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San Francisco is one centre of the world’s most successful technology sector. Measures of its gravitational pull in the global tech sector abound, a popular one being the number of “unicorns”: startups that had billion dollar valuations before share market listing.
Silicon Valley’s success may generate soul-searching by Europeans wondering why the EU’s 500 million people are less successful at commercialising innovation, and its culture may inspire tut-tutting about the glorification of greed or about solving only the problems faced by Stanford dorm-dwellers. But still its cluster of sensational over-achievers continues to attract those wanting to take big technology ideas to the global stage.
It is this last point that brought the Moxie Sessions to San Francisco. Is Silicon Valley really the place to go to advance your business idea, and how well placed are New Zealand firms to make it big?
Scott Nolan, a partner of venture capital firm Founders Fund, emphasised the irrelevance of the origins of the company from an investor’s point of view. His advice: “make it not matter that you are from somewhere else”, unless it is somehow central to your product or to your motivation as a founder. The idea in seeking venture funding is for the investors to think that your company is going to be worth a fortune in the future. Anything that gets in the way of that is bad.
The most important thing for investors remains “traction” in the market, i.e., paying customers. So investors might have questions if coming from somewhere else presented a problem. For example, you should have your story buttoned down on why being based in Wellington won’t make it difficult to sell into the target market, won’t present any communication issues, and won’t stop you being regularly physically present in the United States.
Elizabeth Iorns, co-founder of venture-capital funded Science Exchange, was brought up in New Zealand before pursuing academic and then commercial interests in the UK and the United States. She sees two big advantages in Silicon Valley. First, no matter what stage your company is at, or what your question is right now, there is someone in the Valley who has been through it all before. The open culture really helps: it is okay to contact anyone and ask them for advice, regardless of the perceived social distance (best to make sure that you know what you want before you ask, of course).
The second big advantage is the scale of ambition. There is an obvious difference between the “why me” thinking of New Zealand, and the “why not me” thinking prevalent in Silicon Valley. The everyday examples that demonstrate that someone like you really has changed the world make it harder to think of all the reasons why you can’t.
For David Russell, an old-hand in Silicon Valley technology companies now helping New Zealand companies expand overseas through NZTE, firms need to put more thought into why they are coming to the United States. This is not to say that they should not be ambitious. But thinking before you come about how the United States fits into your growth strategy is going to make a big difference to David’s ability to help you execute on your plan.
David sees two main groups. First, companies that are established in New Zealand, have $10-50m revenue, and are looking to the United States as a growth strategy, perhaps aiming to add 10% to the top line. The second group are tech companies that have no or little existing business and aiming for super-sonic growth in a timeframe kept urgent by their funding sources, or by the transitory nature of their technology advantage.
“Being the biggest in New Zealand is not a thing”, observed one attendee. You need to think you have the best company in the world. At the heart of it you need a true story about what you are doing, and why you care about it more than anyone else does. Your background and the mission you are on might tie in with being from New Zealand. But whatever your story is, it needs to play back to what investors are looking for.
Being “good at” something versus being “the best” at it means claiming-what-you-can’t-yet-prove in a way that seems uncomfortable ground for Antipodeans. In case it helps, we are not alone. Not every American is a natural self-promoter. The country is festooned with small towns that are as culturally different from Silicon Valley as Tawa is from Taiwan. Having struggled is valued. But being too humble can be a bit of a handicap in this business environment.
And note that in the huge United States market, people specialise (or specialize): they do not do everything themselves. You have to be willing to go and find the person you need for the particular challenge you are facing. And yes, to spend some money on it, and to be willing to ask around for help. Large companies in New Zealand might be the only one in their field, but large companies in the USA have plenty of peers to learn things from.
Of course, your big idea might not need to be venture funded. Not everything offers the prospect of billion dollar valuations or 100x returns on investment. Big investor funds might be looking to make a few large investments, rather than pootling around in half-million dollar land, even if in New Zealand that would be considered quite a lot of dough.
So is Silicon Valley really the place for you? There’s certainly no shortage of role models to help you think bigger, and plenty of smart investors looking for opportunities. But the streets aren’t paved with gold. One attendee described New Zealand as “like Oregon, but with better holiday stories”. If your pitch is “Hi, I’m from New Zealand”, you might spark some social interest, but actual progress requires a lot more than just a friendly face and a quirky accent.*
* In fact, attendees were divided on the usefulness of an accent, even one as beautiful as ours. Some thought sounding like an American is helpful so that people can understand what you say. Others thought folks are more interested in an accent, so that might get them listening for longer. Either way, not much you can do about it, I guess.
Every month, The Moxie Sessions brings together a small group of business thinkers to discuss ways New Zealand can take advantage of the Internet to boost its national competitiveness. For more, see http://themoxiesessions.co.nz. In June, the Moxie Sessions called in to the Kiwi Landing Pad in San Francisco, home for New Zealand startups, to talk about bringing big ideas to the USA.
Thanks to Sian Simpson and the Kiwi Landing Pad for having us, and to Alcatel Lucent and its ng Connect programme for the generous sponsorship that helps to make The Moxie Sessions possible.
Check out also the view of the same topic from New Zealand in Session 25 at http://themoxiesessions.co.nz/session/25
Hayden Glass is a consulting economist with the Sapere Research Group, and the convenor of the Moxie Sessions.