‘Pay-it-forward’ culture is key to success of Silicon Valley innovation ecosystem

‘Pay-it-forward’ culture is key to success of Silicon Valley innovation ecosystem

by Nitin Dahad

Around the world, people study the Silicon Valley innovation ecosystem to try and understand how they can re-create its secret sauce to stimulate innovation, entrepreneurship and economic development and growth in their own region or country.

It’s not just about putting up incubators and accelerators, and providing some services to the startups. A lot of it is about culture and collaboration. As many who have visited Silicon Valley extensively have learned, there is a strong ‘pay-it-forward’ culture. That’s well explained in a recent article by Steve Blank, an adjunct professor at Stanford University who currently teaches entrepreneurship at U.C. Berkeley-Haas Business School, Columbia University, and Stanford University.

The article, entitled ‘Want an innovation ecosystem? Copy this one part of Silicon Valley culture’, talks about the background to why this became a key attribute of Silicon Valley culture, and what it means for creating successful innovation ecosystems. We present extracts of that article here, with a link to the full article at the end.

He explains how in 1962, Walker’s Wagon Wheel Bar/Restaurant in Mountain View became the lunch hangout for employees at Fairchild Semiconductor. He says, “When the first spinouts began to leave Fairchild, they discovered that fabricating semiconductors reliably was a black art. At times you’d have the recipe and turn out chips, and the next week something would go wrong, and your fab couldn’t make anything that would work. Engineers in the very small world of silicon and semiconductors would meet at the Wagon Wheel and swap technical problems and solutions with co-workers and competitors.”

“In 1975 a local set of hobbyists with the then crazy idea of a computer in every home formed the Homebrew Computer Club and met in Menlo Park at the Peninsula School then later at the Stanford AI Lab. The goal of the club was: “Give to help others.” Each meeting would begin with people sharing information, getting advice and discussing the latest innovation (one of which was the first computer from Apple). The club became the center of the emerging personal computer industry.”

He then talks about the challenge for immigrant entrepreneurs, and the birth of TiE.

“Until the 1980’s, Chinese and Indian engineers ran into a glass ceiling in large technology companies, held back by the belief that “they make great engineers but can’t be the CEO. Looking for a chance to run their own show, many of them left and founded startups. They also set up ethnic-centric networks like TIE (The Indus Entrepreneur) and the Chinese Software Professionals Association where they shared information about how the valley worked as well as job and investment opportunities. Over the next two decades, other groups — Russian, Israeli, etc. — followed with their own networks. (Anna Lee Saxenian has written extensively about this.)”

He then explains how this evolved to the next generation and became culturally engrained as they mentored the next generation:

“While the idea of groups (chips, computers, ethnicity) helping each other grew, something else happened. The first generation of executives who grew up getting help from others began to offer their advice to younger entrepreneurs. These experienced valley CEOs would take time out of their hectic schedule to have coffee or dinner with young entrepreneurs and asking for nothing in return. They were the beginning of the ‘Pay-It-Forward’ culture, the unspoken Valley culture that believes “I was helped when I started out and now it’s my turn to help others.””

Steve jobs was taken under the wing of Intel founder Bob Noyce



He then explains how in 1975 Steve Jobs called up the founder/CEO of Intel, Bob Noyce and asked for advice, and how Noyce took him under his wing and coached him over the next few years.

Then, speaking about the big picture trend, Steve Blank says:

“Over the last half a century in Silicon Valley, the short life cycle of startups reinforced the idea that the long-term relationships that lasted was with a network of people, far beyond those just in your current company. Today, in spite of the fact that the valley is crawling with IP lawyers, the tradition of helping and sharing continues. The restaurants and locations may have changed, moving from Rickey’s Garden Cafe, Chez Yvonne, Lion and Compass and Hsi-Nan to Bucks, Coupa Café, and Café Borrone, but the notion of competitors getting together and helping each other and experienced business execs offering contacts and advice has continued for the last 50 years.”

Blank summarizes with these key lessons for innovation ecosystem builders:

  • Entrepreneurs in successful clusters build support networks outside of existing companies
  • These networks can be around any area of interest (technology, ethnic groups, etc.)
  • These networks are mutually beneficial — you learn and contribute to help others
  • Over time, experienced executives “pay-back” the help they got by mentoring others
  • The Pay-It-Forward culture makes the ecosystem smarter

In summary, it’s important to understand that the right culture and attitude is a key part of a successful innovation ecosystems; and that ‘pay-it-forward’ is something that helps the ecosystem and economy grow more effectively over the long term.

To read the full article by Steve Blank, click here.

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