Availability of talent drives entrepreneurial innovation – the story of Silicon Valley unemployment


The human toll of unemployment is stark, as is being experienced around the world.

The most recent unemployment statistics for Silicon Valley below illustrate how the region has greater cyclicality in unemployment than almost any other region in the US. In good times unemployment can fall to almost nil, in bad times unemployment rises faster and higher than most regions.


The recent dramatic upturn in unemployment is likely to be far from peak, with for example the mooted IBM – SUN merger potentially leading to 10,000 layoffs, a large proportion of which would likely be in Silicon Valley.

What is bad news for some is great news for others. Bringing ideas to market takes talented people. In good times those people are either not available, or cost too much for start-ups to engage. Today there are once again fantastically talented people who are looking for opportunities, and willing to work for lower – or even no – income in return for a share of what might become big later.

This balances out to a large degree the far more constrained availability of investment capital. The money may not be flowing into start-up companies at a massive pace, but they need less.

So don’t expect innovation in Silicon Valley (or anywhere else) to dry up. The spigot of one of the key enablers of innovation – talent – has just been turned up high. Entrepreneurship is being democratized as more people with ideas and energy are able to execute their vision, rather than being constrained by lack of resources.

This is just one key driver today resulting in the pace of technology innovation going up, up, up…

  • Exactly – and I can validate that from why the NYC tech community isn’t what people want it to be. One of the experienced entrepreneurs here was explaining to me that the lack of talent is what prevents lots of NY startups from going big.
    Because big media and finance dominate the city, all the talent gets sucked into those companies. Why would a developer work at a startup, when he can get paid a lot more working at a bank?
    Sure, NYC is bubbling in activity (as other people have flagged to me), but lots of social media parties do not mean sustainable businesses being built.

  • Interesting point Elias!
    Another factor in NYC – which is perhaps the most status-driven city in the world – is that people see high status for people working in finance and media but not much for those in start-ups (unless they’ve already made it big). Very different in SF where bankers are corporate nerds and entrepreneurs are the adventurers.