One of my favorite paintings is an early work by the British artist David Hockney. The picture has become an icon of California. It depicts a home in Los Angeles, but it could easily pass for a scene from one of the grander suburbs of Silicon Valley. It shows an endless blue sky, an angular house clad in glass, a pair of palm trees, a diving board and ripples of white paint emerging from an iridescent swimming pool. The painting’s title is A Bigger Splash.

I’ve occasionally thought about this painting and its title during the course of the last couple of years. It sometimes seems like a parody of Silicon Valley: the beckoning promise and expanse of the flat pool, the explosive squiggles of paint that threaten to splatter the sky, the invisible nature of the creature that caused the perturbation, and the sheer, high-spirited boastfulness of the title.

You would be hard pressed to think of a series of bigger splashes or more optimistic statements than those contained in the press releases issued by so many startups just one year ago. Think of those eagerly greeted birth announcements that have since turned into obituary notices (or pending obituary notices): Kibu, Boo, Eve, drkoop, Chipshot, living, Miadora, Mercata, Garden, MVP, Bigwords, Mondera, Pets, HomeWarehouse, MotherNature and TheStreet (all of which have “.com” in their official names), Della & James, iVillage, Bravo, Internet Capital Group, idealab!, Fogdog Sports and, of course, that wonderful epitome of understatement, divine interVentures. It was a period when the only motto that seemed to matter was “Time to Empire,” and when entrepreneurs and venture capitalists had been portrayed as salvation from all the world’s woes.

But this new generation of Emperors and Empresses was as woefully ignorant of the fate of its predecessors as all willful optimists. Think back to a prior generation and the spring of 1985, when the future was all about personal computing hardware and software. Then the equivalent roster contained names such as Gavilan Computer, Osborne Computer, Kaypro, NorthStar,VectorGraphic, Imagic, Fortune Systems, VisiCorp, Borland, Activision, Software Publishing, Forefront, Victor Technologies, WordStar International, Priam and Dysan. Back then, newspapers and magazines panted just as hard as they turned Silicon
Valley mortals into icons.

If you survey all these former highfliers and ponder the causes of their demise, you might conclude that beyond the names and industry segments nothing much has changed about Silicon Valley. On the whole, you would be right.Yes, the traffic has become heavier, salaries have risen, rents have escalated and today’s company founders no longer recognize former heavyweights such as Rod Canion or John Sculley. But whether it is the spring of 1985, or the spring of 2000 or, I daresay, the spring of 2005, there are many things that are eternal about Silicon Valley.

There were, of course, some differences in the latest series of Silicon Valley splashes. In retrospect, it seems that the dawn of the consumer’s Internet was the emancipating call for anyone who had ever harbored the slight-est aspiration to be an entrepreneur. For the first time the majority of companies were started by people with liberal arts backgrounds rather than degrees in computer science or electrical engineering. Suddenly, everyone could register a domain and cobble together a Web site. In the pandemonium that followed, it was easier to form a company than to open a corner store, publish a newsletter or start an auto-repair
shop. Also, for the first time, the flow of information about a new enterprise became close to perfect: an Internet company started in Santa Clara County would almost always be cloned a few weeks later in Shanghai, Stuttgart or Stockholm.

The only difference between this latest burst of euphoria and other eras of excess (and success) in Silicon Valley was one of degree. Every promising new market segment-especially where there is a visible example of early success-has always been guaranteed to attract a lot of interest. The list of previous causes of enthusiasm is almost endless. Here are a few examples: flash memories, programmable logic devices, workstations, T1 multiplexers, storage mechanisms (magnetic, tape or solid-state), personal computers, personal computer software, minisupercomputers, relational databases, object-oriented databases, artificial

intelligence, video games, local area networks, information technology service companies, and wide area networks. It does not take much notoriety to transform one example of success into a fad. It also takes only one poorly managed company intent on buying market share at any cost to create a bloodbath in any category.

It doesn’t matter whether it is the spring of 1971, 1981, 1991 or 2001: there are a few things that, I suspect, will always be true about Silicon Valley. Every new decade will only spawn a handful of companies that deserve to become enduring members of the Nasdaq Stock Market. Most of the companies organized in the valley will become product lines of larger companies, features of product lines of larger companies or they will fail.

But if that seems too bleak or cold an assessment, it is hard to conceive of a place where the rules of real success are better understood than Silicon Valley. There will always be massive opportunities for any companies that solve a real need for lots of customers. The most acute of these needs usually will only be
solved by the commercialization of some new technological development. On the whole, companies that answer burning problems will quickly come to operate with high margins and start to generate cash-the mother’s milk of all prosperity and the lubricant of growth.

It is a pretty simple formula. Every time we tinker with the equation or delude ourselves into believing that tomorrow will be different, we will get into trouble. Conversely, every time we stay true to what has worked and help to form and organize companies run by people with a real passion for their business, sympathy for their customers and desire to make money, we will be participants in something that really does deserve the label “a bigger splash.”