There’s Silicon Valley and Not Silicon Valley

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Concerning technology innovation, one sword rules the nation and the world.

By Jim Russell

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The city of San Jose sprawls through California’s Silicon Valley. (Photo by David McNew/Newsmakers)

To explain United States economic geography in one sentence: There’s New York City and not New York City. The U.S., with its multi-polar urban hierarchy (think Germany or China), is rather commonly uni-polar (think London, the United Kingdom, or Paris, France). America is the global hegemon. The Big Apple is the American hegemon. London is Britain’s hegemon. Paris is France’s hegemon. Berlin, late to the party, is Germany’s hegemon. I’m undecided as to whether Beijing or Shenzhen is China’s hegemon. Regardless, one sword will rule them all.

Concerning technology innovation, one sword rules the nation and the world: Silicon Valley, California über alles. Venture capital packs into the Bay Area, resulting in a startling density. No global city hegemons compare. The fruit orchard suburbs put all of history’s innovative cities to shame. The greatest city of all time, in terms of economic dominance, isn’t even a city. One strip mall will rule them all.

This agglomeration says more about risk aversion than it does about the efficacy of doing business in Silicon Valley or the City of San Francisco.

CityLab’s geography of start-ups (i.e. venture capital) re-affirms this lopsided story. If not Silicon Valley, then San Francisco. If not the Bay Area metro, then somewhere in Greater Boston. The residuals are mere curiosities. If not “San Jose,” then better off in San Francisco than in Boston. If not in Boston, then, go wherever.

This agglomeration says more about risk aversion than it does about the efficacy of doing business in Silicon Valley or the City of San Francisco. Venture capital is more akin to migration than economies of scale. When people move, they don’t tend to go very far. In 19th-century France, the reach of dialect was about five miles. Venture capital is the same Tower of Babel. One is either in an important neighborhood of Paris or one might as well be in the heart of dark Africa.

In seeking robust returns, incest rules venture capital. Bet on a lame horse seen everyday. A thoroughbred one thousand miles away named Seattle Slew, pass. “America’s Leading Start-Up Neighborhoods” say more what is wrong with the U.S. than what is right.

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