workers who can work remotely for the foreseeable future have decamped to Marin
County, also to the north, and Lake Tahoe to the east. Startups, meanwhile, are looking
for their proverbial garages much farther afield. To make their funds last longer, many
have rented Airbnbs in cheaper places.
Things are also shifting in a technological sense. If one sector has benefited most from
the pandemic, it is cloud computing: in many industries it has turbocharged the process
of digital transformation, which often involves moving workloads into shared data
centres. Silicon Valley has big cloud-computing firms of its own, not least Google, but the
market leaders, Amazon and Microsoft, are based in Seattle, farther north on the Pacific
Shelf.
Yet the most important realignment is financial in nature. The tacit understanding
between west- and east-coast business elites over how to share the spoils of tech
investing is under threat. The key element of that deal has long been initial public
offerings. They are designed so that investors in private markets, mostly VC s and
related entities, can cash out while letting investment banks, and institutions active in
public markets, make money from flotations. But some VC s are now pushing for “direct
listings”, in which the initial share price is set by an auction rather than by investment
bankers. That reduces fees and makes it easier for early investors, many of them VC s, to
cash out at a high valuation.
A newer approach is to use a special-purpose acquisition company, though it is not yet
clear whether this trend will benefit Silicon Valley more than Wall Street. SPACs, as they
are known, are shell firms that go public promising to buy one or more private
businesses with the proceeds from the listing. They have a dubious history; many have
underperformed the broader stockmarket. But SPACs will get even more popular in
2021, as well-known VC s such as Reid Hoffman prepare to launch their own.
In 2021 it will become clearer where the new Silicon Valley will settle geographically,
technologically and financially. Whatever happens, it is clear, now more than ever, that
it is less a specific place and more a multi-dimensional, ever-changing space.
| Section menu | Main menu |