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Governor Smackdown: Watch the head honchos of the two hottest states for big business face off

June 11, 2014, 7:46 PM UTC

Governor Jerry Brown won’t claim credit for Steve Jobs, but he isn’t modest about California’s business chops. This year, besides leading the country in GDP, the state is home to more Fortune 500 companies (54) than any other—except New York, which it ties. But California isn’t the only state with the right to brag. Recent years have seen a dramatic shakeup in the geography of the country’s largest businesses. Another big gainer: Texas, with its booming energy sector. The Lone Star State, hardly a business mecca two decades ago, now hosts 52 Fortune 500 companies. Enough to give the country’s longstanding economic hubs a run for their money.

The top states for the Fortune 500

Over the last 20 years, the total market cap of California’s Fortune 500 companies soared from $445 billion (about half of New York’s valuation at the time) to $3.2 trillion in 2013—28% more than New York’s today, and easily more than any other state in the country. Texas, meanwhile, can claim the title of fastest growing. Texas added no fewer than 15 Fortune 500 companies in the past two decades. (That’s more big-list companies than Arizona, Nevada and Kentucky have combined.)

How do they do it? In California, it hasn’t hurt that the state has seen more than its fair share of business genius over the years: Jobs, Mark Zuckerberg, and the Google guys to name a few. But perhaps just as important, the state has shown an unparalleled flair for reinvention. In 1995, its bread and butter was manufacturing and financial services. Since then, it has added 20 new companies to the 500 list in the technology and biotech sectors alone. (See our story in the current issue of the magazine, The Fortune 500’s 50-state shuffle.) Aspiring tech hubs around the world can only dream of creating their own Silicon Valleys. Over the past 20 years, the state lost 31 Fortune 500 companies, but added back 39. Schumpeter would be proud.

Texas, meanwhile, has benefited from its ties to industries that are taking off. A national energy hub, the state is home to three out of the top 10 Fortune 500 companies—Exxon Mobil (2), Phillips 66 (6), and Valero Energy (10)—more than any other. Texas’s 52 brand-namers also are the best in the union in terms of sales, collectively netting a whopping $1.6 trillion last year.

Credit their state economic policies or the sunny climes, California and Texas are doing something right. In this exclusive Fortune video, watch these two very different governors—one Democrat and one Republican—sound off on how they got results.

Where’s Andrew Cuomo in this brag-a-thon? The New York Governor declined to respond to repeated requests for comment. Hmm. Wonder why.