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Why It’s So Hard to Build the Next Silicon Valley (bloomberg.com)
26 points by adventured on March 6, 2017 | hide | past | favorite | 52 comments

I don't see why anyone would think fast internet access is the key to "the next silicon valley". Silicon Valley existed as a tech hub before the internet, and all sorts of cities across Europe and Asia have fast internet.

Silicon Valley is going to be difficult to displace for the same reason Facebook is difficult to displace - the network effect. Companies come to the SF bay area looking for talent, and talent comes looking for jobs. You can start your company somewhere far cheaper (an nicer, IMO), but people who are used to switching jobs every 18 months are going to be a hard sell on relocation.

This list of places with 'Silicon' shows just how much people try to create Silicon Valley in other places and how they have not succeeded.


To be fair, Austin does have a substantial semi-conductor presence. But we're still an order of magnitude behind SV levels of funding. Need one or two Googles for that.

I don't think Google made SV. There are a bunch of factors: presence of high quality research universities (UC system, Stanford, Caltech etc.) combined with a succession of successful tech companies (Fairchild, Intel etc.) that created a bunch of VC's that invested in more startups etc.

Texas does have UT, TAMU etc. Maybe we need a couple of mega successful home-grown startups. Or perhaps the different tech companies starting up offices in Austin will create the density of engineers to reach that critical level where startups can find all the talent they need locally. I have a feeling it won't be the same path that SV took though.

wow. amazing. Isn't the SV called that way simply because this is where they used to manufacture silicon based chips AND because the US is one of the main silicon producers, and because it is a valley ?

I mean you can create a drink today and call it "sien cola", that does not mean you are going to sell a 100 million bottles per day tomorrow as a result of your "awesome" marketing strategy.

Why does everyone call their startup scene silicon something ?

It's like Bollywood which is not going to compete with Hollywood just because it has the same name. Or these Chinese companies which brand their phone "Appel" or their car "Felali". They are not going to compete with Apple and Ferrari.

I may be wrong, but I don't think this strategy works.

"They used to mine silicon?" Seriously? Or is this a joke going over my head?

Assume parent is trolling. If not, then imthebigfoot is wrong about both the origins of SV and Bollywood and could be enlightened by checking Wikipedia:Etymology.

Happy now ?

You make good points, but it is hard to imagine a tech boom taking off in an area with poor internet access.

I agree. Fast internet is necessary but not (even close to) sufficient.

One of the first things I noticed after moving to Silicon Valley was that internet access here is surprisingly bad and expensive. You'll likely only have one choice and have to live with it. Most areas in Europe will give you faster, cheaper, and more options to choose from. I got used to it but still don't get why in the heart of tech you can't get 1 Gbit or even 100 Mbit connections for a reasonable price.

So is electricity and water. Can you make a good silicon valley with kick-ass water supply? The article's premise is broken.

But even 25Mb/s (the current US broadband standard) is enough to start a tech business. As long as you don't experience any interruptions, you could readily host your systems on the cloud, and then migrate your business to somewhere more internet ready / pay for better internet when you get the cash.

You mean there is no chance for a tech boom in Australia ?

Yes. It's flexibility of both talent and capital to flood the most promising ideas and starve the worst ones. In areas where companies are more stable, and people more risk-averse, it's harder for the giants to emerge. Adding super-fast internet does nothing to change this.

The article completely overlooks social issues. Tech people may span the fiscal political spectrum, but they tend to be progressive as far as social issues go. Kansas does not have any appeal to most of the tech people I know for that exact reason. They've even rejected the Medicaid expansion for the ACA, which is a useful social safety net for early stage founders with unsuccessful startups.

Doesn't seem relevant given the number of places in Europe that are more progressive and failed to replicate silicon valley.

That doesn't seem relevant given the many other differences between European countries and the US, that don't apply to California vs Kansas.

I don't think statewide social/political issues have much bearing, otherwise, e.g., Austin wouldn't be as successful as it is. Locally progressive is important. I don't know how Kansas City fares in that regard. A University nearby with a strong CS program is important and Universities usually bring with them the progressive crowd.

Is Austin doing well? I keep hearing "Austin has tech!" but I've found it hard to find impactful companies there. It seems like every year when I look them up, most of the companies from the year before have disappeared (minus Dell, Apple, Google offices).

What are you talking about? Which companies have disappeared?

Among different companies in Austin: Apple, Amazon, Dropbox, Cloudfare, Twitch, Facebook (not engineering though...sigh), Blizzard, EA, Intel, ARM, Samsung ... I can go on, but I think I've made my point.

Texas has not expanded its Medicaid program under the ACA. It's dealing with a bathroom bill at the moment too. Just because these happen at the statewide level does not mean that they don't affect people's lives. A tiny blue enclave in a red sea is still affected by the waves.

Is Austin really that successful from a tech standpoint? Which major companies and startups are based there? Which ones have large offices?

Silicon Valley is full of conservatives that are there because that's where the jobs are.

It's not the internet, it's the people. Why isn't KC the next silicon valley? There's not a stanford & Berkeley right there congregating some of the most talented young & ambitious kids in the country.

The "next silicon valley" will be wherever a high percentage of extremely talented young adults congregate and collaborate and have access to resources necessary to grow a company. Being able to download a lot of stuff really fast isn't really a necessary condition for that, even if it helps.

>There's not a stanford & Berkeley right there

This is absolutely a fundamental reason: higher educational system. Atlanta (maybe Texas) is the South's version of SV and it has Georgia Tech, Emory, and others. If a municipality wants to be a top tech city, it needs the colleges and universities to support that.

Austin has UTexas as well, which is a major driver of it being a hub.

See also: the Research Triangle.

The difference to me is cultural — it's not about infrastructure or fast internet at all.

It's hard to explain how it feels for me, when I get to the Bay Area. Being able to talk to like-minded people, not feeling like an out-of-place weird nerd like I do at home. It's no coincidence that I made most of my friends out there.

And anybody I've met that generally wants to "emulate" SV elsewhere generally has entirely the wrong mindset — trying to copy (badly) the investment style, their view / the mainstream media view of "startup culture", etc; it's completely misguided.

Most tech bubbles develop that pretty quickly.

Admittedly, California has a little bit of that going for itself.

1) California is naturally aspirational, it's 'quirky' and the place that people have gone to 'escape' classical norms for a few centuries now.

2) The weather is amazing.

3) It's in the USA = a market big enough to support anything to start, before international expansion. Almost nowhere else can do that. Think Sweden: you have to go 'very international' and deal with many cultures/languages to get going.

4) Standford/Berkley - almost the perfect mix of both public and private ethos in the same spot. I'm not for or against either, but both systems have advantages. Also proximity to other pretty good schools.

5) SF artistic culture + VC culture + Tech culture - I would argue all are needed, and it just happened to be there before, and now they have a mass in all three. Granted, the art-vibe is dwindling.

6) Money - another thing that comes from both US scale and capitalist culture, that doesn't exist most other places. Rich people write big Angel cheques and take risks like few other places.

It's crazy to try to 'reproduce' the Valley elsewhere - it's best to focus on things that regions have as an advantage.

Canadians are not the most capitalist/lean-in people (I know this, I am one), and we don't fare well on R&D spending etc. But - the Oil Sands are almost unique to Canada, and developing around that are tons of relevant mini-innovations and side industries. (Eco-issues aside, but even then - some eco-innovations as well).

Montreal has a huge 'creative community' that they don't leverage well enough.

Sweden has a specific kind of culture that has lent well to their exports and innovations espcially in Music. They are a world powerhouse in pop-music ... Spotify should be no surprise.

When industries are related, or if there is a 'key advantage' somewhere in the core, then other, related inustries can leverage that.

'Critical masses' happens when there is some kind of relationship between the various companies.

Trying to 'just make startups' wherein there is no synergy between entities is not a good strategy.

> 1) California is naturally aspirational, it's 'quirky' and the place that people have gone to 'escape' classical norms for a few centuries now.

Is this still the case? I could sort of see this in the 60s, but present day, living in the bay area it feels pretty home-owner-associationy. In Oregon in the city we had neighbors who performed a ritual pagan goat sacrifice in their back yard -- I kind of don't see that flying in Palo Alto.

Point taken. Less so than before, but it's still fairly weird in many areas. LA and the Bay both have odd sub-cultures and not-so-far out of the city you get some fairly hippy types, but it depends on a lot.

Palo Alto I don't think has ever been quirky.

But yes - maybe Portland is the new SF :)

It runs a little deeper than faster internet access. Missouri and Kansas seem to share the same 2 problems - bad public schools (especially in MO) and mediocre computer science programs. I'm a remote employee (but used to live here) for a small tech company in the KC area. One thing that stands out is that it's unbelievably hard to find half-decent interns from surrounding schools. We still attend career fairs but have pretty much given up on local universities. My boss basically uses his free time to scavenge High Schools for potential candidates. We've had luck with 2 kids so far and both have moved on to ivy-league schools to pursue CS after interning with us. I can almost guarantee you that neither of them is going to come back to the area and I wouldn't blame them.

I have thought about this a lot for many years, and I have lived in or spent a lot of time in parts of the country and world that desire to have a tech community like Silicon Valley. In my estimation, there are three critical ingredients that intersect with "culture" but are not contained by it. In no particular order:

- A critical density of engineers as a percentage of the population. Few places have as many engineers per capita as Silicon Valley but in the places that do it drives the dynamics of the culture (e.g. Seattle).

- Strong lack of risk aversion. This I would argue is Silicon Valley's most unique trait. When combined with its other traits, good things happen.

- High average wealth above some threshold that is well distributed in the local population. Again, there are a few cities such as Seattle that meet this criterion but they are not common. It may merely be a correlation with engineer density.

This is what led me to move to Seattle six years ago after many, many years in Silicon Valley. Seattle (relatively) is more risk averse but it also lacks many other pathologies while having the other critical ingredients (engineers and ambient money) in spades. With the number of Silicon Valley (and New York City) people that I know that have moved to Seattle, I am seeing even the risk averse aspect change over time.

Required reading: Steve Blank's "Secret History of Silicon Valley"


TL;DR: It took decades, spanning back to defense spending in the 1950s and included advances such as radar, ICs, PCs, & the internet.

It's relatively easy to set up a brand new start-up anywhere in the world. It's also possible to grow it from 2-3 founders to perhaps 100 employees.

Growing the company after that is somewhat problematic, as one needs engineers, marketers, business developers and recruiters in rather large quantities. A company that's growing from 100 to 1,000 employees will have to resort to importing such people from Silicon Valley, but what would motivate those people to move?

Some can be attracted by the premise of cheaper housing, better schools, easier commute or, as the article suggests, faster Internet. But they also have to consider the risks of

* lost opportunity cost (a rapidly-growing rocketship startup shows up in 2 or 3 years, eyeing this exact engineer, and is most likely to be located in SV, not in Topeka)

* spousal unemployment

* lack of fallback scenarios for layoffs, team/manager mismatch or just plain burn-out, where you happen to work for the only major tech employer in town

With that said, Snap managed to grow from 0 to 1,500 employees in LA, and I'm sure there are some NY companies in the same league, so things are possible.

Paul Graham's "How to Be Silicon Valley" http://www.paulgraham.com/siliconvalley.html

What does fast internet have to do with silicon valley? Senseless article.

Agreed. In fact, if I remember correctly, San Jose, Sunnyvale, Santa Clara, Mountain View and Palo Alto notoriously have crummy internet speeds considering their "tech" cachet.

Indeed, most of Silicon Valley is effectively* under a Comcast monopoly. As a result, it gets the same crappy, overpriced service as most of the country.

* There are technically other service providers, but they are not competitive if you want more than 20Mbps of throughput.

One of the key things that makes Silicon Valley unique beyond network effects, is the number of early adopters there. This helps to iterate and test the product much faster and lower cost than reaching out around the country/World for early adopters when still prototyping.

Hard to replicate a culture of early adoption and willingness to try new things.

You seem to be getting down voted a fair amount, but I think this cultural attitude is real and a necessary condition. Anyone who's lived on the east and west coast is aware that they have very different cultures, and I'd argue the west coast is a lot more willing to break the old ways.

It's true - but the early adopters are usually related to the industry anyhow. So they are almost the same thing.

There is this video doc from wired on YT, about how Shenzhen in China is the next SV, for the following reasons : the city is thriving, it has the highest number of high rises "in the history of mankind" (to quote that lady in the show), and because it has access to cheap cheap HW components, right down your office.

Just as comments below say, it takes more than having wide spread fast Internet access to be able to replicate the SV. It also takes more than having access to cheap HW components. It also takes more than having access to dirt cheap computer programmers. That's why Shenzhen is not the next SV, neither is New Delhi or Bangalore. Plus, in Shenzhen, I assume the State gov. maintains all the control it can over whatever is going on there. This goes against the SV start-up culture of freedom of entrepreneurship and freedom of thinking and freedom of capital circulation.

If you want to build the next Silicon Valley, you have to build the next Stanford first.

Stanford was actually a mediocre school in the 50's, and then the government started throwing money into defense spending and Stanford managed to get huge amounts of cash for research. It took decades, but there's reason to believe that just about any university could become the next Stanford with enough time and money (time being decades and money being tens of billions of dollars).

If you want to see something interesting, look at what's happening in Pittsburgh right now with Carnegie Mellon and robotics. They have recently gotten huge influxes of cash and I think might be the hub for advanced manufacturing in the future. Of course, this actually started in the 70's, so it didn't take hold immediately.

The east coast US and the U.K. have many universities on par with Stanford's quality.

You a Stanford grad? ;-)

Fast internet has nothing to do with it. You can easily get faster internet in many European cities than in SV.

Culture and capital are the two differentiators, and they're hard to recreate. Investors are willing to bet money on so many crazy ideas.

the next Silicon Valley won't have Silicon in its name. Maybe AI gorge.

This should have been titled "A brief history of Google Fiber" instead.

It's zero-sum like in bloom.bg/1O04ymn

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