Cloning Silicon Valley: The Next Generation High-Tech Hotspots Author: David Rosenberg Publisher: Reuters/Pearson Education, 2002 204 pages

What are the ingredients that have made California’s Silicon Valley so successful as a technology cluster with national and global impact? Which other countries have such tech hotspots, and how do they compare to Silicon Valley? What collective role can industry, workforces, educators and government policymakers play in creating such hotspots in their own countries?

These are some of the most fascinating and high-stakes questions facing players at the cutting-edge of information and communication technologies. Providing some answers is the book, Cloning Silicon Valley: The Next Generation High-Tech Hotspots, by David Rosenberg, with a wealth of informative research across a range of such tech hotspots.

Technology and finance writer Rosenberg was born and educated in the US, and currently lives in Israel. His articles have been published by Reuters, The New York Times, Red Herring, and The Wall Street Journal.

Three chapters introduce the Silicon Valley phenomenon and framework of the subsequent study; the next six chapters cover major technology hotspots of the world: Cambridge in England, Helsinki in Finland, Tel Aviv in Israel, Bangalore in India, Singapore and the HsinChu-Taipei belt in Taiwan.

The book draws on data from sources like the ITU, World Bank, 3i Group, IDC, PricewaterhouseCoopers, World Economic Forum, Global Entrepreneurship Monitor, OECD, UNDP and Wired magazine, as well as books like Regional Advantage (AnnaLee Saxenian), Understanding Silicon Valley (Stuart Leslie) and The Cambridge Phenomenon Revisited (Segal Quince Wicksteed). Information is also culled from over 100 interviews conducted in the year 2000 by the author in the US and the six countries above.

Many success factors in California’s Silicon Valley have been identified by researchers over the years: low taxes, venture capital, risk-taking start-up culture, business webs, physical infrastructure, IT-savvy local population, local living laboratories, good local markets, networking skills, activities and organisations for communities of interest, co-location of companies in various stages of development, flexible organisational structure, legal/accounting services, M&A activity for flow of skilled labour and intellectual property, local academic and research institutes, commercial partnerships between academia and industry, activist government policy via research funding and small business debt assistance, speed of business activity, presence of role models, and human talent in innovators, serial entrepreneurs, marketers, and managers.

“But the basic chemistry is complicated, the order in which they come into play and the reactions they will produce are hard to finesse,” begins Rosenberg.

Prospective Valley-like clusters around the world need to not only juggle these ingredients but also compete with one another, develop local niches, boost exports, gain exposure to global structuring, technology and marketing practices and forge strong links with tech hotspots, financiers and stock markets in other countries (especially in America’s Silicon Valley, via expats and MNCs).
For local companies, this also means gravitating from tech R&D foundations to a business orientation, juggling back-end development and customer-facing marketing across multiple countries, entering into international M&A/alliance activity, and dealing with organisational culture issues for managers from different nations.

One major Silicon Valley ingredient that is actually not in the region is the NASDAQ stock market, which has spawned numerous imitators around the world like techMARK and Alternative Investment Market in London, Neuer Markt in Frankfurt, NMAX in Amsterdam and Sesdaq in Singapore.

“With the exception of London and Taiwan, the European and Asian growth markets haven’t been able to generate the kind of liquidity and only rarely the kind of company valuations seen in America,” says Rosenberg.

More than 70 percent or $97 billion, of world private equity and VC investment was made in the US alone in 1999. VC investments account for 1.01 percent of US GDP, more than double the worldwide average and more than three times Europe’s level.

Two chapters cover regional cluster variations in entrepreneurship, finance and management. Of the six surveyed clusters, Britain, Israel and Finland rank high in terms of innovation; India’s strength is in software writing rather than conceiving of new software; Taiwan excels in manufacturing but not as much in new intellectual property in chips; and Singapore’s strength is in opening its economy to retain outsiders so that its achievements reflect as much, the talents and abilities of foreigners as Singaporeans, according to the author.

While Asians lead in basic math and science skills and teamwork functioning, they seem to lag in creativity and out-of-the-box thinking. America’s and UK’s scientific prowess shows itself not at the secondary school level but at the university and post-graduate level.

Some Asian countries like Singapore have tried to create an environment that serves as a local living laboratory for the broadband content and services industry by wiring every household; Finland’s population actively chases new innovation and services on the wireless front.

The six countries chosen for the study have been selected more out of their varied and interesting socio-economic mix than out of some global ranking. The selected regions also were not major technology players from the earlier industrial era.

Companies in these six hotspots do not have enough of a domestic market for their products and services, and hence must tap global markets for which they will also need global sources of financing if they are to succeed on the world stage. For countries like India, Israel and Taiwan, the networks of their expatriates in Silicon Valley are important; government has played a key role in the technology clusters of Singapore and Taiwan.

Silicon Valley may tower above the other tech hotspots in the world, but it faces challenges in areas like wireless (where Europe and Asia are ahead), and from the east Asian hub centred around China, which is a large market already and could position itself as a major innovator as well.

In sum, this book is an informative read and provides valuable insights into the Silicon Valley phenomenon around the world. The book also provides useful personal perspectives from the dozens of interviews throughout the material. The framework for such international comparative analysis could do with some more academic rigour though.

Madanmohan Rao is the author of “The Asia-Pacific Internet Handbook” and can be reached at madan@inomy.com. This review is published in association with Inomy.com