American Innovation and the Future Start Up

I've lately been considering how the innovation capabilities of America will develop in the next 15 years. Will Silicon Valley continue to be the center for tech activity, or will the very nature of a tech startup change entirely? Perhaps in 15 years, we will be looking instead toward another country for many of the newest and most exciting technical advances. My thinking on the topic got started as I've been reading Zero to One by Peter Thiel (in preparation for Palantir) and the NRC Report Rising to the Challenge: US Innovation Policy for the Global Economy.

In the opening chapter of Thiel's book, he comments: "Unless they invest in the difficult task of creating new things, American companies will fail in the future no matter how big their profits remain today. What heppens when we've gained everything to be had from fine-tuning the old lines of business that we've inherited?" His question is poignant. In spite of undeniable progress, is America stagnating? This is the same question that the NRC report addresses.

While the United States still leads the world in patents and research spending, countries such as China and India are rapidly catching up. A clear emphasis on innovation is necessary if America wishes to continue to lead the world. As the NRC report maintains, America's innovation system is distinctly entrepreneurial (pg. 41), and many companies have profited from the competitive environment there. Yet further government investments in training talent and basic research are still required if America is to grow quickly.

As Thiel explains, what is truly needed is "Vertical innovations," innovations that create something truly new, things that take 0 and turn it into 1. If Thiel explains the danger, then the NRC report offers the political means to do address it. The US should grow foundational pillars of innovation(boost R&D investments, sustain University research, invest in education,
attract talent from abroad) while expanding the reach of its innovation system.

Thiel's point is a good one. The tech industry is still very young, and further innovation is required for all companies, mature or otherwise. But the question still remains in my mind. Will we be looking to silicon valley for the world's greatest inventions in 20 years, or will we have moved on to China, India, or even South Korea?