It's a BYO-slingshot party in the Silicon Valley of Elah
Camel, needle, VC, Kingdom of Heaven
Blocks and Files Silicon Valley is the new Valley of Elah, the place where David slew Goliath by using a disruptive innovation. Today's Silicon Elah is the holy ground of Clayton Christensen's venture capitalists' bible, The Innovator's Dilemma, and its incredibly powerful idea of disruptive innovation.
Oddly Christensen is giant-like in physique: he is recorded as being six feet eight inches tall when at Oxford. Coincidentally he is a Mormon and thereby a sort of associated poster child for Fusion-io, the Salt Lake City based Fusion-io which, led by a David (Flynn) is aiming to disrupt the storage giants with server flash presented as storage memory by shrewd software.
David and Goliath in the Valley of Elah
In the valley of Elah in two weapons competed, a massive club and a slingshot: with the well-known outcome that a weapon that could deliver death from a distance could beat one that required close-up contact. The club industry was too focused on delivering better and bigger clubs that could more effectively crush the person they were used against. The slingshotters saw that people could project death by throwing projectiles from a distance, thus not exposing them to clubbery, and do it again and again. The gun was a only sustaining innovation because it merely threw a projectile further, faster and much more precisely. Club-wielders had no defence and the modernised slingshot reigns supreme in warfare today, along with its cousins, the various forms of self-propelled projectiles, including drones.
The Valley of Elah has become the Silicon Valley of Elah, a place of commerce instead of conflict
What Christensen documented was that incumbent businesses may appear invincible but are actually vulnerable to smaller, nimbler entrants. What VCs realised was that if they funded the disruptive entrants they and the entrants could make a fortune by disrupting incumbents who just could not respond because their business DNA prevented it. So EMC competes with NetApp, HP, IBM, HDS and Dell with high-end and mid-range arrays.
It, likes the others, met the all-flash array startups, offering storage arrays many, many times faster and cheaper for the performance than relative behemoths like VMAX, the DS8000, VSP, FAS6200, etc. What could EMC do?
It has to decide if all-flash arrays are temporary, a literal flash in the pan, or long term. If they are long-term, like all incumbents facing a technology that could displace their own, EMC can ignore them, hoping they will go away, acquire the disruptive startup, or set up its own in-house efforts to build a flash array, which takes time and won't be supported by the existing and threatened business lines. EMC has acquired XtremIO to get flash-array technology, and given the backing VCs their reward (and made XtremIO's founders rich).
In David and Goliath terms, Goliath has welcomed David and his slingshot instead of trying to crush him, and adopted his weapon. The Valley of Elah has become the Silicon Valley of Elah, a place of commerce instead of conflict, a place where the now experienced Goliaths see a repetitive procession of VC-funded Davids with their latest technology slingshots and attempt to build their own version early, like NetApp with FlashRay, or buy it in like Dell with EqualLogic and Compellent and Ocarina (and HP with 3PAR and LeftHand, and IBM with Diligent and Storwize, and EMC with XtremIO etc etc). Canny Goliaths know they can get bigger faster by gobbling up the best of the new Davids that come along instead of trying to crush them with existing products.
For they have read The Innovator's Dilemma too and know the rules of the game. Nobody loses in the Silicon Valley of Elah, except the Davids that fail, the Pillar Datas, the Copans, and so on. The VCs don't care, spreading their bets and raking it in big enough times to make the whole game worthwhile. Failed startups try again and so the disruptive wheel turns and turns again, feeding a frenzy of tech novelty froth. Who cares how long an IPO'd or acquired startup then lasts? The VCs have moved on and are championing another hot little bunch of nerdy geeks with the latest and greatest. The nerds slave away at their computer screen coalface, dreaming of changing the world (and riches). The VCs move from palatial mansion to 5* restaurant, deliriously counting their dollars and watching and guiding their funded guys killing themselves to bring the latest and greatest tech to market.
And the incumbents go ho, hum, seen it all before already. So make the hot box, the cloud software, the software defined whatever, why don't you. We'll buy you up or build our own because we can judge early whether your stuff is good. You'll make millions, we'll make billions and everyone's happy in this repetitive replaying of the biblical D & G show. Except …
Except the collateral damage you can see camped out in San Jose's tent city along the Guadalopue River, the homeless who may well have jobs but can't afford to rent housing because the demand for it and the general richness of the area has enabled landlords to raise rents by, it's said, ten per cent a year, putting housing out of reach of low-paid workers.
There's gross inequality in Silicon Valley. From JC to VC via CC the disruptive innovation game gets played again and again. The big folks get richer while the little folks get poorer. Money is sucked upwards and doesn't fall back down to earth. Some things never change.
Anybody care to disrupt that? ®