How Startups Shaped Silicon Valley - Startup Planet

[Music] we can very accurately say that this piece of land has shaped the world where we live in this is the famous silicon valley it's fast-paced alluring and intimidating all at the same time when we started slight beam we used to live in an apartment somewhere around somewhere around here and the google flex the the offices of google were here this is microsoft this is cisco over here apple over here and facebook over here so why did all these tech companies decide to settle around the same place [Music] if the state of california were a country it'd be the fifth largest economy in the world bigger than india and the uk in france and brazil california generates more than two trillion dollars california's economy is now the fifth biggest in the world [Music] back to silicon valley how did this place come to exist the story is really more than just computers so let's explore the coincidences that made this cradle of innovation possible welcome to company friends [Music] company forensics is our most popular youtube series but this is not what we do for a living at slide being we help founders navigate the early stages of running a business from coming up with a pitch deck to financial modeling to keeping track of their sas subscriptions head to slightly.com to check us out [Music] this is silicon valley in the 20s and 30s and back then there was the occasional zeppelin some radios and prunes it even went under a different name the orchard region was known as the valley of hearts delight california as the entire us was navigating the great depression back then but in this area in particular there was an additional problem people were fleeing they were all leaving to find jobs on the east coast frederick turman was a professor at stanford university's department of electrical engineering and this migration really troubled him and he knew that he had to do something about it he knew that he had to do something to create jobs in the area so he fought to convince companies to establish in san francisco and to do so he planned to use the newest technology at the time radio radio brings endless hours of entertainment information center of the universe radio was vital because turman's plans came when the united states armed forces were using the coastal regions to their advantage thanks to the massive areas they were able to create zeppelin basis and extensive testing facilities so eventually the demand for technical knowledge increased and the problem was the shortage of talent so in the mid-30s turman was working hard to attract both companies and former students and one stanford alum did return a guy named bill hewlett he started working on developing oscillators and improving light bulbs and turman puzzled to get some funding for him and he found another former student and a close friend of hewlett dave packard and they of course founded a company in 1939 and instead of calling it bill dave they called it hewlett-packard was that the best joke we could come up with the military was also spending big bucks in the area to better their test ground and say what you will about the military they're always a good customer now in the 40s turman worked to build the stanford industrial park and it was different from other parks because it would only leads to high technology companies benefiting stanford in the process and turman's vision worked the first company to sign a lease was varian associates in 1959 and they produced vacuum tubes which were a big thing back then and many other companies soon followed some names included eastman codec general electric lockheed and shockley transistor laboratory and we have to talk about that one the name might not mean anything to you these days but william shockley helped create silicon valley and much more but unlike terman this guy doesn't have a great reputation in late 1939 or early 1940s one must learn from these failures and not be stopped by then you will be so conservative that i don't think you'll bring his views on racism and eugenics made him one of the most controversial people in science help at one point he suggested creating a sperm bank only with nobel prize winners intelligence magazine named him the second most controversial researcher which was a thing apparently but he's vital to the silicon valley story he first worked with bell laboratories where he helped co-invent the transistor these tiny transistors are destined to play a big part in our electronic aid different types for different purposes and if you don't know what a transistor is just know that they used to look like this and now your smartphone has millions of them inside this landed him a nobel prize and of course a big ego in 42 shockley left bell to start his own business and his plan was to use silicon as the base for diodes which is more stable than germanium which was previously used so this was some game changing tech but shockley was driving his employees crazy he was excellent at spotting talent but he would demoralize the promising young engineers he was obsessed with incessant psychological tests and even lie detectors he also grew paranoid of his ideas and became jealous of his co-workers his attitude and bad business decisions made him blind to his own mistakes and his eventual demise his silicon diet idea failed and the work environment at shockley was so toxic that many were just unable to continue after just one year of working with him eight of his employees left to create another company and shockley would call them the traitorous eight together these young mercenaries formed fair child semiconductors and yes they would work with silicon transistors and eventually conductors but fairchild wouldn't only be a successful company it would also shape silicon valley as of 2014 92 companies came from first or second generation individuals with origins in fairchild companies like intel and nvidia amd and venture funds like kleener perkins and stanford wasn't far behind the stanford research institute which was formed in 1946 became part of arpanet the very primitive first iteration of the internet computer mouse watched hd television were invented here at sri their success spurred others xerox created its palo alto research center or park there it produced components such as the graphic user interface essential for modern computers and the place was no longer about prunes it was the country's computer hub with names such as apple and atari oracle and others but it still didn't have a name this is the january 11th 1971 issue of electronic news and it has an article that reads silicon valley usa now electronic news was what many historians called the bible of the technology sectors whatever it wrote about it had to be a big deal and one of its journalists don hoffler focused on corporate gossip product failures and insider details kind of like us according to the site computer history over lunch with some managers one of them said something about silicon valley and huffler loved the term so after the meeting he changed the article's title on monday january 1171 the first three pieces called silicon valley usa came out hoffler had made history but he didn't know it in an interview 10 years later hoffler said how was i to know that the term would quickly be adopted industry-wide and finally become generic worldwide well it did but the term wasn't only about technology it was about relentless effort and how individuals can create giants of the industry fairchild's impact was obvious but why did the place remain as the go-to destination for tech even after all those years in the coming years the success of these companies and their employees brought a massive financial impact to the area which came with its own set of problems begin tonight in san jose where the city's homeless problem is becoming a pr problem take a look at this people living in rvs parked along major streets he has to move and being a google employee doesn't guarantee a place to stay in mountain view salaries are high but rent is just plain insane rent for a one bedroom apartment in 2020 was on average two thousand and forty dollars and hey this was cheaper than 2019 it has reached values of four thousand dollars good friends of mine that live in the area make six figure salaries and barely make ends meet making 100 to 150k a year is cool but what gives if all of that goes to rent people have tried workarounds like container homes or literally ditching rent to live in an rv park many locals have been pushed out because prices are just unaffordable if you don't work in tech and the bay area of course has the third highest rate of homelessness in the us so why do these companies keep establishing themselves in silicon valley there's there's a lot of debate about the other reasons why silicon valley is a success and especially why other places haven't been able to replicate it and one theory is that all the money is there yes the acquisitions and the previous exits all the money is there and that's why all the companies keep spawning there well yes and no second reason is that companies are choosing to stay in silicon valley fairchild spawned many enterprises but they didn't leave they were part of this close-knit network this community that went far back as university years so it made perfect sense to stay close to these contexts that you had created these professional networks gave way to another critical factor for silicon valley's success those around you could help you develop new products using their own technology it's it's great it's it's the papal mafia story actually and if you haven't go watch our video about it a third reason is diversity there are many universities packed with highly qualified students they're filled with ambition who want to change the world plus their backgrounds they have they come from different nationalities cultures and practices they're make they make up for this boiling pot of ideas so it's logical that companies that invested in the valley once are willing to do it again it's this energetic cycle of reinvestment a fourth theory is work culture because there's a seriously collapsing barrier between work and life especially in silicon valley yes you have the casual dress code the free office meals remote work long before the pandemic everybody works all the time in the valley 40 hour work weeks are a scam they don't exist the perks are great but everything is there so that you never leave because you have to it's what it takes to make it there i've done it we did it we did the 16-hour workday when we lived over there in the early stages of the company but it's unsustainable this is a valid theory but there's a fifth reason it's a subtle and legal peculiarity that helped create this startup paradise but for that we need to go back to 1872 except as provided in this chapter every contract by which anyone is restrained from engaging in a lawful profession trade or business of any kind is to that extend void that's what the california code section 16600 says which is an updated version of an 1872 law under california's civil code what does it mean outside of california if a company hires someone chances are they have to sign an agreement this document says that if they leave their employer they can't work for competitors for a determined period of time usually about two years so in short this is a non-compete agreement or nca then there's non-disclosure agreements or ndas this document forbids any employee from revealing confidential information about the company and yes ncas and ndas both exist in california but california courts declare these contract clauses as legally unenforceable they are null even if the former employee moves to another company or even starts a company that directly competes with the former employer so in california it's an inalienable right for a person to quit to find work in any other legally sanctioned capacity so ndas and nca's cannot block this opportunity so it's this tiny detail that might be essential for creating silicon valley's culture silicon valley is not just a region in california connections happen sheer luck the culture of silicon valley can be fascinating for the outsiders silicon valley has remained relevant through the decades the 60s 70s 80s and 90s each was a different generation but something ties them together this intense techno optimism links all the generations together they share this belief that technology will be a means by which we make the world a better place beyond that these companies also love or need the hustle survival of the fittest yes your buddies with the rest but the rest won't feed you at least not for free and to survive and to make it in the valley it takes a certain someone as well as a certain network a certain combination of companies around you so can it be replicated one of the arguable silicon valleys of the world is shenzhen a special administration region established in china near hong kong they like to call themselves another silicon valley and they have churned out some pretty massive companies but their potential is still limited by the stability and restrictions of their government their currency and their cultural barriers economics explains did a fantastic video on this by the way silicon valley has the combination of talent experience and capital this capital is wealth that was created precisely by tech companies so these are investors that are bound to invest in the same things there's a stable government despite you know this which makes the stability of silicon valley pretty unparallel around the world as for other parts of the world i'm costa rican and in latin america i hear the term new silicon valley way too many times it can't be done any city or country coming up with that tagline is just being extremely naive but what do you think can it be replicated let us know in the comments hope you enjoyed this video as always do the thing the subscribe the like the comments we appreciate it and we'll see you next week [Music]

Channel: Slidebean

Views: 250,433

Keywords: slidebean, caya slidebean, company forensics, caya, startups, startups 101, silicon valley, why is silicon valley the center of innovation, caya ceo, slidebean ceo, startup stories, startups documentary, is silicon valley dying, history of silicon valley, history of silicon valley documentary, pirates of silicon valley, shockley diode, stanford, stanford research institute, palo alto, palo alto research center, mountain view, sand hill road, sandhill road silicon valley

Id: TSEhh4qFIJ0

Length: 15min 6sec (906 seconds)

Published: Wed Jun 02 2021

Reddit Comments

[u/[deleted]]

Microsoft is based in Redmond, not Silicon Valley. Annoying error in the opening section.