Joint Venture Completes Internet Cluster Analysis

As the digital economy matures and more regions around the country are prepared to offer the telecommunications infrastructure and skilled workforce required to compete for high-tech businesses, the implications for Silicon Valley were presented in a new report from Joint Venture: Silicon Valley Network. Internet Cluster Analysis 2000, released last week, outlines several challenges facing the region.

Unlike Joint Venture's first internet cluster analysis last year, which focused on Silicon Valley's position in the Internet economy as well as identifying other key Internet Cluster regions (Austin, Washington DC, Seattle), Internet Cluster Analysis 2000 characterizes the global nature of the Internet industry today and presents the results of interviews with more than 100 Internet executives around the country.

The report urges local governments in the Valley to take a more proactive and innovative role to attract, retain, and nurture Internet firms. One reason is that in addition to the five key attributes identified in last year's report as essential to attracting high-tech businesses to a particular region (talent, pillar companies, universities, capital and support services), 63 percent of Internet executives identified a strong and supportive government as an important consideration in location decisions. Initiatives mentioned as examples included not only local start-up/seed capital and incubator programs, but also international efforts to entice foreign investment and relocation.

The growing international Internet market is having economic and employment implications: 59 percent of the top U.S. Internet companies have operations in Europe, 43 percent in Asia, 19 percent in Latin America and 7 percent in Africa. Thirty percent of Silicon Valley's Internet businesses surveyed for the report say they would consider relocating.

The report also provides one surprising finding regarding the skilled IT workforce issue. Talent or a skilled workforce, while still important, is becoming less critical a consideration for location decisions. Only 58 percent of the executives surveyed this year said talent was a key relocation issue versus the 86 percent reporting the same last year. Talent remained the number one most often cited reason for current location however, followed by availability of capital, quality of life and proximity to partners.

The full report can be downloaded from Joint Venture: Silicon Valley Network's website: http://www.jointventure.org