San Mateo County Times

Technical dominion is threatened
Thursday, July 22, 1999

By Liz Garone

MENLO PARK -- Geron Corp., the Menlo Park-based company that created headlin PALO ALTO -- Silicon Valley is in jeopardy of losing its Internet stronghold status unless certain economic and quality-of-life issues are addressed soon, according to a new study by Joint Venture: Silicon Valley Network.

There are seven other Internet regions around the country poised to take Silicon Valley's place if it does not shape up, the study said. Among them are San Francisco's "Multimedia Gulch" and New York City's "Silicon Alley."

"We have an economy here that is envied around the world," San Jose Mayor Ron Gonzalez said. "But we can't rest with that. We must continue to adapt and innovate in order to lead the digital world into the next millennium."

Joint Venture, a nonprofit Silicon Valley think tank, presented the study's findings Wednesday at a gathering of industry executives and local politicians at Stanford.

More than 125 Internet executives from around the country were interviewed for the study, conducted for Joint Venture by business consulting firm A.T. Kearney.

Concerns over quality-of-life issues were voiced more than once Wednesday. Skyrocketing house prices and traffic that rivals Los Angeles' are a big concern to the public and private sector.

"We can no longer see ourselves as a suburban community," San Mateo County Supervisor Rich Gordon said. "We have to see ourselves as an urban environment."

One surprise finding was difficulty in gaining access to venture capital for some of the Valley's smaller, less profitable Internet start-ups.

Despite the fact that Silicon Valley companies receive one-fourth of all venture capital funding, it is getting harder to gain the attention of venture capitalists "if you're not the next eBay," said Ben Smith, an A.T. Kearney principal.

In addition to Silicon Valley, seven U.S. regions were cited as Internet "clusters."

Silicon Valley not alone

They are San Francisco's Multimedia Gulch, Los Angeles' Digital Coast, Seattle's Silicon Forest, Silicon Hills in Austin, Texas, Boston's Route 128, New York City's Silicon Alley, and Washington, D.C.'s Silicon Dominion.

Each represents a potential threat to the future growth of Silicon Valley -- and each has its own area of specialization, another concern.

Take, for example, New York City and its Silicon Alley.

"This is the capital of the media and advertising world," said DoubleClick CEO Kevin O'Connor, when asked by the study's researchers why he chose to keep his company in New York.

"These are our core clients."

Topping the list for why executives choose one location over another is access to a talented pool of employees, according to the study.

Silicon Valley simultaneously excels and fails short in this area.

While there are more than 450,000 qualified high-tech people based here, there still is a severe high-tech worker shortage of about 160,000, according to Joint Venture.

Worker poaching

Heavy employee "poaching" in Silicon Valley repeatedly was mentioned at Wednesday's gathering.

"We certainly have more talent drain in this area than we do in Idaho or Colorado, where we also have facilities," said Pradeep Jotwani, a senior vice-president and general manager at Hewlett-Packard.

Creativity remains a premium

Still, for him and Hewlett-Packard, it was worth the risk to keep certain divisions here.

"The talent here has a mind-set you can't find elsewhere," he said.

The complete study is available online at

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