The list of companies Regis McKenna has advised reads like a who's who of the tech world: Intel, Apple, Compaq, Electronic Arts, National...
The list of companies Regis McKenna has advised reads like a who’s who of the tech world: Intel, Apple, Compaq, Electronic Arts, National Semiconductor, 3Com.
McKenna, now an angel investor and author, helped Apple Computer market the first personal computer and Intel the first microprocessor. Silicon Valley’s renowned marketing guru is coming to Seattle tomorrow to talk about how Washington state can nurture a technology economy.
The dinner, sponsored by the WSA, starts at 6 p.m. at The Westin Seattle. McKenna discussed the topic recently with this reporter. Here’s an edited transcript.
Q: You’ve been asked to talk about whether Seattle has what it takes to be another Silicon Valley. What are you going to say about that?
A: It’s like being another Elvis. It’s not the appropriate question. The key thing is the way in which development has been restructured in light of the network. That model for community development has replaced the hierarchy model in all social organizations. Al-Qaida is the extreme form. Regions are just nodes on networks.
More U.S. assets are shifting to Southeast Asia and China, more wafer fabs, more chemical plants. Every time you create a region, you are transferring technology. That isn’t necessarily bad. We just underestimate their ability to get smarter in terms of how to innovate and develop their markets. You are expanding the whole sense of competition.
Helped shaped Silicon Valley’s technology industry
Startups he’s funding and advising: BroadWare Technologies, a surveillance-video company in Cupertino, Calif.; Nanosys, a nanotechnology-systems company in Palo Alto, Calif.; XLoom, an Israeli optical-networking company; and GoldenGate, a San Francisco company that manages data from banking and other electronic transactions.
Favorite technology: Digital camera
Least favorite: Voice-activated car-navigation system
Q: So you think it’s not a question of how one region of the U.S. will compete with another, but how either will survive so many challenges?
A: Right. Regions are dependent on the overall economic growth of the country to address these issues. We’re not building our education base. You talk with people from Asia and other parts of the world. They are beginning to bypass us.
Add to this the ability to invest in our future when we have rising consumer debt. With the housing boom nationwide, personal debt has risen. The trade deficit is unprecedented. Interest on our foreign debt is paid for by foreign investment from Japan, South Korea and China.
Q: Some technology leaders have been speaking for a long time about problems in the U.S. education system. Are their efforts having any effect at all?
A: I don’t think so. We are pretty absorbed in issues of Iraq, Social Security and other issues.
Q: So what can the tech industry do?
A: I think right now there is a need to create an entity of various parts of the community to speak with one voice. I think we need to do that on a national basis. So far there are only isolated warnings, not really a combined effort. We need to approach it on the same scale as going to the moon.
Q: Technology has lost its allure for many people here who are well-educated but cannot find jobs.
A: I think we’re going to have the aftershocks of the boom period for quite a while. We’ve had these cycles since the ’60s in high tech. A calculator company in Silicon Valley used to employ huge amounts of people.
But you can’t develop a regional economy purely on lower-skills labor anymore. Even farming is done now with automation. People are displaced and unhappy. We’re not a country of safety nets. It ended up being ruthless to those people who are not part of the chosen few. That’s why I think the greatest solution is diversity of industry.
Q: This region lacks the diversity of Silicon Valley. What difference does that make?
A: For one thing, you have one large dominant tech company (Microsoft) and we have lots. Boeing is a big user of technology, and you have a strong biomedical sector.
In Silicon Valley there are 25 different industries, and sub-
industries as well. The diversity of big and small companies helps to maintain a stable economic base. There’s a free flow of exchange between universities, research labs, small companies and big companies. We have more projects to do than we have time or money, so we spin out.
The most successful innovation in the U.S. has come from companies under 5 years of age with less than 200 employees. People who break all the rules are the people you pay attention to.
Q: Technology innovations helped propel our economy forward in the last decade. What technologies do you see driving the next revolution?
A: It’s hard to predict the next wave until you’re in it. We only recognize it in the rearview mirror. If you think about the Internet, Microsoft missed it, and they were a booming technological power. Think about Xerox and Kodak. Both of them missed the digital revolution. Now it’s very difficult for them to get back into the dominant role.
Q: But there are new technologies doing very well and making a lot of money, such as Google or Apple’s iPod.
A: They are using existing technologies. They are not platforms for creating literally millions of jobs. The computer was such a revolution. You needed to attach a printer, you had to buy CDs. It became a universal distributor of all kinds of services, and it created new industries.
I think there are huge opportunities in creating networks. Intel has developed a chip for wide-area communication, from the home to about a mile away. If you could build on this, then every automobile becomes a node.
Nanotechnology is something people have purported as the next wave. I’m on the board of one of the leading nano companies. It’s going to be an important factor, but it’s going to take 10 or 20 years of development.
I think the next wave will be more of services rather than products. If you look at the iPod, with iTunes, it’s a service. Google’s a service.
Q: How far can Apple ride the iPod/iTunes platform? Will it help make the company’s PC business a serious market player again?
A: Apple owns a very small percentage of the PC business. It’s a niche market. I don’t think any of us really know how that market is going to evolve. If their computing platform and entertainment platform were to move closer together, they could be a very dominant force. They have a cachet now. I use a PC. My wife uses a Mac. It’s so much easier to interface with a Mac. The better the interface, the better the service.
Q: What tech sector would you put your efforts behind today?
A: I’m actually doing a few seed investments. I think I would look at some form of database management and distribution — something like Google. When you look at the amount of information being generated, with blogs, video and electronic transactions, the storage and data-management issues are going to be horrendous. Moving that in a secure way across a network is an immense problem.
Q: Do you think Apple made a PR blunder going after online journalists in court for publishing company information?
A: I think the idea of trying to maintain your security of intellectual property is really important. I think this has been part of the modus operandi of many tech companies. It’s just that Apple is more visible.
I think when you have leadership coming down from the national level that is managing the media and who has access or who doesn’t, other people start saying, “Why don’t we try it?”
Q: What do you think about Microsoft’s withdrawing support for the anti-discrimination bill and then reversing that decision?
A: The hubris of having a top market position makes us feel we can do anything. But the marketplace feeds back very quickly, and you can have a small group that is very vocal. I think that decision wasn’t thought through in the first place very well.
Kristi Heim: 206-464-2718 or email@example.com