McNealy on the decline of Silicon Valley

Scott Mcnealy, ex-CEO of Sun was quite pessimistic about Silicon valley and future of the tech  economy in general. He said he is asking his kids to learn Mandarin. Here are some of his views:

  • I’’m skeptical that the green jobs are going to drive the recovery. So far, the track record’s been terrible. That’s going to be a challenge for the people here who stuck their neck out to go green.
  • Then there’s social networking…  I don’t think social networking is the jobs driver.
  • It’s all moving to Asia and other places where there are lots of technical engineers who are willing to work at a more reasonable salary because they don’t have to spend $3.5 million on a home and pay half of it to taxes.
  • I don’t think there’s start-up activity in real [research and development] and manufacturing. There’s a lot in entertainment, virtual and social networking. But I’m not sure it’s really going to change the quality of life in a positive way for a lot of people.
  • It’s not the Valley. It’s the overhead and the overhang, the clouds brought in by Sacramento and Washington, D.C., the regulations, the deficit and the misallocation of resources. It’s all of those things.
  • The biggest issues with the Valley are local, state and federal governmental overreach and overregulation. It’s over-pensioned, over-unionized and over the top.
  • I started writing about the decline of Silicon Valley in 2008 when people I knew, that we practically born here, started leaving and going back to India and China. Many have amassed fortunes in a couple of years there, when it was unattainable here, despite the fact that they had degrees from top notch American universities and they were in the land of opportunity.

Scott makes very good points here. The manufacturing has left this area long time ago, but the innovation engine is very active in the valley. What I observe in the software start-up sector, I do not see any other place with the energy, creativity, and dynamism as here in the valley. Scott’s style is to provoke with some extreme statements. I remain highly positive on the future of the valley.

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2 responses to “McNealy on the decline of Silicon Valley

  1. What is the basis of your positive outlook? As mentioned in the article, there are plenty of places where innovation thrives. There does not seem to be any special place to do this. The Valley is a thing of the past – at least in the sense it was in the 1980s and 90s.

  2. Tom,
    Of course innovation can happen anywhere. But there is a combination of various factors that makes Silicon valley very special. Most importantly it is a combination of extremely smart entrepreneurs backed by early-stage funding plus the research from Stanford University (originators of companies like Sun, Cisco, Yahoo, Google, Youtube, ….) and UC, Berkeley (origin of Unix, Ingres, Inktomi,..). This combination creates a chemistry that is hard to replicate. Show me the best software products coming from another geography. There is a number of start-up companies with unique innovations happening right now here in the valley which will dominate for many years to come.

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