Why Silicon Valley Is the Next Detroit

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Image copyright Suzanne Tucker

All good things must come to an end, including Motown and many a once-noble region or hamlet. So I have history on my side when I lob the following grenade: Silicon Valley will take its turn someday, falling from the heights it has attained.

I make this assertion because if we look closely, we can already see what will cause the decline of Silicon Valley. In fact, the valley’s residents are consciously planting the seeds of the valley’s own demise. What’s more, I believe many of them will celebrate when the valley is no longer on top.

My cheery assessment depends on this sleight of words: Decline is relative, and the decline that Silicon Valley faces will be less like watching Hewlett-Packard slip into irrelevance and more like proudly standing to one side as the rest of the world — eventually even the less-developed world — catches up to it. Thus, the “decline” I claim the valley seeks and will eventually succumb to is a most desirable decline, indeed.

Digital disruption — a force that Silicon Valley gestated and nursed from its earliest days — is now global. Digital devices, the networks that connect them, and the software tools that prod human beings to hanker for more of all these things will soon be everywhere. The long-term effect of rising digital disruption will be to redistribute the benefits of the future across the planet even as it continues to improve the already futuristic valley that started it all. What does Silicon Valley have today that other places will eventually enjoy as well? Access to three things the valley currently has in spades:

  • Knowledge. With ubiquitous sensors in every device we own or location we frequent, we will soon collect in a single day far more information than we could have stored in all the hard disks manufactured prior to 2000. But that information is meaningless if we can’t render it into knowledge, which granted the smart people of Silicon Valley an early edge that they are now giving away for free. Analytics available to even the lowest YouTube channel producer now rival the most sophisticated reports CBS, NBC and ABC had available in the 1980s. Apply even better analytical engines to the data from Fitbit pedometers, Google Glass and the myriad of sensors that will listen to the stress in our voices or identify behaviors that undermine our health, and you’ve got an unprecedented depth and breadth of knowledge available soon to anyone, anywhere.
  • Tools. Knowing something is nice, but being able to act on that knowledge is even better. Digital disruption depends on the distribution of tools — most of them free or nearly free — that equip anyone who wants to use knowledge to initiate and test a new concept. Kickstarter and its peers provide this opportunity for thousands of people who want to test their ideas; Amazon can make anyone a merchant partner, an affiliate, or an author, all for no cost; and the Square card reader just helped local merchants sell $800,000 worth of goods and services around the Super Bowl on game day in New Orleans.
  • Capital. It’s not that there’s money going around. But thanks to the knowledge and digital tools available to you, you need a whole lot less of it to bring your idea to fruition. I recently spoke to Charles Teague, CEO of FitNow, the company behind the wildly successful LoseIt! calorie- and weight-tracking app. A veteran of the startup business from the earliest days at Allaire, Charles described for me with a slight tone of disbelief in his own words how cheaply he can launch and manage a company today compared to even ten years ago. This is partly because the tools are cheaper — you can open your Amazon Web Services account with a credit card — but also because much of the value digital disruptors deliver today comes through software. And as a successful entrepreneur who had sold his company to Qualcomm told me last year, “It’s just software; I can do anything in software for $40,000.”

People fond of wine and cheese will argue that there’s more to valley life than just these three things. That’s certainly true, but when you have more knowledge, tools and capital, some of the other things the valley prizes become common elsewhere as well. A culture of achievement, for example. As only people who have lived in a subculture that keeps them down know, the valley is a unique place where even surfers think they can be the next startup billionaires, leading to the creation of a company like GoPro.

It’s presumptuous of me to suggest that all valley residents will be so happy to be dethroned, even if the decline is only relative to the rise of the rest of the world. Venture capitalists, lawyers and politicians will feel the relative decline the most because their services have long been offered under the presumption that the value they provide is scarce, an assumption that’s now patently false. Other valley residents will be pleased, at least if Jeff Hammerbacher, Chief Scientist at Cloudera, is any indication. As he told me in an interview for my new book, “Digital Disruption,” “I don’t subscribe to the ‘great man’ theory of the world. I’d much rather create fertile soil for other innovators to plant their seeds in than just water my own tree. “

He actually talks like that. And that’s what makes him and many others like him the planters of the same seeds that will sow the relative decline of Silicon Valley by lifting everybody else up to join it. Even — perhaps especially — Detroit, home of over 250 Kickstarter projects.

James McQuivey is the author of “Digital Disruption: Unleashing the Next Wave of Innovation.” He is a vice president and principal analyst at Forrester Research and the leading analyst tracking the development of digital disruption.


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