Competing with Silicon Valley

While our society doesn’t agree on much these days, one near indisputable fact is Silicon Valley being the world’s tech capital.

The major tech companies started there decades ago and it’s only grown in this technology revolution we see today. But I wonder if this will change in the next decade or so. Not that Silicon Valley will lose its luster but whether other cities are able to provide a compelling competitor.

Let’s start with what makes Silicon Valley so successful. Rather than count the ways myself, I’ll hand it over to Singularity University’s article in Forbes… Who Can Compete With Silicon Valley. As the article so eloquently states, it’s all about the ecosystem. Replicating Silicon Valley is about tapping into a multitude of different variables that attract talent and facilitate success. So let’s go through a few of those…

1 — The Elders. Silicon Valley has a long history of successful companies. Any city wanting to compete needs to have a few proof cases. These “elder” companies go on to employ, train, inspire, and mentor future tech founders in that locality. If there has never been a major international startup success in the city, it’s hard to build the full startup ecosystem.

2 — The Education. Silicon Valley has the esteemed California university system and Stanford right next door. These universities are churning out technology educated and interested graduates, while partnering on interesting research endeavors. A future competitor needs a strong education system linked into the ecosystem.

3 — The Money. Startups are reliant on funding. Angel investors, venture capitalists, and banks are all necessary in building up the startup ecosystem. If a city lacks good financial infrastructure and funding vehicles, it will struggle to attract founders and limit itself in building great companies. Silicon Valley has hundreds of funding options. A competitive city should make capital investment easy and a strong selling point to potential founders.

4 — The Spirit. Silicon Valley has an aura about it... Anyone can succeed and go on to be the next Facebook or Uber founder. It thrives on dreaming of maximum success. A competitive city would want to replicate such spirit. You can’t be striving for average. You aim for nothing less than changing the world.

5 — The Facilitators. Silicon Valley has all hands on deck to facilitate successful startups. It has the accelerator programs. A supportive government. Business and lifestyle services aimed at the startup founder. The entire area caters toward building a startup. You don’t encounter roadblocks or constraints. Enablers only.

6 — The Culture. Silicon Valley has its own unique culture. Healthy and unique eating options. Large campuses with all-inclusive facilities. Interesting benefits. Openness, where you can have a coffee and learn/collaborate with anyone. All of this is unique. And it attracts people to be part of it. A competitive city should also strive for a defining culture. These examples aren’t necessarily mandatory. Each location should be unique in their own way.

7 — The Mission. Silicon Valley is the world’s technology capital. It thrives on that mission of using technology to power our lives. They also have a secondary mission of making the world a better place through tech. Solving that challenge is what enables everything we’ve mentioned here. It motivates people from around the world to relocate to Silicon Valley and play their role in its sustainable success. And it aligns itself with the other stakeholders we’ve mentioned (education, government, investors, etc). A Silicon Valley competitor doesn’t necessarily have to copy this mission. They might be after something else. But they should definitely rally around a common cause (beyond just making money).

When you go through the list at this stage, you realize that competing with this full Silicon Valley ecosystem is tough. But we’re going to add a few new things to the list because Silicon Valley does have 3 main weaknesses…

8 — The Livability. Silicon Valley has become far too expensive and that’s a real threat. For a startup founder that lacks millions in funding, why live in a place with such unaffordable housing and life costs? If you’re already making $250k+ at Google, that’s a different story. But the founders of the next Google size startup may opt to go elsewhere. If another city could offer the other aspects of the ecosystem for a fraction of the price, wouldn’t it be logical to choose that? Competitive cities can boost their livability appeal beyond just expenses and seek out other desirable features (the weather, local attractions, culture, etc).

9 — The Economic Competitiveness. If a founder has trouble living in Silicon Valley, what about finding other employees? Now that programming skills are more of a commodity, can’t they find someone in another city or country instead? Absolutely. You can hire the rest of your team at a fraction of the price. And we now have the collaborative tools to make that happen. Silicon Valley startups are at a competitive disadvantage economically. A startup from Eastern Europe, for example, might be able to hire 2–3 times the staff under the same budget. Competitive cities should consider how to market their economic attractiveness to potential founders.

10 — The Connection. Silicon Valley critics might call their world an isolated bubble. If this is true, how can they sustainably connect to other industries or customers? The “real world” looks a lot different than their internal culture, which risks becoming disconnected with society’s wants/needs. Competitive cities might find a niche that better connects startups to the real world. And they might facilitate that connection as a key feature of choosing their city.

So the question is… can any other city compete with Silicon Valley?

It’s highly unlikely anyone will replicate it completely. But certain cities may vie for interesting niches. For example, Singapore, London, and Hong Kong might become the go-to fintech spots. Moscow and Dubai for energy startups. Berlin and Tel Aviv are doing some impressive things. China’s government investment is staggering. These locations are already highly rated startup hubs.

And maybe changing technology allows others to build a competitive ecosystem. Might there be a go-to place for virtual reality startups? Or biotech startups? Or blockchain startups? Might someone try to be the go-to place for education? Or financing through innovative government backed programs? We see potential for such things to happen.

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