A History of Silicon Valley

Table of Contents | Timeline of Silicon Valley | A photographic tour
History pages | Editor | Correspondence
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These are excerpts from Piero Scaruffi's book
"A History of Silicon Valley"


(Copyright © 2016 Piero Scaruffi)

The Selfies (2011-16)

The Saga of Apple

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The Age of the Smartphone App

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Gaming

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Virtual and Augmented Reality

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Wearable Computing

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Ubiquitous Computing

The 2000s were bringing back the hardware. The biggest revolution of the 2000s may not have been the Internet (which has been hijacked by the likes of Google and Facebook to become an advertising platform) but the sensor revolution. Thanks to progress in micro-electronics, batteries and wireless connectivity, sensors had become orders of magnitude cheaper and thickly networked. Sensors were opening virtually infinite horizons to a new generation of applications. Wearable computing, self-driving cars, embedded nanotechnology, robots and so forth were the "real thing". By comparison, social media were simply entertainment, that are replacing late-night clubs and bars. There was a reason that they were called "social" and not "industrial"...

Bendable Gadgets

The flat panel display was slowly being replaced by the flexible display. In 1974 Xerox PARC had invented the "electronic paper": Nicholas Sheridon produced the "Gyricon", the first flexible e-paper display. But real progress began only after the introduction of the organic light-emitting diode (OLED), invented in 1987 by Hong Kong-born Ching Tang at Eastman Kodak. In 2006 Philips had introduced the first rollable display, and in 2008 Nokia had demonstrated a flexible OLED display for mobile phones (the Morph). Also in 2008 German-based Plastic Logic (founded in 2000 by Henning Sirringhaus at Cambridge University to make plastic electronics) had announced a bendable display, although it was never released. In 2010 Japan's Sony had demonstrated a rollable OLED display. After so many promises, the bendable display became a reality in 2013 when South Korea's Samsung first demonstrated an AMOLED bendable color screen and then introduced the world's first mobile phone with flexible display, the Galaxy Round. Also in 2013 Intel, Plastic Logic and Queen's University in Canada built the tablet computer PaperTab with a plastic flexible display. In 2016 South Korea's LG demonstrated an OLED bendable color screen that could be rolled up like a piece of paper, and Polyera, founded by Phil Inagaki in 2005 at Princeton University to develop flexible transistors, introduced the Wove bendable smartwatch.

3D Printing

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Big Data

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Beyond the Cloud

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Biotech

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Neurotech

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The Sharing Economy

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Space Exploration

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From Productivity Tools to Entertainment Tools

One of the fundamental changes in the nature and spirit of Silicon Valley was the transformation from a maker of productivity tools (integrated circuits, microprocessors, personal computers, groupware, database management systems, search engines) to a maker of entertainment platforms (mainly videogames and social media).

Silicon Valley from the 1950s to the 1990s was one of the technological centers that contributed to a rapid and significant increase in industrial productivity. Its customers were the big industrial centers of the world, not only households. There was a direct chain of transmission from the innovation in Silicon Valley to the innovation at the assembly line or in millions of offices.

In the 2010s Silicon Valley innovation (at least the commercially successful one) was mainly in videogames and social media. The impact on productivity of a new Facebook timeline or of a new Zinga game was obviously not as big as the impact that the first microprocessors or the first relational databases or the first personal computers had. After all, the dotcom revolution had failed when it had tried to make money out of productivity tools sold to the usual customers (the industrial and financial powerhouses). The dotcom startups succeeded when they started targeting the spare time of ordinary people and started making money out of advertising products to those masses. The gigantic creation of wealth in Silicon Valley during the 2000s had little to do with increasing productivity.

Among the new social-networking platforms, NextDoor, launched in 2011 in San Francisco by Sarah Leary, Nirav Tolia, Prakash Janakiraman and David Wiesen was a social network for neighborhoods that required users to verify their physical address.

Web-based videoconference was now mature enough. The main players were Skype, Google Hangouts (launched in 2013), Webex (acquired by Cisco in 2007, an evolution of Min Zhu's ActiveTouch of 1997 that was an evolution of his previous Future Labs document-collaboration software launched in 1991), and Zoom, a Webex spinoff started in 2011 in San Jose by a former Cisco executive, Eric Yuan.


Internet of Things

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Wireless Power Transmission

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E-shopping

The world of online shopping had not changed much in the early 2010s after Amazon, eBay and PayPal had introduced the de-facto standards, and after Google and Yahoo had invented modern advertising. However, startups tried to find the weakest link in the chain. Blippar, launched in 2012 in London by Omar Tayeb and Ambarish Mitra offered an advertising platform that mixed image recognition and visual browsing. The user could simply scan an object to view information about that object.

Magic, an SMS-based assistant launched in 2015 by Mike Chen in Mountain View, delivered goods to people, thanks to an army of operators available 24 hours a day, seven days a week. This was the kind of "online-to-offline" (O2O) that was big in China. A similar product came out of Germany: GoButler, launched in 2015 by ex-Rocket Internet executives including Navid Hadzaad (Rocket Internet being a startup incubator founded in 2007 in Germany by Marc, Oliver and Alexander Samwer specializing in clones of US-based e-commerce success stories).

Instacart, founded in 2012 in San Francisico by Apoorva Mehta, Brandon Leonardo and Max Mullen, aimed for same-day grocery delivery.

Mobile payment still had not found its king. The region where it had spread first was actually Africa, where Kenya's Safaricom had introduced M-Pesa in 2007. The country were mobile payment was rapidly becoming commonplace was China, thanks to Alipay, launched by Alibaba in 2004 to allow purchases from its own Taobao marketplace, that boomed in 2009, and then expanded to allow any purchase from any online or brick-and-mortar business. In 2007 Kevin Hartz and Alan Braverman launched Xoom in San Francisco to provide an online platform for money transfers that, unlike the traditional bank services, could make funds available immediately at the other end, anywhere in the world (initially Latin America). PayPal acquired it in 2015 (when Hartz had already left in order to found the ticket-management service Eventbrite in 2006 with his wife Julia). At the time of the acquisition Xoom was really just a replacement for the services traditionally offered by the likes of Western Union and MoneyGram (typically for remittances to developing countries such as India and Mexico). Flint, founded by Greg Goldfarb and Andrew Laszlo in 2011 in Redwood City, competed directly with Square, offering a similar credit-card payment for merchants but requiring no additional hardware because it used the mobile device's camera to scan credit cards. Paypal's mobile payment platform was Beacon, introduced in 2013, a Bluetooth-based technology that detected Beacon-enabled smartphones when customers entered a Beacon-enabled store and then automated the purchase of merchandise. Credit card giants Visa and American Express, however, sided with Stripe, founded as Slashdevslashpayments in 2010 in San Francisco by Patrick and John Collison to provide a similar platform for online and mobile payments. Apple's iBeacon (2013) was similar to Paypal's Beacon in that it used Bluetooth technology to alert devices of the presence of fellow iBeacon devices. The company then introduced Apple Pay (2014), claiming to make online payments as secure as in-store payments. The digital wallet was incorporated directly into the operating system and the smartphone included a SIM-independent secure memory chip, an NFC radio, and a fingerprint reader (the digital wallet was "physical" again). Clinkle, founded by Stanford student Lucas Duplan, launched in 2014, promising compatibility with every merchant and phone-to-phone payments.

With the proliferation of online merchants, there arose a need for simplifying the online shopping experience. For example, Wish.com launched in San Francisco by ContextLogic, a company founded in 2010 by former Google engineer Peter Szulczewski and by former Yahoo engineer Danny Zhang, was a mobile commerce platform that aimed at replicating online the shopping experience of the shopping mall.

Music streaming was still one of the biggest online businesses. In 2014 Apple bought the music streaming service just launched by Beats (the company founded by hip-hop musician Dr Dre) and in 2015 turned it into its own Spotify-like service to offset the decline in the popularity of iTunes. People, basically, were rather renting than buying music, just like they did with videos.


Bitcoin

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Fintech

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The Micro-startup

When in 2015 Microsoft acquired LiveLoop (Powerpoint groupware), Sunrise (calendar app for iPhone) and Accompli (mobile email), it added exactly 42 people to its workforce. Twitter added a grand total of 13 people from acquiring Vine (video sharing) in 2012 and Periscope (video streaming) in 2015. Facebook added 16 from acquiring Instagram in 2012 and Luma (video sharing) in 2013. Google's acquisitions in 2015 of Odysee (photo sharing) and Tilt Brush (painting in virtual reality), among others, hardly changed its headcount. One can go back to 2005, when Google acquired a nine-people startup, Android, that went on to dominate the smartphone market. By comparison YouTube, that Google acquired in 2006 when it already had 65 employees, looks like a ridiculously large deal. The moment something goes viral on the Internet there is a big corporations ready to buy it; but sometimes this happens even before that something has had a chance to go viral; in fact Twitter acquired both Periscope and Vine before they launched. (Vine had just been founded in New York two months earlier by Dom Hofmann, Rus Yusupov, and Colin Kroll) What the corporations are looking for is simple: talent. Google, Twitter, Facebook and Microsoft were founded by talented people and remember how important talent was when they started. They were neither the first in their field nor possibly the best, but they had the talent to succeed where others did not. Silicon Valley attributes this attitude to Google's acquisition of 45-people Applied Semantics in 2003, the deal that coined the term "acqui-hire": that team went on to develop AdSense, a major source of revenues for Google. Seattle, on the other hand, may claim that Microsoft pioneered this model when it acquired Groove in 2005: Microsoft never did much with Groove's peer-to-peer collaboration software, but Groove's founder Ray Ozzie eventually replaced Bill Gates as Microsoft's chief software architect. In other words, Microsoft had acquired Ozzie's talent, not Groove's product. (Silicon Valley can, however, respond that Microsoft acquired Danger and did nothing with it, whereas Google acquired Danger's founder Andy Rubin and its Android technology, and for a much cheaper price than Microsoft paid for Danger).

Exponential Organizations

A new buzzword was created in 2014 when Salim Ismail, a founding director of Singularity University, co-wrote with Michael Malone and Yuri van Geest "Exponential Organizations" (2014): 3D printing had gotten 400 times cheaper over just 7 years, industrial robots got 23 times cheaper over 5 years, drones got 143-times cheaper in 4 years, and sequencing the human genome got 10,000-times cheaper in 7 years.

Semiconductors

In the age of the smartphone app people almost forgot why this region was called "Silicon" Valley. However, the semiconductor industry was still very much at the core of the valley, except that a process of consolidation was rapidly changing its shape. In 2015 Intel acquired Altera (specialized in semiconductors for communications), its biggest-ever acquisition, one year after buying LSI's networking business from Avago; and in 2015 Avago (that had been founded in 2005 over the ruins of a 44-years-old division of Hewlett-Packard and Agilent Technologies) acquired Broadcomm, besides CyOptics and Javelin (meanwhile it had acquired LSI and then sold LSI's networking business to Intel).

By then the hardware industry had embraced the multi-core chip, the only way to keep Moore's Law working. Intel's Xeon Haswell-EP of 2015 boasted 5.5 billion transistors but thanks to 18 cores. The cost per transistor had actually been rising since the Taiwan Semiconductor Manufacturing Company (TSMC) had introduced its 28-nanometer chips in 2011. In fact, in 2012 Intel started using a different kind of transistor, the "tri-gate" transistor. The rest of the world called it "FinFet" transistor. Chenming Hu had invented them at UC Berkeley in 1998, and one of his students, Yang-Kyu Choi, had founded the Nanotech lab at the Korea Advanced Institute of Science and Technology (KAIST) that was setting one record after the other in FinFet technology. In 2014 Intel started shipping the 14nm Skylake processor (400,000 times more powerful than the Intel 4004), but in 2015 Intel announced that its 10nm Cannonlake processor would be delayed to 2017. The "nanometer" scale (the separation of the transistors on the chip) was becoming impractical. The first microprocessor, the Intel 4004, had contained 2,300 transistors spaced by 10,000nm gaps. It was just getting too difficult and too expensive to operate at that scale. A Skylake transistor was made of about 100 atoms. With the same technology a 2nm transistor would be just 10 atoms wide. This was technically feasible (in fact, Yang-Kyu Choi's team at the KAIST had already built a 3nm FinFET in 2006), but extremely expensive. The cost of building a factory for microprocessors was already in the billions of dollars. In fact, in 2016 Intel's vicepresident Bill Holt openly admitted that Intel was not planning to use silicon below the 7nm threshold. Then Silicon Valley would stop being "silicon".

Consumer electronics was putting pressure on the memory industry. In particular, the price gap between hard-disk drives and solid-state drives (used mainly for NAND flash memory) kept shrinking. In 2013 Samsung announced a three-dimensional Vertical NAND (or 3D V-NAND) flash memory. In 2014 SanDisk and Toshiba opened a fabrication plant specialized in 3D VNAND in Japan, whose first product, released in 2015, was a flash chip that doubled the capacity of the densest memory chips. In 2015 Samsung unveiled the world's largest storage device, a 16-terabyte 3D NAND solid-state memory; while Intel teamed up with Micron to introduce its 3D-memory chip. 3D memory represented the first new class of memory in a quarter century. Micron and Intel joined forces to manufacture NAND flash memories back in 2005, and in 2010 Micron had acquired Swiss-Italian flash-memory maker Numonyx from Intel.


The Investment Bubble of 2013

A staggering 88 of the 100 largest venture capital rounds of all times took place between 2007 and 2014. A huge amount of money was flowing towards Silicon Valley, largely attracted by stellar evaluation for high-tech startups. In 2014 Airbnb set a new record raising $500 million, while the even younger Lyft  raised $200 million. On the East Coast, a seven-year old Dropbox raised $250 million. Silicon Valley, in fact, had not started this trend: in Texas at the end of 2008, in the middle of the worst economic recession since the Great Depression, the small HomeAway had raised $250 million. The traditional venture capital firm was increasingly joined by the hedge funds, the mutual funds and private equity firms. This phenomenon was allowing startups longer incubation periods, but it was also viewed by many as an alarm bell that a new bubble was about to burst.

This was the era of the "unicorns," or billion-dollar start-ups: Square, Stripe, Airbnb, Pinterest, Uber, Dropbox, Snapchat, Palantir, GoPro, Slack, Cloudera, Eventbrite, electronic notebook Evernote (founded by Stepan Pachikov in 2008 in Sunnyvale), Stemcentrx (a biotech company founded in 2008 in South San Francisco by Stanford scientist Scott Dylla and investment banker Brian Slingerland to treat cancer under the assumption that cancer is caused by a small population of stem cells) enterprise social media platform Sprinklr (founded in 2009 in New York by Ragy Thomas), discount shopping site Jet, founded by Marc Lore, who had sold his e-commerce company Quidsi to Amazon in 2010; etc. Most of these startups generated no cash flow, i.e. were losing money. In 2015 WhatsApp hit the one-billion user mark, but it still didn't know how to make money out of them. At the beginning of 2016 Magic Leap was valued at $4.5 billions without even having demonstrated its product. By 2015 there were 144 unicorns with a total value of $505 billion. Utah, the state with the fastest economic growth in 2014-15, had 4 unicorns (Domo. Pluralsight, Qualtrics and InsideSales).

The unicorns were also emblematic of the decline of the Initial Public Offering (IPO). Apple had gone public in 1980 with a market valuation of $1.8 billion, Microsoft was worth less than a billion dollars at its 1986 IPO, Netscape had gone public in 1995 when it was worth $2 billion, but Twitter waited until it was worth about $25 billion and Facebook until it was worth more than $100 billion. And now many of the unicorns showed no intention of going public. Part of the reason was bureaucratic. The government had reacted to the Enron scandal, revealed in October 2001, with the Sarbanes-Oxley legislation, but that legislation, meant to protect investors and consumers, ended up being a gigantic tax on small businesses because it requires fleets of lawyers and accountants. To protect smaller investors from discrimination, the government had enacted the Regulation Fair Disclosure legislation of 2000. This mandated that all publicly traded companies should disclose information to all investors at the same time. Ironically, this made it difficult for small companies to counter hostile rumors that could devastate their stock values. Generally speaking, the regulatory system began to favor big corporations and discouraged startups from going public. Venture firms such as Marc Andreessen's explicitly stated that their goal was not to take companies public.

Until 2012 the government forced companies to go public when they reached 500 shareholders. In 2011 if a company had 500 employees and each one had been paid some shares in the company, that company was required to file for an IPO. In 2012 the government passed the JOBS Act that raised the number of maximum shareholders for a startup to 2,000. This number made a big difference in the age of the slim IT company (in 2015 a $16 billion colossus like Facebook had only 12,000 employees) because most unicorns had only 100 or 200 employees and 10 or 20 external investors.


Management for Delight

Silicon Valley had always pioneered new forms of management. Fairchild and Intel allowed engineers to behave in a more casual manner than their counterparts on the East Coast, and Xerox PARC made it even more casual. HP pioneered a family-style approach to management. And so forth.

At the beginning of the new century new experiments characterized the biggest success stories. Larry Page debuted as CEO of Google by fighting bureaucracy, to the point that eventually middle management was wiped out; but only to retract and re-hire all those supervisors. However, Larry Page had shifted the emphasis to hiring the right people, even if that meant slowing down the pace of growth, and that principle remained in place even when the hierarchy was reintroduced.

Twitter embraced the principle that "the purpose of hierarchy is to destroy bad bureaucracy" (credited to Chris Fry). So hierarchy is good but bureaucracy is bad. That became a recurring theme. Ask people to obey a boss and they will be happy to be followers; ask them to fill a form and they will quit. So much so that Adobe removed the yearly performance evaluation, one of the most common practices in the USA, and replaced it with a year-long feedback from the boss; basically "guidance" instead of "examination".

A lot of startups also realized that the DIY (do it yourself) model is not always productive and, alas, often alienates engineers, who would rather focus on what they do best. Hence the DIFM (do it for me) model, in which the engineer expects the structure to provide everything that is needed for engineers to focus on their tasks. Even the concept of the "job description" was not always clear. Facebook hired the best and then sent them to a six-week boot camp to figure out the best way for them to contribute to the organization. Slogan: "every job is temporary". Team work was always important in Silicon Valley, but this was the age when most companies, large and small, recognized Richard Hackman's rule of thumb that "no work team should have membership in the double digits". And Bob Sutton at Stanford admonished that "one deadbeat cuts team performance by 30-40%". Combine the two rules of thumb and you get the typical engineering team of the 2010s. As for customer relationships, Intuit's Stephen Gay spoke of "Design for Delight", create an organization that "evokes positive emotion throughout the customer's journey".

Unspoken but widespread was the rule that an organization must be able to steal from others, and morally and legally justify it, while at the same time making sure, on both moral and legal grounds, that others didn't steal from itself. The history of Silicon Valley had often been the history of how a "genius" stole an idea from someone else and turned it into a runaway success (semiconductors, personal computers, database management systems, social media). Terms like "traitors" and lawsuits settled out of court are as much part of the history as the more widely publicized products.


WeChat vs Everybody Else

The truth is that, despite the ridiculous valuations, the unicorns and the million startups, the Internet world (and the world of so-called "smart" devices in general) had never been so maddeningly complicated, with thousands of "smartphone apps" on dozens of different devices. The crisis was not felt in the USA, where competition was still viewed as beneficial to the investment community (certainly not to the user, who had to use myriad applications during an average day). The crisis was not felt in China either, but for a different reason: Weixin/Wechat had largely solved the problem in just a few years since its founding. Launched in 2011 by Tencent (that originally simply offered a copy of ICQ called QQ), within 5 years Wechat had learned how to combine messaging, voice calling, video conferencing, group chatting, Facebook, Twitter, Paypal, Dropbox, and more into one simple and fast app. The original chat/messaging system designed by Xiaolong Zhang had rapidly become a universal platform for all sorts of online needs. 700 million Chinese were using it, and they were spending on average 35% of their online time on it, with little or no distinction between work and private life. Wechat had turned into a smartphone feature almost every ordinary action. For example, exchanging business cards had been reduced to beaming a QR code from one smartphone to another one. In 2016 the cash-less economy was a reality in China, where even taxi drivers and humble family restaurants accepted payment with smartphones (both Tencent's Wechat and Alibaba's Alipay) when it was still a very confusing rarity in Silicon Valley. The smartphone was a frustrating experience in the USA, where the proliferation of apps, notifications and mandatory updates was rapidly becoming more of a distraction than an attraction; whereas in China the smartphone had indeed become an indispensable limb of the body.

Electric Vehicles

Elon Musk gained control of Tesla in 2008 and Tesla's Roadster (first unveiled in 2006) completely changed the game of electric vehicles. In 2012 Tesla introduced a more affordable model, the Model S, equipped with a 100 kwh battery pack, while deploying charging stations all over the country; but Tesla's Model 3, theoretically a low-end electric car, faced the fierce competition of established car manufacturers, notably the Chevrolet Bolt EV (introduced in 2017). Two Los Angeles-based startups tried to compete with Tesla: Fisker Automotive, founded in 2007 by Henrik Fisker, and Faraday Future, founded in 2014 by Chinese billionaire Yueting Jia. Neither succeeded, but several startups rose from their ashes: Evelozcity, founded in 2017 by former Faraday Future and BMW executives), Independent Electric Vehicles (led by Faraday Future's designer Steve Osorio), Karma Automotive, founded in 2015 by ex Fisker executives and owned by Chinese conglomerate Wanxiang Group), etc. There was also at least one spinoff from Tesla: Lucid Motors, founded in 2007 as Atieva in Newark to make batteries but renamed Lucid in 2017 after adding Tesla's vice president Peter Rawlinson, the chief engineer behind Tesla's Model S. SF Motors founded in 2016 by John Zhang (son of the owner of Sokon in China) designed and manufactured its own batteries with technology developed by Martin Eberhard, its chief scientist and Tesla's real founder. Electric vehicle startups raised $650 million in 2017, and several times more in 2018. Among them were Zoox, founded in 2014 by Tim Kentley-Klay, which became a unicorn worth $1.5 billion in 2017; and Nuro.ai, founded in 2016, by two former Google engineers, Jiajun Zhu and Dave Ferguson.

QuantumScape, founded in 2010 in San Jose by Jagdeep Singh and backed by Volkswagen, licensed technology from Stanford for solid-state batteries that replaced the liquid electrolyte of conventional lithium-ion batteries with a solid material, batteries capable of storing more energy and, more importantly, not dependent on cobalt, a very expensive material.

In September 2018 San Francisco held the Global Climate Action Summit at the time when Washington was ruled by climate-terrorist Donald Trump.


Culture and Society

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The Empire Continued

The influence of Silicon Valley over the rest of world was increasing, as was increasing the gap between Silicon Valley and any other region of the world. Gone were the days when Europeans looked down on Silicon Valley as a childish and doomed experiment. Gone were the days when Boston thought it could compete easily with those eccentrics of the Far West. By 2015 the Bay Area dwarfed any other region of the world for technology and science. The top most valued companies in the world (by market evaluation) were in the Bay Area: Alphabet/Google and Apple. The Bay Area boasted the number-one companies in social media (Facebook), semiconductors (Intel) and business software (Oracle). If it declared independence, the Bay Area alone (not the whole of California) would rank 22nd in the world for GDP and third in GDP per capita. The San Francisco Bay Area would rank fifth behind the USA, Britain, Germany and France in Nobel Prize winners. In 2016 Forbes compiled a ranking of cities based on the combined net worth of their billionaires. Palo Alto came out 7th and San Francisco 10th. The other cities all had more than 8 million people. San Francisco didn't even have one million, and Palo Alto was a tiny town of only 50,000 people. In 2016 the MIT Technology Review compiled a list of the 50 most innovative companies in the world: in the top 25 there were 5 from China, 2 from Europe, 1 from Japan and 9 from the Bay Area (more in the Bay Area than in all other continents combined). In 2016 the MIT Technology Review published the list of the 50 most innovative companies in the world. In the top 25 there were 5 from China, 2 from Europe, 1 from Japan, and... 9 from the tiny Bay Area.

Russian president Vladimir Putin was widely considered to be behind the persecution (and sometimes murder) of dissident journalists in Russia. No other region of the USA was applying the "Putin doctrine" more diligently and fervently than Silicon Valley. Its billionaires had little patience for journalists analyzing their lifestyle and their speculative investments, especially when those reports revealed paranoid personalities and dubious business practices, if not outright scams. In 2016 Paypal's cofounder Peter Thiel admitted that he had spent 10 years secretly financing a lawsuit against Gawker Media, a media company guilty of exposing his homosexuality in 2007. Gawker filed bankruptcy in 2016, sending a chill through the media world: Thiel had just warned the entire industry of the financial risk displeasing a Silicon Valley billionaire. Thiel's new venture, Palantir, was a secretive arm of the CIA developing technologies to "search and analyze data" (in other words, to spy on citizens). Venture capitalist Vinod Khosla commented that journalists need "to be taught lessons". And there was no doubt in anyone's mind that all Wikipedia articles on Silicon Valley celebrities and corporations were being carefully edited by hired guns, not by independent Wikipedians. The most popular blogs of Silicon Valley (Techcrunch to name one) were as acritical of and as servile towards Silicon Valley celebrities and businesses as the Russian newspapers were of Putin. In 2011 Peter Thiel had already created controversy by launching his "20 Under 20" fellowship that pays bright students under the age of 20 a generous amount of money ($100,000) to drop out of college and go work.

Despite all the hoopla about the inclusive multi-ethnic community of Silicon Valley, the facts spoke otherwise: Silicon Valley had been and still was very much dominated by the white male culture. The technology (the transistor, the computer, the operating system, the database, the Internet, the personal computer, the World-wide Web, the smartphone) and the ideology (Fred Terman, the first startups, the venture capitalists) had been invented by Caucasian males.

By the second decade of the 21st century not much had changed: sure there were many startups founded by Asians, but the ones that defined the industry (Apple, Oracle, Netscape, Google, Facebook) were almost all founded by Caucasian males (as were Microsoft and Amazon in Seattle, and as were Texas Instruments, Motorola, Compaq, Dell and so forth in other parts of the southwest). In 2015 a whopping 85% of both Facebook and Yahoo engineers were male. At Google the number was 83%, at Apple 80%. At Twitter the percentage was even 90.

Women like Meg Whitman and Marissa Mayer made news when they were appointed to the helm of a large corporation, but they were not founders (nor inventors), and this was true in general of the high-tech industry in the world (Virginia Rometty, Marillyn Hewson, Ellen Kullman, Phebe Novakovic, Anne Mulcahy, Ursula Burns and so forth, and incidentally all of them Caucasians except Burns). Ditto for venture capital, that was mostly in the hands of big firms run by Caucasian males. The idea of Silicon Valley as a melting pot of brains from all over the world and of both sexes was still mostly just that: an idea.

At the end of 2017 the Silicon Valley giants were hardly popular in the USA. First, allegations of rampant sexism led to the ouster of, among others, 500 Startups' co-founder Dave McClure and Uber's co-founder Travis Kalanick. Ellen Pao published the book "Reset" in which she recounted how she sued Silicon Valley's legendary firm Kleiner Perkins Caufield & Byers for sexual harassment and discrimination in a widely publicized case. To make matters worse, a Google engineer posted a memo titled "Google's Ideological Echo Chamber" in which he argued that women are genetically unsuited for engineering jobs. Then executives from Facebook, Google, and Twitter came under fire from lawmakers in Washington following investigations on Russian exploitation of social media to destabilize the presidential elections. And then leaked documents detailed how Apple had stashed as much as $252 billion dollars in the tiny island of Jersey, a British rock off the coast of France, to avoid paying taxes in the USA.

Furthermore, the idea that the World-wide Web constituted a sort of open, utopian Wild West, free of both government and of big business control, lasted only a few years. Cyberspace was quickly settled, colonized and parceled out. Within 20 years it was overpopulated, littered with pornography and fake news, infiltrated by spy agencies, mostly controlled by multinationals, increasingly censored by authoritarian governments, infested with swarms of trolls, bullies, spammers, and now even A.I. bots. Right or wrong, the world viewed Silicon Valley as the physical driver of this transformation.


The Hyper-visionaries

The 2010s were also the age of the hyper-visionary institutions. In a sense, Stewart Brand had pioneered this idea too, when in 1996 he had established the "Long Now Foundation"; but the new generation of hyper-visionary thinking was much more practical and, generally, funded by billionaire philanthropists. In 2015 the Future of Life Institute was created by Jaan Tallinn (Skype cofounder), Max Tegmark (MIT mathematician) and Anthony Aguirre (UC Santa Cruz astrophysicist). It mission was "To catalyze and support research and initiatives for safeguarding life and developing optimistic visions of the future". The advisors included astrophysicists (Stephen Hawking and Martin Rees of Cambridge University, Saul Perlmutter of UC Berkeley, Alan Guth of the MIT), biologists (Christof Koch of the Allen Institute for Brain Science, George Church of Harvard University), philosophers (Nick Bostrom of Oxford's Future of Humanity Institute), economists (Erik Brynjolfsson of the MIT), high-tech entrepreneurs (Elon Musk of Tesla and SpaceX) and Artificial Intelligence scientists (Stuart Russell of UC Berkeley). Then in 2016 Russian billionaire Yuri Milner launched Breakthrough Starshot to build laser-propelled nano-spacecrafts into space and reach in two decades Alpha Centauri. On the board were Facebook's founder Mark Zuckerberg and astrophysicist Stephen Hawking. Milner hired Pete Worden, former NASA Ames executive, as the director of the project, and assembled a team of advisors that included UC Berkeley's astrophysicist Saul Perlmutter, Harvard's astronomer Avi Loeb, Institute for Advanced Study's mathematician Freeman Dyson, and UC Santa Barbara's astrophysicist Philip Lubin. Also in 2016 Elon Musk and Sam Altman of Y Combinator established OpenAI, a non-profit think-tank "to advance digital intelligence in the way that is most likely to benefit humanity as a whole" and hired Ilya Sutskever, research scientist at Google, as its director, as well as Greg Brockman, formerly the CTO of Strip, as its CTO. Scientific advisors included Pieter Abbeel, Yoshua Bengio, Alan Kay, Sergey Levine, and Vishal The funding came from Amazon, Infosys, YCombinator, Peter Thiel (cofounder of PayPal), Sam Altman, Greg Brockman, Elon Musk, Reid Hoffman (co-founder of LinkedIn) and Jessica Livingston (cofounder of YCombinator).

The Boom of all Booms 2014-17

The long predicted decline and fall of Silicon Valley was nowhere to be seen. In 2016 Palo Alto boasted more billionaires than most cities in the world, despite being a small town by comparison with the other billionaire hubs of the world. But the most impressive data about the money flowing into the Bay Area were about the traditionally less developed towns. For example, Emeryville, a tiny artificial village of only 10,000 people lying next to Oakland, the city with the highest murder rate in California and ranked by Forbes the third most dangerous city in the whole USA, raised more than half a billion dollars in venture funding in just three years from 2014 to 2017, way more than big cities like Dallas. It was home to countless biotech startups (Zymergen, Bolt Threads, Cariboo, etc) as well as to Pixar. The larger but much poorer town of Hayward, not exactly a startup hub, raised almost the same amount of money for startups such as Arcus Bioscience, MicuRx, Primus Power, Alphabet Energy, etc. Pleasanton, a city of 80,000 east of Hayward, raised more money than Philadelphia or Miami for startups such as 10X Genomics and Fulcrum Bioenergy. Fremont, also on the east bay but closer to Silicon Valley, mostly famous for greentech’s most notorious failure, Solyndra, was now home to Tesla’s factory as well as to Royole and Lam Research, and its startups (such as DiscoverX) raked up more money than Houston (population 2.3 million).

In August 2018 Apple became the first company in the world to be worth $1 trillion (thanks mostly to a booming stock market). This was an impressive feat, but perhaps more impressive was that the second company to achieve that feat was Amazon, not Alphabet/Google: Amazon passed Alphabet to become the second most valued company in the world despite the fact that Amazon's revenues were one tenth of Apple's. Amazon had started humbly as a way to shop for books online; then it introduced a new way to read them (the Kindle e-book reader); and then a new way to publish them (CreateSpace, originally a South Carolina company called BookSurge that Amazon acquired in 2005); and then a new way to deploy applications on the Internet (Amazon Web Services); and then a new way to get deliveries (Amazon Prime); and then a new way to talk to devices (Alexa). Meanwhile Amazon also built the most automated warehouse in the world and opened the first pilot cashier-less Go stores, almost fully automated. No Silicon Valley company could match the metamorphoses of Amazon.

Despite the huge valuations, no Silicon Valley company ranked with the ten largest companies by revenue, and the great proposed mergers of the era always involved firms not based in Silicon Valley: for example, in 2017 the attempted takeover by AT&T (Dallas) of Time Warner (New York), and the attempted takeover by Broadcomm (Los Angeles) of Qualcomm (San Diego).

The bubble came to an end abruptly in 2018 when a new president of the USA (Donald Trump, engulfed in multiple scandals) decided to attack the high-tech industry, and when several Silicon Valley companies got implicated in his dubious election (Facebook being the main vehicle of "fake news" used by his foreign supporters, and Twitter being the main vehicle for his personal propaganda), and when the self-driving technology came under closer scrutiny (after Tesla and Uber self-driving cars caused fatal accidents). Google was investing a lot in Artificial Intelligence, but the field was over-hyped, and Google had to defend itself in the European Union, where its practices regarding privacy were not popular. Apple was still the most valued company in the world, but its fortunes relied on just one product line, the iPhone. Intel was widely perceived as having lost the race with the competitors in the low-end of the semiconductor market (the one that was growing exponentially because of smartphones) and, in fact, was no longer the most valued semiconductor firm in the world. A trade war with China was looming. China was still banning Google, Facebook, Twitter and many other Bay Area-based companies, while China's rising stars (Alibaba, Baidu and Tencent) were free to operate in the USA. More than half of the top US companies were founded by immigrants or children of immigrants, but Trump severely restricted immigration, especially of engineers and scientists, a deadly blow to the high-tech industry and to Silicon Valley in particular. Real estate was still booming across the Bay Area, but many signals hinted at trouble ahead.


(Copyright © 2016 Piero Scaruffi)

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