Peak Valley?

The Economist has a cover story this week called Peak Valley.

The article suggests that Silicon Valley’s lead as a hub for innovation has peaked and other regions are rising. It ends with the concern that innovation more broadly has peaked.

I somewhat agree with “the rise of elsewhere” narrative and disagree that innovation has peaked.

Our experience at USV has been that we can and do find high impact startups to invest in outside of Silicon Valley but that we find just as many in Silicon Valley.

In our first four funds spanning the vintage years of 2004-2014, we have had twelve very high impact startup investments. Seven of them were from outside of Silicon Valley and five were from Silicon Valley. The seven outside of Silicon Valley came from NYC (four), Pittsburgh, London, and Austin. Each of the funds we raised and invested during that period have had at least one high impact investment in Silicon Valley and at least one outside of Silicon Valley.

But our data set is small. We made investments in a total of sixty to seventy startup companies in that period. And we don’t invest in Asia, South Asia, Africa, The Middle East, and Latin America so we don’t touch large swaths of the area outside of Silicon Valley. And we are based in NYC so we have a home-court advantage there.

My point is that it has always been possible to build a high impact startup outside of Silicon Valley and invest in it too. But if we were to stop looking for investments in Silicon Valley, our opportunity set would be significantly reduced.

What is true is that Silicon Valley has gotten extremely expensive to operate in. We see that across many dimensions. Valuations of startups in Silicon Valley are significantly higher than outside of Silicon Valley. Cash compensation for employees is significantly higher in Silicon Valley than outside of Silicon Valley. Equity compensation for employees is significantly higher in Silicon Valley than outside of Silicon Valley. And the cost of living for employees in Silicon Valley is much higher than outside of Silicon Valley.

All of that means that capital (both human capital and invested capital) needs to achieve a much higher return on input in Silicon Valley than outside of Silicon Valley, all things being equal. I am not sure all things are equal though and that is really the rub.

Silicon Valley has always had one important advantage over other regions when it comes to the tech sector. There is a much higher density of talent, capital, employment opportunity, and basic research in Silicon Valley versus other locations. When I say density, I mean physical density. If you walked a mile, how many tech companies would you pass along the way? That metric in Silicon Valley has always been higher than elsewhere and still is. So even though the return on capital (human and invested) has significant headwinds in today’s Silicon Valley, it is still a lot easier to deploy that capital there. And I think that will continue to be the case for a long time to come.

The Economist piece ends with the observation that some macro dynamics (large incumbents capturing the lion share of the economics in tech and bad governmental policy toward tech) are making innovation harder. While both observations are correct, I do not think we are seeing any downturn in global innovation. What is happening outside of the US, particularly in Asia, is amazing and there are many new sectors that are just emerging now that will drive innovation in new and exciting directions. Things always look darkest right before the dawn and I believe we are seeing the dawn of a number of important new sectors. And I think Silicon Valley is on to all of them and will make a play in all of them. But so will many other regions around the world.

#VC & Technology

Comments (Archived):

  1. OurielOhayon

    i think that article is true if you add one dimension: crypto/blockchain. because it is not Apple/Facebook/Google/Microsoft/Saleforce/Oracle dependant and because it is not Stanford dependant innovation is coming in vast majority outside Silicon Valley. In particular in Asia. The biggest crypto exchange, Binance, was born out of the USA, Bitcoin/Ethereum were born outside of the USA (although important parts were contributed from there). i expect this to go on.

    1. Mohammad Shaikh

      As much as I would like to take credit given I work in the blockchain space, I disagree- I’m seeing a lot of diversity alway from SV regardless of sector/industry.

      1. OurielOhayon

        my point is not about diversity but intensity. New “new things” mostly come outside SV

    2. Sebastian Wain

      Completely true. For example, in Argentina where I live there are many many outliers that show crypto is refreshing the landscape and presumably we are in the top 10 countries, something that seems contradictory analyzing basic economic metrics. In this sense less favorable countries in places like East Europe are also taking advantage.The people in all these places are excited because it is the first time financial innovation opportunities are open to “everyone” and reduced to “just” code. Obviously, there are more scams and fads per cm^3 than before but also interesting stuff.

    3. CJ

      I believe in blockchain for the simple reason that I don’t currently believe in it and I find myself wrong on these things often.

  2. jason wright…- “You’ve reached your article limit”. A limit of zero?the delicious irony of SV is that it has spent decades creating the infrastructure and tools that others are now using to compete against it. another observed jiu jitsu move.

    1. Matt Zagaja

      I know journalism needs subscribers to survive but this (and Wall Street Journal) really take the cake. Until the browser people figure out how to do an easy low cost tip bin I think the paywall needs to be leaky.

      1. jason wright

        the trick they might be missing is to allow a subscriber to invite a friend to have free access for an initial period (say one year). once the friend is hooked they’ll cough it up for year two.

  3. Jens Achilles

    I think that innovation these days despite being fancy is still quite modest compared to the days when the first computers were invented, jet planes took off for the first time and people flew to the moon. On the Apollo mission they had the processing capacity of an iPhone and flew to the moon. Today everybody has this in his pockets and the main use is to post trivia on Facebook & Co. But to fly from Frankfurt to NYC still takes the same time like 50 years ago. So, I hope that we are not at peak of the innovation cycle but on the bottom. Because there are tons of unsolved problems out there and innovation is the key to solve them.

  4. William Mougayar

    Same for Peak Economist that already happened a few years ago. It used to be ahead of others and incisive in their analysis. Now, many other publications are also publishing extraordinary work, especially online.To prove their demise, and relative weakness, in that same issue, the Economist has a long report entitled “Show me the money. Bitcoin and other cryptocurrencies are useless. For blockchains, the jury is still out.” which is just garbage. It is totally off the mark, outdated, inaccurate, and misses the point on so many issues, I don’t want to even begin to pick it apart.

    1. jason wright

      pandering to its conservative readership, and not serving them well.

      1. JLM

        .I have been reading The Economist for longer than most people on this blog have been alive. Back in 2013, when the question of their political leaning came up, this is what they said:…At the time, it was a fair appreciation of their actual published content. Today, like much of the world, it has drifted hard left.Still, it is an essential source of useful information and opinion.JLMwww.themusingsofthebigredca…

        1. jason wright

          As Chomsky has consistently observed, if one wants to get closer to the truth one needs to read the business press and not the populist press. However, with regard to crypto even the business press (the established business press) is well behind the curve. The Economist is itself a business let us not forget, in a fight for survival in this new digital and knowledge age. It is not immune from selling its readership short to defend its position. Journalism benefits from the super modularity of the written word. It becomes what it wants and needs to be to survive.

          1. JLM

            .”Journalism benefits from the super modularity of the written world.”WTF does that even mean?Journalism, as an art practiced by adults who reported verified, multi-sourced facts with integrity and didn’t color them with opinion, has ceased to exist.The reasons why don’t really matter.All one can hope for is the ability to read the left and right views of things and to tack back to the center. It is useful to actually uncover the facts yourself – which is what I try to do.Almost everything in life has become “tribalized” meaning everything has devolved to advocacy based reportage. Nobody reports both sides of any issue – including business.We are at peak baloney when it comes to reportage. I get a kick out of watching and following Tesla for just this reason. There is no thoughtful reporting.JLMwww.themusingsofthebigredca…

          2. jason wright

            I thought that might stimulate you :)Look it up.I’m getting a real kick out watching the German governmental media’s coverage of events in Chemnitz. Apparently everyone expressing anger at the stabbing to death of one of its citizens going to the aid of a woman being molested on the city’s streets is a “far right extremist”, a “fascist”, or a “Nazi”.

          3. JLM

            .Haha. As a writer, I remind you that the first obligation of an author is clarity. Never use a big word when a small one will work.I never accept Internet homework assignments.Be well.JLMwww.themusingsofthebigredca…

          4. LE

            To that point my personal peeve would be this:making it more important for startups in these emerging fields to husband their cashIn other words the use of ‘husband’ in lieu of ‘conserve’.We can infer the age of the writer from that one sentence. For one thing much of what is done in the valley is not in emerging fields but simply rearranging the existing deck chairs of commerce. Second the use of ‘husband’ harks back to the Flintstones days where the man controlled the cash. Otherwise why would you use the word ‘husband’. [1] I will say though that it kind of rolls off the tongue. I can see that being something that the ‘newly hatched’ take up and begin to use and then it becomes the way to say ‘conserve’. Kind of similar to the way ‘ping’ or ‘circle back’ replaced ‘follow up’. [2][1] I am noting there is a verb ‘husband’ which means exactly what they are saying ‘conserve’ however I literally can’t find any actual usage of that actual phrase meaning it does not pass your ‘big word when small one will work’ (which I agree with).[2] Ping started (in this context at least) as an actual technical term whereby you send a packet and see if a remote resource is actually alive and also get an idea of the travel time.

          5. Vasudev Ram

            >Second the use of ‘husband’ harks back to the Flintstones days where the man controlled the cash. Otherwise why would you use the word ‘husband’. [1] I will say though that it kind of rolls off the tongue. I can see that being something that the ‘newly hatched’ take up and begin to use and then it becomes the way to say ‘conserve’. Kind of similar to the way ‘ping’ or ‘circle back’ replaced ‘follow up’. [2]In the hipster community, the life (and half-life [1]) of slang is very short. Case in point: I attended a few webinars of an e-learning platform company over the last year. Each time (with a gap of just a few weeks or months), the founder (who conducted some of the webinars) used a different slang term (e.g. stupid, sick, ridiculous) for the same meaning (talking about features of his product) (all meaning, say, cool or hot – which are slang terms themselves – but not cool or hot anymore :)…Edit: I forgot add: Just like the JavaScript framework du jour. Hear a lot of grumbling about that on HN too.

          6. LE

            Exactly. (And note that you can ‘carbon date’ someone by their use of language which is part of what you are saying.)

          7. jason wright

            Hemingway’s exact view. I use a big one when the only alternative is several small ones….and i never mark them, as we both have far better things to do with our time.

        2. William Mougayar

          I’ve been reading it since the early 80’s, and it has come down several notches, especially on a relative basis. They have become more rear view mirror, and less insightful or thorough in their prognostications.

          1. JLM

            .Are you that old?Your view on The Economist is a very hard assessment to make. One I cannot make though I have been reading it for even longer than that.I’m just not a good enough student of any publication over time to provide such a critique.JLMwww.themusingsofthebigredca…

          2. William Mougayar

            Haha. I was reading it young and found it quite thick to understand then. It was the quintessential global publication for me, at a time when my knowledge needs were insatiable. Maybe I’ve become wiser over the years and harder to impress when it comes to new knowledge.

          3. LE

            It harks from a time when content was thin and in short supply so you drooled over every single morsel. Plus publications like that would typically have access to the thoughts of people that were not widely available as they are now from a host of places.I mean compare the days of “Popular Photography” and “Popular Mechanics” to what you can find today on the internet not only much quicker but in vastly larger quantities and quality.

          4. William Mougayar


        3. sigmaalgebra

          Long my view of The Economist has been that it’s not about economics, is certainly not by or for any real economist, years ago was a junk source of information, and has gotten steadily worse. I was disappointed in it way too often and just gave up. Now when I form such an opinion on a publication, I try to have collected several of their articles that support my view, but I wasn’t doing much of that by the time I gave up on The Economist so don’t have solid data to give to others.Now I put The Economist mostly in the same trashcan as Bloomberg News (seems too devoted to Mike’s far out political ideas), The Guardian (they got a serious case of British, socialistic, wack-o syndrome), and now anything from the BBC (gone 100% to save the world from evils like fossil fuels, plastics, paper).Maybe if one of those rags publishes something from an outside expert, then I’d pay attention, but mostly I won’t consider any content their staff writes. But they are not as bad as the NYT or WaPo.Sometimes for something like a traditional newspaper I will look at AFP. Maybe there is something from Germany worth reading, but I haven’t looked.Mostly for the output of the newsies, I’ve taken to heart a remark of Sharyl Attkisson, IIRC:Essentially everything you get from the media was put there and paid for by someone trying to influence your opinion.That is, from the mainstream media, just f’get about information that is objective, accurate, honest, meaningful, etc. If read it at all, then just note what the deceptive, manipulative, often just “fake” propaganda that some big money and power people are pushing. But DO have to understand that the objectives are often at least one level indirect, that is, need to useAlways look for the hidden agenda.That realization can make reading the news nicely fast — the hidden agenda is usually money and power, unfair power for unjust money. There is an old joke, not fully wrong:The news is always the same. Only the names change.Or, the news is not the product being sold; instead the readers are.E.g., what the heck was the hidden agenda for the totally brain-dead screaming about “global warming”, “free trade”, “open borders”, ObamaCare, etc.? Sure, money and power, unfair power to extract unjust money. In particular, one of the main paths to the money was just the old one, slave labor.Finally I got sensitized to some of this manipulation: If look at some YouTube video clips of the previews of the BBC Blue Planet II, will see, occasionally just dropped into the writing, maybe like “product placements” in some movies, stuff about (A) global warming and (B) threats to wildlife. Sounds like the program producers got payoffs from some of the Greenies. Who? If you wanted subsidies for wind or solar power, then, sure, get the program to smear fossil fuels. If want donations for, say, the Sierra Club, then, sure, raise concerns about loss of trees, flowers, birds, bees, animals, etc. Then back to some amazing photography of whales, dolphins, orcas, fish, shellfish, octopi, penguins, seals, polar bears, sea birds, etc. Oh, by the way, a word from our sponsors: The polar bears are threatened by the loss of sea ice, and we are all threatened by fossil fuels, ….So, for my startup, I’ve promised to do good things with the meaning of Internet content. So, if the meaning is dirty, manipulative, deceptive propaganda, then my startup needs to detect and honor that. Okay, how the heck to do that? Anything with “meaning” of content is something of a Holy Grail problem for computer science still struggling with the grammar of natural languages, and I’ve got to dig the meaning with its hidden agenda out of things like just dropped in product placements. Hmm …! The applied math is solid, and the software runs fine!Occasionally Big Red Car publishes some news; the frequency is low but the quality is nicely high.

        4. Girish Mehta

          If you think much of the world has drifted hard left, why do you think that has happened ? (not rhetorical. not homework assignment).

          1. jason wright

            hard left. it has? which world?

          2. Girish Mehta

            I realized I was accepting the premise of the statement which is why I phrased it as “if you think…”, wanted to understand JLM’s thinking.

          3. JLM

            .First, the leftist entitlement view of the world, which often comes under the beguiling narcotic of the redistribution of wealth from the makers to the takers, is a very attractive proposition.There is nothing as beguiling as “free stuff” for everyone. It is only when one delves into the economic arithmetic of how it gets paid for that it falls apart.Me – still wants universal, free education for everyone as long as that education leads to a taxpaying job and does not overlook vocational education.Second, we have lost any sense of personal responsibility, accountability, or service to a greater cause. When we have no sense of “eat what you kill”, we begin to lust after what the other person has killed.Let me take a small example of which I have personal knowledge – the cessation of the military draft in the United States.I was in the Army when the draft was going full bore, when it was ended, and during the first phase of the volunteer Army.The draft was a very disruptive action. One is sitting at home contemplating their life and they get the typical “greetings” letter that the Army has control over the next two years of your life and, worse, there is a war going on which may put you in physical jeopardy. [As an aside, the notion that the Vietnam war was a draftee war is factually and arithmetically untrue.]All the men in the US had skin in the game. It is particularly poignant when we see how beloved John McCain – a volunteer – is and how our current President avoided the draft through medical deferment with bone spurs. Two very different approaches to service.I think the country is poorly served by everybody not having some skin in the game. OTOH, the Volunteer Army is the most lethal force we have ever fielded, but it is not producing the same citizen development as the draft eras did.The Volunteer Army is, however, a poorly distributed burden amongst our population with many saying, “Hey, let that other guy do it.”One thing which McCain should have been honored for was four generations of service to our country as volunteers in peace and war. Bravo!Third, the death of journalism has made the necessity to ground the current narrative in fact a thing of the ancient past and the narrators, as a group, are the most leftist leaning messaging subset in the entire country.Do not take my word for it, rather, scrutinize voter registration and party registration. I am certainly willing to have it over weighted, but based on this criteria nothing right of center is represented amongst the pens and computers used by the chattering class.I don’t see them as the “enemy of the people” because they aren’t prepared to work that hard, but reporting as fact things which are unsourced, anonymous is a display of laziness.Fourth, things move in a pendulum. Right now, the pendulum had gone too far to the left and it is slowly stopping its momentum – not yet swinging right, but the 2014 mid-terms are a starting point.We are really beginning to see this in the admin of large cities and certain states. This is going to become more pronounced.The current mid-terms are going to surprise a lot of people just as they were surprised on Election Night 2016.Fifth, our academic infrastructure has taken almost a half century to move hard left. With more folks being educated at the post-high school level, more are being exposed to a right-hating, left embracing message. The cumulative impact is real.Let me be clear – the education infrastructure is not satisfied in teaching a forward looking, prospective philosophy, they are also teaching a dismissive, right-hating corollary while punishing students who dare to question their wisdom.Sixth, the Dem party — cutting a swath across the entire party — has the most extreme leftist message at its far left in my lifetime. The word “socialism” is bandied about as an attractive form of governing philosophy without any reference to the results of socialism in countries like Russia, China, Venezuela, Cuba, and Iran. I don’t include despotisms like NK and, recently, South Africa.We are flirting with these ideas because, in some instances, we have lost our institutional memory.Last, we are engaged in the greatest orgy of deficit finance in the history of the world. America has forgotten how to balance a checkbook, a criticism which no political party has an exclusive franchise for or against.OTOH, we are also seeing the resurgence of our enemies, adversaries, and opponents in the form of China and Russia whose cruel, authoritarian, brutal dictatorships will require some stern measures to overcome.We are allowing the Middle East to devolve into a huge killing ground which anesthetizes us to violence and competing philosophies. We were far down this road with the constant Arab-Israeli violence, but now it is almost region wide with the Russians mixed in. Our tolerance of this is unsettling to our own politics.Further affiant sayeth not.JLMwww.themusingsofthebigredca…

          4. Girish Mehta

            Upvoted not because I understood it all, but appreciate the level of detail you put in. (Can’t agree/disagree without understanding first).Re-reading it now.By “world” you were actually referring to academia, journalism, politics etc within the US, rather than the world itself ?

          5. JLM

            .Hey, I’m an American. Our world ends at the oceans.Fair comment on your part.JLMwww.themusingsofthebigredca…

          6. Girish Mehta

            Ok. I think thats why @jasonpwright:disqus asked the question as well. Don’t know if the UK has moved hard left.

          7. JLM

            .Haha, the UK has little room left into which to move, no?JLMwww.themusingsofthebigredca…

          8. Vasudev Ram

            Good pun, whether meant or not.

          9. Girish Mehta

            Well played.

          10. jason wright

            the ‘UK’ is on borrowed time.

          11. jason wright

            if you mean the nation state (rather than the individual American citizen, the majority of whom have no passport) how the wider world might wish that it were so.

          12. Michael Elling

            The makers are simply benefiting from natural network effects. However, in nature there is a redistribution from core to edge and from ecosystem to ecosystem. This doesn’t exist in (wo)mankind’s socio-economic and political institutions where it is too easy for those who have captured the geometric value at the core to maintain their lock on that value. It is important to remember that that outsized geometric value comes from the linearly distributed costs at the edge.

          13. JLM

            .I have absolutely no idea what anything you have written means.I wonder if the “capture [of] the geometric value at the core” is covered under my all-season Texas hunting license? Do I use a shotgun or a rifle?I will always remember that “outsized geometric value comes from the linearly distributed costs at the edge” and to wash my hands after every trip to the bathroom.JLMwww.themusingsofthebigredca…

          14. Michael Elling

            All things throughout history can be tied to some form of network effects and is governed by network theory. Rome, Christianity, Federal vs State vs Local rights, theory of firm, etc…. Most economic theory is missing this aspect of how networks reduce risk and serve to clear marginal supply and demand. Read my equilibrism piece Welcome your thoughts.

          15. Vasudev Ram

            >We are flirting with these ideas because, in some instances, we have lost our institutional memory.Why did that loss happen, according to you?

          16. JLM

            .We do not teach our history or civics. We are no longer readers.It is frightening to realize how little the average college student – who will emerge from college as one of the most educated persons in our society – knows about the American Revolution, the Founding Fathers, the Declaration of Independence, the Constitution, the Bill of Rights, the Amendments to the Constitution, the War of 1812, the Civil War, the American slave experience, Reconstruction, the World Wars, Korean War, Vietnam War, Iraq Wars, Afghanistan (now the longest war in US history).I am appalled at how little people know about how a law becomes a law or the checks and balances amongst the Executive, Legislative, and Judicial branches of the US gov’t.The other day I won a bet when somebody said that the US DOJ was part of the Judicial branch of the government. The guy was a very smart guy.We have turned our back on organizations which stood in loco parentis to teach our children – schools, churches, sports, Boy Scouts, organizations for teens.We stand no test to assume the mantle of American citizenship and we are not obligated to know anything to be able to vote for our leaders.We do not, on the whole, vote. All the nonsense about millenial voters is crap. The only people who vote consistently in this country are the old people.Further affiant sayeth not.JLMwww.themusingsofthebigredca…

          17. Michael Elling

            Perhaps we already are the zombies made so popular in future dystopian movies and TV series that have captivated so many over the past decade.

          18. JLM

            .In some ways, particularly in politics, we are worse than zombies in that we are uninformed, ill-informed, misinformed, and segregated into tribal groups with instructions from the top of the tribe as to how that particular tribe should vote.Talking to unions, ethnic minorities, welfare recipients, immigrants (legal or illegal), government workers, industries. These folks are told “how” they should vote but not why they should vote that way.Their organizations are led by those who want to shoplift the voting power of their organization but want to rig it as well – superdelegates, country reps at state conventions.When someone tries to provide a rational basis for that vote, the info is often shorthand, dog whistle, or dogmatic.An interesting phenomenon is the inroad Trump has made into black support. Thus far, he has allowed the rising economic tide to float their boats though clearly on a secondary wave, but, still, he has a popularity of almost 40%.What this has done, also, is to create a massive knee jerk reprisal from the face baiters and the race haters.They couldn’t even put an icon like Aretha Franklin to rest without breaking out the tribal drums of hate Trump – which once again shows how he controls the agenda.This is all a real problem.JLMwww.themusingsofthebigredca…

          19. Twain Twain

            This is a piece of JLM brilliance: “These folks are told “how” they should vote but not WHY they should vote that way.”Plus “When someone tries to provide a rational basis for that vote, the info is often shorthand, dog whistle, or dogmatic.”Last week, there was this article on ‘How Facebook has flattened human communications’:*…Meanwhile, in AI, “WHY” the AI suggested something is becoming increasingly important but the algorithms aren’t coded for that:*…That the Valley has no idea how to deal with President Trump is clear:*

          20. Donna Brewington White

            Hey Twain — Saw you in this thread and using this as an opportunity to tell you how wonderful it was to meet you and how much my daughter and I appreciated your gift to each of us! I told my daughter that she would be impressed by you and she said that I was right. 🙂 I may owe you some DM responses on Twitter — thanks for the information sent!

          21. Twain Twain

            Hi, Donna! It was lovely to see you both and I hope the rain eased off! You’ll definitely need to visit for months next time!

          22. Vasudev Ram

            >The other day I won a bet when somebody said that the US DOJ was part of the Judicial branch of the government. The guy was a very smart guy.I’m guessing that it is part of the Executive branch. IIRC from school days, from social studies or civics class) there are 3 branches – Executive (i.e. the bureaucracy – the government officials who execute day-to-day tasks), the Legislature and the Judiciary. That was for India, though. (Okay, just saw from what you said above that it is the same for the US. I guess both derive it from the UK.)Interesting points and reasons, overall. Somewhat the same in India, methinks. Not a good situation.

          23. jason wright

            do you have time for universal basic income (UBI)?

        5. CJ

          Upvote simply for this statement:”I have been reading The Economist for longer than most people on this blog have been alive.”It reminds me of a ‘kids these days’ coupled with, ‘OK youngins, let me learn you something today’. LOL

          1. JLM

            .”Your generation did not invent sex.” is my favorite invention.The world would have saved a lot of heartache in war, politics, business if it had listened to its elders.One has to ask the question – why not?Why turn one’s back on wisdom or, at the very least, experience?Warren Buffett is one of the sole exceptions – people listen to him.JLMwww.themusingsofthebigredca…

          2. CJ

            I wish I knew. My favorite iteration of this rule is “those who do not read history are doomed to repeat it.”We could learn a lot by listening to our elders/history both from the mistakes and successes.

    2. LE

      Show me the money. Bitcoin and other cryptocurrencies are useless.This is another example of the point in my other comment per ‘confirmation of what old dude reading The Economist’ is thinking.I don’t want to even begin to pick it apart.Might be an idea to then write a counter opinion piece and submit it to the Economist. (If you do this send to me prior to submitting it to them and I will offer my thoughts and critique.)[1] Come to think of it I think that this is something that USV could assign an intern working with your thoughts to write. If I had a staff that is exactly what I would be using resources like that for (or maybe Nick Grossman).

      1. William Mougayar

        Thanks LE. I’m pondering writing a rebuttal myself, if I find time today after 3 other priorities. But I started with this survey tweet.The jury is not so out it seems.

      2. William Mougayar

        But I give them AAA for writing great headlines. Click bait types and ones that make you pick up that magazine at the airport. After the headline, it goes downhill from there, typically.

    3. Jose Paul Martin

      Yeah, I saw that article as well… but what I love about the Economist, is that they’re at least willing to take up the topics and discuss them.

      1. William Mougayar

        True, but the less sophisticated reader will take their views as the gospel and won’t be able to discern the inaccuracies.

    4. Per Hansa

      2009 – Satoshi’s white paper2011 – the first piece in the Economist on bitcoin…2012 – the first piece on AVC mentioning bitcoin (that I could find)…Before you so quickly malign the Economist, please note that they have been covering crypto since 2011, 2 years after Satoshi’s white paper was published, long before most other major media outlets and likely long before most readers of this blog were even aware of the subject.You don’t have to agree with everything they write to get value from the Economist.

      1. William Mougayar

        Being in the position I am in, I can certainly offer a rightful critique to a distorted view that appears authoritative, yet is actually inaccurate, therefore misleading to their readers.

        1. Per Hansa

          Please do, I second the motion of a letter to the editor!

  5. Jordan Thaeler

    The cost of doing business in the Valley has gotten absurd. A 22-year old engineer is going to cost you at least $200K fully loaded. Statist East Coast cities are not that far behind, either. Raising capital on the coasts – or really any major metro – is undoubtedly easier, but frankly “VC” is just growth equity’s reflection. So founders are forced to reach higher and higher levels of revenue, growth, etc organically. And in [insert metro area in “flyover” state] a software company who’s been forced to bootstrap to $3M ARR is wildly profitable.

    1. sigmaalgebra

      A 22-year old engineer is going to cost you at least $200K fully loaded.When I was 26 and working in applied math and computing around DC for US national security, I was making in annual take home pay, after deductions, 6 times what a new, high end Camaro cost. My wife and I went to the Kennedy Center, Arena Stage, Wolftrap Farm Park, Shenandoah, all the best French and Italian restaurants in DC, got familiar with lots of the fields in the Côte-d’Or, got me a decently good violin and her a nice piano, had big times at Thanksgiving, and had Christmas three times, once each at our apartment, my parent’s apartment, and her parent’s farm in Indiana.Meanwhile I was buying pure/applied math books by the stack and taking a tax deduction!We were saving money quickly.To heck with Silicon Valley!!!

  6. JLM

    .SV is not the enemy; it is the mothership.Like many centers of industry – talking to you Detroit when you used to really build cars – there is a process of osmosis whereby a single flaw (tax policy, cost of labor, unions) is leveraged to take the expertise to another zip code where that flaw does not exist.We want SV to be the mother ship but we also want all the other places to thrive and prosper.The natural forces of migration – again, tax policy, cost of living, labor cost, quality of life – will continue to pick at the edges of even the most successful startups. This is also more obvious when considering a successful company who has exited the cradle.We want SV to continue to be the mothership even though we love all the companies moving to Austin By God Texas, just stop telling us, “This is how we did it in California.” You’re not in California anymore, pal.JK, we love you.JLMwww.themusingsofthebigredca…

  7. LE

    I understand that your point in using this is to spark a discussion. However this is a terrible ‘opinion piece’. And although I am not a reader of the Economist from what I understand that is what writing in the ‘Leaders’ section is? [1] Opinion. Noting that there is nothing that even tells me who wrote this piece. Is it there?? I can’t find it who wrote (what Fred linked to.) Who wrote this? Was it similar to the ‘editorial board’ of the NYT or WSJ?As such it’s about as relevant as a comment on this blog. But at least I footnote most of the things that I say that aren’t clearly my own experience, anecdote or opinion. Or preface in a way that it’s obvious.Take this one small and disappointing paragraph used to support the ‘opinion’:According to a recent survey, 46% of respondents say they plan to leave the Bay Area in the next few years, up from 34% in 2016Would it have been difficult to name the survey? What survey? Also so what? Vs. 2016? No way to see a multi year trend etc. And the number could (in addition to being in error) just as a result of the sheer number of people who know in advance they are transient to the valley and not intending to be permanent residents. [2]Then of course there are the obligatory ‘candy ass’ statements such as this:Ever since Bill Hewlett and David Packard set up in a garage nearly 80 years ago, it has been a byword for innovation and ingenuity.And this:One founder reckons young startups pay at least four times more to operate in the Bay Area than in most other American cities. Oh wow is that great or what? They throw out an entirely made up figure by an unnamed startup founder that is totally off the bell curve and in no way has anything that can be used to support an actual basis in fact. And he ‘reckons’. I guess that means he hailed from the midwest, eh? (An example of what they are doing since I pulled that out of my ass based on simply the use of the word ‘reckon’).Mr Thiel is moving to Los Angeles, which has a vibrant tech scene.Who cares (in support of the point I mean)? Mr. Thiel could be ‘going to Washington’ for many reasons. They didn’t even try to dig and highlight the exact reason. Maybe he wants to go to the beach in Malibu and that drove him to go there (for all we know). Or maybe the women (oops I mean men) are hotter there. Besides so what if Mr. Thiel goes there?This opinion piece is simply an example that plays on people’s existing bias and stereotypes in a way so that what you think you know is confirmed. “Yep that is what everyone is saying’. Or perhaps even better this is light easy reading for some old dude (while drinking Sunday coffee) who reads the Economist and is used merely for entertainment and not actual decision making. [3][1] Devout readers: JLM, William, am I correct?).[2] Like as if you survey college students. “Yes I don’t plan to stay in Ithaca NY actually’.[3] Not saying there is not truth to it btw!

    1. Vasudev Ram

      Man, you’re on a roll today.

  8. Donna Brewington White

    One small annecdotal observation is that recruiting out of SV/SF has become easier over the past five years.I wonder how much innovation will be stymied on the West and East coasts at a certain point by not having a finger on the pulse of other regions such as the Midwest?

    1. jason wright

      why do you think it has become easier?

      1. kenberger

        yeah, @donnawhite:disqus , I’d like to hear more, as I hadn’t heard that.

        1. Vasudev Ram

          My guess is some people want to get out of there because of the high accommodation costs and related issues. One keeps seeing threads with comments to that effect on HN, with people arguing both sides. Some say they would much rather have lower costs of life (rent/buy, food, transport), less commute, a larger house with maybe a garden, good but not expensive schools for kids, related stuff, which they say are easier to get in the middle areas (non-West or East coast highly populated-and-expensive cities), but still not the boondocks, even if they have to work remotely for an SV/SF or other company. Others say the opposite, that despite all those cons, they prefer to live and work in SV/SF because of much more job opportunities, networking, like-minded techies. with pros including a lot higher pay, which some of them think (may be true, don’t know) makes up or more than makes up for the higher cost of living. I guess for the last point at least, it partly depends on what company you work for, whether a startup, small company,, one of the bigcos or a mid-sized one.

          1. kenberger

            I was there for a long time and could make many guesses too. Just wondering what actual evidence might exist right now, 1 way or the other.

          2. Vasudev Ram

            Right, I was actually thinking (as I wrote my comment) that you probably could know those facts (if they are facts) or make those guesses, too – because I had looked at your Disqus profile briefly earlier. Didn’t mean to imply that it was something only I had thought of.

      2. Donna Brewington White

        Hi Jason — Delayed response. Traveling.I want to emphasize the “anecdotal” element of this and that each situation has different contributing factors. Some of this will echo what @vasudevram:disqus has already “guessed.”The caveat is that the majority of people that I contact in SF/SV are not willing to relocate. It is just that the number of those willing to entertain moving has significantly increased.I also talk to a lot of people who would move if they could but are locked in due to family or home-ownership reasons.My greatest experience with the shift involves recruiting from SF/SV to the LA market, largely due to LA’s emergence as a viable tech startup hub and the relative ease of moving from SF to LA. It is now common to have SF/SV-based candidates included in the pool for a LA-based search. These candidates also (generally) have more of a competitive advantage in the LA market than they do in SF.Another experience was recruiting for a cryptocurrency where the competitive advantage of gaining this industry experience often outweighed the advantages of remaining in SF from a career standpoint.Outside of recruiting for LA and cryptocurrency, the reasons are often due to an especially compelling opportunity combined with lifestyle issues — wanting an environment more conducive to raising a family, desiring more affordable housing, wanting out of the rat race, or the ability to make a significant profit on a home sale. I also come across candidates who are looking for their last job before early retirement or one more exit, and no longer have a compelling reason to remain in SF strictly for career-building purposes.Probably no surprises @kenberger:disqus

    2. Vasudev Ram

      Stymied is a good word, stealing it from you. cc/ @JLM, fellow writer (although he is already a master of words).

  9. jason wright

    i like historians of economics. they speak a truth. contemporary economists indulge in empirical witchcraft.

    1. Michael Elling

      Good historians understand events from how things were before the events happened.

      1. JLM

        .History is written by the victors. The best historians acquaint themselves with the views and experiences of the losers.The front page of the newspaper used to be the first draft of history, but it was quite malleable and regional. I get a kick out of reading old newspapers from important dates in history. Today, it is virtually useless.I have recently undertaken trying to understand the role of Reconstruction in post Civil War USA. There are two important books on it, both of which are 750 pages long. One is about Reconstruction from the point of view of official Washington and the other is about Black Reconstruction written by WEB Du Bois.One can connect the dots as to date and place, but the reporting is as if neither party was at the same event.So, what is history under these circumstances?JLMwww.themusingsofthebigredca…

        1. sigmaalgebra

          A good historian can look at circumstances, say, France before the French Revolution, and then explain just why the French revolution happened.Ah, a case of 20-20 hindsight!!???It was harder for historians inthe middle of 2016 to look at circumstances and predict just what would happen in the November elections — “There’s no path to 270”; “Even if Trump wins all the tossup states, he still loses”, …!Net, the techniques of history, even at best, have darned little predictive value!!!“Those who fail to learn from history are doomed to repeat it.” Sir Winston ChurchillOkay, sounds good:Q 1. Just what are we suppose to “learn”, what “lessons from history”?Q 2. Just what will be repeated?I can guess at answers, but the look not very solid to me.

          1. Michael Elling

            I think it’s fairly obvious that if a species grows well beyond the resources of the ecosystem within which it resides disaster is inevitable. That’s 20-20 foresight!

        2. Michael Elling

          Most are unwilling to assume that there might have been a number of different outcomes. We want to believe that things happened for a reason. Much like religion, that belief keeps us optimistic about the future. Without it, the present would be a lot less palatable.

          1. JLM

            .Not disagreeing with you but “optimistic about the future” has to live with “accountable for the past.”What will one day be written about the entire Trump-Clinton-email-Mueller matter? Can it capture the multi-faceted, competing interests or will it just be a compilation of the partisan views, perhaps, only one side?Again, it will be written by the victors.In my lifetime, I have lived through Vietnam at an organic level and watched the changing explanations of events I either lived through or experienced first hand or read from newspapers.The history is often not the history. Because if we don’t have victors, we have scapegoaters.The Kennedy assassination seems to still be in a bit of unresolved limbo or not?JLMwww.themusingsofthebigredca…

          2. Michael Elling

            You hold on to Trump like a religion.

          3. JLM

            .Totally unfair. I mentioned the Trump-Clinton-email-Mueller matter simply as a matter of how history will be written. I picked that topic because it was something folks would identify, as you did.My comment was intended not to pre-judge the outcome or to take sides.You, OTOH, immediately knee jerked as the left is prone to do.I have always been a policy guy. I care not a whit who makes the policy. I like many of Trump’s policies. As to the man, I could care less.Be fair. Read carefully.I do think Trump is coming out of this on the other side smelling like a rose.JLMwww.themusingsofthebigredca…

  10. sigmaalgebra

    Silicon Valley innovation? In VC funded information technology? Lately? Let’s see:So, for content on the Internet, build a computer based version of an old library card catalog subject index with results sorted by a gross measure of popularity. Get the code running really well and, presto, bingo, grow along with Internet content and Internet usage and build a company on the way to $1 T. Do some quite nice ad targeting.See what Xerox PARC, early Apple, and Microsoft did with graphical user interfaces, see wireless coming, see the really bad portable phones, chat with some people at QualComm, look at what can be done borrowing from Linux and C++, and make a highly polished, strictly managed, piece of a play on body prestige jewelry, charge really big bucks, make it a really big status thingy, and zoom to nearly $1 T.With a socially awkward Harvard ugrad computer nerd, start with some simple Web site software to find college chicks “hot or not”, discover largely by accident some incredibly strong desire of some huge fraction of the population to “socialize” via a Web site, run ads, and build a company on its way to worth $1 T.Figure out that the capability of personal computers is growing very quickly (e.g., stop by Intel and Microsoft for some future discussions?); similarly for Internet data rates (check in with Cisco and some of the backbone companies); similarly for HTML, CSS, JavaScript (stop by W3C, maybe chat with Jeff Jaffe, and look at the JavaScript standard), and polished Web browser software, especially good with still images, audio, and video with audio (see what audio, etc. chips the motherboard vendors are installing), see that much of retail shopping is enormously wasteful driving to malls, etc., and bring up a Web site for books and records. Grow the Web site with very high competence, especially in the data handling, Web page production, and back end server farm. Start selling more and more different items making excellent use of some quite good photography as JPG files, provide some, much, of the very best product selection information ever in retailing, and, then, just grow to sell nearly everything that can go through a warehouse and be shipped USPS — no fresh sushi, live chickens or lobsters, fresh ground beef, pork, or lamb, but millions of other products. Build a business on the way to $1 T and become the richest person in the world.So, that’s “innovation”. Hmm ….I thought that Silicon Valley, Stanford, and related parts of California were good at innovation: I think of Leonard Kleinrock, Lockheed Skunk Works, the early HP and Intel, A. Viterbi and QualComm, D. Knuth, H. Royden, and D. Luenberger at Stanford, G. Dantzig, M. Loeve, D. Brillinger, and E. Wong at Berkeley, LLNL, SLA, etc.Now from SV VC we get DoorDash? Uber? We were talking about innovation?IMHO, as Moore’s law slows down and as its hardware is widely deployed, the low fruit has been picked, the hardware is not yet nearly fully exploited, and some real, powerful, valuable innovation can rise again, but I see no big advantage for California in that rise. They seem to want DoorDash and Uber — let them have those.Even with the relatively routine exploitations of Moore’s law, Web browsers, and Internet data rates, some innovation could have helped. Actually, IIRC, surprisingly, long the core chips for Cisco and Juniper were from IBM. But now with the low fruit picked, real innovation can still help and may be crucial for more spectacular growth. Again, for that innovation, I wouldn’t look first at the information technology startup community — YC and Sand Hill Road — of Silicon Valley. It appears strongly that YC and Sand Hill Road just want fast unicorns from routine software to exploit Moore’s law for consumer fun, games, and gadgets and want nothing to do with the powerful innovation typical of the beginnings of Silicon Valley with Dean Terman, Shockley, etc.The days of fast millions from, say, HotMail are over.

    1. Michael Elling

      One has to look at the past 30-40 years within a longer cycle of information velocity going back 100s and 1000s of years. When we see how the analog Bell system retarded the growth of centralized computing in the 1960s to 1980s, we appreciate all the pent-up (possibly wasted?) energy spent on processing at the edge in the 1980s to early 2000s, only to see it all collapse to the middle in the last 10 years. Almost all of this was based on 1-way, store and forward processing and communication; and upper layers that didn’t care a wit about lower layers. And everyone at the edge left to fend for themselves.Now we are confronted with the dual challenges of latency and 2-way performance brought about by real-time 2-way HD video and IoT applications at scale. And to be sustainable and generative they will need to be universal. But no one in SV is thinking about all 3 of those simultaneously. They are off chasing fools gold with AI and crypto.What will happen when we have centralized-decentralized hierarchical networks that evolve more like living organisms? What happens at the core quickly radiates out to the edge, even as what develops at the edge collapses rapidly to the core. What will the platforms and business models look like?

      1. sigmaalgebra

        My FIL was a farmer, made relatively innovative use of the land he had, but did not create or invent that land. People applying Moore’s law, the Internet, the infrastructure software, and the billions of users use those means but don’t create or invent them.Some work has been at the center, some at the edges, and with often inefficient communications. And the system administration time at the edges has been a huge cost, but person by person and each use of their edge devices, worth the cost. E.g., we got rid of the typewriters and a lot of paper letters. In principle much of the edge costs can be eliminated: Slowly the users learn more, and the vendors provide better solutions.What the center would do and look like, and the networks, e.g., border gateway protocol, certificate authorities, content distribution networks, browser encryption and other security means, security for operating systems, the domain name system, etc. were driven by strong needs only since Google, Facebook, Amazon, Netflix, wireless, smart phones, and billions of eager users.Old Ma Bell was lots of pros and cons. They were a highly regulated, nationwide monopoly. Long they used a LOT of vacuum tubes and even longer a LOT of copper.But in the 1930s they saw clearly that vacuum tubes would throttle their growth and pushed hard on some of the best research ever — the transistor. WWII delayed the work, but, presto, bingo, just after the war — done, and the world of transistors exploded and, now, shrank to 14 nm or so each with a billion or so on a chip for ballpark $200. In the history of good technology, that’s a crown jewel. Now a billion bytes of main memory for about the price of a boy and his girlfriend out for romantic dinner for two, with Happy Meals at McDonald’s. In particular, for DDR3 ECC memory, it’s 16 GB for $100, and there 1 GB may restrict the couple to sharing a Happy Meal!So much for vacuum tubes. Next up — solve the copper problem. For this, hmm, lasers were just invented and, maybe, …. So, use ga-al-as heterojunctions, make solid state lasers, each about the size of a grain of rice, and have them light optical fibers. So amazing things with the fibers, amplifiers, dense wavelength division multiplexing, etc. and make copper look like an oxcart compared with a B-70 bomber.That was darned good work. And they did a lot more, e.g., R. W. Hamming’s work on error correcting codes! C. Shannon’s work on information theory. The 3 K background radiation. Blackman and Tukey on the measurement of power spectra from the point of view of communications engineering. A big start on the problem of P versus NP. No doubt much more.It does look like politics played a big role. I’m not up on all of that!As far as can tell now, the US information technology is terrific stuff from the edge, the networks, and the server farms. I believe we do need better exploitation for the good and pleasure of the people we keep in mind — the end users to watch ads and spend money!For the edge, network, and center, I’m not sure how it will go.But the computer behind me I plugged together, with an AMD FX-8350 processor, 64 bit addressing, 8 cores, 4.0 GHz standard clock speed, 16 GB of ECC main memory, 1.5 TB of disk I may soon grow by 6 TB, no so long ago was one heck of a server farm for a Fortune 500 company — no joke. So, the old center, a lot of IBM glass houses, has moved to my desktop!For what can do with a server farm, it doesn’t have to be all in one building. Indeed, a standard idea is to have a backup, mirror, full time, hot standby, ready to take over, duplicate a few hundred miles away with, thus, independent weather, electrical power, natural disasters, falling airplanes, exploding terrorists, etc., but the communications is fine: Just cough of some green dollars, name your desired data rate, say how many independent, redundant paths you want, etc. and go for it. Then the 500 miles is not much of an obstacle.

        1. Michael Elling

          There are constant tradeoffs for storage and processing between edge and core. Also there are constant tradeoffs between layers 1, 2 and 3 (physical medium, compression/modulation, and switching); in order to clear marginal supply and demand.WiFi is a perfect example of incredibly distributed networking (near infinite reuse of the same spectrum); but at the same time it’s all tied together via wire/fiber.Differences in bandwidth and temporal requirements, as well as synchronicity (as determined by what goes on at layers 4-7) all factor into these tradeoffs.Same things that hold for bits holds for atoms as well.

  11. CJ

    There is something to be said about surrounding oneself with brilliant and innovative people that challenge you. I, contrary to a lot of my peers, seek out the best and the brightest and judge myself against them. If I think you’re good, I want to be better.How does this relate to the Valley? The Valley is the home to the best and brightest. As long as that’s the case, innovation will continue to sprout from there at an absurdly rapid;dr Steel sharpens steel.

    1. sigmaalgebra

      The Valley is the home to the best and brightest.Mostly garbage.The “brightest” are overwhelmingly in the world’s top research universities, and they are scattered all over the US and western Europe with some examples in Japan, Russia, and maybe a few more.If you doubt that claim, then just take a text by Rudin, Neveu, Fleming, Bertsekas, Luenberger and work the exercises. For Neveu, you get at least a small trophy for even finding one exercise you can work; I’ll make that stronger, that anyone you can find can work it! Neveu was a very, Very bright guy with an astounding sense of both depth and elegance. Each page has about three places that say “clearly”; each of those takes about two days, and at the end have to conclude the it really was clear!For a short test, look up the definition of a sigma algebra and show that there are no countably infinite sigma algebras. I’ll give you a week and grade your result. Warning: In grad school, I solved it, but I was the only one in the class who did.For more, look up the Zangwill and Kuhn-Tucker constraint qualifications for the Kuhn-Tucker necessary conditions for optimality and show that they are independent. With a good solution, you will also knock off a question stated but not answered in a famous paper in mathematical economics by Arrow, Hurwicz, and Uzawa — 2 out of 3 Nobel prizes. If you give up, then I can point you to a solution in the literature.For a recent stream of bright work, look up the question P versus NP and see the progress — some of which is impressive, with only a little of that progress from Silicon Valley.Note that the discovery of the 3 K background radiation was from Bell Labs and, then, Dicke at Princeton, both far from Silicon Valley.For more, look at the problems of Clay Math in Boston — $1 million prize per solution. Silicon Valley is not beating everyone else going after these problems.Here’s a high school problem for a warm up: Given triangle ABC, by Euclidean construction, find points D on AB and E on BC so that the lengths AD = DE = EC. I’ll grade that one for you. I did it as a college freshman — got it from a friend in chemistry class — with a technique I reinvented in high school.Here’s an easy one: Given real valued random variables X and Y, show that, for the set of real numbers R, among all measurable functions f: R –> R where E[f(X)] exists, f(X) = E[Y|X] minimizes E[(f(X) – Y)^2].In math with theorems and proofs, it’s quite easy to say who the “best and brightest” are, and the current Sand Hill Road backed information technology startup founders have no claims of being the “best and brightest” in the world or even the US.

      1. CJ

        The best and brightest at what they do… Startups, technology, innovation. In the context of my past, it’s whatever my particular craft is, mostly corporate IT related.I didn’t mean the top 1% intellectually in the world, or in math, etc.

        1. sigmaalgebra

          Okay, in the context: Have Gates, Jobs, Page, Brin, Zuck, Bezos and, from the other side of the table, Moritz (former newspaper guy), Doerr, and a few more. Then what is left but a lot of middle level successes and a lot of failures? From the reported averages, the ROI is not so good.Maybe people who also did well, Buffett, Bloomberg, Simons, Trump. Right, of those, only Buffett, maybe Bloomberg, competes in money made with Gates, Page, Brin, Zuck and Bezos. E.g., some estimates for Simons and Trump are $11 billion each.While Bezos has his company HQ in Seattle, IIRC early on he got some equity funding from Silicon Valley. Somewhat similarly for Gates. I’m unsure of any funding Jobs got.IIRC, Page, Brin, and Zuck were funded by Silicon Valley and kept their business HQs there.Looks like we’re not talking a lot of really successful people or businesses or, in those successes, really a lot of original “technology”.So, for the next big successes, maybe they won’t be in Silicon Valley — maybe they won’t be in the US.I’d say, f’get about a pattern of Silicon Valley or elsewhere and, instead, just evaluate projects, startups, people, and companies one at a time, individually.

  12. Pointsandfigures

    I don’t think this is a case of one pie being sliced into smaller slices. Innovation has an unlimited upside. Why entities like the Economist always look at it as Us vs Them or some scoreboard type competition confounds me.That being said, Silicon Valley will always be the hub with the rest of us being spokes on the wheel for the foreseeable future. It would take a pretty big exogenous shock to alter the network effects that exist.

  13. John Revay

    “Things always look darkest right before the dawn”Reminded me of a quote I heard recentlyRemember the words of Chairman Mao: ‘It’s always darkest before it’s totally black.’. John McCain

  14. Steven Kane

    Good grief, this again? Calling peak innovation or the decline and fall of innovation and entrepreneurship is like calling peak humanity. It’s just plain silly — just click-bait, sensationalist, obvious nonsense. Certainly trends and eras come and go, but one of the — if not THE — defining characteristic of the human animal is our capacity to innovate and improvise and adapt and create and use technology. Just like in the movie 2001, the famous jump cut from the early human realizing a bone can be a tool and a weapon…to the space station. Paging Stephen Pinker? Mr. Stephen Pinker, white courtesy telephone please…

  15. Danielle Morrill

    Maybe this is my cynicism about the media machine, especially when it comes to trend pieces, but I have been curious about the veracity of a lot of “rise of the rest” claims. It would be amazing if it were truly peak Silicon Valley and talent and innovation were spilling over into other cities in great waves, but I’m just not seeing that on the ground in Denver. There is a lot of big tech here, but despite the hype around the Denver/Boulder “scene” the reality is there are very few early stage startups here, and nowhere close to the density that we enjoyed in the Bay Area.This is a great place for some post exit R&R and even starting lifestyle businesses or prototyping the next venture-backed thing, but the second I need to hire mid-level management or risk tolerant software engineers that are ready to truly scale a startup I’ll be back in the Bay.

  16. Jose Paul Martin

    Fred, this topic has been on the back of my mind for a number of years, given that I’m not based in SV, but in the Middle East, with my routes from India. I see the competition between countries within the GCC trying to attract startups. Which led me to write this report on Bahrain being the next SV (ht to Paul Graham for the inspiration) –…I hear similar cries from founders in Dubai, where the cost of recruiting is high (primarily because the cost of living is extremely high), compared with Bahrain or Jordan… where startups have a chance of taking off, thanks to a longer runway.And what I see is that Asia, South Asia are also rising up. Previously (like in the last 3-5 years) there’s been a funding crunch. But as I talk to more entrepreneurs, money is flowing to startups, just not dispersed as you would have across various series in SV.This reminds me of the words of the famous Sir John Templeton, and his emerging market focus (before emerging market became a buzzword) “it makes sense that you will find better investment opportunities when you search everywhere in the world instead of just at home.”VC is typically a local business model, and density of population always helps. But don’t you think with technology, remote working, and the ability to cross borders through video conferencing, slack and other means – we are moving into a more global playing field.

  17. Per Hansa

    Peak Valley is really a story of the Bay Area’s failure to build housing. The housing supply is severely constrained, which means every time there is a liquidity event for a new startup or general wage increases around half of the gains are hoovered up by landlords in the form of rents and appreciation. San Francisco, as one example, has built around 3,000 units a year for the last several decades (peaking at 5,000 units for 2016). If that number were 20,000 / year, the population of San Francisco alone would be well over 1.5 million instead of stuck at less than 1 million and the number of startups you could walk in 1 mile would similarly be higher.California also has the country’s highest cost of living adjusted poverty rate. Building more housing would also help reduce rates of homelessness and poverty, not just drive more innovation.Some tech leaders are coming to understand the importance of housing, Patrick Collison, for example, donated $1 million to the YIMBY movement, a pro-housing group.