What may Europeans still learn from Silicon Valley?

Hervé Lebret has many questions about entrepreneurship: Why aren't there Googles and Apples in Europe? Is tech-preneurial growth a question of culture or infrastructure? Are start-ups really understood?

As a manager of grants to innovative start-ups at EPFL, the Ecole Polytechnique Fédérale de Lausanne, one of the two Swiss institutes of technology, and a former Venture Capitalist, Hervé also has many answers, and has composed an interesting book, which is just out: "Start-Up: What we may still learn from Silicon Valley" (where the "we" is for "Europeans"). It's a provocative subtitle, because Silicon Valley has been studied and dissected in every possible manner by legions of European governmental committees, envoys, journalists, writers, analysts, and attempts at cloning it have been countless (and largely unsuccessful).

So I took Hervé at his own word and asked him to list for this blog the 6 things that Europeans still may learn from Silicon Valley. Here is his reply:

• It is essential to bet on individuals ready to take risks, ready to face uncertainty; the age of the famous entrepreneurs when they created their start-ups shows that youth is indeed a key ingredient. Passion and dreams have to be the keywords for these people. You can not succeed in a start-up without them. Remember Hegel: "Nothing great on the world has ever been accomplished without passion. Of course mental age is as imporant as real age so you also have mature "young people".

• Ambition has been missing in Europe. Entrepreneurs are driven by their ego; they are most of the time impossible people because they are focused on a single thing, their success. Betting on ambition is compulsory. Speed is a linked ingredient; and speed requires resources and money; too many entrepreneurs fear venture capital which is essential; talking about "vulture capital" will not help; business is tough... Without feelings of urgency, your competitors succeed. (BG: see also this previous post)

• Innovation requires entrepreneurs and investors who understand each other; there is a virtuous circle of ideas and money which has to be well digested; of course this implies losing control and dilution, but a small piece of a big cake is better than a big piece of nothing. Understanding venture capital is another component of that world; oftentimes, the investors were themselves previously entrepreneurs. And... money may still be seen as a taboo after the speculative fever of the Internet bubble.

• Of course experience is necessary and Europeans may have nice ideas and technologies but seem less capable of developing them. Silicon Valley has many, many Europeans who may be willing to help, mentor the ambitious young entrepreneurs. These should not be mercenaries, but experienced people interested in sharing, helping. Silicon Valley has been known for this openness; networks of people are very efficient in SV such as Indian, Chinese, Taiwanese, Israeli associations and today these people help their native country.

• The main error that Europe and other areas have made is to put in place first an infrastructure (sciences parks, innovation agencies, fiscal, administrative support and so on) whereas Silicon Valley is an ecosystem, i.e. people who interact informally; the culture came before the infrastructure and there is not much you can do about it... infrastructure does not hurt but has too often been seen as the solution, it is a tool only.

• Finally, Silicon Valley is a cluster of people where the fluidity of the exchanges is the major cultural element. When start-ups are about team, team, team, SV is about people, people, people...

Comments

[Pascal Marmier]

The New York TImes had an interesting article that explains how Silicon Valley works around micro-clusters. Again, to reinforce Herve's point, the main reasons why companies locate in one part of the SV or another is to be closer to and attract talents. I like the part of the article where they segment talents into geeks and prada-wearing socialites. Check out the details at: http://www.nytimes.com/2007/12/20/technology/20cluster.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1198253358-KzI2RAuEbZkrCdP0RNPnIA

[paolo marenco]

Italians vs Silicon Valley...we are not many like indian and chinese in the Valley but we do a relevant job! from the Olivetti time - 400 in Cupertino in the 80ties, now in that building is Apple- many stayed there and some other arrived. Mario Mazzola and Luca Cafiero, Olivetti guys , are still a brain for Cisco future , being the start of Cisco router success. Federico Faggin , patented the microprocessor in Intel ..than started many start ups, Foveon the last. Sangiovanni Vincentelli professor in Berkeley is also the soul and the founder of Cadence and Sinopsys....From these top models, me and Jeff Capaccio, founder of SVIEC - Silicon valley Italian Executive Council in Palo Alto, 400 members- launched , after 3 Silicon Valley Study Tours for Italian graduates organized from 2005, a social network based on Ning ( Gina Bianchini, Ceo, italian origin..!) http://www.siliconvalleystudytour.com . The goal : to link italian graduates startuppers and angels in Italy with SVIEC members in the Valley. Great social networking: 16 Forums, 135 Members, Web 2.0 helps italians to exchange ideas in real real time, at 30 hour phisical distance! I think we are the first foreign community to do it in the Valley , if other are , it would be nice to know them.

[Lucy Hooberman]

Bruno - Nesta hosted a group of Silicon Valley entrepreneurs in London after their visit to Cambridge, Oxford and London Innovation and Research centres. There was quite a bit of talk about what the preconditions are in the US that make it work - and in the Q&A at the end I asked each of them what they would change in the UK if they could change one thing. Here is a link to the main section
http://www.nesta.org.uk/mediaplayer/index.aspx?channel=21
I have had a long talk with Ellen Levy who set the programme up about how it could be added to next year.

[Herve Lebret]

I agree with the comments that follow Bruno's post on my book (thanks!). The challenge is how can we connect better with the relevant Silicon Valley people. The funny thing is that Mazzola, Sangiovanni Vincentelli (whom Palo quotes) are mentioned in my book. There are indeed many Europeans in SV, and they nearly as many as founders of start-ups as Chinese or Indians. But the exchange has to go both ways: we need these people to help us, but we also need to show to young people what SV is. See for example what Tom Perkins says about it: "The difference is in psychology: everybody in Silicon Valley knows somebody that is doing very well in high-tech small companies, start-ups; so they say to themselves “I am smarter than Joe. If he could make millions, I can make a billion”. So they do and they think they will succeed and by thinking they can succeed, they have a good shot at succeeding. That psychology does not exist so much elsewhere"

[Paul McManus]

Hervé hits the nail on the head. It’s not about the infrastructure. Nor, in my opinion, is it about skills; business planning, market analysis, financial modeling etc. It is not even about risk capital, as capital will find the good deals wherever they may be. It’s all about the people, the culture, the ecosystem. The key ingredients are entrepreneurs AND mentors.

In working with entrepreneurs/founders in both the US and other regions of the world, I find the conversations at the formation stage with each to be strikingly different. The discussion US entrepreneur centers not on “if” they should start, but instead "what" the business they intend to start should look like. This conversation often settles into a pattern of discussion along the lines of: “Just because you could doesn’t mean you should”. In contrast, the conversation in other regions follows the line, “Even though you can, doesn’t mean you will”. Thus the challenge for entrepreneurial development programs outside the US is to get would-be entrepreneurs to take make the commitment launch and then, this is critical, support their on-the-job training with experienced mentors.

In the US entrepreneurs are our folk heroes, our role models. We celebrate those who succeed, give those who fail a second chance, while asking both to pass their experience down to the next generation. This is ecosystem at work.

Ad hoc organizations such on such as the OpenCoffe Club (http://www.opencoffeeclub.org/) are building ecosystems at the grass roots level around the world and are but one example of how entrepreneurs self organize into vibrant peer communities, but peer groups are not enough. Educators, NGOs and state programs can accelerate development of entrepreneurial ecosystems but need go to beyond process and infrastructural investments toward building sustainable, multigenerational communities of entrepreneurs. These programs can both encourage and promote native entrepreneurs to play a more visible and active role in ecosystem development, or go so far as to attract successful entrepreneurs from other regions to relocate and join local communities.

Building ecosystems are long term efforts Results will take a generation to achieve, but its never too late to start. Whatever path is followed, it comes back to Hervé’s central point; it’s all about people, people, people.