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The Secret of Silicon Valley's Magic with Technology and Innovation

Guest post by: cynthia kocialski

Article Overview: Silicon Valley is a special place. Why is it so entrepreneurial? Why do start-ups sprout like weeds? Many have tried to copy this cradle of innovation and its success, and yet no one has been able to duplicate it. What makes Silicon Valley different?

The Secret of Silicon Valley's Magic with Technology and Innovation

Silicon Valley is a special place, a place where dreams come true. What makes Silicon Valley different? Why is it so entrepreneurial? Why do start-ups sprout like weeds here? Innovation is the lifeblood of economies and of nations. GDP growth is often the result. Many other cities and countries have tried to copy Silicon Valley and yet no one has really been able to duplicate its success. This is an insider's answer to these enduring questions. At this point, entrepreneurialism has become ingrained in the local culture. My daughter, who is in elementary school, does not have an annual science fair. Her school has an Invention Convention. The children are not only expected to invent something that makes their lives easier or better, they are expected to write a simple business plan as part of their projects. This is 2nd grade in Silicon Valley! Recently, I attended one of the more popular professional events held in Silicon Valley - Tech Titans of Tomorrow. The title may be a misnomer as these teenagers are more apt to be referred to as Today's Teen Titans. This annual event invites teenage entrepreneurs to talk about their organizations and their products, and concludes with a session where the teenagers pitch their products to investors for funding. At this year's event, one 17-year-old raised money to start an investment fund that is targeted at providing funding to teenagers to turn their product ideas into a reality. Another teenager received a grant to install centralized energy monitors into local schools so administrators could see which rooms and equipment were creating their huge energy bills; the result is a $5,000 per year savings on their electric bills for each school. Yet, another had started his first company at age 11 and had started three companies by the time he entered college - a lawn service, an company making accessories for handheld PDAs, and an IT services firms helping what he termed "old people like my parents and grandparents" with their computers and mobile devices. Yet another teenager was proud that he had one of the top iPhone applications.

There was nothing like this where I grew up in New York. My parents expected me to go to college and study science and technology and then continue on to graduate school-all in hopes of landing a good job for life at a Fortune 500 company. The environment my daughter is growing up in would have seemed alien to me as a child. Entrepreneurialism is taught at a very early age in Silicon Valley.

Ideas flow in the valley like a river. There are numerous technical, business, and entrepreneur groups everywhere. There are breakfast clubs, lunchtime roundtables, meet-ups, and evening pitch sessions. There are so many of these meetings and events that one has to be very selective in choosing which to attend. An entrepreneur can find someone to talk to almost anytime, anywhere-24/7/365. People present their ideas at meetings; they talk with colleagues and potential investors about them; entrepreneurs gather feedback and refine and hone their ideas. Product concepts and new business models are bantered about on a huge scale. It's a regional brainstorming meeting. This is the reason why, when an idea emerges, there can be dozens of start-ups funded to pursue the same product.

Bill Gates, Michael Dell, and Steve Jobs are newspaper headliners. To most people, they may as well be fictitious characters in a bestselling novel. In Silicon Valley, entrepreneurs are here, there, and everywhere. Our neighbors and colleagues around us seem to all be entrepreneurs or know someone who has succeeded beyond their wildest expectations. We don't have to go far to find someone who has started a company: they live right next door to us or their children go to school with our children.

In the technology business, success goes hand-in-hand with failure. We learn more from our failures. They define us more than our triumphs, and Silicon Valley has had more failures than anything else. Access to "how to do it" and "how NOT to do it" is nearby, and everyone is willing to pass on his or her experience. Most of the universities in the area have entrepreneurship programs and competitions. There are not just academics teaching at these colleges: many of those teaching are retired entrepreneurs who have started some of the noteworthy Silicon Valley start-ups. In Silicon Valley, we call this "Mentor Capital."

Silicon Valley has immigrants from all over the world - India, China, Africa, Europe, Australia, and every corner of the world. These entrepreneurial immigrants have left their homelands and families - they are go-getters because they literally did get-up-and-go. They are risk takers, they are highly educated, they work long hours, they are ambitious, and they are willing to work for less than market salaries. This large immigrant workforce has also given Silicon Valley a great advantage in the era of globalization with their in-depth knowledge and connections throughout the world.

Silicon Valley people are stock-option savvy individuals. Almost everyone works for options in Silicon Valley. There is even one recruiter who specializes in finding "employees without paychecks" searching for workers who will work for 100% stock options until the start-up secures its first round of funding. It's not just the employees. Services will also defer payment until a start-up is backed by investors. Many building owners have made their money not from office rents, but by taking equity stake instead of monthly rent checks. Suppliers will also take an equity stake instead of cash payment for equipment. The eco-system of service providers, employees, and investors is well established in Silicon Valley, and it's not the exception-it's the norm. It takes an extensive community to create and foster start-ups and innovation.

Recently, I hosted colleagues from the Midwest who had never been to Silicon Valley before. They noted that people in Silicon Valley people are unconventional, and they don't feel the need to conform. Workers in Silicon Valley don't expect to keep their jobs for life; most don't even expect to make a decade at a company. I read the average worker in Silicon Valley changes jobs every 18 months. Maybe this, too, is part of the secret formula. As W. Edwards Deming once said, "Innovation comes from freedom. It comes from those who are obligated to no one. It comes from people who are responsible only to themselves."

The cycle of life in Silicon Valley starts when a venture capitalist, angel investor, or former start-up company provides seed capital to an entrepreneur with just an idea. If the idea succeeds, that same entrepreneur becomes an investor and that successful startup creates a corporate venture group to fund the next generation of entrepreneurs and start-ups. And the cycle of innovation continues.

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Article Tags: entrepreneurs, innovation, Silicon Valley, startups, technology



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