Friday, January 24, 2003

I just returned from Joint Venture Silicon Valley's "2003 Index Release & Annual Celebration" breakfast meeting, and thought I'd share some of my notes with you.

The central purpose of the meeting was the release of their latest Index report - indicators, or progress measures, of Silicon Valley's cultural, economic, and environmental health. In the first part of the program, Doug Henton and Kim Walesh, of Collaborative Economics, reviewed the data and set the day's theme of the glass being half full.

Looking at the economic trends over a dozen years, we're not so bad off - if you don't notice the bubble of 2000. Henton said, "We went through the boom and the bust, and came back out in 1998." He pointed out that even after the bust, Silicon Valley's average wages are still twice the national average. Even so, as Walesh pointed out, "only 26% of families can purchase a median priced home."

One positive statistic (glass half full) was that average level of educational attainment is rising; while numbers of drop-outs and high-school grads remained steady, the number of college grads rose from 32% to 41%.

Looking at it as the glass half empty, however, you realize that it's not because of more local kids going on to college; it's all from migration. Those without college educations are being forced to leave the area due to the cost of living, while those coming to the area (from within the US and abroad) are more educated. This is partially because while only 41% of area residents have degrees, half of all new jobs require them.

Following the presentation of the Index, Joe Natoli of the Mercury News led a panel discussion on "Silicon Valley: The Next-Generation Platform for Global Innovation." The panelists were Vinod Khosla of Kleiner Perkins Caufield & Byers, Manual Pastor of University of California, Santa Cruz, and Brian Cunningham of Rigel Pharmaceuticals.

Khosla led with the same positive spin as the folks from Collaborative Economics: "From 1993 to now should be straight line, but we feel worse because went through the bubble of 2000."

Cunningham got an easy laugh in response to a question about tax incentives to stimulate business recovery, saying, "If you don't have revenues, tax credits won't help." Kind of points out the composition of the audience that this was considered the best joke of the day.

Professor Pastor turned a bland conversation about diversity (they're all for it) to more taboo topics by saying that, "We do well with connections across race, but poorly with connections across class." To Khosla's suggestion that informal networks, and not formal programs, are all that's necessary for developing better job opportunities for African Americans, Pastor replied that regardless of race, if you live in a poor area, and all your neighbors and associates are poor, the job leads you get from your "network" aren't going to be very good.

To an audience member's question about California's "anti-business" climate, Pastor again took the less popular route asking the questioner to look at "what makes the Valley great." He listed our well-educated population, our high quality of life, and our built infrastructure, and suggested that perhaps tax support is what helped encourage that. He then expressed his fear that more and more state money being diverted into building prisons will help to destroy what we have here.

Cunningham then decided to take the tack of insulting the audience by calling them fat, lazy, and stupid. "From the gold rush on, we've been lucky," he said. Nature made this a great place to live - not government intervention or anything anybody planned. He felt it was about time that "we need to learn how to compete."

This got Khosla to show a bit of emotion, replying forcefully, "That's not true. We're not lazy!" He pointed out that our good fortune recently was the result of years of development and partnerships between business, higher education, and even (reluctantly) government. He singled out Stanford University's early commitment to new technologies as a critical force in creating the Silicon Valley as we know it.

In the end, the optimistic "glass half full" attitude won out, with all agreeing that Silicon Valley will recover and be a force again. In Pastor's final word, however, he warned against the quick fix. He cautioned against looking for a speedy recovery, that would be likely to leave many people behind. "For a sustainable recovery," he said, "we need to invest in all our people."

And that's about it. I haven't read the full report yet, so I can only comment on the discussions at this morning's meeting. For more information, see Joint Venture's web site at (You can download the full index as a pdf from the site.)

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