Business

An Analysis of San Francisco’s Startups Shows Where the ‘Real’ Silicon Valley is

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(The Verge) – There’s a new map of entrepreneurial hotspots in California, and it’s here to show you where the “real” Silicon Valley is. By coding startup characteristics and looking out companies’ success six years down the line, researchers at MIT say that they were able to map out exactly which areas of California have the highest entrepreneurial quality, as well as identify which characteristics tend to typify companies that “make it big.”

“There’s a lot of interest in entrepreneurship” in the US, says Scott Stern, an economist at MIT and a co-author of the study published in Science today. “And one of the key implications of our study is that we started disentangling the difference between simply starting a new business, and the kind of new businesses that have the potential for significant job creation and growth.”

Based on the researchers’ model, the best indicators of entrepreneurial quality were characteristics like a company’s name. Companies that have short names containing words associated with technology tend to grow better. Businesses that aren’t named after their founders also tend to do better over time. In addition, the model showed that corporations are six times more likely to do well compared with companies that aren’t incorporated. The same goes for trademarks; companies with trademarks are five times more likely to grow than nontrademarked businesses. Patents are also important indicators of entrepreneurial quality, Stern says. “We basically combined the novel use of getting at the details from a business registration with a predictive algorithm.”

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