June 2007

I wrote a piece describing the Silicon Valley and the secret behind its success recently. I have appended the text below.

You are right now in the heart of an area, once called “The Valley of Heart’s Delight”, today better known as the Silicon Valley. Few locations have this veil of mystery. What is the secret behind the success and the ability to rejuvenate itself? Many have tried to analyze the ecosystem of the Valley and certain key factors can probably be found. The mixture of companies of different size, together with the presence of one of the best universities in the world, is fundamental. It has been described as “a regional network-based industrial system that promotes learning and flexible adjustment among specialist producers of a complex of related technologies” in contrast to the situation often found in Europe or, for example in the Boston Area, where regions are dominated by a small number of fully integrated, but independent corporations.

The Silicon Valley mixture of large companies, such as Google, Yahoo, Intel and Cisco, with small and medium sized start-ups enables both people and knowledge to easily flow between the different companies. Various events, seminars, conferences, workshops or just a cup of coffee in the sunshine all lead to an effective technology transfer and exchange of knowledge. Competition and collaboration coexist, creating strong personal connections between the people.

Collaboration, both informal and more formalized, is certainly a key factor to the mystery. The constant exchange of ideas, revolutionary new concepts, brainstorming, competing, challenging each other, all contribute to creating the vital energetic heart beat of the Valley. It is therefore not surprising that the new social media, often referred to as Web 2.0, is thriving here in the Valley, while having some trouble with acceptance in other parts of the world. A vital element of the social media is the interaction between the users. Phenomena such as YouTube, MySpace, and Wikipedia are significant signs of the social media really appealing to the users. Social media is about personal connections between individuals and harnessing those connections to take advantage of the collective knowledge of the community.

The idea of collaboration and organic network building are, however, not new in Sweden either. The so called “dinner teams” in the student organizations called “Nations” in Uppsala in the early and middle part of last century nurtured and created personal relationships across the academic disciplines discussions during breakfast, lunch and dinner. The social gatherings at the Nations in Uppsala have always been significant network building activities. Other social networks such as Juvenalorden, Orphei Drängar and Royal Society of Science have also had importance. On the national level, the traditional scientific societies and academies such as the Royal Academy of Science and Royal Swedish Academy of Engineering Sciences have acted as a social media. The national networks have predominantly been focused on connecting established individuals. Newly formed social networks, such as the elite student network Nova100, connect students early on in their studies and careers. These personal connections are further strengthened by social media and networking sites such as Facebook and LinkedIn.

The concept of building on friendship and collaboration as a means to create more powerful entities together is certainly well-known through history. The formation of the United Nations came out of the political chaos after the World Wars, and the European Union has its roots in the political tension between France and Germany. The main differences today are the bottom-up approach and the connections between individuals regardless of race, ethnicity, nationality, cultural or social background are constantly growing with the help of modern technology. The New York Times columnist and author Thomas L. Friedman spoke about this in his book “The World is Flat”. Combining the bottom-up approach with dynamic, organic and flexible yet firm leadership is definitely the future and is very much dominating in the Valley today. The hierarchies are there, yet democratic. They are organic, yet structured. They are dynamic, yet static.

The (free) exchange of ideas has been shown to be very important for the economical growth. Stanford Graduate School of Business Professor Paul Romer, who developed The New Growth Theory, explains it as:

“Perhaps the most important ideas of all are meta-ideas. These are ideas about how to support the production and transmission of other ideas.”

The unique social ecosystem combined with well-experienced and risk-taking (or perhaps somewhat risk-taking) investors make innovation thrive and flourish. Additionally, the number of people in the Valley having experienced the technology transfer process as well as the startup business world is much larger than elsewhere. Therefore anyone in the Valley – both established individuals and newcomers – can always find mentors to guide them. The importance of mentorship is also a key element in education. At American universities, each student gets assigned a counselor, mentor, to assist in selecting courses and other study related matters.

The importance of the mentality of the people living in the Valley cannot be over-exaggerated. The first new inhabitants of California (besides the Native American Indians) were men and women, stubbornly crossing the Rocky Mountains and enduring great hardships to find a new frontier. Their dedication is nothing else than remarkable and truly amazing. “I will get there, and I will build my own future…” Do and create the impossible. Do it yourself. Do not wait for anyone else to do it for you. They all believe in the impossible and always break new ground.

The role of Stanford University in the Valley is central. The former Dean of the School of Engineering at Stanford University, James F. Gibbons, brought forward one of the more commonly used explanations on Stanford’s role in the Valley, which is “transferring technology from its laboratories to commercial companies.” However, it is not necessarily restricted to the technology transfer office at the university, but rooted in the openness of the university. The close connection between the university and the outside of the university is often forgotten as a factor in the technology transfer, especially since many startups are brainchildren of students, researchers, and other faculty members of Stanford University. Many faculty members are advisors to high-tech startups in the Valley and it is very common that Stanford students work on startups in parallel to their studies.

Looking back Stanford University has been very active in creating what is now known as Silicon Valley. Many, who were transferred to California during the World War II, stayed on when the war ended, and a mass unemployment resulted. Professor Fred Terman encouraged his PhD students Bill Hewlett and David Packard to start a new business, and the rest is history. The birth of Hewlett Packard is historically important and also shows the importance of Stanford University on the ecosystem of the Valley.

A university is about curiosity, seeking answers, and questioning. This freedom of inquiry is an always present element in the daily life at Stanford University. Professor Emeritus in Physical Chemistry Lars-Olof Sundelof of Uppsala University in a speech once described the role of the university to be analogous to a shipyard. The shipyard can only build the ship, but the ship itself sails the oceans. The better preparations of the ship by the shipyard, the better it will manage the ocean (especially the storms). The university should prepare the students for their future and the future challenges they will face. It cannot nor should it dictate the future of the students. The students should make their own future. The students should however learn how to build their future. The students should learn to be curious, to seek answers, to be creative and to trust themselves.

It is important to produce results in various forms and results are certainly important in the Valley. It is about moving forward, evolving as individuals, and always trying to improve the research or product in the unalterable dance towards perfection. The iteration from simple models or prototypes to fully developed models or products, with the help of end audience and customers, has been formalized into the concept of iterative prototyping and other innovation frameworks. Fundamentally it is only about tailing the right solution for the end audience with its assistance. Social media solutions such as Wikipedia and Digg are good examples of using the community to build and form the right solution. Last year a new school with focus on design was founded at Stanford University – the Stanford d-School – which focuses on making the innovation process more efficient and provides courses on the innovation process and innovation frameworks.

Looking at the nature of the Valley and the role of Stanford University in it, it is also clear that any university plays an essential role in the growth of the society as well as in economical growth. What makes the Valley unique may not be the mentality of people in the Valley but the energy of the Valley surely is. It is inspiring and needs to be experienced. It is the thrill of innovation, curiosity, and people. It is the travel down the rabbit hole to Wonderland.