Garage Ventures VC shares Silicon Valley lessons in innovation
By Karamjit Singh October 24, 2017
- A key to success, rarely talked about, is that it is industry that drives innovation
- Frustrating to see different ecosystem stakeholders compete instead of collaborate
WHILE most of us have been brought up on the belief that you win in business by out-competing your competition, even in the hyper competitive environment in the Silicon Valley, the ecosystem believes that winning is achieved through collaboration, shared venture capitalist Bill Reichert, managing director of Garage Technology Ventures in Kuala Lumpur recently. Based in San Francisco, Reichert spoke about the future of innovation based on lessons from the Silicon Valley experience.
Entrepreneurs have to figure out how to build collaborative ecosystems by leveraging on other companies that are stakeholders in the marketplaces they are in. Think of the collaborative networks around the iTunes, the App and the Play stores where other companies leverage these platforms for their own success while making the platform owners more successful.
“So, when you are building your company, do not think that the only way to succeed is to defeat everyone around you. You have to figure out a way to collaborate,” he advised at a sharing session held at iLabs, the incubator that itself is a collaboration between Sunway University, the conglomerate Sunway Group and its venture capital arm, Sunway Ventures. The parties collaborate to foster entrepreneurship and stimulate market-driven innovations.
Still Reichert acknowledges that creating this winning through collaboration mentality is not easy. “It’s frustrating to see but we notice all over the world in regions where an innovation ecosystem is bubbling up, the different stakeholders tend to compete with each other, put each other down and point fingers,” he observes.
The better path forward is for all players in the innovation ecosystem, be they incubators, accelerators, angel investors, VCs, universities, private research labs, to be getting together to be more effective at innovating.
But even when an ecosystem gets this dynamic of various stakeholders collaborating together for mutual benefit, right, success is not guaranteed.
“Because, the key to the success of the Silicon Valley, and this is rarely talked about, is that it is industry that drives innovation,” shares Reichert, adding “but this pillar is lacking in many innovation ecosystems where private corporations are not playing enough in.”
But wait a minute, it is not just about private corporations playing in the innovation ecosystem of their country. These companies must have embraced an open innovation mindset as how the Silicon Valley has done.
Traditional R&D strategy calls for a bunch of PhDs to be locked into a room in secrecy while they toil away to invent stuff. But the Silicon Valley has learnt that this is not how the best inventions are created.
Citing networking powerhouse Cisco as an example, Reichert said that its then CEO, John Chambers, realized sometime in the 1990s that not all the best brains on the planet worked for Cisco and that the only way to tap more smart brains was to be more open. Chambers did this by slashing the internal R&D budget and putting it into corporate development which was tasked with finding the next big thing in the startup world to invest in or acquire.
The lesson from this was: “If you want to be successful in innovation, you have to tap the entire ecosystem of innovation rather than think you can do it yourself.”
The term “open innovation” was created by an academic years later to describe this mindset that became embedded in the Silicon Valley.
But this was nowhere near being the key moment for the Silicon Valley. Sharing what he is convinced was a pivotal event in the success of the Silicon Valley, way back in 1955 a Stanford academic convinced William Shockley a co-inventor of the transistor to set up his semiconductor company in Palo Alto rather than in Las Angeles. “That started a chain of events for the Silicon Valley to become the centre of the semicon industry,” said Reichert.
In a nutshell, over the next five decades, other semiconductor companies started setting up as well and this was then followed by companies which tapped into these technologies to create products and services which then found a willing corporate sector ie the likes of Cisco and others, that were open to try their products out.
“The end result was that the Silicon Valley become the best place in the world to go if you wanted a company to try your technology because of this open innovation mindset,” said Reichert whose talk clearly showed that it took a sequence of other events to happen organically over the preceeding decades to set up the stage for what has become the magic formula for the outstanding success of the Silicon Valley as an innovation hotbed.
Through his travels around the world, Reichert has seen how in the current era governments are pumping in money into innovation but hoping to shortcut the process by supporting startups, incubators and accelerators to try and stimulate the startup ecosystem. It’s working but then not enough startups are making the jump to the scaleup stage to be successful he notes, pointing to the lesson of the Silicon Valley where, “is it industry that drives innovation”.
“So, if you want to scale up an ecosystem, the corporations in the region have to be part of the ecosystem and governments can play a stimulative role. But the best thing they can do is to clear any hurdles and friction that get in the way of the various stakeholders working together and this can be through using laws, taxes and regulations.”
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