You must have heard about the Silicon Valley, the place which is home to a huge number of start-up companies as well as to many established global technology companies. Among them Google, Facebook and Apple are the prominent ones.
There are certain reasons which make Silicon Valley a special place and unlike any other place in the world in terms of technological innovation and entrepreneurial success. I will be covering these reasons later in the article.
Also, I will be sharing with you the pros and cons of setting up a start-up entrepreneurial venture in the Silicon Valley which were revealed to me by the local entrepreneurs, start-up enthusiasts and investors when I went there as a part of business delegation. Knowing about them will help you take the right decision if you are seriously thinking about shifting your start-up business to Silicon Valley from any part of the world for its success.
Before I move further and talk about the pros and cons of Silicon Valley, I would like to share with you the history of Silicon Valley and how the culture of innovation and entrepreneurial spirit started here.
According to Toni Schneider, a venture capitalist of True Ventures and former CEO of Automattic, the history of Silicon Valley is related to a pretty interesting story. It started in the 1950s with a company called Fairchild Semiconductors which was a big research lab based in California. It dealt in defense contracts. The company’s boss was William Shockley who was not a very friendly boss. His way of management caused his team to leave the company and start their own company named Fairchild Company. It eventually became Intel. This was the first start-up business in the Silicon Valley. This was indeed a huge step taken by the team at that time.
During that time, Berkeley and Stanford were two big universities which provided talent to the company. After 1950s, in the 1970s first venture capitalist came in from none other than the Fairchild Company which was the first start-up company. It got success and with the money it earned, the company created the first venture capitalist which invested in newer startups and new companies. That is how the whole ecosystem was created.
Later, the whole thing shifted to the Hippies culture which stressed on opening up and sharing up everything. This can be termed as a kind of open source movement. Later on, everything started to shift towards the software transition.
Let me now talk about the pros and cons of Silicon Valley:
Unlike any other place on earth, many great people are located at the same place in Silicon Valley. They are genius and great at what they do. They are ambitious and persist with what they are doing.
Entrepreneurs setting up companies in Silicon Valley are able to sell them easily and quickly as compared to Europe where it can take ages to sell them.
Startups looking for partnerships with the big companies are able to achieve partnerships with them because many big companies are located in a small geographical area here and these are easily reachable.
There is so much money available in Silicon Valley for funding the startups. Entrepreneurs can use this money for scaling up their operations and hiring more people.
Unlike places in other countries where there are just one or two companies in a particular niche, there are so many different companies in Silicon Valley. This leads to increased competition among the companies which pushes them beyond the limits and makes them better to survive.
Startups, events, investors, most of the clients to start with, legal support and other things needed by start-up businesses are available here in a very small place. Thus, entrepreneurs are able to derive benefit from the strong ecosystem at the Silicon Valley.
Let me now talk about the cons of Silicon Valley:
The entrepreneurial culture of Silicon Valley is pulling more and more people to come here for pursuing their dream of running a successful entrepreneurial venture. They talk about their successes; how great they will be but there are actually less deliverables. The signal to noise ratio has become worse.
The coming of too many people to Silicon Valley who feel themselves to be better than others and who are not in touch of reality, has led to growth of some serious problem like sexual harassment and white and male driven role cultures.
Living costs in Silicon Valley are quite high as compared to other places which makes it difficult for the entrepreneurs to live a regular life. For this reason, funding is easily available and in huge amounts for the companies for running their operations. But it is unfriendly for those start-up entrepreneurs who do not have enough funding. So, they find it difficult to live here or hire employees.
For cutting their costs, start-up entrepreneurs should set up their business in the European Union due to less costs there and when they find their product to be market fit and get their first clients who can cofinance their expenses, only then they should move to the Silicon Valley.
Out of the total number of entrepreneurial ventures set up in the Silicon Valley, only 1 to 5% of them get success and these get covered in the media. But actually, there are a lot of homeless people in the downtown San Francisco. So, everything is not bright and rosy in Silicon Valley, there is also a very tough reality.
Unlike Europe where employees persist with their employing organization in spite of better paying jobs around as they feel emotionally connected to their organization, employees working in companies in Silicon Valley leave their jobs fast when they find a job that pays them only some more money than their present job. Loyalty is hard to find in the Silicon Valley.
Due to the intense competition in the Silicon Valley, startups who fail to improve or who are unable to face the increased competition risk of losing out and getting closed.
Startups based in Silicon Valley get benefitted from the speed, execution power, funding and every other aspect of the start-up eco system which is bigger and much faster. But those startups which are not ready for them, tend to learn the things the hard way and need to pay a lot of money for their needs.
I hope you will find this knowledge useful for taking the right decision if you are thinking about shifting your start-up business to Silicon Valley in the future.