The Silicon Valley Startup Dream
When working with foreign entrepreneurs, people inevitably ask why Silicon Valley has so many successful companies. My immediate response is, “Why does Hollywood have so many Oscar-winning movies?” It’s about clusters of people, companies, capital, expertise, and resources all coming together in one place.
When William Shockley set up shop in Palo Alto and kickstarted the creation of “Silicon Valley,” he did so because he wanted to be close to his aging mother. Every other entrepreneur since Shockley has moved here for a different reason, and I wanted to set out to find some of these stories. Like Hollywood, the San Francisco Bay Area has an instant advantage when the most talented people flock to one location. But is there anything that other cities can do to attract great entrepreneurs to their region?
Home-Grown Heroes
(aka the Lebron James Effect)
Many famous entrepreneurs were born and raised in Silicon Valley. Steve Jobs was born and raised there, benefiting from growing up surrounded by HP engineers. Had he been born elsewhere, there’s no saying how his life would have unfolded.
Pandora
Will Glaser was born and raised in Oakland, CA. After attending Cornell back east (go Big Red), he founded the Music Genome Project with two Stanford graduates, Jon Kraft (born Brookline, MA) and Tim Westergren (Minneapolis, MN). Pandora’s current headquarters is clearly located where it is due to Glaser’s home town bias, but perhaps his co-founders would have settled closer to Stanford instead of the East Bay.
Immigrants Welcome
Palantir Technologies
Peter Thiel was born in Frankfurt, Germany, and his parents moved to Foster City near San Mateo when he was 1 year old. Being raised in the Valley clearly impacted his entrepreneurial passion, but this was only possible because his parents chose to move there. Thiel’s father was a chemical engineer, which offered them lots of opportunities for places to move, but Silicon Valley was the ultimate opportunity for him to grow into the visionary entrepreneur and investor we know today.
Thiel’s other co-founders for Palantir were born in California and attended Stanford. Alex Karp, who would go on to join as CEO, was born in Philadelphia, but met Thiel at Stanford, which is what ultimately brought him back to the Valley.
When Jan Koum was 16 years old, he emigrated from Kiev, Ukraine, to Mountain View, CA. Unlike Thiel, Koum’s mother had to work as a babysitter and live off of social assistance in order to survive. The generosity of the State of California provided a very stable environment for the family, and within years of arriving Jan developed a taste for programming and enrolled at San Jose State University.
Jan’s co-founder, Brian Acton, was born in Michigan and moved to the Valley to attend Stanford (sound familiar?).
Big Companies
Not every founder moved to Silicon Valley just to start a company. Unlike aspiring actors in Hollywood—who wait tables and brew coffee—entrepreneurs in training can earn a decent living in the area sharpening their skills.
Ben Silbermann was born in Des Moines, Iowa, and moved to the West Coast after graduating from Yale to work at Google. His co-founder, Evan Sharp, was born in York, PA, and got a job at Facebook after graduating from the University of Chicago. Both of them were drawn to the area by large companies with interesting projects, which enabled them to plant roots and build networks, which ultimately proved valuable in the launch of Pinterest in 2010.
Venture Capital is LOVES Silicon Valley
There is no doubt that the center of gravity for the venture capital community is somewhere on Sand Hill Road. Entrepreneurs seeking capital make the pilgrimage to see the VCs, but every once in a while investors will find a great company elsewhere and recruit the team to move to the Valley.
Uber
Garrett Camp was raised in Calgary, Alberta, BC, and started StumbleUpon with his classmates at the University of Calgary. As the website grew, investor Brad O’Neill helped set up a round of funding from prominent Silicon Valley angels and move the company from Canada to the Bay Area. StumbleUpon was purchased and then spun-off by eBay.
Travis Kalanick was born around Los Angeles, CA, and built his first two companies, Scour and Red Swoosh, there. After selling his second company, Kalanick was enjoying his success by traveling the world. After meeting Camp in Paris and crafting the idea for a car-sharing service, the pair started their new company in San Francisco—not LA—where Camp had deep contacts, including investors.
Dropbox
Drew Houston was born in Acton, MA, and famously created the idea for Dropbox while a student at MIT. While the idea was still very much in its infancy, Houston received an offer to join Y Combinator in Silicon Valley on one condition… he must find a co-founder to join him. Back at MIT, he partnered up with Arash Ferdowsi, an Iranian-American born in Overland Park, Kansas. Without Y Combinator, Dropbox may have remained on the East Coast or never have existed at all.
Center of Everything
Silicon Valley is the global center for entrepreneurship. For many entrepreneurs, this is enough reason to pick up and move their company and their lives.
Evan Williams and Jack Dorsey both grew up in the midwest. Williams grew up in Clarks, Nebraska, and moved to the San Francisco region to work for O’Reilly Media. Dorsey left Missouri for NYU, but dropped out to move to Oakland, CA. Both of them seemed drawn to the region for its reputation, even if their jobs were nothing special. Biz Stone joined up with Williams after aggressively seeking him out and moving from NYC, where he was working for Xanga.
Square
Jack Dorsey was living and thriving in San Francisco when he paired up with Jim McKelvey to create Square. The pair had worked together in St. Louis, MO, years earlier. McKelvey had the initial idea and joined up with Dorsey to grow the company. But even though McKelvey still lives in Missouri, the strength of the region has kept Square in San Francisco.
AirBNB
Joe Gebbia grew up in Atlanta, GA, and attended the Rhode Island School of Design. After graduation, he moved to San Francisco, which he described as a “hot bed of entrepreneurship” and the leading industrial design city in the world. The city proved as exciting as he had expected, so he spent years convincing Brian Chesky—a native of Niskayuna, NY, and a RISD classmate—to move from Los Angeles to join him in San Francisco. Once together, they quickly created the first version of AirBNB to house conference attendees and make a little extra money.
Founded at Harvard by a group of East Coast natives, Facebook quickly made the move to Silicon Valley. Despite being thousands of miles away from their users, the team moved to California and never looked back.
How Can Other Regions Compete?
Given the reasons why this generation’s top entrepreneurs decided to start their business in the San Francisco Bay Area, it’s hard to find many ways that secondary or tertiary cities can compete. You can find schools as good as Stanford or big companies in many cities, but you cannot recreate the reputation and resources of Silicon Valley. But the question I ask is whether or not that is a bad thing.
Hollywood will be the top creator of blockbuster movies for the foreseeable future, but New York will be the hub of theater production and news. Chicago and New York will continue their dominance in advertising, and plenty of music will be produced out of London studios. And for small regional content, there will always be local stations producing relevant content. Plus, in other countries, the state-owned broadcasters will create great local-language content without any concern as to whether their efforts will be recognized by The Academy next year.
I don’t think anyone would argue that Twitter could have been founded in Evan William’s home town of Clarks, Nebraska, and no amount of public initiatives would have changed that. But there are plenty of opportunities for entrepreneurial success in other cities, states, and countries. We just need to stop trying to copy Silicon Valley and focus on creating environments that can leverage the resources and talents of each region. Some may say this is defeatism, but I say it’s a realistic view of how and where global-scale startups can thrive.
