What Happened to Silicon Values?

Compare Mark Zuckerberg and Larry Page to the founders of Hewlett Packard and Intel, and you'll find a paradigm shift as to how the tech industry treats its customers.

sillicon valley-3.JPGPRNewsFoto/Silicon Maps, Inc.

The Facebook IPO brought with it a flood of questions about how Silicon Valley has changed over the decades. I must be getting old because many people assume that I watched Silicon Valley evolve, and ask me to comment on the changes I've seen.

They assume correctly. I arrived in the San Francisco Bay Area as a young engineer in 1959, before there even was a Silicon Valley. Four years earlier, the physicist William Shockley had brought silicon businesses to the Santa Clara Valley when he founded Shockley Semiconductor Laboratory, and the transformation began. Out came the apricot orchards and in went Silicon Valley.

At the risk of sounding like someone who remembers only the bright spots of a golden age, I think it's worth exploring some of the values of the leaders who first shaped Silicon Valley, because they provide a sharp contrast to those of recent Internet entrepreneurs. The values of Mark Zuckerberg of Facebook, Larry Page of Google, and Mark Pincus of Zynga are currently influencing not only the business decisions their companies make but also the values of many other new Internet businesses.

When I arrived at Hewlett-Packard in 1965, the company was already a $300 million giant. Bill Hewlett's and Dave Packard's ideas and principles were in evidence everywhere. I learned a great deal listening to them in meetings and watching them manage. Dave's memorable quote, "More companies die of indigestion than starvation" -- roughly translated, "Focus, stupid" -- became one of my own guiding principles. I learned that sharp focus ensured great execution and created loyal customers. Dave's values became the company's values and the employees' values. His concern for the customer became the company's concern.

The company was focused on delivering advanced technology of great value, then servicing and supporting the customer to make sure he derived value from what he bought. Customers trusted Hewlett-Packard. I remember one customer who so trusted the salesman who took care of his account that he let the sales rep purchase what he needed. That period of trust went on for a long time. The salesman told me his secret: He never bought anything for the customer that the customer did not really need.

At both Hewlett-Packard and Intel, where I next worked, money was important -- but it wasn't the top priority. The goal was to do the right thing and do it well. If you did that, over time, rewards followed and shareholders supported your efforts. Intel and HP both eschewed the notion of two classes of stock, which gives disproportionate voting power to the founders -- something that is common in the valley now.

Many other things have changed in the valley over the past five decades. I've become increasingly concerned about one thing that is seldom discussed: the valley is no longer as concerned about serving the customer, and even sees great opportunity in exploitation. We are beginning to act like the bankers who sold subprime mortgages to naïve consumers. In such an environment, we are less likely to create the role models of the past who guided the valley to its future.

The unapologetic pursuit of wealth is perhaps the most obvious explanation. Less obvious is the loss of customer power.

Presented by

Bill Davidow is an adviser to Mohr Davidow Ventures and the author of Overconnected: The Promise and Threat of the Internet.

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