circles of influence - tom kosnik

Circles of Influence #1

Circles of InfluenceAnd the Seven Paradoxes

of Silicon ValleyPrepared by Lena Ramfelt and Tom Kosnik,

Coauthors of Circles of Influence (in revision)

Discussion led by: Tom Kosnik, and Amber Fowler, Shadi Mehraein, & Eghosa Omoigui, co-founders of

echovcPresented for N-Chat at N-House Venture Lab:

August 22, 2012If you circulate any part of this

presentation please give credit to the authors.


Who is Tom Kosnik?

1970 1980 1990 2000 2005 2010

AMERICAN MANAGEMENT SYSTEMS


Circles of Influence

Agenda

• Silicon Valley• Circles of Influence• The Seven Paradoxes of Silicon Valley• Silicon Valley vs. Singapore Circles of Influence


What is Silicon Valley? An entrepreneurial state of mind.


What is Silicon Valley?Lots of roads with too much traffic!


What is Silicon Valley?

The highest concentration of

entrepreneurial high-tech companies

in the world.


Silicon Valley Start-ups Have Innovated in many industries

• 1940s -1960s: Aerospace/Defense

• 1970s: Semiconductors and minicomputers

• 1970s-1980s: microcomputer hardware and software plus biotechnology

• 1990s: All of the above plus internet

• 2000- and beyond: All of the above plus Clean-tech (Clean Energy, Air and Water), next-generation bioengineering, wireless, and web 2.0.



Agenda

• Silicon Valley • Circles of Influence• The Seven Paradoxes of Silicon Valley• Silicon Valley vs. Singapore Circles of Influence


What are the Circles of Influence? A model to help entrepreneurs to get players

to bet on their ventures.

Players

Code

Stakes

The Sweet Spot!

Entrepreneurial Cluster


Players bet their stakes on entrepreneurial ventures.

• Venture capital firms (and their Limited Partners)• Angel Investors• Research Universities (Stanford and Cal)• Silicon Valley Law firms• Public Accounting firms• Investment banking firms• Consulting firms• Marketing, advertising, and PR firms• Executive search firms• Stock exchanges (NASDAQ, NYSE, etc.) • TiE, SABA, Monte Jade, AAMA, Silicon Vikings, etc.• Industry Associations (Semicon, SVASE)• Accelerators/Incubators (Astia, Clean Tech Open, Plug-and-Play, Y-Combinator) • BASES, ASES, NUSEA, Energy Crossroads, SWIB• Business and Technical News Media, Blogs, etc.• Joint Venture Silicon Valley; Clean Tech Open, etc.• Social media for entrepreneurs (Facebook, Linkedin)• Government agencies

These are major players in Silicon Valley.

How are they similar to or from different players in Singapore?


The stakes include…

MoneyTime

TalentTechnology

And more…

Customer Relationships

Passion

Reputation

Friends & Family


To get players to bet their stakes on your venture -

you’ve got to know the code…

What is the code?• “Local” business etiquette that builds trust• Rules of the game that vary from cluster to cluster• Explicit and implicit• Verbal and written• Communicated in public and private• Rooted in local cultures of entrepreneurial clusters• Changing across industries in the same cluster.


The Players in Silicon Valley in 2000…Silicon Valley VCs

Angel Investors

Regional BusinessNews Media

Large High TechCompanies with

Silicon Valley HQ(Lead Customers And Suppliers)

Local GovernmentInstitutions

Leading SiliconValley Law Firms

Fortune 500 Firmsnot in Silicon Valley

(Customers)

Executive SearchFirms

State GovernmentInstitutions

Investment Banks

NASDAQ

National BusinessNews Media

Stanford & Berkeley

Big 4 CPA Firms

U.S. Government

Global ConsultingFirms

Most Non-USCorporations

Local Influence

Of PlayersInsideSiliconValley

Global Influence of Players Outside Silicon Valley

Low

Low

High

HighMedium

Medium


The Players in Silicon Valley in 2012…

SV “local” VCs/and Angels

Regional BusinessNews Media

Large High TechCompanies with

Silicon Valley HQ(Lead Customers And Suppliers)

Local GovernmentInstitutions

SV’s “global” VCs

Leading SiliconValley Law Firms

Blogs & Social media(Facebook, Linkedin)

Fortune 500 Firmsnot in Silicon Valley

(Customers)

Accelerators& Incubators

Executive SearchFirms

State GovernmentInstitutions

2U.S. Government

National BusinessNews Media

Stanford & Berkeley

Big 4 CPA Firms

Most Non-USCorporations

Global ConsultingFirms

NASDAQ

Investment Banks

Local Influence

Of PlayersInsideSiliconValley

Global Influence of Players Outside Silicon Valley

Low

Low

High

HighMedium

Medium



Agenda



The 7 Paradoxes of Silicon Valley7 Paradoxes of Silicon Valley

Paradox 1: Mountains in the Valley. Paradox 2: Academic aristocracies sing praise to meritocracy. Paradox 3: Scarcity in the land of plenty.Paradox 4: Innovation masks tradition.Paradox 5:It’s OK to fail if you shoulder the blame. Paradox 6: Long on knowledge, short on wisdom

Myths about entrepreneurship in Silicon Valley

The Valley is an open network.

The Valley is a meritocracy.

Money, talent, and other resources are abundant.

Silicon Valley is “ground zero” for innovation.

It’s OK to fail!

Learning fuels success in Silicon Valley.Everyone cooperates – even competitors.

Paradox 7: Competitors Collaborate and Collaborators Compete.


Mountains in the Valley

Defense/AeroClean

TechComputers

&Communications

Software,Software

as a service,Web 2.0, etc.

Semi Mfg./ Semi-

Conductors s

Life Sciences:Biotech,

Medical Equip.Pharmaceuticals.

Personalized MedicineMedical Informatics. Etc.

and every mountain is a mountain range!


Academic Aristocracies Sing Praise to Meritocracy: 2003

Figure 4.1B: VCs with MBAs from Leading Universities

Stanford40%

Pennsylvania4%

Santa Clara3%

UCLA2%

Columbia2%

Northw estern2%

All Others16%

Harvard31%

Stanford

Harvard

Pennsylvania

Santa Clara

UCLA

Columbia

Northwestern

All Others

Source: Sample of 164 VC professionals from 21 Silicon Valley f irms, June 2003.


Academic Aristocracies Sing Praise to Meritocracy: 2008

�Stanford40%

Harvard31%

Pennsylvania5%

UC Berkeley3%

�UCLA2%

�Columbia2%

Northwestern2%

All Others15%

VCs with MBAs from Leading UniversitiesSource: Sample of 167 VC professionals from 20 Silicon Valley firms,

November 2008


Would you expect such dominance by males in a pure meritocracy?

Fig 4.5: Gender Distribution in VC Firms of Different Founding P eriods

5

89 8595

15110%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

A B C

(A) VC firms founded before 1980(B) VC firms founded from 1981 to 1989(C) VC firms founded after 1990

See Appendix for breakdown.

Source: Sample of 323 VC professionals from 20 Silicon Valley firms in


Scarcity in the Land of PlentyThe Money Talent Merry-Go-Round


It’s OK to fail if you learn –and shoulder the blame

Myth 5:

It’s OK to fail

Paradox 5:It’s OK to fail if you learn -

And shoulder the blame.

How to cope with the paradox:

• If you blame investors they won’t forgive or forget. • Fail fast and adapt before burning through your funding.• When failing remember to show grace under fire.


Do the Paradoxes of Silicon Valley apply in your Entrepreneurial Cluster?

The Paradoxes of Silicon Valley No ?? Yes

1. Mountains in the Valley

2. Academic aristocracies sing praise to meritocracy

3. Scarcity in the land of plenty

4. Innovation masks tradition

5. It’s OK to fail if you learn – and shoulder the blame

6. Long on knowledge, short on wisdom

7. Competitors collaborate, collaborators compete

8 . Are there other paradoxes in your cluster?



Agenda



Entrepreneurial Clusters

• A region engaged in entrepreneurial activity.• Bigger than a single city.• Smaller than a state or most countries.• Examples:

– Silicon Valley– Singapore– Bio-Valley (in Philadelphia)– Wireless Valley (Kista and Stockholm, Sweden)– Beijing – Shanghai– Bangalore


Singapore and Silicon Valley are Complementary Clusters

Singapore Silicon Valley


Singapore and Silicon Valley offer different context for the Circles of Influence

Players

Code

Stakes


Exercise

• Form teams with people sitting near you• Compare the context that surrounds the Circles

of Influence• What factors in Singapore help & hinder the

local Circles of Influence?• What factors in Silicon Valley help & hinder the

local Circles of Influence?


Factors in Singapore that help and hinder the local Circles of Influence

Players

Code

Stakes


Factors in Silicon Valley that help and hinder the local Circles of Influence

Players

Code

Stakes Players

Code

Stakes


Thank YouTom Kosnik

+1 650 450 3330Facebook: Tom Kosnikskype: [email protected]

But please don’t email me!

circles of influence - tom kosnik

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