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Why Silicon Valley Happened Here

Via Jonas Luster, I found an entry by Robert Scoble which, aside from being a rant against religion, claims that Silicon Valley happened where it did because of tolerance:

Is there any reason that Silicon Valley happened in California, and not, say, Kansas? Well, yes. Silicon Valley’s politicial leaders setup a system where ideas were accepted. Even radical wacky crazy ideas.

Go back to the 1960s. Where was the pill invented? Silicon Valley. Where was LSD invented? Berkeley. Where did the hippie movement get started? San Francisco. Which community was among the first to open its arms to homosexuals? San Francisco.

Now, why didn’t Silicon Valley happen in Kansas (or any of the “bible belt” states?) Well, mention any of these topics above in the bible belt and you’ll get run out of town. If you’re really unlucky you could end up dead.

Others later corrected him on where those things were actually invented. Anyway, I think he’s on the right track, but his focusing on religion is an oversimplification. Off the top of my head (hey, don’t sue me if I’m wrong — I just work here), I think Silicon Valley happened here because of several factors.

First off (and I think this is the most important factor by far) was the California Master Plan. You know, the whole UC, CSU system, etc. Initially, the idea was to offer quality higher education for everybody — with no tuition (thus widening the educated pool to include all classes). Of course, this was all very expensive, so eventually funding was drastically cut (I won’t be pointing fingers here), and larger and larger “student fees” were added (by law, they can’t call it tuition even though that’s what they are). As student fees continue to increase, this advantage will vanish. But the plan had already created an educated talent pool and attracted some of the best and brightest from across the nation. And of course, Silicon Valley was helped by the fact that the jewel of the UC system is Berkeley (Go Bears!).

Another factor is the diversity. After all, America’s first Chinatown was in San Francisco, where all of the Chinese migrated after working on the railroads. And California already had a large population of Native Americans and Mexicans. Although these minorities initially faced a great amount of prejudice, this diversity eventually lead to more racial tolerance (and having moved from upstate New York to Southern California back in the late 80’s, I can tell you the difference is night and day). This means most companies in California were more likely to hire minorities, and thus could draw from a much wider talent pool (which I think is the point Scoble was trying to make).

The spark was, perhaps, blind luck. STANFURD was running out of money, and decided to lease some of their land. From NetValley, quoting Fred Terman, The father of Silicon Valley by Carolyn Tajnai:

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 beneficial to Stanford

And after a few key people met and created inventions that made them rich, the possibility of quick upward mobility through the classes appeared real (one of the best motivators you can have, which, as I mentioned before, is why a caste society would be disastrous to our country’s economic edge), and so you ended up with a large and diverse group of talented and educated people working with each other, and working really hard. That’s a pretty good formula for innovation, even if you have relatively high tax rates.