Benjamin Kuo’s Blog

Message to new SoCal entrepreneurs: get over your Silicon Valley envy.

I’ve run into quite a few entrepreneurs lately who have what I like to call Silicon Valley Envy. It’s the–somewhat defeating–attitude that everything in Silicon Valley is better, that in order to validate your startup you need to have approval from the “in” folks in Silicon Valley. This is usually manifested to me by startups who gush that they had so-and-so Silicon Valley media mogul or so-and-so angel investor or VC talk about  their company.

One thing Southern California has been very good at, is going our own way. That means, we’ve create our own startups — kept our companies here even though Silicon Valley venture investors may have pressured companies to move to Palo Alto — developed companies which made business sense or which serve a market need — rather than just followed the latest “trendy” startup idea. This independent spirit set the stage for the last round of successful companies here in Southern California. The big successes here in SoCal — the Overtures, Pricegrabbers, MySpaces, Jamdats, LowermyBills, etc. in the world — didn’t have competitors and weren’t following the lead of the hot Silicon Valley startup of the day/hour.

I’ve always felt, personally, that bucking the trend, finding a different angle on the market, having somewhat of a renegade attitude has been one of the most valuable traits that an entrepreneur can have. About the last thing you want to see in an entrepreneur that is being unoriginal and just trying to “follow the crowd.” Following what “Silicon Valley” thinks isn’t going to get your startup — or Southern California — ahead.

I was chatting with a well regarded venture capitalists here in the area last week, and he was telling me how he looks for companies which aren’t trying to follow Silicon Valley’s “group think” — companies which are different, and which won’t have to compete in the intense pressure zone that is Silicon Valley’s “hot next thing.”

It’s one thing to take the lessons and successes of companies in Silicon Valley, and use that to your advantage to create the next big Southern California sucess — it’s another thing to latch onto the idea that you can’t consider yourself “made” until you get that pat on the head from the Silicon Valley “in” crowd. My advice to you: get over it, and start focusing on if you’re creating a sustainable, worthwhile business and less about becoming a Silicon Valley darling.

I’ve gotten a lot of response from my interview earlier this week with Richard Wolpert, about his new venture fund — which is backed by William Morris, Accel Partners, Venrock, and AT&T. It turns out, Richard also has his own blog — albeit mostly personal observations rather than info for entrepreneurs and others — althought a good one is his look at the difference between Hollywood and Silicon Valley: Valet Parking.

I was greeted this morning by an email from a Silicon Valley group, promoting a event in Los Angeles, and was disappointed to read that they were looking to bring “Silicon Valley to the land of silicone.” It was most likely in jest, but I’ve recently been running into entrepreneurs, venture capitalists, and others from Silicon Valley who think the only thing happening in Southern California is Hollywood content startups.

We’re not just new media startups (which, in reality, are but a fraction of the companies started in this area). We’re Internet advertising; semiconductors; biotechnology, pharmaceuticals, and medical devices; Web 2.0 and SaaS; hardware and electronics; storage and communications; wireless; computer gaming; cleantech and energy; consumer Internet; ecommerce; and a hundred other kinds of companies. That’s part of the strength and the future of Southern California’s technology industry, the diversity of companies here.

Content is a natural strength, of course, because of Hollywood. But it’s far from a dominant part of the technology industry here.  Part of the reason you’re seeing some attention in Silicon Valley to Southern California nowadays is they are enamored with digital media and Hollywood; what they’re missing is there’s a lot more depth to the industry and the folks here.

Glenn Kelman, CEO of Redfin — based in Seattle — recently posted a piece on the difference between Silicon Valley and Seattle’s high tech industries. In what looks like the begining of an old-fashioned flame war, TechCrunch’s Mike Arrington says Kelman has a flawed view of Silicon Valley.

It’s always fascinating to see these kinds of posts — awhile back there was one by Paul Graham (of Y Incubator) on how locating in Houston will kill your startup; and just this week a complaint by Fred Wilson, a New York VC on Silicon Valley arrogance. It seems like what there is a lot of in Silicon Valley–aside from venture capital and startups–is ego.

My personal opinion (having worked in Silicon Valley) is that although there are some advantages to Silicon Valley, there are a number of other high tech centers (Southern California of course being one of the more important ones) where there is a critical mass of high technology companies, venture capital, and service providers that make them robust places for startups. Particular areas outside of Southern California and New England (which have been fairly well established for awhile) worth watching include not only Seattle, but also New York City; Austin, Texas; and Boulder, Colorado; not to mention Tel Aviv and Mumbai.

It’s late Friday, so here’s a (somewhat silly) clip that features Frank Addante, CEO of the Rubicon Project, an LA Internet advertising startup, making fun of some LA stereotypes. (Frank co-founded L90, StrongMail, etc. — Rubicon is funded by Clearstone Ventures).

It’s quite interesting, I’ve noticed recently where we’ve been finding out about local venture fundings, but the companies have been very eager to keep it quiet. I’m always mystified by the “hush-hush” around it, but, a few weeks or months later, I find out the companies have gotten funding from a Silicon Valley VC who only funded the firm if they promised to move the company to somewhere in Silicon Valley (usually Palo Alto or Sunnyvale). The announcement usually is hyped up in the Silicon Valley press corp and no mention that the firm started here in Southern California ever shows up anywhere. I’ve noticed the same thing with companies (particularly those with R&D operations in Israel or China) who do the same thing. I think there’s some sense of “Silicon Valley” envy.

On the other hand, I do hear from lots of (very successful) CEOs and founders of companies who tell me their “war stories” about convincing their VCs that Southern California is a better place for starting a business. They go on to build great businesses here, anyway. I think if you’re more worried about having the “cachet” of Silicon Valley on your firm than making your business successful, you’re less likely to actually focus in on the true factors behind making your company work…

Techcrunch’s Michael Arrington, in a post from very early this morning, says “Silicon Valley sucks“. Arrington says, in the post, titled “Silicon Valley Could Use A Downturn Right About Now” that:

It’s no longer about beautiful products and genius developers. It’s about the money and the status, and hot PR chicks and marketing departments.

Maybe Southern California hasn’t yet the same fevered pitch of venture capital funding that Silicon Valley has, but (with a few exceptions) most of the activity here has been remarkably less bubble-like than you would expect. Where a lot of the general frothiness in the market has been over new Internet services, it looks like to me that Southern California is still seeing a fairly broad spread of investments — biotech, software, semiconductors, and medical devices, along with consumer-facing services and some amount of content. Of the more fizzy investments, they are all smaller, angel-sized rounds — not bubble-era multi million dollar investments. Plus, the people getting funded here all seem to be serial entrepreneurs or with a very strong technical background.

Perhaps it’s because most of the Southern California investors went through the last bubble and have been more cautious; or perhaps being geographically isolated from Silicon Valley there’s less of a herd mentality. I also think that some portion of the deal flow in Southern California is expansion capital into later-stage firms, who cut their teeth in the grim economics post-boom, and are only now taking capital to expand. In any case, I haven’t seen the same PR frenzy and quite the craze here, despite the capital flowing into companies here…

The entire Silicon Valley press core is at Google today for the Google Searchology event, where they announced a number of new tools. Google has several of their tools live online now at Google Experimental, including a new timeline tool which shows your query on a timeline; keyboard shortcuts (for the geeks out there missing your command prompt, vi-style j/k navigation); and a new left hand search navigation. I’ll spare the details as every technology publication and blog in the world will be covering this today and tomorrow…

I attended an invite-only industry networking event hosted by Clearstone Venture Partners last night in Santa Monica, one of several “behind the doors” networking events that seem to happen here in Southern California. Although it was held the same night as the Tech Coast Angels Fast Pitch event in Orange County and the Harvard Business Society’s annual Entrepreneurs Conference (which I heard went very well), it was very well attended by local high tech entrepreneurs and founders.

The importance of cultural context–how your ideas, beliefs and values are shaped by your culture and upbringing–came into sharp focus for me as I was standing talking with Rafat Ali (who is the publisher of Paidcontent.org) and Mike Jones, CEO of Userplane, when Rafat suddenly stopped mid-sentence and excitely said “Oh my gosh, look, there’s Vijay Amritraj!”

For those who don’t know who Vijay Amritraj is, he’s a very famous tennis champion from India (who played Wimbledon in the 1970’s, playing against such folks as Bjorn Borg and Jimmy Connors). He’s better known for those outside India for his role in the James Bond movie Octopussy (at least for me, having grown up on James Bond reruns and having been in diapers when Amritraj was playing Wimbledon). Vijay was probably the most popular person at the event, with quite a crowd looking to shake his hand and meet him. I was talking twice with other entrepreneurs of Indian descent and twice–had a similar reaction as they spotted Amritraj.

Interestingly, I think the lack of “cultural context” in the Southern California area is one reason, that despite the many successful high tech companies here, the industry isn’t well known outside of industry insiders. Silicon Valley has its celebrities — think Steve Jobs, Larry Ellison, Marc Benioff, Sergey Brin and Larry Page, Vinod Khosla, Chad Hurley– who get lots of press not only in Silicon Valley but worldwide. Standing in a room anywhere in the world, you’d probably hear “look, there’s Steve Jobs!” or “Wow! there’s Sergey Brin!” However well that Southern California has done, I doubt you’d get the same response with Henri Samueli (co-founder of Broadcom, worth some $2 billion); Alfred Mann (Pacesetter/Minimed/etc. also worth around $2.2 billion); or even Chris DeWolfe or Tom Anderson at MySpace (though they might come close, since every teen in America is Tom’s “friend”). Perhaps it’s because because Hollywood has so much greater star power here that technology industry celebrities are just not famous enough to recognize; or maybe it’s because we just don’t have the egos and personalities that command the attention.

I spent most of the morning/part of the afternoon at AlwaysOn Hollywood. AlwaysOn is Tony Perkin’s (former Red Herring founder) new venture, and his AlwaysOn Hollywood event focuses in on some of the trends bringing the technology world together with media/Hollywood.

What I find interesting is the difference in crowd you get attending an event like this–primarily a Northern California crowd, with a few folks from Hollywood mixed in, and a few (but very few) people from the technology/startup side of Southern California.

I spent a few minutes talking with Justin Kan, of Justin.tv (for those not familiar with Justin.tv, Justin is wearing a web camera 24/7 broadcasting basically his entire life) and Kevin Rose of Digg addressed the user revolt the company is facing after trying to remove a HD-DVD hack from the popular user-generated news site.

Some of the local executives on upcoming panels: Adam Lilling, CEO of Biggerboat is on a panel later today; Dmitry Shapiro of Veoh is scheduled for a session tonight;  Greg Kostello of VMIX Media is on a session Thursday, as is Steven Starr, of Revver. Frank Creer of Zone Ventures, and Richard Rosenblatt of Demand Media were also on panels at the conference earlier.