A region in start-up mode.

The focus of tech companies both small and large is the customer. No matter how large or small the tasks of the customer – they are addressed here. To achieve this, the Bay Area has produced techniques that “think up” innovations and bring them to series production in rapid time. Many of the people here have taken these techniques on board and utlise them: Lean launchpad, lean start-up, design thinking, open innovation – to name just a few of them. An entire industry of training providers conveys this content to founders and employees. The keywords are omnipresent!

Start-ups arise from the acclaimed universities in the region. Skilled personnel from Europe and Asia come here to found firms and to benefit from the spirit and know-how of the region, as well as its capital. And some guys who have worked their way up found companies to become the next Jeff Bezos or Marc Benioff. In the valley, start-ups develop at lightning pace – for two reasons: they are not restricted by the regulations that govern large corporate organisations and they often plough their savings into the venture. With the high costs of housing, offices, team members and living in the area, these funds are soon exhausted – by which time a presentable prototype needs to have been developed, to be used in an initial fundraising round. This is where the VCs come in, the venture capital firms, of which there are thousands here. From the countless start-ups they select the ones that appear most promising. In a seed round and subsequent A, B and C rounds funds are raised to develop the idea into a prototype, a marketable product and a scalable business model. There is no time for the process of developing a product and business model: fast, strong growth is required. VCs, training firms and numerous others in the Bay Area provide coaching to the start-ups on their upwards journey.

Of yes: things move fast – including failure: ideas that cannot be realised need to be dispensed with swiftly to avoid wasting funds unnecessarily. “Kill your baby!” is the motto – in other words: quickly test if the idea will succeed, if not, drop it and move on to the next one. The methodology for evaluating new ideas and innovations is strongly oriented towards the “fail fast” approach and everyone employs it: the big established companies as well as the nascent start-ups.

Today’s founders are naturally the potential usurpers of the business models of Google, Apple and the like. Nevertheless, the big 5 also benefit considerably from the start-up scene: relevant technologies are developed and brought to market at unheard of speed by independent start-ups. At this point the big corporates intervene and take their (still) small assailants over. This is also beneficial to the founders: they use the funds to pay off their student loans and are often left sitting on a large pile of money. They either continue to remain in start-up mode and found a new company, enter the VC scene and buy firms themselves or take up an employment position with the company that has just bought their firm. One of the people I spoke to in the Bay Area told me: “In the start-up phase we are three times quicker than large companies.” And no-one here is slow, I add.

One impressive aspect is that, compared to the European standard, even the multinational digital corporations have stayed very youthful and still display many of the characteristics of the start-up mode. “Fail fast” also applies to the big players of the region and the aggressive innovation culture is also still present:

• Incremental further developments are not regarded as innovations here.
• Their goal is to disconnect the rules of existing markets and disrupt them with new business models.
• The absolute focus is on the customers, their “pain” and the creation of value for the customer.

As one of the entrepreneurs here in the valley told me, very clearly: “Companies that do not refocus on their customers every day will disappear.”

In Silicon Valley it´s all about business and creating value!