The “Next Silicon Valley” Myth.

As the Information Age progresses, the world is becoming more globalized. Diversity is natural to the nature of Information Technologies much like homogeneity was natural to mass production. Globalization is a decentralizing force. Local economies must pursue specialized production to participate in global markets. This requires countries and cities alike to define an identity to remain competitive too.

Silicon Valley’s genesis began with mass-production in goods like Silicon chips after World War II. However, a new open economy today creates and incentivizes market diversity. This was precisely my criticism with China and its ability to drive disruptive innovations for productivity growth in the marketplace. Diversity is necessary to instill the entropy for change. The next innovation hub will have something Silicon Valley doesn’t.

These are some common pre-requisites for top tech hubs per Atlas Research:

– Private Sector Activity.

– Higher Education.

– Population Diversity.

– Bikeable / Walkable Cities.

– High Incomes.

One of the most compelling identities of Silicon Valley is its legacy of successful startups. However, startup legacy is something you can’t successfully arbitrage. The smartest founders are deliberate in where they start their companies. They want to give themselves unfair advantages for their idea—and a city’s unique, un-replicable infrastructure is one of them. 

Where will you start a company in government technology? It’s unlikely to be in Silicon Valley. Some sectors are best changed in specific locations. There will be more edge cases of unicorns in the future. Unicorns will pop up in areas least expected. 

I’m always skeptical about arbitrage and copying. In a similar tone, the search for the next Silicon Valley is a bearish outlook on the future of progress. Foundational companies are all zero to one, not 1 to n.

One such path to zero to one are the rise of Initial Coin Offers (ICOs) that will offer a more democratized, efficient funding mechanism for startups. Alternatively, in many respects, completely change what it means to create a startup. 

 

The evolution of new technologies makes us no longer tied down by the tyranny of place. The Tiebout Hypothesis in 1951 stated that the way people shop for governance like products. Cities themselves are becoming anachronisms. With innovation, cities are increasingly being commoditized as SaaS.  Law is a function of latitude and longitude if the preferences of thousands of software engineers are aggregated into search queries.

Simply put, our viewpoints on where innovation occurs will change as we develop extranational beliefs of the world. A lot of the problems of Silicon Valley today will be a testing point for this theory. As many people have “voiced” dissent with Prop C, they can “exit” and create their ideal conditions online with the existing technologies today. 

Cryptonetworks are evolving Robert Coase’s theory of the firm by reducing the inefficiencies between the market and the firm where economic activities are achieved through a decentralized consensus.

“Of all 36 ways to get out of trouble, the best way is—leave.”

– Old Chinese Proverb