Understanding Silicon Valley by Martin Kenney

By Martin Kenney

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These institutions are then augmented by an excellent and omnipresent community college system for rapidly assimilating immigrants into the workforce and culture of the Valley. It's a mistake to see this traffic in knowledge as a one-way street. These excellent schools feed the firms of the Valley, no doubt. But as I note below, the firms in the Valley also help feed the ex cellence of the schools. Along with the schools, boundaries of research are continually pushed in the several major corporate research labs, such as PARC, that wittingly or unwittingly contribute to the Valley's flux of ideas.

The engineer was a Stanford graduate named Cyril Elwell; the company was Federal Telegraph Corporation, based in Palo Alto; and the radio transmission technology was the Poulsen arc, which generated continuous long radio waves with an electric arc operating in an atmosphere of hydrogen contained by a strong magnetic field. 5 The role of FTC in the early radio industry has been widely overlooked (but see Aitken 1985) because the reign of the Poulsen arc occurred during wartime and was to be short-lived, as improved alternator—and shortly thereafter, vacuum tube—technology arrived on the scene at the war's end.

Even as this Gold Rush puts all previous ones to shame, it should be recognized that it comes upon the heels of a very deep slump that began in the late 1980s and extended through the early 1990s. Many, including to some degree myself, believed in 1989 that the magic had finally ended. Obviously, we were wrong. From a historical perspective, this leads to two observations: first, although the Silicon Valley high-technology complex has experienced secular growth since the end of World War II, it has regularly been beset by severe slumps, which have brought with them severe dislocation and pessimism regarding the future.

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