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Should Smaller Indiana strive to be like Silicon Valley?
Nwodkedi Idika only arrived at Smaller Indiana Yesterday, but he immediately caught my attention when he said, "I'm hoping to meet others who want to see the Midwest become more like Silicon Valley."
What do you think of this goal? Should we strive to be like Silicon Valley?
Before you answer this questions, you might want to consider: how did Silicon Valley become the hotbed of technology that it is today? What makes it tick? And how has it sustained itself over time even as other regional technology clusters have tried to emulate its success?
If you need a bit more background / perspective on this topic, here's a good article describing the differences between Silicon Valley and other U.S. technology hotbeds. Excerpt from article: As world markets strive to be the "Silicon Valley of (fill in the blank), the differences even among U.S. geographies has me thinking what makes Silicon Valley so different from other geographies that have the same raw ingredients you'll find in the 57-mile stretch from San Jose to San Francisco.
There is a marked difference between the Valley and Valley wannabes. This difference is the intangible "it" that is as difficult to describe as it is to replicate. The spirit and culture of entrepreneurship thrive in Silicon Valley. It is a culture that eschews stability and certainty. When a business fails, its people scatter to new ventures that are the basis of new possibility and economic growth. (Read whole article here).
If you have an academic interest in this topic, check out a book called "Clusters, Networks and Innovation," by Stefano Breschi and Franco Malerba (Oxford University Press). One interesting side note from that book examines another technology region in Hsinchu-Tapei, Taiwan:
"...the authors argue that a key ingredient to their success has been the contributions given by a community of US-educated engineers who have built social and economic linkages between Silicon Valley and Hsinchu economies. This technical community formed during the 1970's and 80's as US educated Taiwanese engineers started to organize collectively and form professional networks and organizations. The reversal of this "brain drain", spurred by the acccelerated growth of the economy in the 80's, thus brought back to Taiwan an increasing number of returnees with strong professional and personal ties to Silicon Valley. Moreover, a growing population of new "argonauts", constantly travelling between companies with activities in both regions, also contributed to establish and co-ordinate a sustained flow of technical knowledge, skills, contacts, capital, and information about new opportunities and new markets. The development of this transnational technical community has also transformed the relationship between the Silicon Valley and Hsinchu economies from one-way to more decentralized two-way flows of technology, skills, and capital, but highly complementary capabilities."
This section goes on to say that multi-national corporations may no longer be the best way for ideas and innovation to spread globally. Innovation spreads as much through social and professional networks of people working on a local level.
There's no arguing with Silicon Valley's success, but it's harder to pin down the reasons why the region has been able to sustain its competitive advantage in the entrepreneurial, high tech arena. Is it the geography which clusters innovative companies closely together? Is it the social networks that connect workers across company lines? Is it the presence of venture capital? Is the the overall risk-taking mindset that seems to pervade the region? Is it the constant influx of bright minds who migrate there who help sustain the environment of innovation?
Should we immitate the "valley"? Can we immitate the "valley"?
Are we better served to immitate Silicon Valley? Or might we be better served to cooperate with the region as the Taiwanese engineers have done? What if we organized our own team of "argonauts" to live on the Silicon Valley "planet" for a time, and bring back to Indiana the knowledge and networks necessary to participate in the Silicon Valley ecosystem?
Or maybe that's already happening??
What do you think of this goal? Should we strive to be like Silicon Valley?
Before you answer this questions, you might want to consider: how did Silicon Valley become the hotbed of technology that it is today? What makes it tick? And how has it sustained itself over time even as other regional technology clusters have tried to emulate its success?
If you need a bit more background / perspective on this topic, here's a good article describing the differences between Silicon Valley and other U.S. technology hotbeds. Excerpt from article: As world markets strive to be the "Silicon Valley of (fill in the blank), the differences even among U.S. geographies has me thinking what makes Silicon Valley so different from other geographies that have the same raw ingredients you'll find in the 57-mile stretch from San Jose to San Francisco.
There is a marked difference between the Valley and Valley wannabes. This difference is the intangible "it" that is as difficult to describe as it is to replicate. The spirit and culture of entrepreneurship thrive in Silicon Valley. It is a culture that eschews stability and certainty. When a business fails, its people scatter to new ventures that are the basis of new possibility and economic growth. (Read whole article here).
If you have an academic interest in this topic, check out a book called "Clusters, Networks and Innovation," by Stefano Breschi and Franco Malerba (Oxford University Press). One interesting side note from that book examines another technology region in Hsinchu-Tapei, Taiwan:
"...the authors argue that a key ingredient to their success has been the contributions given by a community of US-educated engineers who have built social and economic linkages between Silicon Valley and Hsinchu economies. This technical community formed during the 1970's and 80's as US educated Taiwanese engineers started to organize collectively and form professional networks and organizations. The reversal of this "brain drain", spurred by the acccelerated growth of the economy in the 80's, thus brought back to Taiwan an increasing number of returnees with strong professional and personal ties to Silicon Valley. Moreover, a growing population of new "argonauts", constantly travelling between companies with activities in both regions, also contributed to establish and co-ordinate a sustained flow of technical knowledge, skills, contacts, capital, and information about new opportunities and new markets. The development of this transnational technical community has also transformed the relationship between the Silicon Valley and Hsinchu economies from one-way to more decentralized two-way flows of technology, skills, and capital, but highly complementary capabilities."
This section goes on to say that multi-national corporations may no longer be the best way for ideas and innovation to spread globally. Innovation spreads as much through social and professional networks of people working on a local level.
There's no arguing with Silicon Valley's success, but it's harder to pin down the reasons why the region has been able to sustain its competitive advantage in the entrepreneurial, high tech arena. Is it the geography which clusters innovative companies closely together? Is it the social networks that connect workers across company lines? Is it the presence of venture capital? Is the the overall risk-taking mindset that seems to pervade the region? Is it the constant influx of bright minds who migrate there who help sustain the environment of innovation?
Should we immitate the "valley"? Can we immitate the "valley"?
Are we better served to immitate Silicon Valley? Or might we be better served to cooperate with the region as the Taiwanese engineers have done? What if we organized our own team of "argonauts" to live on the Silicon Valley "planet" for a time, and bring back to Indiana the knowledge and networks necessary to participate in the Silicon Valley ecosystem?
Or maybe that's already happening??
Tags: entrepreneur, entrepreneurial, i.t., indiana, silicon, smaller, technology, valley
Replies to This Discussion
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Permalink Reply by Jon D. Speer on -
In a word: no. Indiana needs to play to its strengths. Strong research and technical universities, capable manufacturing, emerging life sciences, grounded values. As I see it, we need to better job of marketing our strengths and capabilities.
With that being said, Indiana also should pay attention to the world around us. We can certainly learn lessons good and bad about Silicon Valley, Taiwan, and others.
As a curious note, Indiana does seem to have quite a software and electronics presence. But many of these companies, as well as other service providers, indicate many of their clients are outside Indiana's borders.
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Permalink Reply by Jack Pincus on -
Indianapolis does have a reasonably good concentration of software companies on the Northwest side. What we don't see in Indiana very is people spinning off of these companies to start new ventures or starting new companies when the company they work for is sold.
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Permalink Reply by Chris Baggott on -
Huh? Actually this is exactly what's happening. Start a family tree from Sofware Artistry, Mezzia, Aprimo, ExactTarget, Baker Hill and you will see lot's of successful offspring. I can say for a fact that at least 5 companies have been started by alumni of ExactTarget.
Mark Hill I think evangelizes this best, but the fact that we have 8-10 years of success in technology companies being built, growing and finding exits inspires others to do the same, teaches hundreds of people locally "how to do it", and attracts all the funding necessary. Aside from all the local funding available, I personally get cold called by a coastal VC firm at least weekly.
We actually have the perfect environment.
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Permalink Reply by Thomas Ho on -
Chris is absolutely right! We just have to do a better job of telling this story so that's one of the reasons why we want to do events such as StartUp Weekend Indianapolis.
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Permalink Reply by Jack Pincus on
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I htink StartUp Weekend would be great and would love to help. I'm also trying to see whether it might be applicable to life sciences although it would be difficult to build a life sciences product in a weekend:-). I also think we have more to do than selling the story. We have to change the way people think. Selling the story may be part of achieving that goal but we have to do much more.
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Permalink Reply by Jack Pincus on
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We do have some software spinoffs and a few spinoffs from those but not enough for a vibrant cluster. And the number of startups formed each year is less than in other areas. Many of our university graduates do not have the passion for entrepreneurhsip. Large amounts of venture capital are hard to obtain. Most investors prefer hard assets and not technology. Mark Hill and possible one or two other succesful entrepreneurs recycle their profits into new companies. Many more cash in their chips and retire. Compared to other regions, we do not have the perfect environment. We must work to move things to the next level.
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Permalink Reply by Jon D. Speer on
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To answer Nwokedi's question about Indiana VCs: yes there are quite a few. The website you reference lists:
* Blue Chip Venture Company
* Gazelle TechVentures
* Guidant Corporation
* Irwin Ventures SBIC, LLC
* Lilly BioVentures
* Twilight Venture Partners, LLC
* Village Ventures Inc.
Also, there is Pearl Street Ventures, Spring Mill Venture Partners, Clarian Health Ventures, Triathlon, and others. There are also a few organized angel networks as well.
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Permalink Reply by christian briggs on -
Entrepreneurship needs culture and resources. One, of course, affects the other, of course. Many people here have made a good case for the importance of the current lack of resources here in Indiana (which can change). Having grown up in Boston and worked there for the last 18 years though (some of that time for startups), i can tell you that entrepreneurship there is heavily cultural. Most people in the Boston area are entrepreneurial in one way or another. It's not a job. It's a mindset.
Creation of this mindset is the biggest role that Universities play in Boston, Silicon Valley, etc. Far bigger than as a source of new workers or patentable technology - they are a source of forward-thinking ideas and explorations that are not always tied to the bottom line. And really good universities produce people who are problem finders and solvers. These people, over time, help to create the entrepreneurial culture - if there is no brain drain. Anecdotally, it seems that the current role of Indiana universities as evidenced by its policies, initiatives, etc. is as a source of workers and patents. In my experience, Boston sees MIT, Harvard, Boston University, Northeastern as productive of its culture more than its list of patentable technologies. Create the culture and the patents and workers will follow - not the other way around.
To thrive, Indiana must create a culture of entrepreneurship in large part by leveraging its strong University system - culturally.
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Permalink Reply by Aaron M. Renn on -
First you have to say what you mean by becoming Silicon Valley. Is it the technology business cluster? The entrepreneurial culture? The bad traffic and sky high real estate prices?
Regardless, I don't fundamentally believe the future success of Indianapolis rests on imitating patterns from elsewhere, particularly a region in a far larger and very different city. While I certainly believe Indiana needs to be aware of what is going on in the world and not have an insular view, reaching your potential as a city and state relies on charting your own path based on who you are, not who you aren't.
To me the places to look at are Portland and Austin. These are smaller cities comparable to Indianapolis. Both of them charted their own way. Both have a tech industry, but they took very different paths. Portland has focused on building a different kind of urbanism with its transit and urban growth boundaries. Austin tried to retain a college town flair, with indie music and a desire to "keep Austin weird". Neither of these paths is right for Indiana I am sure, but they show a possibility of how a smaller city can find success without copying America's largest metropolises.
Ultimately, Indianapolis can only be a world class city by being a world class Indianapolis.
It starts in my mind with an honest analysis of where the city and state stand. I started out with a SWOT analysis at one point but never got that far. But it intrigued me because I started trying to think about how we could turn all of our perceived weaknesses into strengths in a different context. For example, most of Indiana is flat and lacks mountains, seaside, etc. Well, another place like that is the Netherlands. (It has a seaside, but it is ridiculously cold and not that nice). Heck, most of that country is under water. Rather than complain about not being on the Mediterranean coast or having the Alps, they decided to use being flat to their advantage by becoming one of the most bicycle friendly countries in the world. Indy could do something similar. (Carmel is already going down this path).
Regarding the brain drain, this is over rated. Morton Marcus got it right. The problem isn't outflow, it's a lack of inflow. I'd argue it's probably a good thing for a lot of educated people to get out and see the world. And if they don't come back, well, that's not necessarily a bad thing either as now Indiana has a network out there in the world. Who wants to live in a city where everyone spent their entire life there? The real problem is an inability to get people who grew up in other places to want to live in Indiana. Solve that problem, and there is no "brain drain".
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Permalink Reply by Scott Hutcheson on -
There are certainly some things going in some of our universities that go far beyond "workers and patents." The Purdue Research Park is the nation's largest university-affiliated technology incubator. There are over 140 companies in the park and over 3,000 jobs have been created there. The average wage for these new jobs over $60K per year.
The entrepreneurship culture is alive and well in West Lafayette and the economic impact is unmistakable. Purdue is attempting to replicate some of that success in other parts of the state with other incubators. The most recent of which is the Purdue Technology Center of Indianapolis.
In 2007 the Purdue Research Foundation, which operates the research park, held the nation's first STEM (Science, Technology, Engineering, & Math) Entrepreneurship Academy for high school students. Plans are in the works for a 2008 academy that will be open to students across the state (first one was regional). Here is a video about the academy from Inside Indiana Business. More info about the academy is available here.
BTW, I work in economic development at Purdue so I am biased, but this is exciting stuff that is getting national attention.
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Permalink Reply by Matt Theobald on -
No. We are the Silicon Wetland. A filter for the Internet environment. :)
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