Spend a week in the US’s Silicon Valley in northern California and a couple of things stand out.
The social conservatism and herd-like behavior enforced by the driving codes belies the business risk-taking atmosphere.
The general friendliness and quality of life from living in a paid-for paradise (compare the old photos of dusty Palo Alto from the 1940s while semiconductors were being developed in the area and the lush greenery of today after the returns have been reaped for the change money can bring) encourages a positive outlook, but can be skin-deep as anyone who has seen the interactions between evangelical Christians and pedestrians on a Friday night can testify.
The quality of general discussion is unbelievably good and interesting; there is no such thing as an irrelevant segway or a propos moment over here as it really does attract some of the best and most creative minds (which is partly why so few people actually seem to retire).
The entrepreneurial ecosystem – or rainforest – is built on trust and personal connections long since lost in almost all other areas of business and finance and designed to make money and, broadly, the world a better place.
The obsession really is all about technology, which can lead to extreme behaviours – this year there is an obsession with mobile (with other investments like clean tech and healthcare largely overlooked).
Corporations as amalgamations of individuals in this ecosystem are both a source of power, when the people are aligned on a goal, and vulnerable to exploitation, if people decide it is in their interests to do so. (For just the latest of a long line of deals showing how personal, corporate venturing, finance and business interests are caught up in the venture world there is Workday, an online software provider just about to float – click here for the news.)
To borrow from William of Ockham’s razor (Lex parsimoniae), keep things simple, and most business organisations are anything but that.
For parents of corporate venturing units, therefore, this ecosystem is a double-edged sword.
It really is a source of disruptive innovation and creator of globally-relevant opportunities but in order to see and understand this, requires people to be on the ground. A snapshot of the Valley’s corporate venturing units taken by the Corporate Venture Forum identifies more than 100 companies are operating here in information and communication technologies sector.
The Valley ecosystem’s characteristics cause two challenges. First, do the people the corporate parents use develop more loyalty to the local ecosystem for their future than their current employer (which they will need to in order to fit in and learn about the ecosystem)? If so, how much can you rely on them?
Second, how do you translate the ideas insights and deals back to the existing business, ie does the language translate and is it listened to? Local businesses that have grown up in Silicon Valley and set up corporate venturing units, such as Intel Capital, Cisco, Salesforce and Google, in general have a better track record of understanding the language and following the venturing units’ recommendations or parsing out the conflicts of interests than overseas ones for an understandable reason – they grew up in the ecosystem.
All risks can be managed but few corporate venturing parents seem to have even begun an analysis of how to deal with the cultural aspects of the ecosystem.
It is easier to look at an organisation chart and reporting lines and financial metrics than grapple with the soft factors that actually will shape whether you are successful or otherwise in venturing and your business in the Valley.