|
|
During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
Money Moves, 5/24: Chocomize Co-Founder Fabian Kaempfer talks with Bloomberg’s Deirdre Bolton about the business of customizing chocolate
The president's campaign has a new rule—no cell phones allowed
In honor of remote control inventor Eugene Polley, we recognize other influential but neglected inventors who have felt the sting of stolen glory
Forget Adderall. Traders now pop chia seeds to stay focused and energized
The Italian automaker and others are adding hybrid technology to elite cars
The storied bridge that links San Francisco and Marin County changed the face of California
Schools cultivate ties with startups before they're big successes
Dave McClure's traveling venture capital show scours the world for promising startups
Get Four
|  | NOVEMBER 29, 2004
The New Terrain for Silicon Valley [Page 2 of 2] Q: How then does a typical Silicon Valley company change? A: I think the biggest factor for change in the Valley, where the expectation is one of growth, is that any change involves very tricky problem of holding on to your existing customer base while developing new technologies which attract new customers. That's a difficult problem, because you have to do both at the same time. It's a rare company that can do that. I sometimes use this analogy: It's like being somewhere in Arizona on one side of the Grand Canyon. The only way to get across is to drive 100 miles to the north or the south until you come to a bridge. You sometimes see companies that have reached the edge of the Grand Canyon. Had they made the detour 75 miles before they reach the edge of the canyon, it's not quite so difficult a problem. I think this is a problem companies sometimes fall into. They get stuck in a rut where a technology has generated lots of revenue, and they're reluctant to obsolete that technology themselves. Q: Let's look out a few years. How will the Valley change? A: I think several things will occur. In the aftermath of the bubble a lot more attention will be paid to core technology advantage and the sustainability of an advantage. Will there be a market for this technology? A lot more attention will be paid to both those things. I think we'll see much more emphasis on whether you think of outsourcing some sort of the R&D function or restructuring it in some way. I think you'll see more emphasis on that, so that what gets done increasingly in the Valley is what would be extremely difficult to do somewhere else, rather than something that could be done somewhere else possibly less expensively. Q: One area we're hearing more about is the convergence of the info, bio, and materials sciences. How far are we from that, and what's the role of local universities in fostering that? A: I think universities are sources of talent and sources of research. Clearly, those are all areas where we see significant opportunities and where we see various technology discontinuities, which could led not to a single company but to the birth of a new industry. And I think you're starting to see what we could call the second generation of biotech, really driven by the genomics revolution, where we are beginning to understand in a much more detailed fashion how to design and use drugs that are tailored to your genotype and your particular disease. I think the sophistication of that will improve significantly over the next couple of decades. Q: Is the Valley any better or less suited to housing these kinds of companies? A: I think they're different. On the IT side, most companies that start in the Valley, if they fail it's not because the technology failed, it's because the market didn't materialize. The technology is usually there, even if the market isn't big enough or they miss it. On the biotech side, it's often the case that the technology just doesn't work. When I look at a startup coming out of the university, if it's an IT or semiconductor startup, I expect that they'll be getting revenue in something like two to three years, and they'll be profitable in something like five years. With a biotech startup, that schedule is incredibly ambitious. The gap between discovery and product is just larger, and it's larger in a scientific sense. So it's riskier. To succeed technically -- and if you do succeed in creating something to cure a disease and you're among the first -- the market is there. Q: What are the Valley's greatest weaknesses? A: The capacity for growth is limited in a lot of ways. Cost -- it's an expensive place to do something. I think arrogance is always something you have to worry about. Q: What do you mean by that? A: No one is every king of the hill forever. And so I think you can't afford to be arrogant. I don't think you can afford to be dismissive of challengers. Q: So only the paranoid survive. A: Yes! I agree with Andy [Grove].
 Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2004, Bloomberg L.P.Terms of Use | Privacy Notice |
Printer-Friendly Version
