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