One of the most remarkable aspects of running Tech Field Day is seeing all the innovation happening in Silicon Valley. Although we love to take our event on the road to other cities (we’ve hit Boston, Seattle, Austin, and Denver too), nothing compares to the San Jose-San Francisco axis of tech. That’s why this year’s Super Bowl matchup between Seattle and New England made me chuckle: Although one of those two regions may be first in football, they’re just fighting for number 2 in tech!
My Experiences with Tech Field Day
Although I love going to California (especially to escape the Winter freeze and Summer humidity of Ohio), it’s nice to go other places, too. It’s gotten to the point that the waiters and clerks of my favorite Silicon Valley establishments recognize me, and that’s pretty weird considering that my home is 2,500 miles away! But where else can we hold Tech Field Day and still have “critical mass” of local enterprise technology companies?
We went to Boston for Tech Field Day 2 and were happy with five of six presentations at local corporate offices, so we repeated the trip for Tech Field Day 6 and had four of seven. Austin has done fairly well for Tech Field Day, too, with six of 7 for Tech Field Day 7, four of eight for Tech Field Day 9, and three of nine for Virtualization Field Day 4 just last week.
Seattle and Denver haven’t been great for us. Tech Field Day 3 in Seattle was much more disappointing in this regard, with just two out of five companies hosting a local presentation. Denver gave a poor showing for Storage Field Day 3, too, with just one out of eight presentations at a local company office. We haven’t tried Tech Field Day in New York or Los Angeles yet.
In contrast, of the 26 (!) full Tech Field Day events we’ve held in Silicon Valley, more than 80% of the presenting companies have had local offices large enough to host us. Taking Tech Field Day to Silicon Valley is a no-brainer, but taking it anywhere else is a big risk.
Some of this is selection bias: Tech Field Day is generally booked on a first-come, first-served basis, so previous presenters (strongly biased towards Silicon Valley) often fill up the space before new local companies can step in. But there’s also a “local gorilla” aspect, with companies like Dell, EMC, and Cisco claiming multiple spots for events that come near their offices. And of course Tech Field Day is for enterprise tech, so we don’t visit biotech, Internet, or military R&D sites.
My Personal Experiences in Boston
But all of us in tech have experience with the center of gravity that is Silicon Valley. I grew up in New England and worked around Boston for most of my IT career. I watched as Route 128 drained of innovation to focus on a few big companies and as those few were swallowed up to become outposts of Houston, Austin, and especially San Jose. Today, Boston in enterprise IT is dominated by EMC and R&D for outsiders like HP, Microsoft, and IBM.
In my opinion, the drain of innovation in Boston is due to Massachusetts’ draconian non-compete laws. I personally experienced the sting of legal threats and lawsuits when moving from one company to another in Massachusetts, and would never consider starting a company there. In fact, a big reason I finally gave up and moved to Texas (and later Ohio) is the ever-present fear of being sued for changing jobs!
This must be especially acute for people working for EMC. They have such massive presence in Massachusetts that just about everyone I know in tech has worked there at one point or another. It’s much like the situation with Dell in Austin: Everyone either worked there, works there, or will work there, and some people will have more than one of these situations! But those Massachusetts employees live in constant fear of being sued or forced to take a hiatus from tech (sometimes for as much as 2 years!) if they want to go work anywhere else.
Now lawyers can argue pro and con about whether the Massachusetts law is enforceable, but this doesn’t change the situation on the ground. Fear of being sued keeps employees in line, and pointless lawsuits are often filed just to badger employees and serve as a warning to those left behind. Massachusetts Governor Deval Patrick tried to eliminate non-compete agreements but this effort failed. The innovation situation in Massachusetts remains dire.
What About Seattle, Austin, New York, and LA?
Seattle has a solid chance at taking the “number 2 in tech” spot from Boston thanks to a strong history of innovation in the enterprise and Internet sectors, along with a solid base of employees and money from Microsoft, Amazon, and the defense sector. Indeed, Seattle is so strong with Internet data centers that companies like Apple and Google are setting up offices there just to capitalize on this talent! Plus, Seattle (like Austin and Denver) boasts a higher quality of life than Silicon Valley or Los Angeles.
Seattle’s strength is reflected in the graphic at the top of this post, produced by the Silicon Valley Competitiveness and Innovation Project with Bureau of Labor Statistics data. It shows strong growth in Internet & Information in Seattle and Austin on par with Silicon Valley, along with weaker growth in LA, NYC, and Boston. In Software, Austin is growing faster than Silicon Valley (!), with New York and Boston strong yet behind. It’s interesting that Denver isn’t even included on this map, since my experience shows it to be a strong contender in these areas as well.
In terms of overall share of total employment for “innovation industries”, Silicon Valley still leads these statistics, with 26% of employees in this area. And there are many, many of these employees indeed! But Boston’s 18% remains strong, with Seattle and Austin tied at 16.5% and 16.4%, respectively. Overall numbers aren’t shown, but Silicon Valley remains way out in front there.
But I’ve also noticed a distinct drift within the San Francisco-San Jose axis lately: Innovative companies are moving up the peninsula to San Francisco, leaving more-established and perhaps “old-school” companies behind in San Jose, Santa Clara, Cupertino, Sunnyvale and the rest of Silicon Valley. Even Oakland is benefiting from this shift, with fewer tech employees wanting to live in the valley itself. Outsiders will consider all of this to be “Silicon Valley” (and that’s how I’ve termed it here) but locals would balk at this terminology. To them, San Francisco is a very different place!
Although New England ought to win that big football game, they’re losing when it comes to innovation and technology. Seattle and Austin are gaining rapidly, and Massachusetts has itself to blame thanks to oppressive non-compete clauses and the threat of litigation. As for Tech Field Day, look for us to return to Silicon Valley for seven of our nine full events in 2015. At least now you know why!
Graphic Credit: SVCIP.com – used as I suspect they would like it to be used. Read their full report here! Weird Austin photo by Jennifer Huber.
Ethan Banks says
Interesting take on the non-compete issue in Mass. Might explain some of the tech that’s just across the Mass border in Salem, NH (Extreme Networks for one) and Nashua, NH (Plexxi, Dell, DataGravity, off the top of my head), as well as a little north of the border in Manchester, NH (booming Dyn, for example).
Stephen – Seattle is Cloud City (Microsoft, AWS, CenturyLink, even Google has a big presence). Of course Boston has a huge biotech presence and every time I go to Cambridge, the tech presence has grown (of course it always had the MIT pipeline and lots of Silicon Valley companies including Google and VMware have offices).
As for football, I’ve got the same bias as you – Go Pats!!!
Rob Nelson says
Don’t forget NC! Charlotte and RTP have a good mix of companies in all sorts of technical fields. And it’s almost as warm as Cali this time of year.
Transportation is a key issue for Boston. Young people without cars, attracted to the revitalized RT 128 around Waltham, are frustrated by the lack of public transportation. There’s an exceedingly strong correlation between successful innovation zones and great public transportation.
I’d argue that Massachusetts’ crazy non-compete laws attract big companies away from NH since they’re “valuable” in keeping employees. And since they apply to everyone in the Mass orbit (regardless of the location of the new company) NH doesn’t really benefit from not having the same laws…