Egeo312 Silicon Valley1 Rogers, Everett M. and Judith K. Larsen. 1984. Silicon Valley Fever: Growth of High Technology Culture. New York: Basic Books Inc.

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Rogers, Everett M. and Judith K. LarsenRogers, Everett M. and Judith K. Larsen. .

1984.1984. Silicon Valley Fever: Silicon Valley Fever: Growth of High Technology Growth of High Technology

CultureCulture. . New York: Basic Books Inc.New York: Basic Books Inc.

From Chapter 13 From Chapter 13 "The Spread of "The Spread of

Silicon Valleys"Silicon Valleys"

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I.  Four Factors In Silicon I.  Four Factors In Silicon Valleys SuccessValleys Success

1. Proximity to Research 1. Proximity to Research UniversityUniversity

2. Infrastructure2. Infrastructure

3.  Climate, Amenities, 3.  Climate, Amenities, and Quality of Lifeand Quality of Life

4.  Entrepreneurship -- 4.  Entrepreneurship -- Critical MassCritical Mass

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II.  HistoryII.  History

http://itel.mit.edu/itel/meetings/Jan00/mit_map.html

http://cs.ua.edu/~greg/personal.htm

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A.  The Boston -- Route 128 StoryA.  The Boston -- Route 128 Story

        1.  The Great Depression -- MIT President 1.  The Great Depression -- MIT President Compton's responseCompton's response– Encourages applying new technologies Encourages applying new technologies – Helps faculty to set-up own companies Helps faculty to set-up own companies – Goal re-build, re-industrialize the local economyGoal re-build, re-industrialize the local economy

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II.  History - Boston and Route 128II.  History - Boston and Route 128

2.  Need for financial infrastructure2.  Need for financial infrastructure Previously centered in NYC Previously centered in NYC Pres. Compton -- Initiates first Boston Pres. Compton -- Initiates first Boston

venture capital firm venture capital firm – American Research and Development American Research and Development

Corporation Corporation – Bankrolled from Insurance Companies Bankrolled from Insurance Companies – Provide high risk start-up funds Provide high risk start-up funds

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II.  History- Boston and Route 128II.  History- Boston and Route 128

3.  WWII -- "the big easy" -- war research 3.  WWII -- "the big easy" -- war research funding pours infunding pours in

MIT builds up research funding MIT builds up research funding Spins-off entrepreneurs Spins-off entrepreneurs New companies climb from 39 to 1,200 New companies climb from 39 to 1,200

http://ww

w.scienceclarified.com

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II.  History- Boston and Route 128II.  History- Boston and Route 128

4.  High Growth era 1955-19714.  High Growth era 1955-1971– the Cold War gives warm feeling to Aerospace the Cold War gives warm feeling to Aerospace

industries industries

5. Viet Nam Era winds down 1972 - 19805. Viet Nam Era winds down 1972 - 1980– economy sours economy sours – 12,000 engineers/techies our of work 12,000 engineers/techies our of work

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II.  History- Boston and Route 128II.  History- Boston and Route 128

6.  Second Coming post 1980 -- The “Mini” 6.  Second Coming post 1980 -- The “Mini” & PC Computer Boom& PC Computer Boom– Local spatial agglomeration gives competitive Local spatial agglomeration gives competitive

advantage to Boston advantage to Boston – Large skilled labor pool Large skilled labor pool – ““Mini”-computer commercial launch Mini”-computer commercial launch – First developed at MIT -- Lincoln Lab under First developed at MIT -- Lincoln Lab under

Military contract Military contract – Boston's Route 128 means mini-computers Boston's Route 128 means mini-computers

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Silicon Valley StorySilicon Valley Story

B.  Silicon Valley -- Fred Terman and B.  Silicon Valley -- Fred Terman and California DreamingCalifornia Dreaming1.  1942:  California boy sent east to fight WWII in 1.  1942:  California boy sent east to fight WWII in

the labs of MIT (not the labs of MIT (not “halls of Montazuma…”)“halls of Montazuma…”)

2.  Hates the cold climate (weather and people)2.  Hates the cold climate (weather and people)

3. Post war: Heads home, but brings the "MIT 3. Post war: Heads home, but brings the "MIT model"model"

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Silicon Valley StorySilicon Valley Story

4.  Convinces Stanford to go one-up 4.  Convinces Stanford to go one-up on MITon MIT– Stanford U. -- Leyland Stanford's old Stanford U. -- Leyland Stanford's old

ranch ranch 1860s Leyland famous robber 1860s Leyland famous robber

baron/railroad magnate/importer of baron/railroad magnate/importer of Chinese labor/governor of California Chinese labor/governor of California

– And you thought ENRON "owned" And you thought ENRON "owned" government!!! government!!!

Bequested his ill-gotten gains to Bequested his ill-gotten gains to immortalize self (and John Elway) creates immortalize self (and John Elway) creates Stanford U Stanford U

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Silicon Valley StorySilicon Valley Story

4.  Terman Convinces Stanford to go one-up 4.  Terman Convinces Stanford to go one-up on MITon MIT– 1950s Stanford needs use for ranch lands 1950s Stanford needs use for ranch lands – Terman suggests -- build an industrial park Terman suggests -- build an industrial park

incubator for new IT start-up firms incubator for new IT start-up firms builds on "garage" companies of the valley builds on "garage" companies of the valley

http://images.pahistory.org/PAHA/image/301.jpg

Stanford Industrial Park

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Silicon Valley StorySilicon Valley Story

5.  The rest is history5.  The rest is history– Silicon Valley has/develops all four factors in Silicon Valley has/develops all four factors in

abundance abundance 1. Proximity to Research University(ies)1. Proximity to Research University(ies)

2. Infrastructure (R&D)2. Infrastructure (R&D)

3.  Climate, Amenities, and Quality of Life (California Dreamin’)3.  Climate, Amenities, and Quality of Life (California Dreamin’)

4.  Entrepreneurship -- Critical Mass (Garage Inventors)4.  Entrepreneurship -- Critical Mass (Garage Inventors)

The garage where HP started

http://ww

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ark/p976.jpg

http://www.tabsiliconvalley.com/

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Silicon Valley StorySilicon Valley Story

5.  The rest is history5.  The rest is history– Premier IT Premier IT Growth PoleGrowth Pole in the World in the World – Can't afford a place to sleep?  Ride an all night Can't afford a place to sleep?  Ride an all night

bus. bus. Renters [in California] are being forced to be inventive:

• $250/month in Fontana provides a shed for a home.• "Motel 22" is a $3 all-night bus ride in South Bay.

www.housingadvocates.org

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Research TriangleResearch Triangle

C.  The Research Triangle -- The South C.  The Research Triangle -- The South Shall Rise Again (or carpet baggers Shall Rise Again (or carpet baggers heaven?)heaven?)1.  1960 Governor worried by declining Textile 1.  1960 Governor worried by declining Textile

industryindustry2. Public--Private Partnership2. Public--Private Partnership– Textile Executives provide funding Textile Executives provide funding – Government provides services and planning Government provides services and planning 3.  Raleigh -- Durham -- Chapel Hill become 3.  Raleigh -- Durham -- Chapel Hill become

center based on Universitiescenter based on Universities

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Research TriangleResearch Triangle

4.  Advantages4.  Advantages– Low taxes Low taxes – Low wages, non-union Low wages, non-union

area area – nice climate nice climate

5.  Only trails Silicon 5.  Only trails Silicon Valley and Boston as Valley and Boston as growth pole in IT growth pole in IT industry industry

http://www1.american.edu/carmel/ab5293a/Casestudy/Research_Triangle/RTParea.gif

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I. Review Four Factors In I. Review Four Factors In Silicon Valleys’Silicon Valleys’ Success Success

1. Proximity to Research University1. Proximity to Research University

2. Infrastructure2. Infrastructure

3.  Climate, Amenities, and Quality of 3.  Climate, Amenities, and Quality of LifeLife

4.  Entrepreneurship -- Critical Mass4.  Entrepreneurship -- Critical Mass

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Can anyone copy this?Can anyone copy this?

Research Schools can always be builtResearch Schools can always be built Infrastructure can be created through private and Infrastructure can be created through private and

public meanspublic means Amenities are of two types:Amenities are of two types:

– Natural – impossible to createNatural – impossible to create– Social – might be possible to createSocial – might be possible to create

Entrepreneurship – historically this is only learned Entrepreneurship – historically this is only learned through mentoring, this has prevented the artificial through mentoring, this has prevented the artificial creation of a “Silicon Valley”creation of a “Silicon Valley”

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GROWTH POLEGROWTH POLE

““Growth does not appear everywhere at Growth does not appear everywhere at the same time; it becomes manifest at the same time; it becomes manifest at points or poles of growth, with variable points or poles of growth, with variable intensity; it spreads through different intensity; it spreads through different channels with variable terminal effects channels with variable terminal effects on the whole economy.”on the whole economy.” Francois Perroux Francois Perroux

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GROWTH POLEGROWTH POLE

The Silicon Valley is a Growth Pole The Silicon Valley is a Growth Pole Like lightning strikingLike lightning striking

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Growth Poles & their impacts:Growth Poles & their impacts:

1.1. Centers of Technology & Innovation suddenly Centers of Technology & Innovation suddenly appear on the landscape (ex. Silicon Valley)appear on the landscape (ex. Silicon Valley)

2.2. Surrounding region benefits in a distance Surrounding region benefits in a distance decay function (further away less benefit)decay function (further away less benefit)

3. As original technology ages, Growth Pole 3. As original technology ages, Growth Pole faces crisisfaces crisis

Can decline (Detroit, Cleveland,... Can decline (Detroit, Cleveland,... Can move on to new technology (Boston: Can move on to new technology (Boston:

textiles to computers)textiles to computers)

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Silicon ValleySilicon Valley

This development literally came out of the This development literally came out of the “garage”“garage”

But might it now be headed for India? Or But might it now be headed for India? Or elsewhere?elsewhere?

When he was in eighth grade, Steve Jobs, later the co-founder of Apple Computer, telephoned William Hewlett, president of Hewlett-Packard. "Bill answered, and I said, 'Hi, you know, uh, I'm 12 years old and I'm trying to build a frequency counter,' " Jobs recalls. Hewlett, a symbol of entrepreneurial success in the Santa Clara Valley, chatted graciously with Jobs for 20 minutes. When it was over, the kid got not only the Hewlett-Packard parts he needed but a summer job at the company as well. http://projects.edtech.sandi.net/lewis/computerhist/applejobs.htm

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http://www.microsoft.com/india/msidc/