Silicon Valley History & Future Source: "Education and Tech Entrepreneurship" by Vivek Wadhwa, Richard Freeman, Ben Rissing. Ewing Marion Kauffman Foundation, 2008 About 60 years ago, Stanford University had some financial problems. The authorities of university tried to resolve these problems by leasing part of the university land to high-tech companies for 99 years. Carolyn Tajnai clarified this point of Stanford's history in more detail: ' In the 1950's, the idea of building an industrial park arose. The university had plenty of land over 8,000 acres....but money was needed to finance the University's rapid postwar growth. The original bequest of his farm by Leland Stanford prohibited the sale of this land, but there was nothing to prevent its being leased. It turned out that long-term leases were just as attractive to industry as out right ownership; thus, the Stanford Industrial Park was founded. The goal was to create a center of high technology close to a cooperative university. It was a stroke of genius , and Terman, calling it ``our secret weapon,'' quickly suggested that leases be limited to high technology companies that might be benspanananficial to Stanford.

In 1951 Varian Associates signed a lease, and in 1953 the company moved into the first building in the park. Eastman Kodak, General Electric, Preformed Line Products, Admiral Corporation, Shockley Transistor Laboratory of Beckman Instruments, Lockheed, Hewlett-Packard, and others followed soon after.' Fred Terman, The father of Silicon Valley by Carolyn Tajnai, 1995 According to Varian Associates it was a simple decision: 'Gradually, facilities were moved from leased quarters in San Carlos to a quiet corner of Stanford land, thus creating what is today the Company's headquarters site, and incidentally bringingi nto being the Stanford Industrial Park - the most successful complex of its kind in the world.' Source: Varian Associates: An Early History The First building of Silicon Valley First Varian Associates building, Stanford Industrial Park, Palo Alto, California, 1953. Source: 'Russell and Sigurd Varian - The Inventor and The Pilot', by Dorothy Varian. Palo Alto, 1983, p.258. The picture is reproduced here with Varian Associates permission since 1995. Is it a reasonable doubt or ...

just invitation to the further discussion? Among the different organizations that were instrumental in the process of creating Silicon Valley the significant role was the Stanford Research Institute (SRI): After World War II, a great industrial push was under way to reinvigorate the economy. Founded by a small group of business executives in conjunction with Stanford University, Stanford Research Institute (our founding name) was created in 1946 as a West Coast center of innovation to support economic development in the region. The world's first digital computer (ENIAC, weighing in at 30 tons) was introduced, and in what is now known as Silicon Valley a three-bedroom home sold for $10,000. Source: SRI Timeline . Perhaps it was just one of the reasons why at least some of SRI people appeared to be very skeptical about the above photo of Silicon Valley's building #1.

Alice Resnick Senior Director, Corporate and Marketing Communications SRI International wrote to us concerning this subject 31 Jan 2002 14:41:03 -0800: For example, SRI had a building in Menlo Park (one that we still occupy) in 1947, several years before what you call the 'The First building of Silicon Valley: First Varian Associates building, Stanford Industrial Park, Palo Alto, California, 1953' on your web page at In 1995 William Hewlett decided to described in more details his own concept of Silicon Valley's birth. Supernova of Silicon Valley: What does it mean? '...in June, 1995, I had lunch at the Stanford Park Hotel and while leaving, I noticed a man holding a cane and sitting on a bench as though waiting for someone. I walked on by and then stopped, turned around, and walked back. I said, 'Are you Mr. Hewlett?', and he replied, 'Yes'.

I thanked him for his kindness in verifying information for me when I was writing my paper on 'Fred Terman, The Father of Silicon Valley.'He said 'But Fred Terman didn't start Silicon Valley; the beginning of Silicon Valley was a supernova.' He asked if I knew what a supernova was and I said yes, that it was an explosion of a large star. Mr. Hewlett spoke so softly that it was difficult to catch every word, but he proceeded to explain that a supernova caused a rippling effect that set the stage for future events. He explained that Lee de Forest, who was an electronics pioneer in the Palo Alto area in the early part of the Century, and his work were the supernova'. (c) Carolyn Tajnai, 1995 Bill Hewlett, center, with his partner David Packard, left, and former Provost Frederick Terman, who inspired the two graduate students to follow their dream of starting an electronics company. Hewlett and Packard honored their mentor by funding construction of the Terman Engineering Building, dedicated in 1952.

(Source: Stanford News Service) Moving to California in 1910, Le De Forest ( photo above -- De Forest, Palo Alto, 1915 ) worked for Federal Telegraph Company at Palo Alto. While there, de Forest finally made his Audion tube perform as an amplifier and sold it to the telephone company as an amplifier of transcontinental wired phone calls. For this innovation he received $50,000. By the beginning of 1916, he had finally perfected his Audion for its most important task, that of an oscillator for the radiotelephone transmitter. By late 1916 de Forest had begun a series of experimental broadcasts from the Columbia Phonograph Laboratories on 38th Street, using for one of the very first times his Audion as a transmitter of radio: According to de Forest, 'The radio telephone equipment consists of two large Oscillion tubes, used as generators of the high frequency current.'' Source: Le De Forest bio.

Photo left: Lee De Forest's first Triode or 'Audion', 1906 According to Rogers and Larsen, in 1912 'de Forest and two fellow researchers for the Federal Telegraph Company, an early electronics firm, leaned over a table watching a housefly walk across a sheet of paper. They heard the fly's foot steps amplified 120 times, so that each step sounded like marching boots. This event was the first time that a vacuum tube had amplified a signal; it marked the birth of electronics and opened the door for the development of radio, television, radar, tape recorders, and computers.' Also Rogers and Larsen add that,'Lee de Forest had a Stanford University connection; his work was partly financed by Stanford officials and faculty.' Links Between Stanford University and Industry , by Carolyn Tajnai, 1995 Supernova of the Silicon Valley: Can we really see it ?

According to astrophysicist Joseph Shklovski (lectures, 1981) the total level of energy produced by human civilization during the last 300 years of industrial revolutions, is still about one hundredth of a percent of the total energy flow that reaches the surface of the earth from the sun. Meanwhile in recent decades of info-tech revolution, the total level of energy that earth eradiates to space comes to a million times more than it would have done naturally as the planet heated to 300 K. From this point, for the last couple of decades, Earth outran planet-giants Jupiter and Saturn and became comparable to Sun. So, for a radio-telescope's observer from outer space, the earth's info-tech revolution looks like the birth of a new bright star on the cold Earth-planet. Source: 'National Information Resources', by Gregory Gromov , Nauka, 1984, p.15 RENAISSANCE GEEKS Unfortunately, much of the rest of the world would love to be like Silicon Valley.

In one subgenre of the Valley success-myth article, a journalist visits the high-tech heart of a foreign country and asks, 'Does this self-styled Silicon Glen/Alley/Gulch/Fjord/Pampas/Polder/Fen have what it takes to match the success of the original?' Precisely because the Valley possesses the Renaissance qualities of being dynamic, entrepreneurial, innovative and wildly financially successful, it has become a model the rest of the world is keen to follow. But if what's being emulated places little value in old ideas of culture and has little interest in developing new ones, aren't we all aspiring to a debased ideal -- to an impoverished kind of Renaissance, devoid of much that makes life rich? Florence had entrepreneurial energy, education, ambition and technology; it also attracted Giotto, Donatello, Dante, Michelangelo, Brunelleschi, Petrarch and others besides. Who can Silicon Valley point to? If the Valley wants to find a way out of the binary thinking that opposes business success and high culture, it only has to look to Renaissance Florence for help. In his 'The Building of Renaissance Florence,' historian Richard A.

Goldthwaite -- in an economic analysis rigorous enough to warm the heart of any Valley CFO -- considered the Florentine approach of building for prestige, history and art's sake and reckoned its worth to the city's economy. The building of the great architectural monuments of Renaissance Florence, he concludes, 'resulted in considerable internal development and, ultimately, a more mature economy...' RENAISSANCE GEEKS by Simon Firth, Salon.com, 2000. Silicon Valley Entrepreneurial Phenomenon Let us take a look again on the live example. Astronomy Ph.D. Frank Levinson entered optics tech 1980 with Bell Labs. Left 1988 to start Finisar fiber optics -- high speed networking company -- with $60,000. According to the Forbes magazine Finisar worth $8 billion in 2000. Frank clarifies below his personal viewpoint on the sociological nature of Silicon Valley Entrepreneurial Phenomenon: Despite its many contributions to the world economy, the technical community here in Silicon Valley is actually much smaller than most people believe. People end up making connections in strange ways and often these ties last for many years...

My wife Wynnette and I went to dinner at the Flea Street Cafe in Menlo Park recently with a small group to hear a presentation on saving endangered species of domesticated animals such as the Cotswold Lamb. This farm and the organization that supports it was started by Robyn Shotwell Metcalfe...Robyn's husband is Bob Metcalfe, one of the two inventors of Ethernet. Bob and Dave Boggs invented Ethernet when they were scientists at Xerox Palo Alto Research Center (PARC) in the 1970s. Ethernet is also a huge factor in Finisar's past successes, as well as our future growth prospects. Bob went on to be the founder of 3Com, then to work as an insightful and articulate columnist for InfoWorld magazine. He recently became a venture capitalist with Polaris Ventures. Bob is witty, engaging, way smart, funny and an especially good writer. He is a technologist's techie. Dave Boggs (the other Ethernet inventor) was also at the Flea Street Cafe dinner with us. Currently, Dave is working on optical extensions for networks in the metropolitan area. He has steeped himself in the technology of networking since the 1970s.

Another dinner guest was Ron Crane. Ron was a key technical contributor for 3Com from the very beginning of Ethernet. All of today's Ethernet adapter cards installed in the tens of millions of PCs throughout the world are related to the first adapter cards built and tested by Ron, who is still very well connected in the networking industry. You might think that I was invited to attend this dinner because Finisar is a major participant in the Ethernet industry through its Gigabit Ethernet transceivers and other Ethernet modules and because of a professional association I have with Bob. But that's not the reason we were there. We were invited to this dinner because my cat-loving daughter Alana attended preschool in the late 1980s with Julia Metcalfe, daughter of Robyn and Bob. My wife Wynnette and Robyn also became friends and have stayed in touch. At the time our daughters first met, Bob was already an industry icon and I had to use my wife's and daughter's friendships to wedge my way in with the Silicon Valley geniuses behind Ethernet. Bob and Robyn really liked Wynnette and Alana (and eventually me, too!), so our family would often be invited to their social occasions.

During those times I would listen carefully for pearls of wisdom on how Finisar could grow and make its mark on the world. One evening years ago, Bob and I talked about Finisar's early product line and he pointed out that since we were not supporting established standards, our appeal to the industry was being limited. Over the next few years Finisar changed our direction in line with Bob's counsel and this was a major factor in Finisar's growth during the second half of the 1990s. As Paul Harvey would say, now you know the rest of the story! A Tale of Lambs, Preschoolers and Networking, by Frank Levinson, 2001 The most important Googler you've never heard of ... Google started in Susan Wojcicki's rented garage...

Thirteen years ago, the then-tiny company's former landlord became its 16th employee and first marketing manager [She then married to Google executive Dennis Troper and introduced a future husband to her younger sister Anne, who married Brin ] Today, she is one of its 12 senior vice presidents, although by one measure she is first among equals: The advertising products [ AdWords and AdSense, Analytics and DoubleClick , ... ] she oversees accounted for about 96 percent of Google's revenues in 2010. By Mike Swift If some of the other companies rented Susan Wojcicki's garage, will it be in the list of Top 10? Google 3G: why Bing more useful to Google than to Microsoft By Gregory Gromov. Yahoo switched to Bing-powered search results in August 2010. Shortly thereafter, search specialists at Google began noticing that many of the results for Yahoo! searches were the same as those Google searches of the same terms.

Google engineers set up random results on their site for a series of unlikely search terms, such as 'hiybbprqag.' (Google arranged for the nonsense word to point to a Los Angeles theater seating plan on its search engine.) 'Within a couple weeks of starting this experiment, our inserted results started appearing in Bing,' Google said in a statement on its official blog ... ' Google: Sting proves Bing copied search results ' By the CNN Wire Staff When Google published the search experts' findings, their colleagues at Microsoft only shrugged, essentially saying that such things happen, that it was no big deal. However, they immediately stopped copying Google's results. Yahoo! somehow skirted the debate altogether. However, it was not until later that the most interesting part of the story emerged. At the outset, Google's experts were very vocal in complaining about the abovementioned results. They then did an abrupt about-face, apparently accepting Microsoft's explanation. As if on a signal, all the once-spirited grumbling ceased. Both sides suddenly stopped discussing the story. The reason for this is that with the search engine market so out of balance, Google really needs at least a nominal competitor in the business.

In other words, if Bing spontaneously combusted tomorrow - if, for example, Microsoft decided that there was no further need to pursue the already long-lost race for search engine dominance - this would in fact be a great blow to Google. Google would then be completely vulnerable to accusations of having a monopoly on the US search engine market, and would quickly become the next subject of the Department of Justice's anti-trust investigations. Conjoined twins Yahoo and Bing hold second and third places in the search engine market, protecting Google from allegations of monopoly, and making Bing more useful to Google than to Microsoft. How I ended up working for a big corporation by Gregory Gromov In short, knocking on the doors of some monolithic corporation to see if I could get hired by big shots - such a notion never even crossed my mind. Furthermore, I hadn't come all the way to California just to sit in some cubicle. Ever since early 80th when I began writing my first book on trends in IT, I had been interested in studying the basic stages by which these startup companies developed. Not startup companies in general, but specifically those in Silicon Valley. As soon as I had the opportunity, in the mid-1990s, I went for it.

In the beginning, like everyone else there, I went through the agony of starting my own company from scratch, even though I had almost no hope of making it big. This experience, as it turned out, was very useful in a variety of ways ... After that-again, like many others-I threw in my lot with the "independent contractors". This was the right approach. You'd get contracts for two or three months to a year at a time, working for some of the newest startup companies around. I experienced every aspect of their early development, from the birth of an idea to its market debut, to the collapse of the business, or, if it so happened, to the next round of funding. I saw it all up close and, most importantly, was able to study my subject from the inside. Somewhere in my second dozen or so such contracts, I was the first employee to be hired "off the street" for a new startup, the latest in a series of ventures for its founders ... ( read more ) How Silicon Valley Came To Be ... The Cluster Effect: Can Europe Clone Silicon Valley? The Cluster Effect: Can Europe Clone Silicon Valley? Silicon Valley still dominates the technology map, but European high-tech clusters are closing in.

From his office in a renovated five-story 19th-century mill house, Gordon Edge looks out on rural Cambridgeshire. He can see swans floating in the river Rhee, trees overhanging the water, lush greenery along the riverbanks. It’s the stuff of a pastoral England postcard. Walk beyond the mill to the flat-roofed campus of 1960s-style office buildings, and you get a sudden pull into the future. Harston Mill is the headquarters of the Generics Group Limited, which Professor Edge founded and which he serves as CEO. The company is in the heart of Silicon Fen, one of the emergent high-tech clusters some believe could be Europe’s answer to Silicon Valley. There’s more than historical contrast to the location. The venerable Cambridge region has become a hotbed of high-tech activity, a nurturing environment for a company like Generics, which develops and exploits intellectual property. The University of Cambridge, one of the world’s leading science and technology universities, is a 15-minute drive from Generics. Within a 20-mile radius of Cambridge are more than 1,500 high-tech and knowledge-based firms.

The energy of Silicon Fen — even without the emergence of dozens of other concentrations of high-tech activity in Britain and on the Continent — suggests that Europe may finally be getting its technology act together. Generics is a new type of European high-tech firm. Part scientific research company, part technology consulting firm, and part incubator, this hybrid company funds research in optics, new materials, and telecommunications; licenses its intellectual property rights (IPR) to other companies, many of them in the U.S.; and spins out startups. A company so committed to turning scientific research into commercial products is a new and encouraging development in Europe. Cambridge University has been producing groundbreaking research for centuries. It was at Cambridge, for example, that Sir Isaac Newton first propounded the laws of gravity, Charles Darwin described the laws of natural selection, and Professor J.J. Thomson discovered the electron. More recently, Cambridge physicists Sir John Douglas Cockcroft and Ernest Thomas Sinton Walton split the atom with the first nuclear particle accelerator in 1932, and Maurice Wilkes created the first digital computer in 1949. Francis H.C.

Crick and James Dewey Watson published the structure of DNA in 1953, and for the last few years, Cambridge researchers have been busy unraveling the sequencing of the human genome. Historically, however, the region — like the rest of Europe — has failed to convert much of its research into commercial applications. In Europe, there has been nothing to compare with the entrepreneurial powerhouse of Silicon Valley, where technological innovations are rapidly converted into business applications. This has meant that much of Europe’s IPR have gone to the U.S. for commercial development. Tim Berners-Lee, for example, created the protocol for the World Wide Web at a physics research institute in Switzerland, and Linus Torvalds originated the Linux operating system in Finland, but both innovations were converted into commercial applications by U.S. entrepreneurs. The potential of reversing that trend is one reason Silicon Fen and other emergent European high-tech clusters excite European interest. The U.K. now has a number of such clusters, Silicon Fen being the most promising one. Others include Silicon Glen in Scotland, Silicon Ditch along the Thames Valley, and Motorsport Valley centered on Oxfordshire (see “Focus: Motorsport Valley”).

Elsewhere in Europe are other springs of activity: around Munich and Stuttgart in Germany; at Sophia Antipolis in Southern France; at Kista in Stockholm; around Dublin; around Oulu in Finland; and in the Etna Valley in Sicily. For an area of the world that has been good at innovation but poor at exploitation, the new clusters may nurture a European high-tech industry that will finally rival that of the U.S. The Paradox of Location Europe’s emerging high-tech clusters are attracting the interest of European policy-makers, entrepreneurs, and investors, but clusters are not new. Concentrations of specialized companies are dotted around the industrial world and occur in virtually all industries. The Hollywood film industry and Detroit automotive industry are famous examples. A number of European clusters have existed for centuries, including the Italian leather fashion cluster, which includes Ferragamo and Gucci and a host of specialized suppliers around Milan; the flower-growing cluster in the Netherlands; and the financial district in London’s Square Mile. Why and how these geographic concentrations of interconnected companies and institutions dominate their industries has long been a topic of interest to economists and geographers. The phenomenon was first observed by the Cambridge economist Alfred Marshall.

He noted a tendency for specialized companies to cluster together in a way that produces geographic concentrations of expertise and economic activity, which he called “industrial districts.” (Economists refer to them as Neo-Marshallian nodes.) In his 1890 book, Principles of Economics, Marshall observes how “…great are the advantages which people following the same skilled trade get from near neighboring to one another…”. Marshall’s analysis, however, largely overlooked the importance of the role of entrepreneurs. In the 1930s, Harvard economist Joseph Schumpeter acknowledged Marshall’s original insight, but highlighted the role of self-interested economic agents, who took risks in order to generate substantial profits. In Schumpeter’s model, entrepreneurs provide a vital link in technology transfer. They take emergent technology and invent new products, services, and production methods, and develop new ways of organizing economic activity to establish new markets. In this scenario, he argued, new economic activity is driven by new technology. In the 1980s, Stanford professor Paul Romer developed a knowledge-centered theory of economic growth that suggests technological progress is caused by the search for new ideas by researchers interested in profiting from their innovations.

Although he doesn’t explicitly equate entrepreneurship with innovation, his theory interprets growth as a process through which the research sector and other interested parties create new products for the market and obtain monopoly profits from new ideas. The model provides a theoretical underpinning for high-tech clusters. In the 1990s, Professor Michael Porter of Harvard Business School examined the business cluster. His work confirms that the proximity of specialized companies leads to unusual competitive success. Professor Porter suggests that clusters encompass an array of linked industries and other entities important to competition, including suppliers of specialized inputs and providers of specialized infrastructure. Clusters also extend downstream to channels and customers and laterally to manufacturers of complementary products, and to companies in industries with common skills, technologies, or inputs. Clusters often include governmental and other institutions, such as universities, standard-setting agencies, and think tanks, as well as providers of specialized training, education, information, research, and technical support. What is harder to explain is why geographic proximity should continue to confer a competitive advantage in the global economy of the 21st century.

The success of Silicon Valley and other high-tech clusters highlights what Professor Porter calls the “paradox of location.” Despite conjecture that in a connected world geographic location is no longer a significant competitive factor, for high-tech firms, the reverse appears to be true: “Paradoxically, the enduring competitive advantages in a global economy lie increasingly in local things — knowledge, relationships, and motivation that distant rivals cannot match,” Professor Porter has noted. What happens inside firms is important, but the cluster effect indicates that the immediate business environment outside a company plays a vital role in its success as well. Clusters appear to affect competition in three broad ways. First, they increase the productivity of companies in the region. Second, they drive the direction and pace of innovation. Third, they stimulate and trigger the genesis of new businesses within the cluster. “Clusters are knowledge communities,” says Mark Jenkins, senior lecturer in strategic management at Cranfield School of Management, part of Cranfield University in Bedfordshire, one of the U.K.’s leading technology universities. Mr. Jenkins has studied Motorsport Valley and coauthored a number of academic papers on the subject. “A cluster is a way of doing things that is a lot more durable than the know-how of a single company.

It’s more than just co-location. I’d use the term ‘knowledge architecture.’ It’s know-how, but it’s also know-who.” Success Breeds Success Among high-tech clusters, Silicon Valley is the benchmark. Centered on Stanford University, and sprawling along a 30-mile corridor from San Francisco to San Jose, the Valley is home to more than 7,000 software and electronics companies, including Hewlett-Packard, Oracle, Sun Microsystems, Netscape, and Apple. In 1999, high-tech companies in Silicon Valley had a combined market value of $450 billion. The economic benefits have led academics, policy-makers, and others to try to understand and emulate the region’s remarkable performance. A study last year by the U.S.-based Milken Institute identified eight key elements in the creation of high-tech clusters. First, and most important, is the presence of cutting-edge research facilities and top educational institutions. “Research centers and institutions are indisputably the most important factor in incubating high-tech industries,” the report states.

For example, many Silicon Valley companies have benefited from the proximity of some of the most prodigious technology research facilities and sites in the world — Stanford University, Xerox PARC, and Menlo Park among them. Military research has also been a prime source and spur for new technology in the U.S. (and in Israel, which also has a burgeoning high-tech cluster). A close network of research institutions, entrepreneurs, and risk-tolerant venture capitalists is the second significant element. In combination, they translate into rapid adoption of technology. The remaining six ingredients identified by the Milken Institute are: a trained and educated work force; technology spillovers from nearby high-tech industries; the availability of venture capital; high quality of place, such as a pleasant climate, low crime rate, and good schools; a reasonable cost of living, especially affordable housing; and factors that favorably affect the cost of doing business, such as low land prices. Silicon Valley acts as a magnet for investors, entrepreneurs, and technologists. Further, the presence of a number of pillar companies — big-name success stories like Intel, Hewlett-Packard, and Apple — continues to attract talent to the region and stimulate spin-off companies, generating a self-perpetuating cycle.

Once a region establishes itself as a technology hotspot, it can achieve rapid growth. This is the formula Europe hopes to replicate. If European clusters can achieve sufficient scale, they can also propel its high-tech industries. Clusters and Growth There are signs that Europe’s high-tech clusters are now reaching just such a critical mass. In fact, the current prosperity and the history of Silicon Fen suggest it could be Europe’s best prospect for rivaling U.S. clusters. The Cambridge Phenomenon, as insiders call Silicon Fen, has created 40,000 jobs in the region, and an estimated 25 new high-tech business are formed there every month. The annual revenues of the cluster are £5 billion ($7 billion), of which 40 percent comes from exports. Generics is just one rising Silicon Fen star. Other regional success stories include: ARM Holdings PLC, which is on the FTSE 100 and specializes in advanced microprocessor design (it developed the RISC chip, which powers Apple computers); the Autonomy Corporation PLC, a Nasdaq-listed data-analysis software company; and the Web-server software company Zeus Technology Ltd. The Cambridge area has a strong technology pedigree.

It was the site of one of the U.K.’s first science parks, and pioneer businesses included the electronics company Pye and the Acorn Computer Group PLC, from which ARM is derived. A number of leading U.S. and European technology companies — among them Microsoft, which invested $80 million in a research facility, and the former Olivetti Research Laboratories (purchased in 1999 by AT&T Laboratories Cambridge) — have established a presence in the region. The area’s educational heritage continues to provide a nurturing environment for high-tech startups: Cambridge University has an alliance with MIT that’s backed by £70 million ($99 million) of U.K. government funding. The Cambridge–MIT Institute Ltd. aims to be a catalyst for entrepreneurial activities in the region. The area also benefits from a network of angel investors and venture capitalists, including Amadeus Capital Partners Ltd., the investment vehicle of Hermann Hauser, who founded Acorn Computer Group in the 1970s. Some in Cambridge also have designs to expand in order to create a super cluster, taking in the universities of Oxford and Cranfield and the region around Milton Keynes.

This, they argue, would go some way toward easing what many Cambridge insiders say is one of the region’s biggest obstacles to rapid growth — local planning restrictions, which make land development tortuous and increase the cost of doing business. In 1997, the British government announced its ambition to develop Cambridge’s knowledge-based economy, highlighting clusters of computing and biotech companies as the key to future prosperity. The Cambridge region has felt the fallout from the dot-com collapse. The share prices of ARM and Autonomy were both hit hard when high-tech stocks in the U.S. took a battering. But overall, the Cambridge region’s focus on patentable technology has meant that companies have been insulated from the worst effects. Generics, for example, was valued at £242 million ($338 million) in June 2001, rising from £226 million ($330 million) in December 2000, when it was listed on the London Stock Market. The company incubates technology in its own labs, licensing the IPR to consulting clients and creating spin-off companies. CEO Gordon Edge believes that business model is ideally suited to Europe’s current high-tech environment. To date, Generics has spun out nine companies.

Later this year, the completion of a new building will double the size of Generics’ current site. According to Professor Edge, Cambridge’s strength is based on “sophisticated science,” which leads to genuine breakthroughs. This, he says, sharply contrasts with many dot-coms, which were not “true technology companies” because they lacked R&D capability. The Cambridge area and other European high-tech centers are attracting U.S. investment. Such companies as Microsoft and Intel have established research facilities in Europe. The inward investment is stimulating economic growth, and the European hope is that the spillover effects of the American companies’ presence will accelerate the creation of homegrown technology companies. Ireland’s current economic boom, for example, has been built on attracting high-tech multinationals. Technology now accounts for 20 percent of the country’s GDP. Although the benefits are being felt throughout the country, the most dramatic change is near Dublin, where a third of the country’s 3.7 million people live. The city features a number of technology parks. The Citywest Business Campus, located on the western fringe of Dublin, covers 330 acres and has been designated Ireland’s National Digital Park.

Recent corporate arrivals to the Dublin region include Compaq, Hewlett-Packard, Microsoft, Oracle, Gateway, and SAP. But the high-tech influx began in 1989 with Intel’s decision to site its first European plant at Leixlip, a former stud farm just west of Dublin in County Kildare. Intel employs 4,600 people at the 270-acre site, and the company has invested more than $3 billion, with a future $2 billion planned. Giving new definition to the term “friendly neighbor,” Intel’s venture-capital arm has helped finance a number of startups in the Dublin area. Some 600 homegrown software companies, including the Nasdaq-listed Trintech Group PLC, call Ireland their home. In contrast to Dublin’s success to date in developing local businesses, Scotland’s Silicon Glen cluster has not attained the positive results politicians had expected. Since the 1970s, Silicon Glen has been receiving government support in the form of tax breaks and other incentives to attract foreign technology companies to the region.

Although the area now accounts for 15 percent of Europe’s semiconductors and a third of all its PCs, Silicon Glen has not stimulated homegrown companies on the scale anticipated. Motorola’s recent decision to close a major mobile phone assembly plant in the region, and the resulting 3,100 lost jobs, were an unfortunate reminder of the region’s dependence on foreign technology companies. The extent to which the presence of U.S. high-tech companies will stimulate larger homegrown companies remains unclear. Pillar companies have played an important role in building Silicon Valley and other U.S. technology clusters, but Europe’s clusters have so far spawned only technology minnows. Although larger European companies such as the Nokia Corporation and Ericsson have played an important role in the development of the Scandinavian clusters in particular, they are organizations with a long history, and are not direct products of those clusters. Many of the big fish in the European clusters are American, which raises concerns that rather than accelerating the growth of new European companies, U.S. companies may simply absorb the best European technology. Should Government Assist or Not? High-tech cluster creation is a hot issue for European policy-makers.

The debate focuses on whether public policy can be a catalyst for cluster formation, or if the most useful role for government is to remove regulatory obstacles that hinder the free working of capital and talent markets — the view that currently holds sway in Silicon Fen and the U.K. According to Professor Chong Ju Choi of the Judge Institute of Management Studies at Cambridge University, Europe has spawned two different types of high-tech clusters. One type is naturally occurring clusters, which grow up around research universities and resemble those in the U.S. The other type is clusters that have been kick-started by government subsidies of technology companies. Both can be viable, he suggests, although the first type takes a lot longer to form. Silicon Fen, which possesses many of the Milken study’s eight key factors for high-tech cluster development, has developed largely without government intervention, and matches the U.S. model. The largest science park in Europe — beating more than 300 other such facilities — is a government creation. In the 1960s, the French government declared its intention to create “the great European city of science in the sun.” The result was Sophia Antipolis.

Located on the French Riviera between Nice and Cannes, Sophia Antipolis is about one-quarter the size of Paris. A planned extension to the north will double its size. The main technologies at the park are information technology (electronics and advanced telecommunications), medical and chemical sciences, and natural sciences. Sophia Antipolis has been a slow-burning project, making steady progress over the years without grabbing the imagination. It is home to 1,164 companies, more than 20,000 engineers and technicians, and some 5,000 researchers and students. Some say that now it is reaching critical mass, and development is likely to accelerate. Job creation at the park has been rising, lending some credence to the claim. A number of leading companies have established research centers there, including Siemens, Lucent Technologies, Compaq, and SAP. Advocates of policy-led cluster creation point to Ireland, where public policy has been a critical driver in the success of technology companies. Since the early 1980s, successive Irish governments have wooed high-tech industry by cutting business taxes and introducing technology-friendly laws.

In 1981, for instance, corporate taxation for high-tech, pharmaceutical, and financial services companies was slashed from 46 percent to 10 percent, and a number of technology-friendly laws were introduced. Among the more recent laws are a digital signature bill (making electronic signatures binding; an effort to jump-start e-commerce), a telecommunications bill that encourages sharing between operators, and a copyright bill that addresses intellectual property issues. Today, Ireland, an island with a population roughly the size of Connecticut’s, is one of the world’s leading software exporters. “We’ve moved from a vicious to a virtuous circle,” observes David Duffy, an economist at Dublin’s Economic and Social Research Institute. Obstacles remain, however. The country’s infrastructure still lags those in many parts of Western Europe. Despite the accomplishments of Sophia Antipolis and Dublin, some are skeptical about the ability of governments to stimulate cluster formation. Artificial cluster creation is not a good idea, warns Peter Cohan, New Economy specialist and author of Net Profit (Jossey-Bass, 1999). “The basic problem with the cluster concept for policy-makers is that it implicitly assumes that regional economic strength can be mandated by government,” says Mr. Cohan.

“The reality is that regional economic powerhouses became strong because entrepreneurs and research universities spawned new companies. Supporting industries, such as venture capital, law, accounting, and IPO underwriting, emerged to meet the needs of the entrepreneurs. The role of government in these geographic regions was primarily to stay out of the way of the entrepreneurs and to provide some incentives in the form of lower capital gains taxes. In regions where governments try to mandate entrepreneurial behavior they fail.” For now, the British government appears to agree with Mr. Cohan. The Silicon Glen experience has not generated the local businesses that earlier politicians had hoped for. A report by the Department of Trade and Industry published in February of this year identifies 154 regional business clusters in Britain offering opportunities for economic growth. But the report, which examines how government agencies such as regional development authorities can support the development of clusters, concludes that new clusters cannot be kick-started by public policy initiatives. Reprint No. 01307 Des Dearlove, [email protected] Des Dearlove is a business writer based in the U.K. Mr. Dearlove is the author of a number of management books and a regular contributor to strategy+business and The (London) Times.

He is coeditor of the Financial Times Handbook of Management (Financial Times Prentice Hall, 2001). Resources Challenging the Chip – Silicon Valley Toxics Coalition Challenging the Chip Labor Rights and Environmental Justice in the Global Electronics Industry The release of Al Gore’s documentary in 2006 has sparked a revitalized interest in environmental problems facing our country and the world. Among the most critical is electronics manufacturing pollution and “e-waste” which The Wall Street Journal has called “the world’s fastest growing and potentially most dangerous waste problem.” Challenging the Chip: Labor Rights and Environmental Justice in the Global Electronics Industry is a diverse collection of 26 stories about the toxic impacts of electronics manufacturing on workers and communities around the world. Whether it’s in Silicon Valley, California; Silicon Glen, Scotland; or Silicon Paddy, China, Challenging the Chip reveals that the people who suffer the highest consequences are largely poor, female, immigrant and minority. Contributors include visionaries, advocates and scholars who not only document the devastating practices of electronics manufacturing, but also share how they have come together in their workplaces, communities and across borders to successfully shift how the high-tech industry does business.

However, Challenging the Chip goes beyond just challenging the dark side of electronics, it challenges the industry to use its incredible brain power and ingenuity to dazzle the world again with green technologies that are toxic-free and easy to recycle. “Challenging the Chip is essential reading for anyone who owns a cell phone or computer. As its vividly written chapters reveal, our digital possessions connect us not only to global information but also to global contamination and injustice. Happily, this book shows us that we can have technology and clean water, too: Electronics sustainability is organic agriculture for iPods.”—Sandra Steingraber, Ph.D., author of Living Downstream: An Ecologist Looks at Cancer and the Environment. Ted Smith is founder and Senior Strategist, Silicon Valley Toxics Coalition. A Q&A with Ted Smith is available here , in which he answers questions about the state of the global electronics industry. David A. Sonnenfeld is Associate Professor in the Department of Community and Rural Sociology at Washington State University. He is co-editor of Ecological Modernisation Around the World: Perspectives and Critical Debates. David Naguib Pellow is Associate Professor of Ethnic Studies at the University of California, San Diego.

He is the author of Garbage Wars: The Struggle for Environmental Justice in Chicago. Contact for Challenging the Chip: Temple University Press For more information on the book click here . Updates

Question: What was Scotland's answer to California's Silicon Valley called?
Answer: Silicon Glen