"The next Silicon Valley" will be in Northern California
Every city in Australia wants to call itself Silicon Valley. It's not gonna happen. But there are some things we can learn from the yanks.
Let me the set the scene: it’s your first day on the job as a technology journalist. You want to write a hit, something that readers will really remember. You grab a dart and throw it at the nearest world map. Then you check where the dart hit and begin typing “<CITY NAME> could be the next Silicon Valley”.
I’m not sure if that’s actually how tech journalism works, but it feels like it. Apparently the next Silicon Valley is in Brisbane, but every part of Australia and much of the rest of the world have gotten in on the action over the last 25+ years.
But despite the best efforts of every city/state government - and of city of San Francisco, which seems to be trying its hardest to self implode - nothing much has changed. This is because most of the time when someone claims they’re creating the next Silicon Valley it really means:
Government grants, “support”, and publicity on websites nobody reads.
Subsidised offices and co-working spaces mostly filled with recruiters.
Basically, it’s welfare for the upper-middle class. And it doesn’t achieve anything!
I recently moved back home to Brisbane, for the same reasons everyone else does - family, lifestyle, and expensive beer.
Before that, I spent 5 years living in the US, where Silicon Valley is a place that already exists (and can’t be cloned), and where technology companies can be found in abundance anywhere you look.
In the US it’s obvious you cannot press release your way to prosperity. But there are things we can learn from America that do make an impact. Here’s what Australians should know before funding any more silly programs.
1. Universities
American university culture is fundamentally different to the rest of the world, for many reasons, but the most fundamental is that almost everyone moves some distance away from home to study. Typically this is to a college town, though most big cities have universities too. Studying in the state you are from is usually cheaper, but many students will get scholarships, or have the financial means (or the big loans) to study interstate. Wherever they end up, it’s not mom’s house. This means:
Not living with your parents → living in a sharehouse.
New friends, new hobbies, and a complete reset of your social life.
When I was studying in Brisbane, I’d take the bus from my parents house to uni, go to my lectures, and go home. Through some stroke of luck I ended up moving out and into a house with my future business partners, but it was not something I sought out. As soon as we lived together, it was inevitable we’d all one day work together. This is rare in Australia, but in America the idea of you and your roommates starting a business in your dorm room is totally normal, and in some places you’re weird if you don’t do it. Even if most of these businesses fail, more people try, and as the VCs will tell you, it’s all a numbers game.
Of the many many businesses that get started, some will take off, and they will need more staff. Since the founders lived in a stinky over-croweded house with all their friends, they already know exactly who to hire, so the core team can grow quickly and with a lot less drama.
2. Osmosis
Most businesses will fail, but some will succeed, and some of those will get very big. Being a part of a fast growing business that becomes big is an incredible learning opportunity - you see all the stuff that works, all the stuff that doesn’t (there’s much more of that), and you get paid to learn how to avoid making the silly mistakes the founders made.1
Some early employees will like the challenge of continuing to grow through new inflection points for a long time. Others will make some money, learn some things, and go off to scratch the itch of doing it for themselves. Some of these businesses will succeed, some will fail, and the cycle continues. But as a percentage, more will succeed because of the big head start that they got by being around a successful company, seeing how things worked behind the curtain, and getting to influence it themselves.
The example that everyone uses to showcase this point is the PayPal Mafia, the group of former PayPal employee turned founders who collectively built a lot more than PayPal ever was. It’s a cliche example but it’s totally true. But the really wild thing is how these “mafias” are common - everyone knows about PayPal, but every big tech company has a notable network of alumni companies, not just alumni people. PayPal was based in the Valley and while not every mafia member - and their subsequent companies - are based there, most of them are.
There’s this Bill Gates quote about software platforms:
A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it’s a platform.
You can apply the same idea to technology companies. When the value of the companies created by company alumni exceeds the value of the company they are alumni of, that’s when mafias get formed. The PayPal Mafia did this, as did some other Silicon Valley companies, but it’s not easy. There’s not many other places in the world where this has happened.
3. Focus
Nobody sat down one day and tried to make Silicon Valley what it is today. It just kinda… happened? Partially because there was a great university there. Partially because it’s as much a state of mind as a physical place. But mostly because the successful companies that came from this place (and state of mind) were all focusing on being successful. They weren’t worried about job creation, tax revenue growth, or being regional innovation leaders.
They just wanted to build great products and make big money.
In Australia it’s not cool to say of that. You can't admit to having a profit motive - you have to pretend to care about the ecosystem or the startup community or some other movement to justify your work.2 Nobody in the US is going around pretending they built a billion dollar business to help out the ecosystem. Because they don't kid themselves they're able to focus more on actually building.
Creating Silicon Valley in Fortitude Valley
Applying these lessons
It pains me to see “the next Silicon Valley” press releases, and the wastes of money that come alongside those initiatives, because I know they don’t work. Rather than criticise from the sidelines, here’s what we are doing about it:
At Tanda most of the people we hire are early in their career, often fresh out of university. We aren’t big on big teams; by having a lean and effective team we’re able to give everyone lots of context on what’s happening and let them learn from the entire business as we grow. And our only focus is to build the best products to make employment easier and help as many customers as possible.
It’ll take a while to get there, but a side effect of this way of working will be us becoming a platform for other technology companies. Maybe one day we’ll pass Bill Gates’ threshold. Even if we don’t, we’ll have tried to get there the right way - by building the best business and serving the most customers we can.
The biggest lesson I took away from the US is that it’s admirable to try and build a big, great, business. And it’s totally fine to be proud of it.
I hope more people back home adopt that mindset.
But I’ll settle for no more silly press releases.
Don’t worry - you’ll make new mistakes.
For some reason we don’t call this out enough: many Australian “tech visionaries” have domiciled their companies overseas for tax purposes and sent their teams remote to avoid hiring in their communities. These things aren’t inherently wrong, but don’t pretend to be a community-minded patriot while you do it.