To copy Silicon Valley the way it operates today would be extremely foolish. To take its advice, as the guiding principles in the exploration of new ideas that shape our future, would equate to outright stupidity.
So far, I have had discussions about the entrepreneurial aspirations of New York, Boston, Washington DC, London, Berlin, Paris, Amsterdam, Melbourne, Beijing, Hong Kong, and Singapore, after having spent 15 years building startups in Silicon Valley. I know many more major metropolitan areas in the U.S. and internationally want to copy and ultimately surpass Silicon Valley’s innovative culture and entrepreneurial prowess.
For obvious reasons, the influx of entrepreneurs and money builds a vibrant ecosystem, an aura of positivity and a sizable increase in tax base. Despite a plethora of government incentives and even changes in legislation, few – if any – have succeeded.
In the same way, they have failed to copy Hollywood successfully.
Silicon Valley’s early startup successes are undeniable and groundbreaking, with tremendous economic impact and transformative socioeconomic value worth expanding. Some forty years later, however, amidst explosive growth of a variety of mature technology companies, it was supposed to feed, the performance of venture capital as the preeminent arbiter of groundbreaking innovation is grim and regressive.
Puberty at 40
Less than 0.5% of venture capital firms deliver renewable and thus viable asset-class returns. A dense smokescreen of some 790 firms (many now “walking-dead”) under cover of in-transparency, makes it virtually impossible for groundbreaking entrepreneurs to find the right match with only a handful of VCs that still hold monolithic venture merit.
Even heavily diversified Silicon Valley’s grand emperors, such as KPCB, DFJ and others, have admittedly lost their proverbial venture clothes. And the best practices of venture capital get whole new meaning when 80% of 2-years post IPO technology stocks (reportedly) are underwater, conveniently after greater-fool venture returns have been skimmed off the top.
The innovation one can detect will only be as good as the thesis by which it is recognized (Albert Einstein). And when arbitrage turns subprime, the innovation it attracts is or will become subprime by default. More devastating, the groundbreaking innovation that does not match the pattern recognition of risk uniformity, will be wasted. With the real risk outliers systematically tossed aside.
So, to copy Silicon Valley the way it operates today would be incredibly foolish, and to take its advice, as the guiding principles in the exploration of new ideas that shape our future, would equate to outright stupidity.
The failure of Silicon Valley’s arbitrage to detect and correct its own mistakes and grow up economically has yielded a growing general distrust by the most important investor, user and ultimate shareholder of innovation; the public.
The same public who is again asked (through their consent to policies deployed by local and national governments) to re-up their support and commitment for yet another life-cycle of floundering arbitrage. An arbitrage further unleashed and stimulated by naive national government programs, which continue to operate in blatant violation of our founding economic principles.
Reinvent the arbitrage of innovation
So, to protect and stimulate the integrity of our entrepreneurial culture and capacity, no matter where it comes from, we must reevaluate the complete value chain innovation is subjected to. A value chain composed of the role of our government, the risk deployed by asset management, and the merit of venture capital – holistically. And when you take the time to dig in, you will begin to understand the premise of my invention of renewable economics.
The opportunity is wide-open for vibrant geographies willing and able to reinvent the complete value-chain of the discovery and pursuit of innovation anew. For innovation to evolve, its arbitrage needs to.
A purpose bigger than yourself
For too long have we ignored the foundational economics that stimulates and reward the outliers responsible for the renewable evolution of mankind.
Freedom cannot exist without the guard rails that protect everyone’s access to freedom. And so the most important discovery of today lies in the deliberate design of a holistic system that respects and promotes, not our stifling commonalities but our meaningful differences.