When Steve Jobs was still a boy, he looked for the name “William Hewlett” in the local phone book and actually managed to get the founder of Von Hawlett-Pack on the phone. The technologist supported the later Apple computer inventor by offering him a summer job, giving him a few computer components and helping him with advice and action.
Anecdotes like these make it clear how the spatial proximity of one wave of innovation can trigger the next. Although it is very unlikely that Mark Zuckerberg’s phone number can be found in Palo Alto’s local phone book these days, many hopefuls with clever ideas are pouring into the cities around San Francisco. Because there, the driving forces sit just like the venture capitalists. The big networking events take place there several times a year, where a large pool of talented computer scientists can sense the great opportunity.
Would Bitcoin benefit as much from geographical proximity as the technology sector? Silicon Valley veteran and investor Mark Andreessen wrote an article entitled “What does it take to create a new Silicon Valley?” on this topic.
“Imagine a Bitcoin Valley, for example. A place where a country fully legalizes digital currencies for all financial functions.”
Venture capitalist Tim Draper, who recently bought 30,000 Bitcoin at the Silk Road auction, says he already sees a Bitcoin Valley forming within Silicon Valley.
Bitcoin is not high-tech
A concentration of talent and a simple exchange of ideas is good for any up-and-coming industry. But Bitcoin is so different from high tech that you can’t say for sure if what’s good for an industry also applies to Bitcoin. Unlike the chip and component manufacturers that make up Silicon Valley, Bitcoin companies don’t need physical manufacturing or R&D labs to operate. It also feels somewhat ironic to pin geographically to the headquarters of a globally dispersed industry whose greatest virtue is the unrestricted geographical distribution of users.
“Bitcoin Valley can be anywhere you want it to be,” Draper joked in an email.
Most Bitcoin followers have a split opinion about the Silicon Valley concept. On the one hand, they say it might be helpful, but on the other hand, they wonder if it’s necessary at all.
“The Internet already exists and anyone can communicate with anyone from anywhere in the world,” says Bitcoin evangelist Roger Ver.
The talent pool lives
According to Hemant Taneja of General Catalyst Partners, even in a widely scattered world, companies have to be guided by where the talent pool is deepest. Bitcoin could consider several cities at the same time.
“New York would give Silicon Valley the run for its money,” says Taneja, referring to the depth of Big Apple talent in the financial sector.
“You can look at the talents from two points of view. When it comes to making Bitcoin consumer-oriented and finding the right companies, Silicon Valley is probably the right place. But when it comes to understanding and appreciating the regulation and compliance of financial instruments, I dare say that New York is the right place for the talent pool.”
A Distributed Industry
Meyer “Micky” Malka, founder of Ribbit Capital and investor of Coinbase and other Bitcoin companies, sees a more distributed future in the Bitcoin industry. A future in which companies are created where they are needed.
With his background in international finance, Melka sees some pain points in developing countries; for companies in developing countries it may take a little longer to get financial support, but it will happen:
“We see a lot of good ideas all over the world, but the capital we need is still flowing very centrally into Silicon Valley.