There is the inevitable question that arises during these DEMO meetups we’ve been holding around the country. Matt Marshall and I both hail from Silicon Valley, and here we are in New York, D.C., Seattle, L.A., and next week Boston and Austin. More than once a night at any of these events, someone is bound to ask what we think of their entrepreneurs or want to know how their city stacks up to the Valley and other stops on our tour?
My typical answer is a quick assessment of what I’ve seen, a comment maybe on the youth of the companies or the focus of the technologies. And then I make some remark about the importance of getting outside Silicon Valley. The Valley doesn’t have a lock on innovation. Smart ideas are inspired by a range of experiences. The go-go energy of the Valley may actually be harmful to some developing companies that need time to unfold and grow.
This particular DEMO Tour, though, comes at a time when Guidewire Group is working on a project to identify startup talent and potential in regions well outside Silicon Valley. That work and this travel now have me thinking a lot about what sets Silicon Valley apart as a technology center, and why some cities are fertile environments for technology startups while others are good places to be “from” as entrepreneurs move “to” more vibrant communities.
In short, it all comes down to ecosystem and environment.
Admittedly, my thinking here is not fully formed (which is another way of saying, “Come on; challenge it! I need the feedback.), but let me try to explain.
I’ve long held that technology startups – perhaps every kind of startups – require a rich ecosystem to flourish. That ecosystem includes entrepreneurs and investors, most certainly, and also research academics; business advisors; lawyers, PR and marketing agencies, search firms, and many other kinds of service firms who specialize in working with young companies; established technology partners; eager early adopters; and even economic development and government agencies charged with business growth. Silicon Valley has all these things in spades. And it would be pretty easy to stop right there and determine that a region requires all these things in order to be a rich environment for entrepreneurship. In fact, that’s right where I left my thinking on the topic a number of years ago. You need a complete ecosystem, period, to create an environment in which startups can flourish.
Our stop in Seattle, though, has me thinking that there is more to the equation. A diverse, even if not complete, ecosystem is necessary, but it may not be sufficient to create a thriving environment for entrepreneurship. Beyond the obvious, what other factors contribute to Silicon Valley’s success?
I’ve come up with these broad categories, and it is my forming theory that a matrix of these factors contribute to the overall vibrancy of a region.
Completeness of the Ecosystem I might now argue that while there are necessary actors, say entrepreneurs, business advisors, and seed investors, that access to expanded networks – that is, other ecosystems, may be as important as presence within the an ecosystem.
Geography Does the physical region contribute to a concentration of startups, which in turn supports the exchange of ideas, cooperation, and competition that spurs entrepreneurs? Are there physical meeting points that encourage the spontaneous encounters that lead to the spread and support of ideas and thought leadership?
Economic diversity Is the regional economy broadly based or dependent on only a handful of industries? To what degree are other businesses in service to a leading industry?
“Anchor tenents” Which leading companies anchor the technology ecosystem in the region and how do those companies foster or discourage entrepreneurship? Employee incentive plans, for example, may incite entrepreneurial talent to remain in large companies rather than start new businesses of their own, for example.
Academic competition The strength of and rivalry between Stanford and Cal not only spur their own excellence in business and engineering, they drive Santa Clara University, San Jose State, UCSF, and other colleges and universities to be more competitive and offer more programs in support of technology entrepreneurship. By contrast, perhaps, Harvard’s identity with business and MIT’s with engineering may cultivate great talent but perhaps not great competition between them and among Boston’s many outstanding universities.
Local heroes Success breeds success. Do successful entrepreneurs remain in the community and continue to contribute to it? An increasingly robust startup environment is growing in Boulder, Colorado, for example, in large part due to a few entrepreneurs who re-invested their wealth, time, and energy in the region.
As DEMO continues its tour through the end of June, I’ll try to test these theories. I’d also welcome your feedback. What am I missing? Where am I wrong? What rings true? DEMO is its own ecosystem, after all, and I’d love to hear your thinking.
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Hi guys, waited a little bit more from that demo meeting, but anyway at least we've discussed some exciting questions.
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Here is what read in one essay about Ecosystem. The term ecosystem was coined in 1930 by Roy Clapham to mean the combined physical and biological components of an environment. British ecologist Arthur Tansley later refined the term, describing it as "The whole system,… including not only the organism-complex, but also the whole complex of physical factors forming what we call the environment". Tansley regarded ecosystems not simply as natural units, but as mental isolates. Tansley later defined the spatial extent of ecosystems using the term paper ecotope.
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