Silicon Valley is a magical place. Over the last 50 years, it has birthed and scaled most of the major technology companies in our era. It has served as a talent magnet for the best and brightest in technology, and in the same way Hollywood was central for film.

For the longest time, if you were an ambitious technologist, you had to move to Silicon Valley. In 2021 post-pandemic, perhaps that’s less so the case than it was just a couple years ago.

Last week we talked about how everyone is living on the internet. This week we’ll discuss how living on the internet has given birth to a new Silicon Valley — Silicon Valley in the cloud.

According to Marc Andreessen, the popular recipe for creating the “next” Silicon Valley goes something like this:

Build a big, beautiful, fully equipped technology park;
Mix in R&D labs and university centers;
Provide incentives to attract scientists, firms, and users;
Interconnect the industry through consortia and specialized suppliers;
Protect intellectual property and tech transfer; and
Establish a favorable business environment and regulations.

People have tried to create new Silicon Valleys. They called them Silicon Alley, Silicon Beach, Silicon Hills, etc. But, of course, nothing stuck. These initiatives failed to recreate Silicon Valley because they were all siloed attempts that missed the mark — each effort either went top-down, focusing solely on infrastructure by plunking down an office park next to a university, or bottom-up by only focusing on the networks. The combination of both approaches was what made Silicon Valley work. And the network effects kept compounding.

And yet — the Miami meme during COVID notwithstanding — we haven’t heard “the next Silicon Valley” discourse in a few years, partly because all the previous attempts have failed, but also because the big opportunity isn’t as much to copy Silicon Valley as it is to leapfrog the whole thing entirely.

The internet should be the next Silicon Valley. It’s the global medium and the global city.

But in order for the internet to become the next Silicon Valley, we need to understand what made the original so special. In a previous piece we said higher education is a bundle of network, education, and credentials. Similarly, Silicon Valley is a bundle of talent, capital, and culture. It has the world’s highest concentration of top technical talent, and the highest concentration of top venture capital firms. But there’s also something bigger than talent and capital — it’s the mindset. Silicon Valley is where weird ideas are encouraged; where people are celebrated for taking big swings even when they fail; and where people pay it forward and share learnings with the next generation.

Indeed: The dominant theme among technologists is that they help each other, often without asking for anything in return. The number of executives, investors, and retired CEOs who go out of their way to help people is vast. Investors and advisors in Silicon Valley are far more likely to bet their money and time on people who haven't yet paid their dues, partly because it’s the spirit of The Valley, but also because they don’t want to miss the next Facebook or Airbnb. Equity alignment creates a culture of shared upside and “skin in the game”.

In contrast, generally speaking, Hollywood has a very different culture than Silicon Valley. As one tech executive remarked about Hollywood, “They don't even bother stabbing each other in the back; they just stab each other right in the chest.” Hollywood, by nature, is more of a zero sum game: there's only a certain number of movies that get made each year and only a certain number of roles to fill for each film. So there’s an opportunity cost — each movie gets made at the expense of another one that doesn’t.

Technology isn’t zero-sum in that way. One startup getting funded doesn’t mean another can’t get funded. These days, especially in a capital abundant environment, funding is mostly limited by the number of new ideas and the number of people that can execute them.

Silicon Valley rewards a level of radical thinking and risk taking many other places simply won't tolerate. Failure is okay in Silicon Valley because you can fail and it doesn't kill your career. In fact, it’s accepted that it takes multiple attempts to be successful, and thus founders are often respected simply for taking big swings.

Silicon Valley eschews a “pay your dues” culture — no matter what age you are if you have great skills and ideas why can’t you build the next big thing? Paraphrasing Steve Jobs: Every tech product you’ve ever used has been created by people who are no smarter than you. So there’s this pervasive idea that if you’re talented and work hard enough, no matter where you come from or how old you are, you can create products and companies just as good as the ones everybody knows and loves today.

This mindset is now going global. Thanks to social media, accelerators, and a culture of transparency, it’s getting easier and easier to access the Silicon Valley bundle of capital, talent, and culture. And this could never have happened 20 years ago. There was no Twitter, no On Deck, no AngelList, no Village Global, no blogosphere of all this free outsourced content. 20 years ago there was no way to learn how to run a company, let alone hire people or fundraise, without being in the Bay Area.

Today you can learn skills, showcase your expertise, build a reputation, and forge key relationships from anywhere in the world — and the tools accelerating these trends will only continue to improve.

Imagine a world where 8 billion people are connected to the internet — instantly, they join the global economy, information space, and education space, giving them the ability to learn, contribute, and communicate permissionlessly across language barriers, borders, and time zones.

This is a monumental shift. Throughout all of recorded history, we've lived in a world in which some people can contribute to and connect with life changing networks, communities, and economic systems, but the rest have been left behind, unable to plug into what we would consider to be “modern” systems. We’ve yet to achieve global literacy/education, let alone keep people healthy, housed, and fed. If you go down the laundry list of what really matters, you’ll find most people still don’t have access to very basic things. But the internet can change that, and it already has for many.

Many of these problems are access problems, and technology enables us to get more with less. Silicon Valley is the best at solving problems with technology, and so the more the bundle of Silicon Valley becomes available to the rest of the world, the more we’ll be able to increase access to these services at scale. And the more accessible these services are, the more geniuses we’ll be able to discover. Today, we have no idea how many potential Mozarts or Einsteins or Musks there are in the world. But with all this capital and talent mixed together, paired with the nearly instant spread of information flow the internet provides, perhaps we’ll be able to find the next Mozart, Einstein, or Musk soon enough. And they’ll be located in places all over the world.

Steven Johnson wrote a great book called “Where Good Ideas Come From” that discusses how dense cities attract great ideas because it's this combination of ideas that creates real progress. But the internet is the best platform anyone's ever created to uncover and combine new ideas.

In the same way MOOCs unbundled education, Twitter unbundled networks, and Github/Behance unbundled credentials, the internet as a whole is doing the same thing to Silicon Valley: Talent marketplaces are unbundling recruiting, fundraising marketplaces are unbundling capital providers, and digital fellowships are unbundling the pay-it-forward spirit of founder communities..

So with Silicon Valley in the cloud, we’ll bring access to talent, capital, and an abundance mindset to the masses. Silicon Valley IRL will be fine, in the same way Stanford and Harvard will be fine. Physical cluster effects are real. But increasingly so, digital cluster effects matter too, so much so that people can now experience the best of Silicon Valley no matter where they are. The next Silicon Valley won’t be in Idaho or India—it’ll be in the cloud.

Erik Torenberg

Silicon Valley in the Cloud