Should other ecosystems stop trying to copy the Silicon Valley ?

It’s a fact that nobody can deny: the SIlicon Valley is the most dynamic entrepreneurial ecosystem in the world. Yearly studies keep confirming it, and it is increasing its overall domination: last year the Valley attracted about 40% of private investments in startups (about $20 B). Other states leaders and foreign governments keep scrutinizing this area, hoping to replicate its secret formula and host the next Facebook. Unfortunately, the secret is well kept and no one succeeded in this enterprise until now.

Nevertheless, some of the ingredients are pretty well known. Among the most importants:

  • Successful companies, that set examples for aspiring entrepreneurs, foster scientific research and support entrepreneurship
  • High level research, thanks to the presence of institutes such as Stanford, Berkeley, and other well-performing research centers
  • A dense pool of specialized investors, VCs and angels, perfectly integrated into the local ecosystems, and ready to fund the best projects
  • An incredibly talented network of professionals, constantly interacting, exchanging ideas and accelerating the development of new projects. The magnet effect of the region generates a permanent renewal of the workforce, therefore maintaining a great dynamic
  • A unique culture of entrepreneurship, and a startup creation rate 3 to 4 times higher than any other region in the world

Although most of these features could theoretically be duplicated in other region, generating an identical sense of entrepreneurial culture seems impossible. Still, some other ecosystems are performing very well, in the U.S (Boston, New York, Research Triangle Park, etc.) as well as in the world (London, Toronto, Paris, Tel Aviv, Berlin, etc), and needless to say, with very different characteristics than the Valley.

A study conducted with 20 000 startups all over the world, by the company Startup Genome, revealed some wide differences between these ecosystems and the SV :

  • While SV entrepreneurs tend to focus on new markets of very wide size (several billions), european entrepreneurs, especially in London, favor markets that are more mature, and can be conquered pretty fast, to sell the company in a short amount of time
  • SV entrepreneurs focus twice more on online games or social networks than their NYC counterparts, who are ahed on design and fashion
  • SV entrepreneurs tend to have a scientific background, whereas in Europe, founders with business as a primary degree dominate

These facts, beyond blunt analysis, reveal that successful ecosystems rely mainly on their own cultural forces, and pass it on the startups. This is the fundamental teaching of the study, that suggests that duplicating the Californian model is a big mistake.

Of course, no one will argue that Facebook’s impact, especially after its IPO, is gigantic. It will create a new generation of Business Angels who will invest a lot in new companies. But could Facebook have had a similar faith anywhere else ? Marck Zuckerberg already confessed that no, especially last time when he came back to Boston, where he invented Facebook.

By choosing to focus on its cutting-edge R&D facilities and a high quality workforce specialized in design and product dévelopment, the Research Triangle Park, in North Carolina, is still the home of IBM, Lexus or Lenovo. A lot of rising startups, such as AirBnB, come to the region to hire developpers, who are as talented than in the valley, cheaper to hire and more available. That’s how the region tries to keep a competitive edge and prevent a talent-drain toward california.

This example can be a source of inspiration for the creation and development of dynamic entrepreneurial ecosystems. The Silicon Valley’s model, as effective as it is today, may not always be the one to admire. The domination of the web these last years engaged some experts to think that the Valley is creating too much economic value but not enough social and human value through most of its startups. Yet, in a decade or less, these two values may be the most important success factors for new companies, and those that will integrate them most will become dominant players.

Will that be in Silicon Valley or somewhere else ? Polls are open !

The original article, in French, can be found here


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