In reply to “Silicon Valley is losing it’s X Factor” by Alex Barrera, today, Mattias thanks for the tweet!

Well written post, but I don’t really agree with (all of) his conclusions, and some facts are wrong, Songkick was not Sequoia’s first European investment, it was their first UK one. They invested in Klarna in 2010 already, and there are a few other European investments in the past.

My take is really this; everybody (even a lot of people in Silicon Valley) would love to dethrone Silicon Valley. But I think reality plays against this, Alex does mention that a prominent VC shares this view. In the past years that I have built BootstrapLabs in Silicon Valley, and the 10 years before that, spending time regularly in Silicon Valley, I have seen the innovation waves come and go, and the people in my network in Silicon Valley, which consists of serial entrepreneurs, lawyers, prominent VC’s that have been building startups in the Valley since the 90’s, this is the picture I see:

  • Yes, innovation comes in waves, and we might have peaked with-in certain areas. But rest assured a new waves are already looming.
  • The co-working space that BootstrapLabs works with in San Francisco, Rocket Space, now hosts 130 seed stage (or later) startups. Seed stage funded startups in the whole country where I was born (Sweden)  in Europe would total less. Looking around just the SOMA area of San Francisco, we have thousands of startups, across the Bay area countless more. If you look at copy-cats in % of total number of startups in Silicon Valley I would suspect the number does not stand out.
  • Copy-cat or not, the prevailing view in Silicon Valley is not to be scared of competition, and instead to out-execute your competition, the European approach has always been, isn’t that already done? Search was done when Google started, social network was done when Facebook started. Both innovated their way to the no 1 position in the market. Innovation is not just in the idea, the “Silicon Valley” mantra: “Ideas are useless, execution is priceless” frames it quite well.
  • Investors in Europe are increasingly short sighted, and in general would rather invest in copy-cats with an arbitrage (and proven business models) than something new. The investor and entrepreneurial mindset to push the envelope of what we can achieve as a society is still being done in Silicon Valley (Space X with Elon Musk, Founders Fund etc).
  • The VC’s that I talk regularly with, in the Valley, that have seen .COM booms come and go, are more optimistic than ever, same goes for a number investors (LP’s) in the VC funds.

All that said, I do agree with Alex on a number of things: Europe is getting better at building startups, and the quality of the startups that reach out to BootstrapLabs every week are becoming better and better, which is a trend I have seen for at least 2 years now. What I also see is some great European accelerator and incubator programs, Startup Sauna being among the top ones.

I have a very optimistic view for the future of startups in Europe, but Silicon Valley is not standing still, and I don’t believe Europe ever will have a Silicon Valley (and I am not sure Europe need to clone Silicon Valley), I am also certain that we will see more and more world-class products being created by European startups (even though many of them might become Silicon Valley companies along the way).

I also fully agree with the comment thread below Alex’s post; Silicon Valley startups need to go global quicker than before (which is true for European startups too), and Silicon Valley can’t stay as comfortable in the US as they used to, the world is getting increasingly more global which always benefited Silicon Valley startups, but that is a two-way street, on which Silicon Valley can not take it’s dominant position for granted.

Newsweek, seriously?

Yesterday Newsweek published a provocative article by Rob Cox, called “The Ruthless Overlords of Silicon Valley.” It is about the entrepreneurs that created companies, and did share the spoils generously with employees to create  more millionaires than anybody in history.

Behind the hoodies and flip-flops lurk businesspeople as rapacious as the black-suited and top-hatted industrialists of the late-19th century. Like their predecessors in railroads, steel, banking, and oil a century ago, Silicon Valley’s new entrepreneurs are harnessing technology to make the world more efficient. But along the way, that process is bringing great economic and labor dislocation, as well as an unequal share of the spoils.

Rob Cox builds his argument around the deconstruction of Silicon Valley’s moralism, as embodied by Google’s “Don’t be evil” motto, and compare them to the Tycoons of the late 19th century. He fails to recognize, that the Tycoons earned their spoils through opposition to workplace safety, poverty-level salaries and corruption. Larry page may be a demanding boss, but Google isn’t asking its employees to risk their lives and are Facebook employees living in rat-infested houses?

On the contrary the employees in these companies are the best paid workers in their field on the planet, and these companies share more ownership in their companies than anywhere else. Coming from (a slightly more socialistic) Europe, employee equity is close to non existent, and they way every company in Silicon Valley share equity with their employees is positively shocking to any left-wing european I talk to.

Cox, has no knowledge or distinction of apples and oranges, he compares (“old” hardware companies such as) Apple with the new bread of Internet companies, thus allowing him to introduce the various abuses perpetrated by Chinese manufacturer Foxconn. Apple may be as hip as today’s Internet startups, but they are not even in the same breed (no bashing please, I am a big fan of Apple’s products).

It’s an attempt of guilt by association, and an terribly bad one at that.

Read the article, be appaled and Tweet your appellation to the world!

Thanks Dan Primack, for pointing me to this!