Silicon Valley vs The Rest of the World (or not)

Posted on February 27, 2007. Filed under: Uncategorized |

I’ve not bloged in a couple of weeks now – mainly because I’ve now completely lost any sense of time and the rate at which it passes/flies by. So a lot has gone on since I last blogged so I’m starting this post with the intention of doing another post right after it (hopefully today but we’ll see). Before I start though I want to point out two awesome resources you should check out:

  • <a href=”http://news.ycombinator.com”>news.ycombinator.com</a&gt; – This is essentially a digg/reddit type site but only for stories related to startups and the web. This is a good way to quickly find out what the most interesting web stories of the day are and Paul Graham also has plans to turn this into a virtual “recruiting” ground for his future YC investments – you can read more about that <a href=”http://ycombinator.com/announcingnews.html”>here</a&gt;
  • <a href=”http://startupping.com”>startupping</a&gt; – An online resource for web entrepreneurs, includes wiki’s but what I find the most useful is the forum. This needed setting up for a while (perhaps even a social network built on top of it?) and I’m glad Mark Fletcher has been the one to do it.

Ok so the title of this post probably gives away what I want to write about. After Kul’s article for the BBC there’s been a lot of talk of the Silicon Valley vs the rest of the world – some people arguing no one can replicate SV and others saying it doesn’t have a strangehold on innovation. Saul Klein wrote an interesting post here about the growth of innovation in Europe and there have been a number of spin-off posts around the place about the topic. Since I’ve been out here I’ve blogged indirectly about SV vs the UK (based on my experiences obviously) without directly writing a post about it. I feel like I have some stuff to say about the topic so I’m going to do that now.

One thing I think it’s important to lay down before talking about the issue is the problem of over-generalisation. The speaker at our last Y Combinator dinner was Paul Buchheit – employee #23 at Google and also the founder of Gmail. His talk was definitely the least conventional of the talks we’ve had so far – he began by telling us to ignore the advice of other people because ultimately “people are just talking monkeys”. The point he was making is this – people generally give advice based on their own experiences and as a result they inevitably end up over-generalising about things. I think that applies hugely to the context of the Silicon Valley debate – people can only write about their own experiences and so a lot of the time they end up taking this all or nothing position which really doesn’t do justice to all of the issues involved. So with that in mind I want to lay out some variables that will inevitable lead to some degree of generalisation by Kul or I when we write/talk about our experiences of the UK v SV:

  1. We had a very hard time trying to raise early stage funding for our venture in the UK. There are a number of different reasons why that could be the case and they don’t all lead to the conclusion that the UK will never give birth to a Google or Yahoo. The point is that was our experience so that’s all we can talk about. The best way to show that our experience can;t be used to make generalisations from is to show everyone a group of young entrepreneurs, just out of university, with early stage funding for their ventures.
  2. We came out to the Valley to take part in Y Combinator which instantly handed us a fantastic network to draw upon. Not everyone who moves out to the Valley will have access to immediate angel funding + the YC partners + a massive group of people their age who are also starting companies and feel a sense of loyalty to each other. We’re lucky to be in that position but we know that isn’t the case for every single person starting a company in the Valley. The telling thing is that to find a Y Combinator set up we had to move out to the Valley.
  3. On a personal level we already had a network out here before we came – largely due to the annual Silicon Valley comes to Oxford event held by the Said Business School, Oxford. It’s through that event that Kul met Evan which is how we’re now working from the Obvious offices, he’d also worked closely and is good friends with Bob Goodson of Yelp. It’s at the same event that we met Chris Sacca of Google and we also had one of our friends Kirill, working out here on Slide (Max Levchin’s venture). All of those contacts were obviously a great help to us and shape our experiences of the Valley. The most powerful thing to take away from that though (at least for me) is the fact that we probably had a stronger network over here while we were still in the UK and that’s not something we engineered – it just happened but the fact it was easier for us to make contacts in the Valley than in London must be indicative of something.

The point I’m trying to make my laying these things out is that I don’t think there’s a right or wrong answer to the question of what’s better for each individual – starting their tech company in SV or somewhere else. It’s perfectly feasible you might find a fantastic group of people to work with and an angel investor you have an awesome relationship with if you’re based out in the Isle of Man. If that’s your situation then great for you but statisically speaking, however it’s far less likely that you’ll have that set up somewhere outside of Silicon Valley. That’s just a fact and one that can’t be argued with – if you were to look at things completely objectively and wanted to give yourself the mathematically best possible chance of making your startup a success you would want to be based in the Valley. Of course statistics are statistics and both Kul and I are fully aware of the fact that coming to the Valley does not magically guarantee you success and nor does staying in London make failure inevitable.

What I liked about a recent podcast I heard from the Future of Web Apps conference held recently, was when Saul Klein said it’s time we stopped worrying about why we’re (Europe) not Silicon Valley and started focussing on what we’re going to do to drive tech innovation. So the question becomes not how does Europe compete with Silicon Valley – incidentally one thing I have to say is that since I’ve been out here this notion of competing with SV has not been heard/seen once. I find that people don’t walk around with a “SV is the best place in the world” t-shirt each day because for them this is normality. SV wasn’t engineered it just happened and for people out here, this is reality and I myself have not encountered any smugness from people. Sure they accept the fact they’re lucky to be in such an amazing place but they don’t try and make out like they are the be all and end all of the web world. That notion is one I think has been fabricated more by external parties who take creative interpretations of articles about the Valley.

So if you were somewhere in the world and wanted to learn from Silicon Valley and set up a start up hub what would you do? Well my thoughts are this:

  • Be prepared to lose a lot of money. There is no way of hiding from the fact that the majority of startups fail. When you’re talking about first time founders being involved those odds become incredible – it becomes incredibly unlikely that any startups from young founders will actually suceed. But the problem is that to institute a real startup culture it’s the young founders who need to be starting up companies. Silicon Valley is amazing because by the time people reach their mid-twenties they have already started a few companies. Some of them may have suceeded but most will have failed but the overall experience floating around will always be rising. Everything else builds off that – the more founders you have, the more startups = more startup opportunties for other young people = more networks forming = more success stories = more people doing startups. It’s not complicated but to get to that stage will not be cheap – those startups that are going to fail have to be invested in. Simple as that.

There is also a wisdom of the crowds theory at work here which is illustrated by drawing analogies to bees. Bees are good at finding nectar because a large number of bees will fly out and find the flowers they need – each bee who doesn’t find a flower creates a path that is then crossed off the list of potential paths to follow. The same applies to startups – for the really good ideas to take off it needs more people to be working on them. Every time someone tries an idea and it fails, that’s one less fruitless path for people as a whole to follow which has an overall net benefit on the ecosystem. I think failing startups are actually the backbone of what makes SV so successful.

  • Stop focusing on getting the really motivated/”natural” entrepreneurs involved. I’m sure that in every city there will inevitably be some people who will naturally just gravitate towards startups and any hubs that are formed. Much like the early adopters of a website. You don’t need to expend too much effort on finding these people because they’ll find you. What you do need to focus on are the potentials – the people who have the potential to do a startup but just don’t realise it yet. I know the importance of these people because I was one. I was no Richard Branson and there was no sweet selling in the playground for me. I stumbled into startups (or was pushed into it by Kul) and now I can’t imagine doing anything else. But I am not alone – for every one person like me who ended up in startups, there are hundreds who did go through with that job offer and are now sitting behind a desk somewhere. Focus on those people and get their attention and make them think about what they can achieve. SV is amazing because it seems like the majority of these potentials do end up going into startups rather than getting safe jobs (it’s probably not the majority but it definitely feels like it).
  • Get rid of the notion that startups are born from lightbulb ideas – it’s rubbish and it does no good. Google was not born because one day an angel from above came into Larry and Sergey’s dream and told them they should build an amazing search engine and then a few years later introduce adsense and then start taking over the world. Google started because those two guys wanted to do improve the search at Stanford, they did it and the rest is history. I recently read an article on the Guardian about the boom of online entrepreneurs in Britain. What depressed me most about it was how much it played up to the lightbulb stereotype. This is a bad thing because it puts people off – it’s too easy to hide behind the “i would do a startup I just don’t have the idea yet” excuse when you’re obsessed with those lightbulbs. If you read Jessica’s book Founders at Work, you’ll quickly realise that remarkably few startups orginate in this lightbulb way. They usually start because the founders buy into the idea of being their own boss rather than one specific idea – they start something and then go with the flow. If they’re (very) lucky it pays off otherwise they try something else. Without fostering that kind of culture, which flows through the Valley, I don’t think your startup hub is going to get the traction it really needs.

I think I’ll stop there before this post becomes far too long. That basically sums up my thoughts on SV v the rest of the world but I deliberately haven’t framed it as good points of SV v bad points of everywhere else. That’s not where the debate needs to go so I don’t want to add to it. This stuff is really not that complicated. It’ll take a lot of money and time to see the full benefits so any notions of short term profits need to be put aside. Short termist investments or motivations are not going to get people anywhere.

Personally do I think it will happen? I’d like to sit on the fence and say it’s too early to tell but my gut tells me this. There isn’t going to be some sudden destruction of the Valley and in the next tech boom (not trying to imply there’ll be a bust in the meantime) I still think SV will be the hub of it. But I think the landscape will change and it’ll become flatter – like Greg McAdoo from Sequoia said, they are going further afield to make their investments than they have ever done. SV will always be the best place to start a tech company but it doesn’t always need to be the only place.

Then again what to I know? Like Paul Buchheit said, I’m just a talking monkey so you’re better off ignoring everything I say. Time for bed now. Night.

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5 Responses to “Silicon Valley vs The Rest of the World (or not)”

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Actually, my point is not that you should ignore advice, but rather that you shouldn’t take it too seriously or assume that it’s correct. Advice is good when it gives you helpful insight or interesting things to think about, but dangerous when followed blindly.

Nice stuff, you and Kul are doing a good job, and i heard about boso a long time ago. Kirill once came to my uni (warwick) and gave a talk. seemed like a safe guy. wishin u guys well. Im workin on something myself.

heres hopin it goes well!

Heh, Mr Monkey man
I think SV will be the master hub (within the Internet space) and lots of others hubs will continue to pulsate from it (think Bangalore, Barcelona, Dublin etc..). These ‘expansion’ areas will ‘nearly’ always have some connection back to SV. May be 2/3/4th degree of seperation but methinks it will still be there.

Lal

Good day!
Check this out!
*

That is another matter.
Extrefox


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