People in various countries admire Silicon Valley as the beacon of ‘free market’, ‘Innovation’ and ‘Startups’. The Valley is where the ideas flower, the world changes. With the underlying propulsion of technology, problems of the new age are being solved.
Cut to other parts of the world. Nationals from different countries, who have exposure to the Silicon Valley phenomenon travel and reach out to the ‘native startup culture’. Now, here start the copycats. Lets take India for example. There are many ‘Silicon Valley’ copycats involve ‘consultants’, ‘mentors’, ‘Angel Investors’. Now, some of them did succeed, their outlook more authentic, their reasons more genuine, most importantly, their attitude towards ‘adopting’ to the Indian culture more real.
The many who still glimmer but have not made any impact contribute to the percentile of failures. For that one has to understand the difference.
What makes the Silicon Valley?
A simple example is ‘Silicon Valley”s initial days. There has been a gradual evaluation in the Bay Area. Initially starting with military technology, it slowly spawned as electronic chip manufacturing club. The semiconductor manufacturing boom, followed by the blossoming of high tech computer hardware – networking firms resulted somewhere, with several Venture Capitalist firms seeking to fund entrepreneurs.
Stanford University played a significant role in fostering regional research and development. The key factor is here for the success was the ‘drive for innovation’ and the ‘funding to innovate’. Defense spending again went up, with DARPA building the DARPANET, which eventually became the Internet. With the explosion of the Internet, followed the Internet bubble. The resultant rise and crash of NASDAQ Stock prices and Silicon Valley boasted of the richest commercial estate in the world.
The story can be told in many ways, but the point here is – what is that makes Silicon Valley what it is. More than 100 years of ‘intense innovation’, ‘research and development’ and ‘high technology’. Now, let us look at Bangalore, India’s Silicon Valley.
The Indian Silicon Valley:
Since the 1980’s, the Garden City has become the bedrock of software development. Majors like Wipro, Infosys, and a lot of smaller players have setup software parks. The majority of the tech jobs were driven by these IT majors. Elsewhere, in other cities, similar software industry parks came.
But what was happening inside these factories? Indians learn tech fast, and do deliver. However, the purpose was to deliver goods to businesses in the Western World. Showing cost arbitrage, ‘more for less’, the entire software industry of India has evolved as a software manufacturing landscape, rather than focusing on innovation or research.
That is why, you would see that India, still having the most number of techies available, are still short of a product company. For the last 40 years, many successful software services companies have come out. The IT companies are cash rich, but little have been done as funding to innovate – no products at all.
What I would call it is that it was ‘tech business opportunity’ leveraged upon. The Indian Silicon Valley therefore is not even a bio-twin of its US counterpart. The DNA is simply different.
So What? and What next?
Cometh the decade, and cometh the wave. Since 2008, India has seen a wave of startups. Now, if one sits back and sees the pattern of startups, they follow the same ‘service model’ rather than a ‘tech innovation model’. Again these are copycats of Uber, Amazon and the likes which have been built on scale, because of the sheer volume of Indian Domestic Consumerism, indicates that nothing has changed. The Indian Silicon Valley of Bangalore led this wave as well, but again the genetic problem has not been overcome.
The other countries that want to emulate the Silicon Valley should embrace the spirit first than the ‘practices’. The spirit is always about ‘innovation with purpose’. That is the missing piece of my search of the real ‘Silicon Valley’ outside the original.
Ashok Subramanian is the Director of WiseLane Capital Inc., a Chicago-based Investment Consulting and Strategic Ventures firm.