Re-creating Silicon Valley?

[Guillermo Söhnlein]

Even though I was born in Argentina, I grew up in California. Specifically, the San Francisco Bay Area. Yes, "Silicon Valley." Of course, living there we really didn't think it was anything special. It was just "home."

However, for the past 7 years I've been living in exile outside of Washington, DC, which in many ways represents the polar opposite end of the innovation spectrum from Silicon Valley. I've also spent a fair amount of time working with communities on economic development initiatives, especially those focused on building entrepreneurial organizations. I've been fascinated by everyone's desire to duplicate Silicon Valley, while simultaneously admitting it is an anomaly. More interesting, I've enjoyed learning from experienced economic development professionals the various mechanisms for catalyzing such a transformation.

In this regard, I thought I had heard every possible idea for replicating Silicon Valley's entrepreneurial success ... until I read the title of this recent blog post: "Can You Buy a Silicon Valley? Maybe." Essentially, the post suggests that some communities could potentially jumpstart their entrepreneurial cultures by paying 30 angel-backed Silicon Valley startups $1M each to relocate.

Normally, I wouldn't post an economic development discussion in this group ... and I've got my own personal opinions as to what makes Silicon Valley unique and completely un-replicable. However, given the current debate over the U.S. stimulus plan, I thought this suggested approach of using $30M in public funding to "buy" some imported angel-backed companies might be worth throwing out to this group for discussion.

Any thoughts?

[Kumaran Sanmugathasan]

I believe more money should be invested in pure research.Have you heard of advanced propulsion sytems for space travel? I believe all new theories and concepts have to be investigated. Have you
heard of this company called Unitel Aerospace? They have
patents on a starship that can travel instantaneously to other star
systems by quantum tunneling through higher dimensions or hyperspace. It can also
travel through time and to parallel universes. The technology is based
on back engineering of a UFO sighted by the CEO Larry Maurer. Website
is http://www.unitel-qht.com/uni/ . Check it out. I loved it.I believe this companies concept should be researched. I support them. They are looking for money to do research but no one seems to be willing to invest in pure theoretical research any more. I hope they get funded soon.

[D Alan Eastwood]

Guillermo,

Although the article you refer to contains some nuggets of wisdom, I agree with you that Silicon Valley is a unique phenomenon and not replicable. There is much more involved than capital investment; the author mentions the importance of location, for example.

The idea that Silicon Valley can or should be replicated is a good example of people using a creative process devoid of creativity. I would love to have the opportunity to help facilitate some better ideas. The present crisis presents unique opportunities, but the money needs to follow bold new ideas.

So, I also agree with Kumaran's thinking: that more support needs to be given to those pursuing pure (true) science and big ideas.

--Alan

[Colin Doughan]

What makes Silicon Valley unique is much more than a chicken and egg problem.

If it were as simple as injecting a community with seed money, this proposed solution would be adequate - and may generate one generation of success. But Silicon Valley is more, its "multi-generational". Silicon Valley has the following going for it:

1. Education: Silicon Valley has access to some of the best minds (Stanford and many others in the extended area). with no/limited number of kids, many are willing to risk more.

2. Geography/Culture: I love Omaha, NE. Omaha has a lot going for it - quality of life stuff (and the College World Series). But Omaha will always be at a handicap to places like San Francisco. No mountains, no ocean, limited culture opportunities. Geography and Place matter. We are human. We still want to work and live in fun and interesting places.

3. The "Right" Kind of Entrepreneurialism: Silicon Valley is filled with business ventures with short lifecycles (excuse the stereotype). This creates a steady stream of results. These result bread great stories. Stories of how Sally plus Angel/VC turned a good idea into a golden parachute. Stories of how Tom's dorm room idea got him on the cover of Fast Company. Faster lifecycle = faster payout to VCs and Entrepreneurs = More stories = more desire to duplicate previous results.

Can Silicon Valley be duplicated? I am the first to say it CAN be done. Is it as easy as injecting capital? probably not for the long term. BTW - look at Mojave. Why is it growing as a mini-new space Mecca? Geography - easy to launch. Creating stories - Burt Rutan and Scaled C. are out of Mojave. Interesting.

So, what mechanisms can be used (in addition to capital) to create the next Silicon Valley might be the next question to ask.

[Jason Held]

This made for interesting reading. I'm not living in the USA (Sydney-sider) and only one product is far enough along to be viable for Angel funding, so I don't claim enough expertise to say how $30M would be good for a city or an investor.

A few points in the blog hit home, though. Seed funders like Y Combinator were advertised in Australia, but you have to be onsite to compete for funding and a 3-month course. Sensible for out-of-towners if living in the USA and not married. From a practical standpoint, $20k might be viable for very small space eng product prototyping (with *a lot* of sweat equity) but will get you no where near flight.

Angel investing though, will encourage a move. Our toy can get to a break-even sellable alpha for only $350k, and Open Beta for $2.5 million. but would I move? I think the blog author is correct-- about $500k is the cutoff above which my wife doesn't pummel me with a very large mallot :).

That said, sounds like the driver is mostly on the funder side, not the entreprenuer side. Paying startups to move to Sydney may not make it a startup hub (or it might....we really don't know). But getting investors to live there and work locally with universities, incubators, etc will. Yes, some startups will come from out of town, but they will come, and integrate with local businesses.

Final thought to consider: if the startup comes from Silicon Valley, where are they going to look to when it's time to grow? Most likely, Silicon Valley, as that's where their original investors are from. In this scenario, the city just paid $30M in companies destined to leave once they gained the success they were looking for in the first place.

Cheers
Jason

[Joe Latrell]

Guillermo,

I have to agree with Colin in that the concept that is Silicon Valley can be replicated. It cannot be replicated within the time frame that politicians and local communities would desire. Simply relocating companies is not going to work. There are the quality of life issues, access to a good group of thinkers and hard workers, a reasonable tax base, and most importantly the feeling that you are wanted as well as needed.

Remember the Valley didn't spring up overnight. It was a combination of right place, right time, right conditions and a little luck that made it what it has become over the course of several decades. You cannot remake something that complex and get it exactly the same within a few years and expect it to work. Throwing more and more money at the problem is not the answer either. It is a way of living more than a way of financing.

Instead of trying to re-create the Valley, communities should be focused on what makes them a great place to live. They should be asking what can we provide that others cannot? What can we get to make us comparable to other locales? Create a good infrastructure and the entrepreneurs will come. It won't be the Valley, but perhaps in time it will be something like it.

[Nils]

!Hola Guillermo!

Although I was born on the Netherlands, I had the opportunity to visit Silco Valley many times. A wondefurful place to be where ideas come across your head by simply driving down on El Camino...
I absolutely agree with most of the other writers that it cannot be rebuilt that easily. It was unique, not only from a location, skills or business point of view, but also time-wise. We cannot redo the 70, 80s and 90s anymore...

However, there are almost unique other places as well with similar potential. I remember an example in Brasil. There is also a hi-tech compound somewhere (just forgot the name and location). Within the EU there are budgets available to come up with smaller 'Silicon Valleys'. Money is not the only driver, it is also an entrepreneurial way of thinking which has made SV unique, along with the right people, with brilliant ideas, all at the same timeframe. Without them no new SV can emerge, not in the EU, and not in Silicon Valley as well.

However, it is still possible. Why is Milano still the heart of Industrial and Fashion design? Why is Paris the heart of high cuisine and why Hollywood still the the Nirwana of film industries (despite India launches more feature films?), and I can think of many more examples...They all maintain the constraints and drivers for the unique experience which made Silicon Valley as we all know it. Concentrate the best ideas and people at one place and let the ideas evolve and develop.

Saludos,
Nils
P.S> if someone knows the hi-tech centre in Brasil, please let me know

[Thomas Meylan, PhD]

One of the factors identified about Silicon Valley that I haven't confirmed is the practice of high levels of cross-corporate collaboration, both on a formal and informal basis. One of my "informants" suggests that they have a sense of community that transcends their individual business interests; they apparently view themselves as forming (or now maintaining) a region of business innovation and sustained performance. This provides a deeper and richer infrastructure based on mutual business support.

Now, I have just said a whole lot more than I actually know about the situation. However, it is clear from my research and practices in collaboration that if there is a "Silicon Valley Culture" that operates along the lines of my opening paragraph, then, yes, you'd expect vastly higher levels of performance than other regions dominated by a local culture of (unenlightened self-interest) competition.

If as a whole the Silicon Valley region is approaching business from the "my village against the rest of the world" view of things, then they may be building strong, local business alliances and aiming their competitive strategies outwardly toward the world market instead of against each other. That attitude is definitely open to replication if the members of another region can decide and discipline to do so.

Tom

[Erik Saether]

Hi,

Really interesting discussion this one. Because you its all about how do you get focus on an industry. My thinking on this is that space exploration is a science heavily reliant on other sciences. Like Newton said, I see far because I stand on giants shoulders. So I would think that the space city per se should be based close "synergistic technologies".

Business also do not necessarily collaborate unless they foresee value in interaction which is mutually benificial. For example I do rocketry as a hobby but lately have been entering into discussions with people doing model aeroplanes, helicopters, etc because they are saying they developing a tool to send back a GPS co-ordinate with a GSM device. In rocketry this is useful because you now find your rocket if you really want to shoot for the skies.

These are normally the small steps required to build a technlogy so I would say try base such a city close to perhaps an area close to aeronautics business's (design and manufacture); electronics, computers, etc all of which the US is very strong in. The problem with business is people hold their technology cards much closer to their chests than perhaps the hobbyist, but I suppose this is where you need the big dreamers who can take an idea to the next level.

Like they say, where there is will, there is way.

Erik

[Aaron Agassi]

Perhaps they may be incentivized to loosen their grip?

[Colin Doughan]

So what could be done to encourage a “New-Space Valley” similar to Silicon Valley?

Here are a few ideas (I hope others add to this list):

1. Capital. Without a doubt this has to be a major element.
2. A welcoming city/county/state. Favorable tax laws, regulations, zoning, noise tolerance, etc.
3. Easy access to flight testing opportunities. This probably means, a semi remote location – an air/spaceport location would be nice as well.
4. Easy access to experts. This could be done virtually, but there are times where access to a space law expert, an orbital mechanics expert, a tutor in STK etc. would be great. New space companies would benefit from resident experts one could buy-by-the-drink (or better yet, “Angel Experts” – contributing knowledge instead of/in addition to capital).
5. Easy access to tools/equipment – Similar idea to #4. Tools I can rent as needed. Shared clean rooms, and other tools/equipment that I may not use often enough to justify the purchase of, but would significantly improve my chances of success.

Many of these ideas would equally be true of some type of a business incubator.

[Aaron Agassi]

All manner of services to Entrepreneurship brag of their utility to what successful entrepreneurs do, but that does not address the needs of the often obstructed and stymied aspiring entrepreneur, of a more transparent entrepreneurship for the rest of us. Another problem is that while successful entrepreneurs thereby have a cash flow to pay for whatever services to enhance entrepreneurship, beginners and wannabes do not. And our existing educational system remains broadly antithetical to entrepreneurship in more ways than can be listed.

[Aaron Agassi]

How closely must we parallel Silicon Valley? Must it be in computer technology specifically? Must it concern economic zones? Or might we discourse upon catalyzation and transformation most broadly? - Popperian piecemeal engineering and the George Soros doctrine of constructive positive intervention, not limited to commerce but also perhaps to politics and the environment: Small Actions Big Results... Or else, perhaps focused upon topic of this forum, new venture creation towards outer space.