Defrag Blog

Distributing innovation

by Eric Norlin on Aug.20, 2009, under Uncategorized

In case it’s not obvious by now, you get a lot of differing perspectives at Defrag. You’re just as likely to run into a guy that runs a hedge fund, as a gal that’s responsible for a multi-million dollar budget around “social software,” as a pair of co-founders who are barely legally able to order a beer. You’ll also find that people at Defrag are a bit more “skeptical” (cynical?) about “naming conventions.” Brad Feld pretty much kicked off his initial defrag posts (3 years ago) by saying that he was exhausted by the term “web 2.0,” and we’ve got a bunch of folks coming this year that will pretty openly question the “enterprise 2.0″ moniker.

So it shouldn’t come as a total surprise that this morning you’ll find me watching clips of Doug Kass hosting CNBC from yesterday. Therein, Doug refers to what he feels are “economic governors” that will keep a pretty strong headwind on any real economic growth. I couple that with Howard Lindzon’s famous “too small to fail” phrase and pretty much come to how I feel about the macro-economics of the U.S. economy for the foreseeable future (3 years).

Welcome to the new normal: high unemployment, regular bank failures, waves of de-leveraging, “respite” rallies, a productivity surge, AND (as I’m about to argue) a distribution of innovation.

Alright, I’m twisting a phrase here, but my sense is that *something* is going on around tech innovation, and it’s going on right over there in good ole Silicon Valley.

Sarah Lacey had a BusinessWeek post that caught my eye. In it, she hints that something’s changing in the Valley. Employees that used to labor away for the promise of stock options are now rushing for the exits if they get a chance to “monetize” the promise of future riches. Maybe it’s too early to call that a trend, but my gut says that we’re seeing a group in the Valley that has spent the last 5-10 years job hopping at will, riding the waves of the “big win” and generally believing that if they can just land that gig at the right *time* they’ll finally make their millions. In other words, the *employees* of startups have been trained (at least in the Valley) to be market timers, not “buy and holders.” And that, my friends, is bad for innovation.

The result, I think is that we’re seeing a distribution of the kind of innovation that lives in the valley.

Here’s what I’m NOT saying: that startup folks in the valley are no longer innovating. They are. They always will.

Here’s what I AM saying: the vaunted “ecosystem” for startups in the Valley consists of two legs - 1) Capital and 2) talent that can be hired to build that innovation out. Number two has traditionally signed on for the long haul and been willing to hold out for the big win. But that group (in the Valley) appears to be changing; becoming more like the rest of the workforce.

That means there are now pockets where the community ecosystem is alive and growing (hire-able talent), and that the “distribution” of innovation out of the valley has really begun in force. You can see those pockets in places like the Twin Cities, Boulder, Austin, Portland, Boston, etc.

The “new normal” means a lot of things for the macro-economic picture, but I also think it means an ecosystem change for innovation. The oft-predicted distribution of tech innovation out of the Valley is at hand.

On that note: Early Bird ends at the end of the month, so be sure to register.

(sidenote: yes, i know the hyperlinks are broken in the permalinked post, and for some reason working on the general blog url — just click up to that to get them while we resolve the problem.)

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