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What can we learn from the startup ecosystem of Silicon Valley?

June 2, 2015 – by Jennis Jongerius & Jip Samhoud – &samhoud media

Apple, Google, LinkedIn and Facebook. Four tech companies with an enormous impact on our daily lives, companies all based in Silicon Valley. The startup hub in the bay of San Francisco has become the world’s most fertile ground for innovation. Entrepreneurs, investors, technology and talented potentials are all based in ‘The Valley’, which makes that the ecosystem enforces itself.

JennisJongerius_StanfordArmed with the right camera equipment and enough to ask, our crew went to The Valley in May 2015 to explore the entrepreneurial environment. What does it take to create and maintain a successful business? What can the Dutch entrepreneurs learn from the mindset at the other side of the Atlantic? How can Dutch companies become of international influence and in the meanwhile attract talent from abroad to our Dutch startup hubs? Our first stop is Las Vegas, where the biggest startup conference of the United States is taking place.

 

Collision Conference 

Vine&Youtube stars on stage_CollisionConfVegas. The city where you bankrupt faster than the Lehman Brothers and Greece together. Men and women that are desperately in search for the big money go from one casino to another. Most parts of the year this city is not much more than the home to gamblers, party animals and sad Elvis imitations. But two days a year this city is invaded by trendy geeks with their newest gadgets and innovative startups.

This is during the Collision Conference. During this convention 1.200 young entrepreneurs come to Vegas to, how ironically, try their luck. All in the search for media attention or the right investor that can make them as successful as Mark or Steve with just one last capital injection.

The conference does not attract only investors and young entrepreneurs; we also meet coders and influencers in the burning sun of Nevada. Brand new video stream services are launched and of course there are some crowd funding platforms introduced as well, which aim and claim to be better than the existing ones.

The vast majority of the startups will have a hard time to make a healthy business out of their ambitious plans. The chance that one of them will get as successful as Facebook or Google is even smaller. Anyhow, it is highly impressive to see the immense dedication of the young entrepreneurs.

The term “millennials” is a true buzzword in the startup scene, as we have experienced on the conference. Several speakers mention how the new generation is completely changing the foundations of the market. They circumvent the traditional institutions, operate in different places, are hard to reach, consume differently than other generations and in the ‘war for talent’ the bigger companies find it hard to attract and maintain millennial workers. Employers and B2C (business to consumer) companies have major matters when it comes to employing generation Y.

Learning 

A thousand kilometers up North lies Silicon Valley. The contrast between the young and greedy founders from Vegas and the successful serial entrepreneurs in The Valley is big. It is not that the founders from the Bay area aren’t hungry anymore, because they are hungry for sure. The difference lies what they are hungry for. The search for not more money and more investments lies far behind them. They are looking for more market share, more knowledge and more impact. That means innovating and learning.

JipSamhoud_interview

Taking risks

Not only the eagerness to learn, but also the willingness to take risks is part of the right mentality. A great contradiction to the mindset in the Netherlands. “How higher the risk, how higher the reward”, a beloved mantra in Silicon Valley. Ramona Pierson, CEO of learning platform Declara accordingly states the following: ‘Being an entrepreneur is like jumping of a cliff without a parachute’. Jason Johnson, founder of four successful startups adds that ‘Entrepreneurs should be fearless. Eventually it is the investor that decides if it is either good entrepreneurship or sightless recklessness.’

Failure

Along the risks come the failures. One after another. Roughly estimated only one out of ten startups becomes a successful business. However, bankruptcy in the States is not seen as a great fiasco like the Dutch experiences it. Over here it is seen as a valuable lesson for young entrepreneurs. This mindset, together with the loose bankruptcy laws makes Silicon Valley a true startup Walhalla where talented entrepreneurs are keen to settle.

Successful entrepreneurs know that having an idea is only the very beginning of your entrepreneurial journey. Opinions vary but according to the founders we talk to, having an idea is only between one and five percent of your eventual business. Not only will your product change along the way, getting that idea of the ground is a huge project itself as well. You have to learn from you users, your competitors, the market, your product itself, your mentors and your failures. Your capability of learning and your degree of endurance are under high pressure in Silicon Valley. They might be the ultimate indicators for a litmus test for young entrepreneurs.

Pay it forward 

Is learning easy in the Valley then? Yes it is! The bay is characterized by a pay-it-forward culture: everyone wants to help everyone. There are daily meet ups, pitch competitions, hackathons where entrepreneurs, coders and investors come together to learn from one another. In addition to those events there are several incubators and accelerators that aim to kickstart the launch of highly potential startups.

Successful entrepreneurs fulfill an important role in this open-minded culture as well. In 2014 Elon Musk, CEO of Tesla and SpaceX, released the patents of his cars. A great example of the open source philosophy. The release meant that from that moment on, everyone had access to Tesla’s technology and could start working with that electric driving technology. Thereby, Musk accelerated the progression of the field. Musk is just one of the many successful entrepreneurs that decided to use their capital and knowledge to help younger startups in stead of retire and leave their business field for what it is. This attracts even more companies to the Valley and the related competition reinforces the quality of the business in the area.

Universities

Universities play an important role in the area as well. Stanford and Berkeley have a lot of in-house technical knowledge. The educational institutions enthusiastically stimulate entrepreneurship as well. If you have a good idea, the ownership of that idea belongs to the young entrepreneur himself and not to the University he or she is studying at. That makes student even more eager to develop and enhance a certain product.

Making an impact

Silicon Valley is not only unique in its bravery to take risks. They also dare to think big. In Holland we tend to laugh ambitious projects off and even if startups are achieving some successes, we start thinking of the possible decline ahead. The Valley stimulates people to dream big and investors take these ‘fools’ very serious. The line between a foolish misunderstood and a pioneering visionair can be very thin.

Starting a business or creating a new platform or application does not have to be the goal itself. Having impact is what really counts. Impact on as many people in as many places as possible. When you are searching for great impact, unbridled ambition is not enough. You will then need a proper vision.

  Jip Samhoud  San Fransico
Tech for good

The credo ‘Tech for good’ is on the rise. Coders from Palo Alto and the Mountain View are looking to use their expertise to make great impact and make the world a better place. Rose Broom states she notices this shift. She is the CEO of Handup, a successful crowd-funding platform for the homeless: “We see a true shift happening. More and more companies are aware of their capability to use technology to make the world a better place. Jens Christiansen, CEO of Jaunt, a company in Virtual Reality company Jaunt recognizes that as well: “We could efficiently use 3D- visually to improve the techniques in medical world”.

This focus might be related to the hippy-ish background of San Francisco. Johnson: “In Wall Street the successful business people drive Maserati’s. In the bay it is a trend to drive a Prius”. ‘Tech for good’ is also in the way of approaching technology. The focus is not on the possible dangers but on the chances that technology brings the environment.

The Mekka for young entrepreneurs hosts the contemporary version of the American Dream. Instead of the traditional from-paperboy-to-millionaire situation you can now evaluate from garage start-up to Internet billionaire. No wonder many young entrepreneurs go to the bay.

However, The Valley has its downsides as well. The population exists out of white males only. The black entrepreneur Wayne Sutton stands, with his startup Buildup, up for minorities in Silicon Valley. “It is by no means a representation of the total American population. Not to mention the ambition to represent the complete world population. To know what the users of products wants it is very important to know his background.”

‘Unfair advantages’ in The Netherlands

It is not only hard to imitate The Valley; it might be undesirable to do so as well. In Holland we have got our own unfair advantages. We have got ten highly innovative areas (Think of cities like Eindhoven, Delft, Rotterdam) all reachable within a 1.5 hours drive. We are the gateway to the rest of innovative Europe and we stand out in protecting intellectual property when it comes to ideas of young entrepreneurs. We prove to be proper guinea pigs for innovations. If it works in Holland, it often works elsewhere as well.

We should take advantage of our potentials and strengths and there is a lot to learn from the entrepreneurial climate and mentality of the entrepreneurs in Silicon Valley. Starting with an entire change in mindset and culture.

The extra mile

That change has to occur amongst investors, policy makers and politicians. But the most important target group is the entrepreneurs. Eventually, they are the ones that should dare to make the extra steps. Be ambitious, take risks and, maybe the most important of all: dare to fail as that makes every entrepreneur stronger. Only then the Dutch startup ecosystem will be able to reinforce itself.

 

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