Silicon Valley, green tech and the mystery of it all

There's another attempt by an observer to capture the essence, the source, of Silicon Valley's success at chruning out new, and sometimes successful ideas. his one happens to be from an East Coast newspaper. Bemused but impressed is the usual attitude of those who live outside the halo of Silicon Valley. Microsoft's investment in Facebook and the resulting calculations about the overall valuation of Facebook will inevitably lead to much tsk-tsking by the eastern media about the nutso economics of Silicon Valley.

I once had an interesting discussion with a Chinese consular official. He scolded me for the licentiousness, rampant anarchism and overall hedonism of the San Francisco Area. There was not enough central control he warned. I laughed at him and said a certain level of chaos and madness is needed to maintain the freedom and creativity that can produce companies like Intel, Apple, Cisco, Google, Yahoo, Facebook, YouTube, Oracle, CNET, HP, innumerable blogs and countless Web 2.0 companies. Even the Wordpress tools for this blog, come from San Francisco. You want control, I told him, you sacrifice the risk-taking and individualism that produce new ideas and new technologies. I'm still waiting for the first major tech breakthrough from China. No country's economy can coast forever on cheap labor and central planning. Eventually somebody comes along who is even cheaper because of an even lower standard of living.

The most telling quote in the article is from a local explaining his Silicon Valley, "Paul Saffo, a technology consultant who teaches at Stanford, says the valley owes much of its success to the remnants of a 'frontier culture that disrespects elders, values risk-taking and honors failure' in a way that is simply inconceivable in a government or financial center."

Boy, that would create apopplexy in my friend from China.

The article goes to talk about venture capitalists in eastern cities being obsessed with business plans. Huh? The story explains how Facebook, founded at Harvard, had to become a Silicon Valley company to succeed. But builidng an Internet company or software company or even designing new kinds of chips can be done easily in the Bay Area. The server farm or the manufacturing can be put somewhere with cheaper land and labor. This is not always going to be possible or workable with GreenTech firms. There are GreenTech software and design firms. But much of GreenTech will require manufacturing. Hardware and lots of it. That means land and labor. Warehouses and railway lines. Few high tech companies maintain major manufacturing in Silicon Valley. Lucasfilms is one inhteresting exception. George Lucas owns and runs Lucasfilms. He can keep all his animators and tech geniuses on site at the world headquarters in The San Francisco Presidio if he wants to. He doesn't have to answer to a board of directors every quarter asking him to cut costs by 10%. He can pay Bay Area salaries to everybody who works for him and not worry about it. And all Lucas's product is essentially digital. He doesn;t have to sotore huge windmill blades or acres of solar panels. Apple is a more typical company: their design and business headquarters are in Silicon Valley. The iPod is made in China.

Many GreenTech firms are going to need lots of land and/or labor if they are to reach the scale of the current utility companies or fossil fuel companies. That's not going ot happen in the Silicon Valley where real estate prices are far higher than most of the rest of the U.S., not to mention Malaysia or Vietnam. So Silicon Valley VCs are quite active in the green tech arena because they sense the possibly brilliant future of some of the start-ups. It's going to be far easier to raise money to grow a solar or wavefarm business in Silicon Valley than on Wall Street or K Street. Yet many of the new green tech companies may do much or all of their work in other places.

The Wash Po article did have an incisive observation. It pointed out that Fairfax County, Virginia, which really wants to be cutting edge and creative, actually had a conference on same, and one topic was creativity at the Homeland Security Department. Steven Colbert could do five minues on that one. So could you or I.