Crisis in the Valley?

Judy Estrin has a new book coming out. She gave an interview to the New York Times…

Ms. Estrin said that the United States is stifling innovation by failing to take risks in sectors from academia to government to venture capital. “I’m not generally an alarmist, but I am really, really concerned about this country,” she said.

In her book, Ms. Estrin discusses everything from problems in elementary education to drug development, but her expertise is in information technology. Beginning in 1981, she co-founded three tech companies: Bridge Communications, Network Computing Devices and Precept Software. In 1998, Cisco acquired Precept and appointed her chief technology officer. She left in 2000 and co-founded Packet Design. She is now chief executive of JLABS.

Ms. Estrin traces Silicon Valley’s troubles to the tech boom. She said that’s when entrepreneurs and venture capitalists started focusing more on starting companies to turn around and sell them and less on building successful companies for the long term.

“Starting in 1998, there was such a shift in Silicon Valley toward chasing money and short-term returns,” she said.

Part of the reason, she said, was that Cisco and other fast-growing big companies started acquiring start-ups with innovative technologies instead of developing new ideas internally. Entrepreneurs began founding companies with the goal of selling to a big tech company, and venture investors encouraged that.