Why base Silicon Cape in Cape Town?

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What does it take to recreate a Silicone Valley? This question has been looked at from various perspectives, but how does that relate to us? What will it take for Cape Town to build a strong entrepreneurship community and why is it preferred over Joburg? With this article I hope to re-ignite the discussion and to highlight some things that we, as South African entrepreneurs can use to build upon.

“The exciting thing is, all you need are the people. If you could attract a critical mass of nerds and investors to live somewhere, you could reproduce Silicon Valley. And both groups are highly mobile. They’ll go where life is good. So what makes a place good to them?” – PG

Here are a couple of factors that I perceive to be the most important things that the greater Cape Town area has going for it as far as attracting the types of people that you need for a startup environment:

- Nearby world class universities

This is the obvious one as a source of young, keen and ‘foolish’ people who have very little to loose and are generally well placed to make the most of the other factors. UCT and Stellenbosch are the 2 top universities in Africa, with UWC not far down the list either. Smart people are attracted to other smart people. Enter the supply of nerds.

- Nice Weather and Fun things to do

A pleasant climate and lots of things to do are considered quite high on the list of physical attributes of a possible city. This is because it helps bring in rich people with money as well as providing a sticky factor that may encourage startups not ot move as the founders and employees actually like living there. Stellenbosch has one of the highest GDP per capita in the whole country and the area is full of Europeans wanting to avoid their winter. Rich people can generally be picky about where they live and as such will normally choose a place with favourable climate and beautiful landscape. Cape Town is good at attracting wealthy individuals.

- A living CBD and lots of smaller connected centres nearby

Cape Town is very lucky to have its town center still very much alive and kicking. Trapped by the mountain and the sea, it’s not going anywhere in a hurry, and is relatively accessible (traffic is minimal for a city it’s size) not to mention the improvements that the World Cup has brought to the area and infrastructure. The main CBD hub is supported by many smaller ‘hot spots’ – read Camps Bay, Claremont, Sea Point et al. – and they foster a good environment for people to meet and engage informally. Most students don’t want to live in the suburbs, they want action and activity of a campus or a hub.

- Problems to solve

Being a ‘Third World’ country has its advantages. As Shuttleworth said: "The places in the world that are agents of change are usually… …where there are real challenges to solve and people have to come up with interesting new ideas and ways of solving them." The fact that we live in an “edgy” economic environment definitely leaves gaps that people can fill with ideas that just wouldn’t be possible in a first world environment. For all of its drawbacks, these gaps are also a major advantage.

- Not too many big Corporates

The easiest way to highlight this is to look at what happened in America between Boston and the San Francisco Bay Area.

First you had Boston with many large corporates all based around Route 128 – a ring road around Boston – all starting up entrepreneurial hubs and incubators to help drive innovation. There was lots of good funding, alot of interest form DARPA (Military Funding) and all was looking really good as the initial growth spurt was huge due to the capital injections. The problem was that any innovation or developments that happened within the incubators was paid for and owned by the large corporates. So anything that they couldn’t use got shelved and hidden away to keep it away from competitors.

The companies that rule Silicon Valley now are all descended in various ways from Shockley Semiconductor. Shockley was a difficult man, and in 1957 his top people– "the traitorous eight"– left to start a new company, Fairchild Semiconductor. Among them were Gordon Moore and Robert Noyce, who went on to found Intel, and Eugene Kleiner, who founded the VC firm Kleiner Perkins. Forty-two years later, Kleiner Perkins funded Google, and the partner responsible for the deal was John Doerr, who came to Silicon Valley in 1974 to work for Intel.

It was through these friendships and the small origins of the community that the true spirit of what makes Silicon Valley so unique  – the fact that competition and collaboration go hand in hand. Wozniak built the Apple I and II in his after hours while working full time for HP. Google and Facebook are constantly stealing employees and with them their ideas. This just didn’t happen in the formal coporate environment that was prominent in Boston at the time. Johannesburg is like Boston, the wealth is mostly tied up into companies, fat salaries and business deals. It is the wrong kind of capital to start businesses with.

- A Culture of Sharing Ideas

This is possibly the biggest area that I believe that we need to make a conscious effort to ensure. It is what gave the Valley the edge over Boston and is often considered as one of the fundamental strengths of the idea that is the Valley. As Silicon Capetonians we should embrace the spirit of collaboration and support, encourage and grow the multitude of events that are happening in our area. (If you don’t already attend any try the likes of Silicone Cape Events; the Startup Digest; Geek Dinner; Digital Cowboys; Entrepreneurs Anonymous or even start your own.)

- Locals who have made it

Although it is something that takes time, there ar already a couple these around, Vinny Lingham, Justin Standford, Mark Shuttleworth et al. “People who get rich from startups fund new ones.” - PG But not only do they actively help new companies, they inspire others to also try. They make the possibility of success more real in the minds of others starting out. Imagine we had 100 people like them. It’s appalling that we still celebrate Shuttleworth 12 years after his big success.  It’s sad that no one else has been noteworthy enough to replace his position as what a South Africa entrepreneur looks like.*  Not to draw from the massive respect that I have for what he did, it’s just a pity that he’s the only one.

What we lack most is an inspired group of “Relentlessly Resourceful” people which is said to be the key characteristic in any good founder.  We need to continue to draw the right people, keep the community open and engaged and the rest come in time… with a bit of luck.

“…a town that could exert enough pull over the right people could resist and perhaps even surpass Silicon Valley. You don’t build a silicon valley; you let one grow.” – PG


*This observation originated from Sheraan Amod.
Article inspired from the essays of Paul Graham (PG) : www.paulgraham.com—articles.html
as well as Techcrunch on indo: techcrunch.com—what-the-hell-is-going-on-in-indonesia
Techcrunch on SC over Boston: techcrunch.com—the-valley-of-my-dreams-why-silicon-valley-left-bostons-route-128-in-the-dust
and Vinny’s original post on The Silicon Cape: www.vinnylingham.com—silicon-cape.html
Top university stats: www.webometrics.info—top100_continent.asp and thebestuniversity.blogspot.com—university-rankings-concentrating-on.html
Also see
www.businessweek.com—tc2010053_047892.htm
www.paulgraham.com—siliconvalley.html
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    14 thoughts on “Why base Silicon Cape in Cape Town?

    1. I would hardly call Justin Stanford or Vinny Lingham “successes”

      Vinny’s company doesn’t make money and he’s moved to *Silicon VALLEY*, don’t even get me started on stanford.

      Great article with some valid points, none the less.

    2. @Jack H: That is what I mean by ” Not to draw from the massive respect that I have for what [Shuttleworth] did, it’s just a pity that he’s the only one.” How to overcome this is the single biggest problem we face. That and Awareness which is pat of it.

    3. HI
      Agreed. Good article. If I can just add: the Unis, Provinicial Gov and Businesses are looking at various ways to stimulate innovation and entrepreneurship as well, the Technology Innovation Agency is coming on line, where technology entrepreneurs should be supported and the beaches are great places to do a little work on the right afternoons!

    4. Nice structure to the blog – easy to read highlights key points. Also worth mentioning in my opinion is the need to offer these entrepreneurs and like-minded individuals a common space to speak/network and get INVOLVED. Siliconcape serves as a great tool for this, and we as a community need to identify and encourage those that are WANTING to get INVOLVED, and help leverage their efforts..So far we are on the right track – maintaining this momentum is essential!

    5. Someone assumed that you actually want to create a ‘silicon valley’ here and there, and everyone followed that belief.
      Someone assumed that the right thing to do is to ‘attract’ the right people, and everyone followed that belief.

      From those two approaches alone, the chance of success is closed down significantly. No focus is placed on nurturing what you have…we all just sit around for something to happen “more capital”, “more entrepreneurs”, “better skills”.

      Trying to guess and then chase the same path and eventual state of silicon valley is not going to be as helpful as just ignoring that, there are many things that we can see in silicon valley and try to solve here as well, but trying to chase the exact same recipe only makes the job harder, and allow us to easily deceive ourselves (cape town isn’t going to have the same appeal to live in as california had, and that was for attracting people from neighboring cities, assuming those cities had the talent).

      We already have everything we need to become a vibrant community for international level technology innovation in a matter of 3 – 6 months. No we don’t have enough of the high quality talent, we aren’t trained as well, our universities are actually very poor in comparison to the competition, but those aren’t the things we need, those are the thing we can easily change, and the denial of the need to change those things will only hinder the success. All that we need is for a small group of the right people to consider the right things, to make some sacrifice for the effort, and for every other person that cares to fit into the system that group enables.

    6. Points well noted. As a side note Silicon Cape is not another program or initiative. It is an idea. It is a rallying flag for the industry to get behind and use as a brand to unify behind. This takes time, certainly not 3 – 6 months…

      @SMarais – government has more potential to e a negative effect as there is little they can do to build it, but they can harm it in a big way. The best thing for them to do is open the doors and step aside – within reason. This is evident in Russia and China.

      @Tim: I don’t think we are anywhere near 3-6 months away from creating a Silicon Valley, more like 3 – 6 years at best. The idea of Silicon Cape is to be that rally that people can get together. I think that we should not try and be a Silicon Valley, but learn from them and take those lessons to apply to our context.

      I plan to do another post on what we lack… But for the flip side do check out Tim’s post: http://timlind.posterous.com/30893831 as it raises some interesting points.

    7. Just to clarify my “observation”, I don’t think celebrating Shuttleworth’s success is “appalling” in any way, as he is truly a great leader in the technology sector and one of our homegrown heroes. What he accomplished was remarkable, so much so that his story is still often told today. My original comment was more about pointing out that his wake has been largely unfollowed in the years since the Thawte exit, pointing to a lack of other well known, publicly celebrated technology entrepreneurs who have had massive exits (acquisitions or IPOs).

    8. Unifying the industry, which is so small (hence the need for it) doesn’t take long, we can probably call all the key players in 3 days to arrange support for whatever we need, the problem is there is no plan as to what will actually take us there, so instead we just procrastinate to “gain momentum”? I think the gaining momentum stage is well over now, in fact it may have hit a trough, what is needed now is a proper short term plan.

      There’s no use rallying behind our common desire when there is no platform for the people to actually cause any action that might achieve the desire…it then starts to look more like a bunch of people standing around waiting for a show to start that has no script (the people get tired of waiting).

      One of the reasons I say it can take 3 – 6 months is because all you really need to do to achieve that state of a vibrant technology ecosystem is to *enable* potential, not to turn potential into success. So the real work of the initiative is really just that length, followed by maintaining the flow. Which is encouragement to actually act immediately, instead telling ourselves we are waiting to “unify industry”.

      I posted a comment (http://timlind.posterous.com/30893831) to your response on my blog, in that I’ve outlined my main point, that we need to enable and extract action from all, not just to consider being a brand, that is exactly the problem so far, we need to have a *plan* and *enabling* as the most important aspect to the initiative, otherwise how can unifying around the brand be useful?

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    13. Awesome article, great post. Yes, these are many of the reasons why people come to Cape Town to do start-ups and why Cape Town has a much more thriving start-up community.

      PS: Keep calm and forget Silicon Valley. Silicon Cape is just a name with a reference to it.

    14. I do not know whether it’s just me or if everybody else experiencing issues with your blog.

      It appears as though some of the text within your
      posts are running off the screen. Can someone else please comment
      and let me know if this is happening to them as well?
      This might be a problem with my internet browser because
      I’ve had this happen before. Thank you

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