Stephen Adams

Business History Conference, Providence, RI

How should the issue of power be treated in the study of entrepreneurship? Much of the recent literature explores legacy firms strong-arming start-ups, the tug-of-war between providers of and users of digital platforms, and more generally, the phenomenon of asymmetric information. Focusing on such issues, important as they are, gives the appearance that the exercise of power tends to be zero-sum game within the ecosystem involving startups engaging the established.

I will show that there is another perspective from which to examine power and entrepreneurship: Instead of focusing on entrepreneurs, looking at the nodes of the entrepreneurial ecosystem. With this perspective in mind, I explore the development of Silicon Valley and its early cluster formation. Significantly, key aspects of the ecosystem were established and enhanced by individuals with access to, and the ability to influence those with power or resources.

In this paper I show the exercise of such power and influence in action. During the period before the region was dubbed Silicon Valley, targets of that power ranged from philanthropic foundations (regarding the funding of Stanford University) to the federal government (regarding funding the San Francisco airport) to the state government (regarding the expansion of branch banking) to litigants before the Ninth Circuit Court (regarding patent litigation). The outcomes each strengthened, directly or indirectly, the region’s entrepreneurial prospects. The Silicon Valley phenomenon is commonly referred to as the second Gold Rush. What is less well known is the extent to which the San Francisco Peninsula had access to power to match its wealth, and that the region’s entrepreneurs benefitted from it.

Policy History Conference, New York, NY

What are the limits to pursuing organizational, civic, or regional self-interest during total war? San Francisco’s assertion of its interests demonstrates what was possible during World War II. The city owned land reclaimed for the 1939-1940 Golden Gate Exposition. During war mobilization before Pearl Harbor, the city provided the Navy free access to Treasure Island. After Pearl Harbor, the Navy sought ownership and the city demanded a "fair" payment. Because it sued the Navy (which was supported by the Army and the Justice Department), the city faced charges of treason from local groups and national organizations. The Board of Supervisors granted Mayor Angelo Rossi a leave of absence so he could testify—successfully--before Senate and House committees. Instead of a nominal amount offered by the Navy, the city received more than $8 million, which was used to upgrade Mills Field into San Francisco International Airport.

Business History Conference, Online

In September 1960, the Ford Foundation announced a three-for-one matching grant that would bring $100 million to Stanford University. The $25 million from the Foundation represented more than Stanford received from tuition, gifts, and government contracts combined in fiscal year 1959. It was the largest unrestricted grant in the history of higher education. It also culminated a process of co-evolution of organizational capabilities for foundation and university.

In the early 20^th Century, private universities—especially new ones such as Stanford, the University of Chicago, and the Johns Hopkins University—found a much-needed source of additional resources in the Carnegie Foundation and the Rockefeller Foundations. By then, American foundations had shifted their higher education mission from the needy (charity) to those able to make an impact (investment), enriching research universities. Stanford was a beneficiary of “insider granting” when Stanford University President Ray Lyman Wilbur served as a trustee of the Rockefeller Foundation and the Rockefeller’s General Education Board, advocating on behalf of his as institution during deliberations about grants during the 1920s and 1930s.

In the 1950s, the Ford Foundation (then the world’s largest) sought grantees who took a more systematic approach about their plans and associated resource needs. Stanford administrators had began such an approach in the late 1940s, soliciting departments regarding their needs. Along the way, Stanford added staff for planning and the Ford Foundation added staff for grant review. This proved helpful in 1959, when Ford instituted a series of institutional gifts, and Stanford could readily share their long-term plans and related financial needs. Stanford University’s approach to foundation funding had evolved from personal influence to become a replicable organizational capability.