THE END OF THE SILICON VALLEY DREAM

It is difficult, given what Silicon Valley has become, to convey exactly what it was like in the 1970s and ‘80s. It was a remarkable center of technology, but also the embodiment of the spirit of capitalism at its very best, as epitomized by garage start-ups like Apple. Greed, of course, is always a human motivation, but the early Valley culture was created by entrepreneurial outsiders who genuinely wanted to make the world better.

In the early days of the tech revolution, some watchers imagined an almost utopian, communitarian society on the horizon. In 1972, the California writer and zeitgeist diagnostician Stewart Brand predicted in Rolling Stone that when computers became widely available, we would all become “Computer Bums, all more empowered as individuals and as co-operators.” It would be a new era of enhanced “spontaneous creation and of human interaction.” The “early digital idealists,” tech guru Jaron Lanier recalled in 2014, envisioned a “sharing” web that functioned “free from the constraints of the commercial order.”

I was there, working as West Coast editor for Inc. magazine (itself one of the premier media startups of the era). I remember those early Silicon Valley days as a period of extreme competition, with scores of companies battling to dominate emerging industries like laptop computers, disc drives and networking systems. One brilliant marketer and publicist, Regis McKenna, could offer a reporter scores of new companies to visit, mostly backed by venture capitalists. You could spend days interviewing remarkable people, all of whom seemed convinced theirs could be the next Hewlett Packard or Intel.

Paying people $100,000 (and even more!) a year just up write “apps” or games —- may be justifiable and sometimes quite profitable for a small number of extra- successful such “products” — but it is a patently unsustainable business model when it is attempted to apply to hundreds or thousands of venture firms.
Any fool can see that the “winnowing out” stage Is now underway.
And the large successful corporations are realizing that they don’t need thousands and thousands of highly paid personnel to do the work of a couple hundred good programmers.
The issues have been accumulating for a number of years. Highly speculative ventures, bloated salaries and bloated staffing.

Markets always get around to correcting … whether we enjoy it or not

The heart of the change -—

“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. Today tech is dominated by a cognitive elite of Ivy Leaguers, management consultants and MBAs. “We used to build the future,” Leslie Parks, who formerly directed redevelopment efforts in San Jose, once told me. “Then we designed it, now we just think about it.”

But the Valley has slowly left the industrial battlefield — it has lost over 160,000 manufacturing positions over the past two decades. It bought into the idea that the unique genius of its financial and corporate culture would be enough for it to thrive and profit as production headed first to Japan, then China and, more recently, to other parts of North America.

This is a familiar story. Consider, for example, how British industry lost its edge: the Industrial Revolution created a new class of tycoons; then the tycoons’ sons sought a return to the aristocratic past, eschewing dirty factories for elegant postings in the City or a relaxed life in their country estates. More recently, Detroit’s world-beating automotive industry squandered its technological and manufacturing advantages in a rush, pushed by Wall Street and its own financial managers, to earn easy profits from inferior products.”

In the beginning, it was engineers and physical scientists. Now it is programmers and social scientists.

Paying un-needed people to keep them off the labor market sounds like a loser if business strategy (at least if, as here, Purdue’s en masse …)

A more success- oriented strategy is normally to hire people you actually need to be productive on tasks actually needed in your enterprise

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