Wherever you go in the world, New Zealand, Scotland, Austin Texas, Raleigh North Carolina, Hyderabad, Shenzhen …. pretty much anywhere, you will find there are tech centers. Tech centers that often adopt ’Silicon’ or ‘Valley’ or variations on such in their names, but there are many more. The local government will often declare they are investing and building a tech center of excellence to ‘rival’ Silicon Valley. Except they aren’t. Let me explain.
This article seeks to provide insight into why these centers aren’t going to replicate ‘Silicon Valley’ any time soon. (BTW - to be clear, that isn’t necessarily a bad thing.)
Maybe the first point is to remind ourselves that Silicon Valley is not so much a geography as a ‘state of mind’. The actual geography of Silicon Valley is a very small part of The San Francisco Bay Area. It doesn’t for example include San Francisco where companies like Salesforce and Twitter are headquartered. nor Berkley where Uber is headquartered, with a University of the same name that is synonymous with ‘Open Source UNIX’. Still that hasn’t stopped the world at large using Silicon Valley and The San Francisco Bay Area interchangeably. It also doesn’t matter to the main thrust of this short commentary.
Why Is Silicon Valley So Different
AND Why Will Other Geographies Have Such A Hard Time Catching Up
.. well they won’t if they attempt to compete with the Valley head on. Like in all competitive races, the winners in that competition will be those regions that redefine the landscape.
Sitting at the intersection of varied and sometimes unrelated things that are often forgotten, not easily replicated and definitely requires time, I have identified 10 reasons that Silicon Valley has succeeded. (There may be more - but 9 is a good number. Isn’t it?)
Also, to keep the post to a manageable length, I won’t drill down into deep detail on any of the items - but happy to if asked. I will also be following this post up with more detail around some of the points and issues I raise in future posts.
1) Venture Capital
… in Silicon Valley has been around since the late 40s, early 50s - You don’t replace some 75 years of working in a couple of years.
2) Great Weather And Environment
… generally, so people will enjoy coming to the geography - and then staying - in all seasons - and it’s a very pretty region with realtively consistent climate. (Climate change not withstanding.)
… of California.
4) Great Universities
- plural - world class
5) Work Ethic
Doing What It Takes, though we are moving into a world where this idea is beginning to break down. Historically though, the culture of the valley is long hours and hustle, no weekends - you just want to make it happen. It’s not holding up so well these days, but in the halcyon growth days that I consider to be 85 though 2000 it was definitely a differentiator. More in another post.
- I am going to move on from this point and will come back to it later, but the fact is that San Francisco ’67 had significant impact on shaping tech thinking in the Bay Area.
7) Ecosystem of Financial Institutions, Lawyers and Government
- Wilson Sonsini was founded in 1961 - Silicon Valley Bank founded in 1982
It’s not just tech - you need bankers, lawyers, government to understand what you are doing. This is why things like ‘valuations’ are so different when (say) a British company values your start up versus one from ‘Silicon Valley’. Silicon Valley, to riff on Wayne Gretzky - the US generally looks to invest based on where where the company will be … the more traditional thinkers invest based on where the company is.
Before Silicon Valley, the local industry comprised Orchards. Yes it all started with the military and ‘tech’ but other industries were not dominant, say like Banking in NYC, Oil, Gas and Insurance in Houston, Movies in LA … Tech found its place in new and fertile pastures. This is particularly important when you get to a country like New Zealand where any tech business is going to be competing with other already dominant industries, such as (in the case of New Zealand), Dairy, Lumber and Tourism.
The parallels to why large corporations have a hard time with ‘innovation’ are clear. (This is a larger topic that I will come back to in another post.)
9) History and Legacy
The First documented ‘VC’ arrived around 1946
- Arthur Rock moved to Palo Alto in 1961 and set up the first fund
In ‘the valley’, VCs have been a known quantity for a long time. These days VCs and Private Equity are in common usage around the world, bit even twenty years ago that was not the case. , they are a known quantity. In the rest of the world, there
These VCs started their companies and first funds in the 60s
- Mayfield - Morgenthaler - Sutter Hill Ventures - Fidelity - Greylock - Venrock
Keep It In The Family
Just consider one
family dynasty … the Drapers - and I’m not talking Don Draper
- Bill Draper II set up Draper, Gaither and Anderson in **1959** and Draper and Johnson in **1962**. - His son - Bill Draper III founded Sutter Hill Ventures in **1965**. - His son - Tim Draper - the ‘Draper’ that most people talk about started what was to become DFJ in **1985** - His son - Adam Draper started his fund specializing in Blockchain and Crypto in **2012**.
It would be interesting to learn if there are any other families as steeped in VC anywhere in the world, but particulalrly outside of The Valley.
About Those Tech Centers
If you are interested in those tech centers, there’s
- Silicon Glen in Scotland - Silicon Fens in East Anglia, UK - Silicon Alley in New York - Silicon Roundabout in London - Silicon Wadi in Israel - Silicon Mountain in The Cameroon - Silicon Oasis in Dubai
… well, you get the drift. If you have an interest Wikipedia has a very long list of Global Tech Centers, though they aren’t all called Silicon xxx - thank god!
What thoughts do you have?