The flotation of social network Facebook in May at a valuation of more than $100bn was notable in many ways, including identifying the shift in the centre of economic gravity from the east to the west coast of the US. This shift has global ramifications as the venture ecosystem in northern California around the nebulous area of Silicon Valley is creating global disruption. This disruption is based in part on the money that flows round the world from venture capitalists based in the valley. But also, and more importantly, the idea of how private capital can be used to fund fast-growing, often disruptive products and services from entrepreneurs spread by ambitious, motivated people with allegiance to their network of peers rather than social or professional organisations. Facebook’s symbolism Founded by students at east coast-based Harvard University using the school’s equipment and information, Facebook’s rise in less than a decade to a stock market capitalisation of more than $100bn at its initial public offering has been a sore point for the Massachusetts region. Harvard and the state had little economic benefit from the social network’s initial public offering – at the time it had no university venturing fund to provide seed capital to its students and even its large endowment fund that backs venture capital firms as a limited partner (investor) in their funds decided against committing – re-upping in the jargon – to Accel XI, which owned a large chunk of Facebook. Conversely, for northern California, the brain drain of Mark Zuckerberg, co-founder of Facebook, and his company from east to west coast crystallises the success of the vision of local leaders around Stanford University in Palo Alto – the so-called heart of Silicon Valley in the state. As Stephen Adams in his paper, Regionalism in Stanford’s Contribution to the Rise of Silicon Valley, said: “From the early years of Stanford University, the university’s leaders saw its mission as service to the west [the 11 states nearest to the Pacific ocean] and shaped the school accordingly. “At the same time, the perceived exploitation of the west at the hands of eastern interests fuelled booster-like attempts to build self-sufficient indigenous local industry [from the 1930s].” But while Facebook’s move east to west to be closer to the valley is perhaps the most striking example of the power and influence of the “indigenous local industry” built around microprocessors and electronics, its draw as an innovation ecosystem has global reach. A global valley…

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