Silicon Valley (Still) Rules
I have had the opportunity to talk to several founders, CEOs and investors. They all recognize that there is talent and success outside silicon valley. But when it comes down to focus we all end up with an 80/20 rule – 80% of the value is still getting created in 20% of the world’s geography – ok, more like 0.2% but you get the picture. Let’s first just go through anecdotal evidence:
- DailyMotion: So DailyMotion is apparently one of the few startups that can even challenge YouTube theoretically. But what’s their cardinal sin? They are not in silicon valley but in France. Here is what happened to them – http://www.benzinga.com/news/13/05/3548651/yahoo-no-longer-buying-youtubes-little-brother
- Instagram: Facebook bought them. They are based here. Enough said. http://www.crunchbase.com/company/instagram. Ok, so let me explain – Facebook acquired them because it was a threat but more importantly they can now ‘collaborate’ with them and make sure they ‘work together’ to rule the world wide web. You can’t really do that if you are not here. Location matters.
- Oracle: Yes, that small company with $150B+ in market cap and a CEO who will buy anything he likes, including islands in Hawaii. But if you want to understand Oracle’s M&A strategy – there is one dominant factor – location! Hyperion (Santa Clara) over Business Objects (France), Siebel (next door), BEA (next door), PeopleSoft (next door), Sun (next door) etc. The next door factor means you can consolidate R&D and reduce G&A very, very fast. There are exceptions like i-Flex and Retek but they are exceptions.