Christopher Gibson
Mrs. Knapp + Mr. Gryzmala
English 1A + History
3 May 2012
Outline
I. INTRODUCTION –
II. BODY –
A. Agricultural Makeover
1. Happy Farmer
2. A Driven Mr. Stanford
B. The Impact of Hot and Cold (WWII & Cold War)
1. Government, give me some money!
a. Tech Advantages
2. R&D Rises
a. What coin phrase?
C. Birth of “The Silicon Valley”
1. Flock of Entrepreneurs
a. What do you mean “New Business Model?”
2. Invasion of Venture Capitalists
D. I’ll have another, Tech Boom that is!
1. A brave worldwide web
2. Creative Destruction
3. What have you done for me lately
III. CONCLUSION –
Where Innovation Always Has a Home: Silicon Valley
The Silicon Valley has been considered a hotbed for Research and Development since the beginning of the 20th century. Through its agricultural way of being to its modern technological dominance, the Valley has experienced a successfully steady incline of prosperity since pre-WWI. What I intend to bring to light is how the South Bay earned the official High-Tech leader label as “The Silicon Valley” which it is heavily known as today. The focus will be on the main events that kick started the evolution of the information era and how it affects us today. While geared for development of both economical and societal advancement, the second half of the 20th Century in the Valley generated a quantum leap technologically which inevitably changed mankind forever. This Valley’s roots will be revealed from the Agricultural based Santa Clara Valley era; through its maturation to becoming the innovative high-tech based Silicon Valley era.
A. Agricultural Makeover
Before there was High-Tech based “Silicon Valley” the south bay was the Agricultural based Santa Clara Valley. Early on Santa Clara Valley was known as “The Valley of Hearts Delight” or “The Garden of the World” in part due to all the masses of produce rose. The scent of fruits and vegetables filled the clear air until the 1960’s. Fruits like apricots, grapes, prunes, cherries, and many more along with vegetables like broccoli were the valleys primary source of revenue. This was a great time for farmers all over the south bay stemming from San Jose, Campbell, Milpitas, Palo Alto, Los Altos, Sunnyvale, and Santa Clara. These hard working farmers sparked the innovative mindset within the region by creating the first commercial canned produce system which farmers thrived in throughout the United States. Still, these simpler milestones were proof that innovation was inevitable, therefore that mindset eventually lead to a research and development (R&D) industry.
Generally something big or great has to start off through something small. A man can start his life off modestly, and then through hard work can later develop an empire of wealth within the railroad industry. Leland Stanford became founder of the Southern Pacific and president of the Central Pacific Railroads in 1861. He was widely considered a Robber Baron due to questionable method choices to construct and link the Transcontinental Railroad by 1869. Before he was a young student in a moderate lifestyle and now he is a Politician, President, and Owner of a strong industry. The same logic can be translated into a Leland’s sentiment towards his son. Leland Stanford exuberant drive towards encouraging excellence in the fields of science and technology were all attributed to one incident while on vacation in Italy. There Leland’s son grew I’ll of Typhoid Disease and eventually died, therefore inspiring Mr. Stanford to find a way to honor and remember his son. Martin Cheek states in his handbook Silicon Valley that “Stanford University opened on October 1, 1891, and quickly became a cauldron of knowledge and innovation on which much of today’s high-tech world is based” (Cheek 14). The encouragement of knowledge may be directly influenced by Mr. Stanford’s quest for a cure to the disease his son had fallen to. Regardless of the influences, Stanford University had begun something special and later linked to the City of Palo Alto which eventually developed into a symbolic relationship between higher learning entities. The innovative relevance of copper wire was discovered here along with its electrical value, but it was “research in the new field of radio that planted the seeds of Silicon Valley” (14). This field of research would later aid the efforts of a mega event such as WWII.
B. The Impacts of Hot and Cold (WWII & Cold War)
The thought of any war being fought is almost unbearable, but when it involves every continent on the planet, then we ought to think of a technological advantage. During WWII, the radio became more invaluable than ever and other sources of innovation were in high demand. Aviation became a heavily popular industry amongst both young and mature Americans. Along with means of attack from above the U.S. Government focused its attention and funding towards the development of micro chips which would guide missiles into hostile territory solo. If capable this accomplishment would be considered a “game changer” within any military context. However, this source of technology continued experimentation through R&D even until after the war. The Atom bombs had to be dropped from a plane directly above its target to finish out the war on the Pacific front. Nevertheless, even after WWII the U.S. Government pursued further funding of projects through R&D (particularly in electronics) and fundamental lab research through select Universities and Private Companies. Stanford University was one of the chosen ones along with a Private research lab located in Menlo Park during 1945-1973. This signifies the very first time the U.S. Government had involvement with the Santa Clara Valley which sparked the beginning of its transition towards being identified as “The Silicon Valley.”
The events that ensued after a victorious WWII outcome lead to a prosperous United States amid the destruction of both European and Asian Power Nations. The United States stood as the only country relatively unchafed (Aside from Pearl Harbor) by the war and cashed in on the consumer demands of the International community. As stated by Thomas McCraw in American Business…How It Worked, he explains that the “sectors of the economy besides basic consumer goods and new home construction were high-tech industries-particularly aircraft and guided missiles, chemicals and pharmaceuticals, and electronics” (McCraw 114). The American strategy of investment for the future revolved around the rising R&D industries and funding would most certainly be directed towards the innovative Valley of Santa Clara. In Cheek’s handbook Silicon Valley, he also illustrates that “In 1971, Don Hoeffler, editor of trade journal Electronics News, realized how important electronics had become to the Santa Clara Valley…he coined the term ‘Silicon Valley’ after the silicon wafers used in producing computer chips. The nickname quickly caught on as a way to identify the electronics Mecca” (Cheek 17). As a result, elite companies, respected researches, and innovative entrepreneurs could not help but be drawn towards this intriguing hotbed evolving in the Bay Area’s Valley.
A. Birth of “The Silicon Valley”
Silicon Valley’s core of innovation throughout the 1970’s revolved around its evolving stable of open minded entrepreneurs and researchers. Local University students and nonstudents were encouraged to think outside of the box and create something rather innovative. Individuals like the famous Steve Jobs and Steve Wozniak were among the many pure thinkers who revolutionized the personal computer industry with Apple Inc. Nolan Bushnell founded Atari which sparked the video game craze, William Hewlett and David Packard both founded what is now referred today as HP in their garage in Palo Alto during graduate school at Stanford, and the eight engineers that left Williams Shockley’s Semiconductor business to found Fairchild Semiconductor which played a crucial role in developing the silicon. Along with the ability to pursue technological advancement these groundbreaking individuals applied that effort towards their business practices as well. Chong Moon Lee states in The Silicon Valley Edge that the “Silicon Valley business models are open and fluid. Open to new ideas and new people as well as to new technological standards, the winning companies in Silicon Valley are constantly inventing ways of doing business” (Lee 82). What went on during the 1970’s was more than just creating technologies; it was a complete transformation in almost every conceptual way of being through means of doing business throughout all industry. These new open business models were supported by a relatively new entity in its self at the time and that would be Venture Capitalism.
Startup companies began popping up everywhere within the Valley and electronics were the main target of exploration. A Web Services called English-Online article Silicon Valley: Americas High Tech Centre, states that “such growth was possible because people could found a company, get money and rent an office space in only a few weeks.” This process was supported by the emerging Venture Capitalist Companies which were initially based off Sand Hill Road, Palo Alto. Venture Capital is Financial Capital which helps small startup companies whom are unable to secure a bank loan due to limited operation history or are too small to raise capital within market themselves. That means that Venture Capitalist Firms would invest in select startups that they project will have staying power/future. These investments are thoroughly analyzed, but that does not negate the fact that it is always a high risk and high reward business. The returns these Venture Firms generate are significant portions of equity within their investments (Startup Companies) and control over company decisions. The successful investment strategies lead to the maturation of companies such as Apple Inc., Genentech, and Digital Equipment Corporation through the 1970’s-1980 within the Silicon Valley. As time moved onward the emphasis of the technological craze became more and more evident that experts realized that it wasn’t just a fad that may pass, but rather a beginning of a new era altogether.
B. I’ll have another, Tech Boom that is!
During a time when Venture Capitalism had already been established and being an Entrepreneur was actually considered a job, the two would then meet to create a boom which is something called the World Wide Web. In 1993 the Internet was introduced to the market as a symbol of the future and as well as a result from the past. Chong Moon Lee states in The Silicon Valley Edge that “ ‘The Internet changes everything.’ This is a Silicon Valley mantra” (Lee 124). Moon Lee essentially explains that without entrepreneurship there is no internet period. Entrepreneurs are the driving force behind this life altering tool and along with Venture Capitol help these entrepreneurs are encouraged to continue the process of innovation throughout the Silicon Valley. The mid 1990’s was a time the “dotcom boom” was in full effect and it seemed that almost anyone could start a million dollar business just by placing a “.com” at the end of their company name/logo. The internet began to take shape and display its seemingly unlimited usefulness to the world. Having access to this universal tool would then rapidly speed up business interaction, transactions, stock market fluctuations, media access, general consumerism, the list is endless and this is made possible through innovation. This new invention grabbed the hearts and imaginations of countless Americans (let alone others around the world) and sparked mass interests the industry really needed to become the economic power that would later lead the world. However, this process is not a given and has no hassle free blue print to follow, so eventually this dotcom buzz would have to temporarily end somehow.
Out of all the good that came from a prosperous time in our economy like the dotcom boom the Silicon Valley there is always an event that balances everything in the end. It has been the same story throughout history that all good things must come to an end much like the ancient empires, the roaring twenties, Sonny and Cher, the Harry Potter Series, and well you get my point. Still, by the time the year 2000 hit the whole boom turned into a bust and as a result the market collapsed enough to force the Federal Reserve to increase its interest rates at least six times causing the market to slow down considerably at the turn of the century. NASDAQ was hit hard based on the fact that it is technology heavy and during 2000 it had lost at least ten percent of its peak according to Wikipedia records. The major culprits were the failing startups who squandered almost all their Venture Capital with no actual “Net Gain” to show for it. This type of cycle seems to continue somehow in a Capitalistic Society under an innovative driven industry. There great example stemming from a popular Karl Marx theory called “Creative Destruction,” which inevitably suggests that economic innovation linked to business cycles under Capitalism leads to wealth annihilation, and then re-arises out of destruction to return to a new form of wealth. This example can easily be related to the beginning of the 21st Century and how the High-Tech Industry not only recovered, but took off like a rocket worldwide thanks to semiconductor, software, and social networking companies such as Adobe, Cisco, Google, Amazon, Intel, and even the emerging Facebook who are all in power today.
Today’s Silicon Valley faces shaky economic issues, but still conducts itself as a leader of innovative change. By again altering business plans, this region still puts forth its innovative instincts and tries to find ways to strengthen the local economy. A Web-Article named “The Registry” has an article called “Contract Manufacturing Thriving in Silicon Valley” which illustrates that several local businesses/companies have started to invest in local contract manufacturing to ensure the valley’s “Economic Resurgence” (“Contract Manufacturing…”). The article also states that “their client companies are tapping the Valleys deep manufacturing expertise to design and produce the very latest innovations here—before they do high-volume production globally” (“Contract Manufacturing…”). This means that hardware and software based companies throughout the Valley like Google, Apple, startup’s, and everything in between are starting to build prototypes domestically via R&D before they later approve the product for mass production overseas. This is a step in the right direction which brings jobs and revenue back to the Silicon Valley and the United States in general. The whole logic behind decision like this is a testimony to the openness leaders in today’s top companies throughout the Silicon Valley share amongst one another to address an economical issue. It’s an ever evolving business model, or a new software upgrade, or hardware modification, or simply an innovative approach directed by unique entrepreneurs that molded this Valley and influenced this Valley and inevitably run this Valley.
In the end, this “Mecca of innovation” may have its bumps along the road of advancement, but inevitably it will be known that technology has no ceiling. The agricultural era of the Valley showed the world one thing and that was the spark of innovation is not just a physical accessory, but instead a state of mind which everyone has the capability to hone. This Valley’s innovative capability has speared through WWII, the Cold War, and has not looked back since the turn of the 21st century. This is a place that encourages new ideas and making groundbreaking industrial movements. Entrepreneurs, researchers, big businesses all are attracted to and have learned that this region is unique to all and thrives while being an unorthodox open book. Idea sharing/networking and encouraged innovative opportunity has a home called the Silicon Valley. Honoring the past and respecting the technological advances of the future create the acknowledgment that the Silicon Valley has plenty of innovative offerings for today.
Works Cited
Cheek, Martin. Silicon Valley. Emeryville, CA: Moon, 2002. Print. Page 12-21.
"English-Online." Silicon Valley. Web. 19 May 2012. <http://www.englishonline.at/technology
/silicon-valley/silicon-valley-americas-high-tech-center.htm>. Par 5.
Lee, Chong-Moon. The Silicon Valley Edge: A Habitat for Innovation and Entrepreneurship.
Stanford, CA: Stanford UP, 2000. Print. Page 82-126.
Malone, Michael S. The Big Score: The Billion-dollar Story of Silicon Valley. Garden City, NY:
Doubleday, 1985. Print.
McCraw, Thomas K. American Business, 1920-2000: How It Worked. Wheeling, IL: Harlan
Davidson, 2000. Print. Page 114-115.
"News Releases." The Registry. Web. 22 May 2012. <http://news.theregistrysf.com/contract- manufacturing-thriving-in-silicon-valley/>.
