An odd problem has developed in our economy.
Some of our largest technology companies have become so fantastically huge and profitable that they literally don’t know what to do with the cash piling up in their bank accounts.
At the same time, these same companies are complaining that there aren’t enough top-notch engineers to do the work they need done, on account of a big tech-talent shortage in the United States. And, of course, we have a massive unemployment, inequality, and under-investment problem in this country.
So, I have a suggestion!
Instead of whining about a tech-talent shortage while watching their mountains of cash grow ever higher, why don’t these big tech companies do something about it?
Specifically, why don’t they invest some of their extra cash in educating and training more engineers?
The companies could do this in several different ways.
Before we get to those ways, however, let’s review how much extra cash these companies have. We’ll look at just five of the top tech companies–Apple, Google, Cisco, Microsoft, and IBM. There are plenty of others out there.
Cash: $US156 billion
Annual operating profit: $US55 billion
Cash: $US54 billion
Annual operating profit: $US13 billion
Cash: $US51 billion
Annual operating profit: $US10 billion
Cash: $US85 billion
Annual operating profit: $US22 billion
Cash: $US29 billion
Annual operating profit: $US22 billion
Add all that up, and here’s what you get (for these five companies alone):
Cash: $US375 billion
Annual operating profit: $US122 billion
That’s a lot of money!
And instead of just letting that money just sit around earning nothing in their bank accounts, the companies could invest it in ways that would help their businesses, their shareholders, the economy, and the country.
Well, here are three simple ideas.
1. Create venture funds devoted to investing in technology education and training companies.
The Silicon Valley innovation machine has recently turned its attention to education. Dozens of promising startups across a wide variety of disciplines are now exploring how technology can be used to make education and training more universal and efficient.
Most of the companies above already have venture-capital arms. They could each take an additional $US500 million or $US1 billion apiece and dedicate it to investing in companies that are focused on the engineering-education problem.
2. Create formal, multi-year, in-house technology training schools.
Each of the companies could allocate, say, $US1 billion a year to building and funding what would amount to in-house universities. These schools–Apple University, Google University–could take promising undergrads and teach them everything they would learn at an excellent engineering school. The schools could hire great teachers and have some of their own employees teach courses. They could educate students for free, in exchange for multi-year work commitments (similar to the armed forces), or they could pay them a modest stipend or even charge tuition. Unlike actual universities, which often devote much of their curricula to theory or out-of-date skills, these in-house programs could focus on what the companies needed now and in the future.
The operating budget for an excellent engineering school like Caltech is about $US500 million a year (the affiliated Jet Propulsion Laboratory costs another $US1.5 billion). Caltech’s freshman class every year is about 250 students. If each of the companies above spent $US1 billion a year, they could educate and train classes of ~500 students per year.
3. Donate funds to help create new independent engineering schools.
Most private universities are founded on the backs of donations from rich benefactors–corporations and individuals. In addition to the fantastically wealthy corporations listed above, Silicon Valley is chock full of billionaires and centi-millionaires who have earned their fortunes on the strength of engineering talent. So, some of these folks could help increase the supply of future engineering talent by founding new universities dedicated to engineering.
Caltech, which was recently voted the best engineering school in the country, has an endowment of only $US1.8 billion. If each of the companies above donated $US1 billion, and then committed to making additional donations for 5-10 years, a major new endowed engineering university or two could be launched. These schools could churn out hundreds of top-notch engineers every year.
People don’t start universities very often, and it takes a long time for a new school to build up the reputation, prestige, and alumni network of an established one. But money helps. As does branding. And it’s not hard to imagine that, in 30 years, a Page University or Bezos Technology Institute could be every bit as prestigious as, say, Carnegie Mellon (which, of course, was founded in an earlier technology boom, by steel mogul Andrew Carnegie.)
The Bottom Line
Silicon Valley prides itself on its ability to solve problems and change the world.
Unlike some of the other problems that Silicon Valley is trying to solve, this one is relatively simple. If there aren’t enough top-notch engineering graduates in America, we need to help create more of them. And our top technology companies and entrepreneurs have more than enough resources to do it.
So stop whining about the tech-talent shortage, Silicon Valley! Start doing something about it!