Silicon Valley experience report II/IV: Written by David Ballagi, Co-Founder and CTO Zippsafe AG
On the first day we met with Eric Ball, former Senior Vice President (SVP) at Oracle who decided to retire and instead start his own VC fund, when asked why Silicon Valley is so special his primary response was that, here “it is accepted to fail”, well not to fail stupidly but to fail smartly. As long as you demonstrate that you have learnt from the experience it does not lessen your chances to get founded again but in fact often improves it. In Europe we often see failure as a huge set back, something shameful, for this reason we do everything to avoid it ending up spending too much time to fine tune our idea-product instead of getting it out. Over there it is encouraged, in fact the phrase “fail fast” and learn from it came up during almost all of the speeches during the week.
As an interesting side note, this also agrees with the philosophy at Google X (innovation lab google) whereby they work risk oriented with a top-down approach, meaning they look at a project, identify the biggest risk or reason of failure and then start directly to work on that instead of wasting time on things they know can be done. This results that a project doomed from the beginning is brought to failure as quick as possible allowing to reorient much faster resulting in saving costs and time.
This mindset leads to much faster innovation cycles, in the end it is a number game, talented people working on innovation will eventually lead to a breakthrough. If this cycle is more efficient in the valley than Zurich or Budapest, the chance of the next big idea coming out from here is simply bigger. This number game is further enhanced by the concentration of talent and VCs in one place, the yearly investment in startups is 48x bigger than the 1 billion reached nationally in Switzerland on an area which is much smaller (these numbers are based on memory, should be not far off if not correct but do not hold it against me).
This creates an outstanding networking possibility, something that is also strongly embedded in the valley culture, getting a first meeting with anyone is very easy regardless of that person is already an accomplished star, they do not hold their noses high. In fact most of them wear shorts and t-shirts and are very direct, difference is when he gets out of the meeting he steps in to a Tesla S while the other one might take his or her bicycle (by the way, the high concentration of Teslas in the Valley is very apparent). What is difficult however is to get a second meeting, they will only meet you again if they see value gained from you, else they move on. This was also felt in a networking event we took part in, everybody would come and talk to you but if they did not see any benefits for them they would quickly move on. This means you always get a chance, but you also know very fast if you failed.
This network bis further strong in knowhow as the long past of the startup scene has breeded out veterans who have started and exited multiple startups and therefore have a lot of experience. As it is generally expected that somebody who has exited will start a new company within 2-3 years (in Europe this tends to be longer we were told) and they will most likely stay in the valley – this expertise gets back in the network,distributed and eventually multiplied.Just consider how many successful startups each individual founder of Paypal made after they left the company. On top, the startups can learn from each other, copy good practises and avoid making the bad ones before they even started.
Finally this high concentration of talent and success generates a healthy and fierce competition, a competition of which if you come out a winner you will very likely be one globally as well. This filtering of startups and founders locally and at a very early stage makes sure that if you are working on something and it works there, it is definitely worth pursuing and chances are high you will become the next tech giant. As opposed to Europe, you might be winning locally, spend years on the company and in the end not win globally. Hence this is similar to the fast failing effect, if you lose against the competition early on in one field you will move onto the next one very fast.
Conclusion: It is not the location which makes it the Silicon Valley exceptional, it is the people going there ready to work day and night, take high risks and fail hard but stand up again who makes it so unique.
Next topic later this week: Investment Culture US vs Europe
