Posted on November 8, 2016 by staff

Lifting the lid on Silicon Valley and its FOMO


Think of Silicon Valley and images of fabulous glass-fronted buildings, glorious weather, big ideas and huge tech companies will probably come to mind. It’s a melting pot of innovation and collaboration and is a magnet for investment.

Many of the world’s biggest halo brands were born there. Palo Alto, its central economic focal point, incubated Google, Facebook and PayPal; while giants such as Apple, Adobe, Cisco, eBay, Hewlett Packard, Intel and Yahoo! are headquartered in the region, along with mega-disrupters such as Netflix and Tesla Motors.

Entrepreneur Tom Gillis has vast experience of living and working in ‘The Valley’ – and wouldn’t have it any other way.

“I grew up in Boston thinking that Boston was the tech hub of the universe,” he told BusinessCloud. “In 1995, when I graduated from business school, I came out to Silicon Valley and drove up and down Highway 101. I looked at all the logos and names and realised ‘oh my God – it’s an order of magnitude larger’.

“So I moved out here and I’ll never move back because I find Silicon Valley is a very, very special place.”

The region gained the ‘silicon’ reference on account of the large number of designers and manufacturers of silicon chips based in the area.

Now Silicon Valley is a byword for world-changing tech.

“We have the people, the capital, the technology – and most importantly there’s a tolerance of failure which creates this environment where people are willing to try big, bold, super ambitious things, like building cars and fusion reactors, and things that will literally change society,” continues Gillis.

“That’s just magical. I’ve really never found any place else in the world that matches the ecosystem that’s here in Silicon Valley.”

Gillis, who recently turned 50, is the CEO of Bracket Computing, his third venture which he founded in 2011.

He says that even in the California tech sector, only one in ten start-ups will succeed by investor standards – that is, make a big return.

Observers say the UK tech sector is risk averse in comparison to the US West Coast, where investors are more worried about missing out on a big thing than seeing a start-up fail. That is why one-third of all venture capital investment in the United States is concentrated on Silicon Valley.

“VCs are very, very motivated by their funds getting returned by the one wildly disruptive new animal,” says Gillis. “They want risky projects because those things generate the big returns. They’ve got to catch that one successful company that will return the entire fund. It’s what we call ‘FOMO’ – fear of missing out.”

The tech capital of the world is about much more than halo brands and unicorns. As of 2013, the region employed about a quarter of a million information technology workers.

“I think most of the innovation actually happens in small companies,” is Gillis’ view. “When you’re a start-up you have a clean sheet of paper and you have a singular focus, which means you can do one thing really, really well – and if you don’t do that, you fail.

“That creates a very, very rich environment to innovate, but innovation that lives in a lab is simply an interesting historical footnote – Xerox with the graphical user interface and AT&T with the transistor, for example – so it’s [also] about how you can build and also commercialise innovation. Small companies do that really, really well.”

Gillis is optimistic that the UK can find its own, similar recipe to become a world leader.

“Many countries, and many states in the US, are trying to replicate the success of Silicon Valley. It can be done, but you have to have all of the fundamental ingredients: people, a university infrastructure that can create talent, access to capital and an environment that is tolerant of failure – if nine in 10 businesses fail, that can’t be a stigma.

“In more established economies like the UK, [are] people willing to quit their jobs at the big, steady, never-going-anywhere established enterprise to go take a risk?

“As that capability starts to emerge, the UK clearly has all the fundamentals – so I watch with great interest.”