Techdirt — Silicon Valley’s Secret Ingredient — 26 May 2015

Many people have tried to figure out what factors contributed to making Silicon Valley a center of rapid innovation, usually so that they might replicate it elsewhere. But most of these efforts focus on superficial aspects and miss the most important feature of Silicon Valley’s culture: the open and free flow of ideas, information and talent. This week, Mike, Dennis and Hersh discuss their personal experiences with Silicon Valley and their observations about what really makes it so special.

What’s the show?

—The show starts out with a monologue read from Mike Masnick, noted tech reporter, and then a discussion of the monologue topic by Masnick and usually two other Techdirt contributors. It’s an insightful and grounded discussion about the tech world, from a fresh perspective. It’s still new and gaining its stride, but fast became one of my favourites as soon as it launched.

Episode Thoughts

— I don’t live in Silicon Valley, and I’ve never worked there. Unless it was as a small child I haven’t been there. I know I’ve been to Napa Valley, because the memories of being in a hot air balloon above the grapevines are somewhat vivid, but I couldn’t have been to Silicon Valley back then, or I would have surely remembered. I would have known, from the taste of the air or the look of the strip malls, that this was going to be the place where all the news I would one day read came from.

Sure doesn’t look like the most interesting place in the world. Source: Wikimedia

No, for knowing so little about the actual place I’ve developed over years a deep and abiding respect for the region. That’s not special, millions of others have as well, also from around the globe, many who’ve never come nearly as close geographically.

So why is this the place where all the stuff comes from? This show is hosted by three non-Silicon Valley natives plumbing their almost 6 decades of collective life experience there to try and come up with the defining reasons for the area’s completely outsized effect on the world.

Unenforceable Non-competes

The unenforceability of non-compete contract clauses is what Mike Masnick points to as the leading cause. That may take a bit of explanation for someone not familiar with either those terms or their meaning on the performance of an industry to grasp. I suspect though that someone who would be a potential Techdirt listener would have an understanding of the benefits of career mobility for the knowledge workers of the Valley’s initial hardware and subsequent software industries. It’s a point well-illustrated by an example from Detroit. A law change in the 1980's creating enforceable non-compete agreements correlates strongly to the beginning of a decline in the auto industry. Some Googling revealed this academic study on the matter, which “explores a legal constraint on mobility — employee non-compete agreements — by exploiting Michigan’s apparently inadvertent 1985 reversal of its non-compete enforcement policy as a natural experiment.”. The results of that experiment do seem to agree with Masnick’s argument. If you’re working somewhere, but get a better offer elsewhere to advance or expand your work, you can take it. If you want to take the work you’ve been doing for your boss, and start your own company and become their competitor, you can, within reason.

The kismet of the Valley

Co-host Dennis Yang’s first point from his own two decades of experience in the Valley is the ‘kismet’ of the place. Unfamiliar with the word I found a definition. While not likely being the meaning he had intended for the word, I found it amusing.

Likely, this is the definition he meant, and the other two co-hosts seemed familiar with the usage of it in this context.

I found that interesting. Sure, if you have enough people from potentially synergistic fields in one area there will be a higher occurrence of happy coincidences. If the community holds the sharing of ideas and collaborating across disciplinary and corporate lines as a norm than that is even more likely. Kismet does not denote coincidence though. What Dennis is saying with the use of a word with the same meaning as its English-equivalent ‘fate’ is that once Silicon Valley reached a critical mass it was fate that caused the growth of the tech sector to happen here. Fated for it to become the nest for the world’s largest tech companies. Mark Zuckerberg may have had an inkling for Facebook at Harvard but possibly he was fated for success in Silicon Valley, and nowhere else.

The Traitorous Eight

So the freedom of talented people to change their employment or start their own company to follow their passions is possibly the key ingredient for Silicon Valley’s success. In the early days of the Valley’s history, it was that specific impulse that set the groundwork for the Valley’s snowballing success story, through an act of betrayal. I’ll excerpt from Wikipedia here.

“The traitorous eight are eight men who left Shockley Semiconductor Laboratory in 1957. William Shockleyhad in 1956 recruited a group of young PhD graduates with the goal to develop and produce new semiconductor devices. While Shockley had received a Nobel Prize in Physics and was an experienced researcher and teacher, his managing of the group created harsh working conditions. He chose a strategy for circuit design that failed and created an intolerable working atmosphere. The group of PhD graduates hired demanded that Shockley be replaced. When their demands were rebuffed, they realized they had to leave.

With a name and story like that I can’t believe this hasn’t already been turned into a film.

Shockley described their leaving as a “betrayal”. The eight who left Shockley Semiconductor were Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce and Sheldon Roberts. In August 1957 they reached an agreement with Sherman Fairchild and on September 18, 1957 they formed Fairchild Semiconductor. The newly founded Fairchild Semiconductor soon grew into a leader of the semiconductor industry. In 1960 it became an incubator of Silicon Valley, and was directly or indirectly involved in the creation of dozens of corporations such as AMD and Intel. These many spin-off companies came to be known as “Fairchildren”.”

So the tradition of talent mobility had its beginnings in the Valley, and has continued till today. From the hardware companies that pioneered circuitry, to the software companies that went on to conquer the world, it’s primarily happened within what was at first a rural area without long-distance phone service.

It was a fantastic episode for pondering not only the recent tech headlines and trends, but to find out some of the fascinating history of the early days of the region.