Mountain View Voice

News - February 19, 2010

Panelists: Region is losing race for federal 'mega-investments'

by Chris Kenrick

Silicon Valley is losing the race for huge federal investments that will jumpstart the industries of the future, a panel of Valley leaders said last week.

As the Obama administration makes "a series of mega-investments in the future," Silicon Valley trails regions such as Huntsville, Ala. in procuring funds, Emmett Carson, CEO of the Mountain View-based Silicon Valley Community Foundation, told more than 1,000 attendees at a 2010 "State of the Valley" conference last Friday in San Jose.

The conference was convened by the Community Foundation and Joint Venture: Silicon Valley Network, a nonprofit "analysis and action" group.

Carson and others outlined a regional funding gap in clean technologies. He said Silicon Valley is getting none of the $2 billion federal funds now being disbursed for research in vehicle batteries and only $4 million of a $184 million federal investment in energy storage.

Silicon Valley got none of the $3.5 billion going to smart-grid technology, and just $38 million of the $16 billion going to energy efficiency and renewable energy, he said.

Warning against complacency, he likened the region to the Indianapolis Colts' overconfidence leading up to the recent Super Bowl game. The Colts lost to the underdog New Orleans Saints.

"We're not the Saints, we're the favored people," Carson said. "If we think the game is ours we're going to have that outcome, and it will be Huntsville celebrating."

Attendees also heard a range of expert analyses of the 2010 Silicon Valley Index, an annual measurement of the region's wealth and health put forth by Joint Venture (www.jointventure.org). The report, released earlier this month, concluded that Silicon Valley's dominance as the world's innovation hub is "at risk as never before."

The exhaustive study stated that the rise of countries such as China and India, coupled with California's legislative gridlock, is "draining the lifeblood of funding and foreign talent from Silicon Valley."

Russell Hancock, Joint Venture's CEO, announced at the conference that he will create a new position to run "special ops" for procurement of federal investment for Silicon Valley.

"The person will travel to Washington, D.C. a lot and mobilize the entire region to advocate and cheerlead for the federal funds we require," Hancock said. The person will report to a steering committee representing Joint Venture, Stanford University, the Silicon Valley Leadership Group and the Bay Area Council, he said.

There is a Silicon Valley mythology that could feed overconfidence: That entrepreneurs created it all by themselves, warned Gary Pinkus of McKinsey & Co.

The reality, he said, is that early companies such as Fairchild Semiconductor secured 80 percent of their original contracts from the Defense Department.

He added that "California is arguably a terrible state to do business in relative to other states. We have high taxes and high regulations that we're going to have to fix in the context of Sacramento."

Chris Kenrick writes for the Palo Alto Weekly, the Voice's sister paper.

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