Tech goes to town

DRAWN TO BRIGHTER LIGHTS, BET­TER AMENI­TIES AND BIG­GER TAL­ENT POOLS, CRE­ATIVE TECH­NOL­OGY FIRMS ARE PUTTING THE BURBS BE­HIND THEM.

The Australian - The Deal - - Tech Goes To Town - BY RICHARD FLORIDA

For as long as many of us can re­mem­ber, hi-tech in­dus­tries have flour­ished in the subur­ban of­fice parks that are so ubiq­ui­tous in Sil­i­con Val­ley, North Carolina’s Re­search Tri­an­gle and other such “nerdis­tans”. How­ever, in re­cent years, hi-tech has taken a de­cid­edly ur­ban turn.

Sil­i­con Val­ley re­mains the pre- em­i­nent cen­tre of hi-tech in­dus­try, of course. How­ever, even in the val­ley, denser, more mixed-use and walk­a­ble places, such as down­town Palo Alto, are be­com­ing the pre­ferred lo­ca­tions for start-ups and smaller firms. And many oth­ers – Pin­ter­est, Zynga, Yelp, Sales­force.com and Square, to name a no­table few – are tak­ing up res­i­dence in down­town San Fran­cisco.

New York’s Sil­i­con Alley – af­ter a false start in the tech bub­ble of the late 1990s – is now home to more than 500 start-ups, such as Kick­starter and Tum­blr, not to men­tion the gi­gan­tic Google satel­lite housed in the old Port Author­ity Build­ing on Eighth Av­enue, be­tween 15th and 16th streets.

Across the At­lantic Ocean, Lon­don’s on­ced­erelict Shored­itch dis­trict – known these days as Tech City or Sil­i­con Round­about – has been trans­formed into a thriv­ing hi-tech dis­trict that houses 3200 tech­nol­ogy firms and 48,000 jobs, ac­cord­ing to a re­cent re­port from the Cen­tre for Lon­don.

In Los Angeles, Sil­i­con Beach, a roughly five-kilo­me­tre strip be­tween Santa Mon­ica and Venice, has be­come a no­table start-up hub. Its walk­a­bil­ity and ur­ban-like ameni­ties have made it the place where young techies pre­fer to live, work and play, ac­cord­ing to LAbased ven­ture cap­i­tal­ist Mark Suster.

In Seattle, the South Lake Union Dis­trict de­vel­op­ment, pi­o­neered by a co-founder of Mi­crosoft, Paul Allen, is trans­form­ing a once mori­bund man­u­fac­tur­ing area into a ma­jor cen­tre for new tech­nol­ogy, with Ama­zon’s new head­quar­ters at its hub, as well as sev­eral biotech­nol­ogy re­search cen­tres.

Out in the Ne­vada desert, Zap­pos chief ex­ec­u­tive Tony Hsieh is look­ing to re­make down­town Las Ve­gas as a cre­ative cen­tre, re­lo­cat­ing the com­pany’s head­quar­ters into the for­mer city hall and lur­ing start-ups from Cal­i­for­nia. In the city, as Hsieh told For­tune mag­a­zine, “the bar or res­tau­rant be­comes an ex­tended con­fer­ence room”. And since the Las Ve­gas neigh­bour­hood lacked them, the con­cept mor­phed from “let’s build a cam­pus” into “let’s build a city”.

“I love the idea of an ur­ban cor­po­rate cam­pus with all the en­ergy and va­ri­ety that pro­vides,” Twit­ter co-founder Jack Dorsey tweeted in Fe­bru­ary this year, af­ter open­ing his com­pany’s new head­quar­ters in a for­merly derelict Art Deco build­ing in San Fran­cisco’s Mid-Mar­ket neigh­bour­hood.

Ven­ture cap­i­tal icon Paul Gra­ham notes that, for all its many ad­van­tages and power, Sil­i­con Val­ley has a sig­nif­i­cant weak­ness. The hi-tech “paradise” cre­ated in the 1950s and 1960s is now just “one gi­ant park­ing lot”, he writes. “San Fran­cisco and Berke­ley are great, but they’re 40 miles away. Sil­i­con Val­ley proper is soul- crush­ing subur­ban sprawl. It has fab­u­lous weather, [mak­ing it] sig­nif­i­cantly bet­ter than the soul-crush­ing sprawl of most other Amer­i­can cities. But a com­peti­tor that [avoided] sprawl would have real lever­age.”

Still, es­cap­ing sprawl is only part of the ex­pla­na­tion. There are also dis­tinct life­style ad­van­tages in set­ting up shop in the hurly­burly of real ur­ban dis­tricts. Com­pared with pre­vi­ous gen­er­a­tions, to­day’s younger techies are less in­ter­ested in own­ing cars and large houses. They would rather live in a cen­tral lo­ca­tion, where they can rent an apart­ment and use pub­lic trans­port or walk or bike to work, and where there are plenty of nearby op­tions for so­cial­is­ing in non-work hours.

“It’s not that young peo­ple wanted to live in Moun­tain View in the past,” Suster has said. “In fact, so many did not that com­pa­nies like Google and Ya­hoo had free buses with WiFi from San Fran­cisco to their Palo Alto and Sun­ny­vale head­quar­ters.”

Or, as one hi-tech en­tre­pre­neur told the authors of the Cen­tre for Lon­don re­port: “We moved here out of pres­sure from [soft­ware] de­vel­op­ers to move some­where bet­ter. And by bet­ter, I think they mean some­where [with] lots of bars and lots of places you can eat.”

But it goes well be­yond the young and the trendy. With their cul­tural and in­tel­lec­tual ameni­ties, these ur­ban cen­tres are also the pre­ferred lo­cales for many lead­ing sci­en­tists and en­gi­neers. Mi­crosoft es­tab­lished its new re­search lab in New York last May be­cause the top sci­en­tists it wanted to bring on board pre­ferred to stay in the city.

An even big­ger part of the story is rooted in the chang­ing na­ture of tech­nol­ogy it­self. A gen­er­a­tion or so ago, the fastest- grow­ing hi-tech com­pa­nies were more like fac­to­ries. They de­vel­oped pro­pri­etary soft­ware sys­tems, de­signed and man­u­fac­tured the chips, built the com­put­ers and cre­ated the in­fra­struc­ture that made the in­ter­net pos­si­ble. Whether it was Mi­crosoft or Ap­ple, they de­ployed big engi­neer­ing teams – and used big subur­ban cam­puses to house them.

The chang­ing na­ture of tech­nol­ogy, cloud­based ap­pli­ca­tions in par­tic­u­lar, en­able new start-ups to suc­ceed more quickly, with smaller teams and much smaller foot­prints.

The speed of tech­nol­ogy has also been ac­cel­er­at­ing. The com­pa­nies that suc­ceed

are the ones that stay in the clos­est contact with their end-users and first adopters, as the Mas­sachusetts In­sti­tute of Tech­nol­ogy’s Eric Von Hip­pel has shown. When a com­pany is lo­cated in a city, many of those end-users can be found right on its doorstep.

At the same time, hi-tech prod­ucts and in­dus­tries are now far more mul­ti­dis­ci­plinary. Suc­cess of­ten re­quires ex­cel­lence in more than one field of tech­nol­ogy and in other lines of busi­ness. East Lon­don’s tech scene is led not by tech firms as such, but by “dig­i­tal cre­ative” com­pa­nies that com­bine com­puter tech­nol­ogy with mu­sic, art and nar­ra­tive. And mu­si­cians, artists and writ­ers clus­ter in cities.

Soft­ware for so­cial me­dia and apps needs in­tu­itive, easy-to-use in­ter­faces that seam­lessly con­vey in­for­ma­tion. De­sign is cen­tral to new hard­ware prod­ucts as well, the most ob­vi­ous ex­am­ples be­ing Ap­ple’s iPads and iPhones. De­sign tal­ent is con­cen­trated in big cities, with their lead­ing de­sign schools and mul­ti­ple in­dus­tries that draw upon such skills.

Other ar­eas of hi-tech are premised less on break­through innovations and more on ap­ply­ing tech­nol­ogy to huge new mar­kets in retailing, ad­ver­tis­ing, me­dia, fi­nan­cial ser­vices, ed­u­ca­tion, fash­ion, mu­sic, pub­lish­ing and com­mu­ni­ca­tions. Cities such as New York and Lon­don are where those in­dus­tries – and the tal­ent that pow­ers them – are con­cen­trated.

Cities are cen­tral to in­no­va­tion and new tech­nol­ogy. They act like gi­ant petri dishes, where cre­ative types and en­trepreneurs can rub up against each other, com­bin­ing and re­com­bin­ing to spark new ideas, in­ven­tions, busi­nesses and in­dus­tries.

IL­LUS­TRA­TION PETER ARKLE

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