“Empire of the geeks… and what could wreck it” was the featured cover story of The Economist’s July 25 issue. “Silicon Valley should be celebrated. But its insularity risks a backlash,” reads the tag line of its leader article. Last year’s anger at the private buses that take employees who live in San Francisco to their workplaces 30 or 40 miles south, is but one of the signs that a backlash might be brewing.
You can sense the reaction against the perceived excesses of its culture in a pair of recent articles, - Silicon Valley’s Youth Problem in the NY Times Magazine, and What Silicon Valley Thinks of Women in Newsweek, the latter visually making its point in its cover. You can feel it in HBO’s no-holds-barred namesake TV series. And then there is Peter Thiel, - one of Silicon Valley’s most successful, outspoken, and wealthy entrepreneurs and VCs, - who adds fuel to the backlash fire with his controversial views on a wide range of subjects, including women, democracy, capitalism and education.
Over the years, Silicon Valley has achieved an incredible innovation network, giving it an advantage that’s almost impossible to replicate. The region has brought together a large and fluid community of technologists and entrepreneurs who share ideas when they move from company to company - as founders, employees, managers, board members or investors. It carefully nurtures its communities through social connections and business relationships, bringing them together to create a unique innovation culture.
It’s survived boom-bust cycles, most spectacularly when the NASDAQ index tripled during the dot-com bubble in the late 1990s, before crashing in 2000 once the bubble burst. “[T]he decline in the NASDAQ wiped out some $4 trillion between March and December 2000,” notes The Economist. “Silicon Valley was devastated; many of its firms went bust. The ensuing nuclear winter, when tech deals were at a standstill, lasted for years.”
But, it’s now come back with a vengeance, perhaps stronger than ever. “Silicon Valley’s entrepreneurs and innovators, technologists and moneymen are busy revolutionising nearly every aspect of the global economy… Startups touch more people, more quickly than ever before… The area’s tech companies are worth over $3 trillion…”
“But the accumulation of so much wealth so fast comes with risks. The 1990s saw a financial bubble that ended in a spectacular bust. This time the danger is insularity. The geeks live in a bubble that seals off their empire from the world they are doing so much to change…”
“The empire of the geeks draws its strength from a culture of techno-evangelism that enables entrepreneurs to rethink old systems and embrace new ones. Many denizens of the Valley believe that tech is the solution to all ills and that government is just an annoyance that still lacks an algorithm.” Some of its leaders, couple their techno-evangelism with an aggressive libertarian ideology best exemplified by Ayn Rand’s famous quote: “the question isn’t who is going to let me, it’s who is going to stop me.”
“But that is not the only source of anger,” adds The Economist. “Silicon Valley also dominates markets, sucks out the value contained in personal data, and erects business models that make money partly by avoiding taxes. There is a risk that global consumers will feel exploited and that the effects of a shrinking tax base will infuriate voters. If the perception takes root that enormous profits from exploiting data and avoiding taxes are crystallised in the fortunes of a few people living on a patch of ground near San Francisco, then there will be a backlash.”
In a recent online conversation, NY Times science and technology reporter John Markoff, - who grew up and has long lived in Silicon Valley, - said: “What worries me about the future of Silicon Valley, is [its] one-dimensionality, that it’s not a Renaissance culture… It’s an engineering culture that believes that it’s revolutionary, but it’s actually not that revolutionary. The Valley has, for a long time, mined a couple of big ideas.” First came personal computing, set in motion by Doug Engelbart and later refined by Alan Kay; and later ubiquitous computing, - the concept that led to the Internet of Things, - originally developed by Mark Weiser, and later brought to life by Steve Jobs with the iPod and the iPhone.
“In Silicon Valley, we’re in the midst of a bubble right now, and it’ll be interesting to see what the culture is like after it resets,” he writes. “The question is, how does this current bubble end? Not when, but how? What constitutes a bubble? For me, I can clearly see we’re in a bubble economy when relatively more money is chasing relatively few good ideas. When the conversation turns to Uber for ‘x,’ you can tell there we’re out of ideas, that people are basically just trying to iterate and get lucky. I suppose some of them will be lucky. There was lots of good timing before the collapse of the last bubble, and so this bubble is and will continue to create billionaires. But something will cause a reset.”
Sleeping Through the Revolution by USC professor Jonathan Taplin is another interesting article that also touches on the culture of Silicon Valley. Taplin wrote the article “to explore the idea that the last 20 years of technological progress - the digital revolution - have devalued the role of the creative artist in our society.”
The article’s title is taken from a 1968 sermon by Martin Luther King given two weeks before he died, where he said: “Too many people find themselves living amid a great period of social change, and yet they fail to develop the new attitudes, that the new situation demands. They end up sleeping through a revolution.”
Dr. King explicitly cited the emerging technological revolution, with its automation and cybernating, as one of the three revolutions he had in mind, - the other two being the advent of nuclear weapons and the freedom explosion taking place all over the world. “Through our scientific and technological genius, we have made of this world a neighborhood and yet we have not had the ethical commitment to make of it a brotherhood. But somehow, and in some way, we have got to do this.”
“The beginnings of the cyber revolution that King referenced in his sermon were already moving forward in 1968 as he was speaking,” writes Taplin. “The origins of that technology revolution were clearly located in the counter-culture… and the idea (in Nicholas Negroponte’s words) was to ‘decentralize control and harmonize people.’”
“But within 20 years, starting with Peter Thiel’s cohort at Stanford University, the organizing philosophy of Silicon Valley was far more based on the radical libertarian ideology of Ayn Rand than the commune-based notions of Ken Kesey and Stewart Brand. Thiel, the founder of PayPal, an early investor in Facebook, and the godfather of the PayPal mafia that currently rules Silicon Valley, has been clear about his philosophy. He stated, ‘I no longer believe that freedom and democracy are compatible,’ his reasoning being: ‘Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women - two constituencies that are notoriously tough for libertarians - have rendered the notion of capitalist democracy into an oxymoron.’”
“This is a pretty extraordinary statement, and I have reread the interview he gave to the Cato Institute several times. It appears that most women, in Thiel’s judgment, fall into Ayn Rand’s notion of ‘takers’ as opposed to Thiel’s vaunted male ‘makers.’ So for Thiel, in a true capitalist democracy only the makers should get to vote, and the women and the welfare recipients will take what the makers chose to give them.”
Thiel’s views are representative of just one aspect of Silicon Valley’s multi-faceted culture. But it’s this aspect, and the fears that it’s on the rise, that’s led to the concerns that single-minded powerful institutions, whether in Silicon Valley or Wall Street, can cause great damage to the larger society, a concern expressed as insularity by The Economist; one-dimensionality by John Markoff; and radical libertarian ideology by Jon Taplin.
“The Valley’s firms are hardly the only ones to push against taxes and regulation,” writes The Economist. “They are free to operate as they like within the law. But they risk becoming targets because they are so global. They should remember that the law can change. If they want a seat at the table when it does, they need to be part of the markets they sell into, not isolated from them. Even private firms run by geniuses need a licence from society to operate.”
Taplin finishes his article with another phrase from Dr. King’s 1968 sermon: “Our scientific power has outrun our spiritual power. We have guided missiles and unguided men.” To which he adds in conclusion: “Let us not assume that this technological revolution we are living through has but one inevitable outcome. History is made by man, not by corporations or machines. It is time to wake up and begin to think about a digital renaissance.”