Tuesday, December 14, 2010

Silicon Valley and the Two Americas

Last week, Mary Meeker, famed Morgan Stanley internet analyst, decamped from Wall Street (Morgan Stanley) to Silicon Valley (venture firm Kleiner Perkins). I think this is indicative of a lot of things, particularly about the direction of our country and where our best hope lies: technology and the relentless drive of the entrepreneurial class.

I spent a few days last week in Silicon Valley. The atmosphere was crazy; a little like '99, but without the stupid valuations. The restaurants are humming. You can't hire good people unless you're prepared to get in a bidding war. Code writers can strut their stuff like peacocks. The VCs, who spent a few years doing, well, nothing, are once again as hot as a pistol. Kleiner Perkins raised $100 twice over a couple of weeks' time, both in a single day. Marc Andreessen's new venture firm raised $650 million in three weeks. Crazy stuff.

There are two trends and two companies that are driving Web 2.0, as it's been dubbed. The trends are mobile computing...

...and social networking...

A Friend of a Friend?

And the two companies are...

Mobile computing, which means smart phones, iPads, etc., is exploding beyond anyone's imagination. Apple has sold 8 million ipads since last spring at $500 a pop. It's hard to remember that last April, the iPad's success was hardly a foregone conclusion.

Instrumental in the success in mobile computing was Apple's creation of the "app," which is nothing more than bite sized applications designed specifically to work within real estate confines of mobile computing. Initially, all apps were self-contained programs that would run a utility or a game. Increasingly, though, and with remarkable speed, they have become the preferred way to access the internet as well.

Let me give you an example. I happen to love the Drudge Report, but if I wanted to view it on my iPhone a year ago, the process was:

1. Click on the Safari browser;

2. Scroll through my favorite places;

3. Click on Drudge;

4. Wait for it to download (slow);

5. Play with the screen size until I could read it.

All in, probably a 30-40 second process. A year ago, I was willing to put up with this, but 30-40 seconds might as well be forever in digital time. It's a non-starter now. But that's okay, because Drudge introduced an app for which I happily paid 99 cents which solves the latency problem. Now all I do is click on the icon and an optimized version of the web site downloads in seconds.

This is what's going on everywhere: retooling the web to make it a credible mobile computing experience.

Presumably I don't have to tell you about social networking. If you're under 30, it's akin to breathing. If you're over 40, you might want to figure it out, just to keep up with what's going on. 35% of America and a good chunk of the rest of the world is on Facebook. I strongly urge you to see The Social Network.

If you're not a buyer, ponder this: a company you've likely never heard of, Zynga, has a $5 billion pre-IPO valuation and it exists nowhere but inside Facebook. Imagine that: Facebook has become so pervasive that multi-billion dollar comapanies can exist entirely within its eco-system.

(If you're curious what Zynga does, it designs social video games like Farmville and Mafia Wars. 55 million people play Farmville, and the number grows by 300,000 a day. My wife and kids can't seem to get enough.)

We live in two Americas right now. No, not that ass turd John Edwards' two Americas. One is Obama's America is where we are hopelessly in debt at every level of government and unemployment will remain high as far as the eye can see. Where risk aversion informs every new policy and people viewed as helpless wards of the state.

The other is Silicon Valley's America, where the pace of innovation is relentless and the next revolutionary idea is knocking around someone's brain as we speak. Where risk taking is as natural as drinking water and failure viewed as an asset on your resume.

There will be a strenuous tug-of-war between the two Americas in the coming years, and it's not at all clear which side emerges victorious. The optimist in me sides with the angels.

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