When Valentine was talking (part 2)

I have a short memory for things but when I focus on one point, I stick to it for a few days. After finding a few things on Valentine, I digged a little more and found again the interview I used in my book when he compares Steve Jobs to Ho Chi Min (“We financed Steve in 1977 at Apple. Steve was twenty, un-degreed, some people said unwashed, and he looked like Ho Chi Min. But he was a bright person then, and is a brighter man now”).

There he also explains why Silicon Valley can not be replicated. Here it is:

“There is no question. It’s very difficult. And over the years we’ve been visited by hundreds of people from every country in the world, almost all of the states in the country. They all want to figure out and clone what causes Silicon Valley to exist and thrive. Many or most of the visitors are interested in the underlying employment creation. But if you look at venture capital, it only works two places in the world. It doesn’t work outside the U.S., and it only works in Boston, or the greater Boston area, and in Silicon Valley. Basically, almost no other major financial center in the world has ever generated companies of consequence and providence that is so large and visibly successful.

And you can blame it on the weather. You can give credit to the great universities. You can explain that the venture community here is stronger and more experienced than other parts of the world. But the mystique of why it works is still very hard to narrow down to six or seven simple declarative sentences. And it – it is a local bit of magic that – works at this particular point and time. The duration of the venture industry is probably only from something like 1960 through the present, so you talk about not even half a century. [The interview is dated 2004…] It – it’s still a new and – and sort of closet-like form of financial engineering. We don’t think of it as investing at all. We think of it as building companies, often times building industries. And it’s an entirely different mentality and attitude than in the traditional idea of buying and selling things. And this is not a place where you buy things; this is a place where you build things. And you participate in the founding team that creates an entirely new company and sometimes a new industry. And now there are far more practitioners.

But if you go around the world, the Research Triangle in North Carolina was going to be another magic spot. Well, you can’t name a great company, it’s never been started there. You can look at other centers. Seattle – well, there is a great company there. Maybe there are two great companies there – they include Nike. And – has anything happened in the last twenty-five years in that community other than Microsoft and Nike? And the answer is not a lot. [Well he forgets Amazon!] Lot’s of companies have started. Lots of things going on, but not a lot of monumental success. I mean it’s unbelievable the number of companies that have gained prominence, have revenues of a billion dollars in this tiny, little valley. So it is a bit of enigma what all the ingredients are that everybody would like to clone and take away.

I once tried to explain to the Deputy Prime Minister of Singapore who was here trying to take back the magic, and I said it’s a state of mind. You can’t take it back. Somehow or other you’d have to move your people here and they would have to have their DNA changed so that when they went back to Singapore, there was a DNA adjustment in the way they thought, the way they were willing to take risks. I mean in a place like Japan, if you start a company and it fails you’re disgraced. Some people would commit suicide – if that happened.”

“And here – you – you start a company and you fail, some of the best people are better after their failure than before their failure. So you don’t have the stigma of failure. In Ireland, I can’t imagine with jobs so hard to come by, somebody would leave a good job in a country like Ireland to – to run the risk of their company failing. And a place like Germany, it’s so rigid you’d be socially ostracized, I suspect, if you started a company and – and it didn’t work.

Environmentally here – the other ingredient I forgot to mention and it’s more true now than it ever was, the – the community is built up of emigrants and immigrants. So almost all of the people who have started or participated in starting these great companies have come from some other state. Noyce was from Iowa. Went to Grinnell College. And there’s a – Gordon Moore might be an exception of somebody who was born in California. So we have a whole history of emigrants coming from all over the country, and in the last ten years more than ever, we have a huge population coming from Southeast Asia. It – a month doesn’t go by where Sequoia doesn’t start a new company populated by Indians. Fabulously educated, brilliant entrepreneurs, they come from an economic system that is so different from ours it’s hard for me to understand it, although about once every two months I get a lecture from some entrepreneur who says that you don’t even understand your own system.

You don’t understand how unique it is and – and then the fact that it doesn’t exist anywhere else in the world. So there is something here that is – that is different as perceived by the people who purposely immigrate here.”

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