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Thinkers

 

Silicon Valley (The Cambridge Judge Business Debate podcast series)

Silicon Valley is a big success story, spawning the likes of Google and Apple. But what are the secrets of this success, and what challenges does Silicon Valley face to retain its leadership role?

Cambridge Judge Business School International Business Study Trip 2018 Alumni reception @ Tres Restaurant, San Francisco, California

L-R: Michael Kitson, Lisa Van Dusen, Naeem Zafar, Jochem Kroezen

This episode of the Cambridge Judge Business Debate series was recorded in San Francisco, during the international business trip of the Executive MBA (EMBA) class of 2017 of Cambridge Judge Business School. The session was part of an alumni reception, with the audience including EMBA students, Cambridge Judge alumni, and alumni of other programmes of the University of Cambridge.

Faculty members Michael Kitson, University Senior Lecturer in International Macroeconomics, and Jochem Kroezen, University Lecturer in International Business, led the discussion featuring two special guests: Lisa Van Dusen, Chief Relationship Officer of SV2, an early stage venture capital firm for the social venture sector, and Naeem Zafar, CEO of Internet of Things startup TeleSense and Dean’s Teaching Fellow & Lecturer at the University of California Berkeley.

This is the third in a series of “Cambridge Judge Business Debate” podcasts featuring faculty and others associated with Cambridge Judge Business School and the broader Cambridge community. This third podcast focuses on the success and challenges of Silicon Valley – including some of the social and environmental issues facing the region, and whether they are being addressed. Here are some edited excerpts from the comments of our special guests:

Why is Silicon Valley so successful?

Lisa Van Dusen: “It does have a lot to do with proximity, and that people have access to all parts of an ecosystem. Certain things just happened that you could argue were flukes, but they were critical at a certain point of time. There was competition at the same time as there was a desire to do things and create things and make things that was kind of like wildfire.”

Naseem Zafar: “The most important word to describe what’s different about this place than any other place is ‘culture’. There is a sense of collaboration: you can ask anyone ‘what are you working on?’ and you’ll get a cogent, fairly detailed answer. You ask the same question in London ‘what are you working on, what do you do?’ and you’ll be met with some scepticism, ‘why do you ask?’ I can ask this question in Moscow and they’ll ask ‘who sent you?’ Another important thing is how we treat failure: Here you could fail and you are more valuable to the next guy, with a higher salary, because someone else has paid the tuition for your learning. I’m just polishing my sword for the ultimate fight.”

Comparing Silicon Valley with other business clusters, like Shenzhen in China

Naeem Zafar: “Nobody runs a factory like they do over there, but it’s not about factories, it’s about innovation – innovation comes from connecting the dots in a weird way. That’s what’s unique here. We’re not great at manufacturing – we’re okay at manufacturing, Shenzhen is much better – but it’s not about running a good clean factory, it’s about something else.”

Lisa Van Dusen: “China is very top down, and we’re very bottom up. We see a problem, and the problem we end up solving is not the one we first got interested in, so there’s lots of accidental things that happen running into people.”

A role for government

Naeem Zafar: “Government’s role is to set up the rules and get out of the way. Imagine playing a football match when both teams have different rules and different-sized goals. There is a role, and their role is useful.”

Lisa Van Dusen: “The cleantech industry is a great example of that. Here in California where the state has clear goals (such as 33 per cent renewal energy by 2020) it creates certainty around which companies can make solutions, and often times there is long-term investment and a sub-ecosystem for achieving particular goals and you can’t do it without knowing where government stands.”

A downside of Silicon Valley’s success

Lisa Van Dusen: “We have 76,000 millionaires and billionaires in the two counties south of San Francisco, and there is growing wealth and equally growing inequality. If we turn away from that inequality and don’t address it, we are in danger of imploding because it’s not going to be an affordable place to have the very kind of ecosystem that created it in the first place. It’s a living ecosystem, this is not planted and you’re done. You have to nurture it and people of all different backgrounds need to be able to afford to live here.”

Naeem Zafar: “Let’s take an example of a three-bedroom, two-bathroom house. A house like that will cost anywhere from $100,000 to $200,000 anywhere in America. The same house in San Jose will cost $700,000 and in Palo Alto that cost is $3 million. Imagine a firefighter, a police officer, an elementary school teacher – can they afford to live there? They cannot.”

Lisa Van Dusen: “That creates another innovation opportunity.”