Why did the Silicon Valley area develop into such a high-tech hub?

Finally a chance to shine as a social scientist. In deference to the sub's rules I'll keep everything pre-1990 but keep in mind that all of these process are still ongoing in Southern California.

Along with /u/yodatsracist I'll second Regional Advantage. It's difficult to overstate the influence on this book. It helped create the entire field of comparative regional economic analysis and has shaped economic policies around the world. Key to her work is the idea that a regional culture develops that encourages particular corporate and individual practices that help high-tech innovation. As a few other people have mentioned, one of the key events was the initial founding of Shockley Semiconductor and the spinoffs that ensued from it. However, we can look even earlier than that for the origins. Ann Markusen's book Rise of the Gun Belt argues that the region's technological orientation is a result of US defence spending in the 1940s-1960s which helped spur a high-tech aerospace economy in Southern California. This was mostly concentrated around the LA area, but universities like Stanford and Berkley became major research centres. Lawrence Livermore National Labs was founded in 1952 in conjunction with Berkley University for intensive nuclear and basic physics research.

But the real origins go back even further to the founding of Stanford University in 1891. Stanford had an industrial, applied focus to its research from the very beginning. This separates it from more traditional universities of the time which were much more academically focused, even for their science and engineering department. Early faculty at Stanford were hired in part for their industrial connections and willingness to do applied research (Leslie and Kargon Selling Silicon Valley:Frederick Terman's Model for Regional Advantage, Business History Review 70(4) 435-472). As a result, Stanford has always been a leader in technology transfer and reduces the institutional and cultural barriers to taking innovations made within a university to the market place.

However, there's something even more important to Silicon Valley's success. Saxenian points out in Regional Advantage that the Valley has survived repeated ups and downs in the technology marketplace. The original focus was on manufacturing semi-conductors but this market was destroyed when newer fab plants in Korea and Taiwan destroyed the profit margin. When this happened many firms moved on to designing memory chips only for the same thing to happen again. After this we see a shift in the 1980s away from mini-computers, which unlike their name were actually larger and expensive servers (but still smaller and cheeper than IBMs giant hunks of iron) and towards newfangled personal computers. Like all the other markets, this moved from a high-profit activity to more of a commodity, so there was a shift to internet technology in the mid 90s......and well you know how this story goes by now.

How was Silicon Valley able to constantly make these transitions while other similar places like Boston — which like SV has lots of great universities, big high-tech firms, and lots of public investment in R&D — didn't? A lot of researchers point to the importance of Silicon Valley's culture. By this they mean informal agreements over specific business practices such as talking about your new technological innovations with people in other companies, allowing if not supporting movement of workers between firms and the creation of spinoffs by employees, and support for entrepreneurship and risk taking. This culture in many ways developed out of Stanford University but was supported by major industrial leaders such as Bill Hewlett and Dave Packard. The myth of the garage innovator is very important to normalizing the kind of entrepreneurial activity found in Silicon Valley.

/r/AskHistorians Thread