Culture.
It all, always, comes down to the culture of community.
Why does Silicon Valley produce startups differently than elsewhere?
Why does Hollywood have a style and way about their films that really isn’t replicated elsewhere?
Why is Arizona State University a “party school” that produces highly social people?
As entrepreneurs, we like to THINK and BELIEVE that we can all be that next venture the likes of what Gates, Dell, or Musk have spawned.
As founders, many of us are led to believe that if we just follow the “book” (pick your favorite startup book or methodology), we’ll end up just like the author.
Ever wonder why Venture Capital so rarely actually invests beyond where it’s found?? VCs like startups to be close to them? Or some alignment between HOW startups develop and what VC seeks?
Isn’t a startup, a startup, a startup?? Why are European or Chinese startups just a bit different from startups in the U.S.?
Not the idea, not the team, not the opportunity.
Culture dictates HOW ventures develop where you are.
I’ve lived in Austin, TX and Silicon Valley. You know what’s readily obvious when you spend time in both ecosystems?
What mentors, investors, and fellow founders tell one another what matters.
Austin?[ Largely: bootstrap, lean, customer focus, revenue is better.
Silicon Valley?[ Largely: market share, get funding, exit, innovation, and disruption.
Neither is “right” while the other is wrong but it unquestionably reflects that startups differ for a fundamental reason a result of WHERE they develop: Culture.[
What’s drastically different between Arizona State University, Harvard, Oxford, UT Austin, and Stanford?
Culture.
So I’ve been around Stanford and I’ve been around UT Austin.
- Stanford never really celebrated nor promoted their incubators, startup programs, and entrepreneurship classes. They may be there, don’t misunderstand that as criticism; it’s an observation that they aren’t overtly promoted as a value of students being there… because the education itself is entrepreneurial?
- Stanford never talked about IP and Commercialization.
- Stanford seemingly spins students OUT of school to start amazing things.
- I lectured at Stanford, in my late 20s, because I was working in startups.
And now I’m around The University of Texas Austin
- UT Austin has more startup programs than I can count… and few collaborate with one another across the University; as though they’re competing with one another.[
- UT Austin has a massive IP and Commerialization office. I’ve known 4 people now who’ve burned out on trying to make that office work and spin out IP. You know why it doesn’t work? Because our economy isn’t built on University IP anymore… but they keep trying. Austin has more Patent Lawyers in the startup scene than anywhere I’ve ever experienced.
- UT Students don’t graduate and start something. Sure, they can (and do) start things during school, but do you know who owns that IP? (diluting the potential and value in the risk the young entrepreneurs are taking…)
- I’ve offered to lecture at UT… I’m not an Alum. They favor their employees. Heck, who knows; I’m more experienced now and have more success under my belt… seems they don’t have as many “executive” roles (i.e. CMO, CTO, etc.) come lecture as they favor former founders.
Culture.
How does Stanford produce so many successful billion dollar start-ups?
Because its culture produces them.
Not a bad location either…
Sure but the intriguing discussion there in is WHY that’s even the case.
There was a similar question on Quora last week or so. At the time I answered, but have since wondered:
Is that true? Where is the data?
Perhaps Stanford wins (?) because it plays the numbers game better? That is, if their success rate is 10%, just like Other Big Univ A or Other Prestigious Univ B, but Stanford breeds 100 startups and the others (say) 50 and 25. Well, 10 is greater than 5 or 2.5. But that doesn’t actually mean Stanford is more effective. Does it? Sure it looks that way because of the total (quantity). But where is the data that shows Stanford gets the quality trophy?
Indeed. My thought stems from that very question. And agree that it’s unsubstantiated and your thought is probably accurate.
What I didn’t broach is what’s clearly a result of what grabs attention. Silicon Valley grabs attention. The substantial innovations that disrupt markets, grabs attention. The fact that because of that, startups there get more coverage, grabs attention. Startups elsewhere tend to be much more under the radar.
Challenge with that though is perception bias and the fact that attention is a resource. People think there/their way is better, because of the attention. And how that attention means audience and audience means quicker iteration of ideas, access to customers, and data: fail fast.
Hey Paul, great insight! What do you think is the difference between the culture between schools in the Silicon Valley? Say Standford vs SJSU.
It’s just as vast. I’m not as familiar with SJSU but it feels like a smaller and more intimate example. An easier way for most people to see it is that you can’t tell me Berkeley and Stanford are similar experiences; a young entrepreneur shouldn’t expect go to either school and get the same experience and education, even with both in the Valley. My point wasn’t “in Silicon Valley” ergo, the point was that every facet of community has a culture that impacts entrepreneurship:
Neighborhood
School
City
Region
State
Country
Heck, a startup in San Jose operates a bit differently than one in San Fracisco. And those distinctions of place impact one another – a startup in Austin, TX is a little bit Austin, a little bit Texas, a little bit U.S. See my article Why Where Matters
Paul O’Brien Touché.
My sense is, there is a lot of self-fulfilling prophesy going on. That is, Big VC X and Angel Y have a network. They can ask for help, they can get media exposure, etc. They invest and they obviously want a return. I know, #duh 🙂
But I also agree with you, it’s Culture. True story: A few years ago I went to a hackaton (or similar) at Princeton Univ. PU is local for me. During the initial session people were asked to present their ideas to the crowd in hopes of pairing ideas with (dev) teams.
Long to short, there were a couple guys (students) from Rutgers (which is about 20 mins north of PU). The idea from the RU guys? Something about an app that keeps track of your drinking on a Fridya / Saturday night. Now I’m not one to judge (as I am a Rutgers grad) but let’s just say none of the PU students’ ideas involved drinking and/or partying.
Call me stupid / naive but it was then I realize it’s not the superior education you get at PU that matters most, it’s the mindset and scale of thinking, etc. THAT is the golden ticket. Sure the students are PU might have higher IQs but their most valuable lesson / takeaway? The four-minute mile (so to speak) is VERY doable.
Absolutely. Culture. Students learn what is taught by professors and preached by invited speakers.
Perhaps it’s also a function of markets served. If VC investments in Austin predominantly serve B2B markets, those business models may require revenue to be prioritized over scale. As a result, regional VC firms may be forced into a self-reinforcing loop of lower risk tolerance.
From my experience, the gap could be filled by improved connectivity between the entrepreneurial students in Austin, and Austin’s great Angel community. 90% of seed and startup capital comes from angel investors.
Best book ? I ever read on the subject – a timeless classic
https://www.amazon.com/Corporate-Culture-Performance-John-Kotter/dp/1451655320
The diff in vocab of SF Bay Area & Austin are pretty striking ?
SF Bay Area: “Let’s raise VC ? for a disruptive product, spend on user acquisition, then charge.”
Austin: “Let’s bootstrap, and build a customer-focused product, and build a monetization model from day 1.”
Proximity to risk taking capital. Henry Yoshida and I are watching it happen with our Village Global cohort. You have to see some of the new Stanford grad startups we’ve seen. Unreal. Different level.
Chris Palmisano I literally just left Palo Alto two hours ago. Met with a VC at CRV who founded Cardinal Ventures while studying at Stanford.
They were telling me about their early, high conviction Investment in Bird and Niantic.
Definitely culture. And the East Coast (MIT, Rt. 128 axis) is yet another kind of culture.
On the West Coast, you’re encouraged to do startups – you’re looked at kind of strangely if you haven’t been in a couple of startups by the time you’re 30. Folks go out of their way to help you out (the proverbial VC deal over a back fence, sending business your way).
The East Coast is a bit more conservative (though changing) – more university spinouts, more ventures aimed at government & industrial customers rather than consumers. Until recently, people looked at you funny if you were involved with a startup, and folks wouldn’t do business with you until you’d been around for 5 years.
Kind of funny when you think about it. Microsoft, Facebook – started at Harvard, by Harvard students – but migrated (quickly) to the left coast. As opposed to DEC, started by a guy who was working at MIT (Lincoln Labs actually) – building logic modules that were used in a lot of early computer projects at MIT (including the lab course I took in 1972 or so) – then he realized that folks would buy those things, and started DEC. Then they noticed that folks were building computers out of them, and went out and assembled their own (the PDP-1).
These days, MIT puts a lot of effort into licensing technology developed on campus – i.e., encouraging people to commercialize research results, and has lots of programs designed to help students, faculty, and alumni play entrepreneur.
Wonderful perspective Miles Fidelman (https://www.quora.com/profile/Miles-Fidelman)! Seems stories of MIT’s culture and impact are less well known, nationally/globally anyway. I wonder if that too is a cause or symptom of WHY things are different.