Tuesday, October 2, 2007

A Child of the State

There is no other place on earth that has a greater reputation for free-wheeling, creative capitalism than the southern part of the San Francisco bay area known as Silicon Valley. Every economic development officer in every state drools over the thought of capturing just a little of its glory. Cities and states have spent millions, perhaps billions in attempts to duplicate some measure of Silicon Valley's success in biotechnology, computers, and venture capital.

How did it happen? How did the business people in the Valley develop a culture of successful innovation that is the envy of the world? Tom Abate, staff writer for the San Francisco Chronicle, explains it all with the help of Chritophe Lecuyer, author of the book, Making Silicon Valley.

It all started more than a hundred years ago, with the then-new technology of radio. Radio engineers in the area formed hobby clubs, swapped ideas and tinkered with their equipment. Whoever came up with a workable idea that made things cheaper, faster and more reliable got respect. Even better, he got whatever money there was available.

At first, the United States military was the most important customer of Silicon Valley. The military needed lots of help with the new technology for World War I. Military contracts poured enough money into Silicon Valley to bring companies like Magnavox to life.

Over time, the culture of engineering innovation and meritocracy created at the beginning of the twentieth century, sustained and nurtured with military contracts, evolved into what it is today.

There are two remarkable conclusions we should take away from this tale. First, like the Internet itself, Silicon Valley is the child of the state and of war.

Second, radical innovation rarely comes from the dominant institutions in an economy. It usually comes from some out-of-the way place where people are free to explore crazy new ideas, the kind of ideas that usually get shot down in the board meetings of large, well-capitalized corporations.

In 1906 American big business was essentially industrial, not technological. Steel, railroad, utilities and oil dominated the economy. Mass production was cutting edge technology. The high-tech tinkering near San Francisco was viewed as of secondary importance to bigger business concerns in the Mid West and East.

In the end, it was the high-tech tinkering that launched an industry and revolutionized a world. The question is, can Silicon Valley retain its entrepreneurial culture in the face of its success, or will it, like every successful industry before it, eventually turn into a group of organizations not terribly different from the Department of Motor Vehicles?

Or, to put the question another way, must every child become his father?

Photo of the San Jose, California skyline in 2006. Photo created and uploaded by SCUMATTMount Hamilton in the Diablo Range. 01:08, 16 January 2006 (UTC). North is to roughly to the left; looking roughly southeast towards

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