The Signal #38: how to start an innovation cluster?

From our January 20th newsletter. (Want to read them in real-time?  Please sign up!)


We often show this diagram in presentations when talking about how Silicon Valley functions. Credit where credit is due: we developed this based on AnnaLee Saxenian’Regional Advantage, which compared Silicon Valley and Boston / Route 128.


Silicon Valley is already a functioning ecosystem. Describing how it works is a matter of observation. But what if you’re starting from scratch?  This is a question many city and regional planners have asked. If you think of Silicon Valley as one big self-sustaining network effect (people come because of what’s there, and therefore what’s there gets better, and therefore more people and capital come), how do you create network effects in, say, Columbus, Ohio? Detroit? Fukuoka?  Of the above five elements, which should come first?

Jon recently visited San Diego and Seattle, in addition to sites in San Francisco, Berkeley and Silicon Valley. The goal: to visit innovation hubs and also examples of urban redevelopment. Naturally, these two themes are linked. As legacy industries are shed, new green shoots emerge if/when they get exposure to the sun. Similarly, if redevelopment can attract companies that attract people, or better yet, attract people who found companies, and their friends, a cluster can be nurtured.

South Lake Union in Seattle, home to Amazon for more than a decade, is an example of redevelopment that was transformative for the host city.  Of course, Amazon, Microsoft, T-Mobile, and Boeing were already in the Seattle area when SLU was redeveloped by Vulcan Realty. The talent pool, and several pillar employers, were already there. The SLU example isn’t lost on other cities; hence the flood of offers to host Amazon HQ2.

If starting more or less from zero, the usual answer of where to start is universities, which gets us into the typical Silicon Valley genesis story of Frederick Terman of Stanford. More generally, universities attract bright students and faculty, who are likely loyal to a place and therefore more inclined to remain than out-of-towners may be to moving there.  (Both remaining and moving to are, of course, contingent on having employment opportunities.) And if bright people are there creating jobs, then capital logically follows. And indeed, Silicon Fen is based around Cambridge and Boston’s community around MIT and Pittsburgh’s around CMU.

Can the opposite happen? Where a company comes first, and a cluster is founded?  The San Diego telecom cluster begat by Qualcomm and its antecedent, Linkabit, is an example. The Linkabit case also doubles as an example of how new companies can mature their technology through government funding.  The Linkabit diaspora is shown in this diagram, created by former Linkabit executive Martha Dennis.


Note that Linkabit was a NASA vendor. (San Diego also has a substantive military presence.)  The multiplier on those government funds, in terms of local economic contribution, is likely immense.

More to come on this subject.

– Team Blue Field