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Is Silicon Valley's Unique Aura Fading Away?

What does the future hold for today's US technology hub? Well, it depends on who you ask.

California's Silicon Valley is widely regarded as the birthplace of today's tech industry. Ever since William Hewett and David Packard launched their garage-based audio oscillator business in 1939, the southern region of the San Francisco Bay Area has served as an incubator for tech startups, including industry giants such as Apple, Adobe, Oracle, and many others.

The Silicon Valley mindset is about using technology to push for what’s possible, not what’s probable, says Shannon Goggin, co-founder and CEO of San Francisco-based benefits data platform provider Noyo. “It’s about taking big swings, building the future, and creating breakthroughs.”

Yet after decades of tech dominance, doubts about Silicon Valley's long-term industry supremacy are beginning to appear. “Startups realize that they can exist anywhere, as opposed to having to locate in Silicon Valley to be close to talent, investors, and advisors,” says Ari Lightman, professor of digital media and marketing at Carnegie Mellon University’s Heinz College of Information Systems and Public Policy.

Spreading Out

Thanks to decentralization and the emergence of cloud-based resources, startups can now be located across geographies, Lightman says. Tech-focused universities now offer accelerators and innovation hubs, with resources available to help startups mature, grow, and obtain funding regardless of their physical location. “Funding a startup, especially digital platforms, requires less resources than ever before because of cloud-based resources, APIs, and open-source data and code libraries,” he notes.

The pandemic made people realize that personal mobility was actually a premium commodity, says Diane Gilley, executive search partner at Odgers Berndtson. “Those who had the means, capability, and desire to move somewhere [else] in the country, did,” she notes. Meanwhile, many other companies also decided to relocate to other parts of the country when courted with better tax-related options.

The cost of living and working in Silicon Valley has also dimmed the area’s appeal for many current and prospective residents. “The cost to buy a home and raise a family has priced-out folks … and developed a bit of a monoculture of tech and venture capital workers,” Lightman says. Commercial real estate also commands a premium price, which has motivated many existing area businesses, as well as startups, to locate their headquarters and operations in less pricey areas.

People love being provocative, claiming that Silicon Valley is losing its luster, says Vineet Jain, CEO of Mountain View-based Egnyte, a cloud content governance platform provider. Jain is confident that Silicon Valley will always be the top place for technology. “Tech companies are still thriving and setting up shop here,” he notes. “Our unique aura might have changed over time, but Silicon Valley remains unparalleled in its ability to draw talent from all over the world and its ability to spring back amid challenging times.”

Diversity and Dispersion

Goggin believes that Silicon Valley isn't fading away. It will, instead, become more diverse. “Not just in its workforce, but also its leadership and investors,” she says.

Lightman predicts that Silicon Valley will look generally the same in the years ahead, but with enhanced diversity and, hopefully, better transportation patterns and less traffic congestion. He also predicts there will be fewer tech staffers on site and more working remotely.

With a rise in remote work, the value that Silicon Valley employees once placed on a vibrant office life with trendy workspaces, elaborate on-site meals, and transportation, has faded, Jain observes. “People are now looking for solid employers who offer opportunities for collaboration and the ability to make a difference,” he says. “Silicon Valley tech firms are starting to take notice.”

Thanks to emerging distributed company models, the Silicon Valley mindset will continue spreading to other areas, Goggin says. “The startup ecosystem is incredibly supportive, and I will be proud to see the next generation of companies create even more opportunity for people who haven’t historically had the chance to participate in the startup and tech ecosystem,” she says.

Not Down Yet

Like Detroit, which is still widely viewed as the hub of the US automotive industry, despite the fact most vehicles are now manufactured elsewhere, Silicon Valley’s importance is deeply rooted in its history. “We can’t discount Silicon Valley's history and the oversized impact the area has provided to field of computing, from the transistor to companies springing from Stanford University, such as Hewlett-Packard,” Lightman says.

Far from fading away, the Silicon Valley mindset has moved beyond geography, Goggin says. “It’s exciting to see thriving startup ecosystems growing all across the country.”

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Editor's Choice
Brian T. Horowitz, Contributing Reporter
Samuel Greengard, Contributing Reporter
Nathan Eddy, Freelance Writer
Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
Cynthia Harvey, Freelance Journalist, InformationWeek
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing