A really good book to read on the subject is AnnaLee Saxenian's Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (http://www.amazon.com/Regional-Advantage-Culture-Competition...). It discusses why Route 128 failed while Silicon Valley flourished. A major part is that under California law, non-competes are not enforceable in California. As people moved freely between competing companies, their ideas, information, and best practices traveled with them. The diffusion of good ideas gave the region as a whole a competitive edge.

Timothy J. Sturgeon’s "How Silicon Valley Came to Be" covers this as well:

   The fact that the San Francisco Bay Area’s electronics   industry 
   began close to the turn of the Twentieth Century should lay to 
   rest the notion that industrialization and urbanization on the 
   scale of Silicon Valley can be quickly induced in other areas. 
   Silicon Valley is nearly 100 years old. 
   It grew out of a historically and geographically specific 
   context that cannot be recreated. The lesson for planners 
   and economic developers is to focus on long-term, not short-term    
   developmental trajectories. Silicon Valley was the fastest 
   growing region in the United States during the late 1970s and 
   early 1980s; but that growth came out of a place, not a technology. 
   Silicon Valley’s development is intimately entwined with the long 
   history of industrialization and innovation in the larger San   
   Francisco Bay Area.

See http://web.mit.edu/ipc/publications/pdf/00-014.pdf I had blogged about this in 2008 at http://www.skmurphy.com/blog/2008/11/05/steve-blank-on-secre...

Three good books on how Silicon Valley came to be

"Understanding Silicon Valley" by Kenney http://www.amazon.com/Understanding-Silicon-Valley-Entrepren...

"The Silicon Valley Edge" by Lee, Miller, Hancock, and Rowen http://www.amazon.com/Silicon-Valley-Edge-Innovation-Entrepr...

"Regional Advantage" Saxenian http://www.amazon.com/Regional-Advantage-Culture-Competition...

See also this thread: http://news.ycombinator.com/item?id=908026

My argument is not that Silicon Valley was inevitable but that it takes a long time to grow an entrepreneurial region.

It's not misleading in raising the bar to areas/regions that want to be the next Silicon Valley and don't have an entrepreneurial substrate and appropriate ancillary services (e.g. attorneys, accountants, banks, that understand startups and entrepreneurs) to form a viable ecosystem.

I don't think the 100 years is misleading, if it had happened somewhere else (e.g. Boston) I think it would still have involved the same antecedents: major universities, risk capital, electronics firms...It may also have been important that it was primarily agricultural land that was pushed aside, if there had been other active industries they may have preferentially competed for the same talent.

Three good books I rely on for this analysis are

"Understanding Silicon Valley" by Kenney http://www.amazon.com/Understanding-Silicon-Valley-Entrepren...

"The Silicon Valley Edge" by Lee, Miller, Hancock, and Rowen http://www.amazon.com/Silicon-Valley-Edge-Innovation-Entrepr...

"Regional Advantage" Saxenian http://www.amazon.com/Regional-Advantage-Culture-Competition...

Face to face communication is still the best. One of the reasons that Silicon Valley works so well is that it is so small. Many industries develop from hubs and it's not surprising that web technology companies would be any different from automobiles (Detroit), insurance (London and Hartford CT), or movies (Hollywood and Bollywood (Mumbai)) to name three other examples.

For some background on Silicon Valley see

Anna Lee Saxenian's "Regional Advantage: Culture and Competition in Silicon Valley and Route 128" http://www.amazon.com/Regional-Advantage-Culture-Competition...

"Clusters and the New Economics of Competition" by Michael E. Porter in the November-December 1998 Harvard Business Review http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/...