From The Economist
Silicon Valley is changing, and its lead over other tech hubs narrowing
THE garage in which Hewlett-Packard was started in 1939 is now a private museum—a modest monument to the cut-price creativity and bare-knuckle entrepreneurship that made Silicon Valley famous. Drive south from Palo Alto through 20 minutes of inevitable traffic to Sunnyvale and you will find a landmark of a different kind. Nothing of technological note has taken place there. But in February this small two-bedroom house, which boasts just the sort of garage a startup would once have felt at home in, sold for $2m, 40% more than its asking price, within two days of listing—a new record for the area. That translates into a price of $25,386 per square metre ($2,358 per square foot).
When Ajay Royan of Mithril Capital, an investment fund, asks rhetorically “How are you supposed to have a startup in a garage if the garage costs millions of dollars?”, he is barely exaggerating the problem...
AnnaLee Saxenian, dean of the School of Information at the University of California, Berkeley, says she has spent her whole career “defending the Valley’s vitality whenever people have said it’s over”. Now, she thinks there has been an important cultural shift.
In “Regional Advantage”, a seminal study published in 1994, [Dr.] Saxenian compared Silicon Valley’s culture to that of the rival tech cluster around Boston, Massachusetts, known as Route 128. The Valley started to outstrip its competitor in the late 1980s, she argued, because Route 128 was dominated by large, hierarchical companies that were inward-looking and secretive. They valued corporate loyalty and strongly discouraged employees from leaving for a competitor or starting their own venture. In the Valley, in contrast, information was shared much more freely both within companies and between them. Leaving to start something of your own was not frowned upon. Indeed it was encouraged; established firms helped support or spin off younger ones.
“Regional Advantage” has become a classic study of what works and goes wrong for innovation ecosystems, but it may need a new afterword. [Dr.] Saxenian says that the tech titans have developed an increasingly “autarkic” culture that goes against the way that the Valley used to work, “shutting off the flow of talent.” “The problems of Boston,” she says, “are reappearing here”...
Where [Dr.] Saxenian sees the ghost of Route 128, Tim O’Reilly, a publisher and Valley-watcher of long standing sees a flickering echo of Hollywood, with successful entrepreneurs acting the part of high-maintenance movie stars.
Dean AnnaLee Saxenian is the author of Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (1994), Silicon Valley's New Immigrant Entrepreneurs (1999), and The New Argonauts: Regional Advantage in a Global Economy (2006).
