Silicon Valley’s economy is booming, according to the Silicon Valley Index, an annual analysis of the region’s job creation, growth rate, earnings and capital investments. And, in comforting news for investors, it shows no signs of slowing down.
The index found that in 2014, the region created nearly 58,000 new jobs, yielding average annual earnings of $116,000, venture capital investments were higher than any other year since 2000, and more than 16 million square feet of new commercial building space was approved.
More importantly, the organization behind the index, Joint Venture, said SiliconValley’s current growth bears little resemblance to the tech boom of the late 1990s, which ended in a spectacular collapse from 1999 to 2001.
“We’re not experiencing a spike like we did in the first tech boom,” said Joint Ventures director and Chief Executive Russell Hancock. “We’ve grown into this year after year since 2010. We’ve experienced steady incremental growth.”
According to Hancock, there might be more venture capital money to go around, but it’s now harder to get. Investors are being more discerning about who they invest in; they’re “not tripping over themselves to throw money at some 14-year-old with a pets website,” Hancock said, referring to Pets.com, a dot-com enterprise that failed during the first tech boom.
Hancock said another difference between today and the boom of the '90s was that technology has diversified and become an integral part of many industries, such as healthcare, education, retail, and the nonprofit sector. There’s now a mobile phone industry with a thriving app market. And what we consider the “technology industry” has also diversified to include everything from nanotechnology to clean-air technology to IT infrastructure.
“All of these things are in the portfolio and they’re all growing,” Hancock said.
While Hancock said the index wasn't intended to predict whether investors will continue to pour money into the tech industry and whether mega-valuations of tech companies will be sustainable, he did say Silicon Valley’s venture capitalists were being “very disciplined” in the way they spend their money.
“Will it continue?” he said. “That’s a good question."