"As recently as the late 1980s, Texas was still mostly an oil state," said Jani Byrne, director of Strategic Ventures and partner in Venture Capital Group.
Austin was known for government and university jobs. Cattle, cotton and oil were the big moneymakers here.
Then oil prices dropped, and local and state leaders decided something must be done. Austin decided to make technology the centerpiece of its economy, Byrne said.
This coincided with an renewed national interest in science, as it looked like Japan was going to overtake the U.S. as the big player in research and technology, City of Austin representative Jim Butler said.
Silicon Valley didn't just happen; there were contributing factors and environmental conditions that made Silicon Valley blossom when and where it did.
So Austin studied those factors and attempted to put that infrastructure in place.
Austin already had much of the raw materials. AMD, IBM and Freescale (then a division of Motorola) had been here for years. The city had warm weather and was affordable. Austin's music scene had already produced Willie Nelson and Stevie Ray Vaughan, to name just two.
Add government efforts (incentives, no income tax), education (The University of Texas, St. Edward's University, Austin Community College) and the strength of the technology market in the 1990s and 2000s, among other factors. Stir vigorously, and you have the modern Austin.
Austin filed close to 3,500 patents last year, said Susan Davenport, senior vice president of global technology strategies with the Austin Chamber of Commerce.
The city's tech companies employ roughly 100,000 people—that's close to 12 percent of the workforce, she said.
Butler said the music, art and interactive industries grew by 25 percent from 2005 to 2010; The overall economy grew 10 percent.
"We take technology pretty seriously here," she said.
Representatives from government, business and the creative class discussed the modern Austin and how it plans to keep tech thriving during "How the Austin Region Supports the Technology Companies" on March 13.
The panel, moderated by Davenport, included: Byrne; Butler; Gary Cadenhead, Director of the Master of Science and Technology Commercialization Program; and Paul Pellman, CEO of Adometry Inc.
The Austin origin story, besides being a success story and a nice roundup of what people like about the city, shows that the community is willing to invest time and money to foster its technical and creative economies.
Butler said the city zoned its old airport for mixed use and saved some of the old hangars and office space for the Austin Film Society. Now TV shows and movies film there.
So how will Austin continue to grow?
The process starts with the strength of its education system, panelists said. Local universities are churning out entrepreneurs at the undergraduate and graduate levels. Bob Metcalfe, inventor of Ethernet and founder of 3Com, teaches at UT.
The government continues to offer incentives through its Texas Enterprise Fund and enters into agreements with companies to grow Austin's (and other Texas cities') labor force. In the last few days, Apple announced it plans to add 3,600 jobs here.
The city is home to technology incubators, which help grow new companies. It offers networking opportunities, such as the chamber's Austin Innovators and Entrepreneur series.
Private companies help out as well. IBM buys a lot of startups and incubates others through its IBM Smartcamp, an event aimed at identifying early-stage entrepreneurs who are developing business ventures that align with the company's vision, according to its website.
Local angel networks work to provide essential funding for startups.
Lastly, the panel determined that the eclectic, vibrant Austin, of "Keep Austin Weird" fame, is its own best advertisement to lure techies, creative folks, startups and everybody else.
"You can't measure it, but it's usually an important reason for why people come here," Butler said. "We very much support it."