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Silicon Valley Past, Present, Future Russell Hancock Joint Venture Silicon Valley

Silicon Valley Past, Present, Future Russell Hancock Joint Venture Silicon Valley Silicon Valley Institute for Regional Studies Public Policy Program, Stanford University 3 August 2015. My Game Plan. A primer on Silicon Valley What is it? How does it work?

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Silicon Valley Past, Present, Future Russell Hancock Joint Venture Silicon Valley

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  1. Silicon Valley Past, Present, Future Russell Hancock Joint Venture Silicon Valley Silicon Valley Institute for Regional Studies Public Policy Program, Stanford University 3 August 2015

  2. My Game Plan • A primer on Silicon Valley • What is it? • How does it work? • Why have we been so successful? • Silicon Valley today • Current patterns of growth • Current strengths • Current challenges • Silicon Valley tomorrow • Important trends • future projections

  3. Part One What is Silicon Valley?

  4. Common misperceptions NOT a place you can point to on a map NOT a place with a defined identity NOT a planned phenomenon No Silicon!

  5. So, what isSilicon Valley？

  6. So what is Silicon Valley? A remarkably enduring hotbed of innovation and entrepreneurship

  7. Our most important characteristic: We keep re-inventing ourself Silicon Valley’s Waves of Innovation

  8. Milestone Silicon Valley Innovations

  9. However, the Valley’s edge doesn’t stem from innovation alone …

  10. … but also from entrepreneurship

  11. The Valley also generates new business models • Internet-based commerce • (Netscape) • Free search, supported by advertising • (Google, Yahoo) • Music downloads, streaming • (Apple itunes) • Social networking • (Facebook, MySpace) • A la carte television • (Netflix) • On-demand delivery • (Door Dash, Uber, Google Express)

  12. A permanent feature of Silicon Valley: CHURN

  13. Largest Silicon Valley Employers *no longer existed in 2002 *didn’t exist in 1982 Source: Stanford Project on Regions of Innovation & Entrepreneurship

  14. So what’s the secret?

  15. A Habitat for Innovation Results-oriented meritocracy. Climate that rewards risks, tolerates failure Strong markets (capital, labor) Mobile, fluid workforce Favorable government policies University-industry collaboration Specialized infrastructure (venture funding, lawyers, executive search, accountancies) Quality of life

  16. Part Two Silicon Valley today

  17. Silicon Valley was the last region to succumb to the Great Recession The region was adding jobs through Q4 2008

  18. Today Silicon Valley is the first to emerge from the Recession

  19. JOB GROWTH Annual change in Total Number of Jobs, 2008-2014

  20. JOB GROWTH Annual change in Total Number of Jobs, 2008-2014

  21. JOB GROWTH Annual change in Total Number of Jobs, 2008-2014

  22. JOB GROWTH Annual change in Total Number of Jobs, 2008-2014

  23. TOTAL NUMBER OF JOBS 9-County Bay Area +119,576 +3.5%

  24. MAJOR AREAS OF ECONOMIC ACTIVITY 2013-2014 +40,096 +18,445 +12,294 -491 +57,951

  25. AVERAGE ANNUAL EARNINGS

  26. MEDIAN HOUSEHOLD INCOME

  27. Innovation is thriving.

  28. PATENT REGISTRATIONS

  29. VENTURE CAPITAL

  30. VENTURE CAPITAL BY INDUSTRY

  31. INITIAL PUBLIC OFFERINGS

  32. Rapid job growth • Young, well-educated workforce • Accelerating patent registrations • Thriving startup community • Mega venture capital deals

  33. San Francisco and • Silicon Valley together: • $20.2 billion in venture capital • $2.8 billion in Angel investments • 16,055 startups • 76,000 new jobs

  34. Is this a bubble? We don’t think so.

  35. Why not a bubble? Five years of incremental growth Profitable companies, serving proven customer bases Venture community enforcing a high bar Region’s portfolio extremely diverse Economy still moving into promising new areas Valuations are level-headed

  36. VALUATIONS ARE LEVEL-HEADED Price-earnings ratio of top-ten NASDAQ companies, by market cap Source: Barrons

  37. Part Three Silicon Valley tomorrow

  38. It would appear that Silicon Valley is the world’s most prodigious regional economy. So what’s not to like?

  39. Despite our strengths, Silicon Valley faces many challenges and has some structural flaws

  40. One challenge: Tech is no longer a tide that lifts all boats

  41. DISTRIBUTION OF HOUSEHOLDS BY INCOME RANGES

  42. HOME AFFORDABILITY

  43. Poverty & Self-Sufficiency

  44. Growth is putting a strain on the region.

  45. COMMUTE PATTERNS

  46. Train travel in other parts of the world

  47. Train Travel in Silicon Valley

  48. Built in 1863

  49. Another challenge: Fiscal instability, failure of our government institutions

  50. Our tax system doesn’t track with the 21st century economy; no political will to fix it City Revenues in Silicon Valley

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