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Title: 81 percent high school diploma 40 percent college degree .


1
  • Silicon Valley
  • Opportunities Challenges
  • Russell Hancock
  • President Chief Executive Officer
  • Alameda County Library Foundation
  • 24 October 2008

2
  • What is Silicon Valley?

3
The Valleys Distinguishing Features
  • 1,500 square miles
  • 40 Cities, 4 counties
  • 2.6 million people, 42 percent foreign born
  • 1.3 million workers
  • 81 percent high school diploma 40 percent
    college degree
  • 25 percent of workforce in high-skill occupations
  • Income average 60 percent higher than US
  • 6 percent US GNP, 11 percent of US patents
  • Productivity rate growing 50 higher than US
    average

4
But our most important characteristic
Is that we keep reinventing ourselves!
5
Milestone Silicon Valley Innovations
6
Top Patent-Generating Cities, 2007
Source Joint Venture Silicon Valley Network,
2007 Silicon Valley Index
7
  • However, the Valleys edge doesnt stem from
    innovation alone

8
but also from entrepreneurship
  • Silicon Valley has a remarkable capacity to
    create and grow new companies
  • New Companies New Technologies
  • (Entrepreneurship)

    (Innovation)
  • Endogenous Growth
  • New Wealth Creation


?
9
The Valley spawns the leading companies in every
technology generation
10
Largest Silicon Valley Firms
11
Largest Detroit Firms?
12
Technology Regions Will Always Experience
Boom-Bust Cycle
  • New technologies drive dynamic waves
  • Entrepreneurs take advantage of new opportunities
  • Swarms of new firms cluster around new
    technologies creating short term bubbles
  • New products eventually become commodities and
    investment leads to breaking of bubbles.
  • New technologies emerge from the convergence of
    old technologies and the process of creative
    destruction begins again

13
  • SILICON VALLEY LOSING ITS EDGE. Cover Story,
    Business Week.
  • DREAMS OF STRIKING IT RICH FADING IN SILICON
    VALLEY. Front page, Los Angeles Times
  • SILICON VALLEY WILL NO LONGER BE AN ICON. Po
    Bronson, Wired

14
  • SILICON VALLEY LOSING ITS EDGE. Cover Story,
    Business Week, 1985.
  • DREAMS OF STRIKING IT RICH FADING IN SILICON
    VALLEY. Los Angeles
    Times, 1991.
  • SILICON VALLEY WILL NO LONGER BE AN ICON.
    Po Bronson, 2003.

15
Bubbles Arent New
  • Between 1846 and 1852 telegraph miles in the US
    rose from 2,000 to 23,000. Three lines covered
    New York and Boston, though there wasnt enough
    traffic for onne.
  • In 1894 the US had 192 railroads in bankruptcy
    (41,000 miles of track)

16
Bubbles Arent All Bad
  • Spread of cheap telegraphy fostered other key
    innovations Associated Press, national markets
    in stocks
  • Railroads served as crucial platform for new
    industries Sears Roeback.

17
After the dot-com bubble
  • Prices plunged servers, digital cameras,
    domain-name registration, web design, web
    hosting, office space
  • System in place for transmitting data, voice,
    documents, companies like Vonage and Skype rise
    up.
  • Google prospers by lashing together thousands of
    cheap servers and tapping into an installed base
    of 172 million web surfers, and hiring redundant
    engineers

18
But the real story is the small companies
Source Joint Venture Silicon Valley Network,
2005 Silicon Valley Index
19
The Valley also proliferates new business models
  • Internet-based commerce (Netscape)
  • Free search, supported by advertising (Google,
    Yahoo)
  • Music downloads (Apple itunes)
  • Social networking (Facebook, MySpace)
  • Consumer as producer (You Tube)

20
  • So whats happening right now in Silicon Valley?

21
Were adding jobs
Silicon Valley Employment, 1997-2007
Source Joint Venture Silicon Valley Network,
2008 Silicon Valley Index
22
Our innovative edge continues
Silicon Valleys Share of US California
PatentsSilicon Valley Cities
23
Venture funding hits new highs
Venture Capital Investment Silicon Valley Cities
24
Were moving into promising new areas
Venture Capital Investment in Cleantech Silicon
Valley Cities Rest of State
25
Incomes are on the rise
Real per Capita Income Santa Clara San
Mateo Counties vs. United States
26
Median Income Silicon Valley and United States
27
  • So what comes next for Silicon Valley?

28
  • 1. Were not finished with Information
    Technology yet.

29
  • 2. Clean Technology

30
  • 3. Convergence of biotechnology,
    nanotechnology, and information technology

31
  • So whats not to like?

32
Silicon Valley Challenges External
  • Volatility in financial markets
  • Collapse of financial institutions
  • Housing crisis

33
Silicon Valley Challenges Internal
  • As a community we have many issues to address.
  • Its going to get harder and harder to
    participate in the innovation economy.

34
Issues for the Silicon Valley Region
  • The Usual Litany
  • Transportation
  • Housing
  • Infrastructure
  • Tax Fiscal Policy
  • Quality of Life
  • Health care, health insurance
  • Education

35
Housing AffordabilityPercentage of Potential
First-Time Homebuyers able to Purchase
Median-Priced Home
Source Joint Venture Silicon Valley Network,
2007 Silicon Valley Index
36
High School AchievementSilicon Valley
Source Joint Venture Silicon Valley Network,
2008 Silicon Valley Index
37
Enrollment in Intermediate Algebra by Ethnicity
2005
38
Juvenile Felony Offense Per CapitaSan Mateo
Santa Clara Counties
39
Perhaps More Disconcerting
  • It will become increasingly more difficult for
    people to participate in the innovation economy,
    and in the global marketplace

40
  • In the future prodigious job growth in Silicon
    Valley is unlikely.
  • We can most likely expect steady, incremental
    growth.
  • The major opportunities will be in a few key
    clusters, and the industries that support those
    clusters.
  • Those jobs will be hard to get, and require
    significant training.

41
Why? Whats Happening?
  • Intense competition. Rise of competitor regions
  • Companies doing more with less. They have to.
  • Silicon Valley workers doing it with productivity
    gains.

42
Job Distribution by Wage Level Santa Clara San
Mateo Counties2002 2006
43
Why? Whats Happening?
  • Off-shoring and outsourcing.
  • Old story, except now higher-end functions going
    off shore
  • Design
  • RD

44
Why? Whats Happening?
  • Technologies invented here eliminated entire
    classes of jobs
  • Administrative class
  • Archivists, data entry
  • Back Office functions
  • Production

45
Why? Whats Happening?
  • Many of the emerging clusters (Biotech,
    Web 2.0) arent big job generators to begin
    with.

46
Why? Whats Happening?
  • Nature of corporate capitalism itself is
    changing
  • Vertical integration a thing of the past
  • Companies down-sizing
  • Focus on key competencies
  • Groaning under weight of overhead
  • Health care, benefits
  • Reducing FTEs, using contractors

47
  • To survive and thrive in Silicon Valley people
    must be innovative, productive, willing to
    re-invent themselves, and resilient

48
Silicon Valley Worker of the future
  • Will work in numerous places over course of
    career
  • Will have to re-train and re-tool
  • Will have to distinguish self with a unique
    competency
  • Will shoulder a heavier burden for coverage and
    benefits
  • Will need high-end skills language, writing,
    communication, technical expertise

49
THANK YOU FOR INVITING ME
  • Detailed information is available at the Joint
    Venture website www.jointventure.org
  • We also welcome your calls
  • Joint Venture Silicon Valley Network
  • 84 West Santa Clara Street, Suite 440
  • San Jose, California 95113
  • (408) 271-7213
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