Recently, I read an article that stated that there was a generational divide in Silicon Valley. While the older generation had been entrenched in core technologies that drove the valley to the point it is today, companies such as Cisco and Microsoft, the new generation of Valleyites have been far more interested in developing the consumer facing applications that drive revenue from advertising, applications such as Snapchat, Facebook, and Instagram. This article continued on to ask the question of why it was that these talented individuals who could be doing anything in the world were “wasting” (in quotes because it may really not be a waste) their time developing consumer facing applications that provided “superficial” value to our society rather than focusing on driving forward the core technologies that kept the valley alive. This generational divide can be seen in my own family. My dad works at Microsoft, one of the core companies that drove the technology revolution, while I chose to work at a big data firm ( a new hot topic ). While my big data firm hardly serves as the epitome of consumer facing applications, it does provide that stark contrast. So, with that in mind, Why have Microsoft, VMWare, and core tech companies fallen out of favor?
Size is one of the many reasons I think core technology companies have fallen out of favor. Core technologies often have complicated business plans or commercialization strategies. They often require large amounts of capital to get going, and often require a deep understanding of the subject to truly make a difference. If we consider that a deep level of understanding usually arises after a PhD level inspection of a given area of interest, that already puts the average age of a core tech entrepreneur well above 28 (22 + 6 years of PhD Masters program). At that starting age, very few are willing to take the dive into the risky world of entrepreneurship. This, coupled with the difficulty in raising large sums of money as a new entrepreneur, leads to a dearth of startups in core technology areas. This dearth makes it even harder for new PhD graduates, and undergraduates to find employment opportunities as smaller firms. Which in turn, leaves larger sized companies as the only source for core technology companies. Now, why does size affect a new graduates choice in employment? I believe that new graduates from top colleges are used to being appreciated and rewarded both monetarily and socially amongst their peers. The monetary reward is relatively easier to gain at larger companies; however, the social reward is much harder. Because the company is larger, each individual seems to make less of a contribution. Each person’s project is just a tiny blip in the overall revenue stream of the company, in its larger strategic goals. Larger companies make the smart feel unneeded at times simply because of its vastness. Under the assumption that smart people enjoy being appreciated, smart people will naturally prefer smaller firms over larger ones, and by the reasoning stated already, there just aren’t many core technology startups left to chose from if you want to stay small.
In addition to size, I believe that the internet has actually shaped the younger generation’s view of time needed for success. In my generation, the age of the next big company CEO seems to get younger and younger. With the advent of instant messaging, quick broadband speeds, and almost everything at our fingertips, it seems we are caught up in this culture of immediacy. There is this constant pressure that everything must be delivered right away that there is no time to waste. In this mindset, imagine having to make the choice between a business model that takes a minimum of three to five years and a humongous amount of technological risk to make happen to a consumer based model that can be verified quickly and iterated on routinely. The difference between the two situations is staggering when considering their development time. With consumer apps, most of the technology has already been built through APIs and frameworks. The idea can be converted to a prototype, and the prototype to a early stage product within a year. Traction can be gained with close user interaction studies, and empathy maps. With technology companies you have to make a bet that the technological problem you are solving is a part of the future. That it is a problem that at the end of the day can be bought by another company. Technological problems also require a far higher level of technological risk. What if your end solution just doesn’t measure high enough for someone to pay for it? Chances are, as a technology provider, your customers can be enumerated quickly. While the price per sale is high, the number of sales will be far fewer than a consumer app. When you trickle this equation down to the employees and the founders, this equates to a lower revenue yield over a short period of time from technology companies than consumer app companies. This means that we as youngsters can’t get rich (on average) as quickly from technology companies as we can from consumer app companies. When every eyeball is worth $45 dollars (WhatsApp price), and when you have easy access to thousands of friends that you can promote your service to, isn’t it easier and faster to get rich off of a consumer app?
Personally, consumer apps are the “dark side” when it comes to what we should be doing with our lives. It doesn’t really improve society in a meaningful way, and in the end I don’t know if we will truly ever be fundamentally happy with producing superficial improvements in consumer apps. But, at the moment, it seems like the consumer world is far more enticing, easier to access, and far more lucrative. I believe that in the next ten years, we will see a shift away from consumerism of applications and focus our attentions back onto the infrastructure because quite frankly if we continue pushing consumerism at the rate we are today, our infrastructure just won’t hold. So, when that time comes, we will again be talking about this generational divide. The divide between the old who work on consumer apps for the young, and the young who develop the technology behind the stacks that old ones use to deploy their work. Just maybe the tables will have flipped, and just maybe we can go back to focusing on the core parts of computer science that are truly meaningful and lasting.