Distributed Valley, Maybe

In the last ten years, the relationship between innovation and geographical space changed fundamentally. Or at least we thought it had.

Macro technology trends seem to favor innovation moving away from Silicon Valley as its concentrated center:

• More and higher bandwidth networked connections enable the creators and consumers of innovation to be geographically distributed. We can now build an app together over Github and Skype, and then distribute that app in India.
• It’s easier to ship an incremental innovation both at the top of stack (build an app, not a networked camera) and at the bottom of the stack (enabled by supply chain artifacts that are Designed in California but Built in China.)
• Digital knowledge platforms (blogs, Quora, and Twitter) have Silicon Valley norms and traditional publishing (tv shows, magazine profiles, etc.) are taking this culture global

And Silicon Valley seems to be doing its best to limit innovation at home, creating large and important barriers:

• Immigration policy that limits talented people from staying in the Bay Area
• Housing affordability crisis that makes the Bay Area both a more difficult and less interesting place to live

Simultaneously, a new set of collaboration tools that work for everyone but are de facto remote-friendly are taking off. These include Google Docs/Quip, Slack, Github and more, all of which encourage the digital representation of conversation. A cultural shift is being paired with the popularity of these new tools, including everything from 37Signals’ book Remote, to WeWork to Roam and Teleport. We have not yet solved the “collaborative whiteboard problem,” but virtual reality is likely the answer.

And yet… despite the technology, cultural, and policy trends, Silicon Valley remains the software capital of the world. There doesn’t seem to be a reason that Uber, Whatsapp, Instagram or Youtube needed to be started in the Valley; and yet all of them were.

Some potential arguments for the accumulated advantage of Silicon Valley:

• Talent.Not just software production talent; the marketer who was the 100th hire at Facebook will be extraordinary founder or employee number 3.
• Capital. Smart capital that understands how to partner with founders and how to empower great teams to get their best work done.
• Culture. Supporting shorter job stints that reduce job-switch risk, and spread best practices. Defense of silly ideas, with the knowledge that most great ideas look silly at some point.

The last ten years of global technology have been shaped by companies built in the Valley. The trends seem to suggest the next ten years will be shaped elsewhere, and yet we could have said the same five years ago.

We are now exiting Silicon Valley’s fourth wave. There was the silicon chip, the personal computer, the web, and most recently, the smartphone. Will Silicon Valley be the center of the fifth wave? What will be the fifth wave’s magnitude and distribution?

Does Silicon Valley, or even concentrated geography, have a monopoly on innovation? Will there be more Silicon Valleys in China and India, or Virtual Valleys convened on digital forums? The next Silicon Valley may just be Palo Alto.