{"id":12873,"date":"2014-06-12T06:00:04","date_gmt":"2014-06-12T12:00:04","guid":{"rendered":"https:\/\/tested-neuron.flywheelsites.com\/?p=12873"},"modified":"2015-02-24T19:43:12","modified_gmt":"2015-02-25T02:43:12","slug":"silicon-valleys-moment","status":"publish","type":"post","link":"https:\/\/unreasonablegroup.com\/articles\/silicon-valleys-moment\/","title":{"rendered":"Silicon Valley\u2019s Boom-Bust Cycle"},"content":{"rendered":"

Silicon Valley is having a moment<\/strong>. Startups are household names. Entrepreneurs and VCs are being treated like celebrities. We even have our own eponymous television show on HBO, after being ignored for decades in favor of New York\u2019s media and finance industries, DC\u2019s politicians, and LA\u2019s entertainers. Many young entrepreneurs are brash enough to believe that they deserve this treatment, and to them this moment must seem like business as usual. It isn\u2019t. There are specific reasons why Silicon Valley is having a moment; by understanding these reasons, we can better understand how long this moment will last and what\u2019s likely to follow.<\/p>\n

The shadow that Silicon Valley casts varies with its traditional boom-and-bust cycles. Just in my lifetime, we\u2019ve seen things like the videogame boom, the personal computer boom, the Dot Com boom, the Web 2.0 boom, and whatever we want to call our current boom (Social\/Mobile?).<\/p>\n

These cycles follow the classic Gartner hype cycle\u2014the \u201cpeak of inflated expectations,\u201d which leads to the \u201ctrough of disillusionment,\u201d ending with the \u201cslope of enlightenment\u201d and \u201cplateau of productivity.” Amara\u2019s Law stated this slightly differently: \u201cWe tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.\u201d<\/p>\n

Yet the past few booms have been qualitatively different from those that came before.\u00a0For example, before the Dot Com boom, total venture capital investment was less than $3 billion per year.\u00a0 It spiked to $100 billion during the height of that boom, and even after a considerable decline, never fell below $13 billion per year and sits at $24 billion per year today.\u00a0That\u2019s an eightfold increase over the original baseline.<\/p>\n

Similarly, technology\u2019s share of the market cap of the S&P 500 was about 6% before the Dot Com boom, surged to 35% during that boom, and is still nearly 20% today, a roughly threefold increase over the original baseline.<\/p>\n

These numbers simply reflect the key shift that has made Silicon Valley into \u201cSILICON VALLEY.\u201d\u00a0Before the Dot Com boom, technology was an isolated sector that few people encountered in their daily lives.\u00a0 Very few workers ever saw an IBM mainframe or Cray supercomputer.\u00a0The boom brought technology to the mainstream consumer, and the effect has only strengthened since then.<\/p>\n

Today, the average consumer shops online, belongs to several social networks, and owns a smartphone that has more computing power than a 1980s supercomputer.\u00a0And the rise of touchscreen computing may be the most underappreciated yet fundamental change.<\/p>\n

A little irrational exuberance can be fun and productive, but don\u2019t mistake a temporary peak for a permanent plateau.<\/i> \u00a0Tweet This Quote<\/a><\/span><\/p><\/blockquote>\n

As I\u2019m fond of telling folks, my mom is a technological Luddite who mistrusts science and technology.\u00a0 Yet now that she has an iPad,\u00a0she\u2019s constantly on the Internet… as I can tell from all the chain letters and urban myths she forwards to me on a daily basis!\u00a0Touchscreen computing made computers truly consumer products for the first time.\u00a0No complicated interface to learn; no drivers to install. And the tablet revolution is only four years old at this point!<\/p>\n

Yet just because Silicon Valley has become more important than ever doesn\u2019t mean it\u2019s no longer subject to the boom-bust cycle.\u00a0 Other powerful industries such as finance, media, and entertainment still go through extreme ups and downs\u2014just ask anyone who\u2019s been on Wall Street over the past decade. Nor do powerful industries stay on top forever\u2014just ask the auto makers, railroads, and steamship companies that were once the hot new technology.<\/p>\n

It\u2019s easy to see the signs of the \u201ctrough of disillusionment\u201d already – the criticisms leveled at \u201cbrogrammers\u201d working on \u201cmeaningless social apps\u201d as they drive out the long-time residents of San Francisco aren\u2019t just a matter of sour grapes.\u00a0They are a leading indicator of a coming correction that Silicon Valley boosters would be wise to heed.<\/p>\n

Silicon Valley should enjoy its moment.\u00a0Times like this don\u2019t come that often, and a little irrational exuberance can be fun and productive, as long as you don\u2019t mistake a temporary peak for a permanent plateau and plan accordingly.\u00a0If you remember the big picture and the history of the Valley, you\u2019ll be able to keep your head during these heady times.<\/p>\n

Silicon Valley should enjoy its moment.\u00a0Times like this don\u2019t come that often.<\/i> \u00a0Tweet This Quote<\/a><\/span><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Today startups are household names, and entrepreneurs and VCs are treated like celebrities. There are reasons why Silicon Valley is having a moment and by understanding them we can also understand how long it will last and what will follow.<\/p>\n","protected":false},"author":10,"featured_media":19666,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[476,1510,1529],"tags":[2247,450,1058,498,17,677,383,119,359,371],"class_list":["post-12873","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-article","category-career","category-technology","tag-article","tag-career","tag-chris-yeh","tag-culture","tag-money","tag-opin","tag-starting","tag-success","tag-tech","tag-wisdom"],"acf":[],"yoast_head":"\nSilicon Valley\u2019s Boom-Bust Cycle - UNREASONABLE<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/unreasonablegroup.com\/articles\/silicon-valleys-moment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Silicon Valley\u2019s Boom-Bust Cycle - UNREASONABLE\" \/>\n<meta property=\"og:description\" content=\"Today startups are household names, and entrepreneurs and VCs are treated like celebrities. 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