Monday, May 25, 2015

Tech power beyond Silicon Valley (3)

Last update: Saturday 5/23/15
The good thing, no, the great thing about the rapid and unprecedented expansion of tech wealth and power during the last fifty years is that it has not been a zero sum game. Silicon Valley's young billionaires did not snatch their new billions from the pockets of old billionaires located elsewhere. But the bad thing about the new digital wealth is that, so far, its expansion has not been shared by Blacks, other minorities, and women. So the challenge is to ensure that further expansion will not be confined to Asian and Caucasian males. (Note: This is the third in a series of three notes on this blog that pursue this line of discussion -- Diversity  and Ambition)

Let me be clear. I am not a revolutionary, so I am not thinking about radical reorganizations of our society that ensure that all new wealth is shared by everyone. 
  • I do so despite the fact that, like many aging fans of the Star Trek franchise, my devotion to its many TV episodes and movies stems in large part from its depiction of a society that is not only free from the obscene racial and gender biases that afflict our present society, but a future society that has apparently moved beyond our primitive concepts of "salaries" and "wealth". I can't recall ever seeing anyone cash a paycheck on Star Trek. Yet they were all well fed, well housed, well educated, and received the highest quality medical care. Unfortunately, I have no idea how we can get from here to there. So I will settle for achieving more mundane "Jeffersonian" objectives. Not Thomas Jefferson ... I mean "The Jeffersons" TV show, whose theme song announced that by moving on up "we finally got a piece of the pie" ... :-)

Jobs yes, power no
Of course we should continue to press for increasing the share of software jobs in Silicon Valley that are allocated to Blacks, other minorities, and women. But we should do so mindful of the fact that less than 15 percent of the nation's software developers work in the Valley. Most of our recruitment efforts should therefore be directed at the corporations and government agencies outside of the Valley who employ over 85 percent of the nation's developers.

On the other hand, the Valley's position as the globe's preeminent center of technical/financial power notwithstanding, I strongly recommend that we abandon any notions that the Valley's corporate overlords will share substantial power with Blacks, other minorities, and women in the foreseeable future. The value of jobs can be measured by annual salaries, power by sizable chunks of stock. So I anticipate that under continuing scrutiny from the Reverend Jackson and other civil rights watchdogs, the Valley's moguls will share jobs but not power because jobs are much, much, much cheaper than sizable chunks of stock, i.e., sizable enough to qualify for membership in the Valley's power elites.

Alternative Ecosystems of Techies, Entrepreneurs, and Investors
Yes, I'm talking about places outside of Silicon Valley. And, yes, I'm aware that Governors and Mayors and other civic boosters have been talking this same game for the last 50 years; nevertheless there's still only one Silicon Valley, one global epicenter of high tech innovation worthy of the name. But things are changing.

High tech ecosystems need three kinds of talent pools -- tech-oriented entrepreneurs, tech-oriented venture capitalists, and risk-oriented techies. It's important to remember that most techies, like most employees of any kind, would rather have high paying jobs with secure benefits than stock options in risky start-ups. 

Thanks to the Internet and its cloud, all of the techies in an ecosystem don't have to be located in the same place, nor do all of its investors. Therefore competitive agglomerations won't have to achieve the physical size of Silicon Valley to have comparable impact. And thanks to the cloud and its ultra cheap provision of software-as-services, the capital requirements for servers and software for alternative ecosystems can be orders of magnitude smaller than the capital pools that nurtured Silicon Valley for the last 50 years. 

So now that we've caught up with the Governors and Mayors, where should we place our bets??? I confess to being clueless with regards to other minorities and women, but for Blacks one option is undeniable ==> New York City!!!

Why New York?
The Big Apple still dominates four economic sectors -- finance, fashion, advertising, and music. In times past, Blacks have not been major players in fashion, finance, or advertising; but we have made our marks again and again in music, most recently and most successfully in Hip Hop. 

In times past black musicians accumulated wealth by investing the income from the fees they received as performers. But the new Hip Hop multimillionaires and near billionaires have not only been superb performers; they have also been astute entrepreneurs with their own music labels, entrepreneurs who then parlayed their music brands into fashion and marketing. They are now perched on the lowest rungs of the ladder of America's Super Rich. Getting to this level required their having far more drive than most people. So we have to ask: Do they want to move even higher? In other words, are they sufficiently ambitious and/or sufficiently greedy? 

If New York's Hip Hop elites decline to extend their domains into high tech, this wouldn't mean that New York's Black entrepreneurs and techies would be out of the running. As I noted earlier, the new capital requirements are substantially lower than the historic levels that sustained Silicon Valley; so funds could be raised from less affluent supporters via Kickstarter, IndieGoGo, etc.  But IMHO, the active participation of Hip Hop moguls would greatly accelerate the development of predominantly Black high tech ecosystems. Just as early round investments by Kleiner Perkins, Sequoia Capital, or Andreessen Horowitz attract additional investors and additional risk-oriented techies to new ventures, so too early financial endorsements by Diddy, Jay Z, or Beyonce would attract more Black investors and more Black risk-oriented techies.

Armchairs vs. Trenches

Finally, I acknowledge my status as an "arm chair theorist" vs. a leader of "troops in the trenches." The ideas that I have discussed in this note and in its two predecessors are consistent with, but not identical to similar ideas that are being promoted by two organizations whose work I admire, especially because they have moved from armchairs to trenches. In other words, these organizations are actually implementing the strategies that I'm just talking about ==> Silicon Harlem and The Phat Startup ... :-)


Related notes on this blog: