This is the 13th article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.
In our various interviews for this series, one of the most elusive topics of discussion has been culture of risk. Elusive in that it strays into the realm of stereotype and generalization.
Can it be defined by borders, or is that a naive misconception? Is it somehow encoded in the DNA of one nation’s culture more than another, shaped and influenced by how much public policy favours free-market capitalism versus socialism, or all of the above?
There is no one simple answer. However, few would argue that U.S. entrepreneurs tend to have more of a balls-to-the-wall, bet-the-farm-on-a-brilliant-idea mindset than their Canadian counterparts, while U.K. entrepreneurs fall somewhere in the middle … most of the time. On the other hand, one could also argue that entrepreneurs in Western Canada tend to be more “American” in their mindset versus their peers further east, while the characteristics that best define Silicon Valley can’t be found anywhere else in the U.S. And then there are those Israelis, who have cast a mould all their own.
However, there is no denying that an ecosystem that fosters entrepreneurship begins with a willingness to take risk, and then take some more.
“(Entrepreneurs) can only do so much,” Howard Lindzon said in an interview from Accelerate Montreal in March. “It is about the ecosystem and it’s about the government giving money and it’s about people willing to take risk and reinvest so that you are now in the second or third generation of Internet companies. Those people are not buying Porsches, they’re not buying third homes … it’s not about 10 cars, it’s about 10 startups. Whether that’s good or bad it’s definitely a lot more productive to invest in 10 startups than in 10 cars.”
“Attitude towards risk is a huge barometer of entrepreneurial culture,” Ronald Weissman, chair of the Software Special Industry Group at one of Silicon Valley’s oldest angel organization Band of Angels, told us a while back. The true test came following the dot-com bust, when appetite for risk was largely undiminished in the Valley, but became a four-letter word of a whole other sort in other regions, including the tech hubs of Canada and the U.K.
As we have said before, an appetite for risk goes hand in hand with an acceptance of failure, provided, of course, one has learned from their missteps.
“Do you know what we call a failed entrepreneur in Silicon Valley?” he said. “Experienced.”
“Nowhere else in the world would you say that. Anywhere else in the world if you’ve failed, you’ve embarrassed your family, your community, your state. Not here. Failure is accepted as experience … screwed it up? Great. As long as you don’t blame it on someone else and you say ‘listen, let me tell you what I learned, I’ll never do that again.’ Step outside of the Bay area and try that anywhere else in the U.S., let alone anywhere else in the world, and you’ll never get another job.”
And just what is Silicon Valley? It bears repeating that immigrants have started 52 percent of Silicon Valley’s technology companies and account for about one third of its CEOs. As C100 co-founder Anthony Lee said in a past post, “What Silicon Valley has done is create an eco-system and a brand, a model, that allows anyone from anywhere in the world to come and execute.”
Supporting that risky leap from innovator to entrepreneur
Mobile technologist, anthropologist and conservationist Ken Banks recently blogged about the rise of the reluctant innovator, people who found themselves in the midst of a problem they felt compelled to solve, and how an innovator differs from an entrepreneur.
“The interesting thing for me is that, whilst the mechanics of entrepreneurship can be taught, most innovation is random, personal, demand-driven, inspired and instinctive,” he wrote. “In short, innovation occurs naturally in the real world. Balance sheets and P&Ls, on the other hand, do not.”
Hold that thought. Back when we wrote about exploitable technology, we quoted John Stokes, a partner at Montreal-based Real Ventures, on the idea that a successful entrepreneur must be able to lever both “convergent” and “divergent” thinking. The innovator is about convergence, having a problem to solve or premise to challenge. But to succeed, they must learn to also be a divergent thinker, one who can look at all the avenues that could be taken to an objective.
As Banks wrote, people with ideas and business models are called entrepreneurs. Everyone else is an innovator.
Where are we going with all this?
A culture of risk is one that helps innovators overcome the learning curve to become entrepreneurs, supporting them through the trials and tribulations of validating a great idea, turning it into a commercial product and getting it to market. It is a culture that encourages this process and accepts that failure is often times an inevitable, even necessary, stop on the road to success.
On the other hand, it isn’t all about the culture in which entrepreneurs find themselves. They as individuals must also have that “fire in the belly,” as our U.K. associate Phil Newman, puts it. Too often he sees entrepreneurs who achieve that successful exit opt for semi-retirement and that sports car instead of levering their experience and investing in another venture.
The environment in which the entrepreneur operates obviously influences how hot that belly fire burns, but as Silicon Valley’s rich and ethnically diverse population attests, the prevailing appetite for risk in one’s native land does not and should not limit the scope of one’s entrepreneurial vision. As we have said before, if what you need to feed the fire, or, in a more practical sense, the bank account of your fledging startup, isn’t to be found in your own backyard, don’t be afraid to venture over the hedge. Seek out and learn from those people who have already accomplished what you dream of achieving. The entrepreneurial community is a global one that pays little heed to borders.
Next week, we will continue this stream of consciousness with lessons in entrepreneurial chutzpah from a wee but mighty nation on the far side of the Mediterranean.