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Comment by ylhert | Hacker News Reader

Tech in SFBA reminds me of the Resource curse (https://en.wikipedia.org/wiki/Resource_curse). SFBA did nothing special to attract the wealth of technology companies, they effectively got lucky with Shockley/Fairchild/Traitorous 8 and the boom in technology that followed. It seems the local gov't have squandered an opportunity to truly capitalize on the gift they were given, and perhaps even done their best to jeopardize these resources.

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This is ridiculous. The Bay Area, specifically Stanford and Berkeley, contributed to the WWII tech research initiative and then afterwards, Terman made Stanford Research Park which led to Silicon Valley.

Without William Shockley moving to the west coast, the "Silicon" part of Silicon Valley would likely be elsewhere in the world.

he played an important role, but all the work by military tech companies and stanford during the war did as well.

As you point out he could've chosen elsewhere to move. Seems likely the aforementioned developments helped him pick where he did.

He chose to move where he did because he was raised there and moved back to take care of his ailing mother.

That's a counterfactual. Yeah, maybe Shockley's project happened elsewhere it Silicon Elsewhere could have happened somewhere else. But it didn't happen elsewhere. But you are assuming that it would have catalyzed elsewhere. For example, it could have catalyzed in Murray Hill, New Jersey after the transistor but it didn't.

Anyways, people are always leaving the Bay Area. If you came here five years ago, first you were new here and second, you've known people who have left.

So Keith Rabois left for Miami. Great for him. The question is whether the next Keith Rabois will spring forth from Miami. Unlikely.

Magic Leap is based in Plantation, part of the Miami metro. So- you're still right.

I believe they will, given the current Keith Rabois as a mentor.

It is interesting how you can gloss over the signifcance of the inventor of the transistor moving to the bay area, and then use the example how his former laboratory in New Jersey failed to commercialize the transistor as an example of how Silicon Valley is uniquely situated to allow innovation to happen.

A much more reasonable interpretation is that Shockley was going succeed no matter where he went, not that Silicon Valley is uniquely situated, especially with the dominance of east coast companies in defense contracting.

When Shockley moved west in 1956, Stanford Research Park was already 3 years old. Its defense roots predate even that. Shockley wasn't moving to a technological wasteland.

https://steveblank.com/secret-history/

Ames Research Center dates to 1939.

https://en.wikipedia.org/wiki/Ames_Research_Center

William Shockley graduated from CalTech, and his connections from CalTech, more specifically Arnold Beckman, funded his new venture in silicon transistors.

It's true that Shockley picked Palo Alto because of his mother, but it would be unfair to not also credit Stanford who had an outsized role in helping solidify the Bay Area as the hub for "Silicon Valley".

Many many many companies tried to move the industry away from California since the 50s, and every time, those companies star players ended up relocating to the bay area.

California's free-wheeling culture permeates at all levels, from investors all the way down to the individual contributors. It just wasn't an accident that Silicon Valley happened the way it did.

Okay, so if California's "free-wheeling culture" caused SV to be where it is, what factored into CA's cultural development? Why the lack of free-wheeling culture elsewhere?

While I don't fully agree with the parent, there was a long tradition of "Go west young man" for people who wanted to make their fortunates far from eastern bankers and other conservative industries. Very broad brush, but also not wholly inaccurate.

Are you serious? SF's Castro is the gay capital of the world. Summer of Love. The Emerald triangle. The Hells Angels. I could go on.

But why there? Why not somewhere else?

Only seemingly non-random factor you gave is the Emerald Triangle, which could be the answer.

Ahh, sorry. I think I mis-read your comment. I thought you were questioning the existence of free-wheeling culture in CA.

As to why CA, I don't think there is any one reason. The weather and geography are huge. It was a lightly populated state in the 1950s, so real estate was much cheaper than on the heavily populated east coast (big for both start ups and 'artistic' types). And the gold rush mentality is/was pervasive, which I personally think leads to a government and culture that is generally supportive of start ups and small businesses. While CA has a reputation for being unfriendly to businesses, the taxes and regulations are largely targeting big businesses. So that leaves more room for small start ups to compete.

I mean, just look at California's history. If people were willing to upend their lives since the 1800s to move their families to the other side of the country on vague things like the promise of striking it rich somehow, those people probably had distinct personalities. Every one of California's strongest industries have been because people escaped where they were to go strike it rich (in money or fame).

Wine, Movies, Farming, Banking, Education, Tech.

California is just a state with a long history with a weird mixture of entrepreneurs you won't find elsewhere.

At the same time, a significant portion of the computer industry (HP, which is moving its--well HPE's--HQ to Houston, notwithstanding) was in the East through about the 90s. Boston in the case of the Route 128 companies, etc. But also others like IBM. So a large chunk of the industry was away from California.

The point was the local govts did not contribute to the the rise of Silicon Valley, not that no one in the Bay area was involved

local govts did a few things to enable this. They created a welcoming business environment that allowed for rapid expansion. For example, Stanford Research Park was a joint venture of Stanford, and Palo Alto. I am not sure there is any good writeup on the contribution of local governments to silicon valley.

Do you know how many local govts tried to do similar things and it failed? Local govt is not the essential component here.

If you say so. As an outsider (although I used to work close, in Sacramento, for 5 years), I only can say that I did not hear anything about substantial govt participation, similar to post-war infrastructure projects, or recent push for green energy. But, of course, I will be glad to find out that the Valley is the coproduct of some govt program, not only a lucky star alignment.

I think there's some truth in the synthesis of this dialectic.

Yeah, I thought it was somewhat due to Stanford's handling of IP. The argument I heard was that if you're researching at Stanford and make a productizable discovery you can spin off a company no strings. I was at Cornell when I heard this, where any company built off on-campus research had to sign over 20% of the company up front. Makes those initial pitches to VC that much harder.

it was a lot more. they built an incubator called Stanford Research Park as a joint venture with Palo Alto. It gave access to students (key to any tech company, getting fresh students with new ideas and up to date knowledge), access to VC, and nice facilities for tech startups.

I don't know the exact terms of universities when it comes to founding companies but I don't see how the university can prevent you from founding a company, or demand a percentage.

I don't think that's the case. I've anecdotally heard that Stanford does take some (possibly small) amount of equity. From the first paragraph of Stanford's patent policy[0]:

> All potentially patentable inventions conceived or first reduced to practice in whole or in part by members of the faculty or staff (including student employees) of the University in the course of their University responsibilities or with more than incidental use of University resources, shall be disclosed on a timely basis to the University. Title to such inventions shall be assigned to the University, regardless of the source of funding, if any.

For an example of an institution with the kind of IP policy you're describing, the University of Waterloo in Canada has a policy[1] that by default assigns IP to creators rather than the institution:

> Except as stipulated below, it is University policy that ownership of rights in IP created in the course of teaching and research activities belong to the creator(s).

[0]: https://doresearch.stanford.edu/policies/research-policy-han... [1]: https://uwaterloo.ca/secretariat/policies-procedures-guideli...

Yeah this is definitely false. In most cases you own 1/3 at Stanford. But Stanford supports entrepreneurship like nowhere else, in my experience.

That's interesting. Maybe it's the amount of equity that matters so much - it's been years since I heard this and it was an off-hand comment in a talk.

Yeah, the important part about this is "with more than incidental use of University resources," which, for software, is almost nonexistent. (Even internet usage doesn't count as more than "incidental," which I know is a point that many places use to "suggest" they had a part in the creation.)

Otoh, they are extremely supportive of professors and PhDs (and undergrads, though those are often more software) starting companies based on research, and have very good policies regarding this. Most people end up generally happy on all sides.

> The argument I heard was that if you're researching at Stanford and make a productizable discovery you can spin off a company no strings

It's definitely not "no strings" - otherwise Stanford wouldn't be the actual owners of PageRank (which they licensed to Google).

Might be different in upper levels, but this wasn't the case from my experience as an undergrad at Stanford. Wanted to mess around with programming drones for a prototype delivery system (I think in 2015), submitted my proposal for a 2k grant to buy a drone, but I dropped the idea when the committee that manages it said they would make decisions about IP. Maybe my proposal wasn't important enough to warrant an actual negotiation? I suspect that at upper levels of development/research this process is handled differently.

undergraduates aren't employees and have total freedom to do what they want with their intellectual output. However, they can just decide not to give you any money if you make trouble.

No one disputes that those events you cite happened. However, those events were essentially random, not caused by local efforts to stimulate industry. Because of them, the area was blessed/cursed with an excess of productivity that it didn't know how to cause.

Now it's just coasting downhill, unable to maintain the altitude that it once had because it never knew how to (was never possible to?) build that altitude without a big dose of random luck.

Stanford Research Park was a joint venture between Stanford and the city of palo alto. It was highly non-random.

Lots of failed research parks, oil wells, railroads, gold mining operations.

The thing with oil wells, railroads, and gold mining, is that geography/geology matters more than path dependence.

Silicon Valley and Hollywood, and to a lesser extent NYC and London, are more about path dependence. Their dominance in their sectors seem more resulting from, if anything specific to point to, legal factors, than geography or any particular natural resource/phenomenon.

Why make movies and software in California, one in the south and the other a bit more north?

The founding of Hollywood was just as random as the events that "caused" the rise of the Valley. What if Griffith had gone elsewhere? What if Edison hadn't enforced his patents, causing the exodus across the country to make movies out of his purview? Similar climate/environs/affordability elsewhere, why not AZ, NM, TX, GA, FL?

This is a lot different than, say, the reasons for North Carolina to eventually beat New England in textile production, or why the Rust Belt is where it is, or why rail and shipbuilding was big in the Northeast but not so much space and auto manufacturing. It's more like why the appliances that are made in the U.S. are mostly made in the south.

Hollywood is what Hollywood is largely due to its geography. Within a ~4 hour drive of Hollywood its possible to get to an area of california that looks at least passingly (for the purpose of movie making at least) similar to more or less anywhere in the world.

This isn't the map i was looking for, but gives you the basic idea https://brilliantmaps.com/california-filming-map/. The Geographic diversity around Hollywood is absolutely responsible for its initial success.

The climate too. Always sunny (good lighting). Warm, but not too hot.

Cool map. Ecological diversity is evident around LA:

http://www.californiaherps.com/images/vegetationmapjeaster.j...

But what were the first two movies made in Hollywood? Griffith's Western and DeMille's Western. If another genre had been preferred in the 1910s, seems like a movie hub could've landed elsewhere. (Or maybe Westerns were actually made more due to budgetary constraints than preferences.)

https://digg.com/2019/movie-genre-popularity-1910-to-2018-da...

Couldn't've be East Coast because Edison.

https://www.mentalfloss.com/article/51722/thomas-edison-drov...

I honestly do not understand the downvotes. These are perfectly valid points, well argued ...

Edit: Was grayed out when first seen.-

They were most certainly caused by local efforts in the 1950s. The reason the Silicon revolution happened in Silicon Valley had everything to do with Cold War radar systems. I suggest watching Steve Blank's Secret History of Silicon Valley to get a better historical perspective:

https://steveblank.com/secret-history/

the cold war and american science by stuart leslie is a good accounting of the overall history from the early 20th century to the 80s: https://www.goodreads.com/book/show/212074.The_Cold_War_and_...

The "silicon revolution" happened at Bell Labs, rising out of their need to replace vacuum tubes. Shockley only moved to SV because his mother lived there, and she was sick. And it just so happened that Terman invested heavily in making Stanford into a college with heavy links to industry. It is true that military research was a factor in this process (again, semi-coincidentally...Bell Labs invested heavily in military research because they believed, correctly at first, that this would protect them from being broken up...radar was invented, in its modern form, in the UK and developed heavily by Bell Labs/MIT) but there were other factors. SV's pre-eminence looked at from the 1950s was extremely non-obvious however (Boston was the centre of the VC world, MIT and Bell Labs led in research).

Agree, and a lot of those events were 60-80 years ago. I doubt that the amazing innovation and clever governance that allowed these events to happen (or cultivated them) would be possible today

Lots of places contributed to WWII research initiatives. Why not Chicago, where the first nuclear reactor was built? Or Boston, with MIT whose research labs churned out fire control systems and computers? Or Los Angeles, with its defense powerhouses and UCLA/Cal-Tech? Or Detroit? Or anywhere else in the US with given the wartime mobilization?

Because Shockley moved here. Fairchild was founded here, and the Fairchildren built Silicon Valley and its venture capitalism.

MIT had a similar revolution centered around Route 128.

What about other municipalities/areas who have great universities and contributed to WW2? There are many examples of areas with similar initiatives and prestigious universities but have not reaped the same outsized rewards over the past 60-80 years as SFBA. So I would posit that it is more luck than execution, and thus qualifies as a resource curse

The lack of non compete bans anywhere else in the country is not luck though, and other worker protections that prevent legal liability for stuff you work on outside of work.

Yes, but as he correctly points out, none of those things were done by the local govts.

This lecture by Steve Blank at the Computer History Museum is a great summary of the growth of Silicon Valley

https://m.youtube.com/watch?v=ZTC_RxWN_xo

Could you make a similar statement in 1970 about Detroit?

"Detroit" moved to the suburbs. Check out the statistics for Oakland county (and possibly macomb county for the blue collar workers).

Toyota, GM, Ford, Chrysler, Nissan, VW, and all their parts suppliers(and the supplier parts suppliers) have at minimum a white collar office in south east Michigan.

The event that caused the Exodus from Detroit was the Race Riots. You can Google that because I'm not touching that topic.(and it doesn't help Detroit has a 1% tax)

>"Detroit" moved to the suburbs

Similar thing can happen to SV. People moving to "suburbs" -> other parts of CA.

Most people I know would choose to live in a temperate climate with low humidity if they had the option. Detroit might have been economically useful due to certain modes of travel and location of population at the time, but that may not be relevant anymore.

It's also the strong anti-non-compete of CA that allowed the flourishing and spread of technology and know-how.

Come on: there’s a beautiful A/B test you can consult: in the 50s, 60s, and 70s, Boston’s route 128 was the “Silicon Valley” of its time. The US poured even more money into it than they did the Bay Area. Yet which grew and which stagnated?

I think THE major difference was enforcement of noncompetes (as well as those as a proxy for a slew of similar regulatory differences).

Financial resources went to route 128 because of a more corporate-friendly regulatory climate. Innovation came from Silicon Valley because of a more innovation-friendly regulatory climate.

Guess which won out?

US reached economic supremacy in part due to a weaker IP scheme than Europe, and China is doing likewise right now. Innovation requires a mixture of economic rewards (which doesn't happen in the absence of any enforcement), and building off of the work of others (which doesn't happen with strict IP laws). Massachusetts went off of the deep end of more is better.

Coincidentally, Boston is doing better for big business, like biotech, in part because there, the balance falls in a different place. It's very tough to start a scrappy biotech, so the number of employee leaving to do a competing startup is pretty darned low in either case. The downsides of strong IP are smaller, and the upsides of weak IP are greater.

>Guess which won out?

For a long time, Route 128 did largely win out, semiconductors in SV notwithstanding. The lead in computer-related technology did tend to shift to California with the shift to microcomputers. Although it's not clear that was in any way inevitable. (After all, Compaq was in Texas.)

.... Which was the exact moment computing stopped looking like biotech. Before microcomputers, starting a computer company required an investment of perhaps a million dollars in today's currency, depending on the type of company.

After microcomputers, anyone could do it out of their home.

If my employer is making a CAD tool and makes a dumb decision, I can make my better CAD tool and put them out of business. Even hardware changed when I no longer needed to buy individual transistors. Things like the Apple could be designed out of a garage, with commercial off-the-shelf parts, perhaps borrowing a little bit of money from friends and family, but without even taking out a second mortgage. From there, things spiraled up, with quick-turn $40 PCBs, fabless IC companies, and so on.

It didn't have to happen in Silicon Valley, but it couldn't happen in Boston, and with Stanford and what not, Silicon Valley was as good a place as any.

This is not an antagonistic comment but do you have any sources to share about this? I've lived in both cities and feel like I should know more about this.

First results on DDG:

https://www.confortolaw.com/non-competition-agreements.html

https://www.huffpost.com/entry/understanding-californias-ban...

>Boston is doing better for big business, like biotech

There is also a LOT of biotech in sfbay, but it is still in the shadow of internet tech, for various reasons (PhD is minimum cost of entry, longer development times, etc)

Having worked in both fields (computing and pharmaceuticals) and in both areas (Boston/Cambridge and Silicon Valley -- though never in SF) I can tell you the Bay Area is a shadow of the Boston area in this regard. And the VC dollars send the same message. It honestly surprises me that the JP Morgan healthcare conference is still out here -- I imagine it's due to weather: it's a January conference, and a good excuse to get out of NY/BOS at a nasty time of year.

My point in my GGP post was that the opposite is true, first for tech and more recently for internet commerce, in the Bay Area. And I agree that the #1 driver was a healthy attitude to IP laws (which also drove the film industry to California, first to the Bay Area and then to LA).

And the second was an attitude that people don't care so much about your background and what's been done to date, an attitude I believe to be a legacy of the gold rush.

>I think THE major difference was enforcement of noncompetes (as well as those as a proxy for a slew of similar regulatory differences). <

Exactly

But was that part of brilliant overarching strategy from visionary government leaders to develop and foster the world's tech hub, or an accident of history?

I think the point is that success comes from the accumulation of many factors; the best you can pull from them is a thread of attitude. "Success" is thus really an emergent phenomenon coming from a bunch of independent decisions, sometimes with feedback between them.

This is why efforts to "duplicate Silicon Valley" fail. Also why Europe was unable to move the locus of financial transactions from London even after the Euro. In both cases, there are plenty of things to point to but nobody really knows.

An accident most likely, since the policy dates to the 19th century.

There are so many differences between Boston’s route 128 and SFBA that it makes a pretty awful A/B test.

I’ve lived and worked in both. None of the things I prefer about SF have anything to do with the efforts of local governments.

If anything, I’d agree that the local governments efforts and misguided policies are responsible for most of what I dislike most about living in SF.

So much is handled so incredibly poorly, but everyone’s willing to put up with it for proximity to a giant money-making machine spewing wealth around.

An A/B test requires all other factors to be the same. Can you imagine a bunch of Harvard kids quit school, rent a house in Cambridge and code/party all year round?

I live in 02142 and I'm under the impression that this is already what they do....

I remember reading an article a log time ago, probably in the late '80s or early '90s, in a non-online newspaper or magazine that looked at a dozen or two other places that seemed like they were good candidates for SV-like development but had failed to become such.

My recollection is that the article found that there were several factors that all came out right for SV. The other places fell short on one or more of them.

I don't remember all of the factors they found, but I remember a few.

One was nearby top tier research universities.

Another was ready access to investors willing to invest in new kinds of businesses. This one was a problem in several older places. The investors there just wanted to invest in companies doing old things or in doing things related to the main existing industry of the region.

Tolerance of failure was important. In some places, failure forever taints you. Start a company and it fails? The investment bankers no longer want to talk to you, and you don't get invited anymore to the parties and events where the behind the scenes networking goes on. In SV having a failed startup isn't a big deal.

I think there was an element of hippy culture mixed in there that contributed to success from openness and willingness to experiment on paths not directly connected to profit.

Also, I hardly think the opportunity was squandered - it's paid off for a long run. I do think there are challenges ahead for the model to continue to succeed faster than other areas.

> I think there was an element of hippy culture mixed in there that contributed to success from openness and willingness to experiment on paths not directly connected to profit.

I'd call it counter culture but I otherwise agree with you.

I believe that is incorrect.

California has laws that make it safe and easy for employees to go form a startup at the drop of a hat.

In California, regardless of their employee contract, employees own the inventions:

- made in their own time

- made without using the employers equipment or technology

Other states (Texas?) give employers an enormous amount of power over their employees, even giving them rights to the ideas in their heads.

don't forget non-competes and moonlighting. As the rest the world has proven there is [comparatively] no innovation and startups without these two. The things like for example Traitorous 8 can never happen.

Wrt. people leaving because of WFH - anecdotally people leave for other place where there are campuses of their companies. That suggests that there is not much trust in WFH. Once WFH subsides many of those people will still continue their comfortable work and life in those places. Those "stale blood" people - the highly paid employees of those large corps - aren't really drivers of innovation (making $0.5M+ at say Google as a programming drone one isn't going to drop it and make a startup - that is one of the points why Google is paying well :), and by leaving SFBA they provide the chance (by for example relieving real estate pressure a bit) for the "new blood" to come in.

For example, Wozniak was moonlighting from his HP job when he worked with Jobs at Atari.

A local government is only as good as its people. It's people squandered it, though forcing egregious zoning regulations that's leading to the exodus. They claimed profits to the point where it damaged their ability to collect further profits.

Isn't SF wildly corrupt? Do the puppet masters bear any responsibility for the outcomes they orchestrate? Or is stewardship an obsolete concept?

Assessing through the lens of strictly zoning laws, I don't think they've done anything wrong. If we (as a society) say zoning is controlled by local governments, and not the state government, then they are free to vote in people that pass (what I view) as draconian zoning policy.

My criticism of zoning is, historically, it has been used to keep certain groups of people out of certain geographic areas.

Yes SF is apparently wildly corrupt. There's an ongoing FBI probe which seems to show that a wide swath of top level city public works employees have been involved in some sort of corruption scandal. The latest revelation is about the former mayor Ed Lee who died last year. Follow the links in the article for all the tentacles in this farce.

https://www.sfchronicle.com/bayarea/philmatier/article/Forme...

> Tech in SFBA reminds me of the Resource curse (https://en.wikipedia.org/wiki/Resource_curse).

Okay, I'm going to give you the benefit of the doubt here because you said "reminds [you]", not that it _is_ in fact the Resource curse. However, you must acknowledge that the Resource Curse doesn't describe the SF Bay Area _at all_.

We have the richest real estate in country, some of the highest earning zipcodes in the country, employment rate most of the country would love to have, etc. There's no "curse" here, as defined in the economic sense.

The ban on non-competes was pretty instrumental to allowing the startup revolution to occur somewhere in California.

What about great weather and food

> It seems the local gov't have squandered an opportunity to truly capitalize on the gift they were given, and perhaps even done their best to jeopardize these resources.

Wait, what?

What exactly was local government supposed to do with this, ah gift?

From the perspective of someone who doesn't live in the Bay area, it is a libertarian paradise for the haves, unlivable for the have-nots, and is the pinnacle of American culture, with its focus on individualistic solutions (detached housing, strong zoning laws that protect existing landowners, reliance on personal vehicle ownership, privatization of critical services) to society-scale problems.

Throw in conflicting interests of the residents of the cities that make up the SFBA, and you pretty much get what one would expect.

Before asking why your local government has not fixed <some problem that makes us mildly uncomfortable>, you may want to instead ask 'Why haven't we elected a local government that would fix that problem?' Tech has an outsized amount of political influence on governments and elections in the area. Governments don't exist in a vacuum, completely detached from the desires of their constituents.

> the Bay Area

> libertarian paradise

What a strange notion. San Francisco has some of the most paternalistic laws in the US, courtesy of its board of supervisors. Some of them even wanted to ban corporate cafeterias, an issue which returned last year:

https://sfist.com/2019/07/22/watered-down-version-of-sfs-tec...

To pin the blame for these problems on libertarians, of all people, is the height of absurdity:

https://en.wikipedia.org/wiki/Politics_in_the_San_Francisco_...