Where Einstein Meets Edison

East Meets West: 5 Observations on Silicon Valley from an MIT Sloan Perspective

East Meets West: 5 Observations on Silicon Valley from an MIT Sloan Perspective

Mar 26, 2010

In January, a class of 90 MIT Sloan students traveled to Silicon Valley as part of the annual MIT Sloan Entrepreneurship & Innovation Class Trek. Our purpose was to take a deeper look into the entrepreneurial ecosystem on the West Coast.

We were keenly interested in entrepreneurial trends, local investment wisdom, and the Silicon Valley culture.

Here are our top 5 observations:

5) Be wary of hardware.  

VCs in the West are big on capital efficient start-ups. The mentality that start-ups should stay agile and respond quickly to the market – they call this “pivoting” – has carried over from the internet bubble. As a result, cleantech start-ups don’t seem to be as hot in the West as here in the East – a) they typically require large infusions of initial investment and b) returns usually take several years. Hardware bets certainly can be very successful, but choose wisely.

4) The pathway to success is paved with failure.

Fail often but fail quickly – this is, perhaps, the most reiterated message from the Valley. Trial-and-error is an evolutionary process in the West where failures are seen as creating opportunities for better innovations to take root. Failure is encouraged and rarely punished. The spirit of the American West!

3) Social Media will reshape the world.

Everywhere you go, people want to LinkedIn or Facebook you. Twitter is hugely popular and there are many start-ups capitalizing on the trend. The power of digitally connecting and facilitating relationships bears a lesser importance in the investment circles of the East. Not so in Silicon Valley.

2) The people make the culture.

Silicon Valley has a culture characterized as fast-moving, encouraging of failure, and wary of prolonged investments. Add to that list a spirit of experimentation that is rampant and reinforced by the individuals who embody it. The environment is flat and welcoming; a nice change from the entrenched and often bureaucratic culture in the East.

1) Pivot.

Entrepreneurs cannot predict how their businesses are going to go. Business plans are only worth as much as the paper they are written upon. Therefore, an entrepreneur has to pivot upon his/her business plan according to the customer. Be careful not to let your customer rule the roost, but pay special attention to what the customer wants.

After our trip, the top question we are left wondering is this:

  • Is Silicon Valley going to host the next decade of Malcolm Gladwell’s “outliers”? If not, where will they come from…?

 

What do you think?

 

(Originally posted on Silicon Valley Watcher http://www.siliconvalleywatcher.com/mt/archives/2010/01/east_meets_west.php)

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