What Causes Silicon Valley Envy—And How To Fix It

Well, it wasn’t GeeksonaPlane, but the past 10 days have given me another lesson on the global startup culture. I spent three days in Paris at LeWeb, and then a week in London. And everywhere it is the same: smart, wonderful people with good ideas and Silicon Valley envy.

Anywhere outside Silicon Valley, for all intents and purposes, is Phoenix. By that I mean the people think they lack something only Silicon Valley can provide. They either want to be in Silicon Valley or they want Silicon Valley capital and mentorship in their city. Never mind that people are now leaving the Bay Area faster than they are moving in because of high housing costs, poor educational systems, diminished quality of life, and inability to compete with their more successful neighbors (few people in the Bay Area feel rich, satisfied, or happy). 

Fortunately, I am both part of and apart from the Bay Area ecosystem. I’ve invested and mentored there, even lived there part of the year, but always had Arizona as a reality check. And now I’ve got most of the rest of the world. I have even visited entrepreneurs in Uganda. But now I know that even London does not feel up to par with Silicon Valley.

Silicon Valley capital isn’t stupid. If there’s a deal to be made in another city or country, it is already there on the ground. Just yesterday, stepping outside Marks & Spencer on Oxford Street, a glance at my Waze app told me Benchmark Capital had an office across the street. And the incubators already exist in London, despite the perception of a resource shortage. Tech Stars is in Cambridge, Tech Hub is on Old City Road, and there’s a Seedcamp, a Leancamp, a Digital Entrepreneurs Club, Ecademy, and an event every night.

In most of the places I’ve visited through GOAP, the same thing is true. From Santiago to Seoul, from Shanghai to Sao Paolo, there are startup outposts and events for entrepreneurs, who are already connected through social media and sharing best practices. For the past decade, VCs who understand these forces of globalization have been on planes chasing deal flow, while entrepreneurs have pined for the place the VCs fly from.

So what’s missing in these cities that causes the entrepreneurs to feel so inferior? At first I thought it was training or mentorship, but now I am coming to the conclusion it’s a feeling of community. Every city needs more collaboration, someone to pull the pieces together. And someone to stay involved for the long term, because there is no such thing as an overnight success. Companies may need to be mentored and supported for five or 10 years. Look at Twitter--not out of the woods yet and almost six years old.

The biggest problem I see outside Silicon Valley is continuity--the existence of a group of local entrepreneurs who make it themselves and then turn around and reinvest in the younger people coming up. The best example of this is TIE, which began as a way for Indian entrepreneurs who profited from the diaspora to mentor and give back to people back home. About 10 years ago, TIE was the way a graduate of IIT found a job in the U.S., and a way Indian entrepreneurs found funding. It was, and probably still is, an ecosystem.

No Silicon Valley luminary who flies in for a Lean/Seed/bar Camp can ever have the impact of an ongoing entrepreneurial community that collaborates and encourages its own. In Arizona, everyone bemoans the lack of local founders who have experience with large exits. They think the state doesn’t have them.

It does, but after their liquidity events they retreat on to the golf course. They don’t stay engaged. They aren’t trained to give back like Silicon Valley guys do.

I propose a global series of screenings of a documentary I saw last month called Something Ventured. It is about the entrepreneurs and VCs who invested before Silicon Valley had acquired its mythic sheen, when it was fruit orchards. Back then, the capital was in New York, and had to be persuaded to take chances on young entrepreneurs.

That’s how it is now in London, Phoenix, Shanghai, or Sao Paolo. In 50 years, one of those places will have the luster Silicon Valley enjoys now. Successful people in every city need to be shown how much satisfaction there is in mentoring and financing their successors. And in the meantime, be advised: a very small number of startups get funding even in the Bay Area. And 90% of startups still fail. Let’s not use the wrong metric to measure success: for every Mark Zuckerberg there are thousands of failures. But that’s OK as long as we don’t condemn them. Perhaps the next time, having learned, they will succeed.

Remember, everywhere but New York and California, entrepreneurial communities are still in the first generation. In fifty years, who knows where the grass will be greener. 

[Image: Flickr user kunkelstein]