don’t think so.
Why not a bubble? Five years of incremental growth Profitable companies, serving proven customer bases Venture community enforcing a high bar Region’s portfolio extremely diverse Economy still moving into promising new areas Valuations are level-headed
VALUATIONS ARE LEVEL-HEADED Price-earnings ratio of top-ten NASDAQ companies, by market cap Source: Barrons
Part Three Silicon Valley tomorrow
It would appear that Silicon Valley is the world’s most prodigious regional economy. So what’s not to like?
Despite our strengths, Silicon Valley faces many challenges and has some structural flaws
One challenge: Tech is no longer a tide that lifts all boats
DISTRIBUTION OF HOUSEHOLDS BY INCOME RANGES
HOME AFFORDABILITY
POVERTY & SELF-SUFFICIENCY
Growth is putting a strain on the region.
COMMUTE PATTERNS
Train travel in other parts of the world
Train Travel in Silicon Valley
Built in 1863
Another challenge: Fiscal instability, failure of our government institutions
Our tax system doesn’t track with the 21 st century economy; no political will to fix it City Revenues in Silicon Valley
Other challenges: • • Loss of federal funding Reversal of immigration trends Sagging infrastructure Poor K-12 education
Yet we expect Silicon Valley will continue its dynamism and move into promising new areas
One vital trend: convergence
Tech Convergence: Major Research Centers
Convergence firms in the Valley
Another major trend: We are building new clusters in renewable energy and clean technology
CLEANTECH VENTURE CAPITAL
CLEANTECH VENTURE CAPITAL
Summary: Silicon Valley’s leadership will continue unabated Silicon Valley is now joined in its leadership by other global regions The region will have to face down internal challenges to stay competitive The private sector will lead the way
Thank you for the honor of your invitation. Russell Hancock President & Chief Executive Officer Joint Venture Silicon Valley Institute for Regional Studies 100 West San Fernando Street, Suite 310 San Jose, California 95113 (408) 298 -9330 Lecturer in Public Policy Stanford University rhancock@stanford. edu www. jointventure. org
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