The Hot New Tech Cities

2. At least one megasuccess story. Instead of casting a shadow that eclipses smaller enterprises, a brand name not only draws world-class talent to a tech city but generates a stream of apostates who leave to start their own companies. This certainly has been the case in Seattle, where Microsoft has become the (reluctant) spawner of a slew of spinoffs known locally as Baby Bills. ""Half the people working in software here don't work for Microsoft,'' says Susannah Malarkey of Tech Alliance, a regional business group headed by none other than Bill Gates II, the dad of that guy starring in video depositions. So numerous are these new companies that even Wilson, Sonsini, the Microsoft-hating Silicon Valley law firm, has just opened a Seattle office to serve them.

Internationally, businesses seem to set their sights higher when their region is host to a company that kicks global butt. In Helsinki, for instance, the worldwide fame of Nokia ""did a lot for [our] self-esteem,'' says Linus Torvalds, a 28-year-old Finnish programmer who himself has become a national treasure by creating the Linux operating system while at the University of Helsinki.

3. High-tech talent. Whether they come from existing companies, a university or, in the case of Tel Aviv, the Army's Central Unit for Data Processing, smart new hires are like oxygen to high-tech firms. Only places with a rich talent pool can claim to be a tech city. Case in point: after years of bragging about how even a remote location like the so-called Silicon Prairie in North Sioux City, S.D., could incubate a world-class computer manufacturer, mighty Gateway threw up its hands and relocated its administrative headquarters to San Diego. ""We simply exhausted the Sioux City work force,'' explains vice president John Heubusch. On the other hand, once talent reaches critical mass in a city, young fortune seekers flock there, secure in the knowledge that they can choose from a range of existing companies and hot start-ups.

4. Venture capital. Austin, Boston and other towns may not have a Sand Hill Road, where superstar Silicon Valley venture capitalists sift through business plans seeking the next eBay, but they're starting to catch up. Still, it's hard to get inexperienced lenders to understand the high-risk, high-reward Valley ethic. Salt Lake City, for instance, has yet to shake many dollars from the pockets of the wealthy Mormons who dominate the state's financial scene. ""People in Utah tend to invest in what they know and trust, such as real estate, oil and mining,'' says Lynn Gordon Butterfield, COO of a nonprofit group set up to develop Utah's venture-capital system.

Overseas, the task is even tougher. Big money in London, Paris and Tokyo just isn't used to funding nerds in sneakers. But consider the rewards: if you sell a country's traditionally closed banking system on the upside of edgy high-tech companies, you're halfway home to rehabilitating the mind-set of an entire national economy. This is a lesson Israel has learned well: big venture-capital funds have helped seed a start-up culture that has begun to wean the country from its traditional unionized, state-run, kibbutz-based values.

5. Infrastructure. Star high-tech execs and programmers require a huge supporting cast that few places can provide. Bangalore may be the jewel of India's high-tech crown, but, says Saxenian after a recent visit, ""there are still cows in the street and the phone lines break down every couple of hours.'' But plenty of other places have suitable underpinnings for cyberindustry. Boston has at least two law firms specializing in high tech; Austin is loaded with Web designers, and Champaign-Urbana is rich in high-speed fiber for Internet connections. Even a low-key tech city like Nashua, N.H., claims a support system: ""We have lawyers, banking people, a printing industry and business services that are starting to focus on high tech,'' says Bob Thomason, head of a local executive-recruitment firm.