Understanding the Power of Silicon Valley Serendipity in COVID Times

Are you sure you understand what the hidden secret of Silicon Valley is? It's not just a matter of capital or talent. It's about the people.

Photo — Buck's Restaurant of Woodside where a lot of casual meeting happened back in the 90s

TLDR;

The hidden secret that no one can explain about Silicon Valley's uniqueness is called "serendipity." 

In a recent article Steve LeVine wrote:

By its nature, serendipity means both being in the right place at the right time and holding yourself open to interaction. 

Serendipity is not something that you can put in a box and make it ubiquitous easily. Still, Silicon Valley developed an extraordinary ability to foster serendipity systematically in its entrepreneurial culture. The unique trait of this geographic area drives entrepreneurs to make things happen and think that everything is possible. Serendipity by itself is not enough to inspire the entrepreneurial mindset, though. You need determined founders, top-notch investors, and tons of investments in gathering places and initiatives to help people "to be open to interaction." 

Open to Interaction

The Bay Area's tech population is not the most extroverted society on planet Earth. Still, people's openness to cooperation served over the decades as a clear competitive advantage in high-tech business. San Franciscans don't just get together to celebrate but to hang out with interesting people from all over the world. For this reason, not everyone is tailored to the Bay Area, especially if they love to spend time with friends and don’t talk about business. People here are just focused, maybe a little bit obsessed. They have a clear goal in their mind: building massively successful companies that can improve everyone's life. It's not just about making money, but have an impact and change things. All the rest comes from that.

The pandemic changed many of these dynamics, making serendipity harder to happen. People have been forced to stop attending events and meetings. No more "Let's grab a beer after work". Of course, parties got a hard stop. Blocking and reunion restrictions remain a significant threat to allow serendipity to work for its best behind the scenes.

The question is: is it possible that COVID-19 will somehow break Silicon Valley's unique ecosystem forever?

It's unlikely. There are other things, though, that we know for sure. We are not allowed to travel freely to Silicon Valley for a long time. Tech conferences and trade shows have been moved online for the most part. This unique situation is somehow impacting one of the most important competitive advantages of the Bay Area: casually connect with people.

What if—as many say—this restriction will last for more than we think? Experts say that it might take years before we come back to normality. 2023? 2024? Maybe more?

Another crucial consideration here comes from the past. History tells us that creative and serendipitous ecosystems don't last forever. Look at Florence in the Renaissance. 

Can this new reality and its remote work restriction kill Silicon Valley predominance in scaling tech companies?

Nobody knows that. In any case, the future of innovation also depends on solving this problem and find new ways to foster serendipity even outside the classical in-person gatherings. Let me say that Silicon Valley never stopped its race to stay on top of this area. On the contrary, people are working harder to find new ways of meeting exciting people. It is an incredible opportunity and in support of that, I must say that I have never seen so many video conferencing companies show up on stage on the last Y Combinator demo day. Even the overpriced app ClubHouse, which has been evaluated $100M at its first fundraising with just a closed beta released, is an example of that. Unfortunately, I never had the chance to join its "beta-test club." Still, I guess that the serendipity-effect has a lot to do with its crazy valuation. 

The fact is that in the next years, we'll see many companies trying to crack the "Silicon Valley serendipity secret." They will face the market with new software companies designed to replace the local beneficial effect of "making things possible thanks to unplanned interaction." Many will think that, finally, innovation will happen elsewhere. I don't want to ruin your excitement now, but two main factors might play here:

  1. Silicon valley people are moving fast and aggressively. There’s a good chance that if something happens in this space (real alternatives to in-person meetings), it will occur in the Bay Area. Most of the best young companies in the world move to San Francisco once they find they are on something that scales. Valuations and connections are better than anywhere else, and new models can be tested in weeks. 

  2. Living in the Bay Area is a tangible competitive advantage, and people here behave differently. Being close to Silicon Valley is not something you can learn from the Internet. The local culture and mindset have a significant impact on essential qualities like moving fast and keeping persistent. Being tenacious also depends on external signals you collect from everyday life. People encourage you, give you trust, and invest in your company since the early stages. 

We just had the chance to review almost 200 startups from the last YC batch (S20). We witnessed that people who live and grow their products in San Francisco are different (with a few exceptions). Their approach is distinctive. They are confident but never too arrogant. I know that everybody read about Mark Zuckerberg's temper when he founded Facebook. Still, for me, he's an exception, not the rule. Confidence associated with an analytical mind helps to create trust. Mark had incredible traction when he came to the Valley, and when metrics are on your side, everything can happen even faster. He lived in Boston and created the first version of Facebook when he was at Harvard. Still, he fully understood that he had to move to Valley for the good of the business.

That is not a concept that everyone seems to grasp nowadays.

We keep seeing great founders with fantastic products that simply don't get it. They choose to stay where they are for multiple reasons that have nothing to do with the business. Work remote is ok. We bet on that every single time, but only if you don't have any chance to be all together in your business's best place. If you have to choose, let your team work remotely and do everything possible to be in the best possible location for your business.

This is what I expect from a CEO. Silicon Valley is 90% of the time the place to be, not just because of talent or VCs but also for the magical serendipity effect you can get only there. Suppose that is a card you can play, and you don't. In that case, there's a good chance that you'll be put out of business in a couple of years by a Silicon Valley company doing what you do but better, faster, and with five times the capital you have in the bank.

Deciding to get into the startup business requires sacrifice and postponing all the other aspirations you might have for at least 4 or 5 years. You'll be asked to anticipate what's best for your business every single time.

If people tell you what you're supposed to do, it means either you are late or know what you should be doing, but you ignore it.

When I meet such a team (a great one leading a crusade to be successful out of the Valley), I don't know what to do. How long will it take for the CEO to understand that she is missing out on an opportunity? Will she ever understand? The fact that one or two or even ten companies may have achieved significant success without being in the Bay Area doesn't move a dime. You are not that company, and there is no reason in the world not to do what is best for your business's success and do it now. Looking for an environment that fosters unintentional serendipity is the most valuable secret weapon you can have to succeed.

Even Steve Jobs had serendipity in mind when he commissioned the headquarters for Pixar. Jobs wanted an open structure, where everything converged on an atrium. He believed that creativity is a result of serendipity. He said:

Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they're doing, you say 'Wow,' and soon you're cooking up all sorts of ideas.

The new challenge for everyone is how to achieve serendipity in a tightly constrained environment as the one where we live today. Still, as soon as you have the chance, you should go for the real thing. Silicon Valley is just that, and live in such a place always brings an enormous competitive advantage. Maybe four years from now, the gap between San Francisco and the rest of the world will be even deeper. We’ll find out that serendipity can’t be put in a box. In the meantime, the range of opportunities to solve this problem became a new battlefield suddenly for startups. Those are the guys that aim to make our life better in a world a little bit different than we were used to.

This is one of the most exciting aspects of innovation. Seeing an opportunity in every change of course in our life. Seize it and do the impossible to make our journey a little bit better.