“Silicon Valley is not built on success as it is on rubble”
— Paul Saffo
At our dinner last night, Paul Saffo gave a great talk on the different emerging forms of capitalism. He also gave a concise and interesting descriptions of what makes Silicon Valley tick. Paul teaches classes on the future of engineering at Stanford and has been involved with the Institute for the Future.
At the heart of his framework is that our world is
moving from one of nation-states to one of city-states. Rather than the
future being one of the US versus China, it is going to be Silicon
Valley vs Beijing or Chicago vs. Paris. Each dominant city will define
its region. With the globalization of trade and the impact of the
internet, people will identify both with the culture established by
their city/region as well as with global, cross-border
influences/factors such as Islam. With the “flattening” of the world,
Chicago is no longer vying with US cities like New York for influence,
commerce and jobs, but other major cities in the world.
He commented that culture is set in a given region by myth or stories. There are many standard ones with the “creation” story being one of the most powerful. How a city or region views the events and influences of its origin greatly impacts how it views itself today. For example, San Francisco was established during the wild west and the gold rush. Rugged individualism and a maverick spirit characterized the “Wild West”. Even earlier, the state got its name from the Spanish myth of the land where the streets were paved in gold and Amazon women ruled. This has given way over time to the “maverick” entrepreneurial culture. Boston has a more refined flavor of entrepreneurship driven by its Puritanical origins, and Chicago by its middle class, immigrant history. Redefine the origin myth and you begin to influence the culture.
He started his speech with the quote above. He said that Silicon Valley has learned to fail in the right way and that has resulted in its resilience. (His essay on this, Failure is the Best Medicine, is on his site). As technology cycles come and go, bursting bubbles "burn out the under brush". For example, in the early 1990’s, enormous amounts of money went down the rat hole as new and established firms tried to get interactive TV to work. This world cratered but it established the conditions that allowed the Web to take off. It left a sea of C++ programmers and other developers with extensive multimedia talent. People often defined themselves based upon the efforts of old. “We are in the old Activision building”. Each city and region have different models for failure and for capitalism. Saffo commented that in France, bankruptcy is a shame that lasts for generations and defines families.
He defined three specific flavors of capitalism: American capitalism (emphasizes the individual), European (capitalism that focuses on community and preserves continuity) and Asian capitalism (Confucian capitalism that emphasizes networks and the extended family). The US has to realize it is not the only model. Americans (or other foreigners) get rolled in Asia if they don’t have or realize the role of extended networks. Global network models listen to regional voices and tie it all together. There will be new forms of failure and capitalism forming in the coming 20 years, which we will need to be aware of and to monitor.
In short, we are all part of the global scene now…not just the politicians and Fortune 500 firms. We will be dealing with an increasingly complex competitive landscape, requiring an increasingly global perspective.