Category: Ecosystem


Look What I Found in Siberia

By Stephen Forte,
Presenting in Yakutsk

Last weekend I traveled about 250 miles south of the Arctic Circle in Siberia to the city of to Yakutsk. Yakutsk is a city of about 250,000 people and is pretty remote; it is about a 7 hour flight from Moscow, mostly over thousands of miles of snow and ice. Typically it gets to -40C and is usually in the news for being the coldest place on Earth (or Mars). Not the place you would expect to find a thriving startup ecosystem.

Fresco came to Siberia to visit the local startup and tech ecosystem. The local Venture Company and government invited Fresco Capital to host a hackathon, startup pitch event, and an ecosystem lecture series. We spent a lot of time in the local ecosystem and learned a lot of amazing things.

Ministry of Investment and Enterprise

Our first stop was a meeting with Anton Safronov, Minister of Investment and Enterprise for the Republic of Sakha (Yakutia) where Yakutsk is the capital city. Anton was an impressive guy, in his mid 30s, international (undergrad at Harvard, masters at MIT), and motivated to bring the digital economy to Siberia. The province is the size of India, has only 1 million people, but has tremendous natural resources like diamonds, gold, natural gas, and oil. They don’t need any help in those industries and if you want a mining or construction job, Yakutia is your place.

The challenge is to diversify and build the tech ecosystem. Anton is the right person for that job as he is the one who got the original ecosystem players to attend the MIT REAP program where they all met me last year. Anton also came to the opening of the hackathon.

The Hackathon

Siberia Hackathon

The hackathon was themed “Think Global” and had over 100 people participate. We had great diversity with 25% of the participants being women (and two all-female teams) with some people flying in from all over the region to participate.

The results were amazing. A total of 13 teams presented for the judges (going for the $1000 prize) and most played to the strengths of the Yakutia region while looking for a global appeal. The winner was a blockchain based distributed messenger service as Telegram has been in a dispute with the Russian government. Most projects were ambitious and some standouts were social media tools to manage comments on large sites, social media projects around engagement, travel, VR, and EdTech. As the largest tech employer in town is a very successful gaming company, there were a few impressive game teams as well.

Local Startups

Alexey Ushnisky, CEO of MyTona

Speaking of games, the largest and most successful tech company in town is MyTona, a mobile gaming company. MyTona was founded in 2012 by twin brothers Alexey and Afanasey Ushnisky. MyTona’s top games The Secret Society and Seekers Notes have more than 50 million downloads and are consistently in the top 20 grossing iOS games worldwide. We visited their office and they have over 300 employees building the games right in the middle of Siberia! MyTona could not find enough game developers in Siberia, so they train them after hiring them. A supporter of the local ecosystem, it also tells you that you can build a high performing startup anywhere.

We also visited the offices InDriver, a peer to peer ride sharing app also based in Yakutsk. Different than Uber insofar as most drivers are everyday drivers looking to pick up someone to carpool and make a little extra money. They compete head on with the big players in Russia and Central Asia and serve over 10 million rides a day. They too have about 300 employees in Yakutsk and recently closed a Series A.

We also had a startup pitch event where we met 10 local startups as well as visited Technopark, the IT park, co-work space, and incubator all rolled into one. All of the successful local startups we saw were ones that played to the strengths of Yakutsk but were focused globally. A lot of bio-tech (many unique plants and animals are nearby), export (tea and legal Mammoth bones), and cool things like vertical farming and fishing, as well as cooking flour made from fish bone. The startups are all early stage, but most have a clear path to try to get to the level of success of MyTona and InDriver.

We rounded out our time by visiting several ecosystem partners including a local bank (doing some innovative stuff), the Arctic Innovation Center, and the Higher School of Innovation Management (a corporate training center and host of several of our events.)

Fun

Castle Black

Of course we couldn’t go to Siberia and not have a little fun in the ice and snow. The organizers took us out to the Lena Pillars Nature Park, or the place the Game of Thrones producers got inspiration for “The Wall.” To get there we had to drive for about 3 hours on a winter ice road on a frozen river. After we arrived we hiked up about an hour to the top and took in the scenery. Of course it was about -25C/-13F and snowing. But it was worth it.

Our trip to Siberia was full of surprises. There is a lot going on in ecosystems around the world and Siberia is no different. The tech ecosystem in Yakutsk is proof that you can build great global startups anywhere.


Look What I Found in Siberia was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Why I’m Going to Siberia

By Stephen Forte,
Siberia is the most remote place on Earth

Last fall I did a keynote at MIT at their conference bringing together ecosystem partners from around the world to discuss ecosystem development. I spoke about how Fresco Capital builds global ecosystems and described some of our recent experiments in India, Singapore, and Vatican City. I finished my talk by saying that we like to do a lot of experiments to learn and that we are open to trying anything.

At the break, a group from Siberia approached me and asked if Fresco was really “open to anything”. Vasilii Efimov, representing Venture Company Yakutia, a Siberian VC, asked if Fresco would come and visit Siberia.

The team from Siberia was at MIT to discuss how to stimulate economic development in the remote region of Yakutia by building an ecosystem with multiple partners. The team is a partnership between the local VC fund, the Ministry of Investment Development and Entrepreneurship, a local bank (doing some innovative things around IT and exporting), a regional university, and an IT park.

I was impressed with the region’s commitment to ecosystem development and the large group of diverse stakeholders assembled to make it happen; I committed to learning more and to visit Yakutia in 2018. The team at Fresco wanted to see how this model was working in a such a remote region and if we can learn from their efforts and help replicate it in other environments.

We talked about organizing a local Hackathon, similar to the Hackathon we helped organize in Pune, India. The goal of the Hackathon in Yakutia is to learn about the developer and tech ecosystem in Siberia and see how the Hackathon model brings ecosystem people together in remote regions. The Hackathon will be held later this month at the Higher School of Innovative Management which is a large professional development center.

Yakutsk, Russia

In addition to the Hackathon, we decided to organize a local startup mentor office hours and pitch event to give the local startups an opportunity to work with and pitch to an international group (besides me coming from Silicon Valley, I’m bringing partners from Hong Kong and Canada.) It will be a great learning opportunity for the local startups who don’t get a lot of international exposure. They will get some dedicated mentor time as well as have a group pitch event to gain feedback on their pitch as well as their business model. We at Fresco will learn more about Yakutia’s model of building ecosystems.

The team in Yakutia also organized an entire “IT Weekend” that consists of the Hackathon, the startup event, a few mini-conference sessions, local ecosystem tours, and visits to government, Techopark (IT park), university, and corporate partners.

Eyelashes freeze in Yakutia

The Yakutia team likes to brag about how cold it is there, apparently, the coldest inhabited place on Earth. Not sure what I’m getting myself into. However, I’m looking forward to spending time learning, exchanging ideas, and helping build global ecosystems.


Why I’m Going to Siberia was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Fresco Capital Corporate Innovation 2017 Playbook

By Fusion by Fresco Capital,

The days of a single management guru having a neat and tidy model of corporate innovation are long gone. For 2017, any company serious about innovation must constantly be scanning the landscape from diverse sources. To help you get a head start on your 2017 corporate innovation plans, we’ve compiled the best ideas all in one playbook covering the following topics:

  1. Corporate Innovation Strategy
  2. Engaging the Ecosystem
  3. Innovation as DNA

 

1. Corporate Innovation Strategy

 

How should companies approach innovation in an unstable world?

“Every contemporary company has to be a balanced mix of established products and new products that are searching for profitable business models.” — Tendayi Viki

Tendayi introduces a useful five part framework for how established companies can manage the inherent tension of managing both established products and new innovation. Read more…

How to set up a corporate innovation outpost?

“Successful Innovation Outposts typically develop over a period of time through three stages. In the first stage the Outpost focusses on networking and partnering in the Innovation Cluster in which it is based (i.e. Silicon Valley, Boston). In the second stage, it moves into Investing, Inventing, Incubating and Acquiring technologies and companies, and in the third stage building product(s).” —Steve Blank

Steve shares the details of the three stages of setting up a corporate innovation outpost, including key questions and milestones. Read more…

Is your innovation outpost working?

“You have no dedicated system for keeping track of startup ecosystem interactions and information.” — Tytus Michalski

Tytus reviews this and four more warning signs about innovation strategy and outposts along with the solutions for how to fix these problems. Read more…

 

2. Engaging the Ecosystem

 

Why should large companies work with startups?

“The most innovative companies are also the most valuable.” — Kite

Both the data and the anecdotal stories combine for compelling evidence that the most innovative companies are engaging proactively with startups in many ways to create more value for all stakeholders. Read more…

How to build a successful innovation ecosystem?

“Just as momentum is the product of mass and velocity, the ecosystem with the most participants and fastest turnover of ideas will be the most successful.” — Martin Curley

Martin provides case studies, context and 12 principles for successful ecosystem innovation across companies, customers and other partners. Read more…

Where are the opportunities in the global ecosystem?

 “We love small businesses, we love young people, and we love women.” — Jack Ma

Jack Ma shares his views on global ecosystem opportunities and more during an interview with Stanford GSB. Read more…

 

3. Innovation as DNA

 

How to innovate like Google?

“To better understand how Google innovates, I took a close look at what it’s doing in one area: Deep Learning.” — Greg Satell

Writing for the Harvard Business Review, Greg uses Deep Learning at Google as a specific case study to learn about how the company has put innovation at the core of its DNA. Read more…

How to get started with intrapreneurship?

“Never before has there been such a push for employees to take ownership of their own corner of a company.” — Alyson Krueger

Alyson provides examples of intrapreneurship, overall context about why more employees are interested in this option and the benefits for companies. Read more…

What will change most in the next 10 years?

“That’s a good question. But a better question is: What’s not going to change in the next 10–20 years?” — Jeff Bezos

Peter Diamandis highlights this important point by Jeff Bezos about focusing resources on high conviction trends, and expands with his own ideas about what won’t change even in an unstable world. Read more…

What other content do you highly recommend about corporate innovation?

  Category: Ecosystem, Thematic
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The Most Effective Way Governments Should Support Startup Ecosystems

By Fusion by Fresco Capital,

I once met an active angel investor from Europe who was convinced that government subsidies of investors were the most effective way to build startup ecosystems. Of course I asked the obvious question, “what about Silicon Valley?”

“Except Silicon Valley” was his reply.

Huh. Lightbulbs going on everywhere (at least in my mind).

The Best Intentions

Small scale grants to get startups off the ground in place of friends, family and fools money certainly makes sense. After all, most people actually don’t have friends, family and fools with enough money to support them.

What about when governments start subsidising rich angel investors with tax breaks? While this may be the result of genuine intentions to encourage risk taking, if investors are ultimately viewing startup investments as tax deductions, then this is a fundamentally flawed strategy. Instead of being investments, startups are transformed into tax loopholes.

Moving up the investment value chain, it’s certainly admirable for governments to actively support local venture capital because there is a positive knock-on effect of helping the real economy. This leads to a natural question:

How should governments support local venture capital funds in order to scale and build a local ecosystem?

One approach to building a local venture capital ecosystem is to provide rebates and other complex incentives where the government takes on more risk and leaves the private sector with extra return benefits. No matter what the fancy official name of this kind of program, it is effectively a subsidy.

As a venture capital investor, I’m supposed to jump at the chance of getting subsidised returns. Call me old fashioned, but I don’t want to receive subsidies to juice returns because it’s wrong for society (my altruistic side) and I don’t want my returns to be artificially boosted by subsidies (pure ego).

Fortunately, there’s a simpler idea.

Instead of tilting the risk / return in favour of funds via subsidies, government related capital should simply be open to investing in new venture capital funds on market terms. The boring reality is that most government capital is allocated through various intermediaries and by the time it gets to venture capital funds, many decision makers take the view of something like this:

New venture capital funds are too risky, so we prefer teams that have worked together for at least 10 years and are raising fund 5.

If you want to attract venture capital investors to your local ecosystem, it’s a lot easier to do so before fund 5. Rather than throwing around subsidies to attract funds, governments should take a hard look at how their existing capital is being allocated through various intermediaries to make sure that there is an allocation for emerging venture capital funds.

If done correctly, this market driven approach will actually increase returns, as there’s plenty of data to show that new funds are generating outsized returns. Instead of spending money to subsidize venture capital funds, governments can get more money through higher returns.

The Unintended Consequences

Beyond the obvious concern that governments should not be subsidising investors directly, there is also the problem of unintended consequences.

At the company level, since small scale grants for startups to get off the ground usually do make a positive impact, it’s very tempting for governments to scale that up.

Unfortunately, when companies raise institutional capital which was only possible because of subsidies tied to the investment either directly or indirectly, the incentive mechanisms tend to train grantpreneurs.

The reality is that all startup subsidies come attached with complicated forms because governments need to protect themselves from criticism. So there is no such thing as “simple startup subsidies”.

Grantpreneurs are extremely efficient and skilled at filling out the complicated forms and ticking all the right boxes for subsidies but unfortunately are a lot less skilled in building successful businesses.

People improve their skill through repetition. The worst case scenario is creating serial grantpreneurs, who are able to jump from subsidy to subsidy.

One of the goals usually cited by governments to subsidise investors is that this will then lead to more jobs. Of course, there are usually many restrictions on the people who may be hired.

This prescriptive approach to hiring can actually lead to increased inequality because it increases demand for a fixed pool of talent rather than increasing the overall pool of talent. Wages go up for those already with skills. Everyone else, not so much.

Throwing money at jobs is not the same as increasing the overall pool of talent.

A Better Way

Should we just throw our hands up in the air with the view that governments are always wrong and it’s foolish to mess with markets?

Not quite.

Markets are far from perfect and as the impact of technology continues to accelerate, cities and countries that do nothing to build thriving startup ecosystems are at risk of being left behind.

So what should governments focus on when it comes to extra support for startup ecosystems?

Ultimately, every government has limited resources and a key starting question should be “what is the best use of our resources for maximum impact?”

If the goal is to encourage innovation across society and the improvement of overall welfare, better to focus on talent.

What would a program to support talent look like? Rather than giving money to startups, which would empower grantpreneurs to fill out forms more successfully, governments should be subsidising individuals to learn new job skills. To be clear, this does not mean training everyone to become an entrepreneur.

Empowering individuals to make their own job skill education choices at least creates a pathway for them to find new job opportunities. It won’t work for everyone but it has the potential to enhance the overall pool of talent at scale. So rather than funnelling more money to the same number of people, there will be a broader base of talent.

Will there be inefficiency? Of course yes.

Will there be fraud? Probably.

But at least by focusing on individuals, the magnitude of any individual fraud case should be smaller.

Even with inefficiency and fraud, as long as the overall talent pool is improved, then this approach could create massive value for society.

The Unexpected Benefits

Beyond the direct impact of enhancing the talent pool, there is an important secondary benefit: increasing the quality of overall talent should attract more institutional capital.

Why does increasing the pool of talent attract more capital? Because capital follows talent.

Just take a look at the history of Silicon Valley. The talent moved first, led by pioneers like the Traitorous Eight, and the capital followed.

There are two factors behind this dynamic. First, great talent is still scarcer than capital. Second, it’s easier to move capital than talent.

So by focusing on improving the talent base, governments will naturally be building the foundations of attracting capital for the right reasons.

The First Steps

It’s tempting for governments to go big with a fancy launch party and lots of hype around a new program.

But for a talent subsidy program to actually be effective, better to act like a startup and start with a small test. Make it small because then the mistakes will be small and there is only one guarantee with a talent subsidy program: there will be mistakes.

Then this is the most important part: get feedback, learn from the mistakes, and don’t scale up until it’s actually working on a small scale.

This means less publicity in the short-term but ultimately much larger positive impact in the long-term. It’s a marshmallow test for governments who want to support startup ecosystems.

Lightbulbs are a metaphor for new ideas and innovation. If governments truly want to support startup ecosystems, they should be focused on helping people find their unique lightbulb moments.


For anyone else interested in figuring out how governments can help support startup ecosystem talent, please get in touch.

  Category: Ecosystem
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The Hard Thing About Easy Things

By Allison Baum,

An anecdote

I’m a modern girl but I fold in half so easily

When I put myself in the picture of success

Rilo Kiley, “Pictures of Success”

Several months ago, I was attending a conference in Arizona. The venue was on the outskirts of town and the only way I could actually get there was by renting a car. At the time, I had never rented a car before.

By this point in my life, I had already attended Harvard, worked on Wall Street, joined a startup, moved halfway across the world (twice), started a business, built teams, and raised a venture capital fund. All of those things were pretty challenging, yet I was having an immense amount of anxiety about renting a car. Every time I sat down to get it done, I would become paralysed by questions and situational permutations. My mind would run in circles wondering, “Where exactly would I pick it up? What size was appropriate? Which rental agency was the best price? What if I had to return it to a different location than where I picked it up? What if they were out of cars? Where would I park it?” The potential pitfalls were seemingly endless.

Finally, just days before I had to acquire said rental car, I shared my angsty internal dialogue with a trusted friend. She listened, nodded, and then opened my browser to Google and said, “Just do it right now.” Her lovingly intimidating demeanour left me no choice, and I dove into the task of renting this car.

In summary, it took twenty seconds to Google “rental car Arizona”, another ten seconds to compare rates, and another thirty seconds to complete my reservation. Done.

An extrapolation

They warn you about killers and thieves in night

I worry about cancer and living right

But my mama never warned me about my own

Destructive appetite

Jenny Lewis, “Happy”

To date, renting a car is one of the easiest things I have ever done in my entire life. The only thing that made it difficult was my own questioning, uncertainty, procrastination, and inability to move forward. I was overwhelmed by the number of variables I needed to optimise. But the only variable for which I really needed to account was me.

There are many things in life that are actually challenging. Yet, as humans, we specialise in turning the easy things into a struggle as well. So often, doing something as simple as figuring out what to eat, who to call, or what to Google can feel like such an insurmountable task. However, the difficulty is not the problem itself. The real burden is managing your own perceptions, framing your response, and bringing yourself to action. That’s it. The hard thing about easy things is you.

And managing yourself is actually really fucking hard. Especially if you have a questioning mind, an ambitious spirit, or a beating human heart. We are a constant swirl of emotions, reacting to our current context through the lens of our pasts, and attempting to find the balance between what we need, want, and believe is possible. It’s a lot to navigate, and we often lack the tools necessary to find our way.

A conclusion

Cause it’s a new you every day

Puttin’ on a different face

And the farther that you run from it

How will you overcome it?

It’s a new you every day

Jenny Lewis, “The New You”

Our current education system is geared toward teaching us information we can use to accomplish tasks. Facts. Events. Equations. These are the easy things. Not only are they easy to begin with, but technology has made their storage, access, and recall infinitely easier. In many cases, all you need is a good friend to open your browser to Google.

Instead, we should be focusing on equipping individuals with the tools they need to manage themselves. This is the hard part. Education should provide you with the aptitude to understand the problems at hand, the awareness to determine what is possible, the ability to break the problem down into pieces, and the strength to get started. This is one of the many reasons why, at Fresco Capital, we are investing in tools for STEM education. Learning to code is not about memorising facts, learning a language, or creating a cool app. There’s much more to it than that. It is about learning that you are in the driver seat, and providing you with the processes you need to break things down and move forward, piece by piece. After all, that’s the only way to get through the hard parts.

The Gig Economy’s Impact on the Future of Work

By Stephen Forte,

I was recently in an Uber on the way to the airport when I started chatting my driver up. It turned out he had three similar on-demand kind of jobs—none of which were stable, traditional gigs.

This got me thinking: Many of today’s workers, and the younger ones in particular, are more entrepreneurial than their predecessors—despite the fact that they aren’t necessarily bona fide entrepreneurs.

More than 20 years ago, I landed my first real job: a full-time entry-level position on Wall Street at Fidelity Investments. Remember? Young professionals used to be able to get entry-level jobs at good companies and climb the ladder. But today, those jobs simply don’t exist, as many lower positions are outsourced or automated with technology. The economy has changed and new hires are expected to come to the job and start producing on Day 1. Hard to do with only a university degree.

Altogether, these trends have led to a generational bulge of middle-tier jobs. This area of the workforce is now occupied by people who usually would have moved out of those jobs faster, allowing the younger generation to advance sooner. But now they can’t get move upward at all, since folks in the middle tier stay there forever it seems. As a result, more and more people are leaving the lower rungs of traditional employment and are deciding to take part of the gig economy. That way, they’ll get the requisite experience to hit the ground running on Day 1 should they be offered a regular job by an established company.

How Young Workers Get Ahead in the Gig Economy

Want to land a job at Pixar? You’ll probably have to freelance for a while (think: YouTube design videos). Should you perform well in that role, you might get picked up full-time.

Within the next 5 years, many project as much as 50% of the US workforce will be made up of freelancers. This is both a blessing and a curse of the gig economy—especially as it pertains to younger people just entering the workforce. In the past, even those without a career path would fall into a nice profession simply by following the standard track. But today, you need to be more hustle-oriented and driven to reach just the first rung of many corporate ladders.

To be fair, there are exceptions to the rule. The career paths for lawyers and doctors might be the same due to the advanced education and certification required for those professions—and the free market probably won’t (and shouldn’t) change that. Nobody really wants a doctor who’s pieced together experience by performing operations on a gig-basis, right?

The Disruption of Venture Capital

While the rise of the gig economy has shaken up traditional career paths, it’s also enabled younger workers to make inroads into previously exclusive industries—like venture capital.

It used to be that, to get into VC, you needed an introduction from a family member or friend to land an internship. After that, you’d become an analyst. Do well there, and you’d earn your VC stripes. Then leave and go to a fancy Business School and go to a new VC fund as an associate. The better the MBA, the better associate job you’d get and so on.

That’s not true any longer.

Nowadays, there are several hundred VC firms. And hiring managers there are looking for entrepreneurs or former founders with operating experience. For example at my fund, Fresco Capital, we have three partners and three associates, and I am the only one with an MBA -and that was by accident! 🙂

What the Gig Economy Means for Young Workers

But remember, thanks in large part to the gig economy, there are other ways to meet that entrepreneurial criterion or grab that operating experience that don’t involve b-school.

Just take a look at Elon Musk’s story. When he started out, the serial entrepreneur had his sights set on working at Google. He waited outside the company’s Mountain View campus hoping to talk to people and was eventually rejected. Of course, we know how Musk’s story has turned out. He’s started a bunch of big-time businesses, which just goes to show that there are very non-traditional ways to cut your teeth nowadays.

At first, the gig economy looks scary. There’s no traditional go-to school to attend to land your dream job. But the gig economy does provide a democratization of talent—work is there, so long as you’re willing to hustle. Graduating seniors should consider the gig economy as a viable means for getting those tougher jobs.

The first step to landing your dream job starts with understanding that the economy is changing. The second step? Realizing you need to work harder and harder to beat out the next person.

What the Gig Economy Means for Employers

If large companies decide to hire kids right out of college simply because of where they went, they’re going to miss out on the best and brightest workers—it’s as simple as that.

More and more young workers are getting their first experience in the freelance economy. If you’re afraid to tap into this pool of talent, it’s only a matter of time before your company will lose all of its competitive advantage.

We’re going through a transitional period in the economy, and the traditional means of getting a job doesn’t apply anymore. The sooner both young professionals and their prospective employers understand this, the better off all parties will be.

  Category: Ecosystem, People
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Stop Trying to Imitate Silicon Valley

By Stephen Forte,
HBO's Silicon Valley

 

Planners from all over the world try to replicate the success of Silicon Valley with varying levels of success. Everyone from New York City (Silicon Alley) to London (Silicon Roundabout) to Hong Kong (Silicon Harbour) to Moscow (Skolkovo) has mimicked Silicon Valley in an attempt to build their own version of the lucrative startup hub.

The problem is that Silicon Valley has unique features that have allowed the region to become the world’s center of gravity for innovation. Simply copying the things that allowed Silicon Valley to become such a success won’t work, as some regions have already discovered. The tech hubs need to play to their strengths and evolve in their own unique ways.

Silicon Valley’s Recipe for Success

It’s easy to see why governments want to create their own version of Silicon Valley when looking at the valuations the California region is blessed with. There are now at least 74 startups there valued at more $1 billion each. The total value of these so-called “unicorns” is $273 billion.

The reasons for Silicon Valley’s success are many and most of them can’t be easily copied. Geographically, the region is perfectly located near San Jose, San Francisco, and Oakland. Historically, Silicon Valley has experienced decades of success with well-established companies like Google, Facebook, Apple, Fairchild Semiconductors, Intel, Tesla, and other esteemed companies.

In Silicon Valley, everyone knows somebody who has gotten rich off of stock options they think they’re smarter than…which in turn propels them to take a risk at a startup. Perhaps most important for the region’s growth is this competitive and creative culture that continues to allow so many companies to thrive. Not to mention, an endless supply of elite students from Stanford and Berkeley graduate (and dropout) each year to create the next crop of potential tech giants right in the Valley.

But this formula can’t be bottled upon and shoehorned in anywhere. The wealthy people in San Francisco might work at Google and the likes, yet in Hong Kong and New York, the upper class tend to come from finance, and in Los Angeles it’s Hollywoodhopefully you get the idea. This still doesn’t stop governments and business people from trying to replicate Silicon Valley without taking culture and demographics into account.

Being Unique: Playing to Your Region’s Strengths

Every would-be tech hub has its own unique characteristics and features that need to be taken advantage of. If you go to a Starbucks in Los Angeles, you’re likely to bump into a celebrity or similar entertainment personas. For Hong Kong or New York City, odds are high that you’ll fall into a conversation around recent market performance and SEC developments.

Playing to a specific region’s strengths helps lead to success. Modeling a hub exactly from Silicon Valley in areas that don’t carry the same characteristics becomes a major disadvantage. New York, Hong Kong, and London are better suited to be fintech startup hub than Silicon Valley. Los Angeles is better suited to be an entertainment startup hub than Silicon Valley. Playing to those unique strengths make more sense than trying to replicate Silicon Valley.

Fostering Growth

Government benefits are a welcome way to help foster startups, yet they’re only the baseline and not the endgame. All those helpful benefits (friendly tax policies, real estate deals, subsidies, incubators, etc) only go so far. The barriers of entry to create a tech innovation center in the vein of Silicon Valley are so high that these benefits are simply the table stakes. A bigger, greater hook is needed for regions to succeed.

Regions need to embrace what makes them unique and build off of that. With everyone trying to copy Silicon Valley, there’s plenty of room for new players with their own strengths. Any place that simply tries to do exactly what Silicon Valley is doing will pale in comparison to the original.