Silicon Valley Just Ain't What It Used To Be—And That's a Good Thing

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Dan Lyons raises a provocative question in his latest Newsweek article: Is Silicon Valley still solving hard problems? After all, the “silicon” in Silicon Valley comes from its being the birthplace of the microprocessor. The magic of shrinking circuits gave rise to the computer industry, the Internet, and all of its offspring. In contrast, Lyons suggests that today’s Silicon Valley companies are not tackling big enough challenges that could fundamentally alter the economy and or how people live. He points to Facebook, Twitter, and Zynga, “the three hottest tech companies today,” as proof that Silicon Valley is nothing more than Silly Valley.

There are so many things wrong with Lyons’ argument that I don’t know where to start. For one thing, he hangs the entire thing on quotes from Nathan Myrhvold, the former Microsoft CTO who is now best known as a patent extortionist. So I guess it’s Myrhvold’s argument. But using a patent troll’s complaints about the lack of “real” innovation in Silicon Valley as your main example is flawed.

Let’s separate the argument from its source. The question on its own is still important, and should not be rejected out of hand. Well, there are still plenty of companies in Silicon Valley trying to solve hard engineering problems. For instance, Lyons conveniently fails to mention Google, which is arguably tackling many of the hard engineering problems he laments are no longer being tackled. He also forgets that there are still tons of hardware companies in Silicon Valley designing computers, phones, tablets, communications and data storage equipment, to name a few. He also leaves out the entire budding industry of hundreds of greentech startups, many in Silicon Valley, which are trying to re-engineer how we produce and consume energy.

But let’s focus on his argument as it pertains to the newer crop of tech startups: the Facebooks, Twitters, and Zyngas. Lyons warns:

The risk is that by focusing an entire generation of bright young entrepreneurs on such silly things, we’ll fall behind in creating the fundamental building blocks of our economy. The transistor and the integrated circuit gave rise to the last half century of prosperity. But what comes next?

It is not an unreasonable question. The answer, I suspect, will not be a better microchip, although we still do need those. Innovation (and economic value) in Silicon Valley long ago shifted over to software. Even companies that build hardware, like Apple or Cisco, create world-changing products by blending in better software. And the most important software being built today, is arguably on the Internet.

The hardware companies realize this. Cisco has been buying Internet software collaboration companies left and right for a while now. And even Intel is trying to diversify into software with its recent $7.7 billion purchase of McAfee.

As Josh Elman, a product manger at Twitter, notes:

Whining about the technical “depth” of social sounds like hardware eng complaining about rise of software in 80s

Are Facebook, Twitter, Zynga, and all the Silicon Valley startups following in their wake fundamentally silly companies? They each face their own technical challenges, which are far from trivial given the number of people who use their services. Facebook is trying to become the social glue across the Internet. Twitter is building a realtime communications platform that is exponentially more complex than, say, the telephone system (which is a one-to-one system, as opposed to many-to-many). Zynga also must deal with millions of concurrent users. The things people do on these systems may be silly, but that has nothing to do with their technical underpinnings.

Finally, the whole notion that only hard things are worth doing if you want to have a big impact misses the disruptive power of simpler technologies. Yes, building chips may be “harder” than building software, and building Internet software may be easier still. I really don’t know. Certainly, there are more people who can do it. But that is a good thing. Today’s startups stand on the shoulders of older technologies. Simpler technologies can reach more people.

Does the ability to connect with more people on a constant basis make your life richer or poorer? The answer to that question depends more on you and who you choose to connect with than on Facebook or Twitter. Whether or not any of today’s Silicon Valley companies will alter our world as fundamentally as those which brought us the microchip remains to be seen. And I do agree with Lyons that those which solve the hardest problems will have the biggest impact. But dismissing these platforms as silly diversions would be as foolish as describing the telephone a hundred years ago as nothing more than an “electrical toy”.

Photo credit: flickr/Wonderlane.

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