Rude VC: Copying Silicon Valley

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A couple weeks ago I provided a very svstripsuccinct recap of the Silicon Valley narrative. For a more in-depth review, A History of Silicon Valley by Piero Scaruffi and Arun Rao might well be the most comprehensive, and Robert Cringely’s Accidental Empires focuses on the pc industry empire-building during the pre-web era. Understanding the Silicon Valley story is important for those who are striving to replicate the Silicon Valley model in their own communities, such as what the French government is trying to do.

Witnessing these government efforts re-surge over the years, of which France’s current incarnation is dubbed Paris Capitale Numérique, I submit that two fundamental questions should be addressed: i) should governments even try to copy Silicon Valley, and ii) what is the secret sauce that makes Silicon Valley such a bastion of entrepreneurship and innovation ?

Regarding the first question, my opinion is that the answer should generally be no. Silicon Valley today encompasses such a unique confluence of factors — some planned, most serendipitous, and many even difficult to identify — that government attempts to create a replica of Silicon Valley in their home market will inevitably end in futility.

For the Silicon Valley model is one that has evolved over decades. No European government has demonstrated an ability to cultivate a 30-year project. Furthermore, Silicon Valley is not the result of a centrally-planned state endeavor. The government, more specifically the State of California, created an environment that fostered the emergence of Silicon Valley, in large part by trying to do no evil. But it was predominantly the private sector and an abundance of rugged individuals that built the foundation for today’s Silicon Valley.

An experienced European VC that I respect reminded me of The Netherlands’ misplaced ambition to replicate Silicon Valley in 1997:

In 1997 the Dutch Government thought of stimulating IT entrepreneurship by setting up a Government supported VC fund called Twinning. All those hype days….. Anyway, like so many other initiatives of governments also this idea ended in a mass failure. In my opinion there is no way of just copying the Silicon valley concept. That is an unique situation, the environment, the infrastructure, the knowledge, experience, but also the heritage, the long experience and history. No way of copying it in 5 years. No way of copying it anyway!

Don’t try to copy. Think different.

None of this wisdom has prevented numerous regions from trying. Silicon Alley, Silicon Prairie, Silicon Roundabout, Silicon Gulf, Silicon Welly, Silicon Beach, Silicon Border, Silicon Desert, Silicon Glen, etc. and those are just the ones beginning with the word Silicon, the list is actually quite ridiculous.

Yet the areas with the most success in creating clusters of innovation have been those that do it on their own terms and play to their own unique strengths, where the government facilitates an environment that doesn’t penalize failure and then gets out of the way.

New York City has emerged as the world’s second largest market of VC-backed digital media startups thanks largely to the area’s fashion and media sectors (and ironically the Silicon Alley term has fallen out of fashion). Mayor Bloomberg’s policies have supported a vibrant ecosystem of lifestyle and design.

Los Angeles is now gaining status as fertile ground for games startups, its proximity to the Hollywood film studios undoubtedly playing a key role.

Israel boasts the highest concentration of high-tech firms per capita in the world, often companies developing cutting-edge communications and security technologies for export worldwide.

I submit that governments should not seek to copy Silicon Valley, but rather take inspiration from the factors that rendered it a success. In the third and final post of this series on Silicon Valley, we’ll look at the most relevant ingredients of the region’s secret sauce which might inspire France in its goal to spur innovation.

7 Responses

  1. Avatar
    Benoit Curdy

    May you be heard. To be successful, you have to be yourself. It’s true for people, startups and… government initiatives. So for instance, dubbing one self “.* Valley” or “Silicon .*” is not only a very cheap marketing trick but also a pretty accurate predictor of failure.

    You could add Boulder to your list, which has an amazing startups ecosystem and as far as I’m aware is not trying to emulate Northern California. If Boulder can do it, there’s no excuse for European cities.

  2. Avatar
    Rodrigue Hajjar

    Nice post!
    I can’t help but think about what France tried with “Sophia Antipolis” and is now not really considered as a success (considering what they had planned 20/30 years ago);
    Since there’s not much of a startup ecosystem but they were successful bringing
    big companies over.
    I don’t know if you even know or heard about “Sophia Antipolis”, they tend to forget the hundreds of millions of dollars lost.”: http://en.wikipedia.org/wiki/Sophia_Antipolis
    Interesting pdf: http://www.eib.org/attachments/country/plan-and-manage-a-science-park-in-the-mediterranean_en.pdf
    And this old article with a mention of Sophia Antipolis – (the main goal was to
    duplicate Silicon Valley in Sophia Antipolis-http://www.paulgraham.com/siliconvalley.html)
    Quote from the article:
    “If you go to see Silicon Valley, what you’ll
    see are buildings. But it’s the people that make it Silicon Valley, not the
    buildings. I read occasionally about attempts to set up “technology parks” in
    other places, as if the active ingredient of Silicon Valley were the office
    space. An article about Sophia Antipolis bragged that companies there included
    Cisco, Compaq, IBM, NCR, and Nortel. Don’t the French realize these aren’t
    startups?”
    Other quotes in the pdf: “The public sector has invested EUR750 million in Sophia Antipolis over 25 years”
    “At least in the short and medium term. After 30 years, tax revenues generated by a site like Sophia Antipolis are substantial, around EUR40 million a year.
    Nonetheless, it will take many years to amortize the EUR600 million in public funds invested in the project since its inception.”

    There’s a good side though:

    “Sophia Antipolis has created 30,000 jobs in 1,410 companies over 30 years; 54% of those employed are managers. Most of the jobs created are in engineering,management, and skilled services.”

    • Avatar
      mark bivens

      great example! i recall visiting Sophia Antipolis when i first arrived in France and felt right at home with its Northern California climate. in 11 years i’ve only held one meeting with a startup based there.

  3. Avatar
  4. Avatar
    eenoog (one-eye)

    A small point. Your European VC is misinformed. Sure there was a load of crap in that portfolio, but of the 54 companies Twinning invested in, 21 were still alive in July of 2010 despite the downturn and lack of funding post the crash of 2002. Some are quite successful and/or were successfully sold (e.g. X-Hive which was sold to EMC). Research has shown that the initial negative evaluation when the government stopped funding it in 2003 was premature.

  5. Avatar
    yannski

    And the french government already tried something like this with Sophia Antipolis 🙂

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