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Social Networks in Silicon Valley
Emilio J. Castilla, Hokyu Hwang, Ellen Granovetter, and Mark Granovetter
“The most crucial aspect of Silicon Valley is its networks.” There is no proposition so universally agreed upon and so little studied. We see two main reasons for this. The ﬁrst is that the analysis of social networks has been mainly the province of sociologists, but only in recent years have they become interested in industrial organization. The second is that methods for systematic study of social networks are of very recent origin.1 Sociologists’ earlier theoretical concerns led them to focus network analysis on small groups (like children in schools). But more recent work has treated larger groups and even entire industries (see, e.g., Granovetter and McGuire 1998). In this chapter we outline a project in progress, “Networks of Silicon Valley.” Ultimately, we hope to achieve a systematic mapping of the Valley’s networks and their evolution over time. This means also accounting for how networks of individuals literally outside the Valley’s industrial activity, but playing a vital role, articulate with and sometimes become “insiders.” The most obvious such groups are educators, venture capitalists, lawyers, headhunters, engineers, and industrial/civic associations and trade groups. Financial, commercial, educational, and political institutions are linked not only to information technology ﬁrms, but also to one another in this region, since industries do not arise and exist in a vacuum, but in a distinct institutional context. Variations in these contexts may well explain why the myriad attempts to replicate Silicon Valley in utterly diﬀerent contexts, by copying only the fea218
SOCIAL NET WORKS IN THE VALLEY / 219
tures of its ﬁrms, are rarely fruitful. This broader account is essential for understanding how regional economies operate. The distinctive inclination of sociologists is to investigate how diﬀerent institutional arenas mesh with one another, rather than focusing on the technical, economic, legal, educational, or political aspects of a situation. In Silicon Valley, where such linkages are an important and distinctive feature of economic success, this is an especially vital topic. Thus, in this chapter we will introduce some key ideas about social networks, sketch some of the vital institutional sectors in Silicon Valley where they operate, and present an initial exploration of the formal analysis of how these sectors articulate with one another.
SOCIAL NETWORKS IN THE ECONOMY
A “social network” can be deﬁned as a set of nodes or actors (persons or organizations) linked by social relationships or ties of a speciﬁed type. A tie or relation between two actors has both strength and content. The content might include information, advice, or friendship, shared interest or membership, and typically some level of trust. The level of trust in a tie is crucial, in Silicon Valley as elsewhere. Two aspects of social networks aﬀect trust. One is “relational”—having to do with the particular history of that tie, which produces conceptions of what each actor owes to the other. The other is “structural”: some network structures make it easier than others do for people to form trusting relationships and avoid malfeasance. For example, a dense network with many connections makes information on the good and bad aspects of one’s reputation spread more easily. An extensive literature shows the importance of social networks in the economy—from small start-up companies to large multinationals, from emerging industries such as biotechnology to traditional ones such as automobiles, from regional industrial districts such as Silicon Valley to national and supranational entities such as the European Union. (For a general review, see Powell and Smith-Doerr 1994.) In Silicon Valley, networks have special importance in the movement of labor, the evolution of inﬂuence and power, and the actual production of innovation.
Scholars have written extensively on the role of social networks in allocating labor (see Granovetter 1995a). HWANG. Fernandez. The ability of Silicon Valley to restructure itself when conditions change through rapid and frequent reshuﬄing of organizational and institutional boundaries and members (which. Extensive labor mobility creates rapidly shifting and permeable ﬁrm and institutional boundaries and dense personal networks across the technical and professional population. whereas acquaintances are better bridges to new contacts and nonredundant information. Stark  has called a “recombinant” process) is one of the factors that underlie the dominance of Silicon Valley in the new economy. Firms beneﬁt from employees’ social networks. in the Eastern European context. Commenting on Silicon Valley’s exceptionally high rates of interﬁrm mobility. experience faster mobility inside an organization. but from what Granovetter (1973) called the “strength of weak ties. they also move from one industry and/or institutional sector to another—from technical ﬁrms to venture capital ﬁrms or to university research centers—creating crossinstitutional ties and loosely integrating diﬀerent institutional nodes in Silicon . strengthening their role as channels through which technical and market information.” Close friends know the same people you do. GRANOVET TER. and Moore 2000). Castilla. Engineers not only hop around ﬁrms in the same industry. High mobility reinforces the dense networks. Employees hired though social networks tend to quit less. as well as other intangibles—organizational culture and trust. Workers’ social connections are considered resources that yield economic returns in the form of better hiring outcomes. rather than to individual ﬁrms or even industries” (28). The result of this unique culture and vast network of weak ties is that engineers in the Valley move frequently from one project or company to another.220 / CASTILL A. for example—are diﬀused and shared among ﬁrms. AND GRANOVET TER Networks of Access and Opportunity One of the most important aspects of Silicon Valley is the way its labor market works. Recruitment often occurs not through close friends. and perform better than those recruited through other means. Saxenian (1994) has argued that “The region’s engineers developed loyalties to each other and to advancing technology. and employers are thus willing to pay monetary bonuses to them for successful referrals (Fernandez and Weinberg 1997.
and oﬀering general business advice. In Silicon Valley. had worked for Fairchild Semiconductor before moving on to ﬁnance. For example. and Regis McKenna had worked at National Semiconductor before founding his own. From the knowledge of high technology that they have accumulated from their broad portfolios of successes and failures. networks can also be an important source of power and inﬂuence. Suchman and Cahill 1996). for example. John Doerr had been an Intel employee prior to his excursion into venture capital. sometimes reduc- . venture capitalists oﬀer invaluable advice as to what does and does not work. public relations ﬁrm. Mintz and Schwartz 1985) shows how inﬂuence can ﬂow from ﬁnancial institutions to the industrial corporations to which they lend. but often play the multiple roles of broker. Many startups and spin-oﬀs are founded by engineers who are naive about management. Their vested interest in the ﬁrms for which they provide ﬁnancial resources makes them more likely to intervene in the operations of their start-ups.. lawyers help by providing connections to venture capital. As deal makers. once worked in technical sectors of the Valley. Similarly. The lawyers are deal makers as well as counselors (Suchman 1994. venture capitalists can access an informal and formal network of experts to further the long-term viability of newly created ﬁrms. and recruiter. the founder of the preeminent venture capital ﬁrm. Eugene Kleiner. Venture capitalists not only provide necessary ﬁnancial resources to startups and spin-oﬀs. venture capitalists and lawyers play more than their conventional roles. Research on interlocking directorates among ﬁnancial and industrial corporations (e. Further. they inﬂuence the structure and future development of their client companies. 96). Networks of Power and Influence In addition to mediating labor ﬂows. “Silicon Valley attorneys employ their connections in the local business community to link clients with various transactional partners” (Suchman 1994.SOCIAL NET WORKS IN THE VALLEY / 221 Valley. giving Valley ﬁrms access to their accumulated knowledge about the region and high-technology industries. venture capitalists often (re)organize the boards of directors of their start-ups. Many venture capitalists. Kleiner Perkins Cauﬁeld & Byers. now famous. management consultant.g. like conventional business consultants (100).
Networks enhance the capacity to do this by enabling people to mobilize capital. subcontractors. In hightechnology industries in particular. AND GRANOVET TER ing the role of original founders and even severing the original founders from their own creation. Such a network governance structure is a typical way to regulate the interﬁrm alliance practices.222 / CASTILL A. which allows ﬁrms to produce a wide range of industrial products (Herrigel 1996). a “social glue” that binds actors and ﬁrms together into a coherent system. social networks function as a distinct governance mechanism. ﬁnancial. and link to appropriate outlets. and higher quality and more specialized goods attracted consumers. Networks of Production and Innovation Finally. Cisco Systems and Silicon Graphics were two famous cases. GRANOVET TER. In the regions of north central Italy and southwestern Germany. social networks help transmit information and knowledge among diﬀerent ﬁrms and individuals and produce innovation. and end users. Piore and Sabel (1984) argue that a new logic of production— “ﬂexible specialization”—emerged as a challenge to mass production once markets for standardized goods were saturated. a complex division of labor among small and medium-sized companies has developed. ﬁnd relevant and reliable information quickly. Into this volatile environment have stepped ﬂexible producers who can respond quickly to changing market conditions. To meet the demands of this changing marketplace. getting the right product out at the right time has become crucial for the survival and growth of a ﬁrm in a rapidly changing environment. for example. Saxenian (1994) shows that Silicon Valley shares many of the characteristics of European industrial districts. In Silicon Valley. such as collaborative manufacturing. supported by local political. and educational institutions. HWANG. Innovation is so central to high-technology industry that it is not an exaggeration to say that eﬀective social networks determine a ﬁrm’s chance for survival. In this decentralized system. found in industrial districts. dense social networks and open labor markets encourage entrepre- . ﬁrms adopt new modes of organization that spread production across diversiﬁed interﬁrm linkages of suppliers. and thus promotes collective learning among specialist producers of interrelated technologies.
and aid the region’s development. ties between new spin-oﬀs and previous organizations through founders are an important way in which information and experience are transmitted. but simultaneously learn about changing markets and technologies through informal communications. they build upon the know-how they have gained from previous employment. ﬁnancial. This resistance based on past success is what Clayton Christensen calls the “innovator’s dilemma” (Christensen 1997). which have contributed to the construction of dense social networks of entrepreneurs. and common ties to research associations and universities. trade with the whole world. upgrading of a regional economy occurs especially through new organizations rather than through transformation of existing ones. collaborative projects. In this regard. inventors. 1984). While the founders of spin-oﬀs explore new ideas and possibilities.SOCIAL NET WORKS IN THE VALLEY / 223 neurship and the ongoing mobilization of resources. Any region whose institutions or networks resist spin-oﬀs or new entrants may face stagnation. Thus. as we show in detail in the network analysis of the following section. including the region’s educational. High rates of job mobility spread technology. and legal activities. we sketch the application of social network ideas and methods to some of the main institutional sectors of the Silicon Valley industrial district. One way the Valley accomplishes this recombination of knowledge and capital is through spin-oﬀs. Hannan and Freeman 1977. and other institutional actors. Larson’s (1992) and Nohria’s (1992) research on the development of successful start-up companies stresses that social networks to other ﬁrms are a means for quick access to resources and know-how that cannot be produced internally. but the core of knowledge and production remains local. We want to know how Silicon Valley’s networks attained their current structure— what growth process took them from the modest and small-scale enterprise of . just as those in Germany and Italy. Part of the importance of these spin-oﬀs is that most organizations resist changing their core technologies and structures (compare Stinchcombe 1965. promote the recombination of skills and capital. industrial. Silicon Valley companies. NETWORKS AND INSTITUTIONS In this part. Companies compete intensely.
Shockley soon had the core of the ﬁrm. By doing so we hope to illuminate the continuing signiﬁcance of patterns laid down in the initial set of foundings and spin-oﬀs that gave the Valley its distinctive industrial organization. with the encouragement of Frederick Terman. which in turn gave birth to still new generations of important ﬁrms. hanging in their lobbies. and of the nascent semiconductor industry. which would eventually earn them the Nobel prize. in place. Shockley and his collaborators at Bell Laboratories in New Jersey introduced the ﬁrst successful transistor. Networks and Genealogy: A Semiconductor Industry Case Study Part of the legend of Silicon Valley is the story of how Shockley’s company begat Fairchild Semiconductor via defection of the “Traitorous Eight. we undertake the ﬁrst systematic analysis of the data in this chart. Drawing on established ﬁrms such as Raytheon. to the world-dominating structures of the early twenty-ﬁrst century? We address such questions by illustrating how formal techniques of network analysis can uncover patterns not easily found by casual inspection. Many Silicon Valley ﬁrms have a “genealogy chart. and on top engineering and science programs such as those at MIT and Cal Tech. HWANG. by techniques of network analysis and network visualization. Shockley’s ability to spot and recruit talented people contributed to the growth of what would eventually become Silicon Valley. Stanford’s legendary engineering dean and provost. Shockley Semiconductor Laboratories was founded in February of 1956. In this section. for example. Robert . Motorola. tracing their ancestry back to Fairchild. Riordan and Hoddeson 1997). a Stanford graduate. AND GRANOVET TER William Shockley’s semiconductor laboratory in 1957.” and how Fairchild later begat the many “Fairchildren” ﬁrms such as Intel. This was important for Silicon Valley because Shockley. In 1947. Our emphasis will be not only on networks within a sector. William J. decided to start his own company in his native Palo Alto to capitalize on the invention (Hoeﬂer 1971. and Philco. GRANOVET TER.224 / CASTILL A. but also on how networks from diﬀerent sectors mesh with one another.” ﬁrst developed by journalist Don Hoeﬂer and later maintained by the trade association SEMI. History of the semiconductor industry.
Everywhere the Fairchild émigrés went. would say in one of those sunny blonde pale-blue-eyed California voices: “Just a minute. no necktie. 360–61) . Shockley’s eccentric and authoritarian managerial style did not match his Nobel laureate stature. Moore. out in the Silicon Valley. As Tom Wolfe reported: Some ﬁfty-ﬁve-year-old biggie with his jowls swelling up smoothly from out of his F. Naturally the ﬁrst sounds out of Jack’s mouth would be: “Hi. Victor Grinich. (For a full historical account. which was conceived of as a democratic community rather than a hierarchical workplace. all of thirty-three years old. indelibly changing the future development of Silicon Valley’s semiconductor industry. R. Hal. and a pair of moccasins with welted seams the size of jumper cables. they took the “Noyce approach” with them. Jack will be right with you. Julius Blank. Robert Noyce had a vision for this newly emerging industry that explicitly rejected the hierarchical East Coast corporate culture (Wolfe 1983). Both Last and Roberts thus joined Noyce.” (1983. But the “Traitorous Eight” contributed more to Silicon Valley than a breakthrough in technology. Despite his ability to recruit. For example. just a checked shirt. both in their late twenties. In addition to Noyce and Moore. the CEO himself. It was not enough to start up a company. And this new approach diﬀused as employees from Fairchild spun oﬀ to start their own companies. wearing no jacket. with Noyce receiving the ﬁrst patent in 1961. the integrated circuit was ﬁrst developed suﬃciently for commercial production. khaki pants.) At Fairchild.” And once he got to California and met this Jack for the ﬁrst time. by mid-1956 Shockley had successfully recruited Jay Last and Sheldon Roberts from MIT and Dow Chemical Company. would later go on to found Fairchild Semiconductor and Intel. there was no reserved parking at Fairchild. “This is Harold B. it startled businessmen from the East. you had to start up a community in which there were no social distinctions. Hal. Thatchwaite. and Eugene Kleiner to become the “Traitorous Eight” who left Shockley to form Fairchild Semiconductor in 1957. there would be. see Chapter 8. Jean Hoerni. Tripeler modiﬁed-spread white collar and silk jacquard print necktie would call up from GE or RCA and say. respectively.” and the twenty-three-year-old secretary on the other end of the line. The atmosphere of the new companies was so democratic.SOCIAL NET WORKS IN THE VALLEY / 225 Noyce and Gordon Moore.
1 we plot the number of companies founded each year from 1947 to 1986. even those who were among the founders. which displays dynamic three-dimensional images to explore and evaluate the social structure of engineers.) that existed between 1947 and 1986. originally developed by journalist Don Hoeﬂer (with the concept by Jack Yelverton). started their own companies—often in direct competition with their mother company. Management). of course. we have identiﬁed 129 ﬁrms (including spin-oﬀs. spin-oﬀs of spin-oﬀs. AND GRANOVET TER And. left Fairchild to start Intel. there has been no systematic analysis of this spin-oﬀ process. Fairchild spin-oﬀs produced another round of spin-oﬀs and spin-oﬀs of spin-oﬀs and so on. and their experience in previous ﬁrms. and later maintained by the trade association Semiconductor Equipment and Materials International. in semiconductor memory.2 The resulting image represents the social network as a set of actors and the ties between them. These spin-oﬀs led to rapid technological breakthroughs created by networks of scientists and engineers building on the accumulated knowledge of their predecessors. GRANOVET TER. but to carve out a new niche. but it is interesting to see what can be gleaned from the well-known Semiconductor Genealogy Chart. The early history of the semiconductor industry is replete with similar stories of spin-oﬀs. Their intention was not to compete with Fairchild and other already-established semiconductor ﬁrms. some encouraged and some discouraged by parent companies. or SEMI (updated information provided by H. with Andy Grove. Such a picture is like an X ray.226 / CASTILL A. In the chart. and entrepreneurs. HWANG.E. inventors. Our own research on this is at an early stage. laying bare the strucFIGURE1. Social network analysis of the semiconductor industry. This chart indicates that more than 372 people started and built the semiconductor industry since 1947. We use a computer graphics program called MAGE (Richardson and Richardson 1992). Intel grew to become a company with sales of $66 million by 1973. The spin-oﬀ of all spin-oﬀs was founded in 1968 when Noyce and Moore. In Figure 11. . Although all accounts stress how crucial these spin-oﬀs were for the spectacular stream of innovation that came from this region.T. employing more than two thousand workers (Wolfe 1983). after which the chart was no longer updated. Fairchild engineers. there was the start-up culture. etc.
4 Not surprisingly. One important task is to discover how a person’s position in a network may both reﬂect and confer or reinforce a position of inﬂuence.” who use such pictures as heuristic devices to initiate more systematic probes of how structures arise and change over time. on the other hand. Number of new companies in the semiconductor industry founded each year. Roughly speaking. Thus. and as preludes to more complex quantitative analyses (such as those described in Wasserman and Faust 1994).2.3 Each point (or “node”) represents a person. Jay Last. in the sense of having more ties to others (“degree centrality”). Thus. important actors in the semiconductor industry such as Jean Hoerni. or being crucial linkages that actors must go through to reach others (“betweenness centrality”). ture of social ties. can often be shown to be more in- . Shockley.SOCIAL NET WORKS IN THE VALLEY / 227 20 Number of new companies founded each year 15 10 5 0 1947 1957 1961 1963 1966 1968 1970 1972 1974 1976 1979 1981 1983 1985 Year Figure 11. for any two persons in the sample. Julius Blank. Since the presence of a tie between two people is coded from the semiconductor industry genealogy chart. but needing a substantial amount of interpretation. and often raising more questions than it answers. 1947–86. a tie is either present or absent. actors who are more central. The graph of those who started and built the semiconductor industry in Silicon Valley is presented in Figure 11. social network analysts are “social radiologists. Eugene Kleiner. it means that they were co-founders of at least one Silicon Valley semiconductor company. and the lines connecting the points represent the ties. and Sheldon Roberts are the ones who are connected to more than ten people in the network.1. appears with quite a low average number of co-founder ties.
228 / CASTILL A.2 . all founders of Rheem Semiconductor in 1959 (and some of whom also worked for Fairchild Semiconductor).5 Jean Hoerni is the actor with the highest betweenness centrality in the network we computed from the genealogy chart. GRANOVET TER. Araquistain. Baldwin. ﬂuential. Weindorf. HWANG. One virtue of network analysis is that in its impartial way it may point to the need to look more closely at individuals whose centrality has not been captured in the many impressionistic and journalistic accounts of Silicon Valley history. SOURCE: SEMI Semiconductor Industry Genealogy Chart. Marchman.2. and Wiesner. The analysis also highlights other less well known actors who appear to be quite central in the development of the semiconductor social network. Elbinger. The founders of the semiconductor industry. and. Koss. AND GRANOVET TER Figure 11. later maintained by SEMI. Among these are Giﬀord. Breene. Valdes. founder of companies such as Advanced Micro Devices in 1969 and later Maxim Integrated Products in 1983. FIGURE1. ﬁnally. Bower. who had previously worked for Fairchild Semiconductor and Rheem Semiconductor. First conceived by Dan Hoeﬂer.
But the network we display here. Here. we want simply to sketch out the issues. central individuals are those who provided vital linkages among industry sectors. In a network of ties computed at a single point in time. those who played it need not have been highly visible. public relations. Though this was a crucial role in shaping the Valley’s unique character. and real estate. making Silicon Valley the “small world” that it is. A fuller account would treat other institutional sectors such as law. In this section and the next. Though a number of educational organizations have been important in this way. is quite diﬀerent. we focus on the key actor in Silicon Valley’s early history.6 Higher Education and University-Industry Networks: The Role of Stanford To study the evolution of connectedness among industrial ﬁrms in Silicon Valley is already a challenge. as it spans nearly thirty years. Here. Stanford University. because of which much vital information must ﬂow through them before it reaches others. where ties indicate co-founding. and infuse industrial activity with up-to-date science. individuals with the highest centrality are quite likely to be powerful and inﬂuential by virtue of their position. . The educational sector has been especially vital because the constant movement back and forth between industry and university has blurred the boundaries of both and created elaborate social networks that keep academic research focused on practical problems. Recent research on the “small world problem” (known to the general public as the issue of “six degrees of separation”) shows that a remarkably small number of strategically placed ties can dramatically increase the connectivity of a network (see Watts 1999). much of what is unique in this region and accounts for its “edge” is how industry relates to other sectors. however. we choose two such sectors—education and venture capital—and discuss how the social networks within these sectors and with Silicon Valley industry helped shape outcomes. But as we stress repeatedly. This is followed by an illustrative network analysis of IPOs that shows how the diﬀerent sectors work together on a particular activity. and give much more extensive attention to connections. however. depends on a network’s deﬁnition.SOCIAL NET WORKS IN THE VALLEY / 229 The meaning of centrality.
Stanford is the one place where outsiders can gather information about Silicon Valley. conceived by Stanford provost Frederick Terman and oﬃcially founded in 1951. Stanford students and faculty formed new companies. Although the park is still home to many inﬂuential players in the Valley. Sun Microsystems. Currently. The program “strengthened the ties between ﬁrms and the university and allowed engineers to keep up to date technically and to build professional contacts” (Saxenian 1994. Varian Associates moved its R&D and administrative operations to Stanford in the late 1940s. was the ﬁrst of its kind. founded by Frederick Terman in 1953. No university had previously allotted large tracts of its own land for industrial uses (in part because few other universities had Stanford’s more than 8. The Honors Cooperative Program. and Watkins-Johnson joined Varian. 23–24). made it possible for local companies to send their engineers and scientists to pursue advanced degrees at Stanford as part-time students while working fulltime.000 acres of land to allot). Stanford Industrial Park (now called Stanford Research Park). 23). given Stanford’s prominent role in the evolution of Silicon Valley and its accumulated ties to the region’s diﬀerent sectors. Hewlett-Packard.7 In addition. among many others. and Yahoo!. two institutional innovations—the University Honors Cooperative Program and the Stanford Industrial Park—brought together university researchers and nascent industry interests. Further. research and commercial interests proliferated and the business community came to assume the role of innovator. It is also an important port of entry to the Valley for many high-technology ﬁrms from overseas . and other companies such as General Electric. HWANG. developing and commercializing innovations. such as the law ﬁrm Wilson Sonsini Goodrich & Rosati and the legendary Xerox Palo Alto Research Center. The university’s emphasis has shifted to maintaining its relations with already-established ﬁrms as the source of cutting-edge scientiﬁc knowledge and expert labor. Eastman Kodak. AND GRANOVET TER In the 1950s. innovative ideas produced at Stanford ﬁnd their way to industries through licensing via the Stanford Oﬃce of Technology Licensing and various research centers that have proliferated over the past two decades. Silicon Valley has outgrown its birthplace. that were crucial to regional growth. As Silicon Valley matured. By 1962 there were 25 companies in the park (Saxenian 1994. GRANOVET TER. Admiral Corporation.230 / CASTILL A. such as Hewlett-Packard.
These centers also make it easier for foreign companies aspiring to learn the “Silicon Valley way” to introduce themselves into its sometimes arcane culture. The centers and programs are surprisingly informal and decentralized. Now foreign ﬁrms can send their employees to Stanford to study Silicon Valley for a nominal fee. In addition. In fact. companies are invited to confer- . as Silicon Valley start-ups are increasingly formed by nationals of foreign countries (see Chapter 12). It does so in part from its reputation as past midwife of successful ﬁrms. which is a crucial matter. The recruitment of ﬁrms to these centers occurs through already-established personal networks between professors or researchers and businesses. and had particular experience working in the area of university-industry collaboration. One of the crucial links between the university and the surrounding Silicon Valley community is provided by its approximately 50 research centers. The School of Engineering. the director of the Center for Integrated Facilities Engineering had worked both in industry and for various universities before joining Stanford University to set up the center. They receive little ﬁnancial support from the university. which provide for the university and the business community a forum in which they can maintain close contact. typically rated at or near ﬁrst in the United States. For example. the university is not directly involved in their decision-making processes and their daily workings. through the liaisons they have early access to research reports. In particular. Usually a director has extensive experience working with both industry and universities. regularly provides the region with a highly skilled labor force and attracts top researchers from around the United States and the world. Research centers are avenues through which information about the current state of research activities at Stanford ﬂows to industry. a research center director’s role is to identify companies that are interested in the center’s activities and to set up collaborations with the Stanford faculty. one of Stanford’s main current roles is to attract people from all over the world to the region. Most member companies of research centers or aﬃliates programs work through particular faculty members as their liaisons to Stanford.SOCIAL NET WORKS IN THE VALLEY / 231 through its various aﬃliates programs. Though they must be approved by the university administration. and in part from the international reputation of its engineering departments. raising funds internally through corporate memberships.
a former director of one Stanford interdisciplinary research center. as the primary role of the centers and programs is to connect the university and industry. This is not only allowed but encouraged. For example. but through research centers. topics. As a result. had also worked in industry before joining the center. who now works for a high-tech company in the region.8 This. The research centers provide a means by which university researchers can develop or commercialize their ideas. and to support administrative assistants. to purchase equipment. companies learn more about students and researchers who work on their problems.232 / CASTILL A. Through meetings such as annual aﬃliates days and other public events hosted by the centers. They can set up courses geared speciﬁcally toward their design problems through the aﬃliates programs. Students enjoy and beneﬁt from learning by doing. Professors can utilize concrete issues. These centers and programs also provide funding opportunities for researchers in the Stanford community. in turn. the process of funding research is much more eﬃcient and informal. GRANOVET TER. Funding is used to support graduate students. As the industry liaison for the center. which is at times diﬃcult to do in an institution of higher education. helps departments to attract highly motivated students. And some aﬃliates programs include opportunities to send their employees as corporate visiting scholars both to the programs and to an academic department. AND GRANOVET TER ences held on campus and can have individual meetings when needed. his past experiences and networks in industry were invaluable in developing its industry sponsorship program and in . Here. and materials brought to them by industry for their classes. HWANG. Money is received from industry in the form of aﬃliates’ fees. industry and university come into direct contact with each other with the common purpose of university-industry cooperation. Student internship opportunities are provided through networks created in the research centers and programs. Compared to most government funding sources. This is a cost-eﬀective way to tackle speciﬁc problems with the help of cutting-edge researchers and engineers. and some companies exploit this opportunity as a recruiting tool. and entails far less “overhead” cost than traditional grants. which do not go directly to the researchers. researchers and faculty can legitimately pursue applied knowledge. Key individuals move back and forth from industry to academic positions in research centers and aﬃliates programs. to which previous and current aﬃliates and individuals who have been involved in the program or centers are invited.
SOCIAL NET WORKS IN THE VALLEY / 233
raising funds for the center.9 Moreover, his career and current relationship with this center typify the evolving Stanford–Silicon Valley relationship. After receiving a Ph.D. in computer science, he joined a renowned research organization in Silicon Valley, and then a large industrial corporation. He subsequently started his own companies, one of which is now publicly traded on NASDAQ. Then he did consulting work for ﬁnancial companies in the region. Years later, he joined the Stanford center to develop the aﬃliates program. Now back in industry, he still maintains an informal relationship with the center and can imagine returning some day. Speaking more abstractly, the personnel of these research centers constitute “boundary spanning units” (Hirsch 1972), a category of organizational actor crucial in situations in which brokers must connect disparate institutional sectors.10 The centers create social networks that ramify into every corner of the region’s high-tech industry. Because of the proliferation of such boundaryspanning units, unusual in institutions of higher education, Stanford University continues to be a central forum for both academic and industrial researchers to beneﬁt from the exchange of information.
Key Financial Institutions
It is widely agreed that the venture capital industry has been the ﬁnancial engine of Silicon Valley. Harmon reﬂects a popular belief in asserting that
the venture capitalists (VCs in ﬁnance parlance) are the new power brokers, banks, management providers, gurus, and mothers who hold the hands of the newbie idea-ites [the founders of new companies], taking them past the training wheels stage into rocket racers. It is smart money, the people and their capital. It has to be smart—there is no time to make the wrong moves in a world where every great idea has a dozen imitators in sixty seconds. (Harmon 1999, 3–4)
Wilson’s 1985 study is probably the ﬁrst systematic analysis of American venture capital. In his words, “Born in New York, nurtured in Boston, and almost smothered in Washington, venture capital did not really come of age until it moved to California and joined forces with the brash young technologists who were using bits of silicon to create an information revolution as pro-
234 / CASTILL A, HWANG, GRANOVET TER, AND GRANOVET TER
found as the industrial revolution a century earlier” (Wilson 1985, 31). With the formation of venture capital ﬁrms such as Draper, Gaither & Anderson, and Western Business Assistance Corporation in 1958, the basic foundations of today’s venture structure were laid. Experienced venture capitalists now manage billions of dollars. Half of the venture capital ﬁrms in the United States are now in Silicon Valley, which attracted $3.3 billion in venture capital funding in 1998 alone. This is about half of the venture capital invested in the top ten technology regions of the United States, which include Atlanta, Austin, Boston, Dallas, Denver, Phoenix, Portland, Raleigh-Durham, Salt Lake City, and Seattle (Joint Venture: Silicon Valley Network, “Index of Silicon Valley,” various issues). While Silicon Valley industry attracted venture capital ﬁrms, the presence of venture capitalists attracted entrepreneurs from all over the country and the world. Employment grew accordingly, and in 1998 Silicon Valley added an estimated 19,400 new jobs. The number of initial public oﬀerings (IPOs) and mergers and acquisitions (M&As) in Silicon Valley indicates how successful entrepreneurship and companies are in the region. The Valley still produces the highest number of initial public oﬀerings (IPOs) in the country (Joint Venture 1999). Sand Hill Road, in Menlo Park, California, is now the “de facto headquarters for venture capital activity on the West Coast” (Saxenian 1994, 40). Today it is probably the most powerful venture capital enclave in the country and a center of gravity for international venture capital. Networks of engineers, entrepreneurs, and wealthy investors were crucial to the development of venture capital. These networks were fed by major inﬂows of technical entrepreneurs, venture capitalists, management talent, and supporting services from other regions. By the early 1980s, Silicon Valley venture capital was dominated by individuals who had migrated from industry rather than from backgrounds in ﬁnance (Wilson 1985, 50–51). For this reason, venture capitalists play a more active role in Silicon Valley than in other regions of the United States and the world (Saxenian 1994; Florida and Kenney 1987; Nohria 1992). In the 1950s, when the practice of venture capital did not yet have a name, the patterns for investment were established by rich men pursuing some risk investing in an informal but
History of venture capital in Silicon Valley.
SOCIAL NET WORKS IN THE VALLEY / 235
disciplined way. Three stand out among those who began to put risk capital on a more permanent institutional base. Laurance S. Rockefeller (third of the ﬁve sons of John D. Rockefeller Jr.) and John H. Whitney were rich, prominent prewar venture experimenters; and Georges F. Doriot, a French Harvard Business School professor, was very inﬂuential as teacher of a course about entrepreneurship and as president of the American Research & Development Corporation, founded in 1946. In the latter position, he organized capital and support for scientist-entrepreneurs in the Boston area. Government also stepped in by creating the Small Business Investment Company (SBIC) program in 1958, which “created hundreds of venture investors overnight” (Wilson 1985, 13), and later by reshaping the tax system to promote equity investing. One of the most successful pioneers was Frank G. Chambers. Chambers raised $5.5 million in 1959; his Continental Capital Corporation is believed to be the ﬁrst SBIC in Northern California. Chambers and his brother, Robert, were greatly inﬂuenced by Doriot’s teaching at Harvard, and started Magna Power Tools in San Francisco. “Chambers was already part of the informal luncheon-and-investment club that constituted San Francisco’s venture capital community at the time, and he joined a few small investments” (Wilson 1985, 23). Aside from Chambers’s SBIC, the only venture investment group of any magnitude in California was Draper, Gaither & Anderson in Palo Alto. DG&A was formed in 1958 by some of the biggest investors on the West Coast, William H. Draper Jr. (former vice president of Dillon, Read & Company), Rowan Gaither (founder of Rand), and Frederick L. Anderson (a retired Air Force general). DG&A had also raised money from the Rockefeller group. An important Wall Street investment banker, Arthur Rock, moved himself and his “quiet passion for backing entrepreneurs” (Wilson 1985, 31) to San Francisco in 1961. His name is closely associated with the evolution of Silicon Valley. Rock played a signiﬁcant role in the creation of Fairchild Semiconductor by the “Traitorous Eight” and accumulated considerable proﬁts from his investments in companies like Scientiﬁc Data Systems, Intel, and Apple, among others. Rock’s experiences in California convinced him that there was an important business investment opportunity in the West. In 1961 Rock and Tommy Davis, a lawyer who was president of Kern County Land Company, raised $3.5 million from several of the Fairchild Semiconductor founders,
For example. Some of the prominent examples of spin-oﬀs in the venture capital industry are documented by Florida and Kenney (1987. During the 1970s. and Robert C. Davis and Rock and their principle— “back the right people”—became a model for later venture groups. 20–21). a charter member of “The Group” (Wilson 1985. James A. Katzman from Tandem Computers. The evolution of the venture capital industry followed a pattern similar to that of new high-technology companies. HWANG. Reid Dennis and Burton McMurtry founded Institutional Venture Associates (IVA) in early 1974. the number of venture capital ﬁrms increased enormously. which had been founded in 1975 by Harvard sophomore Bill H. now close to the inventors and entrepreneurs and to many of the young technology companies near Stanford. Out of IVA. Gates and Paul Allen. Marquardt joined McMurtry and James J. Simultaneously.’” recalls Reid Dennis. AND GRANOVET TER and opened an oﬃce in San Francisco. GRANOVET TER. Dennis’s Institutional Venture Partners raised $22 million and invested successfully in Seagate Technology. ideas and gossip ﬂowing with the martinis. just a few miles from Stanford University. TVI had a chance to invest $1 million in Microsoft. 49). “One noontime each month they would troop up Nob Hill to the University Club for a meeting of the Western Association of Venture Capitalists. Proliferation by spin-oﬀs from preceding generations was prevalent in both industries. Bochnowski to form Technology Venture Investors (TVI) which raised $24 million.236 / CASTILL A. when Davis started a partnership with Wally Davis to form the Mayﬁeld Fund. venerable Financial District restaurants where the sole was dependable and the sourdough fresh. Deals were put together over lunch at Jack’s or Sam’s. Kagle from the Boston Consulting Group. . McMurtry later brought in Pete Thomas from Intel. The “Boys Club” or “the San Francisco Maﬁa” (Wilson 1985) refers to a 1960s venture capital network that grew up in San Francisco. a ﬁrm making disk drives for personal computers. and David F. It is then that Silicon Valley became the most powerful venture capital enclave in the country. ‘We’d get together and listen to the entrepreneur’s story. as a result of spin-oﬀs and new venture capital ﬁrms started by managers and engineers of companies in the computer industry. The partnership between Rock and Davis lasted until 1968. two new important venture ﬁrms were built in the 3000 Sand Hill Road complex. Venture capitalists were sharing the same physical space. the Group moved down from the San Francisco Financial District to Sand Hill Road in Menlo Park.
formerly head of marketing at Fairchild. would be too confusing and complex for our more modest purpose here. which brought large returns to Sequoia. But they went a step further. founder of an investment banking ﬁrm on San Francisco’s Montgomery Street. though Valentine passed on this funding opportunity. subsequently referred Steve Jobs. had been a Harvard Business School MBA student who took classes with Georges Doriot and had worked for David Packard. Our ﬁrst goal has been to identify all early venture capital ﬁrms that contributed to the development of the West’s Social network analysis of West Coast venture capital firms. Genentech. In 1976 Atari was bought by Warner Communications. he usually knew somebody who did” (Wilson 1985. but also a group of entrepreneurs able themselves to start and run their own companies. In 1972. But the historical evolution of venture capital networks during the key period from 1958 to 1983. who worked for Atari.” was a mechanical engineer from Brooklyn Polytechnic Institute who moved to California to work at Shockley Semiconductor Laboratory. but also to show how the particular structure of social networks in Silicon Valley stimulated higher growth and development compared to other regions. one of the “Traitorous Eight. and if Valentine did not know them. Perkins was an engineer from MIT. 59–60). The founder of Atari.SOCIAL NET WORKS IN THE VALLEY / 237 Donald Valentine. predecessor of the now top-ranked ﬁrm Kleiner Perkins Cauﬁeld & Byers. the ﬁrst venture capital team taking up residence at 3000 Sand Hill Road was Thomas J. encouraging their associates and partners to start companies of their own. Perkins and Eugene Kleiner. moved to Sand Hill Road in 1972 and formed Capital Management Services (which later became the important venture capital ﬁrm Sequoia Capital). . Jobs approached Valentine in 1977 in his quest to found Apple Computer. entering the home video game industry. was the matchmaker for this successful venture fund. he did connect Jobs to his ultimate ﬁnancial supporters. Kleiner and Perkins decided to go into venture capital and to take an active role in designing and building the companies they backed. Nolan Bushnell. Valentine’s connection to Fairchild Semiconductor salesmen led him to invest in Atari. and Hybritech. Kleiner. to Valentine. “Everybody in the Valley knew Don Valentine. Sandy Robertson. if narrated in full detail. This made Kleiner and Perkins not only a venture capital ﬁrm. such as Tandem Computers. Ultimately we aim not only to describe the historical development of the networks.
we ﬁnd some of the oldest and still the most central and inﬂuential VC ﬁrms in Silicon Valley today. the number of venture capital ﬁrms in the Western region of the United States continued to grow. HWANG.2. each point represents a ﬁrm.3 . gossip. and Mayﬁeld Fund. In this cluster. and referrals of opportunities that a given ﬁrm could not take advantage of at a FIGURE1. Figure 11. AND GRANOVET TER venture capitalism. and the lines connecting the points represent the ties between these organizations. Hambrecht & Quist Venture Capital. mainly as a result of spin-oﬀs from existing venture capital ﬁrms. each point (or “node”) represented a person.2.4 shows two clear-cut clusters of venture capital ﬁrms. such as Kleiner Perkins. the presence of a tie between two ﬁrms indicates that they share at least one founder. We expect that the enormous inﬂuence of these ﬁrms derives not only from their early position of dominance.12 As with the semiconductor industry. Next we provide a preliminary glimpse into the network of venture capital ﬁrms. and even large ﬁnancial institutions became willing to invest as limited partners. In this case. This chart indicates that more than three hundred people in more than a hundred companies built West Coast venture capital in the 25 years between 1958 and 1983. The rate of founding remained relatively stable until 1967–68. This network would have provided important conduits of information and ﬂows of resources including advice. It is remarkable how many of these ﬁrms have common founders. is composed of 57 ﬁrms that are highly interconnected with each other. but also from the dense network of contacts they maintained among themselves. We compiled our data from the second well-known Silicon Valley ﬁrm “genealogy chart”: “West Coast Venture Capital—25 years. on the upper right.” created by the Asset Management Company (AMC) in 1984. in which the nodes are more or less uniformly connected. and 232 lines. There are 129 ﬁrms (or nodes).3 we plot the cumulative number of such ﬁrms by year. An explanation for this trend is that during the late 1960s. In Figure 11. which indicates how close-knit this collection of ﬁrms was. Crosspoint Venture Partners. In the semiconductor genealogy graph of Figure 11. After 1983 (not displayed).13 Unlike Figure 11.238 / CASTILL A. Institutional Venture Partners.11 We have identiﬁed 129 venture capital organizations (including spin-oﬀs) in the Western region between 1958 and 1983. here. GRANOVET TER.14 One. we use the computer program MAGE to illustrate the connections. the limited partnership became a common form of organization. after which it grew rapidly.
These newer ﬁrms appear to have gained their inﬂuence as spin-oﬀs of the older and more inﬂuential ones. The second cluster is a group of individual ﬁrms with very few or even no co-founder links among themselves.SOCIAL NET WORKS IN THE VALLEY / 239 120 100 80 Cumulative number of VC firms 60 40 20 0 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 Year Figure 11. appearing isolated in their absence of co-founder relations to other ﬁrms. and Sierra Capital. and 1982 . given moment. however. such as Davis and Rock. Moreover. In this clique. but one possibility is that ﬁrms in the second cluster. such as Melchor Venture Management and Lamoreaux & Associates. Further research will be required to suggest what these ways are. ﬁrms that are not involved in spin-oﬀs or in dense networks of other such ﬁrms may ﬁnd other ways to make their mark. and include many “isolates”—which in this context means ﬁrms whose founders neither came from other VC ﬁrms nor started any new ones. at least for venture capital. Some of the ﬁrms in this incoherent cluster are nevertheless inﬂuential. are also ﬁrms of more recent (1980s) origin. The very diﬀerent structure of these two distinct and completely disconnected groups of ﬁrms also suggests that there are at least two diﬀerent strategies by which venture capital ﬁrms exercise their inﬂuence. They are more or less randomly connected when connected at all. may have other kinds of personal relations to fellow venture capital ﬁrms.3. 1958–83. Cumulative number of venture capital ﬁrms per year. This picture belies the idea that connections in Silicon Valley are dense everywhere and that everyone is connected to everyone else.
Connections among venture capital ﬁrms. SOURCE: Asset Management Company’s Genealogy Chart.15 The average number of ties per person is 6. One of the interesting ﬁndings in the network analysis of individuals is that actors such as Arthur Rock. although we do not show the ﬁgure here. educational institutions. we have also examined the social network of venture capitalists who started and built the venture capital industry in the Western region. the importance of networks of human relations for Silicon Valley venture capital. and over 2.41. and Frank ChamFIGURE1. 1958–83. be more tightly integrated than the ﬁrst cluster with ﬁrms outside the venture capital sector. and the technical sector itself.240 / CASTILL A. which means that each person in the network is connected as a co-founder of a venture capital ﬁrm to 6 other people in the network on average. Eugene Kleiner. Tommy Davis. GRANOVET TER. Finally.4. according to the AMC’s genealogy chart. This corroborates.4 . AND GRANOVET TER Figure 11.200 ties. once again. There are 348 people involved in the construction of venture investing. HWANG. such as law and accounting ﬁrms.
and have . and Kleiner Perkins and their current venture fund descendants are among the ﬁrms that were and still are the most central and inﬂuential VC ﬁrms in the ﬁnancing of companies. and Western Bancorp Venture Capital Company). and Burr.S. and accountants are important channels for the diﬀusion of technical and market information. not only in Silicon Valley. educators. and Fireman’s Fund were also quite central to the development of the industry. These “venture capital” banks are not only “training grounds for inexperienced venture capitalists” (Kenney and Florida 2000). but also excellent places for them to expand their personal networks. who historically had important roles in the institutionalization of venture investing in Silicon Valley. Likewise venture capital ﬁrms such as Small Business Enterprises.to late 1980s (e. Institutional Infrastructure: An Analysis of the Silicon Valley Regional Economy Dense networks not only within but between sectors of engineers.. Most of these venture capitalists. among many) or even earlier (Sierra Capital) that have become central in the current structure of venture capital.. There are also venture partnerships that were started during the mid. where new investment opportunities are emerging. left and started their own limited partnership or joined a more prestigious existing venture capital fund. lawyers. Wells Fargo Investment Company. Interwest Partners.16 An analysis of the network of companies conﬁrms that employees of venture banks such as Bank of America Capital Corporation and Citicorp Venture Capital Ltd. founded a large number of new ﬁrms.g. but also elsewhere in the United States. after learning about venture ﬁnancing by working for a bank. and regional banks (such as Citicorp Venture Capital Ltd. Although we have frequently mentioned the importance of such cross-institutional ties. Westven Management Company. Menlo Ventures. The most central actors in the co-founder network of venture capitalists all appear to have worked in the 1970s and early 1980s for venture capital funds started by important U. Deleage & Company. The venture capital funds such as Hambrecht & Quist. Institutional Venture Partners. are not necessarily as central as one would have expected. venture capitalists.SOCIAL NET WORKS IN THE VALLEY / 241 bers. Bank of America Capital Corporation. Egan.
To illustrate the kind of analysis we believe will be fruitful.. and PricewaterhouseCoopers) take up a disproportionate share of the audit market. Mapping the relationships among diﬀerent institutional sectors in the Valley is a must for a systematic understanding of the regional economic system. The issuer ﬁrms themselves do not appear in the picture.1ERUGIF . In SIC 7375. the issuer-side law ﬁrm. since at least ﬁve ﬁrms from four diﬀerent institutional sectors take part: the new industrial ﬁrm itself (the “issuer”). AND GRANOVET TER given important qualitative examples. the underwriter’s law ﬁrm. a lead underwriting investment bank (usually as part of a syndicate). and 6 accounting ﬁrms participated. KPMG. and the Big Six (Arthur Andersen. HWANG. Firms are connected by lines if they participated together in at least one of the nineteen IPOs. Mark & Co. Inc. Lumer. and an auditing accounting ﬁrm. In these 19 IPOs.17 We deﬁne two ﬁrms as having a network tie when both are involved in the same IPO. investment banks. But it is not obvious how to explore systematically the way diﬀerent institutional sectors articulate with one another. but it presents daunting challenges. The audit industry is highly concentrated. IPO deals allow us to observe the infrastructure of the economy at work. we have not yet attempted systematic analysis of this phenomenon. Broadband Sports. SIC 7375—”information retrieval services”—which includes such familiar ﬁrms as Ask Jeeves.com Corporation. The structure of connections among the diﬀerent companies involved in the ﬁling of IPOs is presented in Figure 11. Ernst & Young. and McAfee.. and accounting ﬁrms are each represented.. 9 lead investment banks. Marc & Company. of which 19 came from California. Law ﬁrms. The diﬀerence between the number of law ﬁrms and the number of accounting ﬁrms reﬂects the diﬀerence in industry concentrations. and the length of the line is inversely proportional to the number of co5. As a ﬁrst step in developing such exploration by network analysis. GRANOVET TER. only the infrastructural ﬁrms that supported the IPOs. the total number of issuer ﬁrms that ﬁled for IPO in the United States in 1999 was 148. we take a small special case: the data on California ﬁrms involved in 1999 IPOs in a single four-digit SIC code. computed with the MAGE program previously described.242 / CASTILL A. Many domestic as well as foreign attempts to imitate the success of Silicon Valley have failed because the Valley’s results depend on its particular institutional conﬁguration rather than on the features of particular ﬁrms. Bailey. Inc. 14 diﬀerent law ﬁrms.5. we chose to study the case of IPOs.
19 We note some interesting ﬁndings in the graph. Sachs & Co. and CS First Boston). and betweenness) that are relatively more densely connected to one another: three law ﬁrms (Wilson Sonsini Goodrich & Rosati. Morgan Stanley Dean Witter. Brobeck Phleger & Harrison. the weaker the relationship. Network of IPO deals in the information retrieval services industry in California. one can single out a group of eight ﬁrms (with the highest score in all centrality measures such as nodal degree. and Cooley Godward). SOURCE: 1999 IPO deals from www. three investment banks (Goldman. closeness.com participations. there is a status dimension to this collection of ﬁrms.SOCIAL NET WORKS IN THE VALLEY / 243 Law firms Investment banks Accounting firms Figure 11. and two accounting ﬁrms (PricewaterhouseCoopers and Ernst & Young)..5.18 Although the network as a whole is densely connected.ipodata. we may think of this as a measure of the “strength” of the tie—the longer the tie. First. All eight ﬁrms are leading ﬁrms in their .
This is out of a possible 38 showings (since there are two law ﬁrms for each deal. compared to 16. reﬂecting the domination of the audit market by a small number of national ﬁrms.9 percent and 34 percent for the largest accounting ﬁrms. GRANOVET TER. equaled only by the accounting ﬁrm PricewaterhouseCoopers. the emergence of national law ﬁrms (with branches in multiple states) and international law ﬁrms means that the market does not necessarily need to be as localized as it appears in this analysis. Second. and thus these three occupied more than 50 percent of the slots in these deals—an extraordinarily concentrated market. employing hundreds of lawyers. HWANG. far diﬀerent from the national pattern for legal services. By contrast. For example.6 percent for the four and twenty largest law ﬁrms. corporate law ﬁrms.244 / CASTILL A. the three most central law ﬁrms appeared twenty times in the nineteen deals. but Galanter and Palay (1991) show that in 1982. But there are only six accounting ﬁrms in the data. respectively. the law ﬁrm of Wilson Sonsini Goodrich & Rosati participated in nine of our nineteen IPOs. Although legal practice is circumscribed by state-level licensing. although the proﬁle of investment banks and accounting ﬁrms suggests the national scope of the markets for ﬁnancial services and audit services. Both Brobeck Phleger & Harrison and Cooley Godward are San Francisco–based law ﬁrms with branches around the country. we begin to see the contours of the institutional articulation of the economy and can . We do not have reason to think that these national patterns have changed dramatically. Yet in our data.9 percent and 3. Given that there are fourteen law ﬁrms in the data. And the high concentration of legal services in our data departs from the more general national pattern. is normally quite low. the three law ﬁrms are all big. Wilson Sonsini has long been an institution in its own right in the Valley. compared to other service industries. Both the investment banks and the accounting ﬁrms are well-recognized ﬁrms. either from the underwriter’s or from the issuer’s side. percentages of total receipts were . From our preliminary study of IPO deals within a single SIC code. concentration in law. the market for legal services appears to be distinctively local. We do not have good recent data. While legal practice is more localized by state-level licensing. this is a remarkable ﬁgure. one for the issuer and one for the underwriter). AND GRANOVET TER own industries (see Podolny 1993 for the status hierarchy of the investment banking industry and Han 1994 for the audit market).
First. Instead. Results for a single SIC code in a single year can only be illustrative. It is our view that these intersectoral ﬂows are what make Silicon Valley unique. which indicates that Silicon Valley is not unique in having its outcomes derive from social networks. but also on the ﬂow of people. we tried to describe and explain the crucial importance of social networks for the functioning of the Silicon Valley regional economy. We would like to know. the ability to leverage value by shifting resources among previously separated sectors has always provided a vital edge for regions able to do so.SOCIAL NET WORKS IN THE VALLEY / 245 point to the local aspect of this conﬁguration. commercial. the general idea that networks are important has attained widespread currency. resources. Our emphasis has been not only on the important networks within institutional sectors. But we have also tried to connect this theme to the large and growing academic literature on the sociology of the economy. Because of the enormous attention paid to this highly successful region. We plan to explore many diﬀerent permutations of this type of analysis in our eﬀort to understand how Silicon Valley industrial and nonindustrial infrastructure has interacted and ﬁtted together. Understanding how the networks of Silicon Valley have been built and are interrelated is essential for understanding regional diﬀerences in development. Our analysis also suggests that attempts to merely copy the structure and features of ﬁrms. CONCLUSION This chapter has had two aims. Diﬀerences in outcomes between years and industrial sectors would help us see why diﬀerent sectors evolve in diﬀerent ways. whether the high concentration of legal services is a regional eﬀect. It is this background of ﬁnancial. or a temporary blip in a less concentrated pattern over time. these networks un- . as though they were independent actors. for example. and information among sectors. The development of Silicon Valley was highly dependent on this particular institutional context. cannot be fruitful. and legal institutions linked to each other that characterizes Silicon Valley. and that in the history of the world’s economy. an industry eﬀect in this particular SIC code. which cannot easily be replicated in other regions. and so our emphasis will not surprise even casual observers.
Locke (1995) proposes that such outcomes are in fact quite variable. GRANOVET TER. HWANG. Such an emphasis should be important in Silicon Valley as well. and cultural reasons. in her book’s title. Saxenian (1994) presented a systematic argument that network structure in Silicon Valley was quite diﬀerent from that in the Route 128 corridor of the Boston metropolitan area. to how the regional economy links ﬁrms of various sizes and competencies together. The important work in industrial organization . when analysts question network interpretations of economic outcomes. including some that are far less successful and have drawn much less attention. The literature on industrial organization has begun to consider this question. These ﬁrms do not compete to the death with small ﬁrms. This means that the interesting problem is not whether networks are important in a region. and to enable us to make the distinctions between network structures that lead to stronger or weaker outcomes. Thus. several recent studies challenge the idea that the “Third Italy” produces uniformly successful outcomes in its textile industry through elaborate networks of ties among small ﬁrms. and that this diﬀerence translated into what she called. because although most attention has gone to the network of small ﬁrms and connections among them. and with what results. it is amply clear that the Valley’s success also depends crucially on the Hewlett-Packards. economic. Increasingly. a distinct “regional advantage” for the Valley. and Lazerson and Lorenzoni (1999) point to situations where what really matters is what kind of ties connect networks of small ﬁrms to larger ﬁrms that can in turn connect them to global partners and suppliers. for a variety of historical. and the Cisco Systems. the analytic problem shifts from whether large or small ﬁrms will triumph. In such a scenario. but instead have an elaborate and complex relation to them that has been a source of vitality not yet adequately charted. they turn not to non-network stories. but to diﬀerent and more reﬁned network accounts. because only some regions have the institutional infrastructure to support such elaborate networks. AND GRANOVET TER derlie the economic structure of many regions. the Intels. but what kinds of networks are associated with what kinds of outcomes. and of the project from which it reports. outcompeting previously dominant but now ponderous and slow-moving large ﬁrms.246 / CASTILL A. is to develop systematic methods to analyze the networks of Silicon Valley. The second goal of this chapter.
We believe that the network studies reported here show the promise of such further development. without establishing the deﬁnitive results that systematic analysis aspires to. our technology and computer programs are a patchwork of materials borrowed from other settings. But we also believe that such analysis is an indispensable step in developing a more sophisticated understanding of this and other industrial economies. As in most ﬁelds. methods lag behind theory. and at present. which will determine whether its worlddominating position can survive very far into the twenty-ﬁrst century. . which need to be further developed and integrated.SOCIAL NET WORKS IN THE VALLEY / 247 that has pointed to the centrality of networks cannot progress further without an adequate toolkit of methods for clear and detailed analysis of the complex data presented by the actual networks in particular regions and industries. We present here exploratory analyses from the beginnings of a long-term project. we are probing its deepest and most enduring source of vitality. In studying Silicon Valley’s networks.
In this case the focal person would lie on all the shortest paths in the network and would be called a “star. For a detailed historical account.500 lines. In a network of N actors. Kleiner. 2. when the person is in fact a star. Centrality can be measured in several ways. as well as a comprehensive inventory of current knowledge. William Spencer. A separate analysis with the companies as nodes. a person tied to two other people is said to be twice as involved as a person with only one link. 3. 9. A person gains power over any two other actors when she lies on the shortest path between the two in a given network of relations. CHAPTER 11. Full results of the network analysis using the program UCINET 5 are available upon request. Webster. Faculty interview. and Kirke 1998. At the present time. 7. MAGE was developed as a device to be used in molecular modeling. Degree is typically used as a measure of an actor’s involvement in a network (Freeman 1979). 1. an actor obtains the highest possible “betweenness” score when all N –1 other actors are tied only to that person. when it lies on no shortest paths. the Honors Cooperative Program has been integrated into the regular engineering curriculum. Last.006 ([n × (n-1)]/2).faseb. There are 372 people (or nodes) and more than 1. For more information on MAGE. personal communication. Each person in the network is connected to four others. 6. see Freeman. and changes between diﬀerent arrangements of objects can be animated. and Roberts) were the most central companies in the semiconductor network. Personal interview. Douglas Jackson. 8. It produces threedimensional illustrations that are presented as interactive computer displays. In contrast. For their indispensable help in developing methods and compiling data to construct this visualization. 4. parts of displays can be turned on or oﬀ. CASTILLA ET AL.org/protein/kinemages/kinpage. We calculated the degree and the relative betweenness of each person on the semiconductor industry genealogy chart. each of which is associated with a diﬀerent substantive interpretation. A person’s “degree centrality” is simply the number of other people to whom the given person is tied. points or nodes can be identiﬁed by picking them. or visit http://www. Transformations of these displays are immediate.” The relative betweenness of a point is a ratio that measures the extent to which a point in a network approaches the betweenness score of a star (Freeman 1979). connected if they shared a founder. . 5. United Kingdom) and Sean Everton (Stanford University). personal communication.392 / NOTES 10. on average. One of the diﬃculties of presenting network diagrams in printed form is that the dynamic capabilities of the program generating the pictures cannot be displayed. “betweenness centrality” is usually interpreted as a measure of an actor’s power. to a maximum of 1. out of a possible 69. see Wasserman and Faust 1994. In this sense.html to learn about and download the MAGE program. only static cross-sections can be presented. 11. A person’s relative betweenness can vary from a minimum of 0. we are grateful to Dimitris Assimakopoulos (Hull University Business School. Images can be rotated in real time. indicates that Fairchild Semiconductor and Amelco (founded in 1961 by Hoerni.
Only those individuals whose principal occupation has been venture capital are coded in the genealogy chart..2 represents people rather than ﬁrms. although not as densely connected as that for people. Kirkwood Bowman. who started Arscott. we have left in the data for California ﬁrms not located in Silicon Valley. 12. accounting ﬁrms. These people were not included since they primarily did real estate deals. we have sought to identify other ﬁrms and connections. WASBIC was the predecessor of today’s Western Association of Venture Capital (WAVC). the venture capitalist with the highest degree centrality in the whole network (connected to 32 people in the industry—ﬁve times the average nodal degree) also worked for Bank of America Capital Corporation from 1975 to 1979. Arscott. 11.256 lines ([n × (n-1)]/2). also applies here. Fuller results of the network analysis are available upon request. who worked for Bank of America Capital Corporation from 1975 to 1980 and left to work for Hambrecht & Quist. This is out of the possible 60. Mohn Jr. Dean C. and investment underwriters on their IPOs. Our cautionary note in the section above on the semiconductor industry genealogy analysis.. West Coast oﬃces of venture ﬁrms based elsewhere are not included as West Coast ﬁrms unless they joined the Western Association of Venture Capital (WAVC). Our preliminary analysis suggests that conﬁning ourselves to Silicon Valley ﬁrms would not signiﬁcantly change the results. But the comparable network graph for semiconductor ﬁrms. There are some omissions.378 ties ([n × (n-1)]/2). An interesting complementary analysis would be to study the network of industrial ﬁrms that are related by virtue of having had the same law ﬁrms. Campbell. then worked for WestVen until 1981. is quite diﬀerent from Figure 11. together with some investment bankers who were included when direct venture capital investment was a signiﬁcant part of their business. who worked for Bank of America Capital Corporation from 1975 to 1979. and in 1979 moved to Capital Management Services. We argue here that members of research centers and programs who have worked both in industry and at universities broker and facilitate the interaction between the university and industry to the beneﬁt of both.4. 13. See Paul Hirsch’s 1972 discussion of the importance of “boundary spanning units” or “contact men” in locating talents and marketing new products for organizations in cultural industries. Figure 11. 18. This is out of the possible 8.NOTES / 393 10. We have done additional research to verify and complete some of the information contained in the chart whenever possible. The information is current from 1958 up to December 1983. Our ﬁndings are tentative. and thus might be expected to receive simi- . In addition. when he started working for Hambrecht & Quist. 15. 16. Because this study is only illustrative. who also worked for Citicorp Venture for a year early in the 1980s and then for Institutional Venture Partners. Walter Baumgartner. and does not break down into clear components. 17. Inc. such as Tom Flowers. on the diﬀerent meanings of centrality in networks with diﬀerently deﬁned ties. and Ray Lyon. 14. Bud Moose. Among the central actors who followed this pattern are David G. to the best of Asset Management Company’s knowledge. and Lawrence G. data collection and analysis are still in progress. who started early SBICs and were leaders of the old Western Association of Small Business Investment Companies (WASBIC). Norton & Associates in 1978 and worked for the previous ten years in Citicorp Venture Capital Ltd. Such ﬁrms are tied to one another in the sense that they talk to the same partners in other institutional sectors.
CHAPTER 12. Ironically. 1989 and 1999. It does not include the numerous Chinese and Indian political. Radha Basu. One interesting issue would be to see whether such linked ﬁrms were more likely to pursue similar strategies than pairs of ﬁrms not linked. 12. Taipei. Calculations based on data from San Jose Business Journal Book of Lists. San Mateo. 19. when Texas Instruments set up the ﬁrst earth station in Bangalore. Interview. In the early days. 9. Interview. 1997. social. 7. and cultural organizations in the region. Y. Many other returnees work in PC businesses located closer to Taipei. 5. This is consistent with Joint Venture: Silicon Valley’s 2000 Index (see Joint Venture: Silicon Valley 2000. 4. PA R T I I I . In 1996. see Saxenian 1999. April 15. See Saxenian 1994. 1997. October 1. For an account of the postwar growth of the Silicon Valley economy. SAXENIAN 1. information. 6. 2. For a related argument. I N T R O D U C T I O N 1. This parallels Granovetter’s (1995b) notion of balancing coupling and decoupling in the case of overseas Chinese entrepreneurs. 1997. The origins of the region’s original industry associations like the American Electronics Association were an attempt to create a presence in a corporate world that Silicon Valley’s emerging producers felt excluded from. July 1. May 16. 1997. 3. This list includes only professional associations whose focus is technology industry. Lester Lee. For more data on immigrants in Silicon Valley. 2. and Santa Cruz counties. 8. The geographic scope of the region shown here includes all of Santa Clara County and extends into adjacent zip codes in Alameda. Interview. Ken Tai. 11. 82 companies in the Hsinchu Science Park (or 40 percent of the total) were started by returnees from the United States. 1997. that board overlaps lead to similar anti-takeover strategies. Market Intelligence Center (III-MIC).394 / NOTES lar or related advice. Full results of the network analysis are available upon request.563 returnees working in the park alone. . see Saxenian 1994. and there were some 2. primarily from Silicon Valley. The following discussion is based on interviews with K. Ken Hao. Interview. Institute for Information Industry. and perhaps personnel ﬂow into the ﬁrms or their boards of directors. See also Miller 1997. nor does it include ethnic business or trade associations for nontechnology industries. it entailed a long-winded process that included breaking or removing 25 government regulations. many distinctive features of the Silicon Valley business model were created during the 1960s and 1970s by engineers who saw themselves as outsiders to the mainstream business establishment centered on the East Coast. 10. Similarly. Han and Jimmy Lee. see Davis 1991. these organizations provided role models and support for entrepreneurship similar to those now being provided within immigrant communities.
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. 294.com Angel Investors (angel investing ﬁrm). 296 American system. 7. 5. 291–92. and graphical user interface. manufacturing in. 391n5. 395n2. 373. success with nontechnical public. 336 Agriculture. 349. and venture capital industry. 396n12. involved in IPOs. 79. 207–8. 216. 305. 373 Ariba. 364–65. 365–66. expertise on SEC rules provided by.com. 362. 192. 381. 235 Andreessen. and Homebrew Computer Club. 3. Minuteman Missile program of. 78. 73. 7.INDEX Accel Partners (venture capital ﬁrm). 153. 206. growth of. Paul. 52. 206. 366–67 Acquisitions: accounting related to. increase in ﬁnancing by. 125. as valuable to start-up entrepreneurs. 255. 114–16. 236 Alliance of Angels. 68. 86.). 70 Amelco. 146–47. 237. 346. 53 (ﬁg. 102. 194 American Research and Development Corporation (venture capital ﬁrm). 63. 228. 294. 83 Amazon. 182 American Electronics Association.. 283–84 Application service providers. suppliers to. 138 Amdahl. 242. 75 AllAdvantage. 114–16. 65. 307. 359. 6. 70–71. 43. 180 Alexander. 272. Marc. 67. 68. 185–88 America Online. 142 Anderson. 288–89. 204. and Internet start-ups. 310 The Angel Network. 309–10. 243. John Sculley at. 353 Adobe. 358. 275. 305 Altera. 356–57. 125. 76 Asia: immigration from. 307. 198 Arscott. 1. as conducive to innovation. 84.. 309– 11. 179. 346. 172–73. 27. traditional rules for. 248–50. 309 Apollo Computer. 309 Alpha Partners (venture capital ﬁrm). 357–60. 235. 164. 368–69. 1. as capital source for start-ups. geographic concentration of. and venture capitalists. 283 Advanced Micro Devices (AMD). 200 Air Force: and digitization of avionics. 29. 65. 355–69. 33. in Santa Clara Valley. 385n3. 348. 306. 273. Lamar. 409 . 51. 167–68. 142 Allen. 309 The Angels’ Forum. 35–36. David G. 74. as source of venture capital. slowdown in exports to. 74. in venture capital industry. venture funding by. 360. areas of expertise of. 394n3 American Management Systems. and Silicon Valley environment. 51. 73. 198 Advanced Technology Ventures (venture capital ﬁrm). 74 Apple Computer. 296 Advanced Research Project Agency (ARPA). Symantec strategy of. companies designed for. 297 Accountants. 393n16 Ascend Communications. Frederick L. 47. by Cisco Systems. 78. IPOs vs. 307 ARPANET. 70. 47. 235. entrepreneurial style based on. 77. 262–63. 198. technology basis of. 13. 204. See also Garage. 132 Applied Materials. 192. 310 Angel investors. 66. 71– 72. 397n13 Adecca (placement ﬁrm). 361–64. 107–8.
192 Beckman. 228 Band of Angels. 243. 167. Egan. accountants’ expertise on hybrid. 54 (ﬁg. James. democratic. 291. 246. venture capital invested in. Indian immigrants. as forcing manufacturing reliability.” 236 Brentwood Associates (venture capital ﬁrm). Vannevar. 79. Tim. 72. 280. 281. 192 Basu. Radha. Rick.). 349 Barrett. Keiretsu. creative services oﬀered by. Arnold. as driving development of planar process. 10. 241. 349 BroadVision. Jim.” 83–84. 9 Baskett. 75 Berners-Lee. 89–90. Japan Asian American Manufacturers Association (AAMA). 52 (table). 197. 317. 163. 297. 81–93. new. 371–75 Business infrastructure. 316. 167–68. Jeﬀ. Julius. 172–73. 287. 238. Phleger & Harrison (law ﬁrm).). 373–74. as requirement for start-ups. 258 Asset Management Company (AMC). 194. 363 Audible. Walter. 87–89. Kirkwood. 25. as social networks. 160. 178. 277 Bowman. 296. Andreas. James J. 277–78. 284. early venture capital ﬁrm in. computer ﬁrms in. 271–73. 177–79 Avionics: digitization of. 221–22 Bochnowski. 198 Beyond News. 264 Bechtolsheim. See also Silicon Valley Bank Barksdale. David. Silicon Valley. 171–72. 95–96. 161 (ﬁg. 236 Boston area. Silicon Valley. 96. 129–33. solid state diﬀusion developed at. oﬀering exponential returns to scale. 86–87. future. see Corporations. semiconductor ﬁrms in. Nolan. geographic location of ﬁrms constituting. 175. 385n4. 284. 159. openness of. Firms Business culture. Deleage & Company (venture capital ﬁrm). 92. 158. characteristics of. 346 Bell. 167. e-commerce. 66.) Blank. 58. 84. shift from vertical to horizontal integration in. 9. 225. 177–79 Baldwin. selfreliant. 72. 308 Autonetics. in other countries. 91–93.. 184. 180 Bay Networks. 25. 385n1. 256 (table). Bill. 241 Burroughs. venture lending by. employment in. Shockley at. 386n2 Bennett. 307. 349 Benchmark Capital (venture capital ﬁrm). 390n1 British Telecom. talent scarcity aﬀecting. 307 Bresnahan. Forest. 160. 295 Bioinformatics. 162 Beirne. 296. 372. 296. to gain mind share. 349 Bush. 372. 90–91 . 348 @Home. 346 Benchmarking. 393n16 “Boys Club. 133. Alexander Graham. 60. 77. and capital availability.410 / INDEX Asia (continued) venture capital invested in. 308 Atwell. 134 The BUNCH. 210–13 Business models. 277. 367 Bell Telephone Laboratories. “no bricks and mortar manufacturing. investment. 237. 107. 77. 343–44 Bushnell. 58 Biotechnology. 237 Business. as area of venture capital investment. 174 Belluzzo. 17. 227 Boards of directors. venture capital funds owned by. embracing standards. 27. 196. 274. 175. prompted by Internet. 133–38. 393n16 Bay. 81–82. 168. 12–13. 60. 58. 76. Thomas. 244 Brodia. 6. 242. reverse markets. 49 (ﬁg. 303 Brobeck. Edward. Timothy. transistor research at. 162. See also Chinese immigrants. 158. 127 Bezos. 6. 61–62. 225. 361–64. 294 Bank of America Corp. value added per employee in. 243. 394n2. Silicon Valley as center of. 173. 76. 21–22. 70. 393n11 Atari. 25 Bell-Mason Diagnostic. 263–64 Baumgartner. 255.. 382–83. Craig. 84–86. 296 Banks: commercial. 161. entrepreneurship encouraged by. 70 Burr.
391n1. increase in start-ups in. see Industry clusters CMGI (venture capital ﬁrm). 191. 48. 303 Cailliau. 76. Clayton. growth rate of. 252–53. Jim. 391n5. 348. John. 343–44. 134 CDC. 351. 2. 280. encouraged by social climate. Software industry . 30 (ﬁg. Silicon Valley pioneers championing. 192 Carstation. 56. Taiwan as source of. 29–30. 353 Career Mosaic. 121.. 394n7. See also Partnering Commercial banks. 395n2.” 250–52. 211–12. 390n3. 24–26. in semiconductor industry social networks. 187. 309–10. 32 Compaq. (venture bank). 303 Centrality. 207–8. 83–84. 33. professional organizations of. between govenment and industry. 195 (ﬁg. 134 CAE Systems. 259. 75 Clusters. 56–57. 72. geographic shift in location of. See also Management teams Cerent. 207–10. start-up advantage in. 353 Carey. 114–16 Chambers. 326 Challenge 2000. 107–8. 128. 13–15. 317. John. 385n3. 197. 343– 44. 240–41 Chambers. 262–63. 223 Christian & Timbers (executive search ﬁrm). 114–16. 119. between industry and educational institutions. 110. 90. 186–87. 78. 187. 390n3. 57 Chambers. 31. 91–92. 48. 67–69. 282 Centillium Communications. 300. acquisitions by. 393n16 Capital: angel investors as source of. 393n16 CEOs. Robert. 311 Compensation: high wages as. as reaching limit of eﬀectiveness. from foreign computer companies. 350 Cirrus Logic. 356 Career Builder. 87–89. Bill. 227–29. 89. 74. as purpose of computer use. 253 (table). 222 Citicorp Venture Capital Ltd. 379 Collaborations: behind innovation by individuals. 201. 251–52. 249. Manuel. 311 Colella. Personal computers. 206. and links between Hsinchu (Taiwan) and Silicon Valley. start-up. See also Silicon Valley Bank Communication: and localization. and immigrants. 397n13. 87.. stock / stock options as. laws facilitating labor mobility in. 256–57 (table). 346. 49 (ﬁg. 91. 395nn6–7 Competition: advantages in. 127–29 Computer industry: foreign competition in. for start-ups.com. 92. in foreign countries. 277 Cambridge University. 91. See also Venture capital Capital Management Services (venture capital ﬁrm). availability of. 130–32 Communities of practice. 240–41. 204. venture capital invested in. and “glass ceiling. Dean C. 63 Carnegie-Mellon University. 309–10. from Japanese semiconductor industry. and Stanford University. 259–63. 237 Cardoza. 120–21 Clinton. 60.). 262–63. Sam. See also Hardware industry. 193–97.INDEX / 411 Business-to-business (B2B) e-commerce. 107–8. 250. 34. 1. in venture capital industry social networks. 70 Centex Telemanagement. 207. 97. 373. 349– 51. 395n2. open standards as changing. government help for. Robert. from Taiwan. 5. 116. 196–97. 55.). 76. for venture capitalists. Frank G. 250. 235. 274. 276. 286.). 283 California: exports from. 241 Clark. as recruitment issue. executive searches for. 129– 32 BuyBooks. 392n5. 338 Castells. 31 (ﬁg. 373–74. 10–11. 198 Calico Technologies. 307. and venture capitalists. manufacturing in. 279. 78. 385n5. 235 Chemdex. 35. 303 Cisco Systems. oﬀered by Silicon Valley. See also Immigrant entrepreneurs Christensen. 188 Campbell. 261. 394n4. for immigrant entrepreneurs. contract manufacturing by. 24.). 17–18. sources of. 249. 282. transformed from vertical to horizontal industry. 188–93. 267. 63. 37. 254–58. 18 Catalina. 326 Chinese immigrants. 204. start-ups by. 57. John. 300. 115.com.
280 Drugstore. Bill. 46. 180. Reid. relationships of entrepreneurs with. 381 Digital Equipment..) deForest. 82–83. 140 Draper. 273. 124. 297. 303 Data General. 49 (ﬁg. 128. 25 EDS. 192. as involuntary salespersons with viral marketing. venture capital funding by. 305 CS First Boston (investment bank). 296 Davidow. Lee. 377. 137 DigitalWork. 235 Draper. 235. 182. III. Wally. 164 Cravath Swaine & Moore (law ﬁrm). 54 (ﬁg. 68. 61 Dataproducts.. 132 The Dinner Club. 179. 158–59 Devine. 109–10 Dalal. 238. 172. Georges F. Internet as aﬀecting. 283–84. 37–38. 363–64 “Digital divide. 388n33. venture capital industry’s interest in. 237 Draper. 307 E-commerce. 125. and culture of self-reliance. as part of Silicon Valley service infrastructure. 309 Ecosystem. 303 Diamond Multimedia. 52 (table). 236. 135–38. 240. 243. 311 Crosspoint Venture Partners (venture capital ﬁrm). 133–35. 286. 159. 352–53 Contingent workforce. viral marketing in.” 55. 297 De Anza College. 186– 87.412 / INDEX Consultants. 182. 396n11 Eastman Kodak. Minuteman missile program. 185 Coyle. 280.S. 83–84. 169 eBay. 13. 314–16. 346 Dhen. 235 Contingency search ﬁrms. 139–40 Draper. and silicon technology. 304. 64–65. 132. 235–36. 75 Doriot. Thomas. 297. 376–77. Tim. 140. 180. 87. 370–71. 51. 91. 56. William H. Larry. 190. and Fairchild Semiconductor. Alfred.. shift from vertical to horizontal integration in. 92 Contract manufacturing. 198. empowerment of consumers by. 26. 308–9. Yogen. 194 . 244 Corporate culture. 221. 166. aversion to. 191. 379 Dole. 47. semiconductor companies marketing products to. 235 Drazan. and Fairchild Semiconductor. Silicon Valley employment related to. 190. 308 Department of Defense (DoD): Advanced Research Project Agency (ARPA). See also Firms Costs: of ﬁnding employees. 370–79. 57. 385n6 DeBower. 34. 294. 385n2 Edison. 239. 196 Dennis. Thomas. 243 C2B Technologies. 296 Draper Fisher Jurvetson (venture capital ﬁrm). 158–59. consumer.. of starting company in U. Rick. 76–77. 375–76. 47 (ﬁg. 143 eCompanies (venture capital ﬁrm). Bob. 271. 187 Digital Impact. Europe. Ron. 235–36. 310 Cooley Godward (law ﬁrm). William H. 236. 343–44. geographic concentration of. 334 Cray Inc. change in need for. interaction. 192 Creative abrasion. as technology shaping Silicon Valley economy. 166. 386n6 Creative destruction. 129. 34. 51. 129–32. 172. 234. 180. 145–46. 198. 342. 379 Davis. 386n6 Creativity. Pehong. 153 Dell. 371–75. 125. 192. 309 Doerr. 358–59 Defense. value added per employee in. 127 Customers. 78 EASDAQ. Silicon Valley as. 66 Continental Capital Corporation (SBIC). 1. 57.). 377–79 Consumers: e-commerce targeting.. 10–11. 172–73. 275. 305 Davis and Rock (venture capital ﬁrm). John. 133–38. 76. 296.). of entrepreneurs. 209–10. 89 Control Data Corporation. Gaither & Anderson (SBIC). Jr.com. 135–38. Jeﬀrey. vs. see Business culture Corporations: collaborations between educational institutions and. 297. 298 Davis. 106–7 Critical Path. Advanced Research Project Agency (ARPA). 192 Conway. 125. 388n33. 50–51. B2B.
86–87 Europe. sales to military by. Dan. 347. 181–82. 91–92. 50 (table). productivity of. government funding for. 51–52. 222–23. 196. 291. 98–101 (table). 114–16. 5–6. 91. 54. 361. and small business owners and traditional entrepreneurs. 201–2. See also individual universities by name Edwards. 160. 302–3. future of.). 180. deﬁned. 299–300 eToys. 326 Employee Retirement Income Security Act (ERISA). democratic corporate culture of. 96–111. 190. 99 (table). sectors employing. CEO searches by. 344–45 Entrepreneurs in residence (EIR) programs. 159. 356–57. 63. 242. 49 (ﬁg. 186. 59–62. 351. 182–83. 289. 47. 81. 90. 111–21. 108. 62. 305. 175. 301 Excite@Home. 185. transistors brought to market by. 27.). industrial districts in. 388n33. 296. 172. global spread of. climate tolerating. as spin-oﬀ from Shockley Semiconductor Laboratory. 106–7. 189–90. spin-oﬀs from. 52 (ﬁg. and Minuteman missile program. Bill. number of. 4. personal account of employment at. transformational. growth in number of. 48. 303. 159. 51 (ﬁg. business culture as challenge for. 372. risk taking by. 206. 366–67. 182 . serial. 95. 167–72. 280–81. 349 Failure. Sherman.). 179. search process of. 283 Elahian. see Stock / stock options Ernst & Young (accounting ﬁrm). 342–54. 235. 349– 50. 310 Equity. See also Immigrant entrepreneurs Entrepreneurship. Silicon Valley. 57. 225. Workforce Engelbart. 128. 181–82. 225. government rules favorable to. 116 Fairchild. 397n16. 225. 165–66. 158. 390n5 Electroglas. silicon manufacturing transformed at. 275. 342. American system of innovation compared to. 165–66. 272. 10. 105–6. 191– 92. 48. 326 E*Trade. 60.INDEX / 413 Educational institutions: collaborations between industry and. 94. temporary. passion of. 172. see Trade Exxon. Larry. inﬂuence of. 125–26. 214. visioneer. 350–51. 353–54. and venture capitalists. 296 Fairchild Semiconductor. 189. reciprocity between ﬁrms and. and venture capital ﬁrms. 216. 212–13. See also Management teams. 159. 126. 3 Entrepreneurial styles. with acquisitions. 308. 163–66. 60–61. 160–63. negative side of. 172–73. 2. 158–83. 35. 273. 10–11.). 385n6. entry-level professional. Douglas. 338. 61. 345. social networks of. 159. 166. Kamran. 112–14 Entrepreneurs: celebration of. founding of. 5. retention of. value added by. and Internet. 55. 116–19. 361–64. 352. 56. 9–10. 289. 48. importance of local heroes for. 3. 281. 95–96. 309 Eilers. 2. 381. 216. 186–87. 316. 177–79. 167. Silicon Valley habitat’s encouragement of. stock /hr>stock options for. wages for. search for. 9. 103–4. 3. 176–77. 243 Ethernet. 54 (ﬁg. 1 Executive search ﬁrms. and community life. 180. venture capital market in. 211. 349–51. 132 Excite. venture capital industry role of. 12–13. 44. 211–12. 348. 347. 352–53. lawyers as. 186–87. planar process developed at. 53 (ﬁg. Silicon Valley. 124. integrated circuit developed at. 299 Employees. 121–22. geographic location of. 395n3 European Venture Capital Association (EVCA). 226.). 297. 396n11 Everdream. 395n3. revised interpretation of. 168 Fairchild Camera and Instrument Corporation. 373–74. business infrastructure supporting. 343– 44. 390n2. 87. 180. 100 (table). growth of. 303 Electric dynamo. value of accountants to. 173–76. with multiple acquisitions. 49 (ﬁg. 347–49. 9. acquisition. 183. 170–71. 187. 345–47 Exports. and immigrant students. 94–96. 115. 71. 295. 122–23. of entrepreneurs. 382–83. unique characteristics of Silicon Valley. 119–21. 115– 16. 62–63. 305. 161 (ﬁg. 250. 49 (ﬁg. 397n16 ePace. 183 Ellison. 391 eHatchery (venture capital ﬁrm). 373.).).). 225. 165.
226. 286n3. 29–30. and knowledge ﬂows. 30–32. 345 Globalism: access to capital with.com. 31 (ﬁg. Robert. Victor. 43. 312. 192– 93. 43. 28–29. 359. of investments by venture capitalists. 297 Grove. 291. entrepreneurship encouraged by. 349 Generally Accepted Accounting Principles (GAAP). 258–60 GO. 24–26. 373 General Motors. 236–37. 393n11 Fong. 106–7. 34–35. Rowan. on transformation of computer industry. 153 Filo. 326 Friedland. with viral marketing. Silicon Valley. 26–27. 87–88. reciprocity by. semiconductor industry involvement by. 308. 344– . 312. small vs. Tom.). of Silicon Valley ﬁrms. 286 Foothill College. 81. 390n2.) Growth: of angel ﬁnancing. 385n6 Ford Motor. 390n3. 362 General MicroElectronics. 69. 27. 112–14 Financial Accounting Standards Board (FASB). 308. of venture capital industry. Peter. 220 Graphic user interface (GUI). in employment. 161 (ﬁg. networks of practice between. 234. 13–15. of venture capital industry. 349 Forrester Research. venture capital industry role of. 294. 385n2. Susan. 125–26. Bill H. 101 (table). method of operation of. Michael. 128 Genentech. trade protection by. See also Corporations “First Tuesday. 110 Frontier Ventures (venture capital ﬁrm).). 310–11 Gates. role of. 186. 277– 78. 119. 299 General Electric.com. 194–95. 53 (ﬁg. centripetal and centrifugal forces of. 44. 5. David. 31. 276–77. 129 Forward. 212. 241 Firms. 326 Gateway. 61 Ghatia. See also Political involvement Granovetter. 299.. 29 Grassroots. 243 Goncher. 293. 160. 61–62. 4–5. Ronald. large. 56–57. 276. 187. 83 Federal Telegraph Company. 139. James. Jay. 237. Kevin. 37–38. as rule maker. 349 Geographic location: constituting Silicon Valley. 26–27. Mark. in American system of innovation. Andrew. 79. 126. competitive advantages oﬀered by. of top U. reach of. 125 Gould. 376–77 Flowers. 304 Goldman. local heroes associated with.). Sabeer. rules and regulations of. computer industry’s shift in. Sachs & Co. and disk drive industry. 334 Gosling. 298. Edward. 23 Foundry Networks. 118. as early investor in Silicon Valley research. 72. 35–36. 4. 57. 334 Grinich.). 364–65 Financial Engines. 187. 102. 30 (ﬁg. Carly. 271. 306–7. and Silicon Valley ethnic social networks. 397n15 Germanium. 29. 31 (ﬁg. as early-stage developer.S. 305. 349 Fireman’s Fund (venture capital ﬁrm). 386n7. communities of practice in. 30 (ﬁg. university funding from. 277. 4. 195 (ﬁg. 325 Government: as buyer of computer products.” 236. 125. 110–11. 271–73. 77. 235 Garage. 336 Gray Cary (law ﬁrm). 372. 144–45 Grundfest. 54. 190–91. 191–92. 301. 139 Gilson. 289–90. Brian. 385n5 Ginzton.). and invention/innovation. 52 (ﬁg.). 60.com. technology companies. 5. 346. (investment bank). 358. 360.” 126 Fisher. 33–34. 345. 234. 73. 66–69. 394n2. of semiconductor companies.). 336 Fiorina. 54 (ﬁg. of service and industry clusters.414 / INDEX Faraday. 172. 236. 309. 8. 303 Gaither. 335–36. 367 Gain Technology. Joseph. 185. 39. 324. 189–90. 32. Joint Venture collaboration with. 66. entrepreneurs’ potential for. 183. 87. and venture capitalists. of entrepreneurial innovation. 390n5 FdX. 119 GoTo. 51–52. 225 “The Group. 234. 396n10. 272. as founder of Intel.). 197. 77. 289. 309. 141–42. 211–12. 335–36 Habitat. 367 Gordon. 25. and replication of Silicon Valley elsewhere. Gordon. 81.
394n7 Hughes Semiconductor. professional organizations of. 168. 271–73. viral marketing by. 248–49 Immigration and Nationality Act of 1990.). professional associations of. spread of. Henry. start-ups by. 174. See also Immigrant entrepreneurs The Indus Entrepreneur (TiE). venture capital market in. 141–42. 226 Hoerni. and Stanford distance learning. 139.). 248–50. 309 “Index of Silicon Valley” (Joint Venture). 259–63. 346. 203 (ﬁg. 73. 54–55. 110. 272.” 4.” 250–51.INDEX / 415 45. 250 incubate. 181 Homebrew Computing Club. 309 Immigrant entrepreneurs. 47. 250. planar process development by.). 224. 256–57 (table). Freidrich. 147. 87. 52 (ﬁg. and microcomputer revolution. 3. 141. Jean. 70. management style of. 228 Hoﬀ. 256 (table). 344. 72. 258. and “glass ceiling. 215–16 Hillman. 251–53. government involvement with. See also Chinese immigrants. 347. 173. 65 Hoﬀman Electronics. as facilitating globalization. 127–28. 253 (table). see Executive search ﬁrms Healtheon. 47. 47. as leading computer ﬁrm. 249. 203–4. 365–66 Heidrick & Struggles (executive search ﬁrm).net. 251–52. 216. 291 Han. 187. 215–16. and . 1. 391 Hewlett-Packard. 6. 70 “Hot groups. 283. 222–23 Industry clusters: deﬁned. as “industrial district. growth of. 187. geographic location of. 248–49 Hayden. in semiconductor industry social network. 139–40. 120 Heesen. 147. 87. relationships of. 97. 203–4. 238. 309 Incubation: Silicon Valley’s role in. 184. 171. 241. employment growth by. Mark. 353 Hennessy. sense of exclusion of. 256 (table). 348. Stone & Company (investment bank). 168 Hoeﬂer. growth of. 175. 386n2. 161 (ﬁg. 258 Industrial district. 262–63. social networks in. 197. 176. 44. 74. and Intel. 304–5. Gary. 25–26. 254–58. 187. 394n4. 260–61 Hardware industry. 60. 5–6 Haley. 167. legislation increasing number of. venture capital ﬁrms’ programs for. Knowledge Ideas Hub (venture capital ﬁrm). 227. 34–35 Headhunter. 237 IBM. 51–52. employment in.).). 192 Hewlett. 267. 54. 8–9.). 200. Steve. 144. 144–45 Hsinchu region (Taiwan). 188. 6–13. K. founding of. and communities of practice. 349. as founder of Fairchild Semiconductor. 326. 11 India: e-mail providers in. 50 (table). 149. 70. 394n4. 258–60. 49 (ﬁg. 52 (table). 166 Hayek. 252–53. 182. 233 Hart-Celler Act. William R. 203 (ﬁg. acquired by Microsoft. 64. ﬂuidity of. Richard. software industry in. 5. 133. features of.. 185. 48. 205 (ﬁg. 225. 54 (ﬁg. 196. 350. 288. Silicon Valley as. John. with other companies. 65 Homestead. 159. 54. 277–78 Indian immigrants. marketing by. 127. 65 HMT Technology Corporation.). 382. startups by. 148. 54 (ﬁg. 51. 253 (table).. 6. 83. with Internet. 167 Hybritech. Ted. 170. Y. 263–66. 143 Ideas: dissemination of. 74. geographic location of. 249. Indian immigrants Immigration Act of 1965. 394n2. 140–42. 32–33. 87. 143 Honeywell.). growth rate of. 160.com (venture capital ﬁrm). 261. 206. 214–15. 165. as Stanford start-up. 365 Hodgson. 248–68. and Fairchild Semiconductor. evolution of. 163–64.) Harmon. Tim. 44. 260. 4. 188 ICQ. 335.” 345 HotJobs. as key organization in Silicon Valley. Don. 353 Headhunters. 222–23. 50–51. Indian software center of. 70. 353 Hotmail. value added per employee in. 362 Harmon. 183. 254–58. 68. 167. 263–64. 397n1. 346 Hambrecht & Quist. 125. 86. 192. See also Inventions. 51 (ﬁg. with localization.
Inc. 43 Kagle. 110 Inventions. number of. 307. 87. 138–46. 125–26. 63. 192. 125. 187. 70. 1. 196. 54. spread of knowledge in. 235. 307 Juno. 99–100 (table).). 26–27. 146–49. 376–77. 163. 283 JavaSoft. 70. 272. and Silicon Valley. viral marketing on. 277 Inforocket. 56. 336 Keiretsu.). James A. and community issues. 49 (ﬁg. 82–83 International Angel Investors Institute.). 26–27. 297. 188. Tom. 127–28. 335. 65. 67–69. 56–57. See also Inventions Innovation Factory (venture capital ﬁrm). 241. See also Localization Information technology. and lawyers’ role. 243. 255 Institutional Venture Associates (IVA) (venture capital ﬁrm).. as spin-oﬀ from Fairchild. 238. 323–24. 241–45. 305. 122. 361–64. 372. 47. 64. value added per employee by. 124–49. 66. and consulting. and geographic location. evolution of businesses based on.. 183. and venture capital. 225. development of. “stuck” in local communities. 65. 85. 393nn17–18 Inktomi. 300. 33. 141 Jurvetson. Jack. 56–57. Bob. 47. 127. See also E-commerce Internet Capital Group (ICG) (venture capital ﬁrm). recruiting using. 2. 55– 56. Guy. in competition with U.. See also Innovation Investment banks. 8. 3. 6. 192 Juniper Networks. innovative social programs of. 308. 11.S. 70. 389n45 . 288–89. 188. 300–301. 153 Joy. and invention. 63. 47 (ﬁg. 137. 143 Initial public oﬀerings (IPOs). start-up advantage with.) Integrated Silicon Solutions. 390n3 Jaunich. Pitch. and microprocessor. in venture capital industry. Inc. 24. 311 Interaction costs. 73. 281 Kemp. 298. 139 Jobs. Robert C. 30–31. 131 Japan: American-type rules enacted in. 3. 323. Vinod. 185–88. 226. 92. 296 IPOs. 307. 183 Katzman. 47 (ﬁg. 335 Kasper. Internet-related. 176–77. Rich. 65. 140. 295–96. 261 Intel. 92. 75 Khosla. Smart Valley program of.416 / INDEX Industry clusters (continued) proximity. consumer product marketing by. 4. 206. 204. 329 Karlgaard. 243 (ﬁg. technology industry in. 65. 147 Kapor. 383 I2. 75–78. accountants’ help with. and venture capital. 309 Institute of Electrical and Electronic Engineers. Steve. 297. 57–58. and venture capital industry. computer industry. as technology shaping Silicon Valley economy. locus of. decline in. 234. 349 Kana Communications. 266–67. Mitch. and commercial bank services. 242. see Initial public oﬀerings (IPOs) Israel. 236 Kawasaki. 276. 64. 346 Integrated circuits (ICs). 381. 284. 206. 3.). 139. 341. 203 (ﬁg. 95. 26. 64. by entrepreneurs. Jack. 7. 50. Steve. 381–82 Jordan. 309 Internet. 241. 126. 307. 192 Kilby. 197–98. 190. 307. 236 Kalinske. 126. 46–48. 306. 236. and venture capital industry. 25–26. 183 Interwest Partners (venture capital ﬁrm). Bill. as Silicon Valley start-up. 62. 308 Innovation. 78. economic. and competition. 84. 310. social networks involved in. 47 (ﬁg. in business models. 340–41. 241 Intraspect Software. 84. 336–38. 291. 202. and IBM. 353–54. 349 Java fund (venture capital fund). acquisitions vs. and entrepreneurship. 323. and American system. 196–97. David Starr. 46. 48. semiconductor competition from. 57–58. 391 Joint Venture: Silicon Valley Network. 128. as technology shaping Silicon Valley economy.. (ISSI). 236 Institutional Venture Partners (IVP) (venture capital ﬁrm). 106–7. 48. 346 Intersil. 1. Moore’s Law of. IPO involvement by. 73. 237 Johnson. 124. 286. challenges to Silicon Valley identiﬁed by.). 81–93. 27. 389n45. movement to innovation from. 196. 382. 25–26. 32.
386n1. April. Don. 372. tolerating failure. 298. 23. 213 McKenna. in Silicon Valley. 329–30. 328. Workforce Lally. 60 Leonard-Barton. 19. favoring innovation. 10. David. 391 Lipstream Networks. 125–26 Localization: and communication. incubation program of. 74. 363 Lee. emotional support provided by. 327–29. See also Employees. Lester. 79. 33 Law of the Microcosm. 377 Lewis. 335–36. 161 (ﬁg. 251 Lenkurt. 386n7. 20–22. 9. 125. Dorothy. 170. Paul. 17. 43 Labor market. 160. 251–52 Lamoreaux & Associates (venture capital ﬁrm). 330–31. Ray. new. See also Industry clusters. 37. 35. 82. 341. 385n5. 281. and Fairchild Semiconductor manufacturing process. 24–26. choice of clients by. 189–90. Michael. 65. 244. 89 . 182. in venture capital network of ﬁrms. 335–36. in social networks. 239 Lam Research. 179. 305. Sandy. 330 Leadership. E. 344. 60 Los Angeles. and shared practice. 360. 35–36. 221. David. 120 Life sciences. 33 Laws: American system of. Proximity Lockheed. 26–27. Jay. Walter. 227. 171. 227. 328. 238. 177. 160. 32. by entrepreneurs. 73 Lucent Technologies. 29. leaks of. 65. 83. 68. Jimmy. 357. industrial. as important for entrepreneurship. 240 Kleiner Perkins Cauﬁeld & Byers (venture capital ﬁrm). 336– 38. 329–30. 277 Limited partnerships. evolution of role of. 310 Listwin. start-up role of. 7–8. See also Ideas. 283. deﬁned. 241 Kleiner Perkins fund. 72. 271. 261 Lee. Regis. 9. 345. 393n11 McCracken. work done at Fairchild Semiconductor by. 4–5 Kurtzig. types of risk encountered by. Silicon Valley. 223 Last.INDEX / 417 King. 23 Lepeak. 32–33. 311 Lyon. 44 Knowledge: actionable. 225. geographic concentration of. in IPO social network analysis. Jim. establishment of. 332–33. Andrea. 72. 243. 342. 102 Lee. 185–86. 17–18. Michael.). 211–12. 12. 37. 160. 347. 334. 32. as coaches. reciprocity with. 286. as founder of Fairchild Semiconductor. Chong-Moon. 274. ﬂows of. shared. 304. 68 Lam. 33. 161 (ﬁg. as business advisers. 237. 169. 189 Lawyers. studies of. 35. 391 Krugman. Ed. local heroes in. ﬂuidity of ideas with. 252 Larson. background of. Inventions Kodak. 10. labor mobility with. 77. 94–95. 378 Kvamme. Java fund of. 99 (table). 221. David. Stan. John. 14–15. 349 Korn Ferry (executive search ﬁrm). 90 Linvill. protecting semiconductor industry from Japanese trade practices. 22–23. Charles. aerospace division. Eugene. 68–69. 37. 225. 125 Lotus. 7. 327. 12. in and about Silicon Valley ﬁrms. 325–41. 291. in Silicon Valley social network analysis. 251 Lee. 17– 18. 97. 379. 169. 237. 182 Law of Diminishing Firms. 159. venture capital ﬁrms as. 273. changes in investment by. hybrid character of. and Internet. 374. spread of. 238. 346 Kirkpatrick. as founder of Fairchild Semiconductor. Silicon Valley concentration of. 328–31. 386n2. 367 Krenz. 307 Lycos. 116 Kleiner. 298–99. 43. 221 McKinsey & Company’s Global Institute. and venture capital. 16–17. 77–78. 242. 331–32. 16. unique role of. 297. 350. 329 LSI Logic. 363–64 Kourey. Floyd. as founder of venture capital ﬁrm. keiretsu structure of.). 327. 114 Local heroes. 27–32. 353 Kortschak. 284–85 Linear Technology Corporation. 370.
204. 379. 303 Monster Board. 118. 236. 304. Lawrence G. Jack. 393n16 Molectro.. 115–16. 297 Menlo Ventures (venture capital ﬁrm). on Fairchild’s contribution to Silicon Valley. 326 MAGE (computer graphics program). 90–91. 188. 161–62. 6. 360 Morgan. 84. on mysteries in the air. 297. 196–97. 392n2 Magna Power Tools. 297 Mohr.418 / INDEX Mackun. 346. 127 Microprocessors. 192. 3. 108–9 Marketing: by Fairchild Semiconductor. 175.). 65. 90. 16. 135 McMurtry. 76 Melchor. Davidow Ventures (venture capital ﬁrm). Hotmail acquired by. executive search ﬁrms in.). 343 Merrill. Burton. 180 MIT. 348 . 391 Mohr. 226. Fairchild Semiconductor plant in. 273. 206 Metcalfe. 282. 226. 262 Moore. of entrepreneurs. working with entrepreneurs. 111 Minuteman missile program. 256 (table). 131 Marin County. and start-ups. 296. 183. 91.com. 179. see Boston area Massachusetts Institute of Technology (MIT): computer research and design at. 27–28. 296. 235 Magniﬁ. 160. Tom. 176. 83–84. William F. partnering with. 104 Manpower (placement ﬁrm). 91. 188. 387n6. 169–70. as founder of Intel.. 177–79. 346. 239 Memorex. 300 Melchor Venture Management (venture capital ﬁrm). 25–26. on Stanford’s contribution to Silicon Valley. Scott. Jim. 236. Pickard. of consumer products by semiconductor companies. 32. David F. and venture capitalists. 167–72. 25–26. 179 Metaphor. 17. 89. 201. as founder of Fairchild Semiconductor. 64–65. 236–37. 326. 225. and venture capital industry. 311 Milbank Tweed (law ﬁrm). 131 Management Recruiters (placement ﬁrm). See also CEOs. 300. 100 (table). 74. 31 Massachusetts. 204. Executive search ﬁrms Managerial style: democratic. subsidiary trades concept of. 35. venture funding by. 192 Maxim Integrated Products. 37. of “Traitorous Eight. 98–99 (table). 347–48 McLuhan. 203 (ﬁg. Alfred: on localization. 63. See also Personal computers Microsoft. 372. 180 Market: controlling. Gordon. reverse. 103. 143 Mind share. 216. 296 Menlo Park: consultants in. 356. 196. 296. 228 Mayﬁeld Fund (venture capital ﬁrm).. 74. 203. 17–18. 147. 236. 297 McNealy. 76. 347. 385n2. 125. 191. after Apple phenomenon. 65. see Defense Miller. 175. 271. 373. 188. Moore’s Law. 353 Monte Jade Science and Technology Association (MJSTA). 187. 214 Moore. Nick. 298. 206. Anderson & Eyre (venture capital ﬁrm). 127. 288. growth of. 353 Manufacturing: “no bricks and mortar” (contract). Jr. discovery of structure of. operating system of. 238. 242. 255. 308. consumer. Paul. see Massachusetts Institute of Technology Mitchell. 372. 299–300 Metcalfe’s Law. 234. 258.com. 20. 393n11 more. 391. 206– 7. 168–69. 138–46 Market risk. silicon (Fairchild Semiconductor). 381. viral. 22. founding of. 174.. 309–10. manufacturing of. target. 16. 161 (ﬁg. Bud. 236 Marshall. 172–73. 238. 77–78. 353 Management teams: building. 71. 103. 148. 117–19. 367 Moose. 284. 271. 302–3. 170– 71. 334 Military. 225. 5. 162. 105. 19. 307 Mesa transistors. 19. 70. 391 Mimeo. Bob. and Silicon Valley. 297. 61. 196. 66. 280–81. 173. 305. 98 (table). 27.” 225. venture capital ﬁrms in. 183 Momenta. 159. 61. 298 Marquardt. 181–82 Manugistics. in changing company. growth of. Fairchild Semiconductor R&D work by. 8–9. 241 Meritocracy. 128. 33. 307 MBAs. and government funding. Marshall. 19.
28–29. 344. 196. 271. 257 (table) Northeast. 98 (table) Motorola. 309–10. 300 Netcentives. 30 (ﬁg. 70.. 282–83. 76.). Gib. 142 The New Venturers (Wilson). 196 National Science Foundation. 47–48. R&D. by entrepreneurs. 100 (table). 225. 3. 47 (ﬁg. 175. 122. See also Hewlett-Packard Palladium (venture capital ﬁrm). 62. 304. 273. 271. 27–28 NASDAQ. 84. as founder of Intel. Jeﬀ. 63. 237. 183. 257 (table) North American Taiwanese Engineers Association (NATEA). 286n3. 196–97 Oracle. 396n11 National Cash Register (NCR). 173–76 . John. with start-ups vs. 237. 301–2 “No bricks and mortar manufacturing. See also Collaborations Passion: of entrepreneurs. 347. 203. 167. 372. 118 Open standards. 89 Nohria. 86–87. 133. 64. 70–71. 146 Netscape. 128. 134 NetMind/Puma. in Silicon Valley worklife. 1. 65. 198 Motivation. 197. 96 Only the Paranoid Survive (Grove). 226. 20. 160. as founder of venture capital ﬁrm. 66. 147–48. 203 (ﬁg. 225. 120 Myers. 298. David. 296. 192 Pension funds. 3. 76.). 67. 356 Olivetti. established companies. 113. 171. 382 Piore. 280. 204. 174. 125 Placement agencies. 386n3 OEMTek. 212 “Mysteries in the air.INDEX / 419 Morgan Stanley Dean Witter (investment bank). 62–63 National Venture Capitalist Association. and integrated circuit. 10. 194. 216. 206. as spinoﬀ from Fairchild Semiconductor. Crane. 125. 70. 372.” 83–84. 107. 73. 73–74. 264 Organization for Economic Cooperation and Development (OECD). David. 79 Naval Air Development Center (NAD). 136. 298. 299. 255. Mark.). 188. growth of. 372. 166. as center of computer industry. 60 NEA. 298 Personal computers. 85–86. 352–53 Planar process. 48. 181.). 120. and planar process. 303–4 Mosaic. 299 Perkins. See also Social networks NetZero. 378. as Silicon Valley start-up. 127. 303 Myers. 176–77. 273 Palo Alto Investments (venture capital ﬁrm). consumer product marketing by. 1. 62. 23 Partnering: with customers. 264 Noyce. Perkins’s Law of. 125. 19. 114 Network eﬀects. 102–3 Paciﬁc Semiconductors. 108 Ownership. of entrepreneurs. 255.) Philanthropy. as founder of Fairchild Semiconductor. 109–10.. 296 Papows. 307 Palm Computing. 123. 344 Patent laws. 349 Olsen. 87. 22. Thomas J. 192 National Security Agency. and Yahoo!. 31 (ﬁg. and venture capitalists. Ken. 169. 189–90 Patterson. 107 Moritz. 96–97. Michael. 70. executive search ﬁrms in. 86– 87. 70. 95. 159. 66. and democratic corporate culture. See also Boston area NorthPoint Communications. shaping Silicon Valley economy. 222 Pittsburgh. by entrepreneurs. 1. law ﬁrms in. 161 (ﬁg. Robert. 98 (table). 223 Nortel. 65. 190 National Semiconductor. 308 Novell. 300. 373. 158. 307 North American Chinese Semiconductor Association (NACSA). as investors in venture capital funds. 305 Palo Alto: consultants in. development of microprocessors for. 225. 25–26. 134. Nitin. and Apple. 30–32. 47. Michael J. 2.” 16. 175 Occupational communities. 173. 194. 181 Packard. 79. by Internet-based companies. 185 Outsourcing. 349 myCFO. 361. 225. 147 Networks of practice. 243 Morgridge.
25–26 Precept Software. 298.420 / INDEX PlanetU. 205–6. and entrepreneurs. 48. 372 “The San Francisco Maﬁa. (Fairchild Semiconductor). 38. 63 Reach. 35–36. 28– 29. with localization. 286 Qume.). 49 (ﬁg.. 23. Arthur. 107–8. 307 Regional Advantage (Saxenian). 222 Safeguard Scientiﬁcs. 63 San Francisco. 66. in Silicon Valley. 65. 372. 394n4. 200 Saper. 11. See also Localization Purdue University. 55. 298. 292. 386n4 Professional services.). 353 Roberts. 164–65. 394n3. 340 Round Zero. Calif. See also Executive search ﬁrms Red Hat. 24. 276. 115 Rambus. 284 Practice. 83 Saal.). 256– 57 (table). see Business infrastructure Proﬁts: 52. 235. 360 Porter. 281 Quality of life. 352–54. 72. spread of knowledge in. Gilbert. 30 (ﬁg. 30–32. 335. 131–32 Salt Lake City. 6 ReleaseNow. 39 Returns to scale. communities of. 227 Robertson. 363 . and semiconductor industry. 307 Redpoint Ventures (venture capital ﬁrm). 317. Manju.” 236 San Jose State University. 176. 32. favorable climate for. Stephens and Company (investment bank). 35–36 Recortec. with clustering. 116 PricewaterhouseCoopers (accounting ﬁrm). Henry S. 85–86 Proximity: and clusters. 66–69. 16. 386n3. 66. Sheldon. 291 Rock. 30 (ﬁg. 297. 84–86. 150. 361–62. 29–30. 4 PowerPoint. 197. Charles E. 254–58. 228 Risk: and commercial banks. 134–35 Replication. 104. networks of. 60 Puri. 2. 122–23. 74 Quindlen. 225.). 296. 14. 317 Robert Half International (placement ﬁrm). 350 Raytheon Semiconductor. and IPO institutional social network analysis. 84 Rheem Semiconductor. 175. 123 Sabel. 181. for start-ups. 255. 180 Santa Clara University. 242. 127 Revenue recognition. 31 (ﬁg. 311–12 Sales risk. start-ups aided by. and high wages. 367 Rowen. 48–50. 38. 251 R&D. 240. 103–4. 18 Productivity. Laurence S. 145 Replay Networks. 23. 359–60 Reverse markets. Jeﬀ. 61. 99–100 (table). 209. 183. 31. 34–35 Reciprocity. 30. 366–68 Principles of Economics (Marshall). 161 (ﬁg. Kim. 75. 22–23. 24–26. 385n6 San Rafael. Michael. 380 Quantum. 235. 4.).). Jerry. Ruthann. measured in value added per employee. 360. shared. 310 Political involvement: of semiconductor ﬁrms. 62. See also Government Polycom. 303–4 Professional associations: ethnic. Michael. 182. main Silicon Valley. and venture capital ﬁrms. 296 Rothschild. 62. 71. 251 Recruitment. 71 Quantum Computer Services. 391 Russell Reynolds (executive search ﬁrm).. and theory. local hero in. 55–56. 65. 77 Saltare. 49 (ﬁg. 207.. 271. 50. of Silicon Valley businesses. 77–78. 48. 237 Robertson. 182. 54. of ﬁrms. 9–10. 125 Sanders. 64–65.com. 31 (ﬁg. 243. of Silicon Valley. 67– 68. 153. 62 Polese. 134 Plessey (English telecommunications company). 385n6 Santa Clara Valley agriculture. 235–36. of suppliers.) Products: consumer. 37–38. 48. 25 S3.com. and venture capital. and venture capital industry. 372 Rockefeller. 347 Ryle. and Fairchild Semiconductor. 297. techniques for managing. 361–62 Ramsey-Beirne (executive search ﬁrm). Harry. 244. start-ups funded by. Sandy. 212–13. 235–36. 339.
71.). 163–64. 206. history of. 260.). 362.). 371–72 Shockley Transistor. 358.INDEX / 421 Saxenian. of entrepreneurs. 359. 60. 160. and web-deployed services. 183 Silicon Graphics (SGI). 264 Sonsini. 227–29. John. 235. see Acquisitions Spin-oﬀs: from Fairchild Semiconductor. 336 Social equity.). See also individual ﬁrms by name Semiconductor Industry Association (SIA). 396n10. 382 Sinha. 56. 6. 61–62. 239 (ﬁg. 160. 142 SEMATECH. 221–22. 193 Small Business Administration (SBA). 160–62. 182–83. geographic location of. 46. 274. transistor invented by. 96–111. 117 Schools. 62–63. 236. 5–6. 160–63. 393n16. 47. in Internet era. 214. George.). 100 (table). 272. 222.). in India. 193. 258. Larry. 98–101 (table). 51. 226– 29. 335–36. 54 (ﬁg. 350 Sperry. 51. 196 Spin-ins. 210–11. see Educational institutions Schumpeter. 49 (ﬁg. Stanford’s contribution to. 393nn11–16. Jack. 139 Snap Track. 307. 372 Shockley Semiconductor. 67–69. 224–26. 120 Sierra Capital (venture capital ﬁrm). 127. 394n4. 1. Joseph. 224–25. 83.). 303–4.). 304. as source of power and inﬂuence. 73. cross-institutional. 120. See also Networks of practice Software Arts. 125. growth of. and venture capital industry. 325–26. 54 (ﬁg. 68 Sequoia Capital (venture capital ﬁrm). 329 Software Entrepreneurs Forum. boundary spanning units in. 337 Shockley. 226–29. 226. 52 (table). 204. 219. 222–23. 68–69. deﬁned. 109. 43–44. value added per employee in. 218–47. 239. of immigrant entrepreneurs. 147. 382. 201. social network analysis of. and “Traitorous Eight. 206. 392nn2–6. AnnaLee. 4. 289. 347. 297. 296. 225.) Software Technology Parks (STPs). 297 Sculley. 13–14. and semiconductor industry. political involvement by. 201–2. 235. 237–41. 122. 256–57 (table). Michael. 376. 52 (table). 364–65 SeeUthere. 240–41. 119–21 Service businesses. 255 Software industry: employment in.). Shockley Semiconductor founded by. 392n5. 349 Seagate Technology. fabless companies in. and Fairchild Semiconductor. 213–14 Silicon Valley. value added per employee in. Gunjan.). 272. 258–60. 236 Seattle. working relationships of. 175. 392n10. 371. 335 Silicon Valley Community Foundation. 222– 23. 64–65. 246 Schlumberger. lawyers in. rules and regulations of. 233. 16. 394nn2–6. 54 (ﬁg. 10. 60. 349 Schmidt. at Bell Telephone Laboratories. 241 Signetics. and venture capital industry. and social networks. 66. 60. 49 (ﬁg. 44. 69–70. 396n10 Small Business Enterprises (venture capital ﬁrm). 55. in venture capital industry. 225. See also Start-ups . 241–45. 227.com. 75. 225. 47. 223. 237. 351 Sharp. 390n3. as governance mechanism. 318–24. 397n14 Smart Valley. 9. centrality in. 162. 243 (ﬁg. 240 (ﬁg. 132 Small Business Investment Corporation (SBIC) program. 241 Small businesses: owners of. 371. 378 Speed: of acquisitions negotiations. 220–21. 94–96. 47. 381 Social networks. marketing by. 227 (ﬁg. 103 Small Business Act of 1958. web-deployed. 346 Serial entrepreneurial style. 194. 331–32. 393nn17–18. 108. 381–82 Smith. 224–25. 297. 34. 47. and labor market. 386n6 Scientiﬁc Data Systems. as advantage. 116. 220. 348. geographic location of. 186 Shearman & Sterling (law ﬁrm). 227 (ﬁg. 254–58. 161 (ﬁg. 162–63. Eric. 226 Semiconductor industry: employment in. William. 212 Semiconductor Equipment and Materials International (SEMI). see Washington state Securities and Exchange Commission (SEC). 132–33 Services. see Business infrastructure Shaneen. 27 Shutterﬂy.” 160. 221. SpencerStuart (executive search ﬁrm). 228 (ﬁg. 263–66. 63. 54. founding of.).). 239. 343–46 Silicon Valley Bank. 66–69. 224. 228 (ﬁg. Japanese competition in. and Stanford.
215–16. 390n3 Tradex. 213–17. 261. and lawyers. competitive advantage of. John W. see Employees. 60. See also Spin-oﬀs Stavers. evolution of. 70. 117–19. on Silicon Valley. 356– 57. 259–63. 281. 3. 368 Trade. 198–99. 356 Sterling.com. start-ups associated with. and practice. research centers. 75 Technical risk. Geoﬀ. 342. Ken. 127–29. 397n13 Syracuse University. and venture capital. 251–53. 86–87. 65–66. See also Chinese immigrants Talent. and Fairchild Semiconductor. 25–26. 143 Thomas. 201. 315. 134–35 TMP Worldwide (executive search ﬁrm). 328–31. by immigrant entrepreneurs. 207. 191–92. 161. 74. 206. 202– 5. and entrepreneurial style. 185. 120. 48. 358–59. and . inﬂuence of. 197 Texas Instruments. 210–13. 1.). 63. 205–13. 1. 114. 114. Frederick. and angel investor funding. 296. 94 TiVo. 133. 62. 170. 84. 298 Technology. Stanford programs founded by. and suppliers. 66. 77–78. 396n12. and Stanford. 77. 182. 201. 351. 207–8. business infrastructure for. 47 (ﬁg. and accountants. 204. 344–45. 202–5. 160. as source of capital for start-ups. 277.. 395n2. 104. sustainability of Internet. 287–88. Bob. 38. Pete. 382. 8. 87. 10. 236 Thomas Weisel Partners (investment banking ﬁrm). 383. 391 ThingWorld. 188. Charles. 231–33. 201–2. venture capital ﬁrm).. 391n1. 73. 309–10. 60 Tai. 1.com. 62 SRI International. 23. 116–19 Transistors: development of. 175. 163– 64. 397n13. Workforce Tandem Computers. 10. 71–72.). 153. Jeﬀry. 34. 206. numbers of. 224. 205 (ﬁg. 389n45. 35–36. 161 (ﬁg. Nirav. 63. 361–64. 309 TECHNET (Technology Network). 394n12. 253 (table). 206. 3 Stamps. and venture capitalists.) Technology Venture Investors (TVI. 205 (ﬁg. 276. 25–26 Thielen. 91–92. 296 Telegra. 64. Silicon Valley role of. 177–79 Sutherland. 73. 60. founders of. 68. 230. 366–69. 127–28. See also Speed Timmons. 208–9. 237. Larry. 296 Sybase.). 35–36. 385n4. 311 Sun Microsystems. 3. 335–36. 353 Tolia. 48. 391 Sutter Hill Ventures (venture capital ﬁrm). 86. 60. 391 Stanford University. 181 Theory. 203 (ﬁg. 346. 391n5. 356 Temporary employees. 352 Terman. and workstation development. 396n8. 201. 203 (ﬁg. 392n7 Start-ups. and talent instability. 395nn6–7 Sumitomo. 299 Tate. immigrants from. 259. 362 Tech Coast Angels. 308 Standards. 371–72 Transformational entrepreneurial style. 262–63. 121. 160. for new companies. 262–63 Taiwan: hardware industry in. 146–49. Bert. 1.422 / INDEX Sporck. 396n11 Stock / stock options. 3.). 309 TechFarm (venture capital ﬁrm). Management team. 303 Symantec. 230. 192. 52. 262– 63. 395n2. 217. and venture capital. Stanford. 279. 392n10. John W. 21. 33. 90. 215–16. 394n7. sources of capital for. 185. 373–74. 72. 300 Time: and Internet.” 160. 162. 207–10. 230 Texas. 37 Teledyne. 46–48. 300 Suppliers. open. 249. 262– 63. 230–33. 225. 391. 204. 204. 67–69. 200–217. 361. 325–26 Stock market. and Shockley. 67. University Honors Cooperative Program. shaping Silicon Valley economy. Hsinchu region of. 371. 353 Thompson.). and HewlettPackard. 349 3Com. 212. 131 “Traitorous Eight. 194. Stanford Industrial Park (Stanford Research Park). 74. 125.). 309–10. 385n3. requirements for successful. 308 Third Voice. 84. 1. technologies developed at. 196–97 Stanford Alumni Association. 236 Technopoles. 250. 53 (ﬁg. 282.
and stock market. 48. 65 Trust. 91. 12. and entrepreneurs. 188 U. in consumer e-commerce.). 276. 279–80. 235. 2. 9. Sam. social network analysis of. silicon vs. 278 Venture capital ﬁrms/funds: approaches of. structure of. 171–76. deﬁned. 396nn9– 10. 159. 70 Universities. and “entrepreneur in residence. 191–92. 77. 286. 393nn11–16. 276–94. acquisitions vs. 277. background of. types of companies receiving. 234–37. 61. 233. as enabling innovation. and Fairchild Semiconductor. 356 Western Association of Small Business Investment Companies (WASBIC). 77. 391 Value added per employee. 300–301.). 346 Univac. strategies for. 396n11 Venture capitalists. growth of. 393n11 Western Business Assistance Corporation (venture capital ﬁrm). professional. 291. 291–92. 193. 120. 283–84. 309. 47. 309. 65–66. ownership of. corporations as source of. model for. 395n3. ﬂow of knowledge about. Ted. 238. 306. 273. 236–37. in social networks. 43. and start-ups. 238. 73.INDEX / 423 Fairchild. 309–12. 141–42. 396n10. 335–36. 312. 280–81. 395n1. 271. 291–92. 73. 279–82. Internet’s impact on. 279– 80. 298. 287–88. 175. 297. 38. 234. 323. 25. 144–45. 147 Turner. 307. history of. 235–36. invested in Silicon Valley. 385n4 University of Texas. see Educational institutions University of California at Berkeley. 27. 317. 73. 34. purchasing interest in start-up companies.. 298. 79. 49 (ﬁg. 304–5. 208–9. and investment stages. 240 (ﬁg. 237 Washington state.). incubation programs of. 60 Tumbleweed Communications. 281. government role in. as source of capital for start-ups. 250. 319–20. and professional institutions. 210–11. 75–78.S. 34. 234 . 301. 299. mesa. 282–84. compensation for. 234. and executive search ﬁrms. 261 Walton. 138–46. 326 Welch. 309–11. 234. 43. 237–41. and diversiﬁcation. 395nn5–7. 289–90. spin-oﬀs in. 306–12. and planar process. 65. 139–42. 303. 92. size of. 235–36. 379. 332– 33. 195 (ﬁg. 326 TVI (venture capital ﬁrm). 236. in Silicon Valley. 292–94. 338 Venture One. 295–96. 164. 302–4. 387n6. 304–6. 391n6. 306. 72. 36. 395n4 Venture Law Group (law ﬁrm). Donald. 293. 197 Watson. shift toward Silicon Valley. 88. 385n1. as coaches. 2. Bill. 378–79. 309. 77–78. Space Technology Laboratory. IPOs in. 143. 297. 286–87. 182. 79. 219 TRW. 284–85 Venture capital industry. 96 Warner Communications. 143. future of. 63. 212. 395n3. 125. 345–46. changes in. 143 Wages. geographic location of. 161 Tri-state logic. contracts for. and banks. Global Entrepreneurship Monitor. 308–9. 277. and angel investors. 72–73. 396n8. 43. 288–89. 291. 133–38 Viral marketing. 307 Unger. see Compensation Walden International Investment Group (venture capital ﬁrm).). 167–72. 301–2. 309 Valentine. 259 University of California at San Francisco. 230 Venture capital. 209. 298–99. 112–14 Vivaldi. 239 (ﬁg. 306–7. 182. 162. 168 WebTV. 296–98. 239 (ﬁg. 144–46 VisiCorp. 3. 277. 165– 66. 208–9.” 305. 297. 297. 312. 212. 120. 395n4 VeriSign. 291. 291. 65–66. Bob. 209–10. 326. 308 Vertical integration: in computer industry. 33. 298–300. Thomas. East Coast origin of. 221–22 Venture Economics. 296. 277. germanium. 11. 194– 95. and Hotmail. 168–69. 397n15. 393n11 Western Association of Venture Capitalists (WAVC). 307. 239. 179. Jr. 285. 301. 221. and risk. in e-commerce.). 312. 329 Visioneer entrepreneurial style. 3. ﬁrst (San Francisco). 397n16. 81 Varian Associates. 237. requirements for obtaining. 294.
John. 8. 333. 8. See also Employees. John H. Tom. growth of. engineering. 8. 206. 248. and location of Internet companies. 235. Steve. 125. 111. founders of. 226 Young. 92. 291. 241 Whitney. 81–82. 308 Yang. 334. 50. H. 25. 65. 352–53. 127. contingent. 244. Jerry. 112–14. 214 Zitel. technologies developed at. 216 Yahoo!. Paul M. 67 Westven Management Company (venture capital ﬁrm). 296 Xerox. 302 Wilson Sonsini Goodrich & Rosati (law ﬁrm). 326. 3. 276. mobility of. 27. immigrants in.. graphical user interface knowledge at. and placement agencies / contingency search ﬁrms. 249–50. 225 Workforce. 271. 230. and scarcity. 50. 385n5. 89–90. 356 . 70 Wythes.. 326 Wireless technologies. Geoﬀ. 189. venture capital aiding founding of. Jack. 32. growth of. 220–21. 230. 112–14 Yelverton. Darby. 91–92. 349 Xerox Palo Alto Research Center (PARC). 198–99 Wolfe. 72. and Company (venture capital ﬁrm). lawyer involvement with. 6. 368 Wilson. 304 Yang. 296 Williams. 342–43. 29. 85–86. 335. 211. Management teams Wozniak. 164 Whitney. 171 Western Electronic Manufacturers Association. 301. J.424 / INDEX Western Electric. 243. 169. Jack..
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