Good weather, close to but not in dense urban area, close to major airports, very diverse population (high level tech workers are a diverse bunch). Close to major educational institutions. Enlightened populace (relatively). Plus just a density of technical talent is a self-fulfilling prophecy.
That's mostly true. California has really good state funded universities in addition to really good private universities plus national laboratories pulling in brain power. As a previous poster mentioned, Stanford being in Palo Alto is one of the big reasons silicon valley is where it is. Back when things got rolling, Santa Clara was relatively cheap, buildable land close to Stanford.
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