Everyone wants to build the next Silicon Valley, says Dileep Rao in a Forbes article recently. He is spot on with his analysis. A common question I get asked is ‘where is the next Silicon Valley’ – and it is also one that many business and mainstream media also ask in various articles and commentaries. All appear to be on a quest to identify the next big tech hub that has the ingredients that can generate the economic impact that Silicon Valley itself does.
The question ‘What is the Next ‘Silicon Valley?’ is also posed in in the New York Times. This is an interesting narrative on locations proclaiming to be the top destination for technology business or the next big Silicon Valley-like tech hub – places such as Chicago, Orlando or South Bend, Ind. It says however that tech businesses and ‘nerds’ still want to go to Silicon Valley – despite the attraction of many other locations.
This attraction of Silicon Valley seems to be reflected in the numbers. If you look at research from the Brookings Institution, it highlights that among the 100 largest metropolitan areas in the United States, San Jose, California, ranks first in ‘advanced industry’ employment as a share of total employment. ‘Advanced Industries’ is characterized by its deep involvement with technology research and development (R&D) and STEM (science, technology, engineering, and math) workers; this sector encompasses 50 industries ranging from manufacturing industries such as auto-making and aerospace to energy industries such as oil and gas extraction to high-tech services such as computer software and computer system design, including for health applications.
The institute says advanced industries represent a sizable economic anchor for the US economy and this sector has led post-recession employment recovery. Modest in size, the sector packs a massive economic punch – as such, these industries encompass the country’s best shot at supporting innovative, inclusive, and sustainable growth.
The Progressive Policy Institute (PPI) also says that places with strong tech/information growth have survived the recession much better that their counterparts. In particular, counties with a higher number of new tech/information sector jobs from 2007 to 2012 had enjoyed substantially faster growth in both overall private employment and non-tech jobs over the same period.
In their PPI Tech/Info Job Index, which measures the number of new tech/information jobs between 2007 and 2012 as a share of 2007 total private sector employment in that county, San Francisco, San Mateo and Santa Clara counties come in the top three – all are in Northern California, embracing the broader area known as ‘Silicon Valley’. The implication of the index is that policies encouraging tech/info growth are more likely to boost the overall economy.
So the question ‘where is the next Silicon Valley’ is not really about replicating Silicon Valley. It’s more about asking which places are creating the tech jobs and ecosystems that can generate the type of economic impact that Silicon Valley has been able to do via this route – creating the tech jobs of the new economy. We now see many places are building their own local version of Silicon Valley, not necessarily just trying to replicate it.
This takes me back to Dileep Rao’s article – what are the key ingredients to creating a Silicon Valley like ecosystem? I summarize his seven ‘rules’ here:
- Attract the world’s best, brightest, and hungriest.
- Develop entrepreneurial radicals who will focus on the next hot trend.
- Don’t ration success from the top down. Build success from the bottom-up.
- Design the infrastructure to build new giants.
- Organize funding institutions to feed the growth after ‘Aha’.
- It’s the entrepreneurs, stupid.
- Beat Silicon Valley.
Overall, it’s about the people and openness – as Rao says, “It is not enough to encourage locals to become brighter. Silicon Valley was not built by the locals, who were mainly in orange groves. Silicon Valley grew because of its ability and openness to attract the world’s best, brightest, and hungriest. Other areas do try to pick their best and then educate them to do great things. But Silicon Valley can do that and more – it can draw them from the distant corners of the world.”
He adds, “In many parts of the world, bright minds are wasted because the rich and the powerful control, as in many Asian, African, and Latin American countries, or bright, young minds join the country’s established organizations rather than pursuing their dream, as in Germany. To grow, areas need to focus on smarts, not skin color; on potential, not breeding; on the motivated, not on the blue-bloods; on practical achievement, not academic brilliance; on open walls, not closed doors; and on law, not corruption. This is the most important rule.”
Many governments, innovation agencies and economic development agencies have recognized these factors, and are indeed creating their own thriving entrepreneur ecosystems focused on nurturing local talent and attracting talent from around the world. And that means there is not just one next ‘Silicon Valley’, but many such places evolving around the world.