6 things Silicon Valley is Doing Right [For Entrepreneurship and Innovation]
Back in April 2019; I moved to the USA, Silicon Valley for a 6-month internship (that finally ended up being 12 months!). Being one year there, changed me and especially my mindset and how I see entrepreneurship. I fully immersed myself from Day 1; after work, I went to events (over 120 events in total), networked with 1000 individuals and had probably 50+ 1-1s to discuss career outlook with entrepreneurs, VCs, Academics etc.
To help me make sense of my experience in Silicon Valley, I turned to Deepti Pahwa. A Stanford Graduate School of Business alumni. Deepti was born in India and lived in Germany and Switzerland for more than sixteen years. Like me, she noticed how the approach to innovation and entrepreneurship in Europe is wildly different from Silicon Valley. Together we brainstormed six characteristics of Silicon Valley that makes it so successful.
1. The Moonshot Mindset, They Think BIG!
Silicon Valley’s culture can be described as the moonshot mindset. “Moonshot” is a term used to describe a lofty goal requiring monumental effort—in other words, a giant leap (Merriam-Webster, 2022). An example of this is the Human Genome Project, a three-billion-dollar, fifteen-year effort to map the approximately 100,000 human genes. In Silicon Valley, entrepreneurs are not the only one to think big, investors do as well, and are willing to take the risks! Investors and Entrepreneurs behave that way!
In the Mindvalley online course, “The Power of Boldness,” well-known entrepreneur Naveen Jain talks about the importance of mindset when building a business. He specifically refers to the investor mindset of Silicon Valley, as opposed to the rest of the world. If he pitched the idea of launching a rocket to the moon, Silicon Valley investors would reply, “Tell me more; how would you do this?” However, most investors from elsewhere would say, “Please don’t waste my time; get out.” If your idea is too big or bold, they won’t hear you out.
The risk capital is probably the most important driver of an ecosystem—and this availability of money is tied to the investment and portfolio mindset of VC-backed innovation. Silicon Valley’s VCs have the mindset for productive failure, and this builds robust portfolios (if one in ten investments works, it is still a profitable business). Entrepreneurs there have a big vision about what the world looks like in five or even ten years. They have the ambition to create a billion-dollar business and conquer the world.
Having a big vision comes with a growth mindset and willingness to fall and learn from failures.
2. Fail Fast, Fail Often, Fail Forward
It’s no secret that one of the defining characteristics of Silicon Valley is its high failure rate. And that’s exactly where growth is found—on the other end of the failure. And that leads to vitality and the generation of new wealth. Failure unleashes future growth and success. Knowing we are allowed to fail gives us the freedom to experiment without being constrained by the fear of failure.
Revenue first, or growth first? Startup companies in the US compete in a big market and need a high degree of market penetration to gain a competitive advantage. Hence, investors and startup founders alike see growth and traction as the main success factors. In comparison, with less later-stage funding available, European startups cannot afford to spend as much on growth, instead needing to generate revenue earlier to stay alive. And this hinders the culture of failure; the decision for a startup is often between continuing to keep active or embracing loss (with the exception of biotech and pharma startups, where the funding process is different and more complex).
One of the things I realized during my time in Silicon Valley is that people are more okay with failing because they are supported by their network—including their mentors.
3. The Mentorship Culture: The Mindset of Giving Back
When I arrived in San Francisco, I received an excellent onboarding. On my first day, my manager, Rama Penta, took me for lunch to a wonderful Ethiopian restaurant (we both remember it so well). He asked, “What do you want to learn here? What are your expectations? How can we make your time here the most incredible time ever?”
I saw again and again very experienced entrepreneurs giving back to the community. They go to pitch event in their free time, advice and mentor founders. Many startups have incredible advisors sitting on their board and the dense availability of those incredible innovators, makes it easier for change-makers to seek advice and wisdom.
They are busy BUT they take and find the time to give.
This mentality of giving back—where senior executives help and guide young people—is what successful people do in Silicon Valley. Why? Many experienced it themselves when they were young, and now they want to do the same
4. The Event Culture: Maximizing Serendipity
It is well known that VCs invest in the team, not the idea or the technology. Everyone knows that a company can only be successful if great people are running it. Even if this is not specific to Silicon Valley anymore, the region initiated this way of doing business.
One of the reasons people move to San Francisco is to network and build relationships. I was finding up to 50 entrepreneurship events a day on the meet-up app.
I experienced that after going to a few events and seeing the same people. If they like you, these people start inviting you to their private parties. This happened to me; I was invited to “invitation only” parties. At these parties you get to meet the actual drivers and business influencers of Silicon Valley: millionaires and billionaires, serial entrepreneurs, and people highly ranked in society.
Those event form communities!
5. Communities and Networks: To Connect with Shared Value and Purpose
People in Silicon Valley come across new faces daily. They work in the same industry, and they will help others who have the same problems. Most people enjoy sharing what they have learned and giving advice to other entrepreneurs. Nobody is hiding; everybody is sharing. This increases their chance of meeting the person who will transform and impact their lives. Serendipity is at its maximum.
CEOs usually join communities like 3DHeals, StartupHealth, InnovatorMD, and the German American Business Association (GABA), to name a few. Often, they enter the community because they resonate with the purpose and mission, which makes it easier to bond with people. They feel part of something bigger.
6. A Well-Coalesced Ecosystem: Connecting All Players
Silicon Valley has two major components that makes it connected and robust:
A. They have the talent and infrastructure (startups, investors, venture capital funds, top-ranked universities, and medical centers, providers of support services (e.g., legal, accounting, etc.), mature companies to scale technologies, or regional and state organizations).
B. They have a willingness to interact, collaborate, and thrive together.
In January 2021, I interviewed Gregory Theyel, the founder of the Biomedical Manufacturing Network (Mikel Mangold, 2021). His organization is on a mission to understand the need of a company, detect how they fit in the network, and how they can benefit from it.
Greg works with different companies but mostly tries to help small ones with five to fifty employees. These small companies usually identify a problem or develop a particular piece of technology. Still, they are not aware of many things. For example:
· How to connect with a contract manufacturer
· Where to find a specific type of adhesive
· Which sensor to choose
“I feel there is a perception that people can just google something and find the answer, but it’s not quite true. In most cases, it’s the specialty insight that a network can provide. Without it, it becomes an importing missing piece of the puzzle,” shared Greg.
His organization is funded by the government, with the purpose of connecting people, connecting a big company with a startup or a university with mature companies. They make those essential connections to these larger systems.
Silicon Valley succeeds as a network. It brings everyone together in a melting pot. What really differentiates Silicon Valley from other places of innovation is the density per square meter of people trying to change the world and their willingness to make introductions. It’s their mindset. This curiosity, the bold thinking, their risk capital, the network of people, the variety of stakeholders, and their ambition to use ideas to transform society; these are the things that make Silicon Valley the father of entrepreneurship and the best entrepreneurial city in the world.
By reading this, I hope you will feel inspired to implement some of these points above in your city, anywhere in the world, to build an entrepreneurial ecosystem. As Reid Hoffman, co-founder of LinkedIn said it “Silicon Valley is not a location, it’s a mindset.“
[More about startup ecosystems, Silicon Valley, mindset and networks in my book: “Today’s Superpower: Building Networks” available on Amazon US, UK, FR, DE, India etc. Type my name and you will find it!]
Ps: note that I experienced Silicon Valley before the pandemic and things may have changed a bit: less events, less f2f, but the dozens of people I met the last two weeks said they are 100% confident everyone will be back that the energy of the city will take off again.
Jain, Naveen. “The Power of Boldness.” Mindvalley online course, January 2021. https://www.mindvalley.com/boldness.
Merriam-Webster. s.v. “moonshot.” Accessed January 10, 2022. https://www.merriam-webster.com/dictionary/moonshot.
Mikel Mangold. “Ep 5. #Bioimpact Silicon Valley: Systems, Maps & Education with Gregory Theyel.” January 21, 2021. Video, 35:34. https://youtu.be/JThDi7bgQrI.