Attending a business event last week near my home in Great Britain, Silicon Valley Comes to Oxford, I am reminded of the attraction and mystique that my birthplace in California has with academics, entrepreneurs and politicians.  The panel of Silicon Valley entrepreneurs on the stage at Oxford’s business school were some of the founders and early investors in successful companies like Facebook, Linkedin, PayPal, and many others.  They had interesting insights to pass along about entrepreneurship and what makes “the valley” so successful.  So what is the secret about Silicon Valley?  Is it a unique place on this Earth that cannot be replicated or can other cities, valleys and glens around the world replicate the model?

I have seen the tremendous transformation of Silicon Valley firsthand.  I grew up in the city of Palo Alto right in the heart of it.  In my early childhood days, Palo Alto was a nice town of middle class families whose parents worked at jobs in San Francisco and around the Bay Area as bankers, retailers or manufacturers.  To the south, cities like San Jose were mostly farm fields and the region was called “the valley of heart’s delight” for it’s fine climate to grow Mediterranean crops like plums and apricots.  

Today, Silicon Valley has been transformed into the most important high tech innovation hub in the world.  The area is now famous as the birthplace of many successful high tech companies like Hewlett Packard, Cisco, Intel, Oracle, Yahoo and many others.  The universities of the area with spin off businesses and trained graduates emerge from places like Stanford, Cal Berkeley, Santa Clara, and San Jose State.  Today, more venture capital funds are invested by Silicon Valley than anywhere else in the world.  And, in spite of many cycles of boom and bust, the region continues to flourish with innovative new start ups Facebook, Tesla Motors, LiveOpps and others.

So what makes Silicon Valley so successful?  On the one hand, Silicon Valley is indeed unique and has continued to maintain a position as a world leader for technology innovation and entrepreneurship.  People from around the world who want to start or work in high tech ventures flock to Silicon Valley.  They are attracted by innovative careers, the chance for rich financial rewards with stock options, and a fine climate and culture around California.  The region is a hub of innovation because innovative people move there with the hope to create a new life.

But is Silicon Valley unique or can other regions replicate this success?  While the valley is indeed unique, it can also be replicated.  The keys to success lie in the components that make innovation happen there including people, money, resources and reputation.  Innovation starts with people.  Risk takers need to be attracted to the area to give innovation the spark.  They are fed by risk capital that understands most of these ventures will fail but the few that do succeed could yield big returns.  Resources come from universities that may incubate new ventures, perform valuable research and development, and supply a steady pool of well trained graduates to scale these new companies.  Resources also come from professional service firms like lawyers who are well versed in intellectual property rights and bankruptcy protection.

And finally, the reputation of the region helps drive its success.  There are many examples of successful companies that started in Europe, Asia, or elsewhere, but it is the Silicon Valley names that continue to capture people’s imagination with their casual cultures and innovative business models.  Other regions do have much to offer and need to market this reputation among business people and professionals.  For example, there is fine weather and beaches near the technology innovation hub of Sophia Antipolis in Southern France, and interesting history and culture around Silicon Fen in Cambridge UK.

The factors that have made, and continue to make, Silicon Valley so attractive can be replicated for success elsewhere.  To achieve this, governments need to focus on making their universities top notch, provide incentives to make it easy to start up new ventures, keep business and capital gains tax rates low, and promote an open immigration policy to allow the best and the brightest to move to the new innovation hub from around the world.  It is not easy to replicate Silicon Valley as the region does have the lead position today.  However, it can be done.  In the end, Silicon Valley is more of a mindset than a place.