In September 2014, Google’s subsidiary Calico LLC and a pharmaceutical firm, AbbVie Inc., announced a partnership potentially worth $1.5 billion, to develop treatments for Alzheimer’s, Parkinson’s and other age-related diseases.
For Google, the initiative marked an effort to expand beyond computer software. For Silicon Valley, the California region known for its high-tech companies and entrepreneurial culture, it suggested new areas for research, for innovation, and for confronting the future. For observers outside the Valley, it posed questions like: Can that global hub of high technology and creative entrepreneurship continue to innovate? And, if it can, can Silicon Valley save the world?
Semiconductors grow in orchards
Observers disagree on how and when the unique mix of technological savvy and entrepreneurial spirit that define Silicon Valley began. Some point to the Palo Alto garage where, in 1939, David Packard and William Hewlett launched their electronics company. Others point to William Shockley, co-inventor of the transistor.
In 1955, Shockley established a semiconductor lab among apricot orchards in a valley near San Francisco. He recruited 12 bright researchers to work for him. Just two years later, eight of them used $3,500 of their own money to develop a method of mass-producing silicon transistors and left Shockley to start Fairchild Semiconductor.
Eventually, many Fairchild employees founded tech startups of their own. And so it went. Companies divided, broke off and multiplied. Innovation accelerated. As historian Leslie Berlin explains, the skills developed while refining one profitable product supported the development of the next.
What makes Silicon Valley unique?
The Valley began with a few advantages. Nearby Stanford University provided technical expertise and, in the crucial years following the second world war, a focus not only on theoretical advances — U.S. government research dollars helped here — but on using those advances to envision and create new consumer products.
Venture capitalists, consultants, attorneys and others saw business opportunities in this model. They learned enough about emerging technologies to evaluate new ideas and to support entrepreneurs with business savvy and crucial investment capital. Bottom line: In the Valley it is relatively easy for an entrepreneur with little more than a good idea to start a company cheaply.
Many have tried to distill and duplicate the Silicon Valley formula. Few have succeeded. So what’s the secret ingredient?
In a word, it’s the culture. Start with a strong tech infrastructure. Add California’s Gold Rush legend and easygoing lifestyle. That’s a recipe to attract people with ideas, a high tolerance for risk and little to lose, says Berlin.
Then there’s critical mass. As more tech entrepreneurs move in, they encounter people like themselves.
“Enthusiasts push each other to come up with something new and better,” says Ashlee Vance, author of Geek Silicon Valley. “Employees shift from company to company, bringing with them concepts that can be tweaked to create a fresh invention.”
In other words, build a place where tech entrepreneurs can network and thrive. As their numbers grow, the place becomes all the more attractive to others.
Other places in the U.S. and around the world have tried to cultivate their own Silicon Valleys. Many have strong universities and plenty of money. And yet they often fail. Why?
Those in the know point to two Valley intangibles: passion and openness.
“If you’re not passionate, you won’t be able to persuade others to join you, invest in you or pay you,” says entrepreneur Jon Grall. “Passion will also help see you through the tough times.”
It doesn’t mean that entrepreneurs don’t make money. They do — sometimes even big money. But for many ambitious tech entrepreneurs money’s not what drives them.
“Google’s position was we have a responsibility to do something amazing for the world,” Sebastian Thrun told the Wall Street Journal. German-born Thrun heads Google X, the company’s advanced research department.
Another thing about passion. If you’re driven to do something, “ethnicity, skin color and accent don’t matter.” Those are the words of Indian-born entrepreneur Yogen Kapadia, who adds that in Silicon Valley “your ability to succeed depends only on your desire to succeed, your ability to innovate and your capacity to work hard.”
Kapadia’s startup, Infinote, is among nearly half of all Silicon Valley tech companies that have at least one founder born outside the U.S. This openness helps explain why Silicon Valley succeeds in drawing talent from around the world.
A disruptive future
The Valley always sought to invent the future, says Chong-Moon Lee, editor of The Silicon Valley Edge. But are its ambitions now too great even for the most visionary entrepreneurs?
Google’s initial mission statement called for nothing less than organizing the world’s information and making it universally accessible and useful. More recently, its chief executive, Larry Page, told the Financial Times the company “could probably solve a lot of the issues we have as humans.”
Cut to the Calico venture. It typifies tech companies’ efforts to disrupt, or radically remake, established industries in fields from transportation (Uber, Tesla Motors) and education (Udacity) to energy (Imergy Power Systems, Bloom Energy) and aerospace (Skybox Imaging, Planet Labs).
Doubters have long predicted Silicon Valley’s downfall. In the 1970s, they pointed to oil shortages. Then they cited Japanese competition and the “dot-com” financial bubble.
Today’s doubters see glimmers of the Valley’s demise in the tech sector’s outsized ambitions. Yet fiscal 2015 proved a record year, with more patents, more stock market launches and a larger share of investments going into the Valley than ever before.
Only time will tell whether the passionate, open-minded, ambitious and, yes, brilliant entrepreneurs of California’s Silicon Valley really can save the world.