In a fascinating essay, excerpted below, Michael Malone wonders if the tech gurus of Silicon Valley should be solving bigger problems. We see venture capitalists scrambling over one another to find the next viral, mobile app — perhaps one that automatically writes your tweets, or one that vibrates your smartphone if you say too many bad words. Should our capital markets — now with an attention span of 15 seconds — reward the so-called innovators of these so-called essential apps with millions or even billions in company valuations?
Shouldn’t Silicon Valley be tackling the hard problems? Wouldn’t humanity be better served, not from a new killer SnapChat replacement app, but from more efficient reverse osmosis; mitigation for Alzheimer’s (and all sundry of other chronic ailments); progress with alternative energy sources and more efficient energy sinks; next generation antibiotics; ridding the world of land-mines; growing and delivering nutritious food to those who need it most? Admittedly, these are some hard problems. But, isn’t that the point!
From Technology Review:
The view from Mike Steep’s office on Palo Alto’s Coyote Hill is one of the greatest in Silicon Valley.
Beyond the black and rosewood office furniture, the two large computer monitors, and three Indonesian artifacts to ward off evil spirits, Steep looks out onto a panorama stretching from Redwood City to Santa Clara. This is the historic Silicon Valley, the birthplace of Hewlett-Packard and Fairchild Semiconductor, Intel and Atari, Netscape and Google. This is the home of innovations that have shaped the modern world. So is Steep’s employer: Xerox’s Palo Alto Research Center, or PARC, where personal computing and key computer-networking technologies were invented, and where he is senior vice president of global business operations.
And yet Mike Steep is disappointed at what he sees out the windows.
“I see a community that acts like it knows where it’s going, but that seems to have its head in the sand,” he says. He gestures towards the Hewlett-Packard headquarters a few blocks away and Hoover Tower at Stanford University. “This town used to think big—the integrated circuit, personal computers, the Internet. Are we really leveraging all that intellectual power and creativity creating Instagram and dating apps? Is this truly going to change the world?”
After spending years at Microsoft, HP, and Apple, Steep joined PARC in 2013 to help the legendary ideas factory better capitalize on its work. As part of the job, he travels around the world visiting R&D executives in dozens of big companies, and increasingly he worries that the Valley will become irrelevant to them. Steep is one of 22 tech executives on a board the mayor of London set up to promote a “smart city”; they advise officials on how to allocate hundreds of millions of pounds for projects that would combine physical infrastructure such as new high-speed rail with sensors, databases, and analytics. “I know for a fact that China and an array of other countries are chasing this project, which will be the template for scores of similar big-city infrastructure projects around the world in years to come,” Steep says. “From the U.S.? IBM. From Silicon Valley? Many in England ask if anyone here has even heard of the London subway project. That’s unbelievable. Why don’t we leverage opportunities like this here in the Valley?”
Steep isn’t alone in asking whether Silicon Valley is devoting far too many resources to easy opportunities in mobile apps and social media at the expense of attacking bigger problems in energy, medicine, and transportation (see Q&A: Peter Thiel). But if you put that argument to many investors and technologists here, you get a reasonable comeback: has Silicon Valley really ever set out to directly address big problems? In fact, the classic Valley approach has been to size up which technologies it can quickly and ambitiously advance, and then let the world make of them what it will. That is how we got Facebook and Google, and it’s why the Valley’s clean-tech affair was a short-lived mismatch. And as many people point out with classic Silicon Valley confidence, the kind of work that made the area great is still going on in abundance.
The next wave
A small group of executives, surrounded by hundreds of bottles of wine, sits in the private dining room at Bella Vita, an Italian restaurant in Los Altos’s picturesque downtown of expensive tiny shops. Within a few miles, one can find the site of the original Fairchild Semiconductor, Steve Jobs’s house, and the saloon where Nolan Bushnell set up the first Atari game. The host of this gathering is Carl Guardino, CEO of the Silicon Valley Leadership Group, an industry association dedicated to the economic health of the Valley. The 400 organizations that belong to the group are mostly companies that were founded long before the mobile-app craze; only 10 percent are startups. That is evident at this dinner, to which Guardino has invited three of his board members: Steve Berglund, CEO of Trimble, a maker of GPS equipment; Tom Werner, CEO of the solar provider SunPower; and Greg Becker, CEO of Silicon Valley Bank.
These are people who, like Steep, spend much of their time meeting with people in governments and other companies. Asked whether the Valley is falling out of touch with what the world really needs, each disagrees, vehemently. They are almost surprised by the question. “This is the most adaptive and flexible business community on the planet,” says Becker. “It is always about innovation—and going where the opportunity leads next. If you’re worried that the Valley is overpursuing one market or another, then just wait a while and it will change direction again. That’s what we are all about.”
“This is the center of world capitalism, and capitalism is always in flux,” Werner adds. “Are there too many social-networking and app companies out there right now? Probably. But what makes you think it’s going to stay that way for long? We have always undergone corrections. It’s the nature of who we are … But we’ll come out stronger than ever, and in a whole different set of markets and new technologies. This will still be the best place on the planet for innovation.”
Berglund contends that a generational change already under way will reduce the emphasis on apps. “Young people don’t seem to care as much about code as their generational elders,” he says. “They want to build things—stuff like robots and drones. Just go to the Maker Faire and watch them. They’re going to take this valley in a whole different direction.”
Berglund could be right. In the first half of 2014, according to CB Insights, Internet startups were the leading recipient of venture investment in San Francisco and Silicon Valley (the area got half of the U.S. total; New York was second at 10 percent). But investment in the Internet sector accounted for 59 percent of the total, down from a peak of 68 percent in 2011.
Doug Henton, who heads the consulting firm Collaborative Economics and oversaw an upcoming research report on the state of the Valley, argues that since 1950 the area has experienced five technological waves. Each has lasted about 10 to 20 years and encompassed a frenzy followed by a crash and shakeout and then a mature “deployment period.” Henton has identified these waves as defense (1950s and 1960s), integrated circuits (1960s and 1970s), personal computers (1970s and 1980s), Internet (1990s), and social media (2000s and 2010s). By these lights, the social-media wave, however dominant it is in the public eye, soon may be replaced by another wave. Henton suggests that it’s likely to involve the combination of software, hardware, and sensors in wearable devices and the “Internet of things.”
Read the entire essay here.