We all know that Silicon Valley is the world IT center. There are thousands of startups and many more ideas in the heads of locals. Numerous expats live here, hundreds of VC teams and individuals search for prospective projects. However, the present state of this heaven is worrying. Due to the pandemic and lockdowns, businesses here face many issues. And it seems that the Valley may never recover...

Silicon Valley Fundamentals

To understand the threat of the COVID-19 pandemic in this place, we should look at the reasons for Silicon Valley's success. The story begins in 1848, the first year of the California Gold Rush. Thousands of gold diggers flooded into the state, forming new communities with the omnipresent idea of freedom, success, and money-making. 

The next stage began in the late 1890s. Experts associate this location with three interconnected factors:

  • Military investments. The US Navy used the Valley and other parts of the Bay Area as one of its core bases. American military institutions invested a lot in R&D centers here, stimulating innovations here. 

  • Universities with bright minds. Founded in 1885, Stanford University is the core educational hub in the region. It nurtures research and developments. In addition, the University of California campuses attract many students. 

  • Venture capital. Based on the previously-mentioned factors, VC surged around the early 1970s. After the IPO of Apple, many new venture capital firms moved to the Valley, making it the largest VC center and a highly attractive location for startups. 

Nowadays, Silicon Valley hosts numerous startups, VCs, and just people who want to change this world to better. Similarly to gold diggers, developers and founders gather around the concepts of freedom and own projects. Today, the Valley relies on the unique business climate, meritocracy, person-focused and result-oriented philosophy, and tons of money. 

COVID-19 and Its Influence on the Valley

From the first HP garage to futuristic Apple Park, Silicon Valley went a long way. Before the pandemic, it was attracting numerous developers, startup owners, capitalists, and committed people from the entire world. This place is unique and unrepeatable. 

The problem is that it can be destroyed by COVID-19. While we don't say about the total abandonment of Silicon Valley, there are high chances that the area will never return to its peak. Marc Andreessen, one of the Valley's icons, blamed the modern startup culture in many sins in his recent post. He emphasized that even the most potent and innovative teams fail to "build" - medicine, vaccines, protective equipment, and infrastructure for these things. 

And locals realize that they're in danger. According to the study by NFX, VCs and founders are afraid of the coronavirus consequences. 39% of investors predict the possible recovery not earlier than April 2021, while 12% think that the Valley will recover beyond 2022. Founders are more optimistic as 30% and 32% foresee a recovery in this September and up to April, respectively. Among the main concerns, startup leaders identify the next ones:

  1. Lack of venture capital.

  2. Reducing sales.

  3. Poor team morale.

  4. Layoffs.

  5. Cutting spending.

  6. Remote cooperation.

  7. Other risks. 

Overall, the COVID pandemic revealed pressing flaws of Silicon Valley: reliance on office spaces, focus on irrelevant things that can't protect the world from global crises, the exaggerated value of money, rush for VC. It's possible that the recent disruption will change the Valley's landscape completely. 

The Future of Offices

But what about working locations? They represent the essential aspect of Silicon Valley culture, but we don't have good news here. Business Insider reports that a surprisingly large portion of employees already recognized the benefits of remote work. Still, many workers want to return to offices. For them, new spaces will be changed significantly: they will feature a lower density of workplaces, sneeze guards, reduced office traffic, and other protective measures. 

It's unclear when Silicon Valley will recover if at all. We'll monitor news and wait for new trends involving the world IT center.