What’s Eating Silicon Valley
Originally published on Quartz.com
Like most people, I look up to and admire the heroes of Silicon Valley (the real ones, not the ones from the TV show). They’ve given rise to services (e.g., Google, Facebook, Uber, LinkedIn, Airbnb) that we use every day and make the world a better place. They’ve created value, wealth, and opportunity at unprecedented historic levels.
I’ve also had the chance to meet some of the leading CEOs and entrepreneurs of the Valley and they are, by and large, good-natured, brilliant, and thoughtful people. They’re earnest and committed to building positive things. Some of them are donors to my organization, for which I’m immensely grateful. It’s clear that Silicon Valley is today more than ever the center of innovation and technological progress.
That said, there are a few things about it that are starting to make me nervous.
I’ve had several friends tell me that they’re leaving the Valley because they want to rejoin the real world. A successful entrepreneur told me he fantasizes about leaving because he wants to raise his kids the way he was raised in Rochester, and that his money would effectively triple as soon as he left. Another successful entrepreneur who moved to San Francisco said he felt like “just another cow in the pen,” and that he enjoyed spending time in other parts of the country because it made him feel more like he was making a difference.
What are these people talking about? What are the things that are starting to freak people out about Silicon Valley? There are a few themes that come up again and again:
The epicenter of wealth and young money
There are a lot of young people, generally from very good colleges, making more money than most people will ever see. These are summer college interns (non-engineers) who are being paid $7,000+ a month and getting perks like free flights home to visit on weekends. Bidding wars and five and six-digit signing bonuses are being paid out for freshly minted engineering grads, particularly from Stanford. Average salaries are now close to $200,000 in the Valley, to say nothing of the upside of equity-based compensation, which can be dramatically higher.
All of the above makes business sense—I’d offer the same thing to a young person whom I thought could potentially be a difference-maker. But it’s a lot relatively early in people’s careers.
Technology companies tend to operate in winner-take-all spaces and thus adopt a very high-commitment culture. That is, if there are 10 or 100 mapping apps or social networks, the one company left standing is worth billions, and the rest are worth a very small fraction of that (probably only what people will pay for the talent on hand). As a result, the organizations are ultra-efficient and expect long hours and constant availability. It’s either win or lose big for a lot of companies, and there’s not much in-between.
Hard work is awesome. But when you see an army of people staring at their computer screens in the evening post-dinnertime, it’s a little eerie.
War for talent
If you want to win big, you have to get the best troops. Well-resourced tech companies are now on the hunt for talent like never before, building massive recruitment pipelines to hoover up top prospects and engineers. Google recruits the heck out of Stanford, Berkeley, Carnegie Mellon, MIT, and other top schools offering six-figures to start, plus bonuses. Facebook sponsors hackathons at the top schools, stays in touch with professors, and invests tons of resources in order to be the most visible and obvious employer.
Don’t think that the smart kids haven’t noticed—the proportion of Stanford students majoring in the Humanities has plummeted from over 20% to only 7% this past year, prompting wails among History and English professors whose classes no longer have students. One administrator joked to me that Stanford is now the Stanford Institute of Technology. In 2014, more Harvard Business School Grads went into technology than into banking for the first time since the dot-com era.
Again, I’d do the same thing. But is this the optimal assignment of our best and brightest? And is it a good thing that one of our nation’s top universities seems to be going vocational?
Insular culture/Not awesome at diversity
The corporate campuses and workplace amenities of Apple, Google, Facebook, etc. are legendary. They’re insider tourist attractions. For the average employee, you wake up and drive from a leafy suburb to a grounded spaceship. You stay there and eat the subsidized gourmet dinner with someone who’s a lot like you. Or maybe you take the dark-windowed company bus from San Francisco and tap out emails with headphones on. Even smaller companies are competing on rock climbing walls and ping-pong tables.
This way of life doesn’t generally expose you to people who are living different ways of life. And the people on the bus and spaceship aren’t representative of most of society based on gender or race or education or age. “Silicon Valley is a bubble” doesn’t refer to valuations or money—it refers to the fact that you live in a bubble.
Crazy high cost of living
Simply put, it will blow your mind what things cost in terms of housing in the Bay Area right now. Modest houses for well over a million dollars. Little apartments the same. One bedroom apartments start at over $3,000/month. The average home in Santa Clara county sold for $1.25 million in August of 2015, up 9% from last year. How is a teacher or just about any regular person going to live there?
Even if you can afford to live in a neighborhood, the elevated costs make it easy to compare yourself to others and say, “Well, sure I’m richer than anyone I grew up with, but I’m not that rich, because look at that guy I work with or went to school with or who lives down the block. That guy’s really rich.” It’s not an environment of plenty, but one of keeping up with the Joneses.
These are some of the things that are making people uncomfortable both in and about the Valley. None of these issues are anyone’s fault. It’s just the market at work—the capital market, the market for talent, the real estate market.
It reminds me a fair amount of Wall Street. Wall Street’s public image took a hit post-financial crisis in part because they were bailed out by the government, in part because they contributed to the crisis, and in part because they don’t produce tangible goods and services (no one got as mad at Chrysler, for example).
But another reason Wall Street had trouble maintaining goodwill was because of some of the attributes above—hard-charging, too much too soon, parallel reality, money flowing everywhere, rich white guys, etc. To use a sports metaphor, it’s like the Yankees or Duke University or the Patriots—they start getting hard to root for, unless they’re your home team.
Solve the big problems
Perhaps the biggest critique of Silicon Valley comes from a technologist quoted in Vanity Fair’s recent article by Nick Bilton—“SF tech culture is focused on solving one problem: What is my mother no longer doing for me?”
Getting a car on demand, finding something online, business productivity tools, connecting with people—these are solutions that the market demands and rewards. They make money. Silicon Valley is like Wall Street in that it will fill and pursue market opportunities to their logical extremes.
If there’s one way that Silicon Valley can lead and distance itself from critiques of insularity and out-of-touchness, it’s to tackle the big, thorny, difficult problems that would improve the state of the world. Problems that are messy, protracted, and involve the prospect of failure and embarrassment. They don’t have a ready market. They affect rich and poor alike. They touch flawed systems. They’re less “What did Mom do to make my life better?” and more “What would make Mom proud?” They require you to do more than cut a check, and instead hunker down and grind away for years.
What problems do I mean? Here are a few that come to mind that would give Silicon Valley the moral leadership to match its economic and intellectual might:
We all know that California is stuck in a multi-year drought. It’s the great equalizer. The Bay Area has been hit less hard by water rationing than Southern California, but the dry spell is finally starting to impact people’s ability to water their lawns and take out the Slip ‘N Slide, not to mention its influence on the epic wildfires that are destroying homes all over the state.
Imagine if the resources of Silicon Valley were to tackle this challenge. How about building a water pipeline from Canada to northern California? Megascale desalination, Israeli-style? Large-scale conservation technologies? If there’s something that would get everyone in California declaring companies as heroes it’s this. Water is free in California, but not really—so be the water bringer.
One CEO commented that it took him about an hour to make a 15-mile commute in the morning to Palo Alto. I found myself shaking my head at the thought of all of these millionaires inching along in standstill traffic twice a day, even those that did their best to engineer a short commute. While some of their Teslas can drive themselves so the driver can send emails and whatnot, commute length is the single biggest determinant of day-to-day happiness according to psychologists. What use is being a mega-baller if you’re stuck in traffic every day?
I know, Google self-driving cars will go mainstream by 2030 and greatly reduce traffic (and potentially eliminate hundreds of thousands of driving jobs). In the meantime, how about dynamic tolling? Staggered commute times? Jetpacks? A public-private partnership to add four lanes to widen Route 101? Again, whoever did this would be a hero, and could probably name the new lanes after their company.
Diversity and social issues
America is bifurcating fast. Social mobility is down, technological unemployment is rising, and we’re heading toward a country where the non-white majority in 2043 will have lower levels of income, wealth, education, physical freedom, and political participation than the white minority. That’s the country kids are growing into.
Technology companies are starting to focus on getting more diversity in their own organizations, which is a great place to start. But there’s much more that can be done.
Take the current controversy over policing. You’re telling me that the best non-lethal weapon we can give an officer in 2016 is a Taser with a range of 25 feet that was developed back in 1974? Or that I can have a video camera on my phone but we can’t stick one on every badge?
Is there really no better system than to rely on overworked guidance counselors and standardized testing at age 16 to identify talented minorities in inner cities?
Technologists could do a lot to lead in the right direction.
National SAT scores are at their lowest points in a decade. Online education is ubiquitous, yet we don’t seem to be getting any smarter. If anything, it’s kind of the opposite. We have decades of research on effective education that isn’t being implemented nationwide. Meanwhile, we plow millions of kids through a factory system that was designed in the agrarian era.
I love Altschool, Minerva Project, and the Khan Academy, but we’re still just scratching the surface of both the opportunity and the need around the country. So many people want this, it’s unreal. There’s even money in this one—the US spends $621 billion on public education, with uneven results.
Is filling out bubbles with a pencil on a test designed in 1901 still the best we can do to measure human potential?
I’m optimistic because this generation of techies is starting to have kids. Nothing motivates you to figure out what’s going on with a system more than when your kid has to enter it (even private schools).
When technologists interact with government, they tend to focus either on things that are good for their business interests (immigration, internet access) or libertarianism (stay out of the way). Otherwise, money gets lost in a maze. It’s a swamp, another world. The operating system of the government is out-of-date and needs an update—only it’s not capable of updating itself.
Don’t let the system scare you off. Look at Lawrence Lessig—he’s a law professor who’s trying to get money out of politics and crowdfunded $11 million dollars to do it. That’s how much Google spent on lobbying last year.
Or Jen Pahlka and Code for America, which sends coders and designers to save cities money by showing them what a lean, talented team can do.
Or Megan Smith who left Google to become CTO of the US, along with the wave of heroes who moved to Washington DC to save Healthcare.gov.
It’s still your country. Don’t give up on it.
For Silicon Valley denizens, this is the golden age of entrepreneurship. But if you look across the country, entrepreneurship is at a 24-year low and most young people are not starting businesses, online or otherwise. They’re looking for jobs in Baltimore, Detroit, New Orleans, Cleveland, St. Louis, Providence, Cincinnati, San Antonio, upstate New York, and wherever else to pay back loans and maybe start a family.
Entrepreneurship in these other cities looks quite different than it does in the Valley. It’s unsexy and gritty, measured in credit card debt rather than VC meetings, by getting customers instead of visitors or users, by changing the neighborhood instead of changing the world. Companies are started not with a desire to be huge, but because there’s a problem to be solved.
These entrepreneurs look up to the people in the Valley for inspiration. You wouldn’t believe how big a difference it would make to have tech rockstars spend time in these cities and commit to making them better. It would make these entrepreneurs think all things were possible.
These are just problems that come to mind for me. The truth is that you could choose just about anything under the sun that you felt strongly about, as long as it came from a good place.
When I ran a company, I didn’t have time for much else. I thought that the work that I was doing represented the most profound impact and good I could make in the world. I was focused. I wanted to be rich. If someone asked me for help I would make a small contribution, but I felt my greatest contribution was my day job.
After we got acquired, I thought about joining or starting another company. Instead I wound up founding a non-profit to make entrepreneurship more accessible and distributed throughout the US.
That decision has driven the last five years. It’s been a struggle and a massive education. The market’s fuzzier. Nothing is as clean as you want it to be. The humanity of it can be overwhelming.
But underlying the humanity is the conviction that the problem you’re addressing is worth solving. It challenges you in ways similar to having a child—you grow up or you quit, only quitting would make you a loser
Here’s the plea to Silicon Valley: we’re worried you’re losing your soul. Please take on challenges that are worthy of you, that demand your heart, reputation, treasure, commitment, conviction, and values—not just what the market’s asking of you. You’re the builders of this era. It’s not enough. We need you to lead.
Andrew Yang is the founder and CEO of Venture for America, and the author of Smart People Should Build Things, published by Harper Collins. You can follow Andrew on Twitter at @AndrewYangVFA.