New List, New Job, New Year

MIT’s world-famous economist Robert Solow died this month at 99, nearly seven decades after his earliest remarkable scholarship which won him the Nobel Prize in Economics. We owe him for much of our understanding of the underlying dynamics of our modern digital economy. Solow’s initial scholarship in the 1950s was radical and complex, but he summarized it neatly: “I discovered to my great surprise that the main source of growth was not capital investment but technological change.” As the Nobel Committee observed, “he developed a mathematical model illustrating how various factors can contribute to sustained national economic growth. From the 1960s on, Solow’s studies helped persuade governments to channel funds into technological research and development to spur economic growth.”

As 2023 closes we are still accelerating into the multi-decade technological propulsion of the U.S. economy, resulting in a seismic shift you may not have noticed. There’s a dramatic new look to the list of 10 Largest American Companies. They’re all tech companies! Sort of… and I’ve joined the newest member of the list.

If you didn’t notice, slipping in under the radar late this year was the completion of the largest IT corporate acquisition in history: Broadcom has finalized its acquisition of software giant VMware for $69 Billion. As an executive at VMware I have accepted an offer to join in the new combined company, to help lead “VMware by Broadcom” operations as the Chief Technology Officer (CTO) for Public Sector, meaning our efforts for government, education, national security etc. That’s a substantial area of work in a large company, and to see just how large let’s take a look at how Broadcom has shaken up that Top-Ten U.S. companies list, which fluctuates daily based on market-cap (this data is from the last trading-day before Christmas):

Top Ten U.S. public companies by market capitalization as of 12/22/2023, source companiesmarketcap.com

Keep in mind that’s not a “Silicon Valley leaders” list, that’s the largest companies in the United States overall. From the three-trillion-dollar behemoth Apple on down to the half-trillion-dollar Broadcom, you see the dominance of tech firms. Eight of the ten are now straight-up hardware-software companies, including Tesla, an auto manufacturer of course but definitionally one marked by its unique technologies in energy, robotics, and digital engineering. Lilly is a pharmaceutical giant founded by Eli Lilly over a century ago which today invests billions in technological research advancement, as recently seen in its COVID-19 diagnostics, therapeutics and vaccines.

And what about Warren Buffett’s Berkshire Hathaway, the seeming outlier? The “value-investing” conglomerate is broadly based, relying on Buffett’s mantra that “Diversification is a protection against ignorance,” but there’s no escaping that its full portfolio is indeed 53% in technology.

When Broadcom joined this Top Ten list by virtue of the VMware addition, it nudged down the finance giant Visa, which is remaking itself with a “fintech” focus and says it has been using machine-learning for thirty years as “the first AI-powered payments network.” More tech firms are sprinkled further down in the Top 50 Companies of course (Oracle, Cisco, Salesforce, Netflix, SAP, AMD). Other fast-growing tech companies will certainly rise, and many established giants continue to morph along Solow’s prescription toward tech-enabled growth.

Back to the Future

The technological shape of the future has been clear, even before Marc Andreesen wrote in 2011 in the Wall Street Journal that “Software is eating the world.” I have written and spoken often about the transformational history of Silicon Valley, stretching back to the first half of the twentieth century. That history is exemplified in VMware’s origin story, in a computer science classroom in 1998 on the campus of Stanford University, and now even more so in combination with Broadcom’s even deeper, more fascinating combinatorial technology roots. Not a flashy company, not a marketing megaphone, just a foundational inventor/manufacturer of tech infrastructure and mission-critical software underlying the digital era.

Broadcom’s roots stretch back through mergers and acquisitions to combine the legendary transistor or silicon or optical or networking or software divisions of AT&T’s famous Bell Labs, Hewlett-Packard‘s semiconductor business, digital engineering trailblazers LSI Logic, all added over the years to the pioneers of video streaming at “Classic” Broadcom, mainframe software at CA, cybersecurity software at Symantec, and now virtualization at VMware… all now joined in the same powerhouse Broadcom. It’s a striking lineage of technological audacity and strategic foresight.

Barreling into 2024 using Robert Solow’s growth equation, with VMware’s previous $3 Billion per year in R&D investment supplementing Broadcom’s existing $5 Billion a year in R&D – and with CEO Hock Tan’s plan to increase our R&D substantially – we intend to enable new advances in foundational infrastructure across the technological landscape (for example see my new colleague Clayton Donley‘s recent piece “Generative AI and the Reinvigoration of AIOps“).

Don’t expect hype. Broadcom’s formula focuses quietly on sustained strategic growth. As we were finalizing the merging of our two organizations I learned quite a bit reading a deeply-researched piece by a semiconductor-industry analyst: “the fact is that in 2023, no one besides NVIDIA will generate even $1B revenue from chips that run large language models. Scratch that, there is one other player. Often overlooked is that Broadcom is the second largest AI chip company in the world in terms of revenue behind NVIDIA, with multiple billions of dollars of accelerator sales… Broadcom, the Silent Giant in the AI Chip Revolution.”

As a CTO in this new software/hardware dynamo I couldn’t be more excited about the future fun. Maybe we can climb that Top Ten list even higher by this time next year – stay tuned.

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