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The End of Silicon Valley?

There are regular news articles and doomsayers that predict the demise of Silicon Valley. The New York Times had one yesterday – Move Over Silicon Valley, Here Come European Start-Ups. Industry conferences also address the topic – the AlwaysOn Innovation Conference had panel last year and Joe Schoendorf from Accel Partners also discussed it extensively over a fireside chat session.

I am very excited to see that European start-ups finally manage to gather attention on the other side of the pond and that high-quality conferences, such as DLD07 or LeWeb3, take place in Europe and help facilitate this emergence.

There are three reasons why the Silicon Valley’s keeps an advantage over other places in the world and in the US for high-tech innovation and entrepreneurship:

- The largest addressable market: the US market remains the largest domestic market in terms of consumer dollars and lack of language barriers; the main roadblock to rapid expansion in Europe is languages and localization issues;

- A tight-knit cluster of high education, entrepreneurs, large companies, and VCs; despite the massive improvement in communication, it still seems that face-to-face interaction is hard to beat;

- A visionary VC community that already has a global reach: look further than DFJ’s exits late 2005: Baidu and Skype.

More than Silicon Valley’s demise, the emergence of competing centers in India and China, seems to me the most likely scenario for the next 20 years. CK Prahalad had a very interesting presentation on this topic at Software 2006.

Update: ValleyWag puts John Markoff’s New York Times article into a very interesting perspective.