Bigness in Silicon ValleyA paradox of Silicon Valley is the persistence of big firms in an ecosystem optimized for startups. Also, a question now central to antitrust is whether Big Tech helps or hinders innovation, especially in SV. Further, a question central to the history of capitalism is whether industrial districts end in oligopoly, with fixed capital prevailing over skilled labor. This paper attempts to define bigness in SV over time: Which firms counted as SV and when, geographically and culturally? When did firms, in any industry, reach measured bigness: by headcount, revenue, market share, market capitalization, profit or other measures of capital efficiency? Which firms enjoyed effective bigness (SV is rife with first movers) through patenting, network and distribution expanse, or brand recognition?
Two conclusions: First, 1996 offers an inflection point. Steve Jobs returned to Apple, Google started, the Fortune 500 added service firms, and David Packard died leaving behind a model for big firms in an innovation ecosystem. Anna Lee Saxenian finished Regional Advantage, which established the still reigning definition of SV as an agglomeration of nimble startups. Historical literature then shifted toward agglomerations of technology-agnostic support firms that created an infrastructure to drive entrepreneurship across many industries. The literature now focuses on big firms that behave like monopolists with global reach (rather than local impact).
Second, bigness that mattered in Silicon Valley came in three broad waves. In the 1960s and 1970s workforce bigness mattered (FMC, Lockheed, IBM, Hewlett Packard). In the 1980s and 1990s revenue and profit bigness matter most (HP, Varian, Intel, Nat Semi, Raychem, Sun, Cisco, Oracle). Since 2000, market cap, as a proxy of network and platform size, matters (Apple, Google, Facebook, Visa, Salesforce). Types of bigness shaped how these firms interacted with smaller firms in this industrial district.