Silicon Valley: Is Being In The Valley Even Important Anymore?

By James Santagata
Principal Consultant, SiliconEdge

Coming across entitled, "Foreign startups in Silicon Valley still a rarity" I immediately asked myself two questions:

a. Why is that? (first thought: money & visas)
b. Does it even matter to be in the Valley now?

I first moved to the Valley at the end of January, 1995 and although it seems like yesterday I'm still amazed to see how far both the internet and technology in general have come in terms of their capability and diffusion into our society. For instance, while many newspapers at ground zero of the dot com boom, such as the San Jose Mercury News, used to worry and fret about the so-called "digital divide", we see how misguided those worries were as even the Bloods and Crips have made great use of Facebook, Twitter and other online media and communication services.

The fact is, these once nascent and intriguing technologies have now become deeply embedded in our daily existence to the very point that although we rely on them for the most mundane tasks, they have effectively become invisible to us. In fact, they only time we do notice the technology that we've come to rely on is when it fails to work or breaks such as during a blackout.

Over the last 18 to 20 years (and especially in the last 7 years) the skills and knowledge need to quickly and cost effectively build and mass produce these technologies and tools have now become all but common place. Moreover the amount of computing power (and bandwidth) we have stuffed into  just our smart phones is mind boggling as is the ability to buy right off the shelf parts and services of most of the things we need to create just about any product or business and to do so immediately.  

We are now longer concerned with the theory or possibility behind building a router or the design and development of a packet switched (rather than circuit based) networks. It's done and proven. Similarly, IPTV is no longer a dream but a reality. 

I could go on and on but I won't bore you.

Beyond core technology, the Valley has grown and matured in the knowledge, processes, skills and resources needed to not only build a product but to launch a company and to make it successful (although, often times, the Valley still greatly struggles with market-based productization and ultimately the monetization of the product. These two sticking points, by the way, provide huge opportunities for the next generation of entrepreneurs to focus on.

It's again hard to believe, but much of this was only possible in the late 1990's and again in the mid 2000's. First, we had the explosion of open source software, from Linux to MySql to Perl to PHP to Python and beyond with various applications available to all. This was coupled with the continuing march forward of technology-price improvements where the price point of servers, routers, SANs and bandwidth plummeted as the power, stability, ease of use and ubiquity rocketed upward. The knowledge of how to set these up and admin them diffused as well -- from the US and Western developed countries into developing countries and even as far as to the pimply-faced high-school kid across the street who could setup or administer your Linux server. This helped pushed the total cost of ownership (TCO) of these technologies down even further, and making them even more ubiquitous and more intertwined in our lives, whether we knew it or not.

This continued after the Dot Com Boom (or Dot Com Crash depending on your point of view), however, around 2005 and 2006 something else happened. We began to see huge improvements in both the knowledge, formation and management of startups and venture capital investments. Once opaque and arcane industries, terms and activities such as the VC industry, the meaning of the terms on a term sheet (such as a liquidity preference or cramdown) as well as the funding raising process itself become transparent, almost overnight!. 

What was once at best, Tribal Knowledge regarding the startup process and how best to anticipate and overcome common obstacles and business threats soon became openly discussed, then codified and finally shared widely to the point that by reading perhaps 15 bloggers in a variety of thematic areas as well as perhaps 30 additional books, a fairly intelligent person running a startup or looking to launch a startup could go from Newbie to low-level Sage in a matter of 3 to 6 months.

With all of these aforementioned changes as well as the codification and diffusion of knowledge it begins to beg the question, "Is being in Silicon Valley even important anymore?"

I would say it was 10 years ago. The knowledge, what there was of it, was very silo-ed as well as tribal and often very anecdotal in nature. 

But now with all of the knowledge, mentors, books, forms, templates and so on I question that. Further, most of the "tech pain" and "tech risk" has been taken out of the equation. 

No longer do you need to rent some space at some sketchy colo at a  former bomb shelter in San Jose  or Mountain View where you need to provision your own rack and where you rack is separated from the next customer's rack by some chicken wire (anyone remember Best Internet on Winchester Blvd that sported the chicken wire colo cages?) 

Heck, you no longer even have to physically be there. Better yet, provisioning happens at the click of a button and almost immediately. And with cloud-based services like Amazon's AWS, scalability isn't a problem either. Only the cash to pay for it.

In effect, so many of these startups are post-tech. Sure, these startups use tech, just as KFC, Walmart or UPS does, but those firms aren't tech firms either. Even vaunted Silicon Valley startups like Airbnb and Uber aren't tech firms. Netflix may be now that it's streaming media, but before that, it was a mail order rental house for DVDs. And what about Groupon? Is that a tech play?

Now of this makes any of these startups "less" or "more" of a startup as it is simply a reality of where the startup world is today.

So why should you be in the Valley? 

Well, some people will do it just for a challenge -- you won't find a more concentrated community of super-switched on, open-minded, openly-sharing people anywhere. Sure there are great communities like it everywhere, but not at the scale that the Valley offers.

In some cases, it's critical to see, learn and reset yourself to what "Valley time" really means. A crushing rush forward. Sure, you can do that anywhere, in any city in the world, but you'll be looked at as "weird". And it's fantastic to benchmark yourself against other world-class competitors.

In the Valley, you come to see that as normal, because all your friends and co-workers will be doing the same thing.

For me, I'm glad I lived in the Valley and I still do business there. It was a very huge turning point and critical chapter in my life. However, for many reasons, not everyone can get there, at least now. Yet they worry and fret about it.

My advice, is don't worry or fret, do the best you can, with what you have, where you are. If the Valley is in your future you'll be there. And beyond that, there is a downside to the Valley -- too many people acting like entrepreneurs attending events and conferences rather than building product or businesses. It's also a huge echo-chamber.

Those are major downsides.

Even if you aren't there, you can still read and see what's going on, without being pulled into the echo-chamber and backslapping "ataboys" that are often made with good intentions but inadvertently damage companies or entrepreneurs in the long run.

Foreign startups in Silicon Valley still a rarity

Summary: Asian programmers may be a common sight in Silicon Valley, but foreign entrepreneurs are practically a rarity, says Valley-based accelerator.

By Victoria Ho for Starting Up Asia
December 5, 2013 -- 08:58 GMT (00:58 PST)

Asian programmers may be a common sight in Silicon Valley, but foreign entrepreneurs are practically a rarity, according to Ben Levy, a partner at BootstrapLabs.

"If you start digging into how many of the foreign entrepreneurs that go through them manage to stay in Silicon Valley, the number might be close to zero or in the single digit percentage," he said.

Foreign startups in Silicon Valley still a rarity, according to BootstrapLabs.Levy, who is based in the Bay Area, said foreign entrepreneurs who try to set up shop in the Valley—even those who manage to go through prestigious programs with Y Combinator or 500 Startups—almost never manage to stay on.

Of course, Levy was speaking from the perspective of BootstrapLabs, whose raison d'etre is to bring foreign startups to the Valley in the first place. But his point is supported by several high-profile tech CEOs who have been pushing for immigration reform in the U.S., in order to attract more tech-savvy workers to the country.

In March, over 100 tech executives including Facebook CEO Mark Zuckerberg, HP CEO Meg Whitman, Intel CEO Paul Otellini and Yahoo CEO Marissa Mayer, signed a letter urging President Obama to relax immigration laws especially for highly-skilled workers into the U.S.

Levy said the missing piece for many startups wanting to stay is the need to have sufficient funding while they build relationships, without having to start out from ground zero "begging for money" already.

While many may have landed in Silicon Valley with some seed funding, follow-on funding can be a challenge for those new to the scene, he said.

Founded in 2008, BootstrapLabs has been active in relocating startups to the Valley, including Zerply and Witsbits from Sweden, and Budapest's Prezi, for example.

Recently however, it's started to plant roots in Asia, with partnerships with accelerators in South Korea and Malaysia.

Earlier this week, it announced a tie-up with Seoul-based Coolidge Corner Investment (CCVC), to set up a program in Seoul for Korean startups. CCVC manages a US$22 million fund.

The visa is not subjected to the same restrictions as the broader H1B visa for most foreign workers into the States, and has allowed Varun to avoid some of the waiting time and regulatory hoops after Semantics3 finished its term with Y Combinator last year.

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