What's Happened to Silicon Valley? (Part 1)

WHAT’S HAPPENED TO SILICON VALLEY? (Part 1) by Scott Budman

Silicon Valley has been world famous for decades.  And, like other worldwide icons (Columbus, Madonna, Tiger Woods), the Valley has been both loved and hated over the years.  Lately, there have been clouds parked over Silicon Valley, and people in and out of the tech world have become skeptical about where we go from here.

We decided to dig deep into Silicon Valley, its culture, and its businesses, for a week-long series of reports called “Boom, Bust, and Beyond.”  We got a lot of help from Valley heavy hitters.  Some, like Joint Venture Silicon Valley CEO Russell Hancock, say that after a series of ups and downs, the Valley faces a current slump it may not be able to get out of.  On the other hand, Yahoo! CEO Carol Bartz says she’s seen worse, and the tech industry always finds some new way to bounce back and create new magic.

Both sides have merit.  We’re facing enormous challenges when it comes to building start-ups, long the lifeblood of Silicon Valley.  Venture funding (long the lifeblood of start-ups) has dried up, as VCs have become unsure about returns on investment, making it tougher for them to go to investors for new money.

We’re also mired in a painful real estate cycle, especially when it comes to commercial real estate.  There are miles of “For Lease” signs wherever you go, and that’s a sign of slow times.

Immigration, long a pipeline for new talent and brain power, is slumping badly, partly because of a crackdown here at home, partly because other countries got tired of exporting their best and brightest, and decided to offer their local engineers similar benefits and lifestyles (seen Infosys’ stock chart lately?  How about Bidu?)  Without new talent, ideas and innovation stagnate.

But even with these issues baring down on us, we found lots of hope, and optimism.  We’ll also examine why a new breed of start-up companies are fighting the odds, with a new business model, and new ideas that just might take the Valley to its next level of success.

We’d love to know what you think.  Scott is standing by for your comments.  You can follow him on Twitter:  @scottbudman.

[View other Scott Budman tech stories on www.nbcbayarea.com]