Why Some of the Most Groundbreaking Technologies Are a Bad Fit for the Silicon Valley Funding Model
By Greg Satell
Over the past few decades, Silicon Valley has been such a powerful engine for entrepreneurship in technology that, all too often, it is considered to be some kind of panacea. Corporate executives seek to inject “Silicon Valley DNA” into their cultures, and policy makers point to venture-funded entrepreneurship as a solution for all manner of problems.
This is a dangerous mindset. The Silicon Valley model, for all of its charms, was developed at a specific time, for a specific industry, which was developing a specific set of technologies....
In 1968 an investor named Arthur Rock backed executives from Fairchild Semiconductor to start a new company, which would become known as Intel. As AnnaLee Saxenian explains in her study of the rise of the computer industry in the Bay Area, Regional Advantage, this transaction in large part became the model for the Silicon Valley way of doing business.
Back east, established firms worked with big banks to launch new enterprises. In the Bay Area, however, small venture capitalists, many of whom were ex-engineers themselves, invested in entrepreneurs. Stanford provost Frederick Terman, as well as existing companies such as Hewlett-Packard, also devoted resources to broadening and strengthening the entrepreneurial ecosystem.
Yet as Saxenian later pointed out to me, this was largely the result of a somewhat unique confluence of forces. Because there was a relative dearth of industry in Northern California, tech entrepreneurs tended to stick together. In a similar vein, Stanford had few large corporate partners to collaborate with, and so sought out entrepreneurs. It was these characteristics that led to a different way of doing things....
AnnaLee Saxenian is the dean of the Berkeley School of Information.
