Peter Thiel: Silicon Valley’s monopoly on big growth tech companies is over

https://www.cnbc.com/2017/10/26/peter-thiel-silicon-valleys-monopoly-on-tech-companies-is-over.html

by champagnepapi • 9 years ago

119 123 9 years ago

melling2• 9 years ago

That’s not a bad thing. Having more places of innovation is better for everyone. Hopefully, we’ll see more world class research universities too. A Stanford University (or two), for example, in every location.

bob_loblaw• 9 years ago

My wife previously worked at Harvard Business School and currently works at Stanford. One of the big differences she noticed is that Stanford encourages students to start their company, while HBS steers their grads towards Wall Street.

dmode5• 9 years ago

This is not a profound statement, but rather obvious. If may calculations are right, there are roughly 6 billion 993 million people outside of Silicon Valley

jayjay71• 9 years ago

It's not a uniform distribution.

tryingagainbro2• 9 years ago

Huh? Me and Warren Buffet together are worth about $81 Billion, it varies daily but around that range.

twblalock• 9 years ago

Why did Silicon Valley ever become what it is, and why did it continue to be dominant in the tech industry for so long, when there were billions of people outside of Silicon Valley the entire time?

Clearly population numbers are not sufficient in themselves to explain why the situation will change.

dmode5• 9 years ago

Thanks for the down votes. But if you haven't realized, the world has changed dramatically since valley became Valley. There is a lot more wealth distribution around the world and technology is easily accessible. Look at the 50s and look at now and see how Asia has emerged as a dominant economic force. China is #2 in total GDP, and India is #7. Couple this with the fact that these two countries have unlimited workforce, it is quite obvious that big growth companies will start forming outside of the US, often focused on their local market. And capitalizing in capturing a lion's share of the local economic growth. And that's exactly what's happening. Alibaba, Tencent, Didi, Ola, FlipKart, OYO rooms, Grab.

This is not some profound statement from Thiel, but something very obvious.

walshemj• 9 years ago

Massive amounts of government speeding on defence and tech going back to ww2

rothbardrand3• 9 years ago

Silicon Valley is not dominant now. It is merely perceived as dominant by a cult of silicon valley, which exists primarily in the heads of people who live in SV.

dogruck• 9 years ago

Summary: soon, we will start to see more successful tech companies emerge out of areas other than Silicon Valley.

tryingagainbro2• 9 years ago

My bet is that still it will be in USA. Among many other things, there's no shame in "failing" in USA. Investors and banks take a chance, fully knowing that most will fail.

In a lot of countries failure will follow you for the rest of your life. Not to mention that you'll be broke owing to banks, friends and tax authorities.

adventured3• 9 years ago

There are only half a dozen or so nations on the planet that can compete with the US at all when it comes to technology start-ups. Nobody else has enough of the required ingredients. For example Sweden has something very interesting going on - yet they are very unlikely to ever produce a Facebook or Google, the fractured European market and cultural system and their tiny local population base is a very big friction point (unless they go after the US market early on, as with Spotify, becoming a proxy US start-up).

The rapid lead that the large, unified market of the US + Canada provides, is extraordinary. Only China offers something competitive to that and as an outsider you can't move to China and form successful large start-ups (which is why among their major tech companies, there are no cultural foreigners or non-Chinese running businesses like Tencent, Baidu, Alibaba, Didi, Alipay, etc and there never will be). The US + Canada = near $21 trillion in economy, with extremely high disposable income levels, that mostly all uses/understands English.

Fundamentally this is why Europe has struggled so immensely to produce new tech giants in the last 20 years, compared to the US or China. It's not the lack of risk-seeking capital; although that's less than in the US, there is still enough. There is some cultural restraint depending on the country. Mostly though, it's because of how extremely difficult it is to adopt to all the various nation by nation differences early into the life of a product and acquire market dominance in enough of them to then have a strong foundation from which to springboard globally.

icu3• 9 years ago

With the greatest respect for Mr. Thiel and his accomplishments I'm skeptical.

I've travelled the world and my experience is that very few places in the world have America's, often irrational, can-do attitude, appetite for new venture risk, and societal acceptance of new venture failure as an important part of the entrepreneurial process.

I just don't think it's that easy to graft these cultural norms to other cultures, let alone replicate the new venture capital, both human and monetary.

As someone in London I wouldn't be on hacker news to 'keep my finger on the pulse' if I believed otherwise.

aaron-lebo5• 9 years ago

He did say SV, which is probably true.

Europe may or may not have the culture you are suggesting, China might have that hunger but no business started there is safe from gov control, Russia has that control without the economic growth, a lot of places are too small.

But...there's probably a dozen cities in the US where you could get everything you can in SV (ok, maybe not the monoculture, the crazy VCs, the crazy cost of living, and tens of thousands of programmers). There are massive advantages to getting out of the Valley, someone is going to realize that, if it hasn't been obvious for a decade.

tomaha4• 9 years ago

I agree that there are nice options in the US and you'll have a much more comfortable life. But if you want to learn as much as you can, if you want to have as many options as you could possible have, and quiet frankly earn as much as you could, you'll likely should move to SV and no other place in the US will even come close to that. The bleeding edge of technology is and will be in SV and China (and China is not really an option for most people).

derekp7• 9 years ago

I wonder why Chicago isn't more of a major destination for tech companies. The city is highly walkable, has excellent transportation infrastructure, and low cost nice housing is plentiful within an hour commute by train or car. You can get a nice house for less than 200k, apartment rent is around 600 - 1000 a month. In the city, there are a lot of old 3-4 story houses that have been converted to each floor being a rental unit, for about 1200.

NicoJuicy2• 9 years ago

Europe has the culture, just not the funding.

Investments are way too little

volkl48• 9 years ago

It is worth keeping in mind that SV's focus is only one area of employment for programmers.

The major Northeast hubs have tons of programmers. The difference is that a lot of them work for the financial industry, government contractors, pharma, and the "unsexy" sort of older tech companies.

This is good for finding somewhere with a lot of programmers but the downside is that the employment market is just as tight here and COL/salary is nearly as high.

--------------

If you're looking for somewhere that actually offers you payroll savings but still has a good enough talent pool to be able to find employees fairly easily, that list is pretty small and arguably getting smaller.

A lot of the trendier secondary cities for this (ex: Denver, Portland, Austin) are themselves getting very expensive, very quickly.

melling2• 9 years ago

He referenced China. Any big startups come out of there?

dmode5• 9 years ago

Here's a list

https://www.techinasia.com/china-top-well-funded-startups-20...

Didi has raised over $10bn.

rm_-rf_slash• 9 years ago

China is a different case. Any successful tech company will be ruthlessly copied and scaled in China by mercantilist policies which work quite well.

But there are no Chinese brands that are widespread household names out of China. Even if a billion Chinese use renren the rest of the world uses Facebook (and maybe vk). Even if a billion Chinese use Baidu the rest of the world uses google (and maybe yahoo, in Japan, for some reason).

icu3• 9 years ago

China is a funny one. For sure there is 'hustle'... I was scammed many a time in Beijing... But there is this really important cultral dimension in China called "guanxi".

It's not easy to summarise the importance and pervasiveness of guanxi... from a Western perspective it could be described as corruption but it's more like a social currency that is involved in any important transaction.

oh-kumudo2• 9 years ago

Didi/Mobike/Meituan/Xiaomi...the list could get really long

user5994461• 9 years ago

The issue is not about the culture, it's the market size.

USA has 300 million high value customers. Any successful company will be massive.

There is hardly any other big market like that in the world.

kamaal• 9 years ago

Most of this was because the top most talent of every third world company wanted and came to the USA. Once they arrived at the US, they used their disproportionate quality of human capital and combined with the immigrant zeal to prove themselves they can succeed at life by doing great things in a new country.

In the past the decade, it has become impossible for most of India and China's best people to come to the US due to very long Green card wait times.

From the Indian perspective alone. Billion dollar start ups and entrepreneurial ventures are popping up all over the country. Even a decade back this was impossible to even think of.

My guess is US is will gradually lose its grip being the economic super power of the world as China and India eat their lunch. It won't happen over a throw of switch, it will be a very gradual prolonged process.

curiouslurker• 9 years ago

Could he just be pandering to his hosts? The concentration of talent and a whole ecosystem that supports entrepreneurs is a significant advantage. It will take time for any other region to amass the same advantages.

aaron-lebo5• 9 years ago

Talent is remote and talent is willing to move, especially when they can make an extra 50% through cost of living differences. That ecosystem produces some great stuff, but a lot of it is garbage. Those advantages are perhaps overstated unless your goal is to move to SV and become a unicorn. It's almost tautological.

adventured3• 9 years ago

but 90% of it is garbage.

That's inherent to the process of all creation and business starting. 90% of everything is garbage. That's a case where there's nothing unique about Silicon Valley. I'm sure you're at least vaguely aware of the very high failure rate of all new businesses within just a five year span.

Or see: last 200 years of industrial history. There were hundreds of automakers just in Detroit in the US, experimenting with just about everything they could. Most of it was garbage. It's a required part of the process of experimentation. If someone stands up and proclaims that aspect is stupid and a waste and they know better (they'd never make such mistakes, they'd never need to perform such wasteful experimentation), well, at least then you know who you're dealing with.

11thEarlOfMar2• 9 years ago

One of the attributes of The Valley that are not easily reproduced is the forced cross pollination of knowledge and experience among the tech work force. This is forced through layoffs as companies, industries and the economy run through their cycles. This cross pollination leads to several outcomes: 1. the workforce is diverse in experience; 2. employees tend to work harder and longer hours in order to keep their job; 3. employees that are released from projects that they still believed in are more likely to take that project elsewhere, or, seek funding themselves.

These cycles work like a bellows, re-shuffling engineering teams en masse and thereby fueling innovation. It's actually pretty painful, but is an important factor and remains unique not in the fact that it happens, but in the scale that it happens in The Valley.

vikiomega9• 9 years ago

Is there a model for this? I'm asking because cross pollination can happen through other means. High density of conferences, strength of networks among other means.

This argument is reminiscent of reformations and the political landscape of Europe way back when.

stcredzero• 9 years ago

This argument is reminiscent of reformations and the political landscape of Europe way back when.

Frank Herbert, the author of the Original Dune books, once made the observation that corporate hierarchies are very much like feudal hierarchies.

kevan• 9 years ago

Why do you think this is unique to the valley? At a first glance every major metro area has this, what's so different?

bllguo• 9 years ago

[It] remains unique not in the fact that it happens, but in the scale that it happens

There are probably more tech workers in SV than any other major metro area

esteban85• 9 years ago

I believe whats special in the Valley that I have not seen anywhere is the sheer concentration of startups, investors and qualified people and the willingness for them to share. Sharing comes in many formats in the valley of knowledge, their own startup, contacts and advise. The last two are the hardest to find elsewhere at the scale that you see in SV, I havent found it in Asia I havent found it in Europe... this for me is the competitive advantage of being in the Valley

untog• 9 years ago

I'm not convinced that is unique to the Valley. In fact, I think the Valley is significantly worse than many other places for cross-industry "pollination". Take New York - the tech industry stands alongside media, fashion, finance, intermingling with them all. By comparison the Valley is "pure tech", and that bubble sometimes shows.

rdiddly• 9 years ago

There really is no rational reason why the phenomenon of Silicon Valley should exist. And at this point if there were anything special Silicon Valley knew that nobody else did, that knowledge has been pretty widely disseminated. And yet for all that, I suspect he's still wrong.

rothbardrand3• 9 years ago

He's right, but "Silicon Valley" only exists in the minds of silicon valley maximalists who live in a bit of a filter bubble.

adrianratnapala• 9 years ago

No idea if Mr. Thiel is right in this decade, but long term silicon valley has lost its main advantage: silicon.

The physical business of building computer parts, especially chips, involves a lot of hard science and deep magic and requires a kind of priesthood steeped in that magic. SV's original success was built on this -- it got rich because it is where the silicon priests lived. But now things have evolved so the it is the Chinese who know how to build the computers and (sometimes) the Californians program them.

Except writing apps is not really deep magic, and is something that can be done anywhere. So SVs advantages move to ever more nebulous things like networking and mentorship -- which are also human universals that happen everywhere.

CalChris9• 9 years ago

An argument can be made that when it was first called Silicon Valley it should have been called Metal Oxide Valley. Originally, SV lived off defense, then made disk drives and now Google, Apple, Facebook, Oracle, ... reign supreme. I think SV will continue to shape shift. It is however, getting kinda expensive.

abritinthebay• 9 years ago

Silicon Valley has not been about the raw production of silicon chips for over 30 years now.

It's been about software and design of hardware for at least that long.

You're also ignoring the networking advantages (personal, career, and business) that proximity provides. They are not trivial. It's why SV has stuck around post dot-com.

B1FF_PSUVM• 9 years ago

It's almost like the VCs in whatchamacallit road tell everybody else to telecommute, but they themselves don't care much about moving around to keep an eye on the troops.

Lazy bas --- err, I mean, damn efficient, well done, old beans.

(Screw the cattle who have to deal with the fallout. Not adding value.)

leggomylibro4• 9 years ago

It's a shame that this happened, but you can see how it did.

Those chips were built on the fervor of people imagining what we could someday do with them. They could create a connected world, solve and create so many problems on a global scale...it's not super surprising that their successors went on to do those things.

What is surprising, and shameful, is how investors reacted, buying into the mania hook line and sinker. There cannot be a Bell Labs or Fairchild Semi in silicon valley today, because they could not promise 10,000,000% user growth and a massive acquisition in N years.

It seems like the market equivalent of snorting pixie sticks instead of eating a balanced meal, but I'm not the person with billions of dollars to swing around.

mi100hael2• 9 years ago

There cannot be a Bell Labs or Fairchild Semi in silicon valley today, because they could not promise 10,000,000% user growth and a massive acquisition in N years.

Sure there can, they just can't have VC as a part of their business plan.

Thankfully, more and more startups are realizing that VC is not their only option, nor usually their best one.

_dps• 9 years ago

There cannot be a Bell Labs ... [today]

Google's R+D arms are arguably in the same broad category as Bell Labs was when it started out. We just need to wait 50 years to see if we will view them the same way in hindsight.

CalChris9• 9 years ago

How is Fairchild Semiconductor so different from PayPal? Both have insanely influential and successful alumni. I could have picked General Magic (Pierre Omidyar, Andy Rubin, ...) but they are less well known.

How is Bell Labs so different from Google X? How is Bell Labs any different from IBM San Jose Research (SQL, photoresists, Gray+Agrawal, relational databases, reliable databases, ...)

11thEarlOfMar2• 9 years ago

Two elements of 'Silicon' remain vibrant in Silicon Valley, even if the Fabs are all gone: First, the Design software and the design itself is still largely in place here. Companies like Cadence, Synopsis, Intel, nVidia, AMD, and many other chip firms still draw on Silicon Valley's work force to design the most complex chips.

Second, the equipment that is capable of fabricating the most complex chips is almost exclusively developed here. Companies like Applied Materials, Lam Research, and KLA-Tencor make the machines that perform mind boggling feats of physics and chemistry[0]. Those companies are currently dominating 3 of the 5 top spots for revenues globally. One of the other 5 is in the Netherlands (ASML), the other in Japan (Tokyo Electron).

So the actual fabs (along with their Superfund legacy) are gone. But the Silicon innovators are still here and thriving.

[0] https://www.youtube.com/watch?v=4G8wXQGEBrA

derefr2• 9 years ago

Sure, design happens in SV, but "design" is something you can do on a laptop (well, as long as you have a beefy box somewhere else on the network to run the layout step.) It's similar to how NYC is the capitol of fashion design: yes, a lot of designers have congregated there, but any individual designer can still do their job anywhere else in the world without much hindrance.

That's not like how SV used to be: before automated layout, design and fabrication were forced to be vertically integrated—you needed a real fab to iterate your design against. So the designers needed to stay where the fabs were, and the fabs would get built where the designers were.

Uncoupling the two means that the fabs can go where it's cheap, and IC design is now just another kind of whiteboard-driven engineering, rather than a kind of monastic ritual performed within a warehouse-sized machine.

marchenko• 9 years ago

Andy Grove would agree with you [1]. He argued that a lot of valuable innovation occurs during the scaling/manufacturing process. If you offshore that step, all of the proficiency and innovation that occurs 'at the bench' develops - and is capitalized upon - elsewhere.

[1](https://www.bloomberg.com/news/articles/2010-07-01/andy-grov...)

replicatorblog• 9 years ago

This is already happening. Just look at the drone industry.

DJI, founded in Shenzen, has 87% market share at the most popular price point, and 48% share in the next closest. This is an $8B market and will likely double or triple in the coming years. US companies won the web, but China is making a run for the IoT.

http://www.marketwatch.com/story/businesses-want-cheaper-dro...

smaili• 9 years ago

The concentration of global tech companies in one small region in California has been a peculiar feature of the industry.

Couldn’t the same be said about Hollywood in LA or Wall Street in New York?

komali2• 9 years ago

You just need some talented people...

Well, yea, hence silicon valley. Like begets like - if there's a place where all the best engineers are hanging out, why wouldn't a budding engineer head out there? This is literally why I moved to San Francisco from Houston :P

And then, the best of the best engineers making oodles of money are probably not going to want to live in like, Michigan, growing tech sector or no. Give up good weather, quick access to great vacation spots (mexico, vegas, anythign over the pacific, all the national/state parks...), legalized weed, etc? Nah man.

edit: My language is assertive but I am very open to being challenged on this.

junkcollector• 9 years ago

Sure, you're making a mistake that is very common around HN. You're conflating technology and programming. If you wanted to study chemistry and be a chemical engineer, Houston is absolutely where you would be flocking to instead of SF. I think the next big tech market is going to be medical and genetics which means Minneapolis and Boston are the places to be watching.

perfmode• 9 years ago

Vegas?

csomar• 9 years ago

speaking at the Future Investment Initiative in Riyadh, Saudi Arabia, Thursday.

Should we be more careful since this was said in an investment fund which is not located in Silicon Valley? Or should we trust Peter for his words?

Peter Thiel: Silicon Valley’s monopoly on big growth tech companies is over

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