Apr 19, 2019

Axios Future

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1 big thing: The stubbornness of genius hubs

Illustration: Aïda Amer/Axios

Over the past few years, big-name venture capitalists and flashy PR campaigns have boasted about replicating the Silicon Valley tech boom in second-tier cities around the country.

But so far there is no stampede to the hinterland. Existing U.S. tech hubs are not only holding on to their stature as primary magnets of top tech talent, but bolstering it. Second-tier cities remain just that.

Erica writes: A small number of U.S. cities — Boston, Austin, and of course the soup of cities making up Silicon Valley — still host almost all the Big Tech headquarters, while parceling out mere morsels of satellite offices or data centers elsewhere, away from the action.

New data from Indeed, the jobs site, shows that Silicon Valley's share of the nation's tech jobs actually increased by 10% between 2017 and 2018. Austin's share grew by 9%.

  • "It's the revenge of geography. Geography really does matter," says Eric Weiner, author of "The Geography of Genius."
  • "The reason that these wannabe Silicon Valleys have not evolved past the wannabe stage is that you can't manufacture a genius cluster or a hub of creativity from scratch."

How they are doing it: "Not only do the Bay Area, Seattle, and Austin have a bigger concentration of tech jobs, but the tech jobs they have tend to be more cutting-edge and pay more," says Jed Kolko, chief economist at Indeed.

  • The most common job postings in tech hubs tend to be in robotics or deep learning, while the bulk of openings in second-tier cities are for roles in quality assurance or hardware engineering, Kolko's research found.

Time moves on: Though he sees Silicon Valley as a weighty and immovable object at the moment, Weiner says that, throughout history, creative hubs like Athens and Florence have led the world — before withering away after about a century.

  • If that is a measuring stick, Silicon Valley has another few decades to go, but may be waning around mid-century.
  • "These huge, growing companies like Google and Uber, with their enormous market caps and the salaries they're giving to get people to stay with them, could actually hurt innovation," Mark Kvamme, a venture capitalist at Drive Capital in Columbus, Ohio, tells Erica. "Why go to a startup when Google is paying you $500,000?"

For now, the Valley is on top.

But venture capitalists and startup CEOs in middle America attempt to paint a glass half-full picture of the data.

  • Despite increasing their share, the tech hotspots still have just 32% of the country's tech jobs. Silicon Valley has just under 10%. The rest are scattered around other cities and states.
  • "I think satellites matter a lot," says Bryce Roberts, a VC in Salt Lake City. "There’s a synergy between satellite offices and endemic startup creation in second- and third-tier cities that I think is hard to spot sitting inside a first-tier market."
  • "Silicon Valley is going to be important because all the major tech companies are already there, and it's got 50% of the venture capital," says Kvamme. "But you've got fast-growing, innovative companies all across the U.S."

Go deeper: The future of innovation outside Silicon Valley

2. Amazon and 'rebordering'

Photo: Wang Zhao/AFP/Getty

Amazon's decision to all but shut down operations in China is another step in a reorganization of the world into two distinct, digitally-driven universes.

What's happening: In an announcement yesterday, Amazon said it will give up the local Chinese market, making its online store there solely a conduit for foreign goods.

Chinese analysts say the move follows tin-eared marketing and enormous gaffes by Amazon going back years, report the FT's Shannon Bond, Yuan Yang and Nian Liu.

  • But it also comes as the U.S., China and Russia are moving to cordon off cyberspace into their own zones of commercial, military and geopolitical influence.
  • As we have reported, this "rebordering," as some experts call it, is visible in the rollout of 5G internet, Russia's stated aim of cutting itself off from the global internet — and the growth of e-commerce.

"We are seeing rebordering in the behavior of both private and public actors," said Janice Gross Stein, a professor at the University of Toronto.

Amazon did not respond to an email seeking comment.

Go deeper:

3. What you may have missed

Photo: Chris Niedenthal/LIFE/Getty

Did stuff take longer than you expected? Not to worry — here is the top of Future for the week:

1. Companies sue for antitrust: Getting ahead of the feds

2. Automation of the food business: A $5.7 trillion market

3. Wall Street reckons with climate risk: The profit motive steps in

4. The AI frenzy at universities: The new industry at stake

4. Worthy of your time
Expand chart
Adapted from Ostle, et. al., "The rise in ocean plastics evidenced from a 60-year time series", 2019; Chart: Andrew Witherspoon/Axios

Tapirs and reforesting (The Economist)

Finding plastic everywhere (Andrew Freedman — Axios)

The ominous new geologic fault (Geoff Manaugh — Wired)

5G, meh. Welcome to 6G (MIT Tech Review)

Holbrooke and the decline of U.S. power (George Packer — Foreign Affairs)

1 comeback thing: Crying over Tiger

Photo: Kevin C. Cox/Getty

Five days after Tiger Woods' capture of the Masters tournament, golf fans, and people who couldn't care less about the sport, remain in various states of rapture. Michael Jordan, no stranger to comebacks, tells the Athletic it was "the greatest comeback I've ever seen."

So it is with Axios' Kendall Baker, who writes that he has found himself weeping over Woods. Kendall's bottom line:

"If Tiger's redemption story doesn't teach you the power of self-belief — or, better yet, teach your children or the children you'll one day have the power of self-belief — I don't know what will."