I spent part of yesterday facilitating an off-the-record discussion with a group of CEOs who run public companies in Silicon Valley. They’re not companies you’ve heard of, unless you’re a deep, inside tech groupie. Their companies have sales ranging from a few hundred million to a couple of billion, but they do the unglamorous stuff that doesn’t make headlines: highly abstruse equipment for the semiconductor industry, embedded software for aerospace companies, specialized semiconductors and so on.
To me one of the remarkable things about wandering around the Bay Area is how many companies you encounter that are like these. You could search Techcrunch and never find a mention of any of them (I’ve done the exercise). Even the ever-inquisitive Robert Scoble doesn’t darken their doorsteps. In largely anonymous buildings all over you encounter companies that would be the glory of all the wanna-be Silicon Valleys all over the world. I think they are far more characteristic of the Valley than the Googles, Apples and Facebooks.
And without violating any confidences, these CEOs are worried. Not about lowered sales and plummeting share prices, although that’s a factor. What they are worried about is that they no longer believe the age-old mantra that the Valley will always come back. They no longer see California as a particularly good place to do business. They look at the state’s staggering fiscal problems, the poor public education system, the still-high cost of housing for their workers, the continuing immigration restrictions for non-American scientists and engineers, and what many of them see as a shift against business and entrepreneurship in American culture, and they start looking westward, across the Pacific.
All of these companies have operations in Asia. And that’s where they see growth for the future. They are shifting resources and workforce numbers to China, to Korea, to Singapore, to India, to Vietnam. They recognize plenty of problems — these are worldly, very experienced executives. We had an informed discussion about the pressures a slowdown in Chinese growth might create, and they are well aware of how hard it is to find and retain the best engineers in India, whatever the great numbers pouring out of the IITs and other institutions. What they are concerned about, however, is doing the right thing for their companies and their shareholders, and to a large extent that means slimming down here and expanding there.
I’m usually skeptical of endism, but my day yesterday had me thinking in distinctly endist ways. I don’t think the shifts we were talking about yesterday, however, are the whole story and I’m going to write tomorrow about what I see as the flip side.