By Victor W. Hwang
The Real Lesson From Silicon Valley Startups
One of the startling things about the success of Silicon Valley, where I’ve lived and worked for years, is that most people learn the wrong lessons from it. This holds true, whether we mean individual entrepreneurs or even cities around the world. I’ve learned this from my work with hundreds of start-ups—including many self-employed entrepreneurs—and with governments on every continent except Antarctica. It’s the reason that I decided to write The Rainforest: The Secret to Building the Next Silicon Valley.
There are two iconic images of Silicon Valley: first, the lone inventor or inventors in the garage and, second, a community with a wealth of accumulated talents, ideas, and capital. As a consequence, most people assume that entrepreneurial success is either a function of an inventor’s brilliance or that communities will succeed when they accumulate sufficient assets.
Most people assume that entrepreneurial success is a function of an inventor’s brilliance, but that's just part of it
What neither of these images captures, however, is that the inventor cannot succeed alone and that a community’s success depends on the exchange—not the mere accumulation—of talents, ideas and capital. Innovation does not happen confined in a garage. The key to Silicon Valley’s success is not just a function of ingredients (individual talents, ideas, and capital) but of the recipe (how those ingredients are mixed together in a community).
That’s where Silicon Valley is truly special. It has developed a unique culture, one that I believe can be replicated. But first, it must be sufficiently understood. That culture was derived from the frontier. Indeed, going any further west will land you in the Pacific Ocean.
The culture of the frontier was one of pragmatic cooperation. It’s the same culture that enabled complete strangers to join together to form wagon trains heading West and place their lives in the hands of others whom they had only just met.
Silicon Valley is not a plantation created by assembling assets. It’s a “rainforest” – a rich ecosystem thriving because its diverse elements mix together to create new and unexpected flora and fauna.
That mixing is made possible and more vigorous by Silicon Valley’s culture. The culture is based on trust, which enables people to band together even though they are naturally tribal. We tend to be most comfortable with people who are most like us, but the truth is that greater diversity—whether based on ethnicity, skills, experience, or outlook—fosters greater innovation.
Silicon Valley’s culture, in turn, offers keys to the success of the self-employed. One is to be willing to trust, and trust quickly if necessary. Just as the pioneers had to make quick judgments to increase their prospects of success, be willing to make those judgments as wisely as possible with the best information available at the time. Trust enables collaboration and thus breadth of talent.
The “Secret Formula” for the Self-Employed
Another is to think of entrepreneurship not as a transactional event but as a social movement. While the day-to-day activities of the self-employed may seem loaded with transactions (arranging meetings, making deadlines, keeping receipts, issuing invoices), entrepreneurial success is ultimately driven by attracting and inspiring people (customers, partners, investors).
Entrepreneurship is much more evangelical than managerial, in that sense. That’s why the Silicon Valley culture is so relevant and crucial. It’s about trust; it’s about the collaboration that trust facilitates; it’s about the diversity that collaboration permits; it’s about the innovation that diversity inspires.
Silicon Valley is a land of startups, entrepreneurs, and innovators, but it’s a state of mind more than a place. That state of mind is a great frame of reference for the self-employed. The “secret formula” that made Silicon Valley an iconic success does not have to be a secret anymore.
Victor W. Hwang is co-author of The Rainforest: The Secret to Building the Next Silicon Valley (Regenwald, 2012) and Managing Director of T2 Venture Capital in Silicon Valley.
(photo credit: http://urbanhorizon.wordpress.com)