May 19, 2012 at 01:10Silicon Valley's golden age is over and we dance on its grave
- Transfer
Interview translation with Stephen Blanc , a professor at Berkeley and Stanford, and Silicon Valley entrepreneur over the upcoming Facebook IPO.
Q (Poll): What will this IPO turn out for Silicon Valley?
O (reply): In my opinion, this is the beginning of the end of the Valley we know. Previously, they invested in science and technology, and, in general, in silicon. A good venture investor could make hundreds of millions. Now the scheme has changed under the influence of two ideas. First, for the first time, billions of people have electronic devices, and many of them are mobile. Secondly, the communication that used to be face-to-face is now flowing to the Internet.
And this trend is only gaining momentum. Facebook is not the last chord, remember MySpace. Art and entertainment, whatever you want, is now in computers. For the first time, companies like Facebook own markets at the level of most people on the planet.
Q: For Facebook, this is cool.
A: For them it is awesome. But the familiar Silicon Valley is over.
If you have a choice - to invest in a cool cure for cancer, but you will not see income for ten years (at best), or in a social network project that will shoot in two years, what will you choose?
If you have a venture investment company, you are throwing out your research department. This is all complicated and it takes a very long time to wait for income. But social networks are another matter, there is no need to wait, the return is fast, since the two things mentioned earlier work.
Q: Half of the market participants for innovation and high technology believe that these are all signs of another dot-com boom.
A: When the last “bubble” occurred, investors went crazy, clinging to any at least some interesting projects. I do not think this is a bubble. Cost is overvalued, in my opinion, but social media is a reality.
Q: Is Facebook worth a hundred billion?
A: In the last bubble, no customers were observed, and Facebook earned $ 4 from each user. Users are customers. They give real income. Nobody argues that Facebook can make money, they argue how much and how fast they will grow. This is only a management issue.
Q: But does Silicon Valley end anyway?
A: I teach science and engineering. I see students trying to launch complex commercial projects. But investors are interested in chasing the billions that are hidden in smartphones. Thank God, we have grants for small research business from the government, otherwise everything would go to the Chinese.
Q: But there are people who do interesting things, for example Vinod Kosl . [approx. transl.] venture investor, one of the founders of Sun Microsystems.
A: Yes, there is one. But think about it. The four most interesting projects over the past five years are Tesla [Motors], SpaceX, Google Driving and Google Goggles. [approx. transl.] Electric cars, private spacecraft, autonomous car and augmented reality glasses . One man, Elon Musk[co-founder of PayPal, SpaceX and Tesla Motors] and one company, Google, have done all four projects worthy of Silicon Valley.
Q: Is this a sign of a serious failure of venture investors in the Valley?
A: Not that someone is doing something bad. Simply paraphrasing Willie Sutton , “social media is where the money is” [Willy Sutton, also known as “Sick Willy” is a famous bank robber (well, there are such celebrities in the USA, well). When a reporter asked him why he was robbing banks, he replied: “because there is money there”] .
Q: What is the catch?
A: I do not know. Thank God for government grants, the National Institute of Health, for Musk and for Google.
Q: Well, is American innovation the end, or is it not so simple?
A: I would summarize it this way - the success of Facebook unintentionally leads to the demise of Silicon Valley in that state when investors took the risks of financing science and technology that helped the world. The Golden Age of Silicon Valley is over, and we are dancing on its grave. Facebook, on the other hand, is a great company. So I have dual feelings.
PS: Article checked for lack of silicone.
Q (Poll): What will this IPO turn out for Silicon Valley?
O (reply): In my opinion, this is the beginning of the end of the Valley we know. Previously, they invested in science and technology, and, in general, in silicon. A good venture investor could make hundreds of millions. Now the scheme has changed under the influence of two ideas. First, for the first time, billions of people have electronic devices, and many of them are mobile. Secondly, the communication that used to be face-to-face is now flowing to the Internet.
And this trend is only gaining momentum. Facebook is not the last chord, remember MySpace. Art and entertainment, whatever you want, is now in computers. For the first time, companies like Facebook own markets at the level of most people on the planet.
Q: For Facebook, this is cool.
A: For them it is awesome. But the familiar Silicon Valley is over.
If you have a choice - to invest in a cool cure for cancer, but you will not see income for ten years (at best), or in a social network project that will shoot in two years, what will you choose?
If you have a venture investment company, you are throwing out your research department. This is all complicated and it takes a very long time to wait for income. But social networks are another matter, there is no need to wait, the return is fast, since the two things mentioned earlier work.
Q: Half of the market participants for innovation and high technology believe that these are all signs of another dot-com boom.
A: When the last “bubble” occurred, investors went crazy, clinging to any at least some interesting projects. I do not think this is a bubble. Cost is overvalued, in my opinion, but social media is a reality.
Q: Is Facebook worth a hundred billion?
A: In the last bubble, no customers were observed, and Facebook earned $ 4 from each user. Users are customers. They give real income. Nobody argues that Facebook can make money, they argue how much and how fast they will grow. This is only a management issue.
Q: But does Silicon Valley end anyway?
A: I teach science and engineering. I see students trying to launch complex commercial projects. But investors are interested in chasing the billions that are hidden in smartphones. Thank God, we have grants for small research business from the government, otherwise everything would go to the Chinese.
Q: But there are people who do interesting things, for example Vinod Kosl . [approx. transl.] venture investor, one of the founders of Sun Microsystems.
A: Yes, there is one. But think about it. The four most interesting projects over the past five years are Tesla [Motors], SpaceX, Google Driving and Google Goggles. [approx. transl.] Electric cars, private spacecraft, autonomous car and augmented reality glasses . One man, Elon Musk[co-founder of PayPal, SpaceX and Tesla Motors] and one company, Google, have done all four projects worthy of Silicon Valley.
Q: Is this a sign of a serious failure of venture investors in the Valley?
A: Not that someone is doing something bad. Simply paraphrasing Willie Sutton , “social media is where the money is” [Willy Sutton, also known as “Sick Willy” is a famous bank robber (well, there are such celebrities in the USA, well). When a reporter asked him why he was robbing banks, he replied: “because there is money there”] .
Q: What is the catch?
A: I do not know. Thank God for government grants, the National Institute of Health, for Musk and for Google.
Q: Well, is American innovation the end, or is it not so simple?
A: I would summarize it this way - the success of Facebook unintentionally leads to the demise of Silicon Valley in that state when investors took the risks of financing science and technology that helped the world. The Golden Age of Silicon Valley is over, and we are dancing on its grave. Facebook, on the other hand, is a great company. So I have dual feelings.
PS: Article checked for lack of silicone.