The growth of Silicon Valley
Apple Campus, Cupertino, Silicon Valley. Photo credit: Carles Rabada via Unsplash
Silicon Valley is the best-known example of an innovation ecosystem with the world’s greatest concentration of entrepreneurs and investors. How did it start and what can other cities and regions learn from it? The development of Silicon Valley was certainly not an overnight sensation - it has at least a 100 year start on any city or region with ambitions of being the 'Next Silicon Valley'.
“As one analyzes how the various waves of business got started, one realizes that the one thing they have in common is a spirit of the Wild West. The Wild West’s eccentric and independent character is the predecessor to all the inventors and gurus of Silicon Valley. The prominent attitude towards risk-taking may also derive from the pioneers of the Wild West.”
The establishment of Stanford University in 1891 was one the first ‘seeds’ planted in the Silicon Valley ecosystem. The University saw itself as part of the development of the West and its staff encouraged faculty and students to start their own businesses.
In the late 1930s, two electrical engineering graduates named Bill Hewlett and Dave Packard started an electronics business out of a garage in Pala Alto, planting a seed that would grow into a giant technology tree and spawn many other businesses.
The ‘Birthplace of Silicon Valley’ is the garage at 367 Addison Avenue, Palo Alto, California, where Bill Hewlett and Dave Packard began their business. Photo by Igor Shalyminov on Unsplash
Stanford benefited from massive government defence research spending during the Second World War and this helped to build its reputation in electronics. Fred Truman was a key individual in this research and as the Cold War began he was a key advocate for the development of the Stanford Industrial Park which famously housed early tech pioneers like Lockheed, Fairchild, Xerox and General Electric.
William Shockley, a Nobel-prize winning physicist at Stanford, was another ‘sower of seeds’. He was a brilliant but erratic scientist and his behaviour encouraged eight of his key researchers - dubbed the Traitorous Eight - left to pursue their interest in silicon-based semiconductors. They went on to establish 65 new enterprises in 20 years, each in turn seeding generations of new ventures. One of the self-styled ‘treacherous eight’ went on to found a venture capital firm that invested in Intel and Apple.
The history of Silicon Valley shows that each business can grow and seed successive generations of businesses. It emphasises the importance of key institutions such as Stanford and key people – not just the entrepreneurs but also the people who encourage, mentor or even irritate others so much that they leave to do their own thing, plant their own seeds, grow their own businesses.