Why Silicon Valley Works

Many eras of world history have one city that acts as the center of gravity for the time. Babylon, Rome, Byzantium, Milan, Paris, London, and now San Francisco. Each held the crown for different reasons, but inevitably, it's a mixture of culture and power.

Here's what makes Silicon Valley unique:

  • A culture of information sharing: good ideas are shared and talked about freely. Yes, there are NDAs and software patents, but startups (the new growth) focus on open source software and talking about new companies.
  • Like-minded people in one place: most coffee shops in a 20 mile radius of Mountain View have somebody in them starting a company or talking to somebody about a new company. Geography matters.
  • Funding: Starting in the 1950s with government money for Stanford projects, to the large number of angel investors we have now, SV just has a lot of money that is willing to take risks, with little long-term ramifications for failure.
  • Reputations built on the present tense: Failure is completely acceptable โ€“ even expected โ€“ here. It's rare in other industries and places where your reputation follows you throughout your career.
  • Meritocracy and oligarchy: at it's heart SV is meritocratic. Good ideas and good people quickly rise to the top. This counters the possibility of charlatans taking advantage of failures being largely ignored. Another counter is that there is there are king makers: Top VCs. They have the ability to blacklist bad actors โ€“ though this is rare.
  • Pay it forward: There's a strong culture of one generation of successful entrepreneurs helping the next. This takes the form of both advice and money.

All of these build a "spiral of success", and make it far more complicated then just one city that has a high density of like-minded people.