Software rules the world, and the Valley still rules software

By Sarah Lacy , written on May 1, 2013

From The News Desk

The debate over whether Silicon Valley will continue to have a strangle-hold on high-growth tech startups is an endless one on the pages of this blog and nearly every tech publication around the world. It seems every city is trying to articulate a vision for why they can be the "next Silicon Valley." Meanwhile, almost all of the largest tech companies are still formed here.

Those who believe the Valley will become less important over time typically point out how much more capital efficient companies have become, and that the Internet and communications make time and space less important than they once were.

Those who continue to believe in the Valley's preeminence going forward typically site one factor: The concentration of engineering talent. Sure, talent can be found anywhere. But it's hard to find any place with such a concentration of it.

We're not just talking about software companies. We're talking about how software is increasingly ruling nearly any industry that needs to compete in the modern, mobile, connected, and productivity-obsessed world.

Look no further than the software-enabled peer economy where commercial fleets and vacation homes are being disrupted by mobile apps and big data. And that surge in hardware companies in the Valley? It goes hand-in-hand with the trend for more software-enabled connected devices. In both of these categories, the devices or mobile apps are frequently quite simple. It's the software behind them that's so complex. Like the reverse of the movie "Tron," software has spilled out of the virtual world and is disrupting nearly every industry you can imagine.

This isn't exactly news in our world. There may be no more outspoken proponent of this software rules world view than Marc Andreessen, who penned one of the most widely read articulations of this, called "Why software is eating the world." One of the companies profiting most from this is Atlassian, which makes software for developers. As I wrote before, if you had to pick one vertical of enterprise software, software development is a powerful one to pick.

We've decided to devote May to a month-long special report on the power that software is exerting on hardware, real world goods and services, and old un-techy industries. Appropriately, Atlassian is sponsoring it.

We've got a lot planned, but as always if you have any story ideas or pitches email tips (at) Check out our previous special reports on the Art of Starting Up, Ecommerce 2.0 or, the Secrets of the Sharing Economy and Online Education at these links.

[Illustration by Hallie Bateman]