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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: 5, Interesting) by mr_mischief on Friday January 14, @06:32PM (11 children)

    by mr_mischief (4884) on Friday January 14, @06:32PM (#1212728)
    Everyone trying to recreate the business climate of Silicon Valley as it is will fail. The first step is to recreate the conditions that gave rise to it.
    • a world-class private university like Stanford
    • world-class public universities that are very affordable like UCSF and UC Berkeley
    • at the time, fairly cheap land prices for building the office and factory blocks
    • some amount of generational political upheaval and change in values about how things are done
    • groups of individuals from larger companies who can afford to and who are motivated to strike out on their own as founders (Fairchild, etc)
    • a new sort of technology niche not already dominated by big players elsewhere (the Valley broke away from mainframes into minicomputers and microcomputers)
    • social groups interested in a topic that meshes well with the industry (the computer user groups, the Well, conventions, etc)
    • interesting problems to solve as a professional and as a hobbyist, encouraging the type of passionate bottom-up startup like Apple, Atari, or HP

    Places like Atlanta, LA, Austin, Houston, Chicago, London, Glasgow, Utrecht, Berlin, Tallinn, Osaka, Tokyo, Tel Aviv, Taipei, etc can become great pockets of the current industry, but its home is still Silicon Valley. Some new niche in the technological marketplace needs to be found to create an analog to it. Shenzen seems to be the place to build things for other companies, and South Korea or Taiwan the place to make the chips to put in them. That's the sort of focused niche necessary. Robotics seems to be poised for this around Boston, what with MIT, Harvard, BC, BU, UMass, NYU, Princeton, Columbia, Penn, Carnegie Mellon, and more within easy recruiting distance and with Boston Dynamics, Barrett, Bluefin, RightHand, Piaggio, etc. Denver's building a nice local industry too, though, and of course SF/the Valley has its own contenders in the space.

    Here's an example. Houston has a medical district where 21 hospitals, many clinics, and multiple medical schools have tax incentives to be near one another. It includes the world's largest cancer hospital and the world's largest children's hospital. The local public library system has a medical library there. There are over 50 member organizations in the district corporation, mostly with a presence within the official 2.1 square mile area. The area includes a Shriners' Hospital, a large VA hospital, and a dental school. Besides the medical schools within it, it's adjacent to Rice University and near the University of Houston. There's been work ongoing to have a business incubator campus and program for startups in the medical, practice services, and adjacent fields. There's a decent chance Houston becomes a real center of medical and med tech innovation around this.

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  • (Score: 1, Interesting) by Anonymous Coward on Friday January 14, @07:51PM (1 child)

    by Anonymous Coward on Friday January 14, @07:51PM (#1212746)

    at the time, fairly cheap land prices for building the office and factory blocks

    People absolutely underestimate how much of a factor this was. Before the tech boom, Silicon Valley was a *cheap* place to make a little startup. That's why there are so many founding myths of tech companies started in garages -- they had no money! Fostering broke local startups is a big piece of the puzzle that a lot of the attempts to make knockoff Silicon Valleys don't get. They want a big centerpiece company like Google or Apple to come to town. They have very little interest or understanding of the 50 or 100 folks that have ideas that could be the next Apple that already live in the area.

    • (Score: 0) by Anonymous Coward on Friday January 14, @08:40PM

      by Anonymous Coward on Friday January 14, @08:40PM (#1212758)

      Google and Amazon are startups like GM and Ford are startups.

  • (Score: 0) by Anonymous Coward on Friday January 14, @09:17PM (1 child)

    by Anonymous Coward on Friday January 14, @09:17PM (#1212768)

    This has a lot to do with it. There is also geographic aspects. When Silicon Valley started, available land was, well, available. Everywhere. As Silicon Valley grew so did almost everywhere else. Today, the best places to build a city, and build an industry, have been used. To build things already. What's left are places that are not as good, or accommodating, or cheap, or close, or any number of other factors. We've found and used the good places. No one is going to build the next Silicon Valley in the middle of South Dakota. Or Eastern Montana. Or Wyoming. Or Kansas. Or Oklahoma. Or Arkansas. Or Mississippi. Or [pick any other less populated place]. The locations that have cheap and available land, don't have the other stuff and aren't appealing to the builders.

    So, are we stuck with what we have? No. Not really. The next Silicon Valley, IMO, will be remote and/or virtual. A workforce scattered everywhere, not centralized in a building or a campus. That is the next Silicon Valley. In fact, Web3 companies who are focused on a remote first employee model may be the leaders in creating the next Silicon Valley.

    • (Score: 0) by Anonymous Coward on Friday January 14, @09:31PM

      by Anonymous Coward on Friday January 14, @09:31PM (#1212773)

      Flyover America is not as dire as the Coasties like to think.

  • (Score: 2) by Rich on Friday January 14, @09:25PM (6 children)

    by Rich (945) on Friday January 14, @09:25PM (#1212770) Journal

    Don't forget the military money. Once you have mentioned conditions in place, which are a pretty good sum-up, large amounts of money have to be poured over it. With the condition of getting something equal in value in return. The tax breaks and subsidies in all the attempts are neither large (in that sense), nor bound to any tangible success expectations. The Silicon Valley got a good percentage of the whole money spent on the cold war, including Vietnam, to provide innovations to stay on the edge of technology. That can be seen in the early 80s, when the Japanese took over a good part of the market, because they built their industry to compete commercially, while the Americans still made their cash of the milspec parts, while also catering to a few happy hobbyists.

    I wonder if a bounty or goal oriented scheme at proper scale might help. Have the government (or a related company) issue a request for offers over 200 million RISC-V CPUs, Quad Core, 2.5GHz, 4-issue out-of-order at max. 50 bucks each - to be designed and manufactured locally. (With a few lines of fine print to give some to those coming in second as well, or a bit more or less if certain tech milestones (EUV) are met, etc...). Cash on delivery, the banks will be better to judge whether any investments will bear fruit... Once the chips arrive, sell them at a price where 10 million every month are taken, wedge them into the mainstream market, and take that over. Oh, and also use the GDPR with full force and ensure you also get the whole software platform for that.

    • (Score: 0) by Anonymous Coward on Friday January 14, @09:35PM (5 children)

      by Anonymous Coward on Friday January 14, @09:35PM (#1212775)

      You're not supposed to mention defense spending. The leftist media always credits acid-dropping hippies: their own kind. Never mind how an acid-dropping hippie is supposed to design and manufacture the microprocessor he writes the software to run on.

      • (Score: 5, Interesting) by Rich on Friday January 14, @09:48PM (4 children)

        by Rich (945) on Friday January 14, @09:48PM (#1212780) Journal

        Oh, you're ALSO going to need the acid-dropping hippies for new ideas to get stuff for free. Intel catered to boring calculator companies with their first micro, Motorola made the 6800 be for industrial controls. It took the hobbyists to build themselves cheap computers "like the big expensive ones". And one particularly obsessive, sociopathic, acid dropping hippy to package that stuff for general consumption. The rest is history and just crossed $3tn in market cap. Serious business people would never have thought to cannibalize themselves by offering cheap computers for everyone.

        • (Score: 0) by Anonymous Coward on Friday January 14, @10:11PM (3 children)

          by Anonymous Coward on Friday January 14, @10:11PM (#1212784)

          Steve Wozniak was not an acid dropping hippie. I know he's been "forgotten" but without him, Apple would never have happened. He designed the computer all by himself. Steve Jobs just sold them. So it took the pair to make Apple succeed, but could you at least mention Woz?

          • (Score: 2) by Rich on Saturday January 15, @12:11AM (2 children)

            by Rich (945) on Saturday January 15, @12:11AM (#1212804) Journal

            could you at least mention Woz?

            He was included in the "hobbyists" part. Probably the best of them.

            Long time ago, I reverse engineered the Woz Machine and wrote firmware for the re-creation, which ended up together with a 6502 in a standalone floppy drive with a serial connection. I think mostly for SGI workstations in a textile manufacturing market niche, where knitting machines were driven by custom Apple II setups and the "industry standard" to pass to production were Apple II DOS 3.3 disks. A friend wrote the logic for DOS 3.3 file access that completed the product. From that point of view, I would've had to include Randy Wigginton as well. :)

            • (Score: 0) by Anonymous Coward on Saturday January 15, @01:43AM (1 child)

              by Anonymous Coward on Saturday January 15, @01:43AM (#1212825)

              Just a nitpick: a hobbyist is someone who does something in his own time for his personal enjoyment -- not something he does for a living. Woz was employed as a digital electronics engineer for Hewlett Packard, so I would not call him just a hobbyist.

              Interesting anecdotes!

              • (Score: 2) by Rich on Saturday January 15, @02:07AM

                by Rich (945) on Saturday January 15, @02:07AM (#1212834) Journal

                If I remember the lore right, he did offer his definitely hobbyist inventions to HP, but they weren't interested.

                When the going gets weird, the weird turn pro