The secret to Silicon Valley’s enduring success

[This post is part of a series produced for VentureBeat by Singularity University.]

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Around the world, you regularly see stories about an attempt to create “The Silicon Valley of <fill in country>,” but you rarely read about a successful new competitor to Silicon Valley. Many theories have been advanced about the reasons for the success of Northern California in so many fields — areospace, semiconductors, chips, PCs, software, biotech, and of course the various iterations of the Internet (boom, web 2, and social) along with less certified booms in cleantech, cars, pharmaceuticals, robotics, and more.

Theories have pointed to the presence of Stanford and its ecosystem or to Hewlett-Packard and its leadership. The large VC community is seen as both a driver of the success and a positive feedback consequence of it. The liberal/libertarian/hippie culture is cited, and some give credit to the major government spending of the early era as the essential kickstarter. And once Silicon Valley was built, there’s no doubt that the large pool of talent, its philosophies, and the easy access to capital have helped sustain it.

All these factors play a role, and most of them have been duplicated (especially government-funded incubators) in the failed attempts to duplicate Silicon Valley around the world. But one factor usually has not: Silicon Valley’s unique immigrant population.

I came to an important realization about this when attending a high-end conference for PC and Internet executives in the late ’90s. A speaker wanted to make a point about immigration to the room, which was full of founders and top executives from the high-tech companies, mostly of Silicon Valley.

He said, “If you were born outside the United States, please stand up.” And more than half of those in the room, including myself, stood up.

We looked at one another, stunned by the realization.

This is no anecdote. A study by Wadhwa et al from Duke University concluded that 52% of startup founders in the USA were immigrants, and that immigrant-founded companies created over 450,000 jobs in 2005.

I had seen some inkling of this before. In 1980, I came to the valley for the first time to work for the first PC software company (Personal Software Inc, later known as VisiCorp), which had itself moved there from Boston and Toronto — yes, it had an immigrant founder. I was surprised how everybody I met in high tech was from “somewhere else.” Not necessarily from outside the USA, but almost universally from outside of the area.
We used to joke how you could not find a native.

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But it was no joke. And I’m sure that if you asked a crowd of high-tech founders in Silicon Valley to stand up if they were born outside the valley, the vast majority of the room would stand. The key aspect of Silicon Valley is that most of these people gave up a life somewhere else — often somewhere outside the USA — to come to California so they could start or participate in something big. The Kauffman Foundation recently released an impressive video demonstrating this phenomenon:

It’s not that the natives of Silicon Valley aren’t smart, wealthy, forward thinking and well educated. Of course they are. So are people in many other places in the world. But the valley has also pulled in the best and brightest of the world, and in particular the most driven. By selecting for drive, the valley is repeating the thing that made the USA and Canada great a century ago as nations of immigrants. While the century-old lesson is oft mentioned, I wish those who are espousing anti-immigrant policies could see the room of high-tech job-creating immigrants standing up. I wish they could see that this immigrant-driven success is happening now, as we speak.

The bad news for those who wish to duplicate the valley is that this is not an easy factor to reproduce. If you can’t build a high-tech valley with your own people, how do you build it with others? Silicon Valley’s other edges — including things like its wonderful climate and Californian surroundings give it a leg-up in attracting immigrants. At the same time, its astronomical housing prices and the anti-immigrant sentiment in the USA push back pretty hard.

As more evidence for this idea, note that other places that have achieved high-tech success, such as Israel and Canada, are young, immigrant-driven countries. The process of building a high-tech center in your town is going to be a slow one. You need to do many things, including most of the popular ones cited above, but you also have to change your immigration policy, and wait a long time to bring in those immigrants.  For now, it seems Silicon Valley is going to keep repeating itself in the success column.

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Brad Templeton is director of the Electonic Frontier Foundation and chair of the Networks and Computing Systems Track at Singularity University.

[Top image credit:  jejim/Shutterstock]