How is Silicon Valley innovation different?

(written by Lawrence Krubner, however indented passages are often quotes)

It is a shame more people do not read Peter Drucker, because I feel like he already covered a lot of this stuff. What is innovation like in most of America? Also, didn’t Facebook and Microsoft start at Harvard.?

This is the Silicon Valley innovation model: 1) get a bunch of really smart people and think up ideas for technology startups; 2) choose a dozen of the best ideas and throw some significant money at them for 6-12 months, and; 3) at the end of a year throw even more money at the two surviving ideas knowing that one of those will also be dead before its second birthday. Brainstorming–seed funding–A-round–success, and of course bloodshed along the way — simple as that.

This model works well in Silicon Valley, where everyone knows people who have worked for eight different companies in the last eight years. But for most of America the model doesn’t work well at all. That’s for three reasons:

1) There often isn’t enough technical talent or if there is, that talent is more risk-averse (or less cocky) than the Silicon Valley crowd.

2) There definitely isn’t enough risk capital outside hotspots like Silicon Valley, Boston or Austin or a few other places that are comfortable with a 90+ percent failure rate. Try that argument down at the bank.

3) The strongest difference between Silicon Valley and real America when it comes to tech startups is how the original idea comes to be. In Silicon Valley you decide to start a company then look for ideas. In real America you have an idea that eventually becomes a company.

That third difference may not sound like much but it is critical. Silicon Valley is a boomtown where everyone is looking for the next vein of gold. In the real America founders more often come up simply with ideas they love that morph over time into products. But since no accelerated, laser-zapped, steroid-boosted in vitro fertilization is involved, these ideas take longer to mature than they would be allowed in Silicon Valley, where success is measured in months, not years.