Does Silicon Valley Exist?
A friend of mine visiting from Europe posed this question to me: "Is there a place that you would say is Silicon Valley? Or does it not really exist?"
This reminded me of being in business school in London. I was the resident Valley representative and so when things like paid lunches and Volleyball courts came up, the bankers and various other professionals got up in arms. "What kind of crap is that?" "Surely that doesn't really happen?" "That's just ridiculous. It won't last."
I explained to my German friend that Silicon Valley isn't really a place. It's a culture. A culture of optimism. It's a place where there is a fervent belief in the ability to create and the ability to get rewarded for those creations. It is probably best summed up by Alan Kay's quote: "The best way to predict the future is to invent it." (In the minds of some, I'm sure it's the closest thing we have to Galt's Gulch in the real world.*) Yes, there's a geographical component, but it's not confined to a particular street.
So, if it's a culture based on inventing the world, what needs to be there? First, you need money. Sorry, but the machines and the food don't pay for themselves. And the rent out here isn't cheap. Even though there is a huge push to bootstrap, you have a whole ecosystem out here oriented toward financing startups.
But why startups? Well, what you really need are talented teams that are able to try new things out and fail and try again. Some of them will grow up to stand on their own, but most of them are developing features, not products, and certainly not businesses. And many of them are doing it redundantly. So, most of them will fail. BUT - the failures are important. They're important for a few reasons:
- They ensure there's a steady stream of talent moving between businesses. This passes ideas and learnings around to different companies.
- They allow people who have been successful at almost everything their whole life to learn how to deal with failure (there is such a profound network here that "failure" doesn't carry a stigma, it's treated the same as simply striking out at an at bat - it happens to everyone and simply marks the time until you get the big hit.)
- It teaches everyone what doesn't work. In a new space, like online, you don't know what you don't know. When a good idea fails, it means that something fundamental wasn't given proper consideration. As a matter of fact, some current success stories are refabrications of ideas that flamed out in the 1990's because the infrastructure just wasn't there yet.
- It serves as a minor league for the bigger companies. (I apologize for the continued baseball references.) In his book "Imagine", Jonathan Lehrer rightly bemoans the fact that we have a highly developed system for identifying athletically gifted kids and providing them with training, support and rewards all the way up the ladder (though, probably not a good job of a net after they come off the ladder). But we don't do it in any other endeavor. I would argue that we are starting to do it for technology in Silicon Valley. As a friend of mine put it, "Silicon Valley is like the Premiership. None of the best players are actually from England, but it's the best football, because the best players come there to play." But there are plenty of other ways to improve the system.
So, to have tech startups, you need engineers. Sure, Stanford produces a lot of them, but that's not it. Engineers come where they can get the best value for their skills. But most importantly, they come where they can get the best skills. They want to play with the best.
[By the way, this is where the food and the volleyball comes in. When you're competing, for talent you need two things: things that make prospects excited and things that keep performers engaged. The food brings everyone together (and provides one less thing for people to worry about) and the volleyball gives the idea of fun, but also creates a place to build teams. If you like the people you work with, you won't leave.]
Once you have companies that are hitting the mainstream, and their products need to appeal to people who aren't engineers, you need designers. The Bay Area has always had a vibrant artistic community. And Steve Jobs led the revolution of design as a key element of a product. (Ok, Herman Miller or Thomas J. Watson, jr. or Frank Lloyd Wright could also lay claim, but I would say today's aesthetic was most influenced by Jobs.)
So, now that we have some of the raw ingredients, what else do you need? People who have been through it, can put some structure on the way of thinking. When you have giants, you have to have people who know how to stand on their shoulders without slipping.
All of these people will be fascinated by the technology and will carry that enthusiasm, so you get a whole region filled with early adopters (not just the people in the industry, but you get coffee shops and toy stores and restaurants all willing to be guinea pigs and helping companies to see how the technology plays in the real world.)
Oh, California law also helps. With the non-compete unenforceability, it allows people to move around and create better ideas. And with the lack of willingness to push on certain issues that might reduce innovation, it creates a good place to stay.
So, now that you have the educational climate, the legal climate, the artistic climate, the financial climate and the cultural climate in place - why is it hard to replicate elsewhere? Two reasons:
- The climate climate. It's nice here. The weather is awesome and the beach and the mountains are close. Sorry London, Berlin, Moscow and Beijing. I love you, and we can't match your history, but you can't match this weather.
- There can be only one. The world only supports so many businesses. So, while you may have some successes out of NYC, Toronto, Chicago or the aforementioned global cities (usually related to the dominant industry there or coming out of a particularly bright university research project), there will always be more here.
So, yes, Silicon Valley exists. No, there isn't one physical spot for it (if pushed, it might be a tie between University Avenue in Palo Alto and SOMA in San Francisco). It really exists in the coffee shops, the bars, the restaurants.
The other night, I had a beer with a friend at the Old Pro in Palo Alto to watch the Warriors/Spurs game. By the end of the game, I had set up two meeting with entrepreneurs who are rethinking very different problem spaces and had a discussion with a guy about how awesome the culture at Facebook is. Sure, the Warriors lost, but tell me where else that's happening?
*I'm not a fan of Ayn Rand's. Just for the record.