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Not a week goes by in the world of tech without someone heralding the globe’s next Silicon Valley – from New York City to Norwich, London to Lagos, the list goes on.
But the real story here is not the next Valley, it’s the death of the tech cluster as we know it.
To understand what makes a tech cluster we have to first look at what made the Valley a success.
It started with the founders; a concentration of white, middle-class, socially awkward geeks, inseparable from their Macbooks. Academic institutions such as Stanford support the ecosystem and that attracts the next generation of Larry Pages.
If you have ever tried to visit the likes of Apple or Google in the heart of Silicon Valley you will know it is not an easy place to get to.
Back in its heyday, the Valley’s isolation from the rest of the status-quo of banks, big business and city life allowed it to thrive, think bigger and build world-changing companies. It gave us game-changing technologies from the semi-conductor all the way up to Apple’s array of iconic iDevices.
But, in time, disruption became inevitable.
In the new wave of tech centres no other city has raced ahead of the pack with this trend like New York. I recently sat down with the city’s former mayor Michael Bloomberg during London’s inaugural Technology Week where he told me he is bullish about the potential for both New York and London to overtake the incumbent Valley: “To be a leading tech city you need the infrastructure, you need the environment to attract people and you need a diversity of people. London and New York have that. Silicon Valley does not”.
Bloomberg is referring to the big picture. It is no longer enough for tech startups to exist in silos of isolation. Tech businesses now need the energy, talent and diversity of the world’s megacities to thrive.
In the Far East many look to Hong Kong which draws upon decades of experience as a world financial capital. It also boasts unbeatable access to China, the world’s biggest market. In the past few years hundreds of startups have popped up and the city-state is now positioning itself as the leading place for foreign startups to relocate and gain access to Chinese talent and research and development.
This new generation of tech companies outside the Valley are less fixated with first-world problems like taking a selfie that looks like it has been taken with a vintage camera. These companies are disrupting centuries-old systems put in place by the establishment.
The key here is existing industries. It is far easier to challenge an existing industry like finance when it is right on your doorstep. You have access to the experienced talent, networks, suppliers, buyers and the entire ecosystem of that industry around you.
This trend is happening across industries. Stockholm may not have the same level of hype as many of its European neighbours but the figures speak for themselves: 6.5% of the world’s billion-dollar exits between 2005–12 were companies from Sweden. Again the majority of these success stories draw upon the city’s existing strengths in music, the arts and gaming.
This opportunity to apply the best of startup culture to existing industries is where much of the growth will come from in the next tech boom. This can only happen in the world’s megacities, which already attract young people looking to build exciting new companies.
Even in California, home to the Silicon Valley, startups are looking for the next thing and flocking to the big cities. Dating app Tinder has emerged as one of the biggest success stories to come out of Los Angeles’ burgeoning tech scene.
Despite being on the doorstep of the Valley, San Francisco has fast become a magnet for tech talent drawn to the big city. The shift away from the Valley has become so strong that the likes of Google and Yahoo based over 30 miles away operate shuttle buses to move employees back and forth to their campuses each day.
Isolated clusters cannot fight the tide of talent flocking towards the bright lights of cities. San Francisco’s expensive and unpopular commuter buses are perhaps the best sign of the times, while pundits obsess over the next Silicon Valley, the world’s megacities are marching ahead.
Alex Wood is the editor in chief of Tech City News
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