SM: In your eyes, what is special about Silicon Valley?
RK: Silicon Valley is unique in the US and the world. The reason is that this community has taken 70 years to build. It started with Terman at Stanford. It was an experiment that he ran effectively that became the innovation industry. Whenever I travel around the world, people drag me to some tilt up with cubes in it and broadband and tell me that this is the Silicon Valley where they are. That is just the shell. It doesn’t have the soul. The soul is where entrepreneurship lies.
SM: Soul is process. If we are talking about methodologies, frameworks, and processes of how we bring products to market, then we are talking about the soul, and there is a science to it.
RK: I think of that as the soul of entrepreneurship. What is interesting from my standpoint is, where does that come from? Tom and I teach students all over the world. We have lots of Eastern Europeans and Asians in our classes. We have a lot of South Americans and a few Africans as well. It is quite clear that they can all get the skills. Our students come out of that class, after just one term, with a remarkable understanding of the entrepreneurial process.
Intellectually they have a framework, although they have a lot more to learn when they deploy it. What really makes the Valley different is the reinvestment of knowledge and resources, generation to generation.
SM: Here you are also allowed to fail and experiment.
RK: Failure is not personal. If you fail for some reason other than being lazy, corrupt, or stupid, then you get another try. The redeployment of the value of experience, even negative experience, is unique to this economic model. It is critical to entrepreneurship because by its nature entrepreneurship will fail more than it will succeed.
If we punish the failures rather than embrace them and redeploy them, then we are cutting ourselves off. Our understanding of entrepreneurship in the Valley is very different from the way most people approach business. It is not exported in a textbook or a skill set.
SM: It is a cultural value system that is very difficult to transfer. Even Boston does not have it.
RK: Not as much. If you ask me how I know when an entrepreneurial cluster is working, I will tell you that it is working when I see the second generation of reinvestment. That reinvestment needs to be capital and know-how.
When you walk through here and see three guys in a room, two 19-year-old guys with bare feet with a dashboard in front of them and a guy in jeans and boots sitting across from them who is a billionaire, then you are seeing the Valley working. A venture capitalist from Europe or Asia looks at that and asks why a billionaire is with those two 19 year olds.
What they don’t understand is that it is not about the money. He is there because he is intellectually curious. He finds them to be intellectually engaging. He finds the problem we are solving to be fun. He has something to add from which he gets benefits, even if it is not money.
SM: In India, if you read resumes you will see “19 years’ experience in blah blah blah”, and my reaction is “what the hell?” If a guy has 19 years of XML programming experience only, I don’t want to have anything to do with him.
RK: That is very true. It is important to understand that you need to take innovation and marry it with entrepreneurship. The investment needs to be in entrepreneurship. Innovation is everywhere because there are smart people everywhere in the world.
SM: Is that something that is doable? Can we teach our methodology to the rest of America, particularly universities?
RK: I think we can teach the skills. Books like “Getting to Plan B” can illuminate the processes. Until we have the cultures, we won’t have a virtual cycle.
SM: Great. This has been fantastic.