It’s not Silicon Valley Anymore

(And it hasn’t been for awhile)

One of the things I’m most thankful to my parents for* is growing-up in Silicon Valley. To me, that means “a place where starting your own business wasn’t mythology, it was what the neighbors did.” When I started my first company with friends, back in 1989, in my last week at TheUnderstandingBusiness, co-workers would approach me concerned for my future: “how are you going to make a living, pay rent, etc.?” I remember being a bit bewildered, thinking “what’s the big deal, I’m just starting my own business.”

That’s when I realized that I grew-up differently than most people. I’m not saying that entrepreneurship is for everyone but it’s distinctly less scary when you’ve seen others do it and watched them succeed and fail. The culture of the Valley back then was different, too. It was a privilege to be directly exposed to this culture when it was worth being exposed to—and for what I chose to do later in life.

I remember the fruit-drying racks throughout Cupertino—you could see them from 280 South as you rounded the corner ahead of the Foothill Expressway exit. I remember the actual cherry orchards behind what it is now only the Olsen Family Cherry Stand in Sunnyvale. I remember nearly everyone that came into our home (and had political discussions) describe themselves as “economically conservative and socially liberal”). I saw the result of a culture that didn’t penalize honest failure. My own father owned his own construction business and I saw the exalted highs and the agonizing lows. I lived those along with the rest of my family. I know about working nights, weekends, and summers in the family business, making less than everyone else and working harder to prove that I was actually pulling my weight. “The Valley” wasn’t a perfect place or time but it was a hopeful one—an aspiration one—and it wasn’t based on optimizing money over quality of life, freedom, or equality. All of that seems so distant, now, and not just because of the building boom. The entire SF Bay Area is more like a different planet, now—and a different era.

Today, when journalists and commentators decree “the Valley” and all of it’s problems, I bristle a bit because I don’t think they see the Valley at all. Or, maybe they do but it doesn’t reflect the previous culture that was responsible for building that name’s value and status.

Silicon Valley, today, truly is more like the television show Silicon Valley than the real place I grew-up in. When I walk down California Avenue or University Avenue, it feels more like I’m on the set of the show than in the actual place. And, what’s changed aren’t the property prices or the Teslas. The culture has been transformed from one of aspirational change to one of aspirational wealth. I’m not going to say that people weren't interested in making money or even being rich in the past but those weren't the driving values of past Silicon Valley. They may have been some of the outcomes, but they weren’t the goals.

I’m going to go out on a limb here with a controversial statement that is going to sound a little xenophobic but what changed everything was that the Valley’s culture was infected with East Coast culture. There, I said it. Now, let me explain.

In 1995, directly after Netscape’s eye-popping IPO, there began an exodus of people flowing into the Valley (and, fairly enough, from all over, not only from the East Coast). Before this, tech culture really wasn’t about making a “killing” in the stock market. Tech culture was focused on making new things and doing things differently. For sure, making money was always a measure of success but it wasn’t the goal for most. Along the way, it became one of the most open, accepting, and supportive places to work and create in the world. Want to wear dresses to work as a male engineer? Go for it! Want to work naked? Let’s figure-out how to make that work, too. Want to be openly gay or lesbian? Not an issue. You’re not white? Why would that be an issue, either? This was more than tolerance for diversity, it was appreciation—even desire—for it.

I don’t want to erase the problems. For sure, there was sexism, racism, sexual harassment (going both directions), etc. But, these didn’t reflect nor did they define the dominant culture. They were rare and isolated. There were even more women in actual tech positions than in tech today.

Before Netscape, people who found themselves in the “multimedia” industry (which included the nascent Internet media) were drawn by the possibilities to create new things that didn’t exist before— things that would change society for the better. As idealistic (and, perhaps, naive) as this sounds, it really was true. No one in multimedia thought they would become millionaires, let alone billionaires. We were going to disintermediate industries, help people create and express themselves in new ways, connect people across geographic and cultural distances, and maybe even make industry a little more fun and fair.

Journalists would regularly come to our office to see what the mystique was all about but they almost always focused on the wrong things—people in shorts! dogs in the office! casual attire everyday! no cubicles or offices! Foosball! In! The! Office! What they consistently missed (and, really, weren't interested in even when explained) was how we hired differently, how we worked collaboratively in teams (this was the beginning of team scrums), how we integrated processes across business, engineering, and design (and other) disciplines, how we created a different working culture, flattened hierarchies, and prioritized more than just profit. In short, how we tried to do the “right thing” whenever we could. Different companies approached these differently but none of this was coming from an optimization mentality—which is to say a traditional business mentality.

After Netscape, that all began to change. The Finance industry (and like-minded others) saw sudden dollar signs—and lots of them. It looked like easy money and, relatively, it probably was. The grand exodus began, not only of engineers and other workers but of “money people”—investors and leaders whose chief priority was optimizing the money that could be squeezed-out of a venture. There were venture capitalists before, but now came the real money and the tactics to game the systems.

If I had to pick one word to define this culture, it would be optimization. “Money people” tend to be optimizers Hell-bent on maximizing returns despite any non-numerical factors (like happiness, fairness, or culture). I almost used the word “equity” there for that second factor but that, of course, means something very different to these people.

Silicon Valley wasn’t the only place that traditional business culture infected tech culture. Like it did to manufacturing culture in the 60s and 70s, Wall Street culture flowed into Seattle, Dallas, Houston, Los Angeles, and ultimately Atlanta and every other boomtown of the 80s and beyond. Replacing the idea that we could build value by building new things, now the MBAs would apply what they learned about management from textbooks and lectures to optimize every department and division, squeezing the humanity out of each in order to manage by spreadsheet and balance sheet. Everything became either an expense or profit and anything that stood in the way of profit was to be eliminated whether it was “right” or not. It’s what killed the US automobile industry as well as business culture in the US, overall.

Now, it dictated organizational management such that wonder and exploration were no longer desired nor tolerated. It took a decade but all of the corporate innovation labs, like Xerox PARC, where the technologies that these industries and the world are still reaping the benefits of today were created. They’re all now realistically gone, too: victims of the same optimizer mentality.

That openness within the industry has now dissipated and everyone is afraid to talk to their colleagues at other companies. The reality of the multimedia and Internet industries is that if engineers, designers, and managers didn’t talk to each other about their projects and approaches, none of it would have happened. While “management” might have been tight-lipped and competitive, everyone else in these industries regularly consulted each other in order to find and build solutions. “Have you built a content management system before?” “How did you approach this technology?” “What tool did you use to build this?” If ever there were an example of cooperation leading to great value creation, it was the tech industry of the 90s. We all competed but we mostly all cooperated, too. In fact, the lesson we learn from Nature and evolution is that cooperation at lower levels is what allows competition at higher levels. If you don’t believe that, you’re missing the fact that you can travel anywhere in North America or anywhere within Europe with only one type of power plug.

Quantitative Culture has been the Infectious Transplant to the West Coast

I’m not sure whether to call it “business culture” since there was definitely business before this culture developed. Perhaps, it should be called “finance culture” since it’s been at its most virile in that industry. Really, to be accurate, it should probably be called “quantitative culture:” since that’s all that’s really valued in it. To be clear, this culture isn’t about paying attention to numerical data. That’s just plain smart. What makes this culture so pernicious is that quantitative data is the only data considered worthy of attention and decision-making. It’s the only thing that’s considered real within it and that’s a big problem. Not only is qualitative data real data, it’s the most valuable.

Every year, at Apple’s annual stockholders meeting, some activist investor gets-up to question Apple’s expenditures on renewable energy and subsidized lunches (food isn’t free at Apple). That’s because these short-sided investors only see money as the important thing to build Apple’s business. They’re the ones that took-down the US automotive industry, thinking that reducing quality and skimping on everything in order to maximize profits wouldn’t have an effect on brands, customer relationships and preference, and (ultimately), the bottom line (and shareholder value).

This is the thinking that has come to Silicon Valley. If you don’t believe me, just look-up where the “titans” of the Valley’s most influential companies and investment firms came from. And, the infection isn’t just in the Valley. This thinking has infected Amazon and Microsoft, too, and isn’t anymore native to Seattle than San Jose. This thinking was imported from businesses and business schools on the East Coast and elsewhere.

I suppose, though, that it doesn’t really matter. It’s here. The infection has spread and despite the Bay Area’s rampant sustainability and social justice culture, it’s still here—and growing. Like other invasive species to our ecosystem, it needs to be pulled-up from its roots and eradicated and that’s going to be a difficult, painful, but ultimately gratifying process.

How do we do this? We need to teach “business” in completely new ways. I worked on that for 10 years and there are absolutely successful, existing, and satisfying ways to do so. We need to eradicate 70 years of business myths and teach both realities and alternatives to those who would work in any capacity—for-profits, non-profits, and government agencies. This can’t be done by adding Ethics classes into business school. First, it’s not just business majors that need to understand these realities. It’s everyone, from designers to engineers to activists to policy wonks. Second, you can’t augment problematic ideas throughout a curriculum by adding one course that seeks to fix them all. You need to fix them in every course. Teaching ethics requires teaching it in every subject—finance, operations, communications, accounting, etc.

It’s not different with sustainability. At most top business schools, you can take an optional “sustainable supply chain” course, either instead of or in addition to the required operations course. If your school offers this, run for the hills. What most chairs and provosts miss is that it’s a clear admission that what they’re teaching in standard courses is unsustainable operations—and why the Hell are they doing that? (The answer, of course, is laziness, or lack of courage, or both.)

The optimizer/quantitative culture needs to be countered in a thousand ways from a thousand points—in schools, in businesses and other organizations and, yes, in regulations. Leveling the playing field for companies behaving well and rewarding them vs. the companies that don’t is exactly the role of government (and always has been). There’s no better place to do that than right here in the SF Bay Area though, to be sure, there are other places where this is happening and many more where it needs to.

This is where B-corps began and became law first. It’s where many companies already seek to improve themselves in so many ways (though, not enough). Whether you’re in Boston, New York City, Atlanta, Athens, Birmingham, or Tulsa, that’s a great place to reset this culture and there are plenty of examples to follow. But, we need to turn-off FOX News, ignore Rush, Jamie Dimon, and (sadly) the entire GOP.

Internationally, Europe is way ahead of the US in this regard and their societies benefit because of it. But, the solution in the USA is going to, necessarily, look different. Still, we can learn from our colleagues. What we see happening in Singapore and Vietnam, too, are examples of how we might challenge traditional business assumptions and practices and reinvent what we once had, here. It will take investments in time and thought but not that much money. We need to rethink how and who we invest in. We’ll need new roles and metrics, including the understanding that no metrics will ever accurately account for everything we should care about—that just takes conviction. We have a lot of inventing to do: new tools, processes, and understandings.

Yet, strangely, all of this change really gets us back to where we mostly were, not some strange place we’ve never been.

*The other things I’m most thankful to my parents for are: growing-up with art in the house and artists as family friends and growing-up attending top-notch public schools (we moved specifically for the school districts) as well as support for learning of all types, at home.

Nathan is a serial entrepreneur, including the new SEED digital currency: &

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