Don’t mourn the unicorn; there are more interesting animals in Silicon Valley

There’s more to tech than building another selfie app.
There’s more to tech than building another selfie app.
Image: Reuters/Mike Blake
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Back in 1999, Lou Gerstner, then chairman of IBM, prophesied (paywall) that pure internet companies were “fireflies before the storm.” Maybe, he said, “one or two of them will be profitable,” but it would be giants of industry like IBM, Ford, and Wal-Mart that would lead the charge in online commerce.

Gerstner, of course, was both right and wrong. Many dotcom firms were indeed fireflies. But a few (including Amazon, which he witheringly dismissed as “a very interesting retail concept”) have become behemoths, and many more are profitable, while IBM is struggling.

Gerstner’s words seem to echo now, as each week brings fresh bad news for Silicon Valley’s would-be “unicorns.” There are layoffs at LivingSocial, warnings about LinkedIn, and pivots at valet-parking startups. The “Uber for X” model rarely works except when X = Uber. Valuations are shrinking, funding is falling, and there’s ill-concealed glee at the signs that yet another tech bubble is, if not exactly bursting, at least looking distinctly deflated.

But that schadenfreude, just like the hype that preceded it, makes it easy to forget that there’s another Silicon Valley, away from the capricious world of dating and laundry apps. It’s the unsexy, stolid companies that build the hidden but immensely complex and costly infrastructure—cloud storage, AI, data analytics, and other things—of a digital world.

Those companies run the gamut from newish firms like Google and Facebook to “old” ones like Microsoft and perhaps even GE. It encountered bafflement when it set up a software-development arm in the Bay Area (what, no office nap rooms?). But it’s trying to build the computer systems—the “Internet of Really Big Things”—that will run 21st-century industry.

Whether GE succeeds or—like IBM—is overtaken by newer, nimbler peers, remains to be seen. Either way, long after “unicorn” has become as archaic a pejorative as “dotcom,” there’ll still be serious money in Silicon Valley, doing serious things.

This was published as part of the Quartz Weekend Brief. Sign up for our newsletters here, tailored for morning delivery in Asia, Europe & Africa, and the Americas.