The Surprise Is on Silicon Valley, Thanks to Obama

Silicon valley

Be careful what you wish for.

No segment of U.S. industry did more than high tech to elect Barack Obama as president of the United States. The 2008 Obama campaign will go down in history as having made better use of digital technology than any before it. From a hugely powerful Web site to the reproduction of the "Change" poster on thousands of Facebook pages to the president's own "tweet" on election night, Silicon Valley played a crucial role in the success of President Obama … and Silicon Valley naturally assumed that the new president would do the same in return.

It hasn't quite turned out that way.

The first surprise to many Valleyites is how innately anti-entrepreneurial the new administration has turned out to be. Candidate Obama looked like a high tech executive -- smart, hip, a gadget freak -- and he certainly talked pro-entrepreneur. But the reality of the past six months has been very different.

One might have predicted that he would use the best tool in his economic arsenal -- new company creation and the millions of new jobs those firms in turn create -- to fight this recession. But President Obama has, instead, appeared to be almost exclusively interested in big business as the key to economic recovery.

By comparison, almost every move the new administration has made regarding entrepreneurship seems to be targeting at destroying it in this country. It has left Sarbanes-Oxley intact, added ever-greater burdens on small business owners, called for increasing capital gains taxes and is now preparing to pile on cap-and-trade, double taxation on offshore production and a host of other new costs. Even Obamacare seems likely to land unfairly on small companies.

Entrepreneurship has been the single most important contributor to the economic health of this country for at least a century now. And if you were going to systematically destroy that vitality, you couldn't come up with a better strategy than the one Washington has put in place in the past six months. Indeed, you can make the case that the sole contribution the Obama administration has made to entrepreneurship in America to date is to force all the millions of unemployed people to desperately set up their own businesses in order to survive.

You might imagine that this would be upsetting to all the Valley tycoons who played such an important role in underwriting, advising and legitimizing candidate Obama. But you would be wrong.

Beware the Start-Up Companies

What I think is most misunderstood by outsiders is that the electronics industry is not monolithic and that its players do not all share the same interests. And nowhere is this divide greater than between start-up companies and the giant, well-known corporations -- even though the latter, just a few years before, were start-ups themselves.

For example, you may think that the competitive challenge that big tech companies fear most is from other big tech companies. You know: Apple vs. Microsoft, HP vs. Dell, Cisco vs. Juniper, MySpace vs. Facebook. But, in fact, that isn't the case.

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