Case Study Adapting the Silicon Valley model to

Case Study: Adapting the Silicon Valley model to the Philippines Economic Growth through Tech Entrepreneurship All images/interviews are protected by copyright and are properties of their respective owners.

Why is tech entrepreneurship important? Economic growth! “If the companies founded by MIT graduates and faculty formed an independent nation, the revenues produced by the companies would make that nation the 24 th largest economy in the world. The 4, 000 MIT related companies employ 1. 1 million people and have annual world sales of $232 billion. That is roughly equal to a gross domestic product of $116 billion, which is a little less than the GDP of South Africa and more than the GDP of Thailand. ” “MIT- the Impact of Innovation”, 1997 Bank. Boston report A 1997 study done on the economic impact of companies launched from one university’s ideas (MIT) shows that : • 1. 1 million jobs were generated • annual sales of $232 billion USD • more than the GDP of Thailand

What is Silicon Valley anyway ? • hotbed of technopreneurship • a region of Northern California south of San Francisco • started in the 1930’s, when Dean Terman of Stanford built the Stanford Industrial Park • has Stanford, UC Berkeley, lots of tech companies, venture capital (Sand Hill Road) • most innovative region in the world • copied by many countries around the world • • Hsinchu Science Park – Taiwan Bangalore – India Multimedia Supercorridor – Malaysia Shenzhen, Zhongguancun (Beijing), Pudong (Shanghai) - China

Taiwan’s economic growth took off with the opening of Hsinchu Science Park ! 12, 000 Hsinchu Science Park Opened 10, 000 200 180 160 140 8, 000 120 6, 000 100 80 4, 000 60 40 2, 000 0 20 1970 1980 1995 GDP/Capita (in USD) 360 Number of Companies 0 in HSIP 2155 7 7244 11163 121 180 0 • Founded in 1973, Hsinchu is now the heart of Taiwan's technology industry • 221 companies with 60, 400 employees • Top science and engineering universities relocated to Hsinchu • Located outside Taipei, to insure that “new thinking” would dominate • Helped to drive Taiwan’s GDP growth to an annual average of 6. 3% • Responsible for some of Taiwan's most successful companies Source : G Hu, “Innovation and Growth in Hsinchu Science-based Industrial Park, Chinese Taipei”, November 1998, ITRI

What makes Silicon Valley work ? Silicon Valley = strong universities + plenty of scientists + entrepreneur stories + culture of risk taking + venture capital located in one place! Locating everything in one place insures a critical mass of scientists/engineers; helps merge the financial, technical, industry social circles; and creates a culture for that place.

Putting all these groups/institutions in one place insures that their social circles converge, creating more relationships, encouraging more funding and more entrepreneurs to come out! academe industry capital entrepreneurs

Some quotes from Silicon Valley expert Anna. Lee Saxenian: “It is no surprise that nations and regions around the world seek to replicate the Silicon Valley experience, to capture the economic benefits of technological advance. Yet most of these efforts have foundered. Planners and policy-makers typically adopt some variant of the "high tech recipe, " believing that if they combine a research university, a science park, skilled labor, and supplies of venture What they fail to recognize is that the relationships that Terman created in the region are as essential to Silicon Valley's continued dynamism as the presence of educational institutions or supplies of skill and capital… capital in a nice environment they can "grow the next Silicon Valley. " The geographic proximity of the region's firms facilitates these high rates of inter-firm mobility. Moving from job to job in Silicon Valley is not as disruptive of social, personal, or professional ties as it can be elsewhere in the country. Silicon Valley executives joke that "people can change jobs here without changing car pools…. The geographic concentration of skill and know how in the region enhances the viability of local start-ups. Moreover, several decades of entrepreneurial experimentation has generated a rich and highly diversified technological infrastructure…. The large firms in Silicon Valley have organized themselves to exploit the regional advantage provided by location in a rich technological infrastructure. By focusing on what they do best and purchasing the remainder from other specialists they have created a network system that spreads the costs of developing new technologies, reduces product-development times, and fosters reciprocal innovation. … Innovation in Silicon Valley is thus an inherently social process: it is only through participating in a community that entrepreneurs pioneer the technological and commercial breakthroughs that have fueled rapid regional growth. And yet without opportunities for intensely competitive and single-minded individuals to achieve personal status and wealth, this selforganizing and technologically dynamic industrial system would simply grind to a halt. Frederick Terman's brilliance lay in his ability to envision and foster a technical community that transcends the boundaries between individuals, firms, and other local institutions- and one that balances the ongoing tension between individual autonomy and collective endeavor. ” “Creating a Twentieth Century Technical Community: Frederick Terman’s Silicon Valley”, by Anna. Lee Saxenian, November 1995.

Other places like Silicon Valley Route 128, MA Bangalore, India Hsinchu, Taiwan Zhongguancun, Beijing

Geographic proximity is important! BW: I want to reel back again to the beginning, which is talking about what makes Silicon Valley work. What makes it special? What's so unique about this place? ELLISON: Well, it's like Hollywood. It's a Larry Ellison CEO Oracle huge concentration of technology companies. So there is incredible cross-fertilization in the orchard. It's just not apricots anymore. And the fact that there's this incredible proximity, and people run into each other a lot. There is tremendous bandwidth of communication… GROVE: … When Intel started and for some years after that, I think, the most important whole ecosystem was concentrated in a short distance. You know, we didn't have a machine shop, so we factor was that the Andy Grove Former Chairman/CEO Intel © 1997 Business. Week drove a few blocks and found a machine shop. So it was very easy to start a non-vertically-integrated company. And it's very difficult to be a startup if you have to do your whole vertical integration job. So it was a lot easier to do a startup because you did not have to do everything, because all of these things were available, as if you had them all under one roof. …. and there proximity helps. If you are located in Japan, you are a ten hour plane ride away from a meeting -- it's a lot easier to do business with people that you can get to fairly rapidly.

Technology and money are not enough. A culture of risk taking and networking is essential. It’s about success stories that get passed around. “It is no surprise that nations and regions around the world seek to replicate the Silicon Valley experience, to capture the economic benefits of technological advance. Yet most of these efforts have foundered. Planners and policy-makers typically adopt some variant of the "high tech recipe, " believing that if they combine a research university, a science park, skilled labor, and supplies of venture capital in a nice environment they can "grow the next Silicon Valley. " What they fail to recognize is that the relationships that Terman created in the region are as essential to Silicon Valley 's continued dynamism as the presence of educational institutions or supplies of skill and capital. ” Anna. Lee Saxenian, “Creating a Twentieth Century Technical Community: Frederick Terman’s Silicon Valley”, November 1995.

Fancy buildings may help, but it is the stories that really matter… HP founders Dave Packard and Bill Hewlett posing in front of their famous garage in Palo Alto, CA (photo from the BBC website) Steve Jobs in front of his garage, where he made the first Apple computer.

We need stories of successful tech entrepreneurs that can be handed down from generation to generation • Who is Peter Valdes ? • Who is Leo Yau ? • Who is Dado Banatao ? • • Native of Olongapo, Pampanga IE graduate from UP; taught Operations Research at DLSU His mother asked him to get a better paying job Moved to the US to study for a Ph. D in Computer Science (Uo. M) Worked for IBM doing systems development work Founded Tivoli Systems with a few colleagues from IBM Got venture capital funding from Kleiner Perkins Caulfield and Byers Tivoli Systems eventually sold to IBM for $743 M • • • Native of Cebu, Philippines Graduate of the University of San Carlos, University of Illinois Retired, in the 1990’s – one of only 20 Intel Fellows Well known international scientist, 20 US patents. Developed the “Yau Model” for semiconductors • • • Native of Cagayan, Philippines graduated from Mapua, moved to the US pursued his MS EE at Stanford University founder of S 3, Mostron, Chips and Technologies, etc. founder, Tallwood Venture Capital

Informal venues (e. g. watering holes, hobbyist clubs) help facilitate information exchange and networking “Every year there was some place, the Wagon Wheel, Chez Yvonne, Rickey's, the Roundhouse, where members of this esoteric fraternity, the young men and women of the semiconductor industry, would head after work to have a drink and gossip and brag and trade war stories about contacts, burst modes, bubble memories, pulse trains, bounceless modes, slowdeath episodes, RAMs, NAKs, MOSes, PCMs, PROM blowers, PROM blasters, and teramagnitudes, meaning multiples of a millions. ” Tom Wolfe, "The Tinkerings of Robert Noyce: How the Sun Rose on the Silicon Valley " Esquire (Dec. 1983) 346 -374. “The Homebrew Computer Club, for example, was started in 1975 by a group of local microcomputer enthusiasts who had been influenced by the counterculture ethic of the sixties. They placed a notice on bulletin boards inviting those interested in computers to "come to a gathering of people with likeminded interests. Exchange information, swap ideas, help work on a project, or whatever. " The club became the center of an informal network of microcomputer experts in the region, and eventually more than 20 computer companies, including Apple Computer, were started by Homebrew members. ” Anna. Lee Saxenian, “Creating a Twentieth Century Technical Community: Frederick Terman’s Silicon Valley”, November 1995.

Business Plan Competitions can help (MIT Philippine Emerging Startups Open http: //www. pesochallenge. org) A technology business plan competition open to mixed teams composed of Filipino techies and friends here and abroad. Also helps bring out the “support ecosystem” of VC’s, IP lawyers, mentors, policymakers, etc.

Venture Capital, Mentors and the Markets • Angels are just around us, even in the University • VC’s are in the financial district, we need to attract them here • Mentors for tech startups just as important (e. g. technopreneurs, advisers) • Access to markets is also important (e. g. Japanese, US, Europe)

Diliman-Loyola Heights Innovation Zone

UP NEC SHONO WAFER FAB – named after Sony Japanese researcher Dr. Shono, who donated the lab to UP. Equipment includes Diliman – Loyola Heights Innovation Zone • Plasma etchers • Lithography tools (Photo, E-beam) • SEM / Transmission Electron Microscope / E- UP AYALA NORTH S&T PARK UP ENGINEERING VE TH A L WEA ON OMM C CP GARCIA AVE CICT UP NEC SHONO WAFER FAB beam writer • Etching tools (RIE, Wet Etch) • Ion Doping • Spin coater, Crystal Grower • Furnace (Thermal, LPCVD) • Sputtering tools • Vacuum Evaporator University of the Philippines UNIVERSITY AVENUE NCC UP LAW (legal) UP EEE – Chip Design, specializing in RF, low power RISC and Digital Logic, Wireless, DSP, etc. UP BAA (accounting) • Software tools : Cadence, Exemplar, Xilinx • Other tools : wafer test prober, Agilent precision measurement rack, anechoic RF chamber, robotics lab, DSP lab, network analyzers, etc. • Actual fab runs at TSMC 0. 25 micron process • Embedded systems, robotics, firmware Electronics Engineering ACADEMIC OVAL Computer Science Math Science CSRC NAT’L INST OF PHYSICS CP GARCIA AVE ASTI – Research on wireless (Bluetooth) protocol stack, open source software, PCB development, etc. K A T I P U N A V E ASTI UP TMC NOTE: Map is not drawn to scale. UP AYALA TECH BUSINESS INCUBATOR UP AYALA TECH PARK – Technology Biz incubator. UP TMC – Policy development / technology management. LEGEND UP NIP –research includes Instrumentation, Photonics and Compound Semi Fabrication. • Lasers (Nd: YAG, Hydrogen Raman, Femto, Tunable CW laser, Argon ion lasers • Laser scanning microscope systems (all built at NIP) • Computer cluster • Plasma-based deposition devices (built at NIP) • Liquid Phase, Molecular Beam Epitaxy • Diagnostics Facility for Superconductors • Scanning electron microscopy • Raman, Photoluminescence spectrometer system A group of VC’s have agreed to hold office part time in the general area (0. 5 days x 2/month). Ateneo de Manila University ATENEO – New incubator in development. Strong research in Grid Computing, Computer Science, Math, Chemistry, Physics. New thrusts include Wireless services convergence Hybrid Fiber / Wireless Architectures Rain effects on microwave links Biomedical devices / telemedicine networks Has an Atomic Force Microscope, etc. KEY RESEARCH LAB/EQUIPMENT KEY INCUBATION ACTIVITY ATENEO INCUBATOR KEY VENTURE CAPITAL ACTIVITY WATERING HOLE FOR TECHIES AND VC’s KEY TECH POLICY CENTERS SUPPORT STRUCTURES ATENEO PHYSICS/ECE/CHEM/MATH

Diliman – Loyola Heights Innovation Zone

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