We are not 'the next Silicon Valley'
Nor should we be. An expert on the original high-tech nexus explains why all these technology clusters are unique and not able to be imitated. Instead, Seattle should build on its local strengths while remaining a key part of the global network of technology industries.
Is Seattle the next Silicon Valley? In a recent article, veteran New York Times technology reporter John Markoff argues that it could be. Increased venture capital investment, second-generation startups whose leaders cut their high-tech teeth and earned their first few millions at Microsoft, and the professors and students of the University of Washington all are contributing to a new entrepreneurial energy here.
All this is paying technological and economic dividends. Local responses to the article, such as a column by John Cook, have ranged from strong agreement to skepticism, but few take issue with the fact that some exciting new companies, increased startup funding, and a growing research community are brewing something fresh for Seattle.
This isn't, however, another Silicon Valley – and it shouldn't want to become one. Here's why.
Not long ago, I wrote a book that explored how Silicon Valley came to be and why other places didn't manage to follow suit. Silicon Valley resulted from a combination of powerful local institutions, savvy real estate development choices, immense capital investment by the Cold War military-industrial complex, and the simple good fortune of being on the right side of national economic and demographic trends. The repeated failures of other places to replicate that success - much less seize Silicon Valley's high-tech mantle - attest to the trickiness of getting this formula right.
The lessons of the tech industry's Cold War-era infancy still hold true today. So with Seattle's burgeoning innovation economy in mind, let's recap how these apply in a global, knowledge-driven age.
You need lots of money that can be spent (somewhat) recklessly. Military grants and contracts provided the capital needed for Valley pioneers like Hewlett-Packard to survive in their earliest, leanest years and created a demand for sophisticated technologies before there was a sizeable commercial market. As military contracts declined in the late 1960s, private venture capitalists and angel investors rose to take their place, giving smart but untested people repeated opportunities to innovate and develop new products.
The recent experiences of other nations highlight the importance of truly adventuresome venture capital. So far, Asian tech superpowers like Japan and China have both made extensive public investments in the high-tech sector but have relatively few resources available for small-scale inventors and entrepreneurs. Western European nations have established hundreds of public V.C. funds, but these often aim to balance regional economic inequities rather than support the best and brightest innovators.
In this respect, Seattle has a true regional advantage. Like the Bay Area and other gold- and silver-rush cities of the American West, it has a long tradition of supporting innovators and iconoclasts. But it is only very recently that the local venture pool has reached critical mass - thanks in large part to the individuals who benefitted from the boom days of Seattle's first tech wave in the 1990s.
You need research institutions with talent, resources, and political clout. Stanford University was not solely responsible for building Silicon Valley, but it had a great deal to do with it. But the mere presence of a big university is not enough - and this is one crucial fact that so many would-be Silicon Valleys have gotten wrong. A university or other research institution has to have strong programs in the disciplines that matter to high tech. It needs to have the budget and willingness to engage in things like university-industry partnerships and to encourage technology transfer rather than hobbling it. And strength is in numbers: It's important for a region to have one of these institutions, and it's even better for a place to have many of them.
The University of Washington, as a public institution, does not have the wherewithal to focus on high-tech issues with the single-minded focus of Stanford (nor should it). But the UW clearly is a major contributor to Seattle's new entrepreneurial wave. Although Seattle would be in an even better position if it had a second large research university in the area, the presence of other powerhouses like the Fred Hutchinson Cancer Research Center and the Gates Foundation create synergies with UW that increase the overall research impact.
You need to be a place that attracts talented people and retains the ones you've already got. Silicon Valley grew because it was a place with qualities that attracted people who had the education, economic resources, and social advantages to live anywhere they chose. It was located in an economically booming state in a prosperous nation, within commuting distance of a major city, but with open land available to build suburban houses, research parks, and highways. It has been able to create an environment that allows white-collar high-tech workers to live, work, and network in something of a self-contained bubble.
In more a more recent era, the bubble hasn't popped, but as I wrote in an earlier article in Crosscut, it has moved to more urban – and thankfully more diverse - settings such as Seattle's South Lake Union neighborhood.
Comments:
Posted Mon, Feb 18, 8:48 a.m. inappropriate
_: Many great insights here.
For years I've dreamed of someone like Gates donating 10 bill and establishing another great university. Wild guess: 20% of that for construction and 80% to provide a permanent subsidy equal to $40,000/year for 10,000 students.
We should definitely fund our colleges better to at least provide more slots, more competitive salaries, etc. But it's not horrible getting relocated graduates that other states funded on their dime.
It's great that our tech sector is becoming less reliant on one company. New powerhouses like Amazon and Expedia, a good roster of midsize companies and divisional offices like F5 Networks, Adobe, and Corbis, lots of startups, and now our share of satellite offices by Google, Yahoo, etc. We're still subject to industry cycles, but less subject to one firm's cycles.
Posted Mon, Feb 18, 10:48 a.m. inappropriate
RE: _: What's wrong with establishing a scholarship program for the universities we already have? Whether Western Washington in the North, UPS and PLU in the south, or UW in Seattle, the Puget Sound region is ringed with great institutions. There's even Evergreen for the granola the tie-die set. Fighting disease is a nice thing for Bill to do, but where are we going to get the next generation of people to tackle these problems? Of course, as a dropout himself, he might not understand the importance of an educated class of citizens...
Posted Mon, Feb 18, 10:49 a.m. inappropriate
Techies also dusting this topic off ...or up?: Very interesting article, and I appreciate the historian's perspective here. You might also want to see Richard Florida's blog entry today, Place Wars -- Seattle vs. Silicon Valley. The techies have joined newspaper columnists and historians to argue their side. But O'Mara gets the last word, imo, with her comment that building on core competencies is the way to go.
By the way, the first 3 links in the article have an additional " at the end of the html code, which makes them unclickable. The first one, Seattle Taps Its Inner Silicon Valley; the second, NYT: Seattle as the next Silicon Valley?; and O'Mara's own link to PUP, Cities of Knowledge: Cold War Science and the Search for the Next Silicon Valley. You might want to fix that -- they're good links, and not everyone will read through to the comments...?
Posted Mon, Feb 18, 12:14 p.m. inappropriate
RE: Techies also dusting this topic off ...or up?: Got it! Thanks for taking the time to let us know.
Posted Mon, Feb 18, 1:30 p.m. inappropriate
The UW needs some competion: Interesting read. As someone who has done time in the local academic and high-tech worlds, I loudly echo the calls for another major university in the Seattle area.
UW's undergraduate program is solid, but it doesn't have the kind of reputation that draws the brightest students from around country, let alone the world. I don't think that's going to change in our lifetime. (BTW, out of state students pay a higher non-subsidized tuition, so contrary to remarks above, it doesn't cost us anything to educate non-locals. )
UW has some very strong graduate and professional schools. However, being the only game in town, they sometimes suffer from the usual problems of being a monopoly - instutitional rigidity and myopia, investment in the way things are, fear of innovation. There's nothing like having a competitor right next door to keep you on your toes.
Posted Mon, Feb 18, 1:39 p.m. inappropriate
"Silicon ": The best way to dodge the "Silicon Alley" label is to coin an equally catchy label of your own. ("Jet City" was pretty cool, but it no longer reflects the diversity of today's Seattle economy.)
How about "Moneyland" or "Stock Option Sound".
Posted Mon, Feb 18, 8:17 p.m. inappropriate
Thought Provoking Article: I enjoyed this article. I have some other thoughts as well. Not only do we have to import high tech talent we have insufficient space at our colleges and universities to educate our own college bound students. We send them out of state in droves because we are too cheap to provide quality educational opportunities here and then hope that they will come back.
As far as competing with Silicon Valley as an equal that is a non-starter. Southern California with a larger population than the Bay Area and a bevy of fine educational institutions has been trying for decades to cut into the Silicon Valley magic to no avail in an effort to replace lost aerospace jobs. We have no where near the horses that Southern California has. We are an interesting opportunity for high tech, but no competitor to Silicon Valley.
Posted Tue, Feb 19, 11:12 a.m. inappropriate
Points of Focus, aka Foci: There is, if you will, a political omission in this piece.
Microsoft was able to compete with the more flexible structure of Silicon Valley with some very revealing strategies.
Microsoft is monolithic, silicon valley organic and decentralized. There is a role for both in our economy and sometimes monolitithic has advantages - certainly Boeing is perhaps tops on that list nationwide. Microsoft's advantages in that regard may be more short term.
I too have long been a supporter of private competition to the UW and Microsoft's relationship with that organization illustrates one of the compelling reasons to argue for this.
Breaking up Microsoft into various divisions is something that respectable people should be willing to talk about around here. We are quite fortunate to host the operating system organization here in Seattle. Like with other industries tending towards monopolization monolithism is essential, but also dangerous. Breaking out the operating system functions from the other elements of the company is something that is necessary for the same reasons we broke up Oil, etc. It is also something that might make us even more money.
Certainly the reputation of other divisions might benefit from the seperation. The failure of HD-DVD (used by the XBox 360) could arguably be blamed on the association with the OS monolith and its history. MS has put money into entertainment that appears worthwhile, and, FWIW, I would've bought the 360 myself had I not those same, apparently founded, concerns.
I'd suggest three seperate companys at a minimum - a consumer division, a business division, as well as OS. Creating a fourth for automobile and transportation computing might be a good venture as well.
Posted Tue, Feb 19, 11:51 a.m. inappropriate
RE: Points of Focus, aka Foci: Antitrust laws are the last refuge of incompetent businessmen. I loathe Microsoft and their crummy products as much as anyone, but nobody is holding a gun to people's heads and making them buy Windows. Lemmings deserve their fate. That said, you don't help the customer by eliminating the strongest competitors. It just makes everyone else lazy. It might make for interesting conversation as to how we'd like to dismantle the Evil Empire, but Microsoft is private property and no morality I can think of gives anyone a right to destroy them simply because they've maximized utility for their shareholders. Microsoft is in decline anyway, and just like the attacks on IBM and the Bell System, antitrust suits are usually a trailing indicator of a firm's utility to the marketplace.
Posted Tue, Feb 19, 3:19 p.m. inappropriate
Being John Markoff: Look, everybody understands that we must build upon our advantages and preserve our distinctiveness. Including John Markoff, who spends a lot of time both in Seattle and in Silicon Valley, and knows each region well. Let's be sure not to caricature what he said. He simply observed that Seattle is exhibiting some of the entrepreneurial success of Silicon Valley; he described some of the evidence and explored of the reasons. (By the way, it's worth noting that he wrote a much longer piece -- it got whacked severely at the last minute due to a layout change, relegating much of his work and many of his insights to the bit bucket.) We have managed to develop a tech ecosystem here -- a feat that has eluded many other regions of the nation. It's distinctly our own, and it's pretty remarkable.
I do want to comment on the idea of creating a second major research university in the region. (Disclaimer: I work at the University of Washington!) There is only one instance in the US of a university becoming world class in fewer than 50 years: UCSD. The best bet in our lifetimes, at least for those of us who don't believe in immortality, is to invest in UW (and in great private research institutions such as the Hutch and the Institute for Systems Biology), and to demand performance and accountability in return. Just to repeat the standard (but true) line, each year for more than two decades UW has been the leading public university in receipt of federal research funding, and one of the top five universities public or private. Things are far from perfect at UW, but you gotta admit, that's a pretty decent record.
I encourage those interested in the broad topic of our region's future competitiveness to become engaged with the Technology Alliance. The truth is that most areas of state policy here in Washington are not conducive to creating a vibrant future for our children. K-12 policy is a wreck. (No need to elaborate on this -- but it is critical to understand that we are doing worse than most of our competitor states, much less our international competitor regions. We can and must do better, because others are.) Higher ed policy is a wreck. (We rank 5th in the nation in community college participation per capita, but 49th in public bachelors participation per capita, at a time when the vanguard of our economy involves goods that are intellectual rather than physical in nature. Our economy is creating great jobs, and they are being filled by other people's kids.) Tax policy is a wreck. (The sales tax and the B&O; tax are truly regressive -- the B&O; tax even more so because many companies have figured out how to avoid paying it.) In fairness to our children, we need to do something about these issues, pronto.
Posted Sat, Feb 23, 10:37 a.m. inappropriate
RE: Being John Markoff: One of the great ironies of wanting to be 'the next ..." is that reputations such as silicon valley have often been built on the backs of a rather narrow sector of the economy. There is a danger in being too focused on one sector - we need to look no farther than Detroit which was once revered for its leadership in the automotive industry, but today few want to be compared to this 'rust belt' city. Durable leadership in a sector is difficult to maintain, Wall Street's financial leadership is one, and Silicon Valley is another which has a much shorter history so far.
When I arrived in Seattle about 8 years ago, I was struck that it has a pretty wide and diverse base of industries that are viewed as leaders nationally and internationally. Companies like Weyerhauser, Paccar and Boeing represent older manufacturing and natural resource based economies, while Amazon, Microsoft, and Starbucks provide examples of more recent entries into the technology and consumer marketplaces. There's also a vibrant wireless comminication, medical and pharmaceutical community, though few of those companies are actually based here anymore. While currently troubled, WaMu is a rare financial institution with national aspirations and local roots.
To achieve a moniker and recognition like 'Silicon Valley' would be to ignore this diversity and to claim we're just one thing (just as Seattle is no longer just Jet City, it should never ignore the breadth of its economic and intellectual leadership).
As to the conversation about institutions of higher learning. There are a lot of advantages to having diversity in the leadership of the elite institutions. Simply creating a bigger, better UW will not create the diversity that is really valuable in continuing to drive innovation.
While it is difficult to create a world-class institution whole-sale, smaller colleges have been promoted relatively rapidly from obscurity and financial troubles to being world class institutions. While UCSD is a good example of what state sponsorship did for creating and developing a university, the private sector can look to institutions like Duke University which went from a financially troubled Trinity College first to a solvent and top tier liberal arts school and later transitioned to a full-fledged research university which now enjoys a tremendous academic reputation.