What’s your plan B?

The Untold Secret Of Silicon Valley: The Talent Safety Net

Benjamin Joffe
Sep 10, 2017 · 4 min read

In their constant quest to build the “next Silicon Valley” or the “Silicon Valley of X”, many government officials and journalists ask my opinion about what they should do.

Almost exactly five years ago, I wrote a quite detailed article on TechCrunch called “Ecosystem 101: The Six Categories That Define Silicon Valley”. It got quite popular, with lots of subsequent input about other geographies I had not looked into.

I thought then and still think it provides a valuable method to quickly evaluate startup ecosystems (I am not a big believer in surveys and other methods for this).

Yet, something was amiss: this approach was useful to evaluate an ecosystem, but didn’t really recommend what to do next.

The categories I had were: market, capital, people, culture, infrastructure, regulations. Most would take a very long time to change. Yet, one seemed more elusive: culture.

Culture Is The #1 Safety Net

What I came to realize, rather recently, is that the #1 reason Silicon Valley works is that people can find jobs after they fail.

Startups in the Valley: all fun and games

Compare that to what the ex-Chairman of Hitachi told me in Tokyo recently: I asked him if an employee could return if he left to start a company or else. His answer: 許されない (we would not forgive).

It’s not even failure that is penalized, but what is seen as betrayal. And other companies would probably hesitate to hire such person too.

Basically, the penalty for venturing out is severe way beyond the time and money invested in a startup: it might ruin your career and your life.

Startups in Japan: the same slackline, but a much painful fall

That situation might have evolved now, but probably not quite enough. In short, there might be as many potential entrepreneurs in Japan, but if you fail, you have much more to lose. You too would be “risk averse” in such environment. Startups are 90% failures, and failure is career suicide.

Other Safety Nets

There are a few others nets I mentioned in a Forbes article before, but I believe are of lower importance:

  • Social benefits for entrepreneurs until their new income matches what they are entitled to,
  • Ability to take an unpaid sabbatical and go back to a job,
  • Ability to have limited liability (some countries don’t make it easy)

Silicon Valley does well without those so I don’t think they are overly important if the job market is fluid.

So there you have it. If you want a better startup ecosystem, large companies have to start hiring startup people. France actually started to do this and the ecosystem is now thriving. Why does it make sense? Because:

  • Startup people are motivated
  • They see the plus and minus of corporates
  • They can help bridge with the outside innovation.

The world’s largest startup campus, StationF, even opened recently in Paris, funded by $270M from local tech mogul Xavier Niel. It can host 1,000 startups and 4,000 people.

StationF haz startupz

France was also the third largest startup contingent at CES in Vegas this year, behind U.S. and China, ahead of… well, all others and by a long shot.

So if you want to build a Silicon Valley, look at how France changed and learn from it!

Add-On: Why Pushing People To Startups Is Irresponsible

I’m an investor and for us, the more startups the better. We get to pick and don’t have to care much about the collateral damage. Money controls the media conversation so you will rarely see anyone argue for the well-being of founders (aside from making sure they don’t burn out — but that’s also self-serving).

As long as the startup experience is not recognized in the larger job market, it is a very, very risky thing to do. If the result of failure in your local ecosystem is wrecking your life, you could move to a place where failure has less severe downside, and be prepared to stay there for a while. Otherwise I wish you good luck!

Note: one thing I haven’t figured out yet is WHY France changed. Did CEOs of MNCs change their mind? Were they replaced by open-minded ones? I don’t know.

Do you know of other safety nets? Let me know in the comments, by email at ben@hax.co or on Twitter @benjaminjoffe.

SOSV - The Accelerator VC

Posts from our frontier deep tech programs: HAX, IndieBio, Chinaccelerator, MOX, and dlab.

SOSV - The Accelerator VC

Posts from our startup accelerators: HAX (hardware), IndieBio (life sciences), Chinaccelerator/MOX (cross-border internet), and dlab (blockchain).

Benjamin Joffe

Written by

Partner @ SOSV — $700m VC fund for Deep Tech (biology, robotics, etc.) | Digital Naturalist | Keynote Speaker | Angel Investor

SOSV - The Accelerator VC

Posts from our startup accelerators: HAX (hardware), IndieBio (life sciences), Chinaccelerator/MOX (cross-border internet), and dlab (blockchain).

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store