Silicon Valley has been experiencing constant growth over the decades but so have a few of it’s problems. That’s where Joint Venture Silicon Valley comes into play- an organization designed to address the pressing needs of the valley at a regional level.
Alan: Welcome back, I'm visiting here today with Russell Hancock of joint venture Silicon Valley, Russell, welcome to today's show.
Russell: Happy to be here, thank you
Alan: For the listeners, can you give your background on how you landed in your position today? Maybe startup though your career history?
Russell: I'm a guy that came here to go to Stanford, did graduate school at Stanford in the political science- I took a Ph.D. there. I thought I was going to be someone that was going to join a department and teach and do research. Thought I would be a pointy headed faculty kind of a guy. Instead I decided that the real world was calling to me, and I didn't just want to be theoretical, I wanted to be in an environment where I was working on policy problems and doing it with the real world actors and the decision makers. So I joined the Bay Area Council and I was their vice president working on a variety of issues including transportation and housing and air quality. I actually went back to Stanford for a short time, I was the director of what's called the Shorenstein Center at Stanford and then I got recruited to take my current position which is as you mentioned, Joint Venture Silicon Valley, I'm the president and CEO. The organization brings together Silicon Valley's leaders public sector leaders also private sector leaders even university figures like the presidents of the colleges and universities and then the labor leader. So all the leaders of Silicon Valley come together in this framework that we call Joint Venture Silicon Valley and I am their president.
Alan: So in the organization, how often are you meeting with the different heads of the organizations?
Russell: Well in an ongoing way, I mean we have committees working groups task force's and we also have a board of directors. The board meets on a quarterly basis and the board really is this out goosed coming together of the region's mayors, city managers, members of the state legislature, members of County boards even members of Congress. So they sit on this board there alongside them are CEOs coming from the tech firms major developers others senior business leaders also heads of labor organizations and college and university presidents all sitting at that table and working across boundaries as true collaborators.
Alan: You know you have a pretty good picture of what's going on in the valley. Can you give us an update?
Russell: I'm happy to do that, in fact it's part of our mission to thoroughly understand Silicon Valley, its trends and its challenges and then we actually document them the organization houses a think tank. It's called the Silicon Valley Institute for regional studies, I'm also the president of the think tank so I wear both of those hats and I have to tell you right now we're in an interesting period. It's sort of hard to tell what's going on. We have a strong thriving economy it's generating jobs at record-breaking paces but over the past, I want to say 12 months, there's been a there's been a shift there's been a slowdown it's like we took the took our foot off the gas pedal for a lap and now we're pivoting into some other interesting areas.
Alan: What are the hot sectors right now?
Russell: Well artificial intelligence machine learning big data for sure, the Internet of Things continues to be very important, security and encryption- those are very big areas but let's not forget electric vehicles- the mobility challenges and the companies that are springing up around mobility and that includes electric vehicles, electric vehicle infrastructure but also alternatives like drones and even crazy things like flying cars which people are taking seriously in in Silicon Valley. Anyway, all of these represent new directions for the economy and it seems like we're pivoting into those areas the way we've done so many times over our 75-80 year history.
Alan: One thing Silicon Valley has a reputation for is that innovation and still it remains about 50% of the venture capital in the world is running through this valley.
Russell: That's about right.
Alan: If we looked at what's happening though to infrastructure here with the prices of real estate, where do you see the forecasts, is everything going to continue to go to the sky?
Russell: Yeah it's pretty crazy. We have the highest housing prices in the United States. There are a couple of little pockets, a zip code here or there in Connecticut, New York, some places like that, that might have a higher median price but for the most part we should all understand that we're living in the highest cost region in the United States. It's a really hard problem to fix. The reason is because we have a landscape that locks us in. We're surrounded on three sides by water and then we're ringed by mountains foothills- permanently protected open space. So we're captive to this geography and then within our footprint for development we're for the most part built out I mean there it's not like we have a lot of unused parcels out there. So it's a supply problem it's a very simple supply problem we can't build enough housing and yet this economy has exploded over the generations and over the past six years unbelievable, growth and sustained growth so we've added hundreds of thousands of jobs- we've only added tens of thousands of housing units so supply and demand the prices are going to go through the roof and they will continue to do that.
Alan: I'm visiting here today with Russell Hancock, he's is CEO of joint venture Silicon Valley, I need to take a quick break and we'll be right back after these messages.
Alan: Welcome back I'm visiting here today with Russell Hancock of Joint Venture Silicon Valley and Russell in the first segment we talked about the overview of what Joint Venture Silicon Valley does. This segment I want to delve more into the current trends and as you're looking at bringing the local governments and the companies together, what are some of the issues that are being faced?
Russell: Well the issue is growth. We have tremendous growth it's been sustained growth, sometimes it's explosive growth but the point is its growth and we expect that this economy will continue to grow. We expect that people will continue to come to the area because of the opportunities that are here. This is an innovative economy it's an entrepreneurial economy that's not going to change we're going to continue to attract the best and the brightest people from all around the world. So the question is can we accommodate that kind of growth can we provide world-class infrastructure to support the world-class companies that are here. Can we address our livability issues so that this continues to be a vibrant setting for the economy but also a vibrant setting for people to raise families and grow their companies so those are the questions. Joint Venture exists to tackle those. The interesting thing about a place like Silicon Valley is that it is after all completely unorganized. Silicon Valley takes in about 45 different cities. Those cities spill over four different counties. There's no overarching framework for those cities and counties to come together in a process of decision making or planning. There's nobody calling the shots there's nobody bringing together people so that they can come to a consensus about what the next steps should be. So we don't really have a game plan, this is a problem it's especially a problem in a world-class region that needs to have a blueprint. So Joint Venture tries to provide that blueprint.
Alan: You know when we move into transportation, we're putting more and more cars on the road every day. And so anyone that drives our freeways can see you know the traffic patterns are changing substantially.
Russell: It's horrendous, we have the traffic in the nation. There's Washington DC, there Seattle, there's Los Angeles they rival us, but we are losing more time to daily delays than any other region.
Alan: So when we look at the south way, we get BART that's currently stopping at the the Tesla plant in Warm Springs, is that going to play a role in in in helping expand down into Silicon Valley and bring more relief off the freeways or how do you look at that from a logistical stand point.
Russell: That's the hope and Bart is extending, into downtown San Jose. That project is underway it's funded, it's not fully funded but we have confidence that that funding is is is going to fall into place and meanwhile the extensions are happening. But here's the thing, it will just get into downtown San Jose that's as far as it's going to go. BART is not going to ring the bay, it's not even going to connect to Cal Train. At some point the hope is that it will connect up at Santa Clara outside of the San Jose Airport and that there will be a linkage to Cal train and then people can take rail all the way around the bay. Will that help it's hard to tell it's not going to be enough, I can tell you that right now. In order to really make a dent in this problem we should be making massive investments in infrastructure and I'm talking about the scale that you see in places like Hong Kong or Singapore or so many parts of Europe and we're not anywhere close to doing that in the Bay Area.
Alan: How often do you get involved with the cities out of the area discussing the issues and the trends.
Russell: Well we work very closely with cities we work with our city managers we also worked with their elected officials including the mayors. Here's the funny thing about the cities in Silicon Valley. The elected officials are there for a four-year period they're regular folks coming from all walks of life. The mayor's usually serve for a 1-year period, they're usually appointed by their colleagues on the councils, a lot of times they're playing what we typically call figurehead roles going to ribbon cuttings and so forth. When it comes to getting down to the nitty-gritty issues of transportation, infrastructure, regional planning and land use, the city's actually aren't the best actors. Mostly because they don't have any jurisdiction beyond their city boundaries and the problems we're talking about a regional and they're not local they are regional and they require cities coming together in new constructs and in new frameworks so this is the difficulty.
Alan: I'm visiting here today with Russell Hancock of Joint Venture Silicon Valley. I need to take another break and we'll be right back after these messages.
Alan: Welcome back, I'm visiting here with Russell Hancock and he's the CEO of Joint Venture Silicon Valley and Russell, there has been significant growth within the past few years in Silicon Valley and it's outpaced the infrastructure. I believe in the first segment you mentioned that we've taken a little bit of a slowdown but now it's picking up again. I wanted to focus somewhat on the housing and the cost of living because this seems to be an ongoing problem where a lot of cities are addressing it by putting denser housing covenants within the city infrastructure.
Russell: Yes, so we have a housing problem. The median home price in Santa Clara County is now a million dollars, that's the median. In San Mateo County's even higher than that's 1.1-1.2 million dollars, those are the home prices now this is housing that's completely out of reach to the rank-and-file members of the workforce, that's the kind of place that we live in and then we're not providing very much housing and we're not putting it on the market in the first place. The inventory of housing is at historic lows so the problem is the housing is getting bought up, in fact it's getting bid up and the sale prices are usually getting thousands and thousands of dollars beyond their asking price. So there's people who can do this, people that are buying the housing but it's crowding out the rest of the workforce and so now we see people living farther and farther away- places where the housing becomes more affordable we're talking about the outer reaches of Concord we're talking about across the Altamonte Pass, we're talking about south of Gilroy, this is contributing to our transportation problems because so nowadays people are flooding onto our freeways, we have an inadequate transit system to bring them in here, and so the problems just spiral.
Alan: You know as we define Silicon Valley, there's pockets, you got the San Jose and the Mountain View and the Santa Clara, where would you consider a central hub of the valley?
Russell: Oh you know debates rage about that, nobody actually knows where Silicon Valley is, they fight about it. If you're in a draw it on a map where what would be the contours, nobody's actually sure. First of all we define it as a phenomenon and not just a place and that phenomena is clearly spreading its footprint is all over the Bay Area it goes all the way up the peninsula it's gone into San Francisco it's going into Oakland. Oakland has become a thriving center for technology and for startups, so really it just makes sense to talk about Silicon Valley as if we're talking about the Bay Area.
Alan: Okay and how does how does the Bay Area Council compare to what you're doing with joint venture.
Russell: Well the Bay Area Council, despite its name, it sounds like a very official government body- it's not it's actually a business organization, they have 300 400 business members and they represent those businesses on policy issues.
Alan: So someone wanted to get involved with Joint Venture Silicon Valley how would they go about that?
Russell: Oh my gosh we welcome that you go to a jointventure.org and there on the website it tells you very specifically how you can get involved. Companies join Joint Venture as members, they pay us annual membership dues, we also welcome senior executives to serve on our board of directors, our board members also paid dues to the organization.
Alan: And you have a marquee event after the beginning of the year?
Russell: Every year it's called The State of the Valley, that's where we release the Silicon Valley index, it happens every February, the index tracks over 70 different indicators and then we spend the day talking about it. What are the indicators telling us what direction are we going, what are our trends what are our challenges how do we mobilize to address them.
Alan: There's different committees that you have that are working on different problems, can you go through some of those committees?
Russell: Well we have groups that are working on infrastructure and by that I mean not only transportation infrastructure but also things like communications infrastructure and civic technology and making sure that we're taking smart sensible strategic approaches to the technology that we deploy in municipal settings across the region. We have a group that's working on bicycle infrastructure. We're hoping that the bike and the two-wheeled vehicles can be a compelling alternative to the automobile and that that would put a dent in our traffic. We have groups that are working on old-fashioned economic development, we have a group that's working on El Camino Real, which is this 19 mile stretch of road that goes up and down the Peninsula and connects Silicon Valley cities and we're trying to that become a place for intensive housing, dense vertical housing so that we can put a put a dent in our housing problems. So those are some of the groups that we have active.
Alan: Google has mentioned and a couple press releases that they look at the self-driving drones as a wave of the future, what's your thoughts?
Russell: We need to be working on every front. We need compelling alternatives to the automobile and if that includes drones so be it. The drone is very promising technology- can be used to deliver not only people but goods, freight, packages and so that can take all of those delivery vehicles off the roads and and it can get them off the roads at all hours of the day and so that's really hopeful. The sharing economy, the ride the ride hailing services can also be an answer to this problem because they represent the promise of carpooling, but they also represent the promise of goods delivery and that can be happening during the off-peak hours so that that helps during those critical commute periods.
Alan: There's been outlying communities that have begun to challenge the growth of the valley, for example, in Utah they have a place we're calling Silicon Slopes right now and some of the Bay Area companies are- they're not relocating they're expanding operations but how do you view that in overall in terms of what you're doing Joint Venture Silicon Valley? Do you see a collaboration?
Russell: Oh sure, there are there are regions around the country that are trying to apply this same formula, it's a formula that promotes innovation and entrepreneurship and they're trying to attract software technology- these leading-edge companies. We think that's terrific, we think that your best strategy for economic development is to have a pie that's expanding and so that everybody's participating in that in that kind of growth. We don't view it as competitive, Silicon Valley will always be a major node on a network of nodes.
Alan: What would you say keeps Silicon Valley in place to be that major node?
Russell: Well it's not our housing and it's not our transportation I'll give you that, but it is the culture of innovation that is here, it's the world's most highly educated workforce that is here, it is Stanford University and the other great universities that are located here and then let's not forget the venture capital that is the secret sauce and so here we have the epicenter of the venture capital industry- an industry that we invented by the way and that is the mother's milk- it makes all of this happen. You go to these other places and you just don't have that kind of sophistication, that kind of infrastructure, you also don't have the supporting infrastructure and here we're talking about the law firms, the accountancies, the executive search, all of this is firmly in place here in addition to a wonderful quality of living fabulous weather. And so that's why these livability issues become so important for Silicon Valley.
Alan: So, Russell, once again could you give the listeners how to reach out to Joint Venture Silicon Valley, contact you?
Russell: And thank you for that opportunity. You simply visit our website, jointventure.org and there on the website it tells everybody how they can get involved you can sign up for a mailing list if you are a company in the region you should be a member of joint venture we welcome your membership.
Alan: Been visiting here today with Russell Hancock of Joint Venture Silicon Valley, we'll be right back after these messages.