An interesting article in today’s (23rd August) Financial Times by Philip Delves Broughton gives a perspective on innovation and growth in the Tech Sector. Here’s the main points:
“A decade on, another tech bubble is set to deflate”
“After the dotcom bubble popped so spectacularly in 2000-2001, a few glum years for the technology industry have been followed by an equally spectacular run… The social media sector has grown and morphed in endlessly surprising ways… Cloud computing has compounded the speed of technological change… While the rest of the US has wallowed in recession, Silicon Valley and other high-tech pockets have thrived.
However, there is a growing feeling that an 8 year boom is over… those blessed by the Valley’s recent success (e.g. David Sacks, PayPal and Yammer) worry that ‘the gig is up’.
Advertisers love the idea of Facebook but can’t figure out how to use it to sell their products. Those who know the company best seem unduly eager to sell its stock. Apple continues to churn out cash…but is undoubtedly a less exciting company without its late founder Steve Jobs. 10 out of the top 15 iTunes paid apps are games…. most people are using their iPads to play Angry Birds rather than solve the world’s problems.
… this current bubble has addressed the margins of our lives, not the core… and to build a new company in this space, you cannot be trivial. However great, well-executed ideas remain scarce.
‘To create a successful tech company, Sacks writes, you have to find an idea that 1) has escaped the attention of the major internet companies, which are better run than ever before; 2) is capable of being launched and proven-out for around $5m…; 3) is protectable from the onslaught of those big companies once they figure out what you’re on to. How many of those ideas are left?’
Marc Anderseen (one of the Valley’s most powerful venture capitalists) says ‘the big companies are incapable of successful innovation….’ ‘Innovation’, he wrote, ‘would remain the preserve of nimble, disruptive startups’
An era in Silicon Valley is ending, quietly leaching away… Marc Anderseen is right to keep the faith however – there is no point in being in the tech industry unless you grasp that bubbles are inevitable, yet trust that the next one will always be better than the last.”