1
2
3	What is Silicon Valley?
4	MOST IMPORTANT CHARACTERISTIC: Region Continually Re-Invents Itself
5	MILESTONE SILICON VALLEY INNOVATIONS Vacuum tube (Varian) Transistor and Integrated Circuit (Fairchild) Microprocessor (Intel) Microcomputer (Apple) Graphical User Interface (Xerox PARC) Relational Databases (IBM Almaden) Internet Search (Google) However, the Valley’s edge does not stem from innovation alone ...
6	… 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
7	Valley spawns the leading companies in every technology generation
8	LARGEST SILICON VALLEY FIRMS 1982 Hewlett-Packard National Semiconductor Intel Memorex Varian Environtech* Ampex Raychem* Amdahl* Tymshare* no longer existed in 2002 2002 Hewlett-Packard Intel Cisco Sun* Solectron Oracle Agilent* Applied Materials Apple Seagate Technology Also: Maxtor, Palm, Google,Cadence, Adobe, Yahoo *didn’t exist in 1982
9	LARGEST DETROIT FIRMS 1982 Ford General Motors Chrysler 2002 Ford General Motors Daimler-Chrysler
10
11	"“SILICON VALLEY LOSING IT’S..." “SILICON VALLEY LOSING IT’S EDGE.” Cover Story, Business Week. “DREAMS OF STRIKING IT RICH FADING IN SILICON VALLEY.” Front page, Los Angeles Times “THIS IS THE END OF SILICON VALLEY AS WE KNOW IT.” Larry Ellison, CEO of Oracle.
12	"“SILICON VALLEY LOSING IT’S..." “SILICON VALLEY LOSING IT’S EDGE.” Cover Story, Business Week, 1985. “DREAMS OF STRIKING IT RICH FADING IN SILICON VALLEY.” Los Angeles Times, 1991. “THIS IS THE END OF SILICON VALLEY AS WE KNOW IT.” Larry Ellison, 2003.
13	So what’s the secret? A HABITAT for Innovation Results oriented meritocracy Climate that rewards risk and tolerates failure Strong markets (capital, labor) Mobile, fluid workforce Favorable government policies Open business environment Universities and national research institutions that collaborate with industry Specialized infrastructure: venture funding, lawyers, accountancies, executive search Quality of life Cluster effect
14	"So what’s happening right now..." So what’s happening right now in Silicon Valley?
15	RIGHT NOW? It’s not the go-go 90s anymore Thank goodness! Region added 350,000 jobs. Sustainable? Since 2001, we have lost 220,000 jobs. Net gain of 130,000 Now, with retrospect, we understand the meaning Internet search was another wave (Google, Yahoo) Internet is a viable tool for commerce (eBay, Amazon) Consolidation, boom-bust cycle is taking its predicted course
16	Rip Van Winkle Theory If Rip Van Winkle fell asleep in 1998 … … and woke up again in 2006 …
17	… He would actually be impressed!
18	Even through the downturn, most key indicators continued to rise
19	Value-Added per employee grows at twice the national rate
20	Region’s share of Venture Funding Continues to Grow
21	Average Pay Still Rising
22	Income Distribution Narrowing
23	High School Performance
24	Housing Density Increases
25	But disparities persist by race
26	Housing still out of reach for too many
27	But Rip Van Winkle would also be confused by something: Valley productivity is not translating into burgeoning job growth.
28	"In the future prodigious job..." 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.
29	Why? What’s Happening? Intense competition. Rise of competitor regions Companies doing more with less. They have to. Bay area workers doing it with productivity gains.
30	Why? What’s Happening? Offshoring and outsourcing. Old story, except now higher-end functions going off shore Design R&D
31	Why? What’s Happening? Technologies we invented eliminated whole classes of jobs Administrative class Archivists, others
32	Why? What’s Happening? 4. Many of the emerging clusters (web 2.0) aren’t big job generators to begin with.
33	Why? What’s Happening? 5. Nature of 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
34
35	"To survive and thrive" To survive and thrive, Silicon Valley workers must be innovative, productive, willing to re-invent themselves, and resilient
36	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
37	Jobs Leaving Silicon Valley
38	Silicon Valley Job Strengths
39	WAGE GROWTH IN KEY SECTORS, 2002-2005
40
41	"So what’s next for Silicon..." So what’s next for Silicon Valley?
42	The Next Big Wave? We’re not finished with information technology yet Telecommunications, hand-held devices, entertainment Ubiquitous internet, WIFI, WIMAX Web 2.0
43	The Next Big Wave? 2. Alternative Energy, Clean Technology, Green Buildings VC activity starting a mini boom
44	The Next Big Wave? CONVERGENCE Nanotechnology, Biotechnology, and Information Technology
45
46	Our Organization Joint Venture: Silicon Valley Network
47	The Joint Venture Program Tax and Fiscal Reform Technology Convergence Consortium Health Care Electronic Medical Records Wireless Infrastructure Initiative Transportation and Housing Unified Building Code Cell phone coverage Disaster Preparedness
48	For more information … www.siliconvalleyonline.org
49	And for more about Joint Venture … www.jointventure.org
50	Thanks for inviting me! Russell Hancock President & Chief Executive Officer Joint Venture: Silicon Valley Network 84 West Santa Clara Street, Suite 440 San Jose, California 95113 (408) 271-7213 www.jointventure.org
51