Most of the world’s top cities are trying to become like Silicon Valley. Even cities with a very different culture and history. Have a look:
And I could also add Silicon Canals, to this list.
While this might seem quaintly funny, it presents a solid shift in thinking about companies, at a global level. While a lot of people will not be sincere in understanding Silicon Valley ethos, and try to copy things superficially, there will be a few who will take this seriously, and going by the minority rule, these could be enough to cause a paradigm shift.
The minority rule will show us how it all it takes is a small number of intolerant virtuous people with skin in the game, in the form of courage, for society to function properly.
This can also be related to how bubbles are seen as helpful in bringing out new technologies and great companies. There is some research on that, but I can’t find it, so I will just share this tweet:
I won’t argue for bubbles. The core idea is that buzzwords attract a lot of insincere people, but they also attract people who are capable of bringing real change, and that makes the hype worth it.
Silicon Valley has been special because of a network of smart people (feeding itself, by attracting similar minds) and venture capital. But talent is evenly distributed geographically, almost by default. As more people get heavily connected, they are able to make more, and learn more. Connectivity and digital tools enable people to build products but also enable them to learn the process (like Design Sprints) of how to build products – from anywhere.
A Pompliano, a VC at Full Tilt Capital, shares this sentiment:
Since more maker tools are available everywhere, most talent too, can remain where it is, and start making their stuff.
But what about capital?
First, even VCs in different countries are starting to think more like Silicon Valley VCs – that is, taking bigger bets. As Jason Lemkin points out, earlier, the European VCs would cash out at around $50M, but now they want to build unicorns.
..times have changed. More Euro VC funds have raised much larger funds, and aligned around Unicorn exits. Skype, Spotify, Transferwise, Ayden, and many others do that. It took a little longer in SaaS and B2B, but it happened there too.
Things are not there yet, but they are moving.
This move has been really fast. In just 4 years, unicorns born in the US has gone from 75% to around 40%. It is highly likely that this trend continues. And if VC money can’t reach a place, ICOs can, but the crypto space isn’t really mature yet. It will of course take some time (5 more years?) for other centres to be as good as Silicon Valley both in terms of talent and capital, but the direction is clear.
Another big factor working here is of course political. The US has is seeing a strong resurgent nationalism, and since most startups are found by immigrants, this ends up making the Silicon Valley talent pool weaker.
So, what does this all mean?
I can just see good news for creators at all levels. The web is open for everyone to learn and make, raise capital and sell. There will be many more great companies and products which we haven’t heard of yet, and that’s a net positive for everybody.
So, I just read about the slowdown in early stage VC financing globally – here. Hence, my final conclusion was misplaced. From this trend, startups everywhere will suffer, as it is becoming harder to raise capital. But the ‘flatness’ thesis holds. And while the deals have slowed down, which means investors exercise more caution, does not mean that they will not invest in good, growing companies. I still think it’s a net positive for everyone if everyone has access to similar tools, and adopts the same mindset as Silicon Valley.