How to Create Your Very Own Silicon Valley

Theral Timpson

It’s a question everyone is asking.  How can we get some of that "stuff" going on in Silicon Valley over in our own neck of the woods?  The thriving innovation, the entrepreneurship, the technology, the money.  

For starters, I recommend you watch a presentation by a fellow well known around Silicon Valley, but new to me:  Steve Blank and his talk, The Secret History of Silicon Valley.

Last month I attended the yearly BIO convention in San Diego, an international confab for those in life science.  This is a conference short on science,  long on business.    This is the conference where states jockey for notice, where countries make their simple pitch:  our place is good for biotech.  Politicians are flown in to make this pitch directly. 

It’s also a convention for lawyers and tech transfer specialists.  They all want to duplicate Silicon Valley.   Every university today has an eye on Stanford and its tech transfer office.

“We’re small and we’re underfunded, we’re nothing like Stanford,” said a woman from the tech transfer office at Carnegie Mellon University.  We were standing in line to board an aircraft carrier for the opening night reception. (We Americans love to show off our might to the world.)

“But you want to be . . .”  I guessed.

“Who doesn’t?” came the immediate reply.

If America has a “shining city on a hill” these days, it’s the group of towns known collectively as Silicon Valley.  And their resident university shines brightest.  

In a New York Times article that ran just a few weeks before the BIO convention, a headline called Harvard “the Stanford of the East”-- a reversal hard to argue with.  

“Stanford’s reputation is far more than buzz . . . it’s sparkling facilities and entrepreneurial culture are widely envied.  But in particular, it basks in its image as the hub of Silicon Valley, alma mater to a string of technology moguls and incubator of giants like Google, Yahoo and Cisco," the article said.

We could add a list of biotech companies whose technology was spun out of Stanford, the crown being Genentech and the Boyer-Cohen patent that started biotechnology.  The inventor of the PCR based HIV test, Mark Holodniy, was also a Stanford professor.

How did it happen?  What made Silicon Valley what it is today?  Why is the New York Times calling Stanford America’s “it” school?

This is a question I’ve been pursuing since we began Mendelspod.  We’ve interviewed enterpreneurs whose companies are Stanford spin-offs, and I’ve asked them, what’s in the water over there?

A good part of the answer came from a meeting I had at BIO.  

Steve Blank is the creator of the Lean Launchpad, a class he developed at Stanford for entrepreneurs.  Steve started eight companies himself, four of which went public.  He’s now been contracted by the NIH to help them make better entrepreneurs.  (See our upcoming interview on the NIH I-Corp Training Program.)  Steve was hanging out at the NIH booth at BIO.  

After about two minutes into my chat with Steve, I knew that I was talking with someone intimately familiar with the story and success of Silicon Valley, and that I had to interview him.  

Had he read the recent article by Jill Lepore of the New Yorker that questioned the “innovation economy” and the “disrupt” concept championed by Harvard business professor, Clayton Christensen?  

“Yes,  And the only thing she got right was her name,” came his reply.

We set up an interview with Steve, and over the past couple weeks I've enjoyed getting to know him in preparation.   Steve’s blog is a treasure trove of ideas that are generously given.  In the blog I found a link to his “The Secret History of Silicon Valley.”

As he begins the talk, Steve jokes about those who might think Silicon Valley started when Zuckerberg came to town and built Facebook.  Or “that guy who recently died--what’s his name--oh yeah, Steve Jobs.”  

In fact the roots of Silicon Valley are in World War II.  And two men can be called the fathers of Sillicon Valley.

I already knew one of them,  William Shockley, the nobel prize winning physicist who co-invented the transister.   He’s the founder of Shockley Semiconductor Lab, the first establishment to work on silicon semiconductors in what came to be known as Silicon Valley.  Over the course of twenty years, eight of Shockley’s former employees started sixty-five new enterprises.  Two of those were Bob Noyce and Gordon Moore, founders of Intel.

This is the story we’ve all seen on PBS.

But the other father was a Stanford man.   Fred Terman was Dean of Engineering and later Provost at Stanford.  We’re introduced to him thirty minutes into Steve’s talk after a lengthy lesson on World War II, the first electronic war.  Because only east coast universities were give any real money to help the military during the war, Terman was pulled to Cambridge to oversee the Harvard Radio Lab.  This lab ran all electronic warfare during WWII.

After the war, Terman came back to Palo Alto, determined that Stanford would “never be screwed out of government dollars again.”  He succeeded.    Steve points out that we all know two of his grad students, Bill Hewlett and Dave Packard.  Terman helped them start their company, invested in it, and sat on their board.  There were many others.  As soon as was possible, Terman insisted that new technology be spun out and commercialized so the University could stay focused on new research.  Other companies he personally invested in were Litton Industries and Varian.     With his leadership, Stanford became an “outward leaning” university.  

On Friday we made it to Steve’s ranch up the California coast directly west of the valley for the interview.  We jumped right into history. 

“So if Stanford got the electronics contracts in the fifites, what happened to Berkeley?”  Steve threw out as I got comfortable on his couch.  

I got lucky with my answer.  “Well, Oppenheimer of atom bomb history was at Berkeley,” I volunteered.

“That’s right.  Berkeley got the nuclear program.  And it had to be kept secret.  Whereas Stanford could be this outward facing school with electronics.”

With an impressive command of the history, Steve leaves little doubt that Terman's leadership at Stanford led directly to the tech powerhouse that came to be known as Silicon Valley.   

So, what does this mean for those wanting to duplicate this success in their own corner of the world?   

There is a coda to this blog.  This week I also interviewed a young enterpreneur from Menlo Park, Brian Frezza, co-founder of Emerald Therapeutics.  Brian and his company have just launched the Emerald Cloud Lab, a robotic lab that life science researchers can access via the cloud. Brian and his co-founder, D. J. Kleinbaum, both came from Carnegie Mellon, a university in Pittsburgh started as Carnegie Technical Schools by the well known industrialist.  Brian had worked with the very tech transfer office at Carnegie Mellon represented by the woman I met at BIO.  So how did Brian end up in Silicon Valley?  

It turns out that Brian and D.J. came to Stanford to do their PhDs.  Then they were going to head back to Pittsburg where they were promised free lab space.     However, just before moving back,  the pair of entrepreneurs were wooed to stay in Silicon Valley by Peter Thiel with money from his Founders' Fund. 

Obviously other universities and places will have to do more than be good at tech transfer to compete with Silicon Valley today.  There’s more going on here in the land of Google, Genentech, and Gilead than the Stanford tech transfer office.   There’s now an ecosystem of available money, mentors, and workforce.   But Stanford's history with tech transfer is a good place to start.

The events we hear about in Steve’s talk can seem random accidents of history.  But the story of Fred Terman and his determination to build a tech community is one that can be studied and emulated.

Editor’s Note:  This article has been updated.  "Inventor of PCR" has been changed to "inventor of the PCR based HIV test."