Lessons from Silicon ValleyLast year, I stayed in San Ramon, California, for training. It is a small city with a population of 80,000 where you can often see grazing cows. But you can also see residents driving Mercedes-Benz and Porsche cars to grocery stores. At community centers, volunteers are often wearing luxury brands.
The peaceful rural town turned into an affluent neighborhood thanks to its proximity to Silicon Valley, which is about 50 kilometers (31 miles) away. The area attracts an elite workforce employed at global companies such as Apple, Google and Facebook, and those looking for a relatively affordable and nice neighborhood settled in San Ramon. Silicon Valley keeps much of the Bay Area employed and thriving. This is the trickle-down economics of Silicon Valley.
During my year of training, I wondered why Silicon Valley produced so many innovative companies. My conclusion from meeting a number of Silicon Valley entrepreneurs is that the driving force is the start-up environment that has been around for over 60 years.
As companies fail and are replaced by others, Silicon Valley considers the failures an asset to enhance the possibility of success the next time around. Venture capitalists offer advice to promising start-ups until they are settled. M&A is active, and it is easy to sell a company and liquidate.
Nearby, universities such as Stanford and UC Berkeley offer entrepreneurship classes, and young people are eager to start their own businesses.
The diverse mixture of cultures and ethnic groups in the region inspire new ideas, and the casual atmosphere adds synergy. As the ecosystem grows, the cycle of talented people, companies and funding continues.
Korea artificially imitated Silicon Valley to establish its own start-up environment. The Kim Dae-jung administration supported venture start-ups, and Park Geun-hye advocated for a creative economy, but these policies undermine the power unique to start-up. The regulations in place may be excessive as well.
Among the top 100 global start-up successes, 57 of them wouldn’t be able to do business in Korea with the current model. American market research service Startup Genome’s global start-up ecosystem report ranked Silicon Valley first with 264 points. Seoul received 2.4 points.
Regarding the keys to success, a businessman I met said that Silicon Valley is far from Washington D.C., the capital and center of the administration. It is hard to meet officials and politicians, and the three-hour time difference keeps the area insulated from most major news stories.
He argued that many people in Silicon Valley truly believe that they can change the world with their ideas. While he was half-joking, his theory certainly gratified my curiosity.
JoongAng Ilbo, Jan. 12, Page 30
*The author is a deputy industrial news editor of the JoongAng Ilbo.