Silicon Valley

Question 1

Unique University

Answer 1

Stanford: practicality, inclusion, openness
Other universities: abstract academics, cultural rigidity, discriminating admissions

• promoted technical scholarship and invention amongst its faculty and students
• a center of technical research= mechanical and civil engineering
• encouraged a close relationship btw academia and industry

Question 2

Frederick Terman (father of Silicon Valley) strengthened 3 linkages btw Stanford and industry

Answer 2

1. People: connected students with similar engineering interests and encouraged them to start their own electronics firm
2. Money: encouraged financial intermediation btw 2 groups
3. Physical Plant: provisions and sharing of physical space (a portion of university land as the stanford industrial park, which sought electronics and high-tech companies as tenants )

Question 3

Unique geographic environment

Answer 3

• undeveloped state of the land: lowering the cost of constructing a high-tech cluster
• natural boundaries of valley ensured that no 2 establishments would be very far from each other

Question 4

Unique Innovation, management , and labor culture

Answer 4

cooperative, entrepreneurial people

• democratic and egalitarian ethos and flat hierarchy (“west coast” management style)
• each engineer part-owner
• decentralized structure
• equity compensation: profit sharing and employee ownership to retain talent and to stave off growing unionism in the Bay Area

Question 5

Unique Approach to entrepreneurial finance

Answer 5

venture capital-type backing: raised capital from friends, employees, and nearby investors

funding vehicle consistent with collaborative, entrepreneurial culture

Question 6

Expansion: links to the military

Answer 6

they needed greater demand (got it from the U.S. military during WWII and Korean War)
DoD acted as a stimulus for high-tech startups
provided the financial capital and attracted the human capital

Question 7

Agglomeration benefits

Answer 7

• reduction in cost of transporting goods, ideas, and people
• higher productivity
• knowledge spillovers
• in technical sectors: learning and idea generation higher
• one industry in a local area grows large enough that related firms chose to also locate in that area to take advantage of being close to the growing industry’s output, workers, and knowledge

Question 8

Endurance: Re-invention

Answer 8

After the mid-20th century military boom, local tech firms quickly adjusted production to non-defense output in Silicon Valley

Transition to commercial-customer-focused companies