In a recent article in the L.A. Times titled, “Why Silicon Beach didn’t live up to the hype as an L.A. tech powerhouse”, the authors listed reasons why the community failed to duplicate Silicon Valley’s success. However, I noticed that of the factors listed, they left out something very important.
The authors blame a significant decreases in the level of venture capital activity in both the Los Angeles tech sector, and in Silicon Beach itself. They also blame, in part, the decrease on the 2022 Russian invasion of Ukraine, interest rate hikes, and the collapse of the FTX currency exchange. But, I believe there were other factors to blame, that were left unmentioned.
What Important Factors Does Silicon Valley Have?
As with Silicon Beach, there have been many attempts to duplicate the spectacularly highly concentrated technology environment of Silicon Valley. Usually, these attempts rely on a few factors:
- Top technology universities
- Extensive network of corporate lawyers
- Strong accounting industry
- Venture Capital firms seeking investment
But is this all that is needed? So far, only a few communities have come close to creating a climate similar to Silicon Valley. These communities include Research Triangle(North Carolina), Boston, and San Diego. So, what does it take to duplicate Silicon Valley’s success?
To Duplicate Silicon Valley’s Success, Management Supply is Key
When communities try to duplicate Silicon Valley’s success, the need for a deep supply of experienced CEOs to run these new startups, and therefore attract the capital required for that success, is often ignored.
NOTE: You can read more about the importance of placing experienced CEOs at the head of your company in my last blog.
The fact is, Silicon Valley has an incredibly rich supply of managers who have been through one or multiple successful startup. And they are the primary fuel that propels Silicon Valley.
In the case of Silicon Beach, you have to ask: Was there the needed source of management talent necessary successful new startups? Because there is not a significant number of household-name technology companies in Silicon Beach compared to Silicon Valley’s, such as Intel, Nvidia, Apple, Meta, HP, NETFLIX, etc. Therefore, there may be a lack of supply of potential management.
Something I Noticed Via Monday Club
Via Monday Club, I noticed that the roster for Silicon Beach was not as robust as Orange County or LA. For those unaware, Monday Club consists of individuals who have been involved in creating startup companies. It consists of about fifteen hundred names in total.
This is what stood out to me: The Silicon Beach total is about fifty percent of the Orange County numbers and sixty percent of the South Bay numbers.
Might this have something to do with Silicon Beach not living up to the hype? I believe it did. More so than the factors listed in the article.
When will people figure out the real reason it’s difficult to duplicate Silicon Valley’s success? It’s not the companies. Or interest rates. Or lack of venture capital activity. It’s the management.
Recent Comments