Techcrunch just posted some new research from the Startup Compass on the world’s top tech hubs and their defining characteristics. A post of this kind always leads to arguments over whose tech hub is best, but let’s start with the data from the 13,000 startups covered.
In terms of the total number of startups, capital raised and startup success rate (defined by Startup Genome as companies at the “scale” stage) Silicon Valley still rules. Silicon Valley has 3 times as many startups as New York, 4.5 times as many as London and 12.5-times the number in Berlin. The average startup in the Valley also raised 2-3 times as much capital as its global equivalents in the early stages of its development and had the most helpful mentors.
Sponsored by VB
Accoprding to Startup Genome, the typical Silicon Valley entrepreneur is quite a different creature to the London founder. Silicon Valley entrepreneurs are more inclined to address new markets, build infrastructure, games and social networks. In contrast, entrepreneurs in London are twice as likely as their Silicon Valley equivalents to build project management software and 50 percent more likely build e-commerce products. Silicon Valley startups are 4.4 times more likely to define lead generation as their primary business model and 3.6 more likely to choose virtual goods.
Silicon Valley startups also create 38 percent more jobs than London startups, while the London has twice as many company founders as the Valley looking to quickly flip their company. The message appears to be that Londoners like to address proven markets with better products, invest less and sell the company quickly while the Americans like to make bigger and more speculative bets in the hyped social and gaming fields.
So far, so cliched. European entrepreneurs are often accused of being more risk-averse and less ambitious than their U.S. equivalents, and in general compared and found wanting according to the Silicon Valley standard. Maybe this misses the point. Startup culture is a subset of the wider culture. It’s hard not to despair when one government after another announces plans to build a new Silicon Valley, overlooking the fact that you could not create Silicon Valley anew in California if you started now. There is no longer any silicon for a start.
Are the metrics for startup success used by Startup Genome even the right ones for the 21st Century? Why do we measure a startup’s funding level or valuation, but not whether it makes the lives of its employees and users better? In an interview with economic thinker Umair Haque in VentureBeat, he argues that Silicon Valley is caught in a competency trap. “The things that made it successful yesterday are exactly the things that prevent it from becoming successful tomorrow”, he said. To succeed in the future, companies need to create “thick value” which he defines as tangibly improving people’s physical, mental or social well-being or improving their lives economically in an enduring way. Instagram, anyone?
Silicon Valley does certain things brilliantly but every city has something unique. Seven of the top 10 tech hubs in the Startup Compass list are outside the U.S: London, Toronto, Tel Aviv, Singapore, Sao Paulo, Bangalore and Moscow. Why not learn from the Valley, but create hubs which play to the unique cultural strengths and values of your own city and people?
Appsterdam’s indie app movement is one example of an alternative approach to building companies. The Berlin startup ecosystem did not evolve because the residents are particularly entrepreneurial (most startup founders in Berlin, even the German ones, come from outside the city) but because the city was cheap, had a thriving cultural scene and was an exciting place to live.
Some of my own favorite startups come from Scandinavia, which does not even make it into Startup Genome’s list of the world’s top 25 tech hubs. Fast Company published a fascinating article recently on how the Scandinavian tech innovations, which includes things like Linux and Skype, tend to further the greater good. The author contends that this is no coincidence, but is driven by the values. Nordic societies favor “egalitarianism, collectivism, homogeneity and conformity as values to be protected and practiced by citizens,” a very different world view to that of most Americans.
All startups, and startup hubs, should reflect the values of their founders. Trying to replicate Silicon Valley is like dressing up as a drag queen to fit in on a girl’s night out; it takes a lot of effort and you will remain an imitation of the real thing. Instead, as Oscar Wilde said, “Be yourself; everyone else is taken.”
VB’s research team is studying mobile user acquisition: Chime in here, and we’ll share the results.