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posted by martyb on Friday January 14, @04:23PM   Printer-friendly

The Secret to Building the Next Silicon Valley:

POLITICAL LEADERS HAVE been trying to replicate Silicon Valley’s high-tech magic since the invention of the microchip. A tech-curious Charles de Gaulle, then president of France, toured Palo Alto in his convertible limousine in 1960. Russian Federation President Dmitri Medvedev dressed business casual to meet and tweet with Valley social media tycoons in 2010. Hundreds of eager delegations, foreign and domestic, visited in between. “Silicon Valley,” inventor and entrepreneur Robert Metcalfe once remarked, “is the only place on earth not trying to figure out how to become Silicon Valley.”

In the US, too, leaders have long tried to engineer another Silicon Valley. Yet billions of dollars of tax breaks and “Silicon Something” marketing campaigns later, no place has matched the original’s track record for firm creation and venture capital investment—and these efforts often ended up benefiting multinational corporations far more than the regions themselves. Wisconsin promised more than $4 billion in tax breaks and subsidies to Taiwanese electronics manufacturer Foxconn in 2017, only to see plans for a $10 billion factory and 13,000 jobs evaporate after hundreds of millions of taxpayer dollars had already been spent to prepare for Foxconn’s arrival. Amazon’s 2017 search for a second headquarters had 238 American cities falling over each other to woo one of the world’s richest corporations with tax-and-subsidy packages, only to see HQ2 go to two places Amazon likely would have chosen anyway because of their preexisting tech talent. One of the winners, Northern Virginia, promised Amazon up to $773 million in state and local tax subsidies—a public price tag for gleaming high-tech towers that seems especially steep as Amazon joins other tech giants in indefinitely pushing back post-pandemic plans to return to the office.

While the American tech industry is vastly larger than it used to be, the list of top tech clusters—the Bay Area, Seattle, Boston, Austin—has remained largely unchanged since the days of 64K desktop computers and floppy disks. Even the disruptions of the Covid-19 pandemic have done little to alter this remarkably static and highly imbalanced tech geography.

[...] It wasn’t just tech policy that made these regions what they are, however. Social spending mattered too. In the prosperous postwar years, the GI Bill sent millions of veterans to college and helped them buy homes. States like California enlarged public higher education systems, making it easy to obtain a low-cost, top-flight university education. Schools and local infrastructure were well-funded, especially in the growing suburbs that many tech people and companies called home.

[...] The US government had a transformative impact on high-tech development when its leaders were willing to spend big money on research, advanced technology, and higher education—and keep at it for quite some time.

[...] The next Silicon Valley will not come from a race to the bottom, from who can offer the most tax cuts, the leanest government, the loosest regulations. It will result from the kind of broad, sustained public investment that built the original Valley.


Why do you think "Silicon Valleys" elsewhere did not become as successful?

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  • (Score: 3, Interesting) by JoeMerchant on Friday January 14, @04:43PM (5 children)

    by JoeMerchant (3937) on Friday January 14, @04:43PM (#1212693)

    One generation? Ever been in a VC pitch? They're not interested in generational wealth, they've got that covered through political purchases.

    The pitch is: what ROI can you give me in 5 years? They're expecting 95%+ failure, so they're looking for minimum 20x+ ROI, inside 5 years. Unicorns deliver that on a semi-regular basis, and they're hunting Unicorns. Longer term, smaller APR yields are for the plebes, real money gets 30%+ APR overall, and since the major principal controllers' average age is over 60, they're not interested in money they can't spend.

    Україна не входить до складу Росії.
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  • (Score: 0) by Anonymous Coward on Friday January 14, @04:50PM (2 children)

    by Anonymous Coward on Friday January 14, @04:50PM (#1212695)

    Given that most of the investments are failures, this is why they demand ridiculous ownership shares for that one hit to cover their losses. Unless you need tens of millions of dollars immediately to grow superfast, you are much better off as a company founder avoiding these VC assholes.

    • (Score: 3, Interesting) by JoeMerchant on Friday January 14, @05:00PM (1 child)

      by JoeMerchant (3937) on Friday January 14, @05:00PM (#1212697)

      I've known two VC funding "winners," both were in their 40s and youthful when they landed the funding, both turned grey and haggard looking like they're at least 60 years old within the next 5 years. They were in the unfortunate middle window, their companies (and my shared in those companies) didn't flame out, neither did they explode in Unicorn glory, they plodded along making steady progress and small profits. Successful by any rational measures, but ordinary success isn't satisfactory to VC investors.

      Україна не входить до складу Росії.
      • (Score: 0) by Anonymous Coward on Friday January 14, @06:05PM

        by Anonymous Coward on Friday January 14, @06:05PM (#1212717)

        Indeed. The expectations on the founders and employees is ridiculous, even as the VCs basically know that. It's pretty cynical when they know 90% of those companies will not "pan out."

  • (Score: 1, Troll) by fustakrakich on Friday January 14, @08:45PM

    by fustakrakich (6150) on Friday January 14, @08:45PM (#1212761) Journal

    they're hunting Unicorns

    Unicorns are thriving under the Wall Street bailouts. Just before the famous virus stole the headlines, over 11 trillion was dumped into repo loans, mysterious that nobody seemed to notice

    Ok, we paid the ransom. Do I get my dog back? REDЯUM
  • (Score: 0) by Anonymous Coward on Monday January 17, @09:20AM

    by Anonymous Coward on Monday January 17, @09:20AM (#1213363)
    Yeah to me that's the main thing. Not many other places around the world will have people willing to throw lots of money at stuff with >90% failure rates.

    Heck some of those top tech companies got huge but never actually made money (and some never seemed to have a real gameplan for making money - WhatsApp, Skype etc). Does Uber actually make money? Instagram? Many of these smell like legalized ponzi schemes. Strictly speaking they aren't ponzi schemes but when the top goal is not to actually get the company to make money but to keep finding more suckers/investors to throw money at you to keep things going, it sure smells similar to me.

    As for the "real silicon stuff" that's probably in China and Taiwan nowadays.