Anthony Waitz | the Olympics | chip design | China

There's also a lot of unease about outsourcing in everything from software and chip design to engineering to customer serv­ice. What businesses will replace the jobs sent to China and India? "It concerns me that a lot of what happens in Silicon Valley is going to leave Silicon Valley and not come back," Anthony Waitz says over coffee at the University Coffee Café in Palo Alto. Waitz is a managing partner with the consulting company Quantum Insight. "What are the next things?"

It's a question that, by its very formulation, attests to Silicon Valley's resilience. It's taken for granted that another killer application will emerge to enrich another set of innovators and investors.

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This time around, however, the killer apps probably won't develop in quite the same way. We'll hear fewer tales of tiny businesses that start in garages and dorm rooms - like Hewlett Packard and Yahoo did - and then grow into household names. The Valley's new emerging businesses require government funding, deep expertise, and elaborate research facilities. "We're talking about electron microscopes and federal research labs," says Hancock. "It's not going to happen in a dorm room."

Creating an environment where this generation of start-up can flourish will require new skills: lobbying government and acting collectively, for instance. Traditionally, the Valley has taken an almost libertarian approach to government and politics: the less of both, the better. That's changing, particularly as local companies realize that governments around the world are serious about building their own high-tech industries - in essence, building the competition. Waitz says the U.S. should look at this competition as if it were the Olympics. "Who do we want to send to the Olympics? Our 10th-fastest guy?" he asks. "We want to send the fastest guy, and that's Silicon Valley."