Silicon Valley became a special place for innovation and entrepreneurship due to several key factors: 1) An environment that fostered risk-taking and respected failure, along with perceived opportunities for new ventures. 2) A culture of networking and knowledge-sharing between entrepreneurs and employees that easily moved between companies. 3) Laws and cultural norms supporting cooperation between companies instead of non-compete agreements, allowing ideas and talent to spread. 4) Strong educational institutions like Stanford that helped propagate skills and encouraged entrepreneurship.

1. How Silicon Valley Became a
Special Place for Innovation
and Entrepreneurship
Richard Allan Horning
SNR Denton US LLP
Silicon Valley
Richard.horning@snrdenton.com

2. SNR Denton

3. I HELP THE TECHNOLOGY
STARTUP GROW FROM THIS

4. TO THIS

5. INNOVATION
Innovation is the specific tool of
entrepreneurs, the means by which they
exploit change as an opportunity for a
different business or service. It is capable of
being presented as a discipline, capable of
being learned, capable of being practiced.
(Peter Drucker, 1985, Innovation and Entrepreneurship)

6. ELEMENTS OF AN
ENTREPRENEURIAL ENVIRONMENT
• Perceived Opportunities
• Culture of Risk Takers and Respect for Failure
• Support Infrastructure
• Propagation of Knowledge and Skills
• First Class Educational System Encouraging
Entrepreneurship
• Capital and Liquidity
• Rewards and Honors
• Repetition and Reinvestment

7. THE INVENTION OF SILICON VALLEY
Don Hoefler, “Silicon Valley USA”,
Microelectronic News, January 11, 1971

8. EARLY OBSERVATION OF
THE OPPORTUNITY
“In the hands of an enterprising people, what a
country [California] might be” -- Richard Henry
Dana, Jr., Two Years Before the Mast (1840)

9. A VAST WASTELAND
“A village of 600 to 800 inhabitants …
with thousands of ground squirrels
burrowing in the plaza” – description of
San Jose in 1846 when the population of
all of California was 7,500
“Not a single modern wagon to be had
…, nothing but the old Mexican cart with
wooden wheels, drawn by two or three
pairs of oxen yoked by the horns” -- Lt.
William Tecumseh Sherman, reporting
on Monterey in 1847

10. JANUARY 24, 1848
Eureka !
“Gold Mine Found”, The Californian, March
15, 1848
“California, no doubt, is rich in mineral wealth;
great chances are here for scientific capitalists”

11. CALIFORNIA IN 1865
• Population has soared to 365,000
• Wheat crop more valuable than gold
• Manufacturing revenue $20M greater than
gold mined in foothills

12. JESUITS ARRIVE
1849

13. SANTA CLARA UNIVERSITY
FOUNDED 1851

14. THE BIG FOUR
Crocker, Hopkins, Stanford, Huntington

15. OPENING THE WEST
1863 - 1869

16. THE FARM

17. THE TECHNOLOGY STARTUP
1893

18. EARLY WI-FI

19. POULSEN WIRELESS /
FEDERAL RADIO
SPIN OFFS
• Magnavox
• Fisher Research Labs
• Litton Industries
• Lee de Forest
• Frederick Terman

20. The “Godfather” of the Valley

21. THE LAND GRANT SCHOOL
Founded 1855

22. BERKELEY CYCLOTRON
(1932)

23. CROCKER RESEARCH LAB

24. WHERE IT ALL STARTED
TV

25. THE IMPORTANCE OF NETWORKING
“In the early days of the semiconductor industry
there were certain places that everyone frequented
and the standing joke was that if you couldn’t figure
out your process problems, go down to the Wagon
Wheel and ask somebody.”
Annalee Saxenian, Regional Advantage (1996),
p. xi

26. THE IMPORTANCE OF
NETWORKING
Woodside CA

27. NETWORKING OPPORTUNITIES

28. THE ROLE OF PROXIMITY
IN INNOVATION
“To the extent that product and process
innovation is based on new ideas and that the
creation of ideas is a social process involving
discussion, then geographic proximity is
important in innovation”
Michael Best, The New Competition: Institutions
of Industrial Restructuring (1990), p. 235

29. SHOCKLEY SEMI-CONDUCTOR

30. THE TRAITOROUS EIGHT

31. THE GOLD RUSH LEGACY
Business & Professions Code Section16600
“Except as provided in this chapter, every
contract by which anyone is restrained from
engaging in a lawful profession, trade, or
business of any kind is to that extent void.”

32. COOPERATIVE COMPETITION

33. EXIT POSSIBILITIES

34. EXIT POSSIBILITIES

35. EXIT POSSIBILITIES

36. WHY SILICON VALLEY SUCCEEDED
• "It's the regulatory environment, the cultural
attitudes, the social and professional networks
that connect people. It's the attitude toward
failure - how you deal with that. Those are things
that are much harder to change than it is to build
up the research facilities."
Prof. William Miller, Stanford