Rogers, Everett M. and Judith K. Larsen

. 1984.

Silicon Valley Fever: Growth of High Technology Culture

.

New York: Basic Books Inc.

From Chapter 13 "The Spread of Silicon Valleys" egeo312 Silicon Valley 1

I. Four Factors In Silicon Valleys Success

1. Proximity to Research University 2. Infrastructure 3. Climate, Amenities, and Quality of Life 4. Entrepreneurship - Critical Mass

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II. History

A. The Boston -- Route 128 Story

1. The Great Depression -- MIT President Compton's response – Encourages applying new technologies – Helps faculty to set-up own companies – Goal re-build, re-industrialize the local economy http://itel.mit.edu/itel/meetings/Jan00/mit_map.html

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II. History - Boston and Route 128

2. Need for financial infrastructure  Previously centered in NYC  Pres. Compton -- Initiates first Boston venture capital firm – American Research and Development Corporation – Bankrolled from Insurance Companies – Provide high risk start-up funds egeo312 Silicon Valley 4

II. History- Boston and Route 128

3. WWII -- "the big easy" -- war research funding pours in    MIT builds up research funding Spins-off entrepreneurs New companies climb from 39 to 1,200 egeo312 Silicon Valley 5

II. History- Boston and Route 128

4. High Growth era 1955-1971 – the Cold War gives warm feeling to Aerospace industries 5. Viet Nam Era winds down 1972 - 1980 – economy sours – 12,000 engineers/techies our of work egeo312 Silicon Valley 6

II. History- Boston and Route 128

6. Second Coming post 1980 - The “Mini” & PC Computer Boom – Local spatial agglomeration gives competitive advantage to Boston – Large skilled labor pool – “Mini”-computer commercial launch – First developed at MIT -- Lincoln Lab under Military contract 7

Silicon Valley Story

B. Silicon Valley -- Fred Terman and California Dreaming

1. 1942: California boy sent east to fight WWII in the labs of MIT (not

“halls of Montazuma…”)

2. Hates the cold climate (weather and people) 3. Post war: Heads home, but brings the "MIT model" egeo312 Silicon Valley 8

Silicon Valley Story

4. Convinces Stanford to go one-up on MIT – Stanford U. -- Leyland Stanford's old ranch  1860s Leyland famous robber baron/railroad magnate/importer of Chinese labor/governor of California – And you thought ENRON "owned" government!!!  Bequested his ill-gotten gains to immortalize self (and John Elway) creates Stanford U egeo312 Silicon Valley 9

Silicon Valley Story

4. Terman Convinces Stanford to go one-up on MIT – 1950s Stanford needs use for ranch lands – Terman suggests -- build an industrial park  incubator for new IT start-up firms  builds on "garage" companies of the valley Stanford Industrial Park egeo312 Silicon Valley 10 http://images.pahistory.org/PAHA/image/301.jpg

Silicon Valley Story

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

1. Proximity to Research University(ies) 2. Infrastructure (R&D) 3.

Climate, Amenities, and Quality of Life (California Dreamin’) 4. Entrepreneurship -- Critical Mass (Garage Inventors) The garage where HP started

http://www.tabsiliconvalley.com/ egeo312 Silicon Valley 11

Silicon Valley Story

5. The rest is history – Premier IT

Growth Pole

in the World – Can't afford a place to sleep? Ride an all night 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 Triangle

C. The Research Triangle -- The South Shall Rise Again (or carpet baggers heaven?)

1. 1960 Governor worried by declining Textile industry 2. Public--Private Partnership – Textile Executives provide funding – Government provides services and planning 3. Raleigh -- Durham -- Chapel Hill become center based on Universities egeo312 Silicon Valley 13

Research Triangle

4. Advantages – Low taxes – Low wages, non-union area – nice climate 5. Only trails Silicon Valley and Boston as growth pole in IT industry http://www1.american.edu/carmel/ab5293a/Casestudy/Research_Triangle/RTParea.gif

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I. Review Four Factors In

Silicon Valleys’

Success

1. Proximity to Research University 2. Infrastructure 3. Climate, Amenities, and Quality of Life 4. Entrepreneurship -- Critical Mass

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Can anyone copy this?

  Research Schools can always be built Infrastructure can be created through private and public means   Amenities are of two types: – Natural – impossible to create – Social – might be possible to create Entrepreneurship – historically this is only learned through mentoring, this has prevented the artificial creation of a “Silicon Valley” egeo312 Silicon Valley 16

GROWTH POLE



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

Francois Perroux egeo312 Silicon Valley 17

GROWTH POLE

  The Silicon Valley is a Growth Pole Like lightning striking egeo312 Silicon Valley 18

Growth Poles & their impacts:

1.

2.

Centers of Technology & Innovation suddenly appear on the landscape (ex. Silicon Valley) Surrounding region benefits in a distance decay function (further away less benefit) 3. As original technology ages, Growth Pole faces crisis



Can decline (Detroit, Cleveland,...



Can move on to new technology (Boston: textiles to computers)

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Silicon Valley

 This development literally came out of the “garage”  But might it now be headed for India? Or 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/ egeo312 Silicon Valley 22