No one disputes that Silicon Valley is the global capital of the tech world. But this wasn’t always so. It is the Valley’s dynamism and networks which have given it an unassailable advantage. Silicon Valley has simply left rivals like Boston’s Route 128 in the dust.
I mentioned a little bit about my first Columbus Day in California in a previous column. But I didn’t tell you the whole story. I was invited to three amazing events on the night of October 12. Venture capital firm Alsop-Louie—known as one of the wackier and unconventional VC firms—invited me to their legendary Columbus Day party. On that same evening I had an invite from Henry Chesbrough, Executive Director of the Center for Open Innovation at the University of California-Berkeley to attend a dinner party for his forum. Down in Silicon Valley I also had an invite to speak at an event with India’s former Minister of Disinvestment, Arun Shorie—the guy who was once in charge of privatizing the country’s moribund nationalized firms and who is as close as you can get to financial royalty in India.
It was a really hard decision which one to pick. And I found myself wondering, where else in the world would I have to face such a decision? The answer is nowhere. Silicon Valley, which has expanded to embrace the entire Bay Area as an engine of entrepreneurship and innovation, is a unique place of powerful and concurrent overlapping networks. As a new arrival to Silicon Valley and San Francisco, I had read about this and did believe it. But it was hard to understand to what degree these types of concentric circles of connections were pervasive in the Valley. I am now studying how some of these networks develop and their influence on success rates in entrepreneurship.
I am focusing on what is possibly the largest of these networks, an organization called The Indus Entrepreneurs (TiE). This started as an Indian network and served as a mechanism for those from the Subcontinent to help each other. Silicon Valley is the birthplace of TiE and remains its stronghold. But at the latest TiE Global Conference, held in Silicon Valley a few weeks ago, an interesting debate broke out among the Board of Directors. While the organization remained largely Indian in composition, a significant number of non-Indians had joined TiE and become very active members (some had risen to the role of chapter president). Some members of the board thought it was time to change the name of TiE from The Indus Entrepreneurs to The International Entrepreneurs. They eventually agreed to drop the “Indus” from the name and to just call the organization TiE. The fact that such a debate even took place illustrates both the power of networks to embrace outsiders and draw them in, as well as the power of these networks, when unconstrained by convention or conservative establishment rules, to grow in unexpected ways. It’s a metaphor for Silicon Valley.
Which brings me to Boston. Ever heard of Route 128? To my surprise, neither have any of my students at Duke or the entrepreneurs I’ve met in Silicon Valley. I’m surprised because it wasn’t so long ago that Silicon Valley was considered a poor cousin of Boston’s tech center—a cluster of technology companies located along this freeway which partially rings the city. Starting in the 1960s and on through the 1980s, Route 128 was, if anything, more closely associated with tech than Silicon Valley. Today few young technology workers even know where Route 128 is located, let alone its importance in the tech world. Silicon Valley has simply left Boston’s tech center behind.
In the 1980’s the Silicon Valley and Route 128 looked very similar—a mix of large and small tech firms, world class universities, venture capital, and military funding. If you were betting on one you’d have been wise to bet on Route 128 because of its longer industrial history and proximity to a large number of high quality educational institutions (Harvard, Yale, Brown, MIT, Tufts, Amherst) and proximity to Bell Labs and other large corporate research centers. You remember Bell Labs, right? It’s where the transistor was invented. Now, aside from big biotech breakthroughs, Boston is a distant second nationally to Silicon Valley in technology entrepreneurship. So, what happened to Boston?
A young professor at UC-Berkeley, AnnaLee Saxenian, wrote a book in 1994 which answers this question. At a time when Boston still thought it was the powerhouse of the tech industry, Saxenian declared Boston the loser in the tech race and explained why it would only fall further behind. This book was titled Regional Advantage: Culture and Competition in Silicon Valley and Route 128. It kicked off a firestorm of criticism from the Boston elite. Saxenian also alienated friends at her alma mater, MIT.
She noted that Silicon Valley had an amazing dynamism about it. There were extensive professional networks, job hopping was the norm, information was exchanged openly, and the culture encouraged risk taking. The Silicon Valley ecosystem supported entrepreneurial experimentation and collective learning. In other words, Silicon Valley was a very open network—a giant social networking site working in analog before the concept of such a thing even existed.
This organizational mechanism was in sharp contrast to that of Route 128. Dominated by large, vertically integrated, and secretive minicomputer producers such as DEC, Wang, Prime, and Data General. Technology, skill, and know-how were trapped within the boundaries of the large corporations.
The differences were evident at many levels: venture capitalists in Silicon Valley had deep roots in local networks and were far more nimble than their east coast counterparts; educational institutions and research labs in the West partnered with local startups as well as more established firms, while those in the East worked only with the largest corporations; and the meritocratic openness of Silicon Valley made it a magnet for non-traditional talent and immigrants.
By the mid-1990s the east had missed the shift from minicomputers to personal computers as the flexible Silicon Valley ecosystem sped ahead with innovation across a diversifying range of components and systems going from chips, routers, and application software to ecommerce and search engines. Today Silicon Valley is the leading location for cleantech venture activity, an area widely considered to be the next big value creation engine for the U.S. and the world.
Boston, however, is no slouch. The Route 128 community remains the second biggest in the U.S. in terms of venture funds committed. Boston has powerful research institutions, still, and lots of very strong companies. In some areas, such as biotech, Boston may even rival Silicon Valley. But overall, its pretty clear that the Valley has not only won but is racing further ahead.
Most entrepreneurs and engineers that come to Silicon Valley, come to experience this network and to embrace the culture it has created. That’s why I came, too. Network effects don’t just work for fax machines. But then again, most of them knew that intrinsically. University guys like me need to do a bunch of surveys to figure it out. They voted with their hearts and feet.
Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.
I was about to join but had a look at here
http://www.tie....viewInnerPagePT
It had Nandan and N Murthy as it’s members (They are founders of Infosys whose employees still use IE6 to browse the web…Imagine more than 100,000 still using IE6 as browser )
So backtracked from my decision of joining it ..
Ramanean, so you are judging the entire organization by the version of a browser which a company founded by one of its members uses?
@ramanean I am sure there is some other reason which would explain this comment of yours..:)
This is the only reason I have
IE6 ====>Wasting time ===>To Code/test it…
A lot of time would be wasted in switching to and fro between two different IE6 windows rather than tabs..100,000 working under them would wasting a lot of time daily
What they are going to do here ? if they can’t even save time or bring in a change in lives of 100,000 (make life better by switching to tabbed) working under them?How I can expect them to guide me ???
Having lived and worked in both areas I think you somewhat overstate the separation.
That said, SiliValley is miles ahead of RT128 in consumer technology products. I think that greatly effects the perception of the differences.
Professor, this is a really brilliant and insightful post. You make some really good points.
I’ll give you an A+!
Thank you Mary. I give you an A+ for your comments.
Based on my experiense 128 is a perfect location if you are in the roll-out phase of your business (especially software business). The valley is a good place to be for a tech start-up (especially in the web business). long story short: if customers and revenue count – go to 128.
Frankly, if I was launching an enterprise software company, I would probably launch on the east coast — that is where the customers are. But for web applications, cleantech, etc. East coast provides no advantage.
Professor you write amazing stuff. I give you 10/10 on insightful blogging…:)
Following you on Twitter too
Cheers,
Arvind
Arvind, an A+ for you also.
Very interesting topic to me. I was recruited away from Boston to Silicon Valley 4 years ago, and after some success out there, have recently relocated back to Boston. 4 years ago, you drove up 128 and it seemed like a ghost town (empty Sun and Microsoft buildings). But I think there’s a lot of growth happening here. Startups have bled the valley dry of local/student talent. The Valley doesn’t match up to the flood of talent that Boston schools produce, and the cost of living makes it too hard for young, out-of-towners to get a fresh start there. Check out Adobe’s huge new Waltham campus, right on 128, and several others that are popping up again. Boston’s VC and startup scene may be smaller, but its conservative nature has protected it better from the recent downturn. Older money and colder weather still can produce innovative ideas. Boston may never even up, but it soon won’t be far behind.
While I think you make some great observations about the cultural differences between the east and west coast tech scenes, your lack of knowledge about the current state of tech in Boston is quite apparent (perhaps because you are no longer here?). The mere fact that you would bring up the 128 belt tells me that you’re comparing “Boston of yesteryear” to today’s Valley. And I think: well of course the Valley would win, hands down. Now put the rumbling hotbed of ideas, science, research, tech, entrepreneurship, and clean energy in Cambridge (where it is now really taking place in Boston) up against the Valley? And you’ve got a game that’s not quite over. Be careful not to declare premature victory, Professor. I think you would be wise to do some more research on what is really happening in the Boston tech scene today.
Rebecca, I am from that part of the world and I can tell you there is a HUGE difference in energy and vitality. But I look forward to seeing Boston catch up!
i’m not holding my breath waiting for the Rte 128 and Boston tech scene to rival the Valley. Silicon Valley is way more open and egalitarian than Boston will ever be, just like in real life.
interesting post, but overlooks one key point. the mindset of venture capitalists in the NE is hugely different from that in silicon valley. SV VC’s will fund anyone that might make them a buck. while NE VC’s are weighed down by old thinking of pedigree.
Great post. Regarding studying how some of these networks develop and their influence on success rates in entrepreneurship, you are probably already familar with your colleague Prof. Porter’s work in clusters.
One topic I’m not sure he touched on is whether workers within clusters are more easily able to find a job what maximizes their value since there are so many firms in the area they can easily move if unhappy with current position. I believe this allows workers within tech clusters to optimize their output since the transaction costs typically associated with such moves (e.g., finding job openings, moving costs, etc.) are greatly reduced in clusters.
Moreover, failure is less risky (and therefore people are less adverse to it) since your next opportunity could be next door or discovered during a visit at the local coffee shop (often crowded with founders of other startups).
JB, I am gradually coming to the conclusions that the emphasis on “clusters” is misguided. Regions have spent billions on forming industry clusters and pools of venture capital. Yet no region in the world has been able to come close to Silicon Valley’s success.
I think the magic happens with the networks: It is all about people — not buildings and infrastructure.
this topic was never interesting or relevant and has by now been beaten entirely to death. thanks for kicking the ciorpse again.
who cares?
Except for not acknowledging the role weather plays (where CA has a big competitive advantage) in attracting talent your analysis here is pretty good.
Yes, that was an oversight. The weather does make a difference.
I live in Boston and coincidentally, I’m founding a start-up here (Boston Digital Media) and I have to say, you’re correct about the cultural differences of CA vs. MA. This is in my opinion, the biggest factor.
In Boston it feels like you need to have a 1200 page business plan, 5 year sales growth projection charts, and multi-variate risk analysis assessments in order to get the attention of local VC.
Out in CA’s SV (I’ve not yet been so I can’t say this with certainty) it seems like it is a much more “shoot from the hip” kind of mentality with VC funding. Which is one reason why when Facebook was looking for VC here in Boston they couldn’t get it and so they started up in CA and the rest is history.
route 128 is closed due to aids
Yes, it’s true that Boston area VCs and employees are more risk-averse and thus missed out on the chance to spawn the next Facebook or Twitter, and Massachusetts is burdened with an obsolete stance on non-competes, but it doesn’t have the absurd real estate prices of California and doesn’t have a dysfunctional political system that spends more money on prisons than schools. And besides, can you name a high-tech company more secretive than Apple?
non-competes are a big difference.
Job-hopping is pretty tough in Boston if it will likely lead to a law suit by your former employer.
Dr. Wadhwa – huge fan of your writing. I have worked both in rt.128 and the valley and the most noticeable difference to me apart from all the points you raise is that the Rt. 128 companies seem to be either silicon or near silicon tech companies while the valley has a great mix of above silicon software companies. Could it be that too much focus on only hardware or embedded software could be why Rt.128 has lagge? (all the great software companies seem to be based in the valley and not in Boston/NH.)
As AnnaLee Saxenian noted in her book, Regional Advantage, Silicon Valley was able to adapt more readily to technology changes because of its culture and values. I think that made the real difference.
Vivek, great piece (again). I moderated a TieCon panel about five years ago, 8 a.m. on a Sunday. The ballroom at Santa Clara was packed with Indians and probably Pakistanis too. It was then that I realized that the Silicon Valley is a place and metaphor as well.
California as a place has been burned down, flooded over, rattled down by earthquakes forever. The minute the dust settles (and sometimes before) we start building again. What separates Silicon Valley from 128 is that New England sense of permanence, that things have done a certain way for 300 years. I think that tends to inform each generation, discouraging risk to some degree.
Brian, I agree. I didn’t realize the difference in attitudes until I spent some time here. That is what a lot of the people from Boston who are posting here don’t realize either. You have to live here to understand what you are saying.
I moved for Silicon Valley to Boston 3 years ago….Boston is no comparison..Even Texas and Illinois & NJ fare better….Forget Route 128….It may go down in history for some recognition it gained in 1980’s….Now completion with International cities is more fierce then 20 yrs ago for such a status..
Dude or Dudette,
Stay on the left coast…
AND…wait for Arrrrnald to “stop” your state from going broke OR global warming from making NV ocean front property OR earthquakes to relocate SV into a Silicon open pit mine OR shortage of water for water-cooled servers/mainframes turned into TSO dumb terminals or power outages/brown-outs to fry your IC’s, OR mudslides to put your Disaster Recovery plans in motion, OR riots/gangbangers to carjack your customers.
Yea we’re in your dust because we’re flying over LA… and heading to China.
SO…Shut down your iphone…go to your Ashram and don’t let your Karman run over your Dogma.
And as your Govern-na-tor says…We’ll be BAAAAK!
Boston Entrepreneur
Regan P. McCarthy
PS Race ya…to the financial finish line.
A subtle shift is happening and the level of networking and energy that silicon valley had in 90’s has shifted to Boulder, CO. I wouldn’t be surprised if Boulder takes over Silicon Valley as the number one entrepreneurial destination in a decade.
Agreed. Seems like many have departed Silicon Valley for Boulder -it’s got quite a tech scene and seems to be growing. Most of my team is based there as Ridgefield, CT has not yet become a hotbed for tech startups (although we have Priceline.com, Kayak.com and Indeed.com down the street in South Norwalk).
Question is whether the VC firms will follow.
Boston is too cold for SE Asians….CA is much warmer.
Wait a minute!
California has 6 times the population of Massachusetts. Of course they are going to have more activity.
I think that New York and Texas and Florida have 3-4 times the population of Massachusetts, but not 3-4 times the tech activity. Also the Boston metro area population is just slightly less than the Bay area. Is it a matter of population size or are other factors more important? It’s interesting to note the countries with small populations that have produced disproportionate amounts of tech innovation, such as Sweden, Denmark, and The Netherlands.
For anyone that wants to further dive into this topic, may I suggest Kawasaki’s “Reality Check”.
There is a whole section on “How to kick Silicon Valley’s butt.”
Interestingly, if you go back even further, to, say, 1940, things looked even more different. Philadelphia, more than any city in the country, looked like it was going to be the nation’s center of science and technology. The first computer, ENIAC, was even invented there. That, for many reasons, obviously didn’t happen.
Here is my team of 8 currently – three Indians, two chinese(asian), one Israeli, two russians and one south american.
Is this possible anywhere else besides bay area?
I didn’t discuss the role of immigrants in Silicon Valley. That is a huge factor in its present success.
Blah blah blah. Insider is right: you’re kicking a dead corpse. There are so many reasons why CA has more startups – population included but the pace is unsustainable. I think instead of competing against each other, it’s time to start working together, along with other big markets like Seattle, Austin and Raleigh. We have much bigger competition from Asia now. I’m proud that we have so many good competitors to be totally honest. Each has their own merits and talent and we should embrace that and again choose wisely when we start our companies in respective cities.
Cultural differences loom large between Silicon Valley and anything in the East, Research Triangle Park included. I’ve consulted and lived in Silcon Valley and in the Northeast, and done product development consulting in Dublin and Austin and other wannabes. I enjoy the differences and each adds a strength or two. The Northeast cultural block I think is largely and network that tends toward compartmentalization based on the school you attended. I am generalizing, of course, but it’s my experience. Sitting at dinner in the Northeast inevitably there is a contest of schools, where you went and where your kids are going, often with legacy guarantees. Sitting at dinner in Silicon Valley (well, actually, it’s often breakfast before work) no one cares where you went to school. It’s about the work, the ideas. The chance to get rich or to feed the addiction of creating new stuff that changes the world of technology is the topic. My barber in Los Gatos felt equal to us all, and had grand plans for his software project, and could get a hearing. That’s tough in the Northeast Corridor, as Princeton, Harvard, MIT, et al networks are largely closed. An odd thing is there are a lot of those folks in Silicon Valley, but in our meetings it rarely comes up as a ticket of entry.
Stephen, I had an interesting email discussion with Erick Shonfeld and Mike Arrington on my last post on elite education. I had started that piece off by saying that “there is a popular belief that an Ivy League education provides a huge advantage in entrepreneurship”. Erick didn’t agree. I was surprised that he said the opposite was true.
I chalked this up to a difference between East coast and West coast. Here your pedigree isn’t important. It is all about how smart and ambitious you are. There it is as you say.
Great post. If you want another proof point just look at where the MIT grads go. In my class, the vast majority (probably 70%) of the tech focused grads left Boston for SV. The rest were split between Boston, Seattle, and Austin.
Garrett, I am amazed that your estimates are so accurate. I did a study titled Education and Tech Entrepreneurship (downloadable for free from: http://ssrn.com...bstract=1127248) which analyzed the percentage of company founders who start their companies in the state from which they graduate.
Mass: 29.0%
CA: 69.2%
Nice article. Think this would be the first article of yours that has escaped the war of words & flaming.
Justin, wait till tomorrow. I have no doubt the xenophobes will find their way here!
I am knowing that 128 was the place to be for DSP only. It was best plece for doing hardwares design. It is not good highway for having softwares only.
Good article..
However, I want to point out Bell Labs guys published so many valuable results in comparison to some researchers from some of the big companies in the ‘open’ west coast – apparently they are fed well but not allowed to publish much.
Publishing papers has nothing to do with creativity and innovation. The Silicon Valley crowd isn’t very secretive…
Fail fast, fail often – there is no stigma associated with failure in the valley. That may be one of the factors that make the valley vibrant and nurturing.
thank you Vivek for the good post/article. i feel much of it is due to the NE culture which is less accommodating to new ideas. ppl are more divided due to pedigree, culture, race, etc. that’s Boston for you. the truth hurts.
It is exactly that open atmosphere, the free exchange of ideas that made nearly 100% of the technology coming out of the Valley vulnerable to foreign, cheaper, production. Every single shift to foreign labor and manufacturing hits the Valley hard. Their ideas are frequently short lived, but that’s another story. Fact is in the east that “protectionist” nature of knowledge and technology is considered “good sense” in protecting your intellectual property and perpetuating your business. In the Valley it’s considered inevitable that “business concepts” will be copied by other cheaper upcomers and therefore they don’t spend any energy in trying to protect them, but rather embrace sharing as a way to stay intellectually ahead.
I think you’d find it rather amusing to survey how many entrepreneurial minds and great engineers and thinkers move East when they’ve along in life. The results would be quite an education.
I think the weather might have something to do with it also
Oh! It is great day for my friend I hope that you will have many success in your job
Very interesting piece, Vivek. You are always right-on. I have lived in six states in the US, including CA, MA, NY and MI. Almost any given day of the week I have at least two (great choices) of professional events I can attend. Where in the world can I ever have so many options? The magic of Silicon Valley continues to amaze me.
I was certain the bursting of the bubble in 2000 would end the Valley’s dominance. Remote computing and globalization offered companies far cheaper ways to access specialized talent than paying top dollar for Cupertino real estate and Bay Area cost of living for your employees.
I now realize the downturn would have had to been much deeper and longer in duration to kill the momentum that had already built up in the Valley, and which has clearly accelerated in the past 5 years.
And not I’m one of those entrepreneurs who’s adding fuel to the local ecosystem with my company, RepairPal, started and operating in the only place in the world I can imagine doing such thing.
You know, I’ve worked in Silicon Valley, as well as Austin, and am now in LA, and looking at moving to Tokyo soon. If there is one thing I can say about SV, it is that everyone there is heavily emotionally invested in this idea of SV as the technological center of the universe. In reality though, it is largely an illusion these days. Sure, SV had its moment in the sun, but these days the reality of a SV company is more often than not, a corporate office where some executives review product designs from Israel, to be put in a case designed in Japan, for a product that runs software written in India, using chips designed in Korea, which will be manufactured in China, on fab equipment made in Austin.
It reminds me a lot of how Hollywood still sees itself as the movie center of the world, even though fewer and fewer films are actually being shot here every year. Yes, the studios are still here, and this is where the agents and execs play golf, but all the work is being done elsewhere.
In a very boring corporate way, Silicon Valley really is the center of the tech universe, in that any company that wants to be taken seriously by the tech press has to have a big office there. I think that is probably why it is now such a center of the Web world since, much like the entertainment industry, that is a world where perception is absolutely everything. Actually though, the days are long gone when SV was really where all the best and brightest talent could be found. Of course anyone in The Valley would dispute this, because they like the idea that living in The Valley automatically means they are the best and brightest.
Here is the future: http://www.cnbc...3934&play=1 .
Abe, just watched that interview. Amazing. I never realized what an innovation powerhouse Israel is. I need to find a reason to visit and learn more.
Yes, Israel is an innovation powerhouse, and extremely bright people can also be found in Boston, and resources don’t cost as much in India BUT here are some of the things that make SV unique.
1. In the words of Navin Chaddha, Mayfield Fund, ‘the SV culture accepts success as well as failure’.
2. SV’s melting-pot culture allows for the Asian, European, and Australian to feel equally at home.
3. There is an abundance of ancillary services that businesses/ people need in order to thrive.
4. People are risk-takers – they are willing to work 16 hours, 7 days a week, in the hope of being a part of the next ‘Twitter’ or ‘Facebook’.
5. The start-up experience is viewed as a rigorous learning experience.
6. SV has an abundance of wealthy people who are always willing to risk investing in the next noteworthy start-up.
7. Stanford — a top 5 University that attracts the best and the brightest, who have an insatiable appetite to succeed.
8. HP and PARC continue to greatly contribute to the SV phenomena.
9. Behemoths like Cisco, Google, Oracle, Apple continue to contribute to SV’s growth.
10. Last but not the least – the beautiful weather!
11) And the most often missed difference? Think back to Columbus Day — SV is a better party. What? Yup — the sense of fun, of adventure, of playfulness is alive and well there, while #128 holds on to its dignity, its degreed professionalism and its intellectual pretension.
All that self-importance makes failure more painful, and drives a different sensibility about risk-taking. #128 needs to “achieve” while SV wants to have one helluva ride getting there.
If you’re short on places where there is amazing and inspiring confluences of networks, then clearly you haven’t spent enough time in New York.
I’d rather be in a place where the average coffee shop has not only a web developer, but an actress, an artist, a banker, a diplomat, a fashion designer, and a professor–not just a Web 2.0 entrepreneur, another Web 2.0 entrepreneur, a VC, and a product manager for Facebook.
FXi, & Lee Lloyd, I believe you hit the nail on the head there. And Mike (Shafer) you have valid points for staying in CA, but Boston has always been considered “the melting pot”. When I use to work in the Boston area in the 80s (& I grew up there), I remember 128 being “the tech circle” and Lotus 123 (out of Cambridge) was king of spreadsheets, before Office came along. Slowly tech moved to the 495 belt, with Apollo, HP, Orbotech and the like and then the pharmaceutical companies started growing in their place. I haven’t been in that area for awhile now, but I know of a few software companies in the area and in So NH that are doing quite well and wouldn’t move from the East Coast. Brian Fuller said it best “What separates Silicon Valley from 128 is that New England sense of permanence…” Both areas have very bright minds and options of opportunity; it just depends on your sense of urgency, drive, & preference.
A wonderful blog post.
IMHO, this is not kicking a dead corpse/horse. Last time I tried to start-up in Boston, I vowed next time I would not hesitate to first move to SV. Boston has the underpinnings for great start-up success, much greater than it has enjoyed. This means jobs, livelihoods, good times for its residents, tax base for the state, and valuable applications and innovations for the rest of the world. But Boston’s start-up ecosystem has just not proven any significant adaptability. Regulations, venture capital, even angels are locked in a time capsule that prevents or slows critical speed to market for any start-up that does not meet some unreasonably high hurdles. These hurdles are not appropriate at the start-up stage. Take the same VC here, and plant him in a SV office, and his attitude will change – group think. Boston’s education system will continue to graduate great entrepreneurial innovators, and upon graduation (or earlier) they will promptly leave for SV. BTW, it is not a dead horse because some of us love the state, and like the Sox, against all logic, we’ll try it again in Boston.
I am looking out my office window at RTE 128 as I write this – many of the comments posted (outside of the complaints about ethnic groups and foreign workers) are thought provoking and add to the conversation. Most of the posts in favor of Boston seem defensive to me and that is probably because although New England is a great place to be from – the regulatory and economic condition of Massachusetts in particular seem to be compounding the cultural differences between RTE 128 and SV. Although one does not like to think of it in these terms, a start-up is a small business with outsized aspirations and Massachusetts right now with a one party legislature and a Governor who would like nothing more than to find a job in Washington and get out of here is not a good place for a small business or its employees. New taxes, excessive fees, a burensome universal health care program make Massachusetts a difficult place to build and grow a business. The economy in California is not better than here and the state’s financial difficulties are well documented but whether but somehow the optimism is still there when I talk to my SV clients. Access to capital is tougher here in Massachusetts – I have seen a number of very good ideas not getting funded in the last two years which result in them dying on the vine. my biggest fear is that with the latest economic downturn, the RTE 128 aversion to failure in any form may result in not many new ideas coming to market here. One of the things I have always admired about SV is that failure is viewed as a positive experience and that individual who was part of that company failure is not an albatross to be avoided but someone who has the knowledge and experience to help us from making the same mistakes – maybe because of the weather but SV is just more optimistic. That is not to say that companies in Boston are not getting funded – today’s news is about On-Q-ity which raised $21 million – but if you look at the management team everyone has or will be getting an AARP card in the mail soon (very experienced very bankable)but if I had $21 million I would invest it in that company as well – great concept – stellar credentials throughout the management team – it is a no-brainer – a low risk investment. Where I think RTE 128 falls behind is that the tolerance for risk is very low where in SV I think “nothing ventured nothing gained” still is the operative language. Boot strapping in SV is a phase in the evolution in an emerging company – on RTE128 is has regrettably become a way of life. One needs only look at the success of incubators here and in SV to see first hand the difference.
Is it true that Vivek proposes relocated all the unemployed Americans out of the way somewhere?
Ain’t weather is the primary driver? Remember the Blizzard of ‘78 that closed down Rt. 128 and stranded like 4000 cars? This single event would potentially be the tipping point between the silicon vs. 128 battle
Interesting sidebar re video that can be viewed on Facebook’s About Us page at 33:15 min into the video. During an interview of Facebook COO Sheryl Sandberg, the moderator questions her on why Marc Andreesen calls Facebook “a real Silicon Valley company”. Sheryl responds that is due to a culture of product development that is emblematic of SV. So I guess that if Facebook had stayed in Cambridge, they would not have been considered able to develop products? Is this what they call a collective Freudian slip of sorts? These issues go from Facebook back to Apple and Qualcomm (all hatched in MA). Imagine all of the satellite companies and wealth that would have been created with those 3 companies alone. To a certain extent, I agree with Virginia S on the pretentiousness of Mass capital. The thing is, nothing will get a VC to invest faster than competing against another VC for a deal, and in Boston’s start-up world there is no need for the sense of urgency of losing a deal such as there is in SV. They’d rather pass than be wrong – a great attitude for C rounds, but not early stage. The local culture feeds on itself to the detriment of the ecosystem and this is as corrosive as the opposite attitude on the W Coast is productive.
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Oct 26 04:20 PM US/Eastern
By DAVID MASON
AP
Leave it to a brainy Indian to come up with the solution to the growing ranks of America’s unemployed: Relocation. Wadhwa, a fellow at the Labor and Worklife Program at Harvard Law School has published a proposal that is gathering notice with several Representatives in Congress. Wadhwa’s plan would focus first on the foreclosure of homes. According to him “unemployed Americans about to lose their homes would be identified by the DHS. The IRS would confiscate homes and other properties left behind by unemployed Americans and the value applied to future taxes owed. Once this process starts, the unemployed would be sent to FEMA relocation centers where they would live and receive valuable training in non-technical fields such as food preparation and warehouse work. The homes coming into possession of the government would be turned over to newly admitted H-1B’s who would use to the homes to establish a base from which to revitalize the American economy. Since Indians have proven themselves to be the technology leaders of our economy, including the current boom in Silicon Valley, the “homes for H-1B’s” swap would be the “win win” situation to reverse the poor economy caused by the lowering of education standards in Americans who cannot compete with the superior education of the Indian marketplace, now credited with the being the chief production center for software used in the United States.” Other proposals include allowing some FEMA residents to have travel rights enabling them to work at neighboring farms and quarries.
Two important factors why Silicon Valley is #1 tech hub:
1. Weather – Only in the valley where you can hit the beach in the summer and go skiing in the winter in Northern California/Nevada border (e.g. Tahoe)
2. Down-to-earth people (no “Fake” CEOs, engineers, and VCs) that’s not worried about making mistakes. Just not the same mistakes but make new mistakes.
This has got to be the most misleading history of Silicon Valley that I have ever read. What do you know about it professor? You came to the valley when? 1999 or 2000? That was long AFTER Americans had already created the 90s boom. The “opening” didn’t start until late 1998 and 2000 when the visa caps were raised into the hundreds of thousands per year. Not coincidentally, 2000 was the same year the valley collapsed. As someone who has worked in the valley since 1990, I can tell you, it’s a shadow of its former self. Indian takeover groups like TIE and other racist Indian organizations have ruined Silicon Valley as we know it.
The 90s tech boom was created by great American developers focusing on creating great products – like “secretive” Apple still does today. Most of the others are dying such as Sun, Microsoft, etc. SV’s freeways are lined with FOR LEASE signs.
Up until late 1998 IT in America was 98% white American males. Large numbers of Indians didn’t begin arriving until the visa caps were raised in late 1998 – disrupting a productive ecosystem in favor of unproven “open” networks. Foreign-worker takeover of companies like Sun, Microsoft, Adobe, and others has been a total disaster for SV. Where’s the innovation professor? Except for Apple, which is still mostly American workers (they only employ 1,308 H-1Bs), and still very secretive, SV is dying.
If you knew anything about the history of SV in the late 20th century, you would know that up until the end of the 90s, Boston had a huge tech influence. Many of the original NeXT people came from Boston and the largest Mac user group in the world was the famous BMUG. You probably don’t even know what NeXT was.
SV zoomed past Route 128 because of the high concentration of great American IT workers who made SV boom in the 90s. I know – I was one of them. Now that we’ve had a decade of “open” networks in SV (i.e.: immigrants), the place is a disaster. You can’t keep riding on the achievements of Americans in the 90s forever professor. People are starting to notice that CA and SV are collapsing due to the takeover of IT jobs by incompetent foreign workers. No amount of spin can keep the faded glory going forever. At some point you people are going to have to either perform, or else move aside and let Americans back in to do the job right.
According to the BLS, Silicon Valley lost tech jobs in almost every major category from 2001-2008.
http://www.bls....y_high_tech.pdf
(8 pages, very readable)
This was not just the shift out of manufacturing: software publishing jobs declined by almost 22%. At the same time, wages were up, so net impact in terms of dollars was limited.
‘Fewer jobs but those remaining more valuable’ certainly has a whiff of the fin-de-siecle about it. Not the least considering the budgetary crisis California is facing.
In any case, the real question is what needs to happen to revive the IPO market or replace it with something comparable. Right now we’re seeing exits to PE or M&A at single-digit multiples of revenue. That poses a pretty major structural challenge for the traditional VC model, no matter where the company is located.
SV has been losing jobs every single month since 2000. Sure SOME jobs are being created, but there is a net loss. The valley went into decline in 2000 and has never recovered. Anyone who still wants to live there or work there is nuts. There are only 2 companies left in the valley worth working for: Google and Apple. The rest are dying. It seems the valley has filled up with me-too wannabe losers from around the world and the productive Americans who created it have been driven out. It’s something of a joke to work there now.