Friday, August 18, 2006

How do you create a technology hub?

Paul Graham thinks creating top universities in a certain place is vital if you want to create a technology hub there. Here he is in How to be a Silicon Valley:

The exciting thing is, all you need are the people. If you could attract a critical mass of nerds and investors to live somewhere, you could reproduce Silicon Valley. And both groups are highly mobile. They'll go where life is good. So what makes a place good to them?

What nerds like is other nerds. Smart people will go wherever other smart people are. And in particular, to great universities. In theory there could be other ways to attract them, but so far universities seem to be indispensable. Within the US, there are no technology hubs without first-rate universities-- or at least, first-rate computer science departments.

So if you want to make a silicon valley, you not only need a university, but one of the top handful in the world. It has to be good enough to act as a magnet, drawing the best people from thousands of miles away. And that means it has to stand up to existing magnets like MIT and Stanford.

This sounds hard. Actually it might be easy. My professor friends, when they're deciding where they'd like to work, consider one thing above all: the quality of the other faculty. What attracts professors is good colleagues. So if you managed to recruit, en masse, a significant number of the best young researchers, you could create a first-rate university from nothing overnight. And you could do that for surprisingly little. If you paid 200 people hiring bonuses of $3 million apiece, you could put together a faculty that would bear comparison with any in the world. And from that point the chain reaction would be self-sustaining. So whatever it costs to establish a mediocre university, for an additional half billion or so you could have a great one.

Not so fast, says Austan Goolsbee, a UChicago economist. This strategy may not work, he says, simply because people and ideas can run away!

advocates should remember an old maxim of economic development: Beware of investing in things that can move. As it turns out, graduates and research ideas both tend to move around a lot.

Is there any evidence to back up this claim? Goolsbee provides plenty of it. The biggest of them all, perhaps, is the following:

Marc Andreessen, for example, invented the Web browser while at the University of Illinois, but then founded Netscape in the actual Silicon Valley rather than starting a new one in Urbana.

So, who is right?

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Update: has a nice discussion of Paul Graham's views -- including his political ones. Thanks to Selva for the pointer; see his comment below.


  1. Anonymous said...

    This discussion on Graham's essays may be of interest:

    It's UK focussed but a lot of it would apply to India as well.

  2. gaddeswarup said...

    The comments in plasticbag are interesting. Part of the URL is missing above but one can go to archives/2006/05/ and find the article.