Twelve Secrets of Silicon Valley

Presentation by Elton Sherwin

to Senior Commercial Officers

US Department of Commerce

May 12, 2011

Plug and Play Tech Center Sunnyvale, California

Twelve Secrets of Silicon Valley

Recipes Any State Can Copy

Elton B. Sherwin Senior Managing Director

Ridgewood Capital

www.EltonSherwin.com

Presentations and checklists:

www.EltonSherwin.com/documents.html and

www.slideshare.net/EltonSherwin

Twelve “Easy” Steps to Clone Silicon Valley

and Encourage Economic Development

#1

Build a Great University

Great University Formula

• Starts as a good university – Add a big endowment for research

• Attract people around the world

• Fund young research professors – Limit their teaching load

– Let them manage their own research • Young professors tightly supervised won’t work

– Ideas for most Nobel Prizes under 35 years old

• Encourage professors to start businesses – Take board seats and work for the university

Keep the Best Students

• Keep top 2-5% students permanently

– Post doc fellowships

– Jobs

– Each creates another 10 jobs

• Like sports teams

– Never win if only recruit locally

– Recruit world class

– Keep the best

#2

#3 Welcome Minorities

• Multi-cultural teams win

– True in sports, true in business

• Recruit PhDs wherever there is a war or repressive regime

– Rescue the brightest and their families

#4 Be Inviting

• Look sharp: Appearance matters

• Quaint downtown with good parking 1 block away

#5 Ongoing Adult Education

• “Junior colleges”

• Continuing studies programs

• Part-time MBA programs

• Trade schools

• Night schools

• Retrain

– 28-year old drummer

– 48-year old second career

Foothill College

#6 High Status for Women

Societies that undervalue and underpay women innovate poorly

#7 Good, Safe Public Schools

• World’s top talent wants good schools for their children

– Successfully multi-cultural

– Safe

#8 Environmentally Sustainable • Value engineering skills

• Agricultural or environmental focus

• Focus on sustainability

Jasper Ridge at Stanford

#9 Celebrate and Build a Brand

– Centers of competency

– Conferences

– Conventions

– Festivals

– Large annual events

– Contests

#10 Employees with “Change the World Mentality”

• California Educated

• Worked at a California Start-up

#11 Good Laws

• Fairness/rule of law – Low levels of bribery

• Easy to start a business

• Easy to own a business

• Contracts work

• Property rights

• Inheritance laws

• Lawyers

#12 Money for New Businesses

• Angels – Perhaps the most important

– Exclusive club with privileges (lunch w/ Governor)

• Venture capital

• Small Business Innovation Research (SBIRs)

• Government contracts

• Small business loans

• Inventory financing

• Equipment financing $

Cities to Study

• Silicon Valley (Stanford)

• North San Diego (UC San Diego)

• Davis (UC Davis)

• San Luis Obispo (Cal Poly)

SuperSynergy

SuperSynergy: Magic combination of three things

1. Research university

2. Big anchor tenant: Corporate headquarters • Company with significant technology presence

3. Edge metropolitan area with an airport • Investors can fly in

SuperSynergy

Two Parents: A Thousand Children

•Stanford and Hewlett Packard – Intel, Cisco, Sun, Oracle, Google, Facebook…

•UC San Diego and Qualcomm – Over 1,000 young companies

in the surrounding ecosystem

Co-locate university and a technology powerhouse

– Edge of city with an airport

Summary

1. Build a Great University 2. Keep the Best Students 3. Welcome Minorities 4. Be Inviting – Look Sharp 5. Ongoing Adult Education 6. High Status for Women 7. Good, Safe Public Schools 8. Environmentally Sustainable 9. Celebrate and Build a Brand 10. Employees with “change the world mentality” 11. Good Laws 12. Money for New Business

Case Studies