As a CEO and immigrant worker (take that, Trump!), I always get asked about moving my company to Silicon Valley. I usually answer that I believe you can build a world-changing organization anywhere, but the job is always easier at your industry’s center of gravity. For fashion, it’s Paris; for finance, it’s London; for tech, it’s Silicon Valley.
Think about it as running uphill versus running downhill. You expend the same amount of energy in both cases, but if you’re running downhill, you go much farther. Being in the center of gravity for your respective industry is much the same: The energy you spend growing your business gets you closer to success than the same energy spent in a different location.
So, should you move your non-U.S. tech startup to the Valley? Every situation is unique, but on balance, I’ve learned that the Silicon Valley advantage pays off nine times out of 10.
It’s been eight years since I first came to Silicon Valley — from Malmö, Sweden — to pitch for seed capital to fund Neo Technology; in 2011, we moved our global headquarters to San Mateo, CA.
Now, with 120 employees in 12 countries and $50 million in funding, here are some things I’ve learned along the way.
It’s not just about the engineers
Everyone knows that Silicon Valley has world-class engineering talent. But the true secret of Silicon Valley talent is the hidden wealth of non-engineering talent available to software and Internet service companies. From business development to product management and more, the best in the Valley are simply the best in the world.
For the most part, the big guns — Google, Apple, Facebook — will win every time when it comes to attracting top Valley engineers. They have, for all intents and purposes, unlimited coffers and can use those resources to recruit engineers in a way that a capital-constrained startup simply can’t. So don’t play their game.
No one understands all the subtleties of their business like a startup founder.
Instead, use your non-Valleyness to your advantage: Build your engineering base where you have an unfair recruiting edge and establish a hacker culture with Silicon Valley DNA — but without the brutal talent war. The compounding effect of long-term engineer loyalty pays out significant dividends as time goes on.
And your office in the Valley? Let it be your hub of non-engineering talent, like sales, marketing, finance, product, etc. Even if your Silicon Valley team doesn’t produce any actual code, they will be better than anyone else in the world at ramping a business around software.
Mentors are the real gold in Silicon Valley
Many startups come to the Valley for the gold rush of investment capital, but the real gold is the willingness of and easy access to the world’s best business mentors.
While the mentorship opportunities in recent startup hubs like Berlin and Stockholm have increased dramatically in recent years, the mentors in Silicon Valley are still some of the most experienced and clueful in the world (let’s call that factor “X”). In addition, they’re also the most willing to invest their time and share their experiences (factor “Y”).
When you multiply X and Y, you get a mentorship culture that’s light-years ahead of anyone else in the world, and I don’t think anyone will catch up for several decades.
Shortly after opening our office in San Mateo, I chased down Rod Johnson, then an SVP at VMware. He was an amazingly successful entrepreneur and a big leader in open source, so I reached out to him for advice, and we began to talk regularly.
The Silicon Valley advantage pays off nine times out of 10.
Today, Rod is the chairman of my board, an investor and one of my closest advisors — all because he was willing to take time out of his schedule to help a young entrepreneur from Sweden. Having access to leaders like Rod — and their willingness to share advice — is unlikely to happen anywhere else in the world at this breadth and depth, so take advantage of those mentorship opportunities whenever you can.
Trust is a surprisingly large hurdle
When migrating your startup to the Valley, there’s likely a significant difference in how business is conducted in the U.S. versus in your own country. I had lived in the U.S. prior to moving my company to the Valley, and Sweden is even said to be the most Americanized country in Europe — yet even I had cultural challenges to navigate.
When I want to work with a service provider in Sweden, we meet, agree on scope and shake hands. They deliver the work and, after a month, send me an invoice. Thirty to 90 days later, I pay the invoice. Done. Simple.
But here in the U.S., it’s a different ball game. Every service agreement starts with upfront contract negotiations laying out every detail of indemnity, liability and super-weird, low-probability circumstances. And a service provider won’t lift a finger until they’ve swiped your credit card and see the money in their bank account.
Even as an Americanized Swede, this low-trust business environment introduced friction in running my startup that I hadn’t anticipated. The specifics will vary from country to country, but you should anticipate frustrations and delays when and where you least expect them.
Still deciding whether to move your tech startup overseas to Silicon Valley?
No one understands all the subtleties of their business like a startup founder who is in it every minute of every hour of every day, but in my experience, it was well worth taking the plunge. If you can, seize the opportunity to move your tech startup to the Valley and start running downhill.