Factors That Drive Innovation in Tech Hubs

I am speaking four times at events during SXSW about the history of Austin tech. Our community has grown from the 25th largest city in the United States to the 10th largest city since I moved here in 1991. That is a lot of growth and most of that is because the city morphed from a university/government town to becoming a leading innovation center / tech hub in just a few decades. If you have things to add, please leave a comment or send me a message (I am always thrilled to learn new points of view that I can add to my speech). The Ten Pillars of Austin's Tech Success: 1.     The University of Texas at Austin and Dr. George Kozmetsky – Beginning in the 1970s the stage was set to attract talent, research and innovation. The combined effort of UT, the city, state, and the local business community was intentional to create a diverse tech business community in Austin. 2.     Central Location in the USA and (Mostly) Good Weather- Accessible and strategically positioned for business, easy access to travel, and a good climate made Austin a great place to live. 3.     Affordability – Historically, Austin offered a lower cost of living and doing business compared to other tech hubs. 4.     Connected/Networked Business and Tech Community - From the very early days our tech scene, business and tech leaders were active in community and their willingness to mentor young entrepreneurs was paramount to Austin’s success. 5.     Robust Business Ecosystem for Large Companies and Startups - The Chamber of Commerce and Opportunity Austin worked to promote/market Austin as a place for Big Tech to open offices and relocate corporate headquarters. And organizations like Austin Technology Incubator, Capital Factory, etc… created support for the growth of entrepreneurship and startups. 6.     Artsy Culture, Music Scene, and the "Keep Austin Weird" Vibe – Austin had a unique cultural identity that attracted diverse talent and made the city a welcoming place for everyone. 7.     Young Educated Workforce – For decades Austin has had a demographic conducive to innovation and startups. These young and ambitious tech workers are from both our local universities (UT, St Eds, ACC, etc…) and the top talent that relocated to Austin. 8.     Angel Investors/VC Capital and Tech Focused Service Providers– Beginning in the late 1990s and 2000s the essential funding that fuels the startup and growth phases of companies became available locally.  Additionally, the seasoned lawyers, accountants, bankers, etc... who help advise tech companies are present in Austin and help drive success. 9.     Government and Policy Support - Pro-business policies, low business taxes, no personal income tax, and incentives that attract and retain companies have historically made Austin a great place to do business. 10.  SXSW – The SXSW Interactive Conference helped highlight Austin on the international stage by brining the world to Texas beginning in the 1990s and continuing through today.

The growth of Germany’s Saxony region is surprising to many who associate Germany with automotive innovation, not ASIC invention. As Europe’s largest microelectronics hub and one of the top FIVE global semiconductor regions, this cornerstone of innovation has a global impact today on groundbreaking sectors like quantum computing, photonics, and process engineering. To understand this rise, we have to trace its roots back more than a century. Saxony’s foundation in machinery production fostered a culture of precision engineering for automakers, but Post-WWII, investments in research and industrial redevelopment positioned the region at the center of Europe’s burgeoning electronics industry. By the 70’s, leaders like Siemens and  Infineon Technologies were bringing cutting-edge electronics expertise and attracting top talent. The establishment of the Fraunhofer Society’s institutes – including Fraunhofer IIS – established a strong foundation of R&D, and collaboration with leading institutions like the Technische Universität Dresden strengthened Saxony’s engineering talent pipeline. The country’s official launch of the “Silicon Saxony” brand in 2001 cemented its role as a leading global tech hub, drawing further investment from the EU and attracting even more talent. But government intervention doesn’t set this region apart, it’s that DEEPLY ingrained culture of collaboration. Unlike tech hubs that lean on competition, global giants and innovative startups here thrive in tightly knit clusters, sharing knowledge and resources. For example, a recent partnership between X-FAB and SMART Photonics will usher in new production processes that will buoy growth throughout Europe, giving the continent a real chance to compete on the global stage in AI and other sectors. As XFab’s CEO Rudi De Winter put it, “Through heterogeneous integration, we’re combining the best of two worlds, which will allow our customers to develop innovative solutions addressing the societal challenges of our times. It’s a great opportunity to build a strong European value chain.” The area’s ecosystem has become such a magnet, that it has propagated many startups in Germany that COULD have explored other countries. Those pushing boundaries in quantum compute, like planqc in Munich, and redefining semiconductor materials, like Black Semiconductor in Aachen, benefit from the cultural roots that reach Dresden. Furthermore, reforms to Germany’s immigration laws have made it easier to attract brilliant foreign engineers, like faster processing of student visas and work permits and allowing foreigners to take language tests in their native language. This is a clear blueprint for leaders of other regions and demonstrates how strategic investment, a collaborative culture, and a commitment to self-reflection and can turn a region that once held a strict, defined view of its future into a global powerhouse for change and innovation. #semiconductorindustry #semiconductors #siliconsaxony

I spent close to 10 years in Utah and saw firsthand how Silicon Slopes went from local buzz to a nationally recognized tech hub. Now, back in Arizona, I’m working to bring that same kind of momentum here through Silicon Oasis. Utah’s success and exits didn’t happen by accident. Here are the 3 biggest things I believe made the difference: 1. Founder-First Mentality – There was a deep culture of supporting local founders, not just big names. Community events, mentorship, and media all centered around lifting up early-stage builders. 2. Unifying Infrastructure – Silicon Slopes created a home base for the ecosystem. It wasn’t just a name—it was a platform that hosted events, shared stories, rallied partners, and made the whole thing feel cohesive. 3. Collaboration Over Competition – From VCs to universities to city leaders, people worked together. That alignment created a rising tide for everyone. Arizona has its own unique strengths. But if we take these lessons and apply them with intention, we can absolutely become a premier innovation hub. That’s the mission behind Silicon Oasis—and we’re just getting started. Let’s build this together. Data from Ilya Strebulaev #SiliconOasis #ArizonaTech #StartupEcosystem #VentureCapital #FoundersFirst

Across the large body of research on innovation and collective intelligence, the most robust factors are interpersonal trust, flat hierarchies, and diverse teams. That last spans a huge range of dimensions from race and gender to expertise and culture to simple lived experience. A new paper introduces a new metric: “Surname Diversity, Social Ties and Innovation”.https://lnkd.in/gzm2jHGx The finding isn’t that a greater diversity of last names somehow drives innovation, per se, but rather that “lower surname diversity indicates more concentrated social interactions among like-minded people”. In otherwise similar neighboring counties, many fewer family names in one (easily measured as entropy) suggests a much more homogenous population with fewer opportunities for the frictions that produce the sparks of innovation. Sure enough, the researchers found that “surname diversity increases both the quantity and quality of innovation”. I like this paper; surname diversity is a very creative measure of community diversity. However, there are some obvious confounding covariates (e.g. migration rates and industry diversity). The authors control for this using an instrumental variable method, which is my least favored natural experiment methodology. None-the-less, within this ever growing body of research, here is another strong argument for leaning harder into the tension between trust and diversity.

🌍 Kenya: Africa’s Leading Investment Destination in Tech! 🌍 Despite challenges with corruption, infrastructure, and social issues, Kenya has claimed the #1 spot as Africa’s top tech investment destination in 2023, attracting more startup funding than any other African nation. Kenya’s ability to innovate and thrive, even amid adversity, has made it the go-to market for global investors. So, what makes Kenya so magnetic? What’s Driving Kenya’s #1 Ranking in Africa? ✅ Vibrant, Resilient Ecosystem Nairobi, known as Africa’s “Silicon Savannah,” is home to more than 200 tech hubs and incubators—an environment perfect for growth and collaboration. The result? Kenyan startups attract the most investment on the continent, outperforming even Africa’s biggest economies (source: ITWeb Africa). ✅ Skilled, Growing Talent Pool With over 300,000 tech graduates entering the workforce annually, Kenya’s young, educated population is powering its tech boom. This talent is behind groundbreaking fintech, agri-tech, and e-commerce innovations that make Kenya a top choice for global investors (source: World Bank). ✅ Entrepreneurial Spirit Kenya’s business ecosystem is packed with local innovators solving practical, everyday challenges. This strong culture of entrepreneurship has driven Kenya’s tech scene forward, with more than 30% of its workforce involved in entrepreneurial ventures (source: Briter Bridges). ✅ Strategic Gateway to East Africa Positioned as a regional hub, Kenya provides businesses with unmatched access to East African markets, making it ideal for growth across Africa. 💡 My Take: Kenya’s #1 ranking is proof that where there is resilience, a skilled workforce, and a culture of innovation, success follows. Other countries looking to attract investment could benefit from studying Kenya’s approach! What can other nations learn from Kenya’s ascent to Africa’s top spot? 👇 Let’s discuss! #KenyaNo1 #InvestInKenya #AfricaTech #KenyaInnovation

I've spent the last 4 days exploring the Israeli tech ecosystem... And to say the least, I’m blown away. Thanks to TAMID Group, I've had the privilege of visiting nearly 20 Israeli startups, VCs, and accelerators with an incredible group of people. There’s no way that I’ll able to summarize all I’ve learned in 1 post, but I’ll start with some of the lessons I’ve learned along the way. 1) Innovation can thrive anywhere: The transformation of Be'er Sheva (a town that 10 years ago had zero high tech scene) into an impressive innovation district with over 300 companies big and small, shows that great ideas can flourish in unexpected places with the right vision, investment, and coordinated effort 2) Collaboration breeds success: One common thread among all the companies I visited was their emphasis on collaboration. Whether it's partnerships with marketing platforms or establishing innovation hubs, working together has been key to their success. 3) Diversity fuels innovation: From the Israel Defense Forces’ commitment to diverse recruitment to Tech7 Venture Studio’s efforts in empowering young professionals, diversity in talent is a driving force behind groundbreaking ideas and solutions. 4) Empowering Aspiring Entrepreneurs: Organizations like Yazamut 360° play a pivotal role in nurturing young minds and helping them discover their potential as entrepreneurs. Investing in the next generation is essential for a sustainable innovation ecosystem. 5) Adaptability is key: The ever-changing landscape of the tech industry demands adaptability. OurCrowd's diversified approach to investments and Tech7 Venture Studio's support in adapting to global challenges showcase the importance of staying flexible. 6) Fostering a culture of excellence: Companies like OrCam and Lightricks prioritize investing in their people and maintaining a positive work culture. This not only attracts top talent but also fosters loyalty and dedication. 7) Global thinking for Israeli founders: Israeli founders are now increasingly focused on global partnerships and finding product-market fit in diverse regions. Expanding beyond local markets is vital for scaling success. Visiting these innovative companies and meeting the brilliant minds behind them was truly unlike anything I've ever done, and I'm excited to share more with you about the journey soon! And a big thank you to all the orgs we've visited, our organizers, and my fellow participants 💗 Have you been to Israel? Seen inside of the Israeli tech ecosystem or been a part of it? #daniellefarage #danielletravels #startups #israelinnovation #futureofwork #innovation #vc #investing

As I mentioned in my last post, I just completed a global GenAI tour, engaging with colleagues and clients to share opportunities, challenges and risks and in turn, got a decent sense of the current state of GenAI adoption worldwide. The diversity in strategies and the pace of change are remarkable. Many countries are vying to become GenAI hubs, but not all will take the lead. Here are the key factors shaping the geographical leaders in this space: 1. AI Infrastructure & Compute Access: Local, scalable infrastructure is crucial. Access to chips and energy will be critical for sustained growth 2. National Policy & Regulatory Environment: A balanced AI policy fosters confidence and investment, distinguishing impactful countries. 3. Talent & Research Ecosystem: Adapting educational systems to evolving AI skill sets and fostering partnerships with universities and trade groups is essential. 4. Enterprise & Economic Readiness: Digitally mature economies with agile enterprises can integrate GenAI effectively, gaining a competitive edge. 5. Cultural, Linguistic & Societal Fit: AI must align with local values. Widespread AI literacy and cultural acceptance are key to inclusive adoption.

🚀 The Midwest Isn’t Emerging—It’s Mispriced. Michigan Is the Proof. As I fly from San Francisco to Detroit—and my friend Dug Song heads from Detroit to Indianapolis for the Global Entrepreneurship Network Congress, where he’ll engage with Brad Feld, Mark Cuban, Scott Dorsey, and others—I’ve been reflecting on a broader question: 💡 What conditions actually drive innovation ecosystems forward? Having helped build ecosystems from the Middle East to the Nordics, and now researching innovation and private markets with Professor David Brophy at the University of Michigan - Stephen M. Ross School of Business, I’ve explored this from both a practitioner’s and analyst’s lens. And one thing is clear: Michigan isn’t a blank slate. It’s structurally advantaged—and chronically undercapitalized. Yes, it’s still emerging—but the foundation is unusually strong. ✅ What already exists: 🏛️ Research Power: U-M ($1.8B+ in annual R&D), Michigan State University, and Wayne State University anchor a dense corridor—part of a 90+ college network statewide. 🦄 Unicorn Output: 40+ unicorns trace back to Michigan alumni—Duo Security, stockX, Llamasoft, Workit Health. 🏢 Enterprise Density: Global leaders in auto, healthcare, manufacturing, and defense—ideal for B2B innovation. 🌉 Infrastructure: Detroit-Windsor is one of North America’s busiest trade corridors. 👩💻 Talent + Cost Advantage: Technical talent at lower burn and higher retention than coastal hubs. 🌆 Scale: Detroit metro >4M—comparable to top-tier startup cities. 🏗️ Capacity for Growth: Affordable housing, redevelopment-ready parcels, cultural fabric ready to be reactivated. 🤝 Civic Momentum: Institutions like The Kresge Foundation and Wilson Jr. Foundation are laying deep roots. Dan Gilbert has played a central role in reimagining downtown as a vibrant innovation hub. 🌀 Symbolic Signal: Even the name of Ann Arbor–based Renaissance Venture Capital quietly affirms the renewal already underway. To be clear: I’m not affiliated with any of these efforts. I’m simply observing—independently and analytically—what the data and context reveal. Michigan doesn’t need to be transformed. It needs to be recognized. And it’s not alone. Much of Middle America shares this pattern: 💪 Structural strength. 💸 Missing capital. The opportunity isn’t to create ecosystems from scratch— It’s to activate the ones that are ready. It’s energizing. And I’m excited to be here. ✨ Skylar Bennethum Christine A. Cory Tincher Rob Jandernoa Song Foundation Kelly Kang Khalilah Burt Gaston Chris Rizik Dave McClure Hazel Reyna Shibu Ryan J. Munder Wassim Mourtada Anurag Chandra David Zhou Winter Mead Asilica Redshift Capital

Europe has the talent, the universities, and the capital to rival Silicon Valley - yet I'm constantly asked why it doesn't have an equivalent? The answer isn’t a lack of innovation but rather how ecosystems are structured. Europe’s #startup hubs — London, Paris, Berlin, Amsterdam — are globally competitive, yet they remain fragmented and generalist rather than developing deep specializations. Research from Harvard’s Michael Porter (The Competitive Advantage of Nations) shows that industry clustering leads to stronger economic growth. This is exactly how Silicon Valley emerged: not as a "tech hub," but as the world’s best at scaling software-driven companies. Europe has also made incredible progress in venture capital growth—$91 billion in 2021, according to Atomico — but investors remain cautious, favoring revenue over risk. With the average U.S. Series A being twice the size of its European counterpart (PitchBook, 2023), European startups often struggle to scale at the same pace as their American rivals. The good news? Change is happening. Estonia’s e-Residency program, France’s La French Tech, and the #EU’s Digital Single Market are laying the groundwork for a stronger, more unified startup environment. How do we develop that further, economically? ✅ Specialize—each region should focus on what it does best. ✅ Encourage higher-risk, high-reward investment. ✅ Streamline regulations to make scaling across borders frictionless. ✅ Foster a culture where failure is seen as a stepping stone, not an endpoint. #Europe can build a global startup powerhouse. The question is no longer if, but when. What steps should policymakers and investors take next to accelerate this transformation? 👉 Read the full analysis here:

I wrote bits about Cambridge and it's role on the innovation map of the world, but there is one factor that is commonly missed. This is not a Sillicon Valley-bis. Let's look at 10 facts from the WIRED article: - The "Cambridge Phenomenon" is the thriving technology cluster in the Cambridge region, which has been a hub for innovation for over 40 years. - The region is home to over 5,000 high-tech firms, employing more than 60,000 people, and generating £21 billion in annual turnover as of 2023. - Cambridge is known for its prolific generation of patents, with 258.5 patent applications per 100,000 residents, surpassing other UK cities. - Cambridge University plays a central role in the region's innovation ecosystem, with over 213 startups and 178 spin-outs associated with the university. - The proximity to London and the city's reputation for being "open-minded" make it attractive for recruiting talent from various backgrounds. - The region excels in commercializing academic work, turning research into successful businesses. - Initiatives like Cambridge Consultants, the Mott Report of 1969, Cambridge Science Park, and the St John’s Innovation Centre have played a significant role in fostering collaboration between academia and industry. - Cambridge Enterprise, established by the University, helps commercialize research, with a high five-year survival rate for portfolio businesses. - Researchers in Cambridge enjoy autonomy, allowing them to become entrepreneurs, which has led to numerous spin-outs. - The availability of funding options, including local VCs and angel groups, contributes to the region's innovation and growth. So what is NOT in the list? Even by observing the set of companies mentioned in the article, you could see it easily: Cambridge is not a B2B SaaS kingdom, nor a house of a customer facing, well known brands. The whole ecosystem orients itself towards deeper side of tech, having a crazy amount of semiconductor or biotech companies. This is great for the city, and less so for the country. Let me explain why: Through current AI tech wave you can see that companies having massive brands and distribution channels are the ones the most rapidly gaining out of AI revolution. Microsoft, Google, Amazon - you name it. While Cambridge as a city is able to maintain it's idyllic character through concentration of a very specialized tech, that by definition focuses on University graduates, it does not produce similarly sized behemoths. Arm, company with a special place in my heart, has a workforce of 6-7k people for the last years. But if UK as a whole wants to see its role in tech being improved, it need's to start producing Salesforce/Snap/Bytedance level companies that can amass enough working capital and workforce to successfully play in the big league. Or am I wrong? Source: https://lnkd.in/eNMzujuS? #cambridge