Silicon Valley Edge

date Oct 6, 2010
authors Lee, Miller, Hancock, Rowen
reading time 3 mins
  • Book Title: Silicon Valley Edge - A Habitat for Innovation and Entrepreneurship
  • Author: Lee, Miller, Hancock, Rowen
  • Year written/published: 2000
  • Some extracts:

10 features of the Valley’s habitat:

  1. Favorable rules of the game
  2. Knowledge Intensity
  3. High Quality Mobile Workforce
  4. Result-Oriented Meritocracy
  5. Climate that rewards risk-taking and tolerates failures
  6. Open Business environment
  7. Universities and research institutes that interact with industry
  8. Collaborations among business, government and non-profit
  9. High quality of life
  10. Specialized business infrastructure - array of support services

Know how and Know that…

Know how is akin to practical experiences, know what to abstract information. WIthout the requisite now how, know that has limited usefulness. With only know that, you might talk a good game, but you would never be able to play one.

An Innovation framework:

  1. Defense (1950s)
  2. Integrated Circuits (1960s)
  3. Personal Computers (1980s)
  4. Internet (1990s-2000s)

Creative destruction…

The economist Joseph Schumpeter, best known for coining the phrase “creative destruction” to describe the process of economic innovation, outlined a dynamic framework for understanding innovation: Economies are driven by successive waves of innovation, during which entrepreneurs take advantage of opportunities and then “swarms” of new firms cluster around talent and technology.

Lesson on Silicon Valley…

The lessons to be learned about Silicon Valley, the innovation region, is that new events will drive entrepreneurs towards opportunities in a ceaseless cycle of Schumpeterian creative destruction. I this model of discontinuous economic development,it is difficult to predict the future based on current trends. Innovation is driven by new breakthroughs and entrepreneurs who drive dynamic change resulting from these breakthrough. What we do know is that the innovation region will continue to discover the new opportunity and take advantage of it. Innovation and entrepreneurship built on strong foundation of regional networks is the right model for the future of Silicon Valley.

Insanely great products…

It was during this time that the valley built its foundation on what Steve Jobs would call making “insanely great products”. Everyone really believes that people would beat a path to your door if you could design a great product. And that’s why people questioned the value of customer marketing here. Instead. product marketing, which depends upon close relationship with the engineers in product development was important. During this time, it was apparent that if we went to the marketplace and asked people what they wanted, they would never get into the passing the lane with that information. All great products arose not from customer research, but from product marketing and a full understanding of what customers were really trying to do.

Differences: Motivation for venture owners:

  1. Small Business owner: Make daily living and hope for financial success
  2. Traditional Entrepreneur: Commercialisation of highly sophisticated technology or patent
  3. Silicon Valley Entrepreneur: Aiming for global level of success with entirely new technology

R&D and Innovation:

  1. Small Business owner: Constant struggle to maintain business, stay competitive, and improve products/services
  2. Traditional Entrepreneur: Highly creative ideas for new products and markets
  3. Silicon Valley Entrepreneur: Excellent access to new technology

Types of Silicon Valley Entrepreneurs:

  1. Long Term vision
  2. Acquisition entrepreneur
  3. Transformational entrepreneur
  4. Serial entrepreneur

First order model for Viral spread:

cumulative users = (1+ fanout) ^cycles

In this model the exponent cycles is the number of times the product is used in the time period since launch (or frequency * time). In the early days, Hotmail and ICQ fanned out to about 2 new users every month, and they each in turn told 2 friends and so on. Success of the recruiting message and the retention rate as a percentages: Cumulative users = [(1+fanout) * conversation rate * retention rate]^(frequency * time)

Requirements of a successful Startup:

  1. The right product
  2. The right team
  3. Sources of capital - Angel investors, Professional venture capitalists, Large industrial firms
  4. Appropriate infrastructure - Technical characteristics, Social Characteristics, Educational resources