Learning from Silicon Valley

One doesn’t have to spend much time in Silicon Valley to see its unique culture and understand why the area has evolved into the preeminent technology ecosystem globally.

Because of that unique culture and the resulting network effects of the prolonged and concurrent concentration of talent, experience, and capital, the significance of Silicon Valley (SV) cannot ever be matched. However, we can study the reasons of its success and I strongly believe that other technology ecosystems can grow their significance as long as they fully embrace the SV mentality.

If I had to summarize it, the culture of Silicon Valley is characterized by an unmatched sense of urgency, an open mentality and a pay-it-forward culture.

Urgency from all ecosystem participants

One can argue that the sense of urgency is not a unique characteristic of SV. Many ambitious entrepreneurs around the globe feel the urgency to create and grow fast.

The Bay area, however, has disproportionately attracted more people who have the same mentality. It is everyone, and not just the startup founders, who is driven and works hard. Startup employees aspire to support their organizations and develop with and through them. Investors strive to learn from and constantly support their portfolio companies. As a startup founder, everyone around you is working relentlessly, constantly learning and growing.

In Silicon Valley, you are competing in the startup Olympics and cannot afford not to do your absolute best. I have noticed that some founders from local ecosystems, don’t feel the same level of urgency. They often get complacent by benchmarking themselves against a weaker and more relaxed local/European ecosystem startup mentality. People in Silicon Valley work hard and know they can’t waste a moment. This mentality needs to become a way of life for any globally aspiring tech entrepreneur.

Open mentality: openness to novelty, diversity, and failure.

Most “crazy” ideas launch and get funded in the Bay Area. There is increased risk appetite by both entrepreneurs who are urged to think big and shoot for the stars, funders who are willing to support those crazy ideas as well as consumers (early adopters) of those products. This openness to novelty has come as a result of successful risk undertaking in the past. Successful and rewarding bets in risky startups have reinforced the confidence of entrepreneurs and Venture Capitalists and have built an “open to novel” mentality that characterizes the ecosystem.

The Bay Area is also very open to diversity as we can see from LGBT rights movements and in the same way the tech ecosystem attracts people of all races. It is a meritocratic environment that not only accepts but rather supports diversity as long as the results and the potential is there. It should come to no surprise that most of the people working in tech in San Francisco are international. It is often argued that teams comprised from people with different backgrounds and ethnicities have better results because of their diversity in perspectives.

Finally, failure is not only tolerated but rather embraced: quick trial and error is the startup mantra and failure does not condemn the entrepreneur from pursuing future endeavors. An entrepreneur is expected to quickly learn from failure and is allowed, armed with the acquired knowledge, to try again. It is often easier for founders who have failed once (obviously, we are not talking about failure owed to incapability but rather to lack of product market fit) to get funded for their second startup. This concurrent openness to novelty, diversity and failure that characterizes SV is unmatched in any ecosystem and has been a key reason of its huge success.

Pay it forward culture

One could argue that some ecosystems share to a significant extent the sense of urgency and to some extent the openness of Silicon Valley. However, one clear characteristic that we encounter the least in most other ecosystems (except maybe from the Tel Aviv one) is the notion of collaboration or “pay it forward”.

People in the Valley are willing to give you a chance and listen to what you have to say. Then, provided you are serious and what you say makes sense, they will invest the time to help you or connect you with relevant people who can help. They do not expect something in return at least not immediately. This is not transactional. It is rather the case of successful people paying back the support they had gotten when they were also starting off. It is the continuation of a positive circle that started in the past and now helps new capable entrants succeed. This way the whole ecosystem benefits because the right people are encouraged and supported.

If there is one thing to learn from Silicon Valley, that is the “pay it forward” culture. Ecosystems thrive and develop if there is support amongst their capable members.

As discussed I don’t believe that the SV ecosystem can be replicated. It takes many decades and huge collective effort. The tech ecosystem game is mostly a winner takes all game where the leader has an unfair advantage in attracting the best talent and the most capital.

However, that does not mean that the serious players in each ecosystem should not learn and apply the lessons, influence others, and therefore play their part in improving their local ecosystems.

On our part, VentureFriends will constantly work in the direction of inspiring urgency, openness, and collaboration not only among our portfolio companies but also among all capable participants in our local ecosystem. We hope all European ecosystems will act in the same direction so that we have more technology successes on our side of the Atlantic.