Brief thought exercise: could modern-day San Francisco someday go the way of Detroit?

This isn’t going to be the most informed post of all-time; it’s mostly just a set of potentials and theories. Still, I think it’s interesting to consider. Start here: you can make an argument that, in the pre-war period and perhaps into the 1950s-1960s, Detroit was maybe the economic center of the United States. While it’s seemingly doing a bit better right now, it did file for bankruptcy recently — and this is after the famed auto bailouts. In the current context of the U.S. economy, the wealth is predominantly concentrated in the Northeast corridor, but the “engine” of technological growth is likely the Bay Area. 

One interesting aspect around this: if you read most older management theories, they tend to focus on things that came out of Detroit (i.e. Henry Ford essentially helping to invent the weekend because he wanted more people to buy cars, and/or Henry Ford paying his workers more than anyone else). If you look at a lot of current management theory — stuff like disruptive innovation or employee happiness models, etc. — they tend to come from San Francisco companies (think about your perceptions of Google’s employees). Detroit was a boom town and crashed. Could San Francisco crash?

Simply put, almost no global society (save perhaps China) or U.S. city (save perhaps New York, and even New York has gone through quite a few down years) has ever been stable and “on top” for hundreds of years running. All good things come to an end. Look at the Rust Belt: that area helped power America to its tremendous rise; now the term is essentially one of abject disdain.

So San Francisco is beautiful, yes, and it has 344 days of nearly amazing weather in a given year … but that alone can’t secure its future:

Digital disruption — a force that Silicon Valley gestated and nursed from its earliest days — is now global. Digital devices, the networks that connect them, and the software tools that prod human beings to hanker for more of all these things will soon be everywhere. The long-term effect of rising digital disruption will be to redistribute the benefits of the future across the planet even as it continues to improve the already futuristic valley that started it all. What does Silicon Valley have today that other places will eventually enjoy as well? Access to three things the valley currently has in spades.

Here’s a simpler way to phrase it:

They say that unless we boost government spending on science, technology, engineering and math—STEM, in industry jargon—we will be unable to keep up with countries like China and India. At some point, companies such as Apple, Cisco, HP, IBM, Microsoft and Oracle could be eclipsed by foreign rivals, just as Ford, General Motors and Chrysler have been.

Please also don’t forget: San Francisco is expensive as hell, and that may drive talent away over time.

The ironic / “meta” thing about this is that some argue now that Detroit could actually become the next Silicon Valley. There’s a ton of entrepreneurship in the city, there’s about 300 Kickstarter projects rooted there, and they have deals with a few business schools around tuition reimbursement for taking gigs in Detroit. They’re stealing some start-ups!

This is also interesting as a direct comparison between their two ecosystems:

Broader point is this: in the past 18-24 months, you probably know at least one person who has moved to San Francisco. I think I actually know 7-10. People love it out there and sing the praises and — assuming you’re not in any type of finance (NYC) or government (DC) or oil (Houston) gig — it’s a good place to find work, even if you’re actually living in Santa Clara. But just as it’s the current center of American innovation, so too was Detroit … and change is sometimes the only constant….


Ted Bauer


  1. I couldn’t agree more. There are so many apps for apps that can be developed. And the cloud is killing the big iron (read most current news about IBM). Here is more info -https://www.linkedin.com/pulse/20140408162332-4205334-is-the-silicon-valley-soon-to-be-detroit2-0

    • I actually JUST wrote about the decline of IBM a few minutes ago. So random — and yes, the writing is on the wall.

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