The Center of the World

[Tugg Speedman]

Facebook ($267B)
Amazon ($246B)
Netflix ($45B)
Google ($440B)

Four companies that run websites.  Collectively they are now worth $1 trillion!

Welcome to the FANG economy.  Stop making stuff and start coding a website, that is how you make money.  Anyone not doing this is waiting for the coders to take their business away.

Cover story in this week's Economist




Inside Silicon Valley:  Empire of the geeks
Silicon Valley should be celebrated. But its insularity risks a backlash

http://www.economist.com/news/leaders/21659745-silicon-valley-should-be-celebrated-its-insularity-risks-backlash-empire-geeks

As a result, American capitalism has a new hub in the west. Wall Street used to be the place to seek fortunes and make deals; now it is increasingly the Valley. The area’s tech companies are worth over $3 trillion. Last year one in five American business-school graduates piled into tech. Jamie Dimon, the boss of JPMorgan Chase, has warned of mounting competition for Wall Street. Goldman Sachs recently held its annual shareholder meeting in San Francisco.

I agree with this ... Wall Street is no longer the power center in this country.  It is now the area around Standford (Silicon Valley).  It is the power center of the world right now.

[GooooMarquette]

Except that there's some fruit company that is worth about $700 billion alone.  And it makes mostly stuff.

[GGGG]

As a result, American capitalism has a new hub in the west. Wall Street used to be the place to seek fortunes and make deals; now it is increasingly the Valley. The area’s tech companies are worth over $3 trillion. Last year one in five American business-school graduates piled into tech. Jamie Dimon, the boss of JPMorgan Chase, has warned of mounting competition for Wall Street. Goldman Sachs recently held its annual shareholder meeting in San Francisco.

I agree with this ... Wall Street is no longer the power center in this country.  It is now the area around Standford (Silicon Valley).  It is the power center of the world right now.

Hello Economist!!!  Welcome to 1990!!!!

I mean, I love the magazine, but they really specialize in making observations that everyone else figured out a long time ago.  I mean people are "seeking fortunes" in Silicon Valley???  GET OUT!!!

[StillAWarrior]

I'm curious what percentage of the employees at those companies are involved in coding.  I'm not disagreeing that coding is extremely important.  I just think that it's less about coding then finding (or creating) a need and meeting it.  At their core, those four companies are service companies.  Those four companies are about finding a way to bring something to our doorstep that we used to have to venture out for (i.e., companionship, consumer products, movies and information).

[Benny B]

I'm curious what percentage of the employees at those companies are involved in coding.  I'm not disagreeing that coding is extremely important.  I just think that it's less about coding then finding (or creating) a need and meeting it.  At their core, those four companies are service companies.  Those four companies are about finding a way to bring something to our doorstep that we used to have to venture out for (i.e., companionship, consumer products, movies and information).

Exactly... it's not about coding at all; it's about forging new frontiers.  Has anyone ever looked at Amazon and said, "holy crap, their website has the most freaking awesome coding I've ever seen, I need to buy something from them because their use of Javascript is so dang ingenious."

More people have said "Damn, I wish Amazon had dancing hamsters on their front page.  Oh well, I'm still going to add the American Crew hair gel to my Subscribe and Save order."

[Tugg Speedman]

Hello Economist!!!  Welcome to 1990!!!!

I mean, I love the magazine, but they really specialize in making observations that everyone else figured out a long time ago.  I mean people are "seeking fortunes" in Silicon Valley???  GET OUT!!!

No, this week cover is going one step further. 

It is saying Silicon Valley has morphed from a place of opportunity (which it was circa 1990) to the most influential place on the planet, surpassing Wall Street.  The true masters of the universe are no longer on Wall Street, they are in Silicon Valley.  It also has all the money too.

The article also notes that Wall Street heavy hitters are leaving finance and joining tech firms in the Valley.  Goldman Sachs plays second fiddle to Tech forms in college recruiting among non-engineer types.  This is new.

[keefe]

I'm curious what percentage of the employees at those companies are involved in coding.  I'm not disagreeing that coding is extremely important.  I just think that it's less about coding then finding (or creating) a need and meeting it.  At their core, those four companies are service companies.  Those four companies are about finding a way to bring something to our doorstep that we used to have to venture out for (i.e., companionship, consumer products, movies and information).

I agree with you wholeheartedly, but...

The Coder/Dev culture is the living, breathing heart of tech innovation and will always be so. perspective is perhaps the greatest advantage in creativity.

[Tugg Speedman]

Exactly... it's not about coding at all; it's about forging new frontiers.  Has anyone ever looked at Amazon and said, "holy crap, their website has the most freaking awesome coding I've ever seen, I need to buy something from them because their use of Javascript is so dang ingenious."

More people have said "Damn, I wish Amazon had dancing hamsters on their front page.  Oh well, I'm still going to add the American Crew hair gel to my Subscribe and Save order."

No you don't say to yourself that Facebook, Amazon, Netflix or Google are great sites!!!  But you know what a bad site is (we have all been lost on them, see most .gov sites). 

Think of the unbelievable volumes of data these sites have and how easy it is to find what you want.  That is what is remarkable ... and why they are work $1 trillion dollars.

[Tugg Speedman]

Maybe this will pit things in Prospective

FANG           Mkt Cap          No. of Employees
Facebook    ($267B)                   9,200
Amazon      ($246B)                 154,000
Netflix        ($45B)                       2,200
Google       ($440B)                   59,000
Total          ($1 trillion)            219,000

Bloomberg has an index of every publicly traded company in the State of Wisconsin

58 public traded companies in WI
Market Cap of all 58 companies = $183 billion (Snap-on and Rockwell are the largest)
Total Employees = 477,000

The state of Wisconsin public companies are 18% the value of the FANG and employ twice as many.

Point is epic major history redefining change is happening in the business.  Facebook alone is worth more than all of Wisconsin's 58 companies combined, with just 9200 employees.

Simply put, if a website is not a critical part of your business, you risk be left behind, like brick and mortar retailers, newspapers and/or taxi drivers.

[tower912]

Companies thriving in Cali despite all the negatives?

[Benny B]

Companies thriving in Cali despite all the negatives?

Even in a drought, Wall Street never thirsts.  Maybe that's why Silicon Valley is the new Wall Street.

[brandx]

I'm curious what percentage of the employees at those companies are involved in coding.  I'm not disagreeing that coding is extremely important.  I just think that it's less about coding then finding (or creating) a need and meeting it.  At their core, those four companies are service companies.  Those four companies are about finding a way to bring something to our doorstep that we used to have to venture out for (i.e., companionship, consumer products, movies and information).

You're right. It's the ideas that count. They can find the coders anywhere.

[GGGG]

No, this week cover is going one step further. 

It is saying Silicon Valley has morphed from a place of opportunity (which it was circa 1990) to the most influential place on the planet, surpassing Wall Street.  The true masters of the universe are no longer on Wall Street, they are in Silicon Valley.  It also has all the money too.

The article also notes that Wall Street heavy hitters are leaving finance and joining tech firms in the Valley.  Goldman Sachs plays second fiddle to Tech forms in college recruiting among non-engineer types.  This is new.

It's because they are following the money.  Really this isn't new or revolutionary. 

Simply put, if a website is not a critical part of your business, you risk be left behind,

Wow.  With rather obvious observations like this one, I'm surprised the Economist hasn't put you on staff.

[MU Fan in Connecticut]

I thought 1st Avenue & 1st Street in New York City was the center of the world?

[chapman]

Maybe this will pit things in Prospective

FANG           Mkt Cap          No. of Employees
Facebook    ($267B)                   9,200
Amazon      ($246B)                 154,000
Netflix        ($45B)                       2,200
Google       ($440B)                   59,000
Total          ($1 trillion)            219,000

Not really.  Market cap is an indicative of future earnings expectations, where employee count is a current total.  However, looking at the revenue per employee for these four compared to Wisconsin-based companies' top four, this group does generate 3x more revenue on their headcount.  The future expectations would have to be that this number can grow even more due to the use of technology making it easier to scale.  Facebook shouldn't have to keep throwing bodies in or buy manufacturing facilities to grow their business; Kohl's is focusing heavily on their e-commerce model because they don't want to open and staff new stores to grow.  For a Netflix, it's very necessary that the $2.5M per head keep increasing - their profit margin isn't impressive due to the high cost of content.