Budding technology-driven centers and established ones such as the Telecom Corridor of Richardson, Texas, admire the fertile business culture of Silicon Valley, where the concentrated creative energy of thousands of techies results in a constant flow of new ideas, and new companies to capitalize on them.
But admiring the culture and replicating it are very different things.
Despite Richardson’s success attracting international telecommunications giants as well as smaller telephone-related companies, the hoped-for spinoff of new high-tech ventures from bright local brains so far has remained elusive.
Indeed, like many areas that covet the Valley’s record, the Telecom Corridor lags far behind in developing smaller companies. Of 2,700 venture capital investments tracked last year by Price Waterhouse, the national accounting and consulting firm, Richardson drew just two.
Silicon Valley, a region starting just south of San Francisco and stretching about 40 miles south to San Jose, pulled in 700 and more than one-third of the nearly $13 billion invested.
Not that Richardson lacks raw ingredients. “If you can get some of the engineers from Nortel to put their heads up over their cubicles and start companies, you can really get something going,” says Jim Fontaine, founder of Plano, Texas-based Sentient Communications Inc., whose products help improve telephone quality over the Internet.
And backers of the Telecom Corridor are trying. Richardson corporations recently created a business incubator called Startech that offers financing, office space and consulting services to selected high-tech firms.
Still, “it’s a heck of a lot harder” to start a new tech company in Richardson, or anywhere in North Texas, than in Silicon Valley, says Fontaine.
One reason may be that the urgency just wasn’t there before. “We have had a lot of other things that have taken care of us–oil and gas and real estate–that were the driving parts of the economic environment. In Silicon Valley it was very different,” says Startech president Matt Blanton. “They’re way ahead of us, but we’re working on our own little niche.”
People who’ve built businesses in Silicon Valley say it has four critical elements that Richardson lacks:
– A generation’s worth of entrepreneurial success stories that encourage risk and forgive failure.
– A concentration of venture capitalists with money at the ready.
– Support businesses that cater to tech start-ups.
– Plus, from respected Stanford University near Palo Alto, a constant supply of new players.
“There is a culture difference,” says Andy Bechtolsheim, who was a co-founder of Sun Microsystems in Palo Alto. He compares Silicon Valley’s entrepreneurial climate to the Germany that produced great composers or the Paris that gave birth to Impressionist painting.
“You need a sort of critical mass of people coming together doing similar things,” he said. “They sort of egg each other on, and the outcome is more than they expected.”
For big telecommunications firms, Richardson has critical mass. Its telecom cluster is said to be the nation’s largest, and the concentration works like a magnet to draw in corporate suppliers.
Some entrepreneurs say it’s a plus for them, too.
“For my product and for what I’m doing, this is the only place I want to be,” says Scott Kingsley, chief executive of Richardson-based Telsoft Technologies Inc., which is developing equipment to route traffic more efficiently through phone networks.
But others don’t even consider the region when deciding where to start a company.
In Redwood City, Calif., for example, 27-year-old John Lilly invites all the smart people he knows to dream up new high-tech businesses every other Wednesday.
Dinner’s on his company. All ideas are public domain, like open hands of poker. Pick a theme, any theme. Say, technology and sports.
Such informal brainstorming and networking are part of everyday life in Silicon Valley, and Lilly might be throwing the dinners in North Texas.
He went to high school in San Antonio and interned at the now-defunct Superconducting Super Collider in Waxahachie, about 25 miles south of Dallas. His dad works for the Richardson branch of a global telecommunications company.
But the Stanford grad says Richardson is no place to build a start-up factory. “The roads are too big and empty. Oh my God, there’s so much space. I don’t think there’s enough density there.”
Things are different in Silicon Valley. Ideas are everywhere, and money follows.
Everyone seems to know a start-up stock option millionaire and 15 failures who are trying again. Lilly’s company was given free office furniture from a bigger firm that well remembered its start-up days.
When Bechtolsheim left Sun to start his latest venture, a computer networking company called Granite Systems Inc., he traded in his Porsche for a Volkswagen van because he thought it better fit the start-up mentality.
Then there’s Silicon Valley’s big-time investment money.
The nation’s most prestigious venture capital firms are clustered in a row of outwardly modest, two-story buildings along Sand Hill Road, just down the street from Stanford.
“If the venture capitalists are based in California and there’s a gold mine of opportunities in the Silicon Valley, there’s no reason to pursue deals in the Southwest or Texas or Richardson,” says Ed Kay, Dallas chairman of Price Waterhouse’s Technology Industry Group.
Texas firms, on the other hand, often look out of state for deals to finance.
Fontaine, whose company participates in the Startech program, stays in North Texas largely because of family ties. But he picked a Silicon Valley law firm so he wouldn’t have to spend time explaining such tech start-up staples as stock option plans.
More subtle differences exist, too.
Richardson-area community colleges and the University of Texas at Dallas are training students for jobs at the city’s large telecommunications firms. Stanford computer science and engineering graduates gravitate to start-ups the way members of certain Texas fraternities go into commercial real estate.
Nothing, it seems, is too off-the-wall to fly in the Silicon Valley, either.
One afternoon recently, New Zealand-born David Williams pored through Halted Specialties Co., an electronics store whose stock ranges from tiny computer parts to $49 Radio Shack TRS-80 computers worthy of space in a time capsule. His quest: Components for an electronic pumpkin-patch baby-sitter capable of producing Linus’ Great Pumpkin all by itself.
Sun Microsystems workers built a computer program they call a Burrito Tool that lets them place orders at a Hispanic grocery store from their computer desktops.
Such creativity is the first step in a successful venture. And, as Visio Corp. chief executive officer Jeremy Jaech told a class of Stanford engineers, another key is to find problems people will pay to have solved.
Bechtolsheim says half the graduates in his Stanford Ph.D. class became entrepreneurs. “It was like an IQ test. If you were smart enough, you would start your own business.”
