Pity by the Bay: Valley frets over other areas’ newfound fortunes

SAN FRANCISCO, Feb. 7, 2003 — Is the Bay Area’s status as a nanotech stronghold in trouble?

A string of speakers at a nanotech event at the San Francisco Chamber of Commerce recently would have you thinking yes. They painted a bleak picture of nanotech’s future during a three-hour meeting of local business, research and political figures, with speaker after speaker warning that the Valley was in danger of ceding its preeminence to other places.

“The Valley is living off its past glories, assuming that this will extend to nanotechnology,” said Chris Piercy, a partner at Knowledge Market, a venture capital firm. “All these other places are organizing initiatives and pulling down federal money. We have a lot of regional interests that need to be pulled together.”

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Meyya Meyyappan, director of the NASA Ames Center for Nanotechnology, said that nanotech’s development has become a worldwide race, and for the Bay Area it means that “for the first time, everyone’s out of the gate at the same time. Michigan, New York, Texas, they’re all right there” with California.

Phil Kuekes, a researcher at Hewlett-Packard Laboratories, added that nanotechnology needs specially trained workers. “You need to start with the work force. Nanotechnology will happen where the work force is available. Where is our highly trained work force going to come from?”

These comments and others like them were made repeatedly at a Nanotechnology Roundtable co-hosted by the NanoBusiness Alliance and the San Francisco Center for Economic Development, part of the city’s Chamber of Commerce.

Still, they are odd words to hear in a region Small Times magazine ranked as the most promising in the United States for small tech development. The Bay Area features research centers such as the University of California, Berkeley, Stanford University and NASA Ames Research Center; scientists such as Paul Alivisatos and Marvin Cohen; leading corporate researchers like IBM’s Don Eigler and Hewlett-Packard Co.’s Stan Williams; plus most of the leading venture capitalists in the field.

It isn’t as though places around the world haven’t tried, and failed, to replicate the Valley’s vaunted entrepreneurial culture. “A lot of people are struggling to understand the intangibles of Silicon Valley,” said Brock Hinzmann, technology navigator at SRI International in Menlo Park, Calif. Hinzmann noted that it took the Valley perhaps 30 to 40 years to become the Valley, and doubts that other areas will overtake it in less time, even if it does nothing.

Speakers did note the Bay Area’s abundant resources. But the fear is that the Valley may not know what to do with competition.

“We’re not used to competing,” said Roberta Achtenberg, senior vice president for public policy at the San Francisco Chamber of Commerce.

That kind of hand-wringing also seems out of place for a region that usurped technology leadership from Boston’s Route 128, survived the loss of the DRAM business, weathered the death of Ashton-Tate and Borland International Inc.’s application businesses and remains preeminent, though Microsoft Corp. and IBM are based elsewhere. But Silicon Valley, after the popping of the Internet bubble, is a glum place — with official vacancy rates hitting 30 percent, almost 7 percent of the work force unemployed and economists forecasting minimal economic growth for the next two to three years.

There is also no question that money for nanotech research is going elsewhere. In particular, Albany, N.Y., has landed Sematech North, thanks to its Center of Excellence in Nanoelectronics. Worse for the locals, the California NanoSystems Institute is in Los Angeles, not the Bay Area.

San Francisco itself is keen to avoid losing nanotech firms the way it lost biotech firms to South San Francisco (Genentech), Emervyille and other Bay Area cities. Leamon Abrams, director of the Mayor’s Office of Business and Economic Development, came “to see how the city should structure its regulations and provide incentives to attract nanotech businesses.”

Other politicos included representatives from powerful California politicians Sen. Dianne Feinstein and Rep. Nancy Pelosi. The highest-ranking state official to attend was Lon Hatamiya, California’s secretary of technology, trade and commerce.

Despite the hand-wringing, no action came out of the meeting except a request by Hatamiya and Achtenberg for follow-up meetings to develop a coherent strategy to pursue funding for nanotech research and institutes. Those in attendance were sanguine about the need for more meetings. “This is a first step to putting people on each other’s radar,” said Alex Wong, a partner at venture capital investor Apax Partners, who was encouraged by the turnout.

It might be much ado about nothing. But Silicon Valley does not want to find itself sitting on the sidelines of the Next Big Thing.

“The Bay Area is like a river — it flows by itself,” Meyyappan said. “Now we’re trying to channel the river, to make sure the source doesn’t dry up.”


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