Australia vs.

Silicon
Valley: Replicating a
culture of innovation
BY TASNUVA BINDI
March, 2014
Original: http://www.startupdaily.net/2014/03/australia-vssilicon-valley/
Every region dreams of becoming an innovation hub like Silicon Valley
the foundation for tomorrows startups. But none have been able to
successfully recreate the magic that inhabits the region.
Since the 1950s, experts have been trying to solve the Silicon Valley
enigma. There was something unusual happening in the region
particularly in the field of innovation and entrepreneurship. Upon
further research, they found the answer to what makes Silicon Valley
tick its the people.
But what kind of people?
According to CIO, Silicon Valley is home to social outcasts, radical
libertarians and nerdy geniuses who just want to be left alone. Its not
just physical isolation they desire, they dream of fleeing society
completely and building tech-utopias.
Apparently, this is no exaggeration.
In a less extreme description, we can say that Silicon Valley is where
technology luminaries, visionaries, risk-welcoming investors, and serial
acquirers co-exist. It is a place where opportunities are abundant for
the entrepreneurial-minded.

Paul Graham, Co-Founder of Y-Combinator, wrote in an essay: you

could make a great city anywhere if you could get the right people to
move there. So the question of how to make a Silicon Valley becomes:
who are the right people, and how do you get them to move?
That is a good question: how do you get the right people to move or to
stay?
The answer is: create an attractive culture.
In Reassembling the Social (2005), French sociologist Bruno Latour
offers the following account of how and where culture is made:
Culture does not act surreptitiously behind the actors back. This most
sublime production is manufactured at specific places and institutions,
be it the messy offices of the top floor of Marshal Sahlinss house on
the Chicago campus or the thick Area Files kept in the Pitts River (sic)
museum in Oxford (p. 175).
The relevant argument here is that culture is not something that
happens spontaneously. It is produced.
But if culture is produced, cant it be reproduced?
Most people say no. In a study by Accenture, titled Decoding the
Contradictory Culture of Silicon Valley, Steven John, Chief Information
Officer of Workday is quoted saying, Silicon Valley is like Tasmania or
Madagascar. Its developed different life forms than anywhere else.
This may just be the case. There is something about the culture of
Silicon Valley that lures people from all over the world to pack their
suitcases and migrate there. In fact, two-thirds of people working in the
Valley are foreign workers who bring a diverse set of experiences on
how industries in different countries work.
Its why were seeing an exodus of Australian developers and tech
startup founders to Silicon Valley.

Australian startups like Collusion, HappyInspector, OrionVM and

RecruitLoop have all moved to the Valley for better support during their
high-growth phase. Alec Lynch from DesignCrowd and Pierrick Ganon
from timeBlend are also planning their move.
But what is it about the culture of Silicon Valley that makes it such a
desirable place?
Many people have difficulty answering this question. They mention the
high density of startups, the wealthy investors, the oversized burritos.
But they havent been able pinpoint elements of Silicon Valleys
workplace culture.
The answer is in the aforementioned Accenture study. The study
recognises five seemingly contradictory characteristics in Silicon
Valleys workplace culture that have enabled the region to flourish and
produce some of the worlds most successful companies.
1.

Laid-back yet driven for speed: While people are laid-back,

they will work long hours for their companies.
Supporting mechanism: Company policies favour taking a done
is better than perfect attitude, taking risks and breaking things
and then quickly pivoting to fix those things to move on

2.

Committed yet independent: People are committed to their

work and their colleagues. Yet they are free agents with no strong
allegiance to one company.
Supporting mechanism: Strong venture capital community and
virtually unemployment for IT skills.

3.

Competitive yet cooperative: Although companies and

individuals can be ruthless competitors, they also cooperate toward
larger goals.
Supporting mechanism: Employee stock options; open-source
projects; and personal professional networks.

4.

Pragmatic yet optimistic: People realise that failures are

inevitable, but they are also optimistic that any problem can

eventually be solved.
Supporting mechanism: Strong venture capital community;
company policies that dont punish reasonable mistakes; and fluid
employment market.
5.

Extrinsically motivated yet intrinsically fulfilled: People

are motivated by money. However, their fulfllment comes from being
recognised for their creativity and innovation.
Supporting mechanism: Stock options; company awards; and
work that is challenging, worthwhile and interesting.

If you look closely, these characteristics are present in Australias

startup culture. However, we dont have the same supporting
mechanisms.
The other thing is that in Silicon Valley, youre likely to bump into other
influential people in the business scene while grabbing a coffee or a
beer something that is highly unlikely in Australia.
When you cram tens of thousands of companies, and hundreds of
thousands of people who work in the tech scene, into a relatively small
geographic area, the opportunities for spontaneous interactions that
might lead to valuable insights, new opportunities and new deals is
greatly amplified, says Matt Mickiewicz, Co-Founder of Hired.com and
99designs.
Agreeing with the sentiment, Silicon-based Australian entrepreneur and
Co-Founder of WP Curve, Alex McClafferty says, If you go to any bar in
Hollywood, youre likely to be served by an aspiring actor whos on the
verge of the next big thing This applies to Silicon Valley as well.
There are a lot of people who are working on their next big thing, so
you can expect to learn about 5 or 10 new apps and startups at each
event you attend.
We cant replicate Silicon Valley
Mickiewicz makes an interesting analogy, saying Silicon Valley is to
Engineers, like Hollywood is to Actors. A magnet for the best of the best

to compete on the world stage, show off their talent, make the biggest
impact, and access the types of opportunities that they might not have
locally.
There is something disheartening about this statement.
If all our home-grown talent moved abroad, then how would we to
thrive as a nation?
It would certainly be nice if we didnt feel the need to take our skills
overseas given our skills and work ethic are our best assets.
To have our talent flourish on our soil, we need to have the same
appeal that Silicon Valley does.
While we can try to copy Silicon Valley, its very unlikely that we will be
able to successfully replicate the culture because theres at least half
a centurys worth of effort that makes the Valley what it is today.
We would need to have the same series of events occur in the same
chronological order with the same people for us to be anything like the
region. We would need history to repeat itself in an entirely different
location.
Mark Zawacki, Founder of Silicon Valley-based consulting firm 650
Labs, believes the reason why no region can replicate Silicon Valley is
because its ecosystem is more sophisticated than just having a highdensity of startups.
In his article, Why the Next Silicon Valley doesnt really exist,
Zawacki points out that Silicon Valley has a critical mass of serial
acquirers. Indeed, Silicon Valley is home to high-tech luminaries
including Apple, Cisco Systems, eBay, Google, Hewlett-Packard Co.,
Intuit, LinkedIn, Oracle, Sun Microsystems and Yahoo.
There is a sizable cluster of Silicon Valley companies with the balance
sheets and foresight to make very large acquisitions, he writes.

Also, these large companies can execute an industry disruption in their

sleep figuratively speaking. At the very least, theyre accustomed to
disrupting things.
Apple and Google have disrupted the mobile industry, Google and
Facebook have disrupted the advertising industry. Apple has disrupted
the music industry. Square, Netflix, Airbnb, Uber, and dozens of others
are beginning to siphon off billions of dollars in other industries,
Zawacki writes.
Ease of capital raising the biggest appeal
While it may be a geographical area of just a few hundred square
kilometres, Silicon Valley boasts achievements (and revenue) that are
far larger.
The pace of innovation and growth in Silicon Valley so far hasnt been
matched anywhere else in the world Thousands of new startups
spring into existence every year, backed by a huge network of seed
funds, incubators, accelerators and venture capital firms, says
Mickiewicz.
He adds that Australia does not yet have a large group of active seed
investors or proven incubators like Techstars and Y-Combinator.
Even successful Australian companies are often looking to the US for
capital, where investors can offer better valuations, make faster
decisions, and get comfortable with a level of risk that many Aussie
investors would shy away from, says Mickiewicz.
No one can contend with this fact. Fei Yao, Co-Founder of Couchelo,
says Being a small fish in the big pond means that you will meet a lot
more people to motivate you and provide the right mentorship.
Australian tech entrepreneur Murray Hurps, who launched Ad Muncher,
Startup Muster, and Leap Touch out of Sydneys Fishburners, agrees

that Silicon Valley offers easier access to investors, but has a slightly
different way of looking at it.
How much investment do you really need to launch your idea? And
how hard do you think it will be to make someone realise its worth
investing in?
Do you honestly have an exciting new idea with a clear path to a
worthwhile market?
Do you need a few developers, a designer and some marketing help for
a year to see if its actually possible?
Then you can do it from Australia.
Founder of Pollenizer and a respected personality in Australias startup
scene, Mick Liubinskas, believes that most companies can be based in
Australia and have global sales with an office in the US.
My view is that some companies should be there based on
partnerships and business development If you can get global sales
without raising capital, then do it and stay in Australia. If you are a
consumer business or need a lot of capital before you get sales, then
you will probably have to go to the Valley, he says.
Liubinskas adds, however, that keeping more companies based in
Australia while having global sales is critical to building the compound
interest for our ecosystem.
We need to put more focus on sales and drop the focus on capitalraising.
So, move or stay?
Some Australian founders cross the border of optimism and fall into
idealism thinking that as soon as they set foot in Silicon Valley, they
will be greeted with a cheque.

Unfortunately, the chances of closing a business deal or establishing a

strategic partnership with a major company while collecting baggage at
the airport is slim.
As McClafferty says, even though theres a ton of talent just being
here wont get you a big payday. You have to be really smart, driven,
motivated, a hard worker and a little lucky to make it big time.
Meanwhile, Australias startup scene is growing rapidly year-upon-year;
and many founders agree that we are at the cusp of something
massive.
Exciting times are ahead and Id like to see Australia climb even
further up the startup genome and compass rankings from the 12th and
into the top 10 [best places to launch a startup], says Peter Cooper,
Founder of Cooper Investors and SydStart.
Echoing the sentiment, Hurps presents a rhetorical question, Do you
want to go to the open treasure chest and pull out whatever jewel is
left at the bottom, or do you want to try unlocking a new treasure chest
that other people havent discovered yet?
If innovation is, as the Australian Bureau of Statistics defines it, the
introduction of any new or significantly improved goods or services,
new operational or managerial processes, or the implementation of
new organisational processes, then we are not falling behind.
While weve had less startup generations where entrepreneurs build,
exit and reinvest in another company, we are certainly closing the
information gap. Some of our local communities are no longer two
years behind Europe and the US, says Cooper.
It is often hours or days before we are on top of the latest trends; and
in some areas, we are influencing globally for example, the Freelancer
IPO and the two acquisitions by Apple that had Australian roots
(SnappyLabs and Nest Labs).

Admittedly, Australia is still a work in progress when it comes to

building the infrastructure and having the right mechanisms in place to
support the startup community. But we are certainly building a culture
that stimulates entrepreneurial minds and companies in ways that lead
to innovative businesses.
As McClafferty points out, while Silicon Valley is where its at in terms
of funding and startup action, the Australian tech scene is moving in
the right direction.
Consider homegrown heroes like James Martin from Oneflare and
Bosco Tan from Pocketbook. These guys are kicking goals and focusing
on what matters getting users and customers. Theyre leading the
way for Australian founders in the Australian market and Im proud of
them.
The talent is there. The potential is there. The only way we can improve
our ecosystem is by talking to startups about their past achievements,
current needs and future plans. That data can be then be used to
implement the right initiatives for our startups.
Startup Muster is already onto this. Launched two weeks ago, theyll be
surveying Australias startups every year and putting that data
together to into a Deloitte-esque report.
Still call Australia home?
It would be unfair to ignore, as Cooper says, the boomerang trend.
Many startup founders move to Silicon Valley, absorb new knowledge,
and bring it back to Australia to grow the countrys tech skills base or
reinvest in local startups.
As previously quoted, Mickiewicz says, Hollywood is to actors, like
Silicon Valley is to engineers.

But as Hurps points out, people dont go to Hollywood to start their

acting careers. They start their acting careers locally with the goal of
being wanted in Hollywood.
There are a number of benefits in finding your feet locally. Firstly, the
competition is less intense leaving more room to pursue ideas that
havent yet been explored.
Yao points out that we have an awesome collaborative community,
and weve seen an exciting growth in incubator and accelerator
programmes nationwide.
Were also uniquely positioned to be able to tap into the exploding
Asian markets, she adds.
A PwC report from April 2013 reveals tech startups have the potential
to produce four percent of Australias GDP (Gross Domestic Product) by
2033.
Commissioned by Google Australia, the report estimates that in ten
years, tech startups could contribute AUD$109 billion and 540,000 jobs
to the Australian economy.
The growth of the Australian technology sector is essential to the
future success of the economy (PwC: The Startup Economy, April
2013, p. 9).
Evidence from the Comprehensive Australian Study of Entrepreneurial
Emergence (CAUSEE) suggests that even though the proportion of the
population actively engaged in business creation is higher in the US
(4.9 percent) compared with 3.4 percent in Australia, Australian
startups compare well on indicators of quality.
The study finds that Australian startups are:

less likely to be motivated by necessity or lack of alternatives;

more likely to be growth oriented;

more likely to emphasise research and development; and

more likely to be based on young and/or sophisticated

technologies.

Similarly, the Global Entrepreneurship Monitor (GEM) reveals that

Australia has the highest proportion of startups motivated by
improvement driven opportunity.
With over half a million Australians involved in early stage
entrepreneurial activity at any point in time, it is safe to say were a
serious contender on the global stage of innovation.
But the best part about staying in Australia is our lifestyle.
Mickiewicz agrees that Australia is one of the best places in the world
to work and live, and that not every person will want to trade quality
of life or lifestyle for a fast-track career, higher salary or new business
opportunity.
Perhaps, were too quick to forget why were called the Lucky Country.
Hurps, who has founded numerous startups locally, says Australia has
never held him back.
In fact, he says, being able to celebrate a hard-earned victory down at
the Opera Bar, watching the sun set behind the harbour bridge, really
makes it all the sweeter.
So, as Yao asks, If youre busting out the trusty laptop, why not do it in
front of a golden beach?
Indeed, weve got some impressive scenery. May as well enjoy it while
disrupting an industry.