We are not 'the next Silicon Valley'

Nor should we be. An expert on the original high-tech nexus explains why all these technology clusters are unique and not able to be imitated. Instead, Seattle should build on its local strengths while remaining a key part of the global network of technology industries.
Crosscut archive image.

The Silicon Valley of California. At top, San Francisco Bay. (Google Maps) Click to enlarge.

Nor should we be. An expert on the original high-tech nexus explains why all these technology clusters are unique and not able to be imitated. Instead, Seattle should build on its local strengths while remaining a key part of the global network of technology industries.

Is Seattle the next Silicon Valley? In a recent article, veteran New York Times technology reporter John Markoff argues that it could be. Increased venture capital investment, second-generation startups whose leaders cut their high-tech teeth and earned their first few millions at Microsoft, and the professors and students of the University of Washington all are contributing to a new entrepreneurial energy here.

All this is paying technological and economic dividends. Local responses to the article, such as a column by John Cook, have ranged from strong agreement to skepticism, but few take issue with the fact that some exciting new companies, increased startup funding, and a growing research community are brewing something fresh for Seattle.

This isn't, however, another Silicon Valley – and it shouldn't want to become one. Here's why.

Not long ago, I wrote a book that explored how Silicon Valley came to be and why other places didn't manage to follow suit. Silicon Valley resulted from a combination of powerful local institutions, savvy real estate development choices, immense capital investment by the Cold War military-industrial complex, and the simple good fortune of being on the right side of national economic and demographic trends. The repeated failures of other places to replicate that success - much less seize Silicon Valley's high-tech mantle - attest to the trickiness of getting this formula right.

The lessons of the tech industry's Cold War-era infancy still hold true today. So with Seattle's burgeoning innovation economy in mind, let's recap how these apply in a global, knowledge-driven age.

You need lots of money that can be spent (somewhat) recklessly. Military grants and contracts provided the capital needed for Valley pioneers like Hewlett-Packard to survive in their earliest, leanest years and created a demand for sophisticated technologies before there was a sizeable commercial market. As military contracts declined in the late 1960s, private venture capitalists and angel investors rose to take their place, giving smart but untested people repeated opportunities to innovate and develop new products.

The recent experiences of other nations highlight the importance of truly adventuresome venture capital. So far, Asian tech superpowers like Japan and China have both made extensive public investments in the high-tech sector but have relatively few resources available for small-scale inventors and entrepreneurs. Western European nations have established hundreds of public V.C. funds, but these often aim to balance regional economic inequities rather than support the best and brightest innovators.

In this respect, Seattle has a true regional advantage. Like the Bay Area and other gold- and silver-rush cities of the American West, it has a long tradition of supporting innovators and iconoclasts. But it is only very recently that the local venture pool has reached critical mass - thanks in large part to the individuals who benefitted from the boom days of Seattle's first tech wave in the 1990s.

You need research institutions with talent, resources, and political clout. Stanford University was not solely responsible for building Silicon Valley, but it had a great deal to do with it. But the mere presence of a big university is not enough - and this is one crucial fact that so many would-be Silicon Valleys have gotten wrong. A university or other research institution has to have strong programs in the disciplines that matter to high tech. It needs to have the budget and willingness to engage in things like university-industry partnerships and to encourage technology transfer rather than hobbling it. And strength is in numbers: It's important for a region to have one of these institutions, and it's even better for a place to have many of them.

The University of Washington, as a public institution, does not have the wherewithal to focus on high-tech issues with the single-minded focus of Stanford (nor should it). But the UW clearly is a major contributor to Seattle's new entrepreneurial wave. Although Seattle would be in an even better position if it had a second large research university in the area, the presence of other powerhouses like the Fred Hutchinson Cancer Research Center and the Gates Foundation create synergies with UW that increase the overall research impact.

You need to be a place that attracts talented people and retains the ones you've already got. Silicon Valley grew because it was a place with qualities that attracted people who had the education, economic resources, and social advantages to live anywhere they chose. It was located in an economically booming state in a prosperous nation, within commuting distance of a major city, but with open land available to build suburban houses, research parks, and highways. It has been able to create an environment that allows white-collar high-tech workers to live, work, and network in something of a self-contained bubble.

In more a more recent era, the bubble hasn't popped, but as I wrote in an earlier article in Crosscut, it has moved to more urban – and thankfully more diverse - settings such as Seattle's South Lake Union neighborhood.

Meanwhile, the workforce that populates this environment has become far more footloose than it was in the 1950s and 1960s. Some educated professionals can choose to live anywhere in the world, and the cities that can't provide competitive amenities suffer. Some of these are physical and environmental: Polluted air in Chinese and Indian cities dampens local campaigns to recruit expatriates and returning nationals. Others are social: "Science cities" built out in far suburbs or rural areas fail to lure talented people away from more interesting and cosmopolitan towns and cities.

Retention of talent also matters. Cities like Philadelphia and Baltimore have some of the top-ranked research universities in the world, but the alumni of schools like Penn and Johns Hopkins often hop the first Amtrak out of town after graduation.

Seattle has excelled at attracting talented people; its high proportion of college-educated residents attests to this. It hasn't done as well at producing them. The people who went to college here make up a relatively small part of the tech workforce. In Silicon Valley, Stanford and Berkeley pulled talented students to the Bay Area from across the country and the world. Many of the builders of the Valley, from Hewlett and Packard to Google, are products of local universities. A region's students are essential to its future economic success.

You need to build on existing strengths, not follow the next big thing. This is another one that many Silicon Valley wannabes get wrong. As the eminent urban scholar John Friedmann puts it in his book The Wealth of Cities, "cities are not containers." The perpetual pursuit for outside capital - and transplanted ideas and innovations - is a far less productive strategy than building on core competencies. Thirty and 40 years ago, regions around the world were trying to emulate Silicon Valley by building semiconductors; today, nearly as many places are fixated on becoming the next biotech hub or the next capital of nanotechnology. Simple rules of economics dictate that few of these aspirants will meet their goals.

Silicon Valley succeeded not because of the "silicon" but because it was doing something that complemented existing regional strengths. The area had been a hotbed of amateur tinkering with radio technology since the 1910s; faculty and students at Stanford had been working on transistor technology for a generation. Similarly, Seattle was launched onto the global economic map by technologies and companies that built on things local people and firms already did well. Nordstrom injected a new level of customer service to selling shoes; Starbucks did the same thing years later in selling a cup of coffee.

The succeed-at-what-you-know rule bodes well for Seattle in terms of one emerging tech market: green technology. People here have been thinking and analyzing and developing the possibilities for these kinds of things for a long time, and although many Valley titans are already on the green-tech bandwagon, Seattle companies are finding there is plenty of room for them to take a leading role.

And whatever you do, don't call yourself another Silicon Valley. Literally hundreds of places around the world have, at one time or another, appended "Silicon" to their name in an effort to capture some of its high-tech magic. This branding is often the kiss of death, and most regions fall short of their goals.

The fact is, there really never will be another Silicon Valley. As one of the best recent articles on this topic observed, the Valley remains a truly unique ecosystem for technological innovation, with specialized niches and decades-old interpersonal networks. However, it's no longer the only game in town. The people and firms of the Valley are part of a global supply chain in which many places - including Seattle - play an important role.

In this worldwide network, the most vital innovation centers are those that know their own strengths, provide exciting and dynamic environments for people and firms, and have the resources and institutions that provide a home for new and exciting ideas.


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