Why Technology Is Not Silicon Valley’s Real Innovation | Jack Lazar | TEDxSantaClaraUniversity


Translator: Elisabeth Buffard
Reviewer: Denise RQ This is my dog, Fenway,
he’s the family’s dog actually. We love this dog, this dog is great to us,
he really means a lot. Family is out looking at
the Pacific Ocean here enjoying life, but dogs actually live
a pretty rapid-paced life. If you think about it,
as you probably know, every one year for human
is seven dog years. So in the Valley, we’re actually very fond
of talking about how we live in dog years because technology goes
so rapidly in the Valley; we feel like we’re operating in dog years. If that’s the case, well then,
I’ve been around the Valley for about 200 years now,
and I’m feeling pretty old. But I’ve also seen one of the biggest
economic booms in history, and it’s been impressive. If you look at Silicon Valley
in the early days, it was really just a land
of orchards and fruit trees. People came here because the weather
was good, it was good for farming. But we were a nice little place nestled up
against the Santa Cruz Mountains, close to the beach, close to the Sierras;
you wanted to be here. And people came here; and in fact,
today we are thriving metropolis filled with people,
and businesses, and technology. We’re filled with an incredibly
multicultural diverse population. Silicon Valley has become
an important part of California. California has grown: if you look at California
at the turn of the 20th century, there were about
a million and a half people here. And in fact now, we have
three million people in Silicon Valley alone. We represent about 7.5%
of the population in California, but yet, we only make up about
1% of the 156,000 square miles that is California. So why do all these people come here? Well, it’s an innovative place. But it starts with
the educational institutions: places like Stanford, and Cal,
and of course, Santa Clara. Places that promote diversity,
promote innovation, promote entrepreneurialism. And the result of that is we get
a bunch of creative people concentrated in an area
where creativity is really blossoming. Couple that with venture capital: venture capital
has really been the catalyst for what we’ve been doing in the Valley. And in fact, it’s amazing
when you go and look back at the venture capital investments
in North America over the last 20 years. 37% of all dollars
have been spent right here, right here in this tiny,
little Silicon Valley. Over a quarter of a trillion dollars
have been spent here. And you have to ask yourself,
why is that happening? Well, it’s happening because we’ve created
some fantastic technologies over time. Phones became smartphones,
and things like GoPros and Fitbit, and now, we’re busy making
all these things work together, and that’s the Internet of Things. It’s become a big business: back in 1990, all of the technology companies – now this isn’t Silicon Valley,
this is all technology companies – they were about 500 of them, and they were valued
at about 212 billion dollars. Seems like a lot, right? Well, today if you look
at all the technology companies, there’s over 2,500 of them;
they’re valued at 7.3 trillion dollars. Apple and Google each are worth more than the entire technology
industry was in 1990. So this has become a really big business. You have to ask yourself
why does technology happen? And there is a graph
put out by the Gartner Group that’s very famous in technology circles,
it’s called the technology Hype Curve. What happens
is you have a technology trigger: something new happens; we’ve all heard
some great new technology that we want, we really want,
you saw something you really want. Autonomous driving would be one that I would say it’s going
through technology trigger right now, it’s going up the hype curve. Great examples: I had a general council
and that’s kind of the legal guy that runs a company,
so he’s a head legal guy in my company. in 1999, he calls me up, and he says, “Hey, guess what!
I just saw this new technology. it’s going to be so awesome! You put this thing in your ear
and you can talk wirelessly on a phone!” Wow! Imagine that! Now we take it for granted;
that was Bluetooth. That technology happened. It got very inflated, and then of course, it didn’t work as well
as it was supposed to, was too expensive, there are a variety of things that made it
not really live up to expectations, so we became disillusioned. And many of these things
where we become disillusioned, they go down that trough
of disillusionment, and they go away, because we can’t actually create
a business model for them. In the case of Bluetooth,
we were able to actually make that slope of enlightenment happen. That slope of enlightenment
is when you create a business model. So my point is quite simple:
technology is really cool, but what makes these things popular,
what makes them exist is this slope of enlightenment. it’s when you find
the business model that works. So I’m going to give you a couple of examples of companies
I was fortunate enough to work with: the first one is a company
called Electronics for Imaging; they made this device that looks like
a big giant PC, old PC there. This is in the 90s,
so give me a break, OK? And what that device did is it created the ability to have short-run
digital color printing. Pretty cool! OK, what does that mean? That means you can print something
over a network, and it comes out in color. Well, in 1991, that wasn’t possible. If you wanted to print in color, you need to print
hundreds of thousands of them on a printing press. And they were really expensive. We created this box, and this technology
made short-run color printing happen. And at Feros, which was
another company I worked at, we did this thing called Wi-Fi
– anybody heard of them? – It’s kind of important, it’s a lot bigger
than I ever thought it was going to be. But Wi-Fi was amazing, and we decided
we could make a semiconductor that could do it and spread it out
to the masses. Amazing technology: a hundred million
dollars invested in developing that chip. Hundred million dollars, lots of money. At GoPro, video cameras,
and still cameras already existed and we’ve had them for a long time, but what GoPro did that was different
was they shrunk it in size, they allow you to mount it
wherever you wanted to, turn it around on yourself, and actually, capture and share
the most important moments of your life. It didn’t matter where you were,
you could be 100 feet underwater, you could be up in the stratosphere, you could be underneath a rocket, although I definitely
wouldn’t advize that. Wherever you were, GoPro could do it. So this little camera did that. But it wasn’t really the technologies; it was the business models
that made these companies successful. Why? So first, if you look at EFI, that picture that you see up there
is actually a print press. In the old days, when we had
magazines and things like that, you actually used
to print these things out, color on a print press;
nice glossy color prints. But the thing was
you couldn’t really do it because it was so expensive
to turn on a print press that very first copy
cost you 10,000 dollars. You had to pay for the equipment,
it didn’t make sense! No one ever printed in color,
we just had black and white. Actually, we had dot matrix,
and that’s a whole another story. And so what EFI said was,
“Look, we got a different idea. Take this box and connect it
to a color copier; and now you’ll be able to sell, you’ll be able to push a file across
a network and printed out in color.” And to make that accessible to all of you, we went and said, “Let’s get staples,
let’s get OfficeMax, let’s get Kinkos. They can sell this to you
for a buck a page.” We sold a device to those guys
for 50,000 to 60,000 dollars, they sell you color printing, which you’ve never had before,
for a buck a page, everybody’s happy. That’s a good business model. In the case of Atheros,
we wanted to make Wi-Fi chips. But to do that, you would
traditionally use an old process where you frankly had to own
your own manufacturing plant. And these were hundreds of millions
of dollars of plants, sometimes billions. Good old Atheros had
100 million dollars in funding, but we certainly
weren’t going to buy a plant. So what we said was, “We got an idea. There’s this new type of process
that’s happening in Asia, and if we could just make
a semiconductor in that process as opposed to the traditional approach, we would have these folks who want
to basically run out their factory, and they could supply us all these chips.” This is the fabulous semiconductor model. And so we did that, and we started
by putting chips out there for 30 dollars. You didn’t see them in many places, but eventually Wi-Fi chips
got under a buck, and now I bet you probably have ten,
twenty different Wi-Fi devices around you in your life, your home, your set-top box,
TV, whatever it may be, everywhere. With GoPro,
it was something very different. It wasn’t really the technology at all,
in fact it was the marketing. An innovative approach to marketing
is what makes GoPro different. In fact, you probably don’t know this,
but the very first GoPros were neither designed nor engineered
or manufactured by GoPro. They were done by third parties. But the idea was
we were going to show you how you could do
all these great things in your life, these aspirational things. And so we did videos, viral videos
that you’ve all seen. Is there anybody here
who has not seen a GoPro video? OK, so there’s going to be a couple,
but most people’ve seen a GoPro video. You look at it, you say,
“Wow! I want to do that! I want a high quality video like that, I want to capture and share
the most important moments in my life. That’s what happened,
and we had this revolution: people decided they wanted to buy GoPros. And it became a billion,
billion and a half dollar company. There’s other companies
are doing this too, folks! It’s not just the ones I worked at. People like Box and DropBox
are changing storage. They’re removing the need
for something like this. I didn’t mention this before,
but this is a 4.5 gigabyte harddrive. Think about how much storage
you have in your phone. This is from 1995:
technology changes quickly. It’s a great paper weight. (Laughter) They’ve changed the model by giving you
as much storage as you want for 10 bucks a month or less. Good business model! Uber and Lyft created ride-sharing. They said there’s people over here
who have some spare time, and they want to effectively
rent out their car. And these cell phones already exist, and we can pair people up
with a smartphone. Pretty simple business model,
and guess what? They didn’t have to buy a fleet of taxis. They simply have to leverage technology
that was already out there — creative business model. In the case of Tesla, they make cars. And cars though have been made
for many years, hundred years. Now look: their cars are different,
the batteries are cool, there’s some great technology in it. But what’s really innovative about Tesla
is the way in which they get you the car, the way in which they sell you the car. Today if you buy a car, from for Ford,
Chrysler, GM, BMW, any of these guys. They all are dealers, right,
you go to the dealer. Does anybody like to go to the dealer? Yeah, I didn’t think so. So when you go to the dealer, you haggle
with them, they try to get you to buy the cars off their lot, they sell you
their warranties, the undercoating, and all the other crap
that nobody wants, right? The Tesla said, “Wait a second,
we don’t want to build a bunch of extra cars
and put them out in the market for a dealer to make money off of us,
it doesn’t make any sense. How about we just take your order online?” And guess what, all the profit that was
in that part of the business model got pushed back up to Tesla. And they can innovate and come up
with more, better cars going forward. Business model innovation
is really key because without it, you’re just throwing money
into a sinkhole. And we did this really well in 1999,
and 2000 I might add, for those of you who were around. We invested more money in technologies
that you can ever imagine. The Internet revolution was here,
and we were going to make it happen, and we just kept investing and guess what,
there weren’t any business models. So it didn’t make any sense, and the house of cards fell,
and a lot of money was lost. We always have to remember
that business models are really the innovation that we’ve had. But also, business models
are created by people. People are the real piece
of Silicon Valley that make us unique. We are innovative, creative,
risk-taking people here in the Valley, we’re a very diverse population. Thirty-seven percent
of the people in Silicon Valley weren’t even born in the United States. That’s compared to 13% for the full US. sixty percent of the people
in Silicon Valley are black, Latino, or Asian. Much more diverse
than the overall United States. And 48% of the people in Silicon Valley
actually have a college degree. A lot more education here, so in theory,
we’re supposed to be pretty smart, right? I believe that these people innovate
because they have the right values. And one of the key values
that we have is risk taking. We accept people not only
when they succeed but when they fail. We talk to people, we collaborate,
we work in teams, we think, we care about what other people think. There’s been a lot of talks here today
that it made me think about this, and I think that when it comes down to it, you really have
a unique set of people here. I run an exercise
where I’ll take 100 words, and I ask people, “Find the 50 words
that are most important to you.” What are your values?
What are your 25 most important values? How about ten? How about five? This is only 28 on this list,
and this is hard to choose from. Choosing five words off here
that are your values is tough. But the reason I do this exercise
is because we go back and forth. And we talked about it,
and the teams understand each other. And so we do a better job of actually
working together, collaborating. We become more innovative,
we create the business models, we leverage the technology. These are my five key values. Health: I never could quite
get away from this one, because I figure if you’re not healthy,
you’re pretty much dead, and if you’re dead, none of the rest
of values seem to really matter, right? So health, you’ve got
to take care of yourself; love: love for my family,
love for my community, love for my business, because if I love, I have passion,
and if I have passion, I make a difference and making a difference
is one of the key values that I think Silicon Valley
really understands. And of course you have to do
all of this with integrity. Just doing it because you’re passionate
about it doesn’t matter. You need to be — you need
to carry the utmost of integrity, particularly for someone like me
who was in a finance role in many places, that matters. So these values are important, we need to embrace them, we need to be accepting of people,
we need to promote diversity in our community, and we need
to actually carry these values to the next generation
because if we do that, I’m actually pretty sure that we’ll have another couple hundred dog years
of innovation left in Silicon Valley. Thank you. (Applause)

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4 thoughts on “Why Technology Is Not Silicon Valley’s Real Innovation | Jack Lazar | TEDxSantaClaraUniversity

  1. Baldness is prolific with loads of wifi around. Just saying. I got bald patches a couple years ago using my op alpa wifi adapter. It took months for the hair to grow back and I haven't used that adapter since. Those 'signals' will also shorten your lifespan.

    I'm into internet security if anyones looking for someone to work in that area.

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