A History of Silicon Valley

Silicon Valley Christine Johnson October, 2013

©  2013 SAP AG or an SAP affiliate company. All rights reserved. 2

What’s so special about the San Francisco Bay Area?

Image from : http://www.siliconvalleyindex.org/index.php/component/content/article?id=101

9 counties + San Francisco, Oakland & San Jose metros

Home to approximately

7.15 million the largest driver of population growth in CA

Known for its: §  Natural beauty §  Progressive

thinking §  Liberal politics §  Entrepreneurship §  Diversity

The largest city in the area

San Jose 10th most populous city in the US, oldest city in CA and its first capital

San Mateo and Santa Clara are 2 of the top 25 wealthiest counties in the US


Great schools fuel great minds

Stanford University graduates have created an estimated 5.4 million jobs and generate annual revenues of $2.7 trillion*

The revenues of companies that were founded by Stanford University students equal the gross national product of the world’s 10th largest economy.

71 Nobel Laureates from UC Berkeley.

52 Nobel Laureates from Stanford.

* Based on responses to the 2011 Alumni Innovation Survey, sponsored by the venture capital firm Sequoia Capital.

§  20 private colleges including University of San Francisco, Stanford and Santa Clara University

§  6 public universities including UC Berkeley, UC San Francisco, SJSU, SFSU

§  30 community colleges in the greater Northern California area


Silicon Valley

Silicon Valley was originally named “The Valley of Heart’s Delight.”

Orchards of apricots, prunes, cherries and other agricultural products dominated the early landscape.

The first technology innovators formed the beginnings of what we now know as Silicon Valley in the 1950’s.

The area was first nicknamed “Silicon Valley” in a 1971 Electronic News article by

journalist Don Hoefler.*

• Computer History Museum, http://www.computerhistory.org/revolution/digital-logic/12/328/1401

• http://www.morganhilltimes.com/articles_from_gilroy/andy-s-orchard-featured-in-sunset-magazine-spread/article_28d12001-1e11-53cc-a5f0-7e616228d558.html?mode=image

• http://www.marianinut.com


Silicon Valley today: A scientific/commercial renaissance

Gene splicing and gene cloning discoveries at Bay Area universities have spurred advances in biotechnology.

Other advances mark Silicon Valley as a unique place whose creative energies have changed the world.

§  Lasers §  Nuclear magnetic resonance §  Random access computer storage §  Disk drives §  Integrated circuits §  Personal computers §  Open-heart surgery §  Inkjet printers

Source: http://en.wikipedia.org


What are the top strengths of doing business in SV?

Source: Poll by SVLG (Silicon Valley Leadership Group) of 177 innovation economy CEOs and Senior Officers

access to skilled labor

71%

entrepreneurial mindset 60%

44% proximity to customers

and competitors


The Venture Capital Capital

There are more VCs in Menlo Park than any other city in world.

Sand Hill Road has been known as “the street of dreams” for seekers of venture funded capital.

An entrepreneurial spirit and forgiveness of failure culture are the norm here.

Hewlett Packard started with $500

Atari started with $250 by Nolan Bushnell’s own money. People thought playing games on a TV set was one of the stupidest ideas ever.


Some of the companies founded here

Acuson Corp

Adobe Advanced Micro Devices

Apple

Applied Materials

Atmel Corp

Bloom Energy

Conner Peripherals

Cypress Semiconductor

ETrade

Food Machinery Corporation

Genentech

Hewlett Packard

Intuit

Intuitive Surgical

KLA Tencor

Lam Research

Maxim Integrated

Rambus

Quantum Corporation

MIPS Technologies

NVIDIA

Oracle

Palm Inc.

Xilinx

Trimble Navigation

Rolm Communications

Silicon Graphics

SRI International

Sun Microsystems

Tesla Motors

SLAC National Accelerator Laboratory

Intel

Ebay PayPal

Google Facebook

Cisco

Twitter Electronic Arts

Atari

NetFlix

Symantec

Yahoo!

Yelp


“Even after the collapse of the dot-com bubble, about 4,000 IT-related companies located along Highway 101 from San Francisco to San Jose generate approximately $200 billion in IT-related revenue annually.” Gregory R. Gromov, The Roads and Crossroads of Internet History.

Highway 101 – The tech industry’s Madison Avenue

San Francisco

San Jose

Google Computer History Museum

Microsoft Labs Hacker Dojo

Violin Memory

NASA Ames

eBay/PayPal

NetApp Yahoo!

Bloom Energy

McAfee Cisco/WebEx

EMC Intel

Oracle

US 101


The early years

1953: William Shockley left Bell Labs in a disagreement over the handling of the invention of the transistor.

1956: Shockley creates Shockley Semiconductor Laboratory in Mountain View, California, dedicated to research around using silicon, instead of germanium, for transistors and diodes.

1957: Shockley wins the Nobel prize in Physics and the "traitorous eight" engineers leave the company to form Fairchild Semiconductor.

1971: Two of the original employees of Fairchild Semiconductor, Robert Noyce and Gordon Moore, go on to found Intel and create the first microprocessor, the Intel 4004.

1975: Steve Wozniak, builds a home computer from a cheap microprocessor, and shows it to the Homebrew Computer Club in Menlo Park.

1976: Woz and his friend and fellow club member, Steve Jobs, form Apple Computer in Steve's garage in Cupertino and Apple's first personal computer, the Apple I, is sold for $666.66.

Sources: Wikipedia, www.computerhistory.org/revolution Image sources: Wiki Commons?

Moore’s Law


The early years

1977: The Apple II, Commodore PET and the RadioShack TRS-80 launched the first wave of personal computers.

1979: Xerox’s Palo Alto Research Center (PARC) was a hotbed of innovation in the ’70’s. In 1979, Xerox gave Apple access to some new ideas in graphical user interface, which were reflected in the first Mac.

1981: Adam Osborne founds Osborne Computer Company and debuts an early “luggable” computer that cost $1,795 and weighed 23.5 pounds.

1982: Three Stanford grads and 1 UC Berkeley grad started Sun Microsystems, originally manufacturing powerful graphic workstation computers, later developers of software including Java. Sun was sold to Oracle in 2009 and their flagship campus is now home to Facebook.

1994: Jim Clark and Marc Andreessen were the founders of Netscape. Netscape’s Navigator and Microsoft’s Internet Explorer browsers went head to head to capture the burgeoning internet market.

1995: Netscape’s successful IPO in 1995 kicked off the Internet Boom that continued into the early 2000’s.

Source: www.computerhistory.org/revolution


The heady ’90s of high flying stocks & bonuses

In the ’90s, many tech companies paid their employees in stock options.

As stock rose, the late ’90s became a time of irrational exuberance.

Offices sported Foosball tables and video games.

Secretaries had options worth millions.

Companies had signing bonus mania, giving away free house cleaning, or even BMWs, to new employees.

Source: http://www.thebubblebubble.com/dot-com-bubble/


The dot-com bubble

The historic speculative bubble of 1997–2000 was known as the dot-com bubble, or the dot-com boom & bust, or the Internet bubble, take your pick!

The collapse of the bubble took place during 2000-2001.

Some companies failed completely.

Some lost a significant portion of their market caps.

Some recovered and surpassed their bubble peaks.

Cisco’s stock

declined 86%

Amazon’s stock went

from $107 to $7 per share…

Microstrategy’s stock slid from $3,500 to $4

per share

…but a decade later it exceed $200

Source: http://en.wikipedia.org/wiki/Disk_drive, http://en.wikipedia.org/wiki/Amazon.com, http://en.wikipedia.org/wiki/Cisco


Some memorable dot bombs

Boo.com

Lycos

GeoCities

Pets.com

Excite@Home

InfoSpace

Webvan

WorldCom

Inktomi

and closed ten months

later.

Boo.com – spent $188m in just 6 months in an attempt to create a global online fashion store

Pets.com – ran a $1.2 million Super Bowl commercial in 2000

featuring their famous sock puppet mascot,

GeoCities – purchased by Yahoo for $3.6 billion then closed by Yahoo 10

years later.


CASH

Cash or stock, you make the call

Even vendors were offered stock in lieu of cash.

This created more than one “collateral” millionaires, for example, David Choe.

Choe is Korean-American muralist and graffiti artist who grew up rough in Los Angeles. A bad-boy street artist known for doing cover art for a Linkin Park album. In 2005 Choe was commissioned to paint murals at the first Facebook headquarters.

He was offered the choice of cash or Facebook stock. He said the very idea of Facebook seemed “ridiculous and pointless” at the time, but he chose the stock.

Now estimated worth $500m.

STOCK


Cash or stock, you make the call

Alas, the story of Pejman Nozad.

In 2005, Facebook founding President Sean Parker approached him about renting 165 University Ave. in Palo Alto, a property owned by Mr. Nozad's partners.

The deal came with a chance to buy $50,000 of stock in the fledgling social network – but with strings attached to the lease.

Mr. Nozad's partners said no. "We put on our real-estate hat, rather than our investment hat," he remembers. By his math, those shares in Facebook would be valued at about $50 million today.

Source: http://online.wsj.com/article/SB10001424052702303360504577412031389480536.html


X=The largest 15

digit perfect square

palindrome.

A win/win way to recruit in Silicon Valley

The race for talent in Silicon Valley is highly competitive.

Big and small companies alike have to compete pre-IPO start-ups and companies like Facebook and Google who offer incredible compensation packages including stock and top shelf benefits.

“It’s very difficult to compete on comp, especially right now when a huge element of compensation is stock. When you’re competing with the promise of pre-IPO companies it’s just driving your compensation up. We’re going to have to introduce a disparity in our internal equity. We should pay what it takes for amazing critical talent.” Nellie Peshkov, VP of global talent acquisition at Electronic Arts

Source: http://www.ere.net/2012/07/20/recruiters-ponder-pay-metrics-and-relocation-in-californias-silicon-valley/

RocketFuel’s clever Hwy 101 billboard recruits engineers with a challenge, solve the puzzle to get the address of their company.


2011: Largest venture capital deals Greater Bay Area


2011: Largest IPOs in the Greater Bay Area

Zynga LinkedIn Pandora Media Solazyme Jive Software

$1 billion

$353m

$235m $198m

$120m


2012: Largest venture backed companies Greater Bay Area


2012: Largest IPOs in the Greater Bay Area

$16 billion

$732m

$264m $260m $120m $115m $94m

Facebook Workday Splunk Palo Alto Networks

Infoblox Guidewire Software

Vocera Communications


Silicon Celebrities

Silicon Valley pioneers are honored at The Computer History Museum Fellows Awards and The SV Forum Visionary Awards.

�  Robert Noyce �  Gordon Moore �  Andy Grove �  Bill Hewlett �  Dave Packard �  Steve Jobs �  Steve Wozniak �  Guy Kawasaki

�  Scott McNealy �  Larry Ellison �  John Doerr �  Don Valentine �  Charles Schwab �  Linus Torvalds �  Marc Andreessen �  Jerry Yang

�  Sergey Brin �  Larry Page �  Marissa Mayer �  Carly Fiorina �  Meg Whitman �  Mark Zuckerberg �  Sheryl Sandberg �  Elon Musk

Source: http://www.computerhistory.org/fellowawards/hall/, https://svforum.org/Visionary-Awards , http://www.huffingtonpost.com/2011/07/26/celebrities-silicon-valley-lady-gaga_n_909494.html

“Timberlake To Gaga: Celebrities Go Silicon Valley With High-Tech Investments” Huffington Post 07/26/11

Some reach celebrity status beyond the valley…

Even Hollywood wants in on the act…

SAP Silicon Valley


SAP – Celebrating 20 years in Silicon Valley

SAP Labs, LLC was incorporated

1996

SAP established the first development group outside of

Walldorf, Germany in Foster City, CA

1993

Changed the name of SAP Technology

to SAP Labs and moved the facility

to Palo Alto

1997


SAP Silicon Valley today

Over 3,500 employees in four Bay Area locations

One of the most diverse locations with 40+ nationalities and languages spoken

74 of the 313 managers are women*

Palo Alto EBC hosted 1,404 meetings in 2012 and 1,047 meetings In 1H 2013

SAP Silicon Valley Products and Technologies include Business Applications, Database & Technology, Mobility, Cloud, and Analytics

Home of SAP HANA, Startup Focus, Western Sales, SAP Ventures, Ecosystems & Channel, User Experience, and Mobility Design Center

* SAP Palo Alto, August 2013


SAP Palo Alto: Sustainability Front-Runner

§  650 solar panels

§  3 telepresence rooms

§  100% renewable energy

§  18 charging stations

§  Rectifier, air-side economizer and 380v DC data center

§  LEED Gold Building

§  LEDs & intelligent lighting systems

§  Bioswale & garden

§  Sustainable food services


SAP Ventures: Investment Front-Runner

Help innovative and disruptive companies with SAP’s expertise, relationships and geographic reach in addition to capital (partial list)

©  2013 SAP AG or an SAP affiliate company. All rights reserved.

Thank you

Contact Information: Christine Johnson Sr. Director, SAP Community Relations @SAPBayArea My Blog: http://scn.sap.com/people/christine.johnson/blog LinkedIn: www.linkedin.com/pub/christine-johnson/2/155/101