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