Sean Randolph is senior director for the Bay Area Council Economic institute as well as being the Former Director of Trade for the California Trade and Commerce Agency, he is an Executive with expertise in economic policy, technology and innovation, and international affairs. Frequent speaker and writer on economic issues, with over 200 published reports and articles on foreign affairs, international business and economic policy. Active kayaker and trail, mountain and ultramarathon runner.
This episode we talk about:
- Which countries have the strongest ties and influence on Silicon Valley?
- How big of an economic influence does Silicon Valley really have on the state of California?
- How does trade policy affect startups?
- What role does the Bay Area Council play in Silicon Valley and the rest of the world?
- What laws are being discussed that will affect all of us in the coming years?
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Pre-Intro 00:00
You’re listening to the Silicon Valley podcast.
So to begin with, I just want to say this interview was actually recorded in February. Yeah. And what happened was I was trying to record a bunch in anticipation of a vacation. And while I was on that vacation, a lot happened and I had to go back to the US and we all know why, the quarantine and everything. And with that, this episode release got pushed back a couple of times, and I was almost thinking of not releasing it, but then after listening to it again, I thought, Oh my gosh, this gives a great perspective of how much the world has actually changed in such a short amount of time. So, with that, here’s the episode that was recorded in a February. And that is just being released now. On today’s show, we sit down with Sean Randolph, who is the senior director for the Bay Area council economic Institute, as well as being the former director of trade for the California trade and commerce agency. He’s an executive with expertise in economic policy technology and innovation and international affairs, a frequent speaker and writer on economic issues with over 200 published reports and articles on foreign affairs, international business and economic policy. On Today’s show, we talk about which countries have the strongest ties and influence in Silicon Valley. How big of an economic influence this Silicon Valley really have on the state of California and the rest of the world? How does trade policy affect startups? What role does the Bay Area council play in Silicon Valley, and what laws are being discussed that will affect all of us in the coming years? And please give us a review on iTunes, which encourages us to create more content such as this. So now let’s get to this show and enjoy.
Intro 01:48
Welcome to the Silicon Valley podcast with your host Shawn Flynn, who interviews famous entrepreneurs, venture capitalists and leaders in tech. Learn their secrets and see Tomorrow’s World Today.
Shawn Flynn 02:05
Sean, thank you for taking the time today to be on Silicon Valley.
Sean Randolph 02:08
Happy to be here.
Shawn Flynn 02:01
Now, Sean, can you give us a brief intro to your background before we start the heavy questions today?
Sean Randolph 02:16
Well, for a long time, I’ve moved around the intersection between business and government, mostly around economic policy. I spent about 12 years in the us government working on congressional staffs on foreign affairs, did a short period in the white house, in the political appointments process for foreign affairs and ended up taking the job that I wonder for myself in the state department of the policy planning staff, that’s the officer for Asia was there at state doing that a lot of economic policy work for five or six years. I handle international affairs for the energy department for a few years and came home to California after that. And I have run international business associations. I’ve been a consultant on and off, but I’ve been for quite a few years now here at the Bay Area council economic Institute.
Shawn Flynn (03:03):
What really excites me about your work is you’ve written over it 200 economic reports and we’ll go into detail later. But one of the reports that I read not too long ago, talked about incubators and accelerators programs and kind of all the countries involved. Can you talk about the ties to other countries, how they seem to rise and fall and what countries have the biggest investment in Silicon Valley within these last few years?
Sean Randolph (03:28)
Well, one of the things I’ve really noticed, which is it’s striking, and it’s not obvious to everybody who just is around the Valley day to day is the enormous global footprint here. It really is a condensed global economy here in our region with active engagement from almost every corner of the world and in a very big way. And it’s always been an international trade and investment centers, Bay Area has been one of the four leading regions across the US for trade meaning imports and exports, what you put on an airplane or put in a container on a ship, but it’s global character has really shifted a lot in the last 10 or 15 years around the innovation economy where I think most people would agree around the world that while it’s not the only place by any means where innovation happens and where entrepreneurs gather and where you have a powerful technology led economy, it’s unquestionably the number one in the world. It’s the key place in the world to connect if you’re in this game globally. And that brings an enormous number of companies from overseas, across many, many different industries. It brings a wide range of governmental entities, whether it’s technology agencies, trade investment, offices, think tanks from around the world. And it brings a large number of incubators and accelerators. And so the glue, the connector for all of these is innovation, but it’s really digitization. It’s everything to do with the digital economy. So we’re not good at everything here, but what we are really, really good at is sort of defining the future of the digital economy globally, as it impacts an increasingly wide range of sectors. And that’s what really draws these companies in it, of course it draws in a lot of entrepreneurs. And part of the draw there for the entrepreneurs is where the largest source of venture capital in the world, about half of all the venture capital investor in the US has invested right here in the Bay area, a very small area, which means you’ve got access here to growth capital at a scale you don’t have in most of the world and you have access to mentors who’ve done this before, and you just have a large infrastructure that is receptive to entrepreneurs coming from everywhere. So, we have a lot, of course, that are home grown. You don’t get your plug and play your 500 startups. You could go on and on, but there is also large and growing number of accelerators that are internationally sponsored. They may be sponsored by overseas governments by private entities. Many are public and private, but they’re really from everywhere. And what they’re trying to do is help startups and early stage and growth companies from their countries get connected here, learn the game, understand the Silicon Valley way of doing business, meet mentors, meet partners, and they’re successful. And they’re not all successful, but if they are successful attract capital and expand globally from a base in Silicon Valley, but often deeply connected to their markets at home.
Shawn Flynn 06:36
So the corporations and countries that have the strongest ties and influence in Silicon Valley, who are they?
Sean Randolph 06:42
I’d say the biggest number come from Europe collectively. If you broke a divide by individual country, it wouldn’t be as large by country, but collectively, if you just take the EU, the other European countries, that would be the largest presence of any one region. I’ve counted something over 65 major European corporations that have R and D facilities or innovation offices who in the Bay area, if you look at it, just the count, the number of accelerators in the region here that have some form of European sponsorship. And if you look at say the large umbrella accelerators, Hey, your rocket space or 500 startups, or any of those, if you look at the international participation there, the Europeans are always going to be the largest single group. So I think the deepest connection there is with Europe, you do find a lot of activity with China. I think China will probably come after Europe and then you’ll find a significant to lower scale activity from everywhere from Singapore to Korea and elsewhere. But I think the largest single presence is European, which is kind of against the logic because everybody thinks, Hey, we’re a big Asian center. We’re very Asian focused and we are, but I think it’s not well understood just how significant the European footprint is here.
Shawn Flynn 08:13
So, most people do think, I would say that it is more Asian focused, as you just mentioned. European has stronger ties. There’s more accelerators, there’s more involvement. Why do you think that one group is kind of viewed, has had enough bigger impact when in reality, not really.
Sean Randolph 08:31
Well, I think it’s logic well, and it’s true to think of the Bay areas, a national hub with Asia. And it is one of our defining characteristics here in this region. However, we did some work for the European union a few years ago, looking at the relationships with Europe across the board historically and currently. And one of the things we found was that, and this was a couple of years ago coming out of the great recession where Europe with sort of slow tree cover compared to say China or Asia. And historically about a little less than half of our trade from this region is with Asia. Historically, let’s say 23, 24% spend with Europe than 20, 21% with North America and maybe the all the rest of the world together like five or 6%. So really heavily weighted in those three areas. And over a number of years, our trade with Europe had actually dropped, our trade with the NAFTA had gone up and our trade with Asia had stayed quite strong or they maybe 45% or so of the total. So a big Asian story. And when you read the newspapers or hear the media, what do they talk about? The conversation is about trade. Talk about trade war with China. It’s trade. What we found looking at Europe was that it was true. Absolutely Europe’s importance as trading partner had declined, but it’s important as an investment partner had increased. So what we learned was which was a surprise that there is more aggregated investment from the Bay area in Europe than there is in all of Asia together, including Japan and China. And there is more investment here in the Bay area from Europe. Then there is from all of Asia together, including Japan and China. So the relationship with Europe is much more about investment and R and D and services than it is just with traditional trade. So I think it’s really a question of what people focus on and what the media focuses on. And I think it also reflects that European economies are really advanced industrial economies, advanced technologically. So the connection here, yes, and so much about imports and exports. So that about how the innovation systems connect, how the R and D happens, those kinds of partnership, these are economies that are really high level comparable levels. And I think that is sort of reflected in the nature of how we connect
Shawn Flynn 11:03
Is often in the news due to its size of a hundred billion dollars, along with his investments in companies like Uber and WeWork, what economic developments have led to the formation of these mega funds and their impact in the Bay area?
Sean Randolph 11:18
Well, I think SoftBank right now, it’s an interesting story. Over the last couple of years, it’s been a mega story just by the sheer volume of the investment, a hundred billion dollars, the goal of raising the second fund and just the scale of investment that the company has made in companies, not just here in the Bay area, but all around the world, emerging, leading companies in their industry and has sort of aggregated and investment in certain fields to try to connect the growth companies in a given area. It’s the model has been called. And a little bit of question now with the evaluations of WeWork and other companies. Yeah, it’s a big issue. I think, anyway, that so much of the wealth in the investment field is privately held and hasn’t gone to public markets yet. And there’s always this question of the background. Well, what is the real value of this company? It hasn’t been tested by the market. So I think the WeWork thought of the IPO was a real eyeopener for a lot of people that perhaps some of these valuations weren’t justified. And I think it’s shaken the soft bank model. And then there’s been reporting that more than a handful of fake companies are cutting back, scaling back. So I think there was a shakeup going on there. So I think that really the impact of SoftBank, it has been interesting. There was so much money they’ve put into the venture market that it’s pushed up valuations. And the company is here have had to increase their investments in companies that they wanted to support basically meet or be competitive with SoftBank. So it may be a healthy thing if that falls back some now
Shawn Flynn 13:00
Are there other mega funds that compete with SoftBank?
Sean Randolph 13:04
Nothing that I’m aware of that’s comparable in scale, there’s big funds, but I think SoftBank is really, and the category of its own. And for that reason you could debate whether it’s sort of an outlier, it’s not a model that others are necessarily following or attempting to follow.
Shawn Flynn 13:22
When someone thinks about economic development around innovation technology, what should they be thinking about?
Sean Randolph 13:28
So a lot of places around the world and around the US look at the Bay area, including of course, Silicon Valley, as a model for how you can develop and grow an innovation about economy, it’d be technology led could be entrepreneurial led. You know, you can name your terminology, but there’s a broad perception that we’ve done it here better than anywhere else. Not perfectly, of course, but better than anywhere else so far. And so they’re actually a lot of people who come through our office here at the Bay Area council economic Institute, wanting to have that conversation. So how did this happen in Silicon Valley? What can we replicate? What can we learn from this and take home? And the answer that I usually give is don’t even try, or at least don’t try to replicate exactly what happened here, because it grew up in a unique way, but there are things you can take away from it. So I think the key ingredients have been, and this is a little bit different from historical economic development. It has been meeting universities that generate a lot of technology, a lot of patents, a lot of licensing. But more importantly who generate company founders. And you’re looking at most of the leading companies in the region that have grown up in the last 20 or 30 years, the most have been founded and are led by people who graduated from one of the universities here in the region, especially at Stanford and Berkeley, UCSF and others as well. There’s the national laboratories here. We have a substantial percentage of all the national laboratories in the US in a dependent laboratory as well. So having a technology base that’s anchored by one or more research universities is really important. Capital is really important. So we’re fortunate and this area that close to half they about 45% of all the venture investment in the US is invested here in the Bay area. So let’s say you on a clear day like today, if you want it at the top of the Salesforce tower, you would physically see where 50% or so of all the venture investment in the US is taking place. So, having that kind of capital accessible right off the door, off the campus, accessible to people coming out around the U S and around the world, it’s really, really important. Having a really skilled high quality workforce is extremely important. And of course, that relates back to the schools, back to the universities. Yeah, it also can take different forms if we were an industrial economy with more manufacturing, that would mean having people with the manufacturing skills required, were not that’s for that as we were at one time, but certainly for us and for other economies that are looking into it, the sort of technology led having a deep engineering skill base. It’s extremely important, but that goes back to the education. But it also goes back to having an environment where people want to come and live and work. Because so much of our workforce here in this region is global about, let’s say 35 to 40% of the startups in the region have been started by people who’ve come from other countries. And it really makes this a globally Connally where people are bringing their best ideas in. But to do that, you have to have the opportunity that attracts them. And maybe they’re looking for the venture investment that maybe they’re looking for mentors. Maybe they’re looking for the markets that come from being next door to major companies like Twitter or Facebook or Google or Intel, or you can pick your industry, having an attractive physical environment, a culturally rich environment where people just want to live and stay. That’s also important. It’s not a bad thing that we have a very clean environment here and a good climate. So, I think it’s that combination of thing, but so much goes back to the educational infrastructure that really enabled a knowledge based economy to kind of build on and capitalize on its strength and assets, and then attract investment and attract really smart people.
Shawn Flynn 17:27
Are there any laws or regulations that either encourage entrepreneurial-ism or something? Or suppress entrepreneurial-ism.
Sean Randolph 17:37
I don’t think there’s any specific ones that impact entrepreneurial-ism directly. I think either you have an entrepreneurial spirit, we’re not, there have laws in Europe that have perhaps discouraged entrepreneurial-ism. For example, in France, the bankruptcy laws have been historically pretty egregious and it would discourage you from starting a company. If you would be scarred for life, if you fail, you know, here, the attitude is you don’t want to fail, but if you do fail, it’s not always a bad thing. If you’ll learn from the experience and have a deeper experience and understanding of what needs to happen next, because so many people succeed as entrepreneurs on their second or third try, in parts of Europe, that has not been the case. If you fail, you fail. And part of that in different countries has been related to different laws that discourage risk taking. And I already penalized people whose companies do fail. So I think you can have negative laws. I think the one thing that impacts us here, that’s definitely not helpful is, is the cost of living, which is driven by the cost of housing. And unless you already own a home in this region, or you have a very high income, I think everybody is challenged to live in this economy. And the upside is it’s a great economy and great economies are never achieved. The downside is that, that the biggest single factor in that cost is the lack of availability of housing. And that is driven primarily by local government policies that have increase the cost of construction and have reduce the supply of housing far below what it could be or needs to be. And so if you’re were an entrepreneur, yeah, it means you may be live with a lot of other people for a while, more and more of your discretionary income is taken up with housing and not for other things, but it may mean that when your company grows, it may be too expensive to hire people here. And maybe you grow your company and more of your employees, someplace else, someplace else in the US someplace else around the world. And that’s not necessarily a bad thing, but it is the case that many, uh, entrepreneurs who don’t have a whole lot of income, I think find it’s a really challenging environment due to the cost of housing.
Shawn Flynn 19:59
And at your time here at the Bay area council, there’s been several disruptive companies that have grown in San Francisco. Can you talk about Uber and how these disruptive companies impacted the city, the policies and the debates as they were growing and launching?
Sean Randolph 20:15
It’s a really interesting topic. Probably the two classic cases would be Uber and Airbnb that have both spread globally. Of course, I think the pattern has been, or at least started off being that these companies came in with a and inherently disruptive model and sort of burst on the scene. And they weren’t asking for permission to do things. They did it typically in the absence of a regulatory framework. And you can debate whether a regulatory framework is or was necessary, but as they came in, they were disrupting a lot of things, Airbnb with impacting the hotel industry, but it could be argued. It was also impacting the available housing stock for rentals. Obviously Uber massively disrupted the taxi industry. And of course, we’ve seen that around the world where in different markets, different countries, each has its own debate as Airbnb and Uber have come in about how to accommodate them. What’s the right level of regulation? Some places say Uber has been shut out. Other places. There’s been an accommodation, other places it’s still open where you find a lot of pushback from the traditional disrupted industries who are, you know, severely challenged. But I think if you look at say the city of San Francisco, my impression is that they’ve tried to walk a line to develop appropriate regulation, but at the same time, not discouraging innovation, if you just, said okay, we’re not going to allow this to happen. We’re going to saddle this model with so much regulation that it’s just not going to work. They could do that, but it would kill an innovative business model that has been wildly successful. And that people like people like this service, otherwise it wouldn’t be successful. And the same with Airbnb. So I think in every city around the world, the deal is being worked out. What is the right level of regulation? I think there is an issue though, in California at the state level right now, AB five, which essentially requires most gig workers to be classified as employees. That is a real issue because a lot of the innovation that has taken place in business models growing out of the Bay area has been the ability of sort of independent workers to engage with these companies, such as Uber or Lyft at their discretion. And there’s an argument back and forth about one, are they exploited? On the other hand, you find a lot of them say, no, we really want to be independent here. We don’t want to be employees, but that extends beyond just say Uber and Lyft to a lot of other companies that have a similar kind of model and the innovation has been around that model of workers to independently self-manage and relate to these larger platforms. So if the question is around regulation, you can have regulation. It goes too far. And that actually threatens the business model and potentially undermines innovation. I think AB five current California law across that line.
Shawn Flynn 23:18
Now you’ve written over 200 economic reports. What have been some of the biggest surprises for you over the years as you’ve done your research for these reports?
Sean Randolph 23:26
Well, you know, there have been no eye-popping surprises except one conclusion, which I’ve been able to read from having looked at so many different countries and their experiences that geography does matter. It’s not a virtual world. It is to some degree, of course, but it does where you are, how you interact with other people. The opportunities for doing that for a lot of innovation comes from the intersection of people and ideas. And the more you can mix it up very often, the more innovation comes out of that. And then the aggregation of these different assets. I was mentioning earlier between the technology research, the pools of capital for investment, the pools of investment capital, the corporate headquarters that can buy product from emerging companies that can be test markets for emerging companies that will spin off new companies from existing employees, a whole range of things from physical infrastructure to financial capital, to human capital that tends to aggregate. Then you could argue about how many places in the world really matter from that perspective. Some people have a larger number, some of the smaller number, but you could just say in the US you’ve got the Bay area, and then you have some degree LA San Diego for biotech, Portland, for some things, Seattle, Austin research triangle, North Carolina, Boston, New York, you’ve got London, Paris, Amsterdam, Stockholm, some other cities in Europe, for particular kinds of things. Bangalore, Shin Xin and Beijing, some others, but well, you can count on, on a couple of hands. The cities that are really are leading the global economy, I am struck with the conclusion that at the end of the day, geography does matter.
Shawn Flynn 25:19
What technologies do you think will shape the future the next few years?
Sean Randolph 25:22
Well, it’s interesting. If you look at what the VCs are investing in, and I deal with a lot of corporate innovation offices from say major companies around the world that have a presence here, where they are looking to engage with their customers around sort of co innovation, and they’re doing R and D, and this is relating to their global business models. They’re partnering with universities on a technology development and strategy is they’re working on sort of policy environments that affect the emergence of these technologies. And it’s pretty uniform right now where most of them are focused. No huge surprise you. The big one is AI. Everybody is in the AI hunt. IOT is very big there, robotics to some degree, think of synthetic biology is going to be more and more important. So, there’s a number of areas like that, where the investors and the people doing the R and D and a lot of the companies that are looking to reorient their existing business models, where they’re investing. I think those half a dozen or so sectors are probably the key ones right now.
Shawn Flynn 26:38
So AI artificial intelligence, IOT, internet of things. And then you also mentioned VC before venture capitalism, just for all the acronyms
Sean Randolph 26:45
That would cover all of that. And then synthetic biology. And we’re seeing a pretty good amount of activity around robotics that does relate to the internet of things.
Shawn Flynn 26:56
And then how important is startups for job growth?
Sean Randolph 26:59
It’s really, really important, which is why so many countries and companies around the world are here in the Bay area. They’re very often drawn by the startup. When I talked to a lot of these major corporations, it doesn’t matter where they’re from. They can be from Japan, they could be from Germany, they could be from just about anywhere and you ask them why they’re here. They’re looking often to partner with universities around research. They are looking to kind of just have an antenna up in Silicon Valley for what’s going on here, like where research and innovation around IOT and around AI and these other fields where that’s going. But almost all of them are looking for startups because the general feeling is that, you know, many will have they’re on R&D budgets, which can be quite substantial, but the size of your R and D budget doesn’t necessarily correlate the innovation. And a lot of the innovation is coming from startups who in many cases may be more focused and more nimble and fast moving than the larger corporations. And so these companies are very often looking to engage with partner with, and invest in startups as a way of accelerating their own internal innovation. So you’ll look at the number of corporate venture funds, not just US, but from around the world that are here in the region. It’s phenomenal. And they’re all looking at the startup pool here and what can move their business models forward. By tapping into that pool, you look around the world at all the different countries that are behind the Bay area in facilitating the development of startup, but are still coming on pretty strongly. The Europeans, the Japanese, the Koreans, Singapore, India, China, of course, they’re all making maximum efforts to, and current startup growth sometimes by nationally funded venture funds by funding, accelerators, and incubators, a lot of those traditional tools. But I think there’s a broad recognition around the globe inspired by what happened here in Silicon Valley, that we’ve had this explosive economy and these companies that not many years ago were there were students there in closets. And now they’re dominating the world in terms of the most hotly capitalized companies globally. And that kind of rapid development of the growth that it leads to, a lot of places would like to replicate. And so they see the startup model as being a way potentially to produce these really large, highly successful, highly capitalized companies that create or transform industries and the companies that are producing the job and that are really doing the innovating are starting off with these very small companies that then in the right the environment can grow. So I think globally, and not just here supporting, nurturing, enabling startups to take root is a really important strategy.
Shawn Flynn 30:07
How has the Bay area Silicon Valley, the economy different than the rest of California and also the rest of the US
Sean Randolph 30:14
well, we are more technologically oriented for sure on the upside. And most of this is on the upside. We have a remarkable concentration of the worlds. As I just mentioned, with highly capitalized companies, we really need in a wide range of digital industries. If you look at the workforce, the population here, it’s the most highly educated in the United States, that’s sort of Boston and Washington DC are comparable. But with those, you know, we have the highest number of people in the US with advanced degrees that gets reflected in the kind of work that gets done here. And then there’s this big infrastructure around innovation and technology. And I think the global dimension of this brings so much capital and talent here that this region wouldn’t be what it is without enormous presence of global talent. And so we are different from a lot of California. In that respect, you find different industries say in Southern California, biotech is very strong in San Diego. You’ve got media and you’ve got the ports of LA and long beach and logistics in LA, but there’s no place in California with a comparable sort of concentration of technology broadly defined. And then of course you have got the central Valley of California, which is another story altogether. There’s this huge difference between coastal California, which is for the most part, better educated, more diverse economy, more technologies, more growth, and the interior parts of California, where generally the levels of education are lower levels of economic development are lower, less diversified, more agriculture. So there’s actually many California’s. I think you’ve got at one level, coastal, California, and inland California, and then within coastal California, the major urban centers, the Bay area is by far characterized as kind of the technology center and with sort of somewhat different things happening in San Diego and Los Angeles. Although everybody is into technology at some level
Shawn Flynn 32:21
How does trade policy affect the startup ecosystem?
Sean Randolph 32:25
It affects the economy in a reading significant way that affects ours in significant ways. And that includes startups through, I think, the window of investment. So maybe not so much in trade because a lot of the startups aren’t doing that much in traditional trade. But If you look at the trade war we’ve had with China for the last couple of years, that has among other things dampen the environment for investment, there has been in the mid 200s, a growing amount, for example, of Chinese investment coming in through different kinds of venture arms into Silicon Valley, investing in a range of companies. And guess what things like IOT and robotics and AI that has fallen off dramatically now because of the political tensions between the US and China and new regulations that were enacted about 18 months ago under the export control administration of the commerce department and committee on foreign investment in the US which reviews inbound investment for security reasons from overseas. And that added scrutiny to investment from China is causing a very significant reduction in inbound investment, which would have come to startups. So, I don’t think that’s actually going to make a huge amount of difference here because there’s plenty of startup capital around, even with that investment from China, but certainly trade and investment policy and global economic policy has and effect when you start to look at it, how capital moves around and where it goes.
Shawn Flynn 34:04
And on a global scale IP intellectual property is often talk about, especially with companies here in Silicon Valley, as they expand, how important should companies be focused on this one aspect or expansion?
Sean Randolph 34:20
Well, it’s pretty important, of course, for smaller companies, it’s important for bigger ones too, but bigger ones have more capacity to defend their interests and smaller ones often don’t. We live off our intellectual property here. That’s what we generate primarily. And having a strong intellectual property regime globally is extremely important. And so when you look around the world, where would younger companies choose to go to, if they’re going to a country with a problematic IP environment, that’s not going to encourage that kind of investment of those kinds of partnerships. On the other hand environments with strong IP protection, let’s say in Europe or Japan or Canada, those are kind of environments that encourage innovation, where the people generating the ideas and generating the innovative products in benefit. And if they don’t have that kind of protection, they may not want to go there.
Shawn Flynn 35:17
And Sean, I want to go back your economic reports in the past few months, you’ve released ones on India, on Singapore, Japan, all amazing packets of information. Can you talk a little bit about these reports?
Sean Randolph 35:32
and what we’re trying to do in them is to bring out why global relationships are important. And what’s unique about each one in terms of the issues, but especially the opportunity and what are they particular connections with Silicon Valley and the Bay area at that point to opportunity and a range of different industries. And we set off maybe 10 or 12 years ago to look at China and India, which we did. They were these two enormous emerging economies. We felt there was something unique happening between the Bay area and both of them, which turned out to be true. Still believe. There is no place in the world with a greater depth of connection across the board with China than the Bay area. And they’ll place in the world, absent, making the London with a greater depth of connection with India than the Bay area. So when you have that, there’s enormous things you could do. But then other countries started to see what we were doing with China and India said, Hey, what about us? Can you write about us? And so we’ve done all this work since then, or Europe and the Nordic countries and many others. But this last year, we looked at in depth Canada for the second time. And that’s really relevant now in the context of North America and the US-Mexico-Canada trade agreement, we’re actually beginning work on a new project looking at Mexico. So we’ll be looking at Canada and Mexico is part of this North American package, but we also did these pieces very recently looking at India, Singapore, and Japan, and each one is a unique kind of story. When we look at say all of those, I think one piece of wallpaper in the background though, is that for many years, let’s say almost two decades companies from here, I’ve been really focused on China. And I think China with this particular growth and the scale of its market, just suck the oxygen out of the room. So, you had in the early 200s or late 1990s, a lot of investment is going into Southeast Asia and that kind of faded back as just China just absorbed so much. The people kind of forgot about Japan, but now with the issues between the US and China. And I think a lot of us would say it is really important that these two economies remain close and intertwined and not be pulled apart as some would like to do. So, we really believe here at the council and the Institute that having a strong and growing relationship with China, it’s very important for both sides, but that said, it’s a more difficult environment than it was 10 or 20 years ago. It’s more politically complex. US companies are making money in China. They want to be there. They want to grow there, but it is definitely more complex and there’s more headwinds to deal with. And so when we look now at what’s happening in Japan, we look at what’s happening in India, but look at what’s happening in Singapore. Each has its own story. We’re seeing more innovation coming out of Japan. Now, as large Japanese companies are trying to transform themselves into quicker, more Daimler, more innovative companies. They’re often here in Silicon Valley, well, leveraging resources here to kind of try to accelerate that you have Singapore, which has been a global multinational hub for a long time successfully pushing innovation and trying to make themselves even more than they are today. A regional platform for technology and R and D and for startups for Southeast Asia and beyond that. And then you find India, of course, being, I think currently fifth largest economy in the world, fifth or sixth, continuing to grow growing middle class, more startups, more venture investment, and this potentially enormous market. So, looking at all these countries, I think what we’re seeing is US companies, at least reevaluating their long-term strategy. If you have so many chips globally, where do you stack your chips? And if a lot of these chips have been especially stacked in China, it’s not that they’re going to take them off the board in China, but maybe they’re going to redistribute them. So to avoid economic or trade conflicts, to avoid political issues, for whatever reasons to get there very good services closer to their customers, maybe not quite so far away to address new and growing markets. So what I’m seeing through these different reports lately is different parts of Asia is that the Indo-Pacific region becoming more interesting as companies reconsider where to stack their chips in the Asia in the future, where to redistribute their investment of their manufacturing. And there were other activities. And so Singapore and the Osteon region in Southeast Asia, it’s a really interesting place. India is a huge complex place. It’s not easy, but the Modi government, the last five years has been doing a lot to streamline investment. They’ve made enormous strides, digitizing their economy across the board, really remarkable while their traditional infrastructure, which is really a critical issue. It’s still lacking. Their digital infrastructure is getting better and better, which means the opportunity for enormous growth and productivity and everything digital. So I think the landscape, as we see at these reports, sort of bring out that the landscape of opportunity in Asia, it’s continuing to change and evolve. And yeah, it’s, it’s about things opening up in Japan, close relationship with Japan. It’s about really dynamic economy in Southeast Asia. And it’s about the business environment in India, changing for the better.
Shawn Flynn 40:44
And can you talk about how the Bayer council works with its members?
Sean Randolph 40:48
Well, it works with members on a lot of different issues. There are domestic issues and there’s of course, overseas issues. And so the big priorities for the council day to day here, that affect everybody. The big one, of course, being housing that affects as we were discussing earlier, the cost of living, the cost of doing business, it affects whether our children can live near us. When they grow up, it affects where, and whether companies continue to grow here, it affects quality of life. So housing is a huge issue for the council. Transportation is related to housing, just mobility, the ability to get around here. And so they’re very closely related and the council works actively with local governments. It works actively in Sacramento. It has an office there working with state government, state government legislation, and works on ballot measures here in the Bay area that would address these really core issues that Canada will affect our long-term economic competitiveness. The Institute, we do a lot of the research and kind of longer-term strategy development that had formed those strategies. We developed data, but also ideas about how to address these issues and how to address the opportunities. And then when we get to the technology and the global issues, transportation, the housing, our challenges, they’re slowing us down. On the other hand, the technology, other global issues are enormous opportunity. So we tried at the council and the Institute to focus on both trying to focus resources and address the things that are challenges for the longer term that could affect how our economy looks for the worst. But also look at it. How do we keep the door open to global talent? How do we invest in the things that have made us strong and unique here? So we continue to grow in the future and attract people from all around the West and all around the world.
Shawn Flynn 42:33
And Sean, thank you for your time today. Anyone else to find out more information about you or Bay Area council, what’s the best way to go about doing it?
Sean Randolph 42:41
Everything we do is on our website and it’s just a logical name. It’s www.Bayareaeconomy.org and all the reports are there including the housing, the transportation, but all of the global technology, other studies are all available. There’s no charge. It’s open for everybody to use.
Shawn Flynn 43:01
Great. Anyone that enjoyed this episode, please give us review on iTunes or any other podcast platform you use to listen to it and please share it. And once again, Sean, thank you for your time today.
Sean Randolph 43:14
Thanks very much, Sean. I enjoyed it.
Outro 43:17
Thank you for listening to The Silicon Valley Podcast. To access our resources, visit us at TheSiliconValleyPodcast.com and follow our host on Twitter, Facebook, and LinkedIn @ShawnFlynnSV. This show is for entertainment purposes only and is licensed by The Investors Podcast Network. Before making any decisions, consult a professional.
