You Don't Create A Silicon Valley By Government Fiat
02/10/2007
Two separate articles came out in two separate newspapers based 3,000 miles away from each other this past weekend -- but together they demonstrate exactly why so many places have had difficulty creating their own, local versions of "Silicon Valley." Especially during the dot com bubble, it seemed like every country and every state wanted to create some area that was a "local" Silicon Valley.

from the takes-a-bit-more-than-that dept

There were silicon islands and silicon prairies and silicon alleys and silicon mountains... and almost all of them went nowhere.

An article in the San Francisco Chronicle talks about how the original Silicon Valley was created, through a mixture of strong educational institutions, easy flow of capital and a culture that focused on risk, experimentation, entrepreneurship -- and the free flow of ideas. While the government played a big role in early Silicon Valley culture, it was as a customer, not as the creator of the culture.

Contrast that to the story in the Washington Post about how Prince William County set out to create a high tech hub, which is still struggling to get much traction in the high tech world. Rather than paving the way for those critical components to form, the county simply set aside some land and (it appears) some marketing efforts to promote the county as a good place for high tech companies.

That seems to be about all that many other "silicon somethings" did in the past decade as well -- forgetting that there's a lot more involved in creating a true high tech hub.

 

 

High-Tech Hub Still a Work in Progress

In Prince William, Innovation Park Adds 2,000 Jobs but Eli Lilly's Departure Signals Stalled Growth

By Cecilia Kang Washington Post Staff Writer Monday, October 1, 2007; D01

Ten years ago, Prince William County set out on an ambitious plan to convert 1,500 acres of dairy farms into a life sciences and high-tech business hub. The Innovation at Prince William business park was expected to generate high-quality jobs and create a more urban feel to the bedroom community, and help the county put its stamp on the Washington region's economic boom.

By some measures, the county's efforts have yielded success. Innovation, on the western end of the county, has attracted about $503 million in investment and 2,057 jobs from businesses and organizations that have located there or plan to move in soon, according to the county's economic development office.

The FBI is building its Northern Virginia field office there, bringing 300 new jobs; and George Mason University broke ground last week on a $25 million biomedical research lab funded by the National Institutes of Health. On Sept. 1, a biotech company, Mediatech, moved from Herndon into new offices at the business park, adding 202 jobs.

Yet about half the land the county purchased in 1997 is still undeveloped and the park's trophy occupant, Eli Lilly, pulled out last January. The economic development department hasn't attracted any widely recognizable company names to Innovation since it lured American Type Culture Collection from Rockville as its anchor business 13 years ago. Now the business park is a patchwork of office complexes surrounded by empty lots, with a mix of companies that include a waste management firm, an insurance broker and a cable television call center.

The economic development officials and regional developers say it is too early to judge the success of Innovation. High-tech and biotech centers like the Research Triangle Park in North Carolina and Shady Grove Road in Montgomery County, they say, are examples of places that took many years to attract a critical mass of businesses. They say the county is only beginning to bear the fruits of years spent getting roads into Innovation, passing pro-business tax and zoning laws and getting the word out across the country via the county's $2 million economic development program.

"This is not a short-term play, this is a long-term play," said Martin Briley, the executive director of the county's department of economic development. "Synergistic growth will occur over the next decade or two."

The mixed progress of the park illustrates the challenges of luring companies to a business park 35 miles from the District, at a suburban outpost where the closest white-tablecloth restaurant is a few miles away. The county competes with Loudoun and Fairfax counties to attract biotech companies to the region. And recent attention from anti-growth and anti-illegal immigrant measures have affected the county's image.

"Eventually there will be significant development on that property, but you have to realize that Prince William has never been a top-drawer place and their image problems these days aren't helping it," said John T. "Til" Hazel, a longtime regional developer with no interests in Innovation.

Trying for a New Image

The image problems Prince William confronts today are similar to the issues it faced decades ago. Throughout the 1980s and 1990s, it was known as a commuter county dependent on businesses such as the Potomac Mills outlet center and strip malls filled with dentists, accountants and real-estate agents. The county developed an anti-business reputation with its much-publicized fight against Disney, which wanted to build a U.S. history theme park near the Manassas battlefield. Residents regularly protested proposals to encourage sprawling growth.

These days, the county is attracting notice for its tough stance on illegal immigration, supporting laws that would cut services to undocumented immigrants and proposals for added police enforcement.

"The more Prince William County is in the news, the more it conveys a sense of turmoil, and businesses like things to be predictable. You don't want to portray yourself as a place that isn't progressive and friendly to businesses and its employees," said James C. Dinegar, president of the Greater Washington Board of Trade.

Some of the county's elected leaders, however, say the attention over the tough stance on illegal immigrants has helped the county's image as a place that is trying to improve the quality of life for businesses and their employees.

"You don't want to move into a community where people aren't tackling the problem and dealing with it," said Corey Stewart, chairman of the board of supervisors.

Stewart and other county leaders are bullish on Innovation. Its roots date to 1992, when GMU devised its "distributed university" plan to open branches around Northern Virginia, including a satellite campus in Prince William that would be focused on information technology and biotechnology.

The county and IBM, which had a chip plant nearby, gave George Mason land and resources for a new campus. The county hoped George Mason's research departments would be a magnet for businesses such as semiconductor designers and drugmakers, and that its professors would spin off companies from their lab work.

Prince William County soon scored its first big win by attracting American Type Culture Collection from Rockville in 1994. As several counties competed for ATCC, Prince William won in part by offering $6 million in state and county incentives. The relocation of the nonprofit research and culture repository was a vote of confidence in the county's biotech goals, bringing 190 employees with an average annual salary at the time of $54,000. GMU and ATCC shared lab space on the campus, an important symbolic gesture that demonstrated the melding of academia and commerce.

"The county was outstanding. When we needed lights, we got lights. When we needed roads, we got roads," said Raymond Cypess, president of ATCC, who added that the firm initially lost several employees who didn't want to relocate or commute.

To keep up the momentum, Prince William's board of supervisors passed a controversial measure to buy 529 acres of privately owned land for $8.5 million, with plans to sell it to targeted businesses in high tech, biotech and the corporate headquarters of other industries. The county dubbed the 1,500-acre swath of farmland Innovation at Prince William. The county hired Briley, who is now paid $255,356 a year, according to county's human resources department, to manage an expanded staff and revamp marketing plans.

"We were afraid the energy was going to be lost, and the families that owned the land would sit on it," said John Schofield, who helped drive the economic plan as marketing and research director of the Department of Economic Development.

Innovation's first few years were promising. The county was riding the dot-com wave and several high-tech companies such as Covad Communications, Ronobotics, Astrolink International and Avenir announced plans to open offices at the business park. Developers such as Gilbane Properties were buying land for speculative office space.

But when the Internet bubble burst, many of those companies scrapped their plans to come to Prince William or went out of business. In the case of Covad, it sold its data center to Comcast, which uses it to field customer service calls.

Innovation's Limits

Today, a drive down University Boulevard, the main road through Innovation, reveals only modest changes since 2001.

George Mason has expanded its campus, which now totals 2,000 students. A biomedical research laboratory, where researchers will develop and test vaccines, treatments and diagnostics against biological terrorism and infectious diseases, is scheduled to open in the summer of 2009. Across the street, ATCC has also nearly doubled its staff and expanded its building. On the other side of the Prince William Parkway, a building that will house 300 jobs at the FBI's Northern Virginia field office is nearly complete.

Yet for-sale signs dot vast stretches of open fields. The closest place to grab lunch beyond some office cafeterias is a McDonald's or a Subway sandwich shop, a short drive outside the park. Business visitors have to stay at hotels miles away on Sudley Road near Interstate 66. ATCC's Cypess, who commutes from suburban Maryland four times a week, holds executive and client meals at a restaurant near Old Town Manassas, about three miles away.

Bringing in more stores and restaurants is tied to the growth in office and other development, said Michael Armm, a representative for developer Lee Sammis Associates, which is planning a hotel and retail space at Innovation.

"Have to have critical mass of business people before you can get services in, and we're heading toward that now," Armm said.

However, one reminder of Innovation's uncertain future is the steel beam skeleton of the half-completed Eli Lilly plant on University Boulevard, which has stood frozen in time since January.

The $325 million facility was to create 350 jobs. But the project was abruptly halted when the Indianapolis-based drug company shifted gears in a company-wide restructuring of its global manufacturing operations. The site is now for sale and may be sold off in smaller parcels if the county agrees to change the land-use rules governing the project.

"There's no way to make it sound like Lilly's leaving was not what it was. It wasn't a good thing," said Robert Scheer, president of developer Scheer Partners, which has developments in Innovation. "What happens in [biotech] is that more than any other industry it behaves like lemmings. Companies go where others have gone."

County leaders now downplay the importance of Eli Lilly's insulin-cartridge manufacturing plant.

"Lilly's operation was going to be primarily a manufacturing operation and wasn't a research-and-development facility that would add a significant life sciences component to Innovation," said Stewart, chairman of the board of supervisors. Besides, he added, "Innovation isn't solely focused on biotech."

 

 

 

High-tech culture of Silicon Valley originally formed around radio

Tom Abate, Chronicle Staff Writer

Sunday, September 30, 2007

In 1961, Robert Noyce showed how two transistors could be... The San Jose of yesteryear bore no resemblance to the hig... This dollar bill was one of 10 that were signed as a symb... The eight founders of Fairchild Semiconductor pose shortl... More...

They weren't out to make history, the eight young engineers who met secretly with investor Arthur Rock 50 years ago to form Silicon Valley's ancestral chip company, Fairchild Semiconductor.

The men, among them future Intel co-founder Gordon Moore, mainly wanted to escape their brilliant but batty boss, William Shockley, who had just shared the 1956 Nobel Prize in physics for his role in the invention of the transistor.

Shockley, who had started a company in Mountain View in 1955 to commercialize this breakthrough, had bullied and browbeaten his young engineering staff, whose numbers included future venture capitalist Eugene Kleiner, at 32 the oldest of the bunch; the rest of the renegade group were younger than 30.

So when the Traitorous Eight, as they're sometimes called, held their hush-hush meeting in San Francisco, they had reason to fear discovery - but no way to know that by quitting safe jobs for a risky startup, they would earn a place among what Stanford University historian Leslie Berlin calls the "Founding Fathers of Silicon Valley."

But wait. The National Register of Historic Places recognizes the garage in Palo Alto where David Packard and William Hewlett started their company. Isn't that the birthplace of Silicon Valley?

And here's a hitch. Not until 1971 was "Silicon Valley" used to describe the concentration of chip-making firms in the South Bay.

So what is Silicon Valley? How and when did it arise? And most important, perhaps, what is the future of this region that has become a synonym for innovation?

"There is this myth that Silicon Valley was all orchards when the chip companies arrived, but it's not true. It had been building, building for a long time," said Christophe Lécuyer, a Stanford-trained historian who turned his dissertation into a book, "Making Silicon Valley."

Lécuyer, now an economic analyst with the University of California system, said the region's technological awakening began almost a century ago when, not long after the great quake of 1906, the Bay Area - and particularly the Peninsula - began innovating with the then-hot technology of radio.

"The San Francisco Bay Area was a natural place for interest in radio because it was a seagoing region," said Timothy Sturgeon, an industrial researcher at the Massachusetts Institute of Technology who described this radio period in a paper, "How Silicon Valley Came to Be."

Lécuyer and Sturgeon argue that, roughly 30 years before Hewlett and Packard started work in their garage, and almost 50 years before the Traitorous Eight created Fairchild, the basic culture of Silicon Valley was forming around radio: engineers who hung out in hobby clubs, brainstormed and borrowed equipment, spun new companies out of old ones, and established a meritocracy ruled by those who made electronic products cheaper, faster and better.

As Sturgeon notes, as early as 1909, Stanford graduate Cyril Elwell was acquiring patents for new radio technologies and persuading university officials, including then-President David Starr Jordan, "to finance a new company" in Palo Alto that would be called Federal Telegraph Co.

That same year in San Jose, Charles Herrold started a school for radio engineers and began broadcasting to radio hobbyists and later to a small local audience to become what a 1994 PBS documentary called "Broadcasting's Forgotten Father." Back then, the region had none of its present cachet relative to other clusters of radio activity like New York, New Jersey and Boston.

But in this rivalry with the industrial powers of the East, the future Silicon Valley would find a powerful customer with deep pockets - the U.S. military.

Sturgeon said U.S. naval officials, impressed by Federal Telegraph's technology, gave the Palo Alto firm huge contracts during World War I - the first but not the last time war would fuel the region's tech firms.

In another hint of the future, Sturgeon writes that around 1910, Peter Jensen and Edwin Pridham quit Federal Telegraph "to start a research and development firm in a garage in Napa" to improve loudspeakers. In 1917, they formed Magnavox, which built public address systems for destroyers and battleships in World War I.

The war's end took the wind out of Silicon Valley's sails. The Eastern radio powers, notably RCA, dominated the field during the 1920s and 1930s. The region's entrepreneurial fire cooled but, as history would show, didn't die.

Creation story

The next chapter in the Silicon Valley story involves the familiar tale of how Hewlett and Packard hatched the region's first technology giant in a Palo Alto garage.

Sophisticated versions of this creation epic also credit their mentor, Stanford engineering Professor Frederick Terman.

Terman, who began teaching at Stanford in the late 1920s, would spend the rest of his career formalizing the university-industry collaboration that would come to typify Silicon Valley.

But in the hardscrabble '30s, it was all Terman could do to hold together the ecosystem of tinkerers and researchers who were trying to survive the Depression.

He had help from tech pioneers such as Charles Litton Sr., who in 1932 established a machine shop that made better vacuum tube manufacturing tools. Tubes were the workhorse of electronics before transistors and - according to Lécuyer - Litton's tools allowed San Bruno vacuum-tube-maker Eitel-McCullough to build superior components - and a reputation.

Another seminal event was the 1939 invention of the klystron tube by Stanford research associates and brothers Russell and Sigurd Varian, who would later start Varian Associates. The klystron tube led to more powerful radars, helping the United States and its allies gain an advantage in World War II.

In his 1995 memoir, "The HP Way," Packard himself provides a glimpse of this ecosystem in action, telling how Terman arranged for him to work evenings at Litton's shop.

"Charlie Litton had started with the Federal Telegraph Company in Palo Alto," Packard wrote, adding, "My relationship with Charlie developed into a long and enduring friendship."

Garage-era Silicon Valley also adopted the business model of the radio age - supplying the U.S. armed forces.

"Military funding was critical for the rise of Silicon Valley from the very late 1930s to the early 1960s," Lécuyer said. For instance, he said, Eitel-McCullough had about 15 people making vacuum tubes before the war. That swelled to 4,000 employees in 1943, then contracted to 200 in 1945, when peace crippled demand for tubes.

So, by the time the Traitorous Eight started Fairchild, the recipe for Silicon Valley largely had been written. Still, the notion that they founded the valley is justified by what financier Rock brought to the party - the money to bankroll bold engineers.

"The venture capital sector really arises along with the semiconductor industry," Lécuyer said. "Once the venture capital is in place, it makes all the other things possible."

From Fairchild forward

Investment that rewards risk became the final catalyst for the Silicon Valley we know, where ideas, nourished by money, spawn startups, products, even whole industries, like biotechnology.

The first big wave of startups created by venture investment were the dozens of Fairchildren - chip companies like National Semiconductor, Advanced Micro Devices and Intel - started by engineers who traced their ancestry to the Traitorous Eight.

Intel became the largest of these Fairchildren, and Moore the best known of the eight. But the gang leader was his charismatic colleague Robert Noyce. A technical innovator - in this meritocracy he had to be - in 1961, Noyce designed the first chip that enabled two transistors to work together on a single slice of silicon. Called the "integrated circuit," it is the ancestor of today's billion-transistor chips.

In 1971, when trade press reporter Don Hoefler used "Silicon Valley" to describe the concentration of chip-making firms on the Peninsula, the name stuck. But almost from the start, it stood for more than chip-making.

"Silicon Valley created an environment that allowed ideas and money and people to combine more easily," said AnnaLee Saxenian, dean of the School of Information at UC Berkeley and an expert on the region.

The early chip industry, like the two waves of innovation before, initially depended on military expenditures, Paul Ceruzzi, a curator at the Smithsonian Institution, writes in his book "A History of Modern Computing."

Only this time, it was the Cold War that opened the government's checkbook.

The Soviet launch of Sputnik on Oct. 4, 1957, prodded the United States to modernize its missile and space program. The newfangled silicon chips were considered vital - albeit costly - components, and Ceruzzi writes that NASA and the Defense Department bought so many "that the price dropped from $1,000 a chip to between $20 and $30."

Falling chip prices fueled development of new electronics for corporate customers and eventually individual consumers. Reliance on military purchases lessened, though defense dollars remained important in spurring research. Thus, when Larry Page and Sergey Brin later dreamed up Google, a defense research grant helped support their work. And when Stanford computer scientists won a robotic car race in 2005, the prize came from the Defense Department.

By the 1970s, therefore, Silicon Valley was poised to capitalize on new civilian technologies like PCs, as exemplified by Apple Computer.

In the 1980s, excitement shifted to scientific workstations and networking devices from firms like Sun Microsystems and Cisco Systems, and to software like the version of UNIX perfected at UC Berkeley.

In the 1990s, the point-and-click browser popularized by Netscape ignited the dot-com boom and, after a painful bust and slow recovery, the recent rise of Google and social networking sites such as Facebook signal another wave of entrepreneurship.

Back to the future

Today, Silicon Valley is showing signs of age. Traffic is bad. Housing is worse. And it's competing with every metropolitan region in the nation - indeed, the world.

Saxenian, the Berkeley dean, is optimistic. Her most recent book, "The New Argonauts," posits that Silicon Valley will remain a design and innovation center by partnering with lower-cost manufacturing centers overseas.

"Viewed from outside the United States, Silicon Valley is an amazing place," she said. "I'd put my bets on innovation coming out of the valley for the next 20 years."

But jobs are a concern. Tech employment hasn't yet recovered from the dot-com bust. The American Electronics Association says California had 1.2 million tech jobs in 2000. Its most recent snapshot found 280,000 fewer Californians collecting high-tech paychecks.

Is it outsourcing? Is it globalism? Is it a problem? Maybe the answer depends on whether you're looking for work or looking to hire.

And more to the point, after all this time, do we know what Silicon Valley is, or better yet, how to keep it vital?

"My biggest hope for the valley is that we continue to have the focus, creativity and capital to reinvent our future and the future of technology," said Paul Otellini, CEO of Intel Corp., the most prosperous of the Fairchildren.

"My biggest fear is that we will get complacent and allow it to happen elsewhere."

E-mail Tom Abate at tabate@sfchronicle.com .