Silicon Valley Special Sauce - Key Ingredients For a Tech Hub

It started out with a bang. The great tech boomany would be technology hub. Without investment,
swept into San Francisco and Silicon Valley with atech sectors are almost guaranteed to fall behind
massive wave of investment and talented engineers.other regions with more active investment firms.
If a company could throw together a sock puppetHuman Capital
and an HTML website they were sure to get millions.As the chapter of the Great War closed, a ground
Unfortunately, the art of due diligence was tossedswell of troops returned home with dreams of
out the window like a soggy fast food carton aspeace, families and success. Education was a primary
investment firms began to resemble forty-ninersfocus. The GI bill provided an educational stimulus the
flocking to the gold rush more than prudentlikes of which had never existed before. Certain
businessmen. Inevitably the bubble popped and theuniversities placed greater emphasis on their
tech industry deflated. Fortunately, the foundationspecialties to help provide a more useful education to
that was laid during the early days of the PC andthe great numbers of applicants. Stanford, a school
throughout the tech boom left Silicon Valley uniquelywith a long history of computer science and
capable of fostering innovation and supportingengineering, began to buckle down and look for ways
technology companies. Given the high growthto enhance their stature in these fields. The Stanford
associated with technology, other regions haveIndustrial park was an early attempt to bolster the
begun to produce and foster high tech sectors. Fromtechnology prowess of the school. In a move to
New York media startups to Chicago's recent techmake use of available university owed land, Stanford
revival, what are the critical elements to supporting adecided to lease the land to local companies. One of
vibrant technology industry? Here is an examinationthe requirements set forth in the leasing decision was
of some key characteristics that make Silicon Valleythat each company must be in the technology
such a powerhouse.industry. Companies from Hewlett-Packard to General
Legal FoundationElectric moved into the newly available space and
One of the primary reasons that the Valley is such abegan offering subsidies for their employees to
tech magnet has to do with its legal environment.attend graduate school at Stanford while they were
During the early sputtering days of innovation beforeworking. This combination of educational and
the web 2.0 bubble, certain engineers in the valleyemployment opportunities began to draw engineers
decided to take chances. The area was known forto the region from all over the world. The web 2.0
research into early computing technology and certainbubble of the 1990's accelerated the pilgrimage of
employees developed innovative ideas that the largertechnology expertise to San Francisco and the
companies were not completely willing to back.greater Bay Area. Any ambitious engineer with an
Shockley Semi Conductor laboratory offer a solididea and a will could try their hand. Even after the
example. Initially founded to research the possibility ofboom, the sheer number of computer engineers in
replacing germanium with silicon as the best materialthe greater Silicon Valley area is unrivaled. This wealth
to build semiconductors, the company eventuallyof available engineers represents the full spectrum of
gave up research due to assumed difficulties withtalent from 3rd rate hacks to world leading geniuses.
manufacturing. As the company scaled back theirFor technology hubs, being able to effectively access
efforts, several key engineers decided to take a riskyour talent pool is almost as important as the
and form their own company, Fairchild Semiconductor.availability of the talent itself. Given the supply of
That day Silicon Valley became Silicon Valley. Theengineers, Silicon Valley and San Francisco technical
brazen risk taking approach has permeated therecruiting firms have sprung up to help match
business culture of the area ever since. Given thestartups with the technical expertise required to
increasing level of spin-offs and new ventures, legalrealize their big ideas. Needless to say, human capital
firms in the area gained a wealth of expertise inis probably the most critical factor for any region to
forming, fostering and protecting new ventures. Thisbecome a center for technology companies.
legal expertise represents a key component toClout
fostering the formation of new technologyThe most intangible attribute, and probably the most
companies in the area to this day.universally acknowledged one, is the clout of Silicon
Venture InvestmentValley. Companies with roots in the area are actively
The end of 1980 marked the beginning of thecompeting with organizations on the cutting edge of
venture investment boom in Silicon Valley. As thetechnology. A corporate address in the Valley is
local semiconductor industry took off, many playersalmost like a stamp of approval. Between the
in the Sand Hill road area of Menlo Park began to lookventure firms priding themselves on due diligence and
for opportunities to invest their new wealth. A couplethe top notch engineers, Silicon Valley has curb
of upstart entrepreneurs including Steve Jobs andappeal. Clout is possibly the most difficult
Steve Wozniak had a little idea about selling kits forcharacteristic to achieve. For any aspiring technology
personal household computers. Despite the inherenthub, establishing legal protections, developing a
risk of trying to sell computers for individual use,venture friendly environment and courting engineering
some investors took a chance on the nascenttalent are the first major steps. With perseverance
company called Apple. In 1980, Apple issued an initialand a continued commitment to supporting the local
public offering of 1.8 billion dollars. In the aftermath oftechnology industry a region can only hope to
this unprecedented success story both individuals anddevelop a level of clout capable of inspiring tech
investment firms began to flock to the investmententrepreneurs for years to come. After all, inspiration
opportunities in the area. Over the years, theseis what puts the twinkle in the eyes of the next
investment firms worked to develop a uniqueSteve Jobs or Bill Gates to grace us with their grand
understanding of the needs and risks associated withideas. Regardless of where the next big ideas spring
financially fostering technology companies. A dynamicup the characteristics the define Silicon Valley are
venture capital environment is a critical element forsure to resonate in the next great technology Mecca.