There is this discussion going around VC circles about full stack startups. The notion that the business doesn’t just build a gadget but a complete end-to-end business. This a profoundly different kind of business investment for the valley and worth mulling over…
Over the last fourty or so years, Silicon Valley has been about making technology investments. Companies were created to build things that other businesses turned into products that real people consumed.
Put differently, technology was created to be in the service of a business like Starbucks. Silicon Valley built the technology that enabled Starbucks to sell more coffee, better treats and yet Starbucks is just another entrant in the restaurant business. Essentially companies outsourced their IT engineering budgets to high tech Silicon Valley companies.
The emergance of companies like uber and airbnb and altschool and Luxe and of course Amazon are not about technology companies but instead companies that happen to leverage technology. These companies may have a tech budget but their business, their products and the bulk of their staff are not technology. They use technology, they may invent technology but engineering exists to serve. Engineering is a service inside of the business not the business…
Sure tech is important to uber but the drivers are vastly more important…
These are just normal businesses that happen to get funded by VC’s… They are not traditional high tech companies…
As more of these companies get founded and succeed the valley becomes more about a place where entrepreneurs set up shop and less a place where technology gets built. As investors look to find the next business to fund instead of the next piece of innovative technology there is a real risk to the original valley ecosystem… No longer are technologists the winners but conventional business men…
Over time if this pattern holds these business men will succeed and become investors who will look to create more businesses that happen to use tech or… not.
After all our current business heroes are not guys who built technology but guys who understood a business need and found some tech guys to build it. Heck when Twitter paid 10 million for A VP of engineering the discussion on business insider . com was about how overpaid he was. I mean seriously no engineering leader should be that much – because they are just a service to the business after all….
The demographic and the core of what is the valley will change and the path to success will change.
We engineers that created a small corner of the world where geeky engineering could rules will find ourselves displaced by a new very different kind of world.
Engineers may become relegated once more to being shoved in the back room while the real power within companies has meetings…
Then the question remains what does this portend for future tech investments? My gut tells me that we will see a movement of investment outside of the valley over time. As this becomes home to large conventional businesses and investors pursue more of them… The guys who want to build tech will move elsewhere because their ability to find people and get investment will be better elsewhere. The valley relied on engineers investing in each other…
My wife says change is what you can rely on. And this change feels real andd it does mean that the future will look very different….
Still remaining bullish for the valley, I am just no longer certain the term Silicon will be appropriate… Maybe entrepreneur valley…
Leave a Reply