As seen on telegraph.co.uk
What I learned from the new masters of the universe in Silicon Valley
Fearless. That’s the aura of San Francisco and Silicon Valley. And that one word has acted as a magnet for people, capital, skills and ideas on a scale that is jaw-dropping to the new arrival.
I have spent the last week meeting and interviewing British tech entrepreneurs living and working here. There are up to 250,000 Brits living in the Bay area and they are helping to build nothing less than a new world capital for the confident.
Take Michael Birch, the understated founder of Bebo, who exited for a cool $850 million and put it to me like this, “There is a fearless belief that you can achieve anything here.”
He should know. He has just opened a 58,000 square foot members’ club, The Battery, which is staggering in its scale and ambition. A shrine to ideas, creativity and the quest for perfection, it is a physical manifestation of the Valley’s pursuit of the exquisite in all things. As one entrepreneur put it, “anything but perfect just will not do.”
Huddle’s Andy McLoughlin came to the Valley on the mantra of “Go Big or Go Home” and he told me that, “Everyone here is focused on making a world-beating company. We came out here in 2007 and you could immediately feel the palpable energy.”
Simon Segars, the chief executive of Arm, arguably Britain’s most successful ever technology export, agrees. “The spirit of entrepreneurialism here is unique, really quite special,” he said.
In fact, in the Valley, they tend to not even use the word entrepreneur. They far prefer the term “founder”. I think it has a different connotation than it does for the UK where it tends to be a more functional description.
Whether they acknowledge it or not, today’s Silicon Valley founders are in a very real sense the torch-bearers of the principles upon which the original founding fathers built the States. Enterprising builders of capital and ideas, advocates of life and liberty, they are heirs to the self-evident truths enshrined in the Declaration of Independence. Here, the founding of a business is the embodiment of the American Dream, the most economically exulted and commercially celebrated act of creation.
This belief in free enterprise is everywhere and it is powerful. Today’s founders maintain a visible legacy with their pioneering past. I visited an exclusive golf club that in the UK might have adorned its walls with the great and the good of years gone past. Not a bit of it here. Try the colourful entrepreneurs of yesteryear; the bootleggers, the 49ers prospectors, and roguish robber barons.
But history goes only so far in the Valley. Where many of us might fret about being trapped by the past, the fear here is of becoming stuck in the present.
Today’s generation of Silicon Valley buccaneer is not part of some short-term bubble. Their time has come and the future is the name of the game.
And, while some in the commercial world view the pace of change as a danger to be checked, on the West Coast, business has its foot to the floor to speed things up.
There is a fixation among Valley entrepreneurs with confronting the impossible at every turn. From technology-led cancer cures through DNA coding to realising the potential of big data, there is an impatience to make the impossible not only realisable but inevitable. It’s not bragging, it’s just part of living in an intense world that, for people here, is limitless in its scope and ambition.
In large part, that is due to the extraordinary mix of cultures the Valley attracts, like a latter-day Ellis Island. “Most people here are not from San Francisco,” says Bebo’s Birch. “Because it’s all here, people want to come here.”
“If you look at our HQ it is the United Nations,” says Simon Segars. “People from all over the world flock here.”
Ebon Upton, the Raspberry Pi founder, highlights the “brain drain to the Bay and its ability to suck in talent” as a major part of its competitive advantage.
That accumulation of the world’s talent builds a velocity of creativity in the Valley. In the reception of one corporation I visited is the Einstein quote: “Creativity is contagious. Pass it on.”
Think driverless cars are a thing of the future? Here the expectation is that everyone will be using them on Californian freeways within ten years.
Here Apple is building a new headquarters that, when completed, will be bigger than the Pentagon. It’s a place where corporations will soon have the commercial firepower of nations.
Silicon Valley is on a scale that I found almost unimaginable. It is a river of money flowing 1,800 square miles with over 20 of the Fortune 500 based in the Valley alone. US venture firms invested $7.8 billion in 1,005 start-ups in the third quarter of 2013. Nearly half that money went to Valley companies.
“The thing that really makes Silicon Valley impressive is the reinvestment in new companies,” says Huddle’s Andy McLoughlin.
Only when you are here can you can see why WhatsApp went for $19 billion. For Silicon Valley, the recession is not only over, but many argue that it never even arrived.
It is a muscular and mainly masculine world brimming with confidence. It is one where youth is the cult to be celebrated. The average age of a founder is just over 33 years old.
And, while some point to issues of arrogance and naiveté, for the most part there is a more functional relationship with age. John Reynolds, of the language technology business Swiftkey, said, “People in their 20s have no clue about what can’t be done, they just set about solving the problem.” And of course they often do precisely that.
The Information Exchange
The focused role of the university is crucial to the success of the Valley, explains Birch. “If you’re at Stanford you are very likely to work for a start-up and everyone knows it. All the firms want to hire the best grads from Stanford.” He contrasts this focus on channeling talent with his own experience in the UK, “I graduated with a degree in physics and wondered what the hell to do and ended up at an insurance company.”
McLoughlin speaks of the pivotal role of “universities sponsoring innovation and supporting it with cash.”
Reynolds believes that the universities in the Valley have created a massive information exchange. “It feels as thought the ideas are coming from here. You might hear about these ideas six months earlier by being here.”
He believes that the role of UK universities in seeding start-ups has been significantly improving but believes that there is a long way to go. “When I was at Cambridge there was no link with start-ups,” he recalls. “In the UK a lot of people are studying for the pursuit of learning, not thinking about their future or starting a business.”
The collective knowledge of a Valley feeds the shared feeling of having a stake in the birth of new technologies. This is the era of the innovator.
That is why, in this part of America, they do not need to worry about glamorising the image of science to attract more young people. And that culture is spreading. The number one rated job in the US right now is the software engineer. Physics is not for geeks, it is a rock star degree.
The failure fetish
Silicon Valley is a destination rooted in a rejection of knowing your place. It’s about a deeply disruptive generation of founders.
Central to this is the rite of passage that failure provides. Not something to diminish confidence but to build it. Want to know what they call your first failure here? The ‘Million Dollar MBA’. A valuable and sometimes essential process of learning and life experience.
Eben Upton contrasts “the fetishisation of failure here versus the idea that it is shameful to fail in the UK.”
Birch speaks of “a great forgiveness of failure. Whereas in the US they’d ask what did you learn from that, in the UK they would see it as proof that it was a bad idea.”
“Here you are with very successful people so you strive to be as successful as your peers. There wasn’t that same striving for success mentality in the UK. I always felt I could stay at my parents or get a job so I never felt it was a major risk. The only thing I ever really thought I would lose was some face if this [Battery] went wrong.”
Most of the British entrepreneurs I met have an immense fondness for the mother country but I don’t get a sense that many are in a rush to return home.
Many worry about the UK’s appetite to be a world beater, and are concerned that self-interested parochialism could cost the country dearly.
As McLoughlin puts it: “We’re talking about Cambridge and London competing and they are barely 40 miles apart. I know Americans that would drive 40 miles to get a burrito.”
The last time I visited San Francisco was in the summer of 2009. Then the world was gripped with the terrifying scale of the financial meltdown. But there was an air of resilience about the city, it didn’t appear to be a place preparing for economic famine.
Today the appetite for growth is ravenous. That attitude is fearless, the optimism palpable. This is a part of the world that proves the mantra of the SAS. Who dares wins.