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Why Silicon Valley Will Continue to Rule, a Medium post by Leslie Berlin


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For all the love-hate that would-be challengers heap on the Bay Area, Silicon Valley will be king as long as immigrants prefer to come here over anywhere else. A top historian of the culture breaks it down for you.

You can't really understand what's going on now without understanding what came before.

Everything here builds on what came before it.

When I get to Taylor’s home on a hill overlooking the Valley, he tells me about another visitor who recently took that drive, apparently driven by the same curiosity that Steve Jobs had: Mark Zuckerberg, along with some colleagues at the company he founded, Facebook.

“Zuckerberg must have heard about me in some historical sense,” Taylor recalls in his Texas drawl. “He wanted to see what I was all about, I guess.”

To invent the future, you must understand the past.

I am a historian, and my subject matter is Silicon Valley. So I’m not surprised that Jobs and Zuckerberg both understood that the Valley’s past matters today and that the lessons of history can take innovation further. When I talk to other founders and participants in the area, they also want to hear what happened before. Their questions usually boil down to two: Why did Silicon Valley happen in the first place, and why has it remained at the epicenter of the global tech economy for so long?

I think I can answer those questions.

First, a definition of terms. When I use the term “Silicon Valley,” I am referring quite specifically to the narrow stretch of the San Francisco Peninsula that is sandwiched between the bay to the east and the Coastal Range to the west. (Yes, Silicon Valley is a physical valley — there are hills on the far side of the bay.) Silicon Valley has traditionally comprised Santa Clara County and the southern tip of San Mateo County. In the past few years, parts of Alameda County and the city of San Francisco can also legitimately be considered satellites of Silicon Valley, or perhaps part of “Greater Silicon Valley.”

The name “Silicon Valley,” incidentally, was popularized in 1971 by a hard-drinking, story-chasing, gossip-mongering journalist named Don Hoefler, who wrote for a trade rag called Electronic News. Before, the region was called the “Valley of the Hearts Delight,” renowned for its apricot, plum, cherry and almond orchards.

“This was down-home farming, three generations of tranquility, beauty, health, and productivity based on family farms of small acreage but bountiful production,” reminisced Wallace Stegner, the famed Western writer. To see what the Valley looked like then, watch the first few minutes of this wonderful 1948 promotional video for the “Valley of the Heart’s Delight.”

Three historical forces — technical, cultural, and financial — created Silicon Valley.

Nearly everything that we associate with the modern technology revolution and Silicon Valley can be traced back to the tiny, tiny transistor.

Fascinating detail: Money is like a baton being passed by relayers. 

Driving the birth of Silicon Valley, along with the right technology seed falling into a particularly rich and receptive cultural soil, was money. Again, timing was crucial. Silicon Valley was kick-started by federal dollars. Whether it was the Department of Defense buying 100% of the earliest microchips, Hewlett-Packard and Lockheed selling products to military customers, or federal research money pouring into Stanford, Silicon Valley was the beneficiary of Cold War fears that translated to the Department of Defense being willing to spend almost anything on advanced electronics and electronic systems. The government, in effect, served as the Valley’s first venture capitalist.

The first significant wave of venture capital firms hit Silicon Valley in the 1970s. Both Sequoia Capital and Kleiner Perkins Caufield and Byers were founded by Fairchild alumni in 1972. Between them, these venture firms would go on to fund Amazon, Apple, Cisco, Dropbox, Electronic Arts, Facebook, Genentech, Google, Instagram, Intuit, and LinkedIn — and that is just the first half of the alphabet.

This model of one generation succeeding and then turning around to offer the next generation of entrepreneurs financial support and managerial expertise is one of the most important and under-recognized secrets to Silicon Valley’s ongoing success. Robert Noyce called it “re-stocking the stream I fished from.” Steve Jobs, in his remarkable 2005 commencement address at Stanford, used the analogy of a baton being passed from one runner to another in an ongoing relay across time.

Immigration really has fueled our culture.

The Valley continues to be a magnet for young, educated people. The flood of intranational immigrants to Silicon Valley from other parts of the country in the second half of the twentieth century has become, in the twenty-first century, a flood of international immigrants from all over the world. It is impossible to overstate the importance of immigrants to the region and to the modern tech industry. Nearly 37 percent of the people in Silicon Valley today were born outside of the United States — of these, more than 60 percent were born in Asia and 20 percent in Mexico. Half of Silicon Valley households speak a language other than English in the home. Sixty-five percent of the people with Bachelors degrees working in science and engineering in the valley were born in another country. Let me say that again: 2/3 of people in working in sci-tech Valley industries who have completed their college education are foreign born. (Nearly half the college graduates working in all industries in the valley are foreign-born.)

Here’s another way to look at it: From 1995 to 2005, more than half of all Silicon Valley startups had at least one founder who was born outside the United States.[13] Their businesses — companies like Google and eBay — have created American jobs and billions of dollars in American market capitalization.

Silicon Valley, now, as in the past, is built and sustained by immigrants.

One big threat to our future is the continuing decline in federal support for basic research.

Venture capital is important for developing products into companies, but the federal government still funds the great majority of basic research in this country. Silicon Valley is highly dependent on that basic research — “No Basic Research, No iPhone” is my favorite title from a recently released report on research and development in the United States. Today, the US occupies tenth place among OECD nations in overall R&D investment. That is investment as a percentage of GDP — somewhere between 2.5 and 3 percent. This represents a 13 percent drop below where we were ten years ago (again as a percentage of GDP). China is projected to outspend the United States in R&D within the next ten years, both in absolute terms and as a fraction of economic development.

Yep, immigration is what made the US of A so great at it's inception, and still does:

“Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed, to me: I lift my lamp beside the golden door.”

Oh yeah, and I'll examine your H-1B visas too...

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