When thinking about technology companies and innovation there is one place that immediately comes to mind: Silicon Valley. But how has this region of California become so interconnected with the technology business? What factors determined its success and appeal to so many internationally successful brands? Is there something in the water?
The name Silicon Valley is usually used to mean the Santa Clara Valley in California, although it is sometimes extended to include other parts of the San Francisco Bay area. The term was first used in print in a series of articles written by Don Hoefler in the Electronic News, who heard Ralph Vaerst use the phrase in conversation. The reason for this moniker can be traced back to the invention of the silicon transistor in the area back in the 1950s.
It is widely believed that Stanford University had a huge influence on the development of the area, and its staff and alumni prompted many of the initial innovations and new companies started in Silicon Valley. The university had close ties with some of the first big names in the area, like XEROX, Fairchild Semiconductor, Shockley Semiconductor and Bell Telephone Laboratories. The institution also operated one of the few nodes that constituted the Internet’s grandfather, the ARPANET.
Before Stanford’s involvement and encouragement of entrepreneurial spirit, the Valley benefited from some Government investment, who used the San Francisco area to develop new technologies for the U.S. Navy, namely radio and aerospace.
However, the university’s willingness to let office space to new businesses and Shockley’s invention of the silicon semiconductor acted together to spark what has now been built into a seemingly unstoppable force on the international technology scene. Some of Shockley’s employees also started new companies around this time, and one has a name we still hear today: Intel.
The great talent pool and technical minds in the area were credited for many inventions which paved the way for the industries we see today. One business success story came from the Stanford Industrial Park during the 50s, from the garage of a Stanford University graduate named David Packard. Hewlett-Packard is one Silicon Valley’s oldest names and whose products we still have in our homes today, and whose developments in the personal computing industry have made our lives so much easier.
During the 1970s, another company whose name we’ve come to associate with its products, Xerox Corporation, started another wave of development and ground breaking innovation. Opening the Palo Alto Research Centre, Xerox gave the world certain items we now can’t get through the day without: ethernet cables and laser printers, as well as a graphical user interface.
Where Xerox couldn’t make these inventions pay, in stepped two brilliant minds who were to build technology empires and change the world as we know it: Bill Gates (Microsoft) and Steve Jobs (Apple Inc.). Apple is now the largest publicly traded corporation in the world, and its products have created a whole new lifestyle and keep people waiting in lines for hours to get their hands on the latest releases.
As the internet became more and more popular, Silicon Valley became the home of numerous new dot com start-ups. With so many young Stanford graduates or employees of the big companies in the area, it comes as no surprise that the Valley turned into a technology cluster and started leading the way in the industry. With the start-ups came a real estate boom as well as an economic boom, and while the dot com bubble eventually burst, some of the companies started in this time are still going strong today: Google Inc., Netflix Inc., Facebook Inc. or LinkedIn Corporation.
With the tech companies came the infrastructure necessary to sustain the new developments. New law firms were started to help with the numerous new companies that needed to be registered, as well as to solve any legal disputes that may arise between rival companies. We all know where there’s a patent, an innovation and an invention, there will always be a claim that somebody else got there first.
California law also helped the start-ups to flourish, as it forbids non-compete clauses in employment contracts. This meant that creative young engineers employed by the bigger companies could leave to start their own businesses without difficulty.
Another sector that was born in Silicon Valley is venture capital, with two big players on the international scene founded in the area at the beginning of the 1970s: Sequoia Capital and Kleiner Perkins.
There might not be something in the water in Silicon Valley, but there is a convergence of factors that helped develop a hotbed of technological innovation. One thing is crystal clear: there is not one young, technology enthusiast who doesn’t know the name Silicon Valley or who doesn’t dream of being head-hunted by one of its companies one day.