This is a guest post by entrepreneur Roman Stanek.
I love Silicon Valley. I love the venture and social infrastructure that nurtures startups. I love its drama as companies create innovative products, become attractive acquisition targets, and then decide whether to sell or go it alone. But most of all, I’m fascinated by Silicon Valley’s unique dynamics that produce a constant stream of innovation — which my good friend John Seely Brown defines as “invention implemented.”
That implementation of innovation is key because it’s what makes Silicon Valley special. It’s the fuel that creates value, drives M&A, and builds companies. It’s also the fuel that creates whole new markets and, by extension, jobs.
I realize Silicon Valley might not exactly appear like a jobs-making machine. Even last year’s 3.6 percent employment growth rate, returning the area to job levels last seen in the dot-com era, seems sluggish to the thousands of people still looking for good jobs. I believe we’re on the threshold of far greater growth — growth that will impact more people, in more age groups, and across more industries than ever before.
Over the years, I’ve watched this area produce more jobs than elsewhere in the country — even amid our downturn — and I believe we are once again on the upward curve of a five-year cycle. That’s because Silicon Valley’s innovation generates new markets, even as old ones decline. We saw that clearly with Facebook, and the rise of the social media market. And we witnessed a similar jobs surge about 10 years, when VMware gave birth to the virtualization market.
Now I believe the entire Silicon Valley community is poised to benefit from new innovations aimed at business customers. Already, we’re seeing enormous funding rounds for companies that help businesses sift through and make sense of mountains of data, set up software-based networks, manage help desks via the Web, and communicate more easily with suppliers, partners and customers over the Internet.
Some of these startups will become successful in their own right. Some will go public. Some probably won’t make it. And a portion will be acquired by larger companies eager to deliver important innovations faster than they could with their own research and development.
I believe that, regardless of the outcome, it’s all good news for people who live and work here. Here’s why: New markets form around disruptive technologies and services that, in turn, give rise to more companies catering to these new markets. And with over 2 billion people around the world using broadband Internet (up from approximately 50 million a decade ago) many of those markets are global — creating even more demand for new employees. It’s a virtuous cycle if ever there was one.
What’s more, venture funding for business-focused startups is on the rise. Andreessen Horowitz, which manages $2.7 billion in funds, has made enterprise a big part of its investment strategy. Kleiner Perkins has said it will invest at least $200 million this year in companies targeting business customers. In fact, just about every major VC firm is now investing in the so-called enterprise space.
And the best part? Long before a company can even dream of customers, it has to hire an army of highly expert developers who understand business needs and are proficient at building modern, enterprise-hardened systems that meet stringent corporate demands. But it doesn’t stop with engineers.
Business-focused companies also need to hire experienced sales people who understand how new services work with current products. Good salespeople also have a deep understanding of customers’ industries, the problems they need to solve to better compete, and their biggest concerns. This is not the job description of someone just out of college.
All this new enterprise activity is translating into a real boom for the area — increasing local restaurant business, driving companies’ marketing efforts (have you noticed all the new billboards along 101 lately?), and spurring retail sales. The 280 and 101 highways are now populated by brand new BMWs, Mercedes-Benz and Teslas.
And maybe the best news of all?
In an area that is known for valuing youth over experience, we’ve entered a cycle of enterprise-focused innovation that holds the promise of creating jobs for everyone, regardless of age. If that promise proves true, then Silicon Valley’s economic contribution will be immeasurable.
Roman Stanek is the founder and CEO of GoodData, a company that offers a range of business intelligence software and reporting tools to help companies monetize big data. Prior to this, he was the founder of NetBeans.org, sold to Sun Microsystems, and Systinet, which was acquired by HP. Follow him on Twitter @RomanStanek.