If you went to Silicon Valley 50 years ago, you’d find orchards and farmland. Today, it’s home to the world’s biggest companies. Talent continues to pour in and it will forever be synonymous with the latest and greatest technological developments. Its business leaders and companies are household names, instantly recognisable anywhere: Zuckerberg, Bezos, Gates; Meta, Amazon, Microsoft. So what gave this pocket of the Californian countryside its magic touch, and what can the UK do to replicate the success of Silicon Valley?
First, there’s the proximity to leading universities, creating a pool of ever-replenishing talent. There’s also relatively cheap office space. Investors with connections as deep as their pockets and with reach to the wider financial industry and government can fund an idea into an innovation. But perhaps most of all, there’s an effervescent culture of networking and information sharing. Which begs the question: why hasn’t the UK managed to reach the same heights as Silicon Valley?
Universities and spinout programmes in the UK are some of the best in the world. We’re a hub for global talent and investor cash, where once it was harder to come by – even as we face a long economic re-start. Indeed, London holds the top spot for VC investment and unicorns of any city globally outside of the US.
The missing piece lies in the absence of a truly close-knit ecosystem, symbiotically determined to achieve the best outcome. In turn, this results in a dearth of leaders imbued with a sense of what’s possible and the confidence to see ventures realise their full potential.
It’s easy to assume we have these in abundance – at last count, the UK alone has 191 VC funds as of 2021, with £404bn under management. And companies do find fertile ground to grow too. However, very few are willing to scale to the point of taking their companies public and find themselves heading to the US at the sign of the first life-changing cheque. The recent nosedive of the pound against the dollar will only have exacerbated this, encouraging US acquirers to act.
Silicon Valley network effects
Silicon Valley is a perfect example of how success breeds success: early employees of some of these household-name businesses have gone on to found their own unicorn companies – those with a $1bn valuation. Their children go to the same schools, they eat at the same restaurants and they holiday in the same places. I’ve been part of it for two periods of my career, while at Oracle and Salesforce, where I was CMO then COO – so have seen it first-hand and it inspired the creation of Boardwave, to emulate this ‘secret sauce’ for software leaders here with the backing of major VCs, global consultancies and advisors.
There’s an organic network effect that means a conversation in a coffee shop can actually be essential to solving your niche sales pipeline problem. This isn’t yet reflected in the UK ecosystem – while there are uniting factors, many founders operate in disparate silos, disengaged from the wider startup community.
There are myriad factors as to why this is a lot harder to achieve here – there’s no centralised hub for technology and the pandemic fundamentally changed the nature of work and working relationships. Serendipity has been replaced by calendar invites and video call links. But the opportunity is there – and software plays a critical role in achieving it.
Founders need access to those who have walked in their shoes before – not just in a general sense, but on a granular level: whether it be the challenges of specific stages of growth or a particular problem that exists in a sub-sector of a sub-sector of the wider technology industry.
Creating these connections organically is a challenge – there will be plenty of dead ends and unread emails – but we must build these connections so we can raise up the wider software industry to truly compete with Silicon Valley – and Asia, namely China. The sector is fragmented and we need to create avenues through which the wealth of expertise can be leveraged by all, for the benefit of all.
Time to drop the mysticism of Silicon Valley
This networking piece of the puzzle is not exclusively a CEO problem – VCs and private equity also have plenty of work to do. Many of them will do their best when it comes to networking, but VCs in the UK do not put as much emphasis on it as their US counterparts.
It should be an essential part of ensuring deal flow – but once they get a live investment opportunity, it’s typically a case of heads down for six months until it’s over the line. Networking goes by the wayside, when the very nature of investing is deal-driven. That laser focus on transactions sees the pastoral aspect diminished.
Neither is the mentoring that can occur within a portfolio realised as often or as well as it should be. By building walls around their portfolio companies, investors often deny or discourage them from accessing external expertise (perhaps in networking with executives from businesses owned by a competing investor), which could be pivotal in elevating these businesses to the next stage of scale.
By building trusted relationships and networks, we can bring these barriers down, improving deal flow for VCs and private equity and in turn their returns on investment. Simultaneously, founders reap the benefits of previously unattainable connections and opportunities – truly a win-win.
Silicon Valley is synonymous with the future of technology, and yet it appears we now have all the tools at our disposal to create the next generation of household-name businesses in the UK. It’s time to drop the mysticism of Silicon Valley’s uniqueness – it may have been the first to the start line, but the winner of the software race isn’t a foregone conclusion. Europe – and foremost among countries, the UK – is hot on the heels of the US and Asia. We just need to unlock the untapped potential, energy and expertise by bringing together the veterans and new generations of the software industry to share their wisdom and expertise.
Phill Robinson is the founder of Boardwave.
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