Posts by Kihong Bae:

Why Warren Buffett’s Keen on Korea

오늘 BusinessWeek지를 보니, Warren Buffett과 한국과 관련된 재미있는 기사가 있었다. 지난 번에 소개하였던 Jeremy Siegel 교수가 쓴 글과도 일맥상통하는 내용같다.

Why Warren Buffett’s Keen on Korea
“Attractively priced” stocks, healthy debt ratios, plus solid manufacturing prowess position Korea to profit from growth in China and the Mideast
by Moon Ihlwan

In other parts of the world, South Korea’s gross domestic product growth—projected at around 5% this year—would make it a high-profile destination for portfolio managers. But since Korea is in Asia, the country is largely overshadowed by the dazzling economic performances of China and India. As concerns grow about overvalued Chinese and Indian stocks, though, money managers shuffling their Asian portfolios are finding Korea increasingly attractive. For American billionaire investor Warren Buffett, for example, China is out, and Korea is in. During his visit to Asia late last month, Buffett cautioned against overreaching in China. Yet he expressed confidence in Korean equities, describing the country as “one of the world’s most attractively priced markets.”
Indeed, Buffett’s holding in Korean steelmaker Posco (PKXFF) is one of his top-performing stock investments this year. Buffett’s Berkshire Hathaway (BRKA) spent $572 million over the past three years or so for a 4% stake in Posco, one of the most profitable steelmakers on the planet, and that stake is now worth well over $2 billion. Berkshire recently sold off its shares in PetroChina, the only Chinese company it owned, but Buffett said during his brief visit to Korea on Oct. 25 that he would hang on to Posco. “It’s a great company and great companies get worth more and more,” he said.
Certainly Korea is not immune to the turmoil shaking markets worldwide. Shocks from the U.S. credit crisis and soaring oil prices have pared the Seoul exchange’s benchmark Kospi index by around 9% this month. Weaker-than-expected tech demand has sent prices nose-diving in memory chips (BusinessWeek.com, 6/15/07), where the Koreans rule.
Samsung Electronics (SSNGY), the bellwether for the country’s information technology sector, has fallen nearly 15% this year and has laid off some 1,600 workers, almost 2% of its workforce.

Korea Excels in Shipbuilding
Still, the benchmark Kospi index is up about 30% from the end of last year, a reflection of strong growth in other parts of the Korean economy. A major attraction is the country’s manufacturing prowess in diversified industries. Korea’s shipbuilding, steel, petrochemical, and other smokestack companies are booming as emerging economies spend heavily to build up their infrastructure and as their shipping trade explodes. “A number of Korean companies are dominant forces in cyclical industries and have historically outperformed their global peers when their industries are in an upswing,” says Yang Ho Chull, chief executive of Morgan Stanley (MS) Korea. “What’s particularly attractive for portfolio managers is the strong performance of these companies, fueled by the rapid growth of China.”
Consider the shipbuilding industry. As China turns into the factory of the world, demand for new ships to carry China trade is expected to remain strong until at least 2010, according to a report by the Bank of Korea, the central bank in Seoul. That means Korea’s shipbuilding firms, which built 41% of all ships delivered last year and include the world’s top three players—Hyundai Heavy Industries (HYHZF), Samsung Heavy Industries (SMSHF), and Daewoo Shipbuilding & Engineering (DWOSF)—will enjoy a boom (BusinessWeek.com, 5/18/07) for a few more years.
The influx of shipbuilding revenue to Korea is so huge that the central bank warned this month against further appreciation of the Korean currency. The shipbuilders, who are sitting on enough work for almost four years, cash in their future revenues to be received in dollars on the forward market to hedge against currency risks. Banks that take up the forward deals then sell dollars for the won on the spot market to offset their dollar forward purchases, and subsequently borrow dollars abroad to settle their spot deals, in the process pushing up the won. Little wonder the share price of Hyundai Heavy, the global shipbuilding leader, has more than tripled so far this year. On Nov. 8, the world’s top shipbuilder released its third-quarter results, reporting that its net profit more than doubled, to $475 million, from $230 million in the July-September period last year.

Greater Transparency Means Higher Stock Prices
Other cyclical sectors such as steel and petrochemical industries are also benefiting from rapid development of emerging markets. LG Chem (LGCLY), Korea’s largest petrochemical company, churns out products ranging from plastics to flooring and automotive parts. It posted a 73% jump in its net profit, to $229 million, in the third quarter. LG shares have jumped 120% so far this year.
The introduction of global corporate standards in Korea since the 1997 Asian crisis has also paved the way for share gains. “In the past, the Korean market has traded at a relative discount because of a lack of transparency and liquidity; but with significant improvement in these areas, the discount, at least for the leading 40 or 50 Korean companies, is disappearing. It is no longer a major issue,” reckons Yang at Morgan Stanley.
Corporate restructuring since the crisis has also improved the financial health of Korean companies. Economist Lim Kyung Mook at Korea Development Institute, a government-funded think tank, points out that the country’s average corporate debt, which used to be as high as four times equity in the late 1990s, has been cut to below 100% of equity. “Many Korean companies are now sitting on a cash pile big enough for them to weather a downturn and reap handsome profits from the next upturn,” Lim says.

Higher Oil Prices Help Korean Contractors
Take LG.Philips LCD (LPL), which has maintained its debt level well below half its equity. The world’s second-largest maker of liquid-crystal display (LCD) panels was bleeding red ink for four consecutive quarters until March of this year because of a supply glut in the industry. Yet the company last month reported a net profit of $573 million for the July-September period, its strongest profit in 13 quarters, against a loss of $249 million a year earlier, as demand for thin panels for computers and TVs grew.
Even an upsurge in oil prices is translating into a bonanza for engineering and construction companies in oil-importing Korea. That’s because the Koreans take a big chunk of the red-hot Middle East construction market. Much of the money earned from high oil prices is spent in building new refineries, petrochemical plants, highways and water desalinization plants, where Korean contractors are strong.
There’s no sign the stream of new construction orders will slow soon. In Dubai, the world’s largest building, the world’s largest indoor ski slope, and three artificial islands shaped like palm trees are all under construction. Saudi Arabia is building the $27 billion King Abdullah Economic City. And Kuwait plans to double its refining capacity at a cost of $14 billion. “The Middle East countries have never been so determined to set up their own industrial base,” says Hong Sung Il, a general manager at Samsung Engineering (SGRGF), a specialist plant contractor whose share price more than doubled so far this year. “The construction boom there will continue at least until the end of this decade.” Korean companies have won $25.6 billion worth of construction contracts in the first nine months of this year, up from $12.6 billion a year earlier, according to Seoul’s Construction & Transportation Ministry.

Decoupling from the U.S. Economy
The dwindling dependence of Korea’s cyclical industries on the U.S. economy is good news in the face of slower consumer spending in America (BusinessWeek.com, 11/26/07). “To some extent, the Korean economy has been decoupled from the U.S. economy,” says Chang In Hwan, chief executive at Seoul fund manager KTB Asset Management. “A spending crunch in America will be felt much more mildly here now than it was a few years ago,” he says.
Encouraged by the more balanced industrial strength, a growing number of Korean consumers are putting their money in stocks instead of in real estate and bank deposits. The amount of money in equity mutual funds, or investment trust funds as they are known locally, reached $111 billion this month, up from $50 billion at the end of last year. “Short-term corrections and fluctuations are inevitable, but in the longer term better corporate profitability and improved liquidity will drive the Korean market upward,” says Chang.

Microsoft Coffee Chat

오늘은 컨디션이 별로 좋지 않았지만 매우 일찍 일어났다. 오전 8시에 Cosi 2층에서 마이크로소프트에서 일하는 와튼 동문들과 간단하게 커피를 마시면서 MBA summer internship이나 full-time employment에 대해서 이야기할 수 있는 Coffee Chat 세션이 있었다.

4월 Welcome Week때 신입생을 위한 small group dinner를 host하였던 와튼 ’07년 졸업생 Vladimir Cole과 와튼 동문 6명이 와서 1학년들과 이런 저런 이야기를 하면서 정보를 교환하고 있었다. 여기 온 마이크로소프트 사람들은 Corporate Strategy Group과 Product Management Group에서 대부분 일하고 있었으며 Vlad는 Xbox 360 제품을 담당하고 있는 수많은 Product Manager 중의 한명이다. 마이크로소프트에서 일해봐서 회사에 대해서는 잘 알고 있지만, 내가 관심있었던 Corporate Strategy Group의 사람들을 더 만나보고 싶었다. 이 그룹이 주로 하는 일은 Bill Gates (이제 곧 회사를 그만 둘 거지만…아직도 마이크로소프트 하면 Office나 Windows보다 빌 게이츠를 생각하는 사람들이 더 많다)나 Steve Ballmer를 보좌하는 팀으로써 말 그대로 마이크로소프트의 미래 전략을 정의 하는 그룹이다. 마이크로소프트에는 워낙 똑똑한 사람들이 많이 있지만, 특히 이 그룹에는 인텔리들이 많이 있다. 대부분의 사람들이 Harvard MBA, Stanford MBA, Wharton MBA 출신이다…

이 그룹에서 내가 특히 관심있는 업무는 바로 strategic investment/acquirement이다. 즉, Microsoft가 새로운 분야로 진출하려고 할때 이 분야에 이미 진출해 있는 다른 회사를 인수함으로써 비즈니스를 하냐 아니면 모든걸 마이크로소프트가 새로 개발해서 무에서 시작하냐를 결정한 후, 다른 회사를 인수/합병하기로 결정하면 인수할 기업의 가격을 정하고, 인수 후 계획을 세우는 업무이다. 일종의 venture capitalist 작업이지만 기업 내부의 corporate venture capitalist인 샘이다.

마이크로소프트는 단점도 많이 있지만, 장점이 훨씬 많은 회사임이 확실하다. 그리고 그 장점 중 가장 손꼽을 수 있는 부분이 바로 smart people이다. Google로 많은 고급인력이 유출되는것도 사실이지만 아직도 많은 학생들과 IT 관련자들이 마이크로소프트를 존경하는 이유는 바로 이 똑똑한 사람들이 만들어 내는 sheer intellectual power가 아닐까 싶다…

Would I like to go back to Microsoft? 아니…그래도 싫다…ㅎㅎㅎ

Technology / Internet Trends – Morgan Stanley

Morgan Stanley Global Technology Team의 간판 스타 Mary Meeker 여사가 2007년 10월 17-19일 San Francisco에서 열렸던 Web 2.0 Summit에서 발표한 자료의 링크를올린다. 특히 이 자료 중에서 내 눈길을 끌었던 자료는 20장에 나와 있는 중국의 Internet Market Capitalization 자료이다…중국의 상장된 인터넷 기업의 총 market cap이 $50 Billion이란다…그리고 이 숫자는 최근 4년 동안 76%의 CAGR을 이룩한 숫자이다…QUITE IMPRESSIVE!!

How to be Silicon Valley

거의 한달에 한번씩 Silicon Valley에 오는거 같다. 오늘은 Oceans International의 고객사인 Clunix 사가 실리콘 밸리에서 BlueRun Ventures라는 venture capital회사와 미팅이 있어서 왔다. Supercomputing 관련 솔루션을 제공하는 8년된 베테랑 벤처 기업인 Clunix의 권대석 사장님과 김소헌 실장님이 Lake Tahoe에서 열린 SC2007 행사를 성공적으로 마친 후 한국 들어가기전에 잠시 들리셨다.
나는 실리콘 밸리를 사랑한다. 내가 99년 미국에 와서 처음으로 정착한 곳이 이 동네라서 그런지 모르겠지만, 하여튼 이 동네에 오면 마음이 편해진다. “필라델피아에서도 몇 개월 있다보면 정이 들겠지” 라는 생각을 하지만, 실리콘 밸리와 같은 느낌은 나지 않을거 같다..자, 그러면 실리콘 밸리가 뭐가 그렇게 특별날까? 많은 지역과 나라들이 실리콘 밸리의 dynamics (자본, 기술, 우수한 인력 등..)에 대해서 연구한 후에 각자의 지역에 replicate하려는 노력들을 많이 하였지만 아직까지 실리콘 밸리를 100% 복사하는데는 실패하였다. 뉴욕의 Silicon Alley, Texas의 Silicorn Valley, 한국의 대덕 연구 단지/테헤란 밸리…흉내는 내지만, 뭔가 많이 부족하다…What is it so special about Silicon Valley and how do we become one?
Y Combinator의 창업자인 Paul Graham의 블로그에서 이 질문에 대한 답을 찾았다. 바로 How to be Silicon Valley라는 글인데, 모두들 자세히 읽어보시라고 권장하고 싶다. 이 글을 읽으면 실리콘 밸리가 왜 실리콘 밸리이며, 전세계 IT 창업자들과 엔지니어들이 뼈를 묻고 싶어하는 곳인지 5% 정도는 이해할 수 있을것이다. 나도 꼭 졸업 후 이 동네에서 살고 싶다…Man, I love this place!

Could you reproduce Silicon Valley elsewhere, or is there something unique about it?It wouldn’t be surprising if it were hard to reproduce in other countries, because you couldn’t reproduce it in most of the US either. What does it take to make a silicon valley even here?What it takes is the right people. If you could get the right ten thousand people to move from Silicon Valley to Buffalo, Buffalo would become Silicon Valley. That’s a striking departure from the past. Up till a couple decades ago, geography was destiny for cities. All great cities were located on waterways, because cities made money by trade, and water was the only economical way to ship.Now you could make a great city anywhere, if you could get the right people to move there. So the question of how to make a silicon valley becomes: who are the right people, and how do you get them to move?

Two Types
I think you only need two kinds of people to create a technology hub: rich people and nerds. They’re the limiting reagents in the reaction that produces startups, because they’re the only ones present when startups get started. Everyone else will move.Observation bears this out: within the US, towns have become startup hubs if and only if they have both rich people and nerds. Few startups happen in Miami, for example, because although it’s full of rich people, it has few nerds. It’s not the kind of place nerds like.Whereas Pittsburgh has the opposite problem: plenty of nerds, but no rich people. The top US Computer Science departments are said to be MIT, Stanford, Berkeley, and Carnegie-Mellon. MIT yielded Route 128. Stanford and Berkeley yielded Silicon Valley. But Carnegie-Mellon? The record skips at that point. Lower down the list, the University of Washington yielded a high-tech community in Seattle, and the University of Texas at Austin yielded one in Austin. But what happened in Pittsburgh? And in Ithaca, home of Cornell, which is also high on the list?I grew up in Pittsburgh and went to college at Cornell, so I can answer for both. The weather is terrible, particularly in winter, and there’s no interesting old city to make up for it, as there is in Boston. Rich people don’t want to live in Pittsburgh or Ithaca. So while there are plenty of hackers who could start startups, there’s no one to invest in them.

Not Bureaucrats
Do you really need the rich people? Wouldn’t it work to have the government invest in the nerds? No, it would not. Startup investors are a distinct type of rich people. They tend to have a lot of experience themselves in the technology business. This (a) helps them pick the right startups, and (b) means they can supply advice and connections as well as money. And the fact that they have a personal stake in the outcome makes them really pay attention.Bureaucrats by their nature are the exact opposite sort of people from startup investors. The idea of them making startup investments is comic. It would be like mathematicians running Vogue– or perhaps more accurately, Vogue editors running a math journal. Though indeed, most things bureaucrats do, they do badly. We just don’t notice usually, because they only have to compete against other bureaucrats. But as startup investors they’d have to compete against pros with a great deal more experience and motivation.Even corporations that have in-house VC groups generally forbid them to make their own investment decisions. Most are only allowed to invest in deals where some reputable private VC firm is willing to act as lead investor.

Not Buildings
If you go to see Silicon Valley, what you’ll see are buildings. But it’s the people that make it Silicon Valley, not the buildings. I read occasionally about attempts to set up “technology parks” in other places, as if the active ingredient of Silicon Valley were the office space. An article about Sophia Antipolis bragged that companies there included Cisco, Compaq, IBM, NCR, and Nortel. Don’t the French realize these aren’t startups?Building office buildings for technology companies won’t get you a silicon valley, because the key stage in the life of a startup happens before they want that kind of space. The key stage is when they’re three guys operating out of an apartment. Wherever the startup is when it gets funded, it will stay. The defining quality of Silicon Valley is not that Intel or Apple or Google have offices there, but that they were started there.So if you want to reproduce Silicon Valley, what you need to reproduce is those two or three founders sitting around a kitchen table deciding to start a company. And to reproduce that you need those people.

Universities
The exciting thing is, all you need are the people. If you could attract a critical mass of nerds and investors to live somewhere, you could reproduce Silicon Valley. And both groups are highly mobile. They’ll go where life is good. So what makes a place good to them?What nerds like is other nerds. Smart people will go wherever other smart people are. And in particular, to great universities. In theory there could be other ways to attract them, but so far universities seem to be indispensable. Within the US, there are no technology hubs without first-rate universities– or at least, first-rate computer science departments.So if you want to make a silicon valley, you not only need a university, but one of the top handful in the world. It has to be good enough to act as a magnet, drawing the best people from thousands of miles away. And that means it has to stand up to existing magnets like MIT and Stanford.This sounds hard. Actually it might be easy. My professor friends, when they’re deciding where they’d like to work, consider one thing above all: the quality of the other faculty. What attracts professors is good colleagues. So if you managed to recruit, en masse, a significant number of the best young researchers, you could create a first-rate university from nothing overnight. And you could do that for surprisingly little. If you paid 200 people hiring bonuses of $3 million apiece, you could put together a faculty that would bear comparison with any in the world. And from that point the chain reaction would be self-sustaining. So whatever it costs to establish a mediocre university, for an additional half billion or so you could have a great one.

Personality
However, merely creating a new university would not be enough to start a silicon valley. The university is just the seed. It has to be planted in the right soil, or it won’t germinate. Plant it in the wrong place, and you just create Carnegie-Mellon.To spawn startups, your university has to be in a town that has attractions other than the university. It has to be a place where investors want to live, and students want to stay after they graduate.The two like much the same things, because most startup investors are nerds themselves. So what do nerds look for in a town? Their tastes aren’t completely different from other people’s, because a lot of the towns they like most in the US are also big tourist destinations: San Francisco, Boston, Seattle. But their tastes can’t be quite mainstream either, because they dislike other big tourist destinations, like New York, Los Angeles, and Las Vegas.There has been a lot written lately about the “creative class.” The thesis seems to be that as wealth derives increasingly from ideas, cities will prosper only if they attract those who have them. That is certainly true; in fact it was the basis of Amsterdam’s prosperity 400 years ago.A lot of nerd tastes they share with the creative class in general. For example, they like well-preserved old neighborhoods instead of cookie-cutter suburbs, and locally-owned shops and restaurants instead of national chains. Like the rest of the creative class, they want to live somewhere with personality.What exactly is personality? I think it’s the feeling that each building is the work of a distinct group of people. A town with personality is one that doesn’t feel mass-produced. So if you want to make a startup hub– or any town to attract the “creative class”– you probably have to ban large development projects. When a large tract has been developed by a single organization, you can always tell. Most towns with personality are old, but they don’t have to be. Old towns have two advantages: they’re denser, because they were laid out before cars, and they’re more varied, because they were built one building at a time. You could have both now. Just have building codes that ensure density, and ban large scale developments.A corollary is that you have to keep out the biggest developer of all: the government. A government that asks “How can we build a silicon valley?” has probably ensured failure by the way they framed the question. You don’t build a silicon valley; you let one grow.

Nerds
If you want to attract nerds, you need more than a town with personality. You need a town with the right personality. Nerds are a distinct subset of the creative class, with different tastes from the rest. You can see this most clearly in New York, which attracts a lot of creative people, but few nerds. What nerds like is the kind of town where people walk around smiling. This excludes LA, where no one walks at all, and also New York, where people walk, but not smiling. When I was in grad school in Boston, a friend came to visit from New York. On the subway back from the airport she asked “Why is everyone smiling?” I looked and they weren’t smiling. They just looked like they were compared to the facial expressions she was used to.If you’ve lived in New York, you know where these facial expressions come from. It’s the kind of place where your mind may be excited, but your body knows it’s having a bad time. People don’t so much enjoy living there as endure it for the sake of the excitement. And if you like certain kinds of excitement, New York is incomparable. It’s a hub of glamour, a magnet for all the shorter half-life isotopes of style and fame.Nerds don’t care about glamour, so to them the appeal of New York is a mystery. People who like New York will pay a fortune for a small, dark, noisy apartment in order to live in a town where the cool people are really cool. A nerd looks at that deal and sees only: pay a fortune for a small, dark, noisy apartment.Nerds will pay a premium to live in a town where the smart people are really smart, but you don’t have to pay as much for that. It’s supply and demand: glamour is popular, so you have to pay a lot for it.Most nerds like quieter pleasures. They like cafes instead of clubs; used bookshops instead of fashionable clothing shops; hiking instead of dancing; sunlight instead of tall buildings. A nerd’s idea of paradise is Berkeley or Boulder.

Youth
It’s the young nerds who start startups, so it’s those specifically the city has to appeal to. The startup hubs in the US are all young-feeling towns. This doesn’t mean they have to be new. Cambridge has the oldest town plan in America, but it feels young because it’s full of students.What you can’t have, if you want to create a silicon valley, is a large, existing population of stodgy people. It would be a waste of time to try to reverse the fortunes of a declining industrial town like Detroit or Philadelphia by trying to encourage startups. Those places have too much momentum in the wrong direction. You’re better off starting with a blank slate in the form of a small town. Or better still, if there’s a town young people already flock to, that one.The Bay Area was a magnet for the young and optimistic for decades before it was associated with technology. It was a place people went in search of something new. And so it became synonymous with California nuttiness. There’s still a lot of that there. If you wanted to start a new fad– a new way to focus one’s “energy,” for example, or a new category of things not to eat– the Bay Area would be the place to do it. But a place that tolerates oddness in the search for the new is exactly what you want in a startup hub, because economically that’s what startups are. Most good startup ideas seem a little crazy; if they were obviously good ideas, someone would have done them already.(How many people are going to want computers in their houses? What, another search engine?)That’s the connection between technology and liberalism. Without exception the high-tech cities in the US are also the most liberal. But it’s not because liberals are smarter that this is so. It’s because liberal cities tolerate odd ideas, and smart people by definition have odd ideas.Conversely, a town that gets praised for being “solid” or representing “traditional values” may be a fine place to live, but it’s never going to succeed as a startup hub. The 2004 presidential election, though a disaster in other respects, conveniently supplied us with a county-by-county map of such places. To attract the young, a town must have an intact center. In most American cities the center has been abandoned, and the growth, if any, is in the suburbs. Most American cities have been turned inside out. But none of the startup hubs has: not San Francisco, or Boston, or Seattle. They all have intact centers. My guess is that no city with a dead center could be turned into a startup hub. Young people don’t want to live in the suburbs.Within the US, the two cities I think could most easily be turned into new silicon valleys are Boulder and Portland. Both have the kind of effervescent feel that attracts the young. They’re each only a great university short of becoming a silicon valley, if they wanted to.

Time
A great university near an attractive town. Is that all it takes? That was all it took to make the original Silicon Valley. Silicon Valley traces its origins to William Shockley, one of the inventors of the transistor. He did the research that won him the Nobel Prize at Bell Labs, but when he started his own company in 1956 he moved to Palo Alto to do it. At the time that was an odd thing to do. Why did he? Because he had grown up there and remembered how nice it was. Now Palo Alto is suburbia, but then it was a charming college town– a charming college town with perfect weather and San Francisco only an hour away.The companies that rule Silicon Valley now are all descended in various ways from Shockley Semiconductor. Shockley was a difficult man, and in 1957 his top people– “the traitorous eight”– left to start a new company, Fairchild Semiconductor. Among them were Gordon Moore and Robert Noyce, who went on to found Intel, and Eugene Kleiner, who founded the VC firm Kleiner Perkins. Forty-two years later, Kleiner Perkins funded Google, and the partner responsible for the deal was John Doerr, who came to Silicon Valley in 1974 to work for Intel.So although a lot of the newest companies in Silicon Valley don’t make anything out of silicon, there always seem to be multiple links back to Shockley. There’s a lesson here: startups beget startups. People who work for startups start their own. People who get rich from startups fund new ones. I suspect this kind of organic growth is the only way to produce a startup hub, because it’s the only way to grow the expertise you need.That has two important implications. The first is that you need time to grow a silicon valley. The university you could create in a couple years, but the startup community around it has to grow organically. The cycle time is limited by the time it takes a company to succeed, which probably averages about five years.The other implication of the organic growth hypothesis is that you can’t be somewhat of a startup hub. You either have a self-sustaining chain reaction, or not. Observation confirms this too: cities either have a startup scene, or they don’t. There is no middle ground. Chicago has the third largest metropolitan area in America. As source of startups it’s negligible compared to Seattle, number 15.The good news is that the initial seed can be quite small. Shockley Semiconductor, though itself not very successful, was big enough. It brought a critical mass of experts in an important new technology together in a place they liked enough to stay.

Competing
Of course, a would-be silicon valley faces an obstacle the original one didn’t: it has to compete with Silicon Valley. Can that be done? Probably.One of Silicon Valley’s biggest advantages is its venture capital firms. This was not a factor in Shockley’s day, because VC funds didn’t exist. In fact, Shockley Semiconductor and Fairchild Semiconductor were not startups at all in our sense. They were subsidiaries– of Beckman Instruments and Fairchild Camera and Instrument respectively. Those companies were apparently willing to establish subsidiaries wherever the experts wanted to live.Venture investors, however, prefer to fund startups within an hour’s drive. For one, they’re more likely to notice startups nearby. But when they do notice startups in other towns they prefer them to move. They don’t want to have to travel to attend board meetings, and in any case the odds of succeeding are higher in a startup hub.The centralizing effect of venture firms is a double one: they cause startups to form around them, and those draw in more startups through acquisitions. And although the first may be weakening because it’s now so cheap to start some startups, the second seems as strong as ever. Three of the most admired “Web 2.0” companies were started outside the usual startup hubs, but two of them have already been reeled in through acquisitions.Such centralizing forces make it harder for new silicon valleys to get started. But by no means impossible. Ultimately power rests with the founders. A startup with the best people will beat one with funding from famous VCs, and a startup that was sufficiently successful would never have to move. So a town that could exert enough pull over the right people could resist and perhaps even surpass Silicon Valley.For all its power, Silicon Valley has a great weakness: the paradise Shockley found in 1956 is now one giant parking lot. San Francisco and Berkeley are great, but they’re forty miles away. Silicon Valley proper is soul-crushing suburban sprawl. It has fabulous weather, which makes it significantly better than the soul-crushing sprawl of most other American cities. But a competitor that managed to avoid sprawl would have real leverage. All a city needs is to be the kind of place the next traitorous eight look at and say “I want to stay here,” and that would be enough to get the chain reaction started.

Shake ‘N Bake team dinner

다음 주 목요일까지 우리 learning team은 MGMT654 숙제로 Toyota와 McKinsey 케이스를 분석해서 3장짜리 리포트를 제출해야 한다. 자동차 제조와 컨설팅 서비스 제공이라는 매우 상이한 industry에서의 leader인 두 회사가 가지고 있는 자신만의 competitive strategy는 무엇일까? 매우 재미있는 케이스였는데 그 내용을 여기에다가 다 적으려니, 책 한권 분량의 글이 나올거 같아서 일단 생략한다. 오후 5시에 만나서 우리 아파트 1층의 미팅 룸에서 약 2시간 정도 케이스 분석을 해보니, 그래도 상당히 재미있는 의견과 결론이 나왔다. Brian만 빼고는 우리 팀이 다 모였다. 그 전날 Taco Bell에서 음식을 잘못 먹어서 하루 종일 화장실만 왔다갔다 하고 있다고 한다.

7시에 미팅을 끝내고, 몇 주 전부터 계획하고 있었던 팀 저녁을 먹으러 다덜 5층 우리집으로 올라왔다. 그냥 밖에서 저녁을 먹어도 되는데, 시끄럽기도 하고 한국 음식에 대해서 잘 모르는 팀메이트들한테 한국 홍보도 하고 지현이도 소개해 줄 겸 LA 갈비, 잡채, 베트남 롤, 몇 가지 반찬을 준비했는데 역시 반응은 굉장히 좋았다. 음식 준비한다고 와이프가 고생을 많이 하였는데, 내가 2년 동안 같이 지낼 팀원들과 인사도 할 수 있었고, 나 또한 learning team과 더 친해 질 수 있었던 좋은 기회였다. 아직도 집에 들어가면 거실에서 LA 갈비 냄새가 나는거 같다.