Disruptions: The Echo Chamber of Silicon Valley

Jim Wilson/The New York Times Engineers tend to move to the Bay Area to get together with other engineers.

In San Francisco, a bad habit can be the spark that leads to starting a company.

Mike Belshe and Bill Lee were continually running late for meetings and texting each other: “I’ll be there in 5 mins!” So they created Twist, a 10-person start-up in the city’s South of Market neighborhood. The company’s first product is a smartphone app that helps you tell someone you’re late by showing your location on a map. Investors liked the idea enough to give Twist $6 million in venture financing last year.

“We thought there had to be something better than sending a text message,” Mr. Belshe said in a phone interview. “We were trying to tackle that problem of meeting up and making it easier.”

Is Twist a great idea, or are Mr. Belshe and Mr. Lee falling into a local propensity for creating a product for technophile friends rather than the public?

Sometimes, Hollywood screenwriters create scripts filled with inside jokes that only people in Hollywood could appreciate. Sometimes, New York media writers write about other New York media writers. And sometimes, tech entrepreneurs in San Francisco and Silicon Valley to the south create companies best appreciated by other people who live and breathe technology.

Twist is hardly the only start-up whose target audience does not seem to extend far from San Francisco Bay. Among many, there’s BlackJet, which offers “affordable private jet” solutions for people in the area. And there’s Swig, which connects people with local liquor stores that provide home deliveries.

“One of the most important lessons I’ve learned is that we are guilty in the Valley of designing things for ourselves, and we are not the target market,” said Andy Smith, who is the co-author of “The Dragonfly Effect,” a book about marketing, technology and entrepreneurship.

Engineers tend to move to the Bay Area because of the opportunity to get together with other engineers and, just maybe, create a great company, Mr. Smith said. But in a region that has the highest concentration of tech workers in the United States, according to the Bureau of Labor Statistics, the bars, restaurants and other haunts of entrepreneurs can be an echo chamber. The result can be a focus on solutions for mundane problems.

“Some of the start-ups being created are designed for people who have rung the cash register already,” Mr. Smith said. “They are not necessarily bad ideas but they are not the ideas the world needs more.”

As George Packer wrote in The New Yorker last week: “Life inside Silicon Valley can be a paradise (for its winners) of opportunity and reward. Meanwhile, life outside falls further and further behind.” Mr. Packer’s critique started a new round of hand-wringing in the industry among people who worry that they are, well, thinking small.

That’s not to say there aren’t still people thinking about big markets. Elon Musk, the founder of Tesla, which sells electric cars that can cost more than $100,000, said last week at the D: All Things Digital conference in Rancho Palos Verdes, Calif., that he hoped to offer a $30,000 version of the car in the next five years. Mr. Musk is also working on SpaceX, which is already taking cargo to the International Space Station and which he hopes will one day take regular people (or at least regular rich people) into outer space.

But too often, says Jason Pontin, the editor in chief and publisher of MIT Technology Review, these start-ups are solving “fake problems that don’t actually create any value.” Mr. Pontin knows a thing or two about companies that aren’t exactly reaching for the stars. From 1996 to 2002, he was the editor of Red Herring, a magazine in San Francisco that chronicled the region’s dot-com boom and eventual collapse.

Still, some companies that start out with Silicon Valley in mind have shown they can adapt to the rest of society. Take Uber, which began in the San Francisco area as an online service meant to shuffle the affluent around in fancy town cars. As the company has expanded to other cities, it has created less expensive options for customers.

Even the founders of Twist see a future beyond informing their friends that they are five minutes late. Mr. Belshe said Twist planned to offer a version of the app that can give users the “estimated time of arrival for your packages, too.”

Just as Facebook is synonymous with relationships, and Google is synonymous with search, Mr. Belshe said he hoped Twist could be the go-to company for people who want to know the estimated arrival time for any number of things.

“When you’re a start-up, it doesn’t matter if you have it all figured out,” said Mr. Belshe, who has worked for Google and previously sold a software company to Microsoft. “It matters that you have some large opportunities.” Mr. Lee, his co-founder, is also an industry veteran.

And if the company flops, that’s fine, because most start-ups do.

“One of perhaps the most compelling things about Silicon Valley is that it is a place where you can fail, and if you do, you can raise money and try again,” said Mark Leslie, a retired entrepreneur and lecturer at the Stanford Graduate School of Business. “It’s a miraculous place; the streets are lined with gold here.”

E-mail: bilton@nytimes.com

How Tom Donohue Transformed the U.S. Chamber of Commerce

Nor does Mr. Donohue show much deference to the current president of the United States. The chamber’s headquarters sit across Lafayette Square from the White House, and in May 2010, with unemployment near 10 percent, Mr. Donohue festooned the building’s grand, Corinthian-columned facade with four banners spelling J-O-B-S in red, white and blue block letters, each 23 feet, 4 inches high.

Three years later, the banners are still up. During a recent interview in his office, an expansive suite with black walnut paneling, Mr. Donohue offered a blunt explanation for why he hung the sign facing President Obama’s home. “So he’d have to look at it every day,” he said, lowering his voice to a theatrical growl.

That the head of the chamber would openly relish needling the president of the United States speaks to the wholesale transformation that this 101-year-old trade association has undergone on Mr. Donohue’s very aggressive watch.

Over the last 16 years, Mr. Donohue has used his considerable talent for fund-raising to build the once-struggling chamber into a free-enterprise research outfit, Supreme Court advocacy group and lobbying powerhouse. The chamber’s lobbying operation alone spent $136 million last year, according to the Center for Responsive Politics; the next-biggest spender, the National Association of Realtors, spent less than a third of that.

At 74, with his Kennedyesque mop of white hair and a Brooklyn accent, Mr. Donohue comes off as part street fighter, part showman and part head of state. He zips around town in a chauffeured Lincoln and flies around the globe in leased private jets. His salary, $4.9 million in 2011, makes him the second-highest-paid trade association chief in Washington, after the head of the Edison Electric Institute, according to CEO Update, a trade magazine.

“He’s got a little theater in him,” Billy Tauzin, the former Louisiana congressman and a onetime amateur actor, says of Mr. Donohue.

“He’s like the Energizer Bunny,” said John W. Bachmann, senior partner at Edward Jones and the past chairman and current treasurer of the chamber’s board, calling Mr. Donohue’s salary a “bargain.”

Yet, while increasing the group’s influence, Mr. Donohue has also plunged the business lobby into partisan politics. That move has infuriated many Democrats, made some local chambers uneasy and produced an embarrassing flop in the last Congressional elections. The chamber spent millions in an unsuccessful bid to wrest the Senate from Democrats; of 12 chamber-backed Republicans, nine lost.

“They got their clock cleaned,” said Mr. Tauzin, an outside adviser to Mr. Donohue. “It was a bold idea. Bold ideas either succeed boldly or fail dismally. In this case, I think Tom would tell you it was a dismal result.”

Not one to back down, Mr. Donohue has ordered his political team to “figure out what happened” and to try harder in 2014, said Scott Reed, his senior political adviser. But publicly, Mr. Donohue is changing the subject. He has always been a man of big ambitions, and his latest is to secure an immigration overhaul, long a priority for business. A deal he cut with Richard L. Trumka, president of the A.F.L.-C.I.O., on a new visa program for low-skilled workers helped produce a bill that passed the Senate Judiciary Committee in May.

Mr. Donohue rarely mentions President Obama by name, and in casual conversation allows that he had a better relationship with another Democrat, Bill Clinton. (“You get in a big fight with him one morning, and then two days later you’d be over there for a drink.”) He refers to Mr. Obama as “the president across the street” — a phrase that Mr. Reed says is “not a disrespectful thing,” but a reflection of Mr. Donohue’s position.

“That’s the institution speaking,” he said.

Immigration is one issue, at least, on which the chamber and the Obama administration might come together. Businesses of all stripes want the immigration system improved. High-tech companies like Facebook want access to skilled foreign workers. Large-scale farms want to hire Mexican and other migrants. Small businesses want a stronger electronic employment verification system, to shift the burden of making sure workers are legal to the government and away from employers.

It is now up to Mr. Donohue to deliver. And while he waves off talk of retirement — “If you see me in a box with flowers around it, I’m only thinking about retiring” — there is no question that an immigration bill could be a legacy item, a capstone to his long career.

WHILE big, wealthy companies help keep the chamber afloat — “We have to raise $5 million a week to run this place,” Mr. Donohue says — advocating for small business is perhaps more popular with the public. So one morning in April, Mr. Donohue could be found holding court at America’s Small Business Summit, the chamber’s annual gathering for small-business owners, who come to network and lobby their lawmakers on Capitol Hill.

Like all things Donohue-related, the meeting was a slick production, with hefty corporate support and Washington-insider speakers like Michael V. Hayden, former director of the Central Intelligence Agency, and Bob Woodward, the Washington Post journalist. In the exhibit hall, representatives of T-Mobile and FedEx handed out trinkets.

Mr. Donohue used his keynote address to exhort the audience to “defend and advance a free-enterprise system” whenever it “comes under attack” and to give politicians in Washington — the words “Republican” and “Democrat” never pass his lips — a piece of their minds.

“It’s about time,” he thundered, “that our leaders in Washington start making the tough decisions that we pay them to make!”