What a difference three years makes

In 2003, Po Bronson wrote an influential article in Wired labeling Silicon Valley the new Detroit. Three years later, the article reads as both visionary and completely off base.

The visionary part was Bronson's prediction that Silicon Valley wouldn't return to being a lifestyle trend-setter.

"It was a new culture that both captured the world's imagination and had it running scared. Rich people in New York felt poor. Smart people in Redmond felt stupid. Producers in Hollywood spoke a whole new lingo. Every Fortune 500 company felt vulnerable to itty-bitty startups. Silicon Valley was an argument in the form of a place. It argued for a new way to live, a new relationship between owners and employees, a new bond between work and play."

Bronson was right in declaring this idea dead. Today you don't find a lot of people around the world who want to live the Silicon Valley lifestyle (or who even believe there is one). Most established companies have gone back to ignoring the tech industry, and the wild parties of the Bubble period seem to be a thing of the past.

But Bronson also predicted an end to the potency of Silicon Valley companies themselves.

"I doubt startups will ever become commonplace again....The hype machine keeps puffing, but the truth is that the pace of change in Silicon Valley is no longer special or extraordinary. In the past few years, Hollywood has been transformed by reality television, which has created new fortunes and new stars. Washington has swapped out an administration of 24,000 Democrats and replaced it with 24,000 Republicans. Wall Street has been altered by new rules governing conflicts of interest. The music and book industries have far more new products running through their pipelines than the tech industry."

Three years on, venture funding hasn't rebounded much, but startups are commonplace anyway. The scope of change in online software is breath-taking, and it feels like we're only scratching the surface of what's to come. Apple has the entire music industry on the run, and a company called Google – not even mentioned in Bronson's article – is re-inventing advertising. High tech isn't necessarily sexy, but it's definitely dangerous. I personally think it's more dangerous than it was at the peak of the bubble in 2000, because the software startups today are much more efficient (enabling a lot of low-cost experiments), and because the rest of the world has turned its back on the industry, allowing surprises to bubble up unnoticed.

I don't want to beat up on Po Bronson; it's more or less impossible to predict the future. But it's good to ask why he was partly right and partly wrong, because that may help us anticipate what's coming next.

Soon after the Bubble burst, it felt like everything associated with it was garbage – the culture, business models, and the technology. It turns out that the bubble culture really was an illusion. Partying every night and jumping jobs twice a year rich turns out to be economically unsustainable, not to mention physically exhausting. And the huge bolus of venture capital that the Valley struggled to digest (and largely wasted) shows no signs of returning.

But the technology was still maturing, and the business models were just getting started. Once the stupid, weedy startups were cleared out, we were left with a crop of extremely efficient new companies, and new technologies and businesses that were just starting to have an impact. That crop is only now starting to flower, and we won't see its full impact until the end of the decade at the earliest. But to me it's already clear that the impact will be enormous.

So, is Silicon Valley dead? Yes, as a cultural icon. But as a disruptive economic force, it was just taking a rest.