Tugulab Blog.

There could not be another Silicon Valley, it’s the market rule

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In the 50s/60s when the cold war was ramping up, the US Army and later on NASA, had to create new technologies. Some related to communication, other for bellic use.
The people more qualified to create this kind of technologies were researches and professors at famous universities. It happened that in the Bay area had few of these universities. To note is also the close industrial economy that could bring to market these new technologies.

The US government started to invest money in these universities to create these new cool technologies. Later on the professors started to create their own R&D companies. These same companies started to be contracted by the government to keep creating shiny tech. Some other bigger companies started to buy more and more frequently this smaller, but successful, R&D cos.

This cycle, in that ecosystem, in that historical moment, created the Silicon Valley.

In the 50s the world technological market size was really small. It wasn’t an interesting market where to invest and speculate. Indeed the majority of investors kept investing in the financial market.
With time the technology positioned itself at the center of our lives. Doing so the technology market grew to a huge size, where the Silicon Valley has always been the main player. The Silicon Valley has been the monopolist of this market from the beginning.

In the recent years with tech becoming trendy and valuable to everyone, more and more investor wanted to invest in this market. What they’ve found is that investing in this market is hard. Getting into the good deals is hard because there are the players of the Silicon Valley who have the monopoly and are more appealing.

It started a long, and pretty boring, collective euforia where mayors and prime ministers announced they wanted to create “the next Silicon Valley”. All topped by a lot of press and noise.
The plan has always been injecting money in a neighbourhood of a city who would become the Silicon [alley | roundabout | crapper]. Investors, backed up partially by the government, started to create events and press release about “innovation, disruption and fund raising”.
The startups arrived and started to experiment with new products and technologies (the only good thing).

What the last few years have taught us, though, is that this is not really working. Yeah, we’ve new shiny co-working space surrounded by a hipster attitude. Early money in some places is fairly easy to find. Sometime a successful startup do an exit.

What we’ve not got closer a single bit is “creating the next Silicon Valley”. No city or country in the world has demonstrated progress toward this goal.
The main reason is that the tech market is a mature and attractive market, where there’s already a monopoly. It’s like if tomorrow I woke up and I want to create the next search engine (hello Bing) or the next Facebook (hello Diaspora or Ello).
It’s really hard to pass ahead of a monopoly because it’s in a better position. Plus the resources, the culture and knowledge they have is not slightly comparable with yours.

Your city could not become the next Silicon Valley because you don’t have the same conditions of the Silicon Valley, when it was born. The market is not small and with low competition anymore. It’s not easy to become the leader city of the tech market.
The rules of the market, that work for companies, work also for cities who want to become the next tech capital.

If you want to become a great place that allow people to change the world, you cannot use the same dictionary the Silicon Valley used. You have to create something different. You have to create your own conditions. You have to create your own rules.

This blog post has been inspired by Peter Thiel in his lecture at Stanford.