What goes down, doesn't always come back up

People often say in various forms that Silicon Valley is the bed of technological innovation and a huge driver of economic prosperity. I've lived here my entire life and would agree that our past history does support that in some respects, but I'm also aware of one simple truism: past performance is no guarantee of future success.

A report that was issued today by some pundits agrees with me: Silicon Valley still has a lot of fancy and cutting edge tech shit going on, but there are serious problems afoot as well. At a minimum:

• Venture capital investments are down
• Patent filings are down as well
• The number of mid-level jobs has also gone down (cough, outsourcing of jobs, cough)

Additionally, there's the usual plethora of shit to blame on the California state government -- high taxes, crumbling infrastructure, crappy schools, etc. On top of that, the last decade or two has also seen the rise of other tech centers around the world, including Austin, TX, Bangalore, India, and various tech hubs on the US East Coast like Boston and Research Triangle Park.

This brings me to my point and it's that what goes down does not necessarily go up. In more specific terms, the economy will not simply "get better" again because it's gotten better in the past. As Andy Grove said in Only the Paranoid Survive, there are strategic inflection points in business (but also in life generally) in which the old way of things is lost forever. Case in point:

1. In the late 1990s, Napster came out which facilitated wholesale copyright infringement of music. The record companies, of course, sued Napster out of existence, but then popped up a whole slough of similar services. The ones I can think of off hand include Kazaa and Morpheus, but I'm sure there are tons more. Before Napster, the record companies forced consumers to buy songs by the album. Now that Napster is gone, are consumers back to doing that or have you been living in a damn cave for the last decade and never heard of iTunes?
2. Years ago, the US still relied on Pony Express riders to deliver mail and other packages around the country. Then the telegraph was invented which allowed messages to be sent long distances without the need for someone to actually hop on a horse and hand deliver the message. When the first Pony Express riders found themselves without work, I'm sure someone must have thought 'Don't worry, this telegraph stuff is just a fad -- we'll be back to hand delivering messages in no time.' And they were right, if you ignore telephone and email.
3. When the first automobiles started appearing on US roads in the early part of the 20th century, they replaced horse drawn carriages. Did carriage drivers get displaced? Sure. Did some of them think that cars were just a passing fad? I do. Were they just a passing fad or did they represent an inflection point in which technology changed forever?
4. When the first manufacturing jobs in the Midwestern US started going overseas to China, Mexico, and the like, do you think those manufacturing workers stood around and said 'Don't worry, those jobs will come right back in a jiffy -- no one's ever going to buy something made in China anyway.' When outsourcing of engineering jobs first started in Silicon Valley in or around 2001, that was the sentiment a lot of people here echoed -- that the jobs would come right back to the US once the economy picked up. Some jobs did come back -- most notably Dell's executive level telephone customer service -- but for the most part, I'd say they haven't. And unemployment (currently 11%) in Silicon Valley has languished for the better part of this decade. Older tech workers find themselves increasingly having to start over again in their 50s and 60s. Coincidence?
   
5. And, finally, something more recent: when Google, Yahoo, and others first started putting maps on the Internet, I'm sure the paper map makers weren't worried -- 'A map on a computer screen? Ridiculous. You can't take a computer screen into the car with you. You'll always need paper maps.' Can you still get a paper map? Sure, but it's a lot harder as more and more people use Internet maps instead.

Lastly, from a general logic perspective, the idea that the good times will always return is silly -- if they did always return, then nothing permanently bad would ever happen.