by Lucie Greene
In bringing up these problems, Obama was reminding the audience of our era’s recent significant turn inward—its insatiable self-regard and dying communitarian spirit. Silicon Valley, after all, has been exceptionally good at catering to our individual needs (selfies and overnight doorstep delivery). It has also been exceptionally good at making services and products affordable, accessible, and easy to get on a day-to-day basis. Hotels, taxis, all can be cheaper. Or even free, if you consider Google Maps free, and not something you are paying for when access to your personal data and online behavior is leveraged to sell highly targeted advertising. But these applications have been driven by scale, profit, and market forces, often without accountability. Or self-mediating accountability in the form of reviews. And while they’re affordable to many, they’re not affordable to all.
So, what happens if they become a replacement for the state? What happens if Silicon Valley powers our hospitals, provides our education, builds our cities?
These questions sent me on a journey to explore the tension between Silicon Valley’s wild ambition and limitless resources, and the reality of what a Silicon world built in their image (free from the irritation of government constraint) might look like. I wanted to make sense of the changes happening now and to understand what they might mean. Before it’s too late.
1
The New Power Map
In San Francisco, clapboard Victorian homes dot tree-lined streets. Tourists eat ice cream by the docks. Ride the trolley cars. Buy overpriced chowder, hooded sweatshirts, and pose with men dressed as sea captains at the Argonaut Hotel overlooking Alcatraz and the Golden Gate Bridge. Save for a smattering of tired tower blocks, or the isolated plinth of Salesforce’s newly added soaring 1,070-foot tower, it’s largely a low-rise town, not a city. On the best days, its rolling hills are bathed in bright Pacific light. On the worst, they are shrouded in damp mist.
Drive south into Silicon Valley along a winding highway and you’ll reach the bland confines of Palo Alto. It’s aggressively suburban. Low-rise boxy campuses are surrounded by lawns and serviced by cookie-cutter terracotta-hued Spanish revival retail developments, featuring Starbucks, nail salons, and dry cleaners in replicate arrangements. Nothing about this city by the bay, or the towns surrounding Silicon Valley’s headquarters, signals proximity to wealth, or that you’re frequenting what is now perhaps one of the world’s biggest global power centers.
Historically, when it comes to wealthy cities, power has been about display—about monumental opulence and vision, like Paris’s grand avenues, or concentrations of vertiginous pointy buildings with shiny, masculine surfaces like Chicago or New York, their soaring skylines built around history, communicating wonder and might. And these monuments have become intertwined with the central urban fabric and architecture. Not Silicon Valley, which, in the Bay Area at least, still seems to keep the full magnitude of its iceberg beneath the surface, or obscured at a distance by green pastures and campus-like optimism, and in fortress pastures like Apple’s new ring, which you can only take stock of from above and which are outside town centers. This is a sprawling but low-rise power. Or it was, until recently.
How did Silicon Valley go from a microchips hub to a global powerhouse? The Valley’s ascent was at first stealthy but is now truly bold-faced. Silicon Valley has mastered soft power. Its economic and cultural influences have become magnetic forces. Luminaries of industries all flock there. Where once Washington, DC; Wall Street; Hollywood; Detroit; hell even Dallas led their respective sectors of politics, finance, movies, cars, and energy, Silicon Valley now owns a piece of all these industries and more.
“Silicon Valley has evolved from a wonky backwater to a major power center that kind of snuck up on other power centers,” says Margit Wennmachers, perched on a stool in the Battery, one of San Francisco’s new wave of hip, Soho House–style members’ clubs serving its new-tech royalty. German-born, Wennmachers speaks with a slight European lilt. “If you look at the U.S., it used to be Washington, DC; then New York; then L.A. [that dominated in their fields]. Now, all of a sudden, Silicon Valley has become a major power center with a lot of companies that are growing very fast, that are interesting, and are potentially replacing existing industries.”
Wennmachers, a venture capitalist and partner at Andreessen Horowitz, is slim, dark-haired, with clear eyes and pale skin. She was a cofounder of OutCast Communications, one of the tech world’s top public relations firms, and has been dubbed “the real queen of Silicon Valley” by CNN for her role in the rapid rise of its most iconic companies.
Wennmachers is known for identifying and evaluating new startups for investment potential, to date including Twitter, Jawbone, Foursquare, Facebook, Groupon, and Zynga. She’s a key connector in the Valley, hosting salon-style dinners at her home. Beyond her strategic investment advice, she’s often credited with being the chief architect of the very magic, and the narrative, that has made these companies so successful. (At Andreessen Horowitz, her use of PR to amplify the venture company’s reputation, as well those of the startups it invests in, is a competitive advantage.)
When I ask Wennmachers about the magnitude of all the changes wrought by Silicon Valley and how centralized its power seems, she acts as if to even raise the question is to voice a conspiracy theory. “There’s no central authority in Silicon Valley and there’s no plan that says ‘Let’s take over all of these existing industries.’”
Massive centralization is, however, happening.
“Education and health care are very hot right now,” she says. “There’s a huge boom in FinTech,” referring to financial technology, a new segment of online-banking, money-transfer, payment, and currency startups emerging in recent years to disrupt the traditional finance industry. “And that is not the databases that sit in the guts of the bank, but actual innovation on how consumers and business customers interact with financial services.”
In fact, finance, like every sector, is being disrupted by new upstarts, thanks to smartphones and relaxed regulations. Millennials are fleeing the big banks in part because of mistrust after the 2007/8 global economic crisis. The top four U.S. banks ranked among the ten brands least loved by millennials in 2015, according to a three-year study from Viacom Media. Expectations of banks are changing. Millennials want to be able to make international transfers free of charge and are happy banking purely through their phones. One in three respondents in the same Viacom study believed they won’t need a bank at all in the all-digital future.
Payments are also being transformed with contactless mobile transfers and apps, making Silicon Valley the gatekeepers to swaths of new behavioral data. The Apple Pay system, which allows consumers to keep several credit cards stored on their iPhone or Apple Watch, saw its payment volume rise 450 percent in 2017. Facial and thumbprint are increasingly forms of financial ID. (Alibaba recently unveiled its “Smile to Pay” system, which uses facial recognition to process payments.) At both Amazon and Alibaba’s much-vaunted “cashierless” supermarkets and fashion pop-ups, customers must download the brand’s respective app in order to pay before they can emerge with any products.
Silicon Valley is expanding into almost every sector. Powerful industries that used to be closely associated with region, and dotted across the country or world, now eye encroaching Silicon activity. Hollywood has been scooped up with burgeoning entertainment and streaming ventures. Medicine, health care, and pharmaceuticals are next. Detroit is on the block. Tesla is producing highly successful cars too—and is now more valuable than Ford. Then there’s the emerging focus on reinventing food itself, with products like Soylent and Impossible Foods—which has re-created the molecular structure of beef from vegetables, an eco-friendly burger that cuts down the carbon footprint of cattle.
“There’s a lot of movement and who knows what will happen? Tesla and Google have a project, Apple is working on something and Uber is working on something,” Wennmachers says. “Detroit, and companies such a
s Volvo and Toyota, might be moving into driverless cars, but they’re now competing with Northern California.”
Indeed. As technology, data, and science become central to all aspects of how we live, Silicon Valley (and San Francisco) is an ambidextrous center for influence. Brands, from food to beauty and luxury, flock here to launch experimental “labs,” stage workshops, and meet with executives, as if proximity to the tech world will breed the future by osmosis.
The Valley has taken on incredible symbolic significance. Where creativity, concepts, and culture could be innovative before, technology and data are now the primary things associated with the future. And Silicon Valley has the tech experts—which gives this stretch of land on the U.S. West Coast massive ideological and economical influence.
The Rise of “Silicon Valley”—the Brand
It’s helpful to think of Silicon Valley as not a single entity but a tribal community, suggests Danah Boyd, principal researcher at Microsoft Research and scholar of social media, from her office in the Flatiron District of New York.
It’s a summer morning, the cool air-conditioning is streaming, befitting of sweaty summer months in Manhattan where blistering heat and sunshine are shielded from office incumbents by grey, pollution-freckled glass.
One of the biggest challenges when looking at Silicon Valley, says Boyd, is the common assumption we’re dealing with a homogenous infrastructure, a Big Tech monolith that somehow happened all at once. In fact, Silicon Valley is quite tribal, and evolved into its current state in multiple layers. “There are really interesting and unique stages,” she says.
But Silicon Valley as a concept is important to examine because it has evolved to represent so much more than a sector or industry, and does represent something holistic. It’s a culture, a state of mind, an ethos, a language, and an aesthetic. There are common Silicon Valley tropes and values, meaning that Amazon is based in Seattle but still feels intuitively like a “Silicon Valley Brand.” Ditto Snapchat in Los Angeles. There is now a legion of would-be imitators in the shape of Silicon Roundabout, Silicon Beach, you name it. All trying to associate themselves with that same mystique.
The term Silicon Valley was coined in 1971 and referred to a clutch of silicon-chip manufacturers based in Santa Clara Valley in the southern part of the San Francisco Bay Area. Geographically, the original Silicon Valley has spread to areas such as San Francisco and Oakland (Uber announced it was relocating there in 2015).
Fifty-three businesses in the Fortune 1000 are based in the Golden State. California’s economy is the sixth largest in the world, bigger than France’s, with a GDP of $2.46 trillion. The only countries with higher GDP output are the U.S. as a whole, China, Japan, Germany, and the UK.
Examining Silicon Valley’s rise from the 1970s to the post-2000s, with the revival of Apple to the landscape of global tech megabrands we have now, is pivotal to understanding its cultural influence and the state of play we exist with today, and perhaps the reason we scrutinize it less than other industries.
Today this group of companies has come to represent something collective and symbolic. They are not only economic powerhouses, but they established the notion that technology and platforms are more than just products—they were world builders, ways of life, aspirational tools, and their outlook was at one with the “future.” This group of companies has created communication strategies specifically to this end. And as they have grown, their point of view, messaging, and slogans have pervaded.
Innovation has been integral to Silicon Valley’s identity. But until recently it wasn’t ingrained in the public’s consciousness the way it is now, in part because its clientele were businesses and the government. Its products were not marketed aggressively and sold to the general public.
The Valley’s early life was as a hub for STEM research (science, technology, engineering, and mathematics) with a military and Navy focus, driven by Stanford University (founded in 1885) and its affiliates from 1939 onward. Innovation at this time was applied to helping the war effort, created and funded by the federal government. As the Valley shifted, or rather, expanded, from being a supplier of government and industry to provider of everyone’s pocket shopping and music devices, so too has its psychological role in society grown. As well as its promise. Like with any major brand sold to us, from Coke to Nike, the process of selling it has necessitated attaching more significance to its products and their powers. If Coke united different nations and Nike empowered athletes, Silicon Valley companies were way more than just phones, communication platforms, and computers.
With Silicon Valley’s rise, so too the notion of “startup” culture has taken on great influence. Every traditional industry (including mine) has redesigned its space to look, feel, talk, and operate like a startup. We don’t change, we “hack.” The jargon is embedded in our vernacular. “Disrupt,” “innovate,” and “unicorn” are all now in our cultural lexicon, thanks to Silicon Valley.
Stanford University is credited with a major role in creating the Valley’s original startup culture. Frederick Terman, dean of engineering during the 1950s, is famous for encouraging graduates to take their education and use it to start their own companies—examples include Hewlett-Packard and Varian Associates. Varian built the research and development lab on the edge of Stanford’s campus that later became the Stanford Research Park.
The 1970s saw a number of shifts in Silicon Valley, but chief among them was the switch from providing business systems to making products and ideas geared directly toward the consumer, though with none of the hyperbole attached to today’s raft of brands. Technology, even consumer-facing, was about business and work. This was the era of microchips and blue-chip tech businesses, such as Intel, which launched its first microprocessor in 1971, and “Big Blue”—IBM’s nickname. Both have since tried to refashion themselves in groovier reiterations, following new-wave Silicon Valley’s lead. (See Watson, IBM’s cognitive learning computer. And Intel’s recent Creators Project with Vice Media, connecting it to digital cool kids.)
The association of technology with freedom starts around this time, but from a different place. Besides the giants, another group of San Francisco enthusiasts saw technology as a counterculture tool, and a weapon to sidestep governmental systems for liberation. This was when the legendary Homebrew Computer Club—a garage-based, grassroots endeavor that brought together tech geeks and computer hobbyists—was formed. Steve Wozniak was inspired to dream up the Apple 1 at the club, passing around the schematics and even helping other members to build their own. Steve Jobs and Wozniak formed a partnership to sell the computers they built in their garage at night.
In contrast to the corporate nature of the microchip business, at Homebrew the personal computer was positioned as a force for democracy and freedom. The group was influenced by the Whole Earth Catalog, a counterculture magazine published by Stewart Brand starting in 1968 that featured detailed product reviews and essays. The magazine’s countercultural spirit had a major influence on Steve Jobs, who quoted its final issue’s goodbye message, “Stay hungry, stay foolish,” in his 2005 Stanford University commencement address. Kevin Kelly, founding executive editor of Wired, says Brand “invented the blogosphere” long before the arrival of the internet, as it was a “great example of user-generated content.”
An emblematic marker of this mindset is “A Declaration of the Independence of Cyberspace,” John Perry Barlow’s piece, now more than twenty years old, written in response to the first time that the World Economic Forum, at Davos, Switzerland, decided to pay attention to technology.
Barlow’s piece now seems positively romantic, in view of 2018’s reality that the rollback of net neutrality rules in the U.S. is likely to transform internet use to a series of sprawling but mutually restrictive internet empires, and make access to information and websites closely dictated by commercial interests.
When John Perry Barlow wrote his piece, the internet represented the antithesis of the co
mmercial internet we now have that’s dominated by internet service providers or Silicon Valley giants. It starts: “Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather . . . Cyberspace does not lie within your borders . . . We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth . . . We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity . . . Your increasingly obsolete information industries would perpetuate themselves by proposing laws, in America and elsewhere, that claim to own speech itself throughout the world . . . In our world, whatever the human mind may create can be reproduced and distributed infinitely at no cost.”
Parts of this remain, of course, though the freedom of speech part is presenting its own challenges and debate when it comes to extremist user-generated content. And it assumes that a lot of consumer information can exist online in the public space, even if you didn’t put it there (as the landmark Right to be Forgotten case explored). But our internet interactions have become product, in the form of data, in many instances for advertisers to better target us. Visibility for a small company or platform in searches is now something that must be paid for. Our behavioral data is the commodity, not the hardware sold to us. It’s a commercial engine unrecognizable from the innocent days when the internet was a gateway to any universe of your choosing. But that early association with the internet as special, freeing, and decentralized has remained—and has been used as a tool by tech brands and internet providers to dodge criticism, especially concerns about privacy and/or anticompetitive behavior. We regulate water, power, roads, and television. But the internet is still defended as somehow “special.” We view it very differently from other services and commodities.