Boom times are returning to Silicon Valley and San Francisco is leading the way. That’s the bottom line conclusion in an annual report released last week by a major non-profit group – Joint Venture Silicon Valley. But as a one-day conference to discuss the trends coming out of the report showed, it’s not time to break out the champagne just yet.
The report, compiled and issued by Joint Venture and the Silicon Valley Community Foundation, indicated that 92,000 jobs have been added in the Bay Area over the past 12 months. This is the highest annual growth rate in over a decade. And San Francisco, with the addition of nearly 16,000 jobs alone in the same period, stands out as a place where technology is booming, big time. “One of the biggest stories is the stunning emergence of our city to the north,” said Russell Hancock, Joint Venture’s president and CEO.
At a one-day conference – “State of the Valley 2013” – held last Friday in San Jose, a parade of government officials, tech executives, and industry observers discussed the results. And while the mood was clearly upbeat, Hancock and others were careful to point out speed bumps on the road to full economic recovery that lie ahead.
For starters, most of the job growth occurred in the first half of 2012. The new jobs really tailed off in the last six months. Venture capital spending also dropped significantly, often seen as a key engine for driving new companies in the tech sector. Hancock also bemoaned the noticeable lack of passenger traffic and flights out of Mineta San Jose Airport. There was a surge of optimism last month when ANA opened their daily nonstop service from San Jose to Japan. The only problem is their planes are Boeing 787 Dreamliners which have been grounded for weeks now because of battery problems, thus depriving the local airport of much-needed passengers and revenue.
But you have to look beyond the numbers at the “State of the Valley” conference to gain a truer perspective on where Silicon Valley and the tech industry as a whole may be headed. One of the keynote speakers was Tim O’Reilly, founder of O’Reilly Media. O’Reilly has become well-known for his “crystal ball” thinking, and he’s been uncannily accurate. He recognized the participatory power of the Internet early on which led him to open one of the very first web portals and built his media business around the power of open source computing.
In his remarks, O’Reilly noted that the tangled web of computerized financial networks is a rising power that could eclipse the Internet itself. That means for those who smugly view Silicon Valley as the center of the tech universe, the real rising power may be in the financial markets on the East Coast. “New York is the second Silicon Valley we should all be paying attention to,” O’Reilly warned.
He also felt that the viral nature of online video is rapidly becoming a huge media force “that’s about to explode.” O’Reilly described attending an event recently in Los Angeles where men and women who “star” in their own YouTube videos were brought onto a stage where they were cheered, as he put it, “like they were the Beatles.”
The changing landscape of large tech companies who dictate the direction of the industry was also noted by a number of speakers last Friday. It wasn’t that long ago that Microsoft and Hewlett-Packard were seen as the dominant players, objects of endless speculation in every panel discussion. Now they have been replaced by Apple and Google. “Remember when Microsoft was scary?” said Kara Swisher of the Wall Street Journal. “They’re almost like a pet now, you feel sorry for them.”
Joint Venture’s conference always provides an interesting snapshot of Silicon Valley’s progress and continued influence in the national (and international) discussion. For the past year, things have gotten better for jobs and growth. But there is always a lingering feeling that the party could end early and the crowd will look elsewhere for the next big innovation. “I think of Silicon Valley as this huge, rich dysfunctional high school,” said Swisher. What’s open for debate is how much the Valley has really learned from the past.
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