Change is good. That belief has been at the heart of Silicon Valley’s innovative tech culture since the beginning.
In the 1970s Silicon Valley referred to a strip on the San Francisco Peninsula stretching some 17 miles from Palo Alto to San Jose and from the bay westward 7 miles, encompassing Sunnyvale and Cupertino. It was a specific plot that contained a cluster of microchip startups that would give Silicon Valley its name and forever change computing. Today, “Silicon Valley” comprises the entire San Francisco Bay Area, with its remarkable density of technology firms.
The vibrant networks that grew out of the Valley’s pioneering companies included venture capital partnerships, a new model of high-risk, high-reward investment that would only grow in importance. Strong professional and personal connections and a culture of innovation seeded hypergrowth in technologies and companies throughout the Valley. Immigration, especially from East and South Asia, proved indispensable by providing successive waves of new talent. Academia helped to foster the region’s shift from agriculture and resource extraction to technology and business creation. UC Berkeley was a pioneer in nuclear physics, while Stanford’s mix of research and entrepreneurship contributed to at least three of Silicon Valley’s booms: Silicon semiconductors, personal computing, and the online world.
Over the decades, as industries have come and gone, and through spectacular booms and busts, the idea that technological change is good is the one thing that hasn’t changed.
Until now.
What’s different today? It’s the scope of the changes wrought by technology: the rate at which it happens; its global reach; its impact on every aspect of our lives.
We hear a lot about the failures, misuses, and challenges of Silicon Valley technology and the sometimes dishonest, biased, or greedy motivations behind its makers. As the world looks to technology to address many of its major challenges, from epidemics to climate change to poverty, CHM finds itself reflecting on the current state of the region it calls home. How can Silicon Valley build on its culture of looking forward, its conviction that change is good, to better serve humanity?
By asking questions. By better understanding how we got where we are today — our roots, our past. And by understanding that while change is complicated, it’s also possible.
When George Orwell wrote 1984, in 1948, it seemed obvious that in the future any Big Brother watching you would be a nation state. The idea that corporations would collect data on the most personal aspects of people’s lives—with their active participation—would have seemed wild for even a speculative plot. But today, Google, Facebook, and other big Silicon Valley web companies have become richer than many governments by selling information about people to advertisers.
These companies are built partly on technology developed in partnership with government, like the internet and email, while some of the data they collect is used in government for everything from improving public health to election campaigns (think Facebook and Cambridge Analytica).
Silicon Valley has built a sort of electronic panopticon with a unique mix of government, business, and academia. Such blending of roles is not uncommon for the region. While some Valley creation myths credit lone, heroic entrepreneurs, the reality is that the region’s success rests on an entire ecosystem.
In fact, much of the Valley’s work happens in a fourth zone at the margins of business, government, and academia. This geeky, research-y “interzone” is funded by all three, and its natural habitat is conferences and industry alliances, standards creating organizations, and firms like the Stanford Research Institute (SRI) that do contract research.
To see how things blend, just look at those devices in our pockets and purses. The tiny chips that power our smartphones derive from the transistor, commercialized in the Valley during a wave of 1950s Cold War military spending. That wave built on the Bay Area’s legacy of military bases dating to the Spanish Presidio, with accompanying support industries like shipbuilding and later missile and space rocket building. The huge high-tech boom those chips created would put the Silicon in the Valley’s name.
Under the hood of smartphones is a full personal computer. Much of personal computing grew out of local research funded by federal agencies, including NASA and ARPA, which was then developed by industry at Xerox PARC, Apple, and Microsoft among others. The personal computing boom of the 1980s followed.
Your phone’s digital radio can trace its pedigree to the ARPA-funded Packet Radio Network at SRI and GSM in Europe.
This raises another topic. Not all Valley government funding is domestic. Just as the Valley’s secret sauce for recruiting is a global brain drain of top talent educated by other countries, it also repurposes foreign-born technologies.
The World Wide Web was funded by a dozen European countries. Parts of the internet the web runs over were paid for by French and British taxpayers, while the missile and space industry of the Cold War was built on German tech captured in World War II.
Like any specialty region, from film in Hollywood to finance in London, the Valley is driven by a snowball effect. Having reached a critical mass of talent, investment, and specialized infrastructure, it attracts more of the same. The gravitational pull applies not just to skilled workers, but to entire technologies wherever they originated, and government dollars. If the Valley has one superpower above all others it is in creating business models for good ideas, many of them developed by government and academia, and making them pay.
Over the last 50 years, Silicon Valley has often been in the news for its seemingly bottomless supply of astonishing tech innovations. People may not realize, though, that the region is also a hotbed of business model innovation. While media attention and public ire is focused lately on Valley companies whose business models monetize users’ attention and reap profits from mining personal data, some tech entrepreneurs and business leaders are looking beyond profits.
The concept of corporate responsibility has been around for a long time, but the idea that companies should measure their success not just by the financial bottom line but also positive social impact (double bottom line) and positive environmental impact (triple bottom line) is on the rise. Indeed, among venture capitalists “impact investing” is trendy . . . and profitable. The myth that being socially responsible means sacrificing profits is being hotly debated. And, research overwhelmingly shows that companies with more diverse management teams, including gender and ethnicity, lead to higher corporate profits. In a world where powerful millennial customers and employees vote their values at home and at work, being responsive to issues they care about is not just good for people and the planet, but good for business, too.
Investors, philanthropists, and entrepreneurs are getting creative about tackling global challenges large and small. Acumen is a nonprofit investment fund that focuses on companies addressing poverty. The Omidyar Network combines venture capital impact investing with philanthropic efforts, giving away over a billion dollars. Social entrepreneurs have leveraged tech innovations to improve the way they do business with online platforms, expanding awareness about causes and providing avenues for creative solutions. For example, Kiva uses a crowdfunding model to generate loans for entrepreneurs in underserved countries. Coursera provides access to online courses from elite universities to people everywhere. And the Skoll Foundation invests in and connects individual social entrepreneurs to resources and networks.
What can the business community do to spread these positive models? Plenty. Entrepreneurs and funders can ask themselves if their new product or service can not only make money but also if it’s good for society. Metrics for measuring well-being and impact can be developed and shared. The way businesses are evaluated and the legal landscape can shift from a single bottom line toward a global vision where doing business always means doing good.
percentage of Americans in 2018 who will purchase a product because a company advocated for an issue they cared about. Millennials are more likely than other generations to research issues and the extent to which the company contributes. Credit: Forbes
companies surveyed in Spain that said companies with more women on their research and development teams came up with more innovative ideas.Credit: Business Insider
percentage of companies that have more culturally and ethnically diverse executive teams that are more likely to see higher-than-average profits. Credit: Study by Mckinsey & Company
trillion dollars of assets around the world being professionally managed under responsible investment strategies, an increase of 25 percent since 2014. According to Tim Mohin, chief executive of the Global Reporting Index (GRI), “This number is so large it needs context—it exceeds the GDP of the entire US economy.” Credit: Forbes
growth rate percentage in sustainable, responsible and impact investing from 2016 to 2018. Credit: The Forum for Sustainable and Responsible Investment
The San Francisco Bay Area has been a magnet for technology developers and entrepreneurs for decades. They’ve come for its abundant capital, skilled workforce, infrastructure, ties to the academic-military complex, and more egalitarian and participatory management structures. Many of these elements first came together in the late 1930s and 1940s, with an early group of radio vacuum tube companies on the San Francisco Peninsula.
Hewlett-Packard was founded in 1939 as a scientific instrument maker, and like the tube companies, fostered a spirit of autonomy and responsibility through their famed “HP Way,” which included “management by walking around” and using first names for all employees. HP’s flexible corporate culture helped it thrive and transform itself six times in response to changes in the market (including entering the computer business), and was widely admired, and emulated, in the Valley, inspiring people and teams such as Apple cofounder Steve Wozniak, who worked in HP’s calculator division. After the tube companies came the semiconductor firms like Fairchild and Intel, which would also make their mark on computer startups. Ann Bowers of Intel led early Apple’s human resources department. Mike Markkula brought from Intel to Apple both the capital and managerial experience necessary to take Apple to the Fortune 500. Steve Jobs found a mentor in Intel’s Robert Noyce, and in turn imparted lessons to such entrepreneurs as Mark Zuckerberg. Each new generation of entrepreneurs have stood on the shoulders of their predecessors.
Distance from the East Coast’s centers of corporate power and proximity to Hollywood south and San Francisco and Berkeley north have also contributed to Silicon Valley’s unique culture. In the 1960s and 1970s, many engineers dabbled in the Bay Area’s counterculture and worked to redirect technologies aimed at the Vietnam War effort to benefit everyday people instead. UC Berkeley students gave computing power to the people with Community Memory messaging terminals, a radical idea when computers were seen as tools for government and corporate power. Researchers at Xerox PARC, who were developing some of the technologies behind personal computing used today, thumbed their noses at their corporate overseers in New York, and were profiled in Rolling Stone magazine. The Macintosh team at Apple raised a pirate flag.
Today’s developers of wearable tech and cryptocurrencies hope to disrupt the health care system and global finance. This history has helped shape an image of Silicon Valley entrepreneurs and engineers as rebellious, irreverent, resistant to authority, and disrupting the status quo. The figure of the lone tech maverick has been promoted heavily by marketing campaigns such as Apple’s Think Different ads but such traits are overblown. Teams build companies and innovations come from the contributions of many people. And, though they may not make the news, entrepreneurs and innovators come in all ages, races and genders.
From the 1930s to the 2010s, Silicon Valley companies have cycled through a variety of management styles and corporate cultures, corresponding to many different industries, from semiconductors to software. Many companies succeed by giving their employees the freedom to experiment, be creative, and solve problems. Yet for every successful enterprise, there are many failures.
Which begs the question: Is there a shared culture that allows Silicon Valley to continually reinvent itself?
Silicon Valley marketing legend Regis McKenna coined the phrase “Silicon Valley state of mind,” characterizing the innovative, idealistic spirit that connects the region’s past, present, and future. The phrase-turned-ethos has become a source of pride for the region while also taking on new life for emerging technology hotspots around the world looking to emulate the success of the Valley. But as the Valley and the entire San Francisco Bay Area finds itself a symbol for all that is good and bad about technology, while facing its own societal issues as a result of the region’s tech boom, some are questioning whether its state of mind is one that should be emulated.
We’ve seen that the region’s great strengths are embedded in its culture: an openness to new ideas, taking risks and learning from mistakes, a willingness to share information and expertise, a highly skilled workforce connected through deep networks, and a wealth of capital to fund promising innovations. The Valley is also becoming a leading hub for all kinds of tech, not just high-tech. From biotech to fintech, Silicon Valley is expanding its expertise and network, furthering the opportunity for cross-collaboration and teamwork with the world’s best talent.
But the Valley’s success also has unintended consequences: a high cost of living, income inequality, transportation and housing challenges, diversity issues, fraud, and greed. Other regions seeking to emulate the Valley could learn from both its successes and failures to craft incentives as well as checks and controls.
While the Valley may be under intense scrutiny as it tries to make sense of its creations and their profound impact on the world, the essence of the Silicon Valley state of mind has remained straight and true. It is the optimistic hope that the region can, and will, help to build a better tomorrow.
