Tuesday, November 11, 2008

Where did Silicon Valley come from?

Those of us who have had the privilege of working in the premier startup hub in the world often take its advantages for granted. Among those: plentiful financing and nerds, a culture that celebrates both failure and success, and an ethos of openness and sharing. It's useful to look back to understand how we got those advantages. It's not side-effect of some secret mineral in the water: it was painstakingly crafted by people who came before us. And what may surprise you is how many of those people were part of the military-industrial complex.

I think the absolute best reading on this subject is a book called Regional Advantage: Culture and Competition in Silicon Valley and Route 128 by AnnaLee Saxenian. It's an academic treatise that tries to answer a seemingly straightforward question: after World War II, why did Silicon Valley become the undisputed leader of the technology world, while Boston's Route 128 corridor did not. To an early observer, it would have seemed obvious that Route 128 had all the advantages: a head start, more government and military funding, and far more established companies. And although both regions had outstanding research universities, MIT was way ahead of Stanford by every relevant measure. However...
While both Stanford and MIT encouraged commercially oriented research and courted federal research contracts in the postwar years, MIT's leadership focused on building relations with government agencies and seeking financial support from established electronics producers. In contrast, Stanford's leaders, lacking corporate or government ties or even easy proximity to Washington, actively promoted the formation of new technology enterprises and forums for cooperation with local industry.

This contrast — between MIT's orientation toward Washington and large, established producers and Stanford's promotion of collaborative relationships among small firms — would fundamentally shape the industrial systems emerging in the two regions.
The book is really fun to read (how often do you see an academic tome crossed with a real whodunit?). It's important not just for historical reasons, but because we are often called upon to take sides in current debates that impact the way our region and industry will develop. Just to pick one: will software patents, NDA's and trade secrets laws make it harder for people to share knowledge outside of big companies? We need to work hard, as previous generations did, to balance the needs of everyone in our ecosystem. Otherwise, we risk sub-optimizing by focusing only on one set of players.

However, even that fascinating history is not the whole story. You might be wondering: who were those brilliant people who made the key decisions to mold Silicon Valley? And what were they doing beforehand? Steve Blank, who I've written about recently in a totally different context has attempted to answer these questions in a talk called "Hidden in Plain Sight: The Secret History of Silicon Valley." If you're in the Bay Area, you have the opportunity to see it live: he's giving the talk at the Computer History Museum next Thursday, November 20:
Hear the story of how two major events – WWII and the Cold War – and one Stanford professor set the stage for the creation and explosive growth of entrepreneurship in Silicon Valley. In true startup form, the world was forever changed when the CIA and the National Security Agency acted as venture capitalists for this first wave of entrepreneurship. Learn about the key players and the series of events that contributed to this dramatic and important piece of the emergence of this world renowned technology mecca.
If you can't make it, you can take a look at this sneak peak of the slides, courtesy of the author:

In addition to learning who to thank (Frederick Terman and William Shockley), you'll get a behind-the-scenes look at World War II and the Cold War from an electronics perspective. Fans of
Cryptonomicon will have a blast.

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  1. In his first slide Steve Blank anchors the birth of Silicon Valley with Hewlett Packard but I am guided by Timothy J. Sturgeon's "How Silicon Valley Came to Be" and believe that Federal Telegraph is a better origin point.

    The fact that the San Francisco Bay Area’s electronics industry began close to the turn of the Twentieth Century should lay to rest the notion that industrialization and urbanization on the scale of Silicon Valley can be quickly induced in other areas. Silicon Valley is nearly 100 years old. It grew out of a historically and geographically specific context that cannot be recreated. The lesson for planners and economic developers is to focus on long-term, not short-term developmental trajectories. Silicon Valley was the fastest growing region in the United States during the late 1970s and early 1980s; but that growth came out of a place, not a technology. Silicon Valley’s development is intimately entwined with the long history of industrialization and innovation in the larger San Francisco Bay Area.

    From California Historical Landmarks for Santa Clara note that Federal Telegraph predates HP by more than a quarter of a century and all of the early WWII era technology entrepreneurs had a common interest in radio.

    NO. 836 PIONEER ELECTRONICS RESEARCH LABORATORY - This is the original site of the laboratory and factory of Federal Telegraph Company, founded in 1909 by Cyril F. Elwell. Here, Dr. Lee de Forest, inventor of the three-element radio vacuum tube, devised the first vacuum tube amplifier and oscillator in 1911-13. Worldwide developments based on this research led to modern radio communication, television, and the electronics age. Location: In sidewalk, SE corner of Channing Ave and Emerson St, Palo Alto

    NO. 976 BIRTHPLACE OF SILICON VALLEY - This garage is the birthplace of the world's first high-technology region, "Silicon Valley." The idea for such a region originated with Dr. Frederick Terman, a Stanford University professor who encouraged his students to start up their own electronics companies in the area instead of joining established firms in the East. The first two students to follow his advice were William R. Hewlett and David Packard, who in 1938 began developing their first product, an audio oscillator, in this garage.
    Location: 367 Addison Ave, Palo Alto

  2. Google has a great video of Steve giving an earlier version of this talk: