The Decline of Silicon Valley

Apple Store Silicon ValleySilicon Valley is the home to three of the five most valuable companies in the world: Apple, Facebook and Alphabet. Since 2000, its firms have created the operating systems used by over 95% of the world’s smartphones. For decades it has been the place to go if you want to be successful in technology, however, recently entrepreneurs have started to look elsewhere and the implications of the decline of Silicon Valley start-ups could be a cause for concern.

So why are businesses leaving the leading hub of technology and innovation? The key reason for this change is due to high costs. The cost of living is one of the highest in the world, not to mention it is four times more expensive to run a start-up here than in any other city in America. The Valley’s relative importance is falling as other high-tech hubs are becoming more attractive, even investors are spending more on companies outside the valley compared to before. Other high-tech hubs, such as Portland, Los Angeles and Texas, are receiving many more start-ups than they previously did, and the number of people moving to the Valley has largely declined in recent years. The dominance of the tech giants has contributed to the fall of companies, particularly start-ups. In the shadow of the giants, it’s harder for firms to compete – leading to innovation becoming more of a struggle. Facebook’s median salary is $240,000, which is phenomenally higher than any start-up in the valley, giving small start-ups no chance in success or recruitment. Lastly, tighter visa restrictions have large implications for the economy, where over 50% of leading tech firms were founded by immigrants, and Trump’s new anti-immigrant policies limit this entirely.

Silicon Valley will remain as a home to the largest tech giants and a place where ideas can grow, however the bar has been set high and it seems like the only way now is down. The issues are that the cost of living and running a business will continue to force people out, firms will continue to dominate, and government policies will change the Valley’s dynamism. The struggle now is to learn how to keep start-ups entering the Valley and not be intimidated by the giants.

Rose, Senior Prefect (Year 13)

Photo Credit:
Smith Collection/Gado
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