My op-ed in Croatia’s leading finance journal – Banka.hr:
Life is about choices, and up until now we have chosen to focus our resources and energy on building ˝Janitorial Valleys˝ and their equivalents. Change won’t come with prime ministerial junkets but with real leadership, vision and refocused priorities.
By Milan A. Račić (October 14, 2014) • Prime Minister Milanović is wrapping up his technology junket in the United States this week. Ostensibly his purpose is to line up investments in Croatian-based IT, but we all know that the reality is much different – this is purely a pre-election press relations exercise.
Modern economies don’t function as they used to in the 1960s and 70s, particularly not in the way they used to function in much of the non-aligned countries. The days when my dictator could fill a plane with ˝dignitaries˝ and visit your dictator and then come back with a set of deals and investments are long gone.
There are a whole host of very good reasons why the world’s top technology companies won’t make any near-term investments in Croatia. Many of these reasons have to do with real tangible deficits or limitations which Croatia has: a micro market, limited infrastructure, a fairly uneducated workforce, an inferior educational system, and an inefficient, slow and expensive administration.
But these aren’t the main impediments to growing our own Silicon Valley.
London, Berlin, Mumbai, Seoul and a host of other cities around the world try to emulate the success of Silicon Valley. Most will fail, not for a lack of money or expertise, but for a lack of intangibles.
Deceitfully Simple Recipe for Success
The formula is seemingly simple: build around an academic centre, try to revitalize some blighted area, provide subsidized ˝hip˝ office space with good infrastructure, offer generous tax subsidies and seed a venture capital pool. Then watch your tech baby grow.
However, it almost never grows up to be the home of young world-beating tech champions you hoped it would be. Instead, it more often resembles a recreational centre for pudgy and good-natured middling enterprises.
According to recent American statistics, new companies let nearly 25% of their employees go in their first year of operation versus 6.6% at established companies. Startups are increasingly relying on a feedback loop of build, measure, learn – the Lean Startup. It’s all about not wasting time, not wasting product, not wasting feedback and not wasting people – if the product doesn’t fit the market, change it, if your people don’t fit the challenges, change them. Instead of building perfection and releasing it, adherents are testing and changing to customer-defined perfection.
Tehnopolis as a Driver of Middling Enterprises
In contrast, in a story published late last year, ˝Napokon: Zagreb će dobiti svoju Silicijsku dolinu˝, Večernji List touted the fact that after six years of debate Zagreb’s Tehnopolis finally received approval to start preparing the documentation to apply for an EU grant for its development. They hope to prepare the documentation, do a feasibility study and apply for the EU infrastructure tender by the end of 2014. If the EU agrees, they hope to start construction of Tehnopolis by the spring of 2015.
Tehnopolis will have 20,000 square meters and will be outfitted with laboratories with new mobile equipment, servers, 3D printers, CNC machines and very high speed internet. The City of Zagreb, the Mayor, Zagreb Holding Co., the city office for EU projects, the city office for business and the city office for strategy, the Ministry of Regional Development and the Ministry of Entrepreneurship all played a role supporting and/or approving Tehnopolis.
Are you still with me, or are you wondering why you also weren’t asked to comment on and approve this project? It’s like alternate universes – the lean startup vs. the big fat slow and lumpy startup – the LumpUp.
Yet Tehnopolis is an attempt at emulating Silicon Valley, but it misses the point by a mile and almost a decade.
But Croatia is not alone in lagging behind. It may be the EU’s newest member, but its mindset, pace, and organizational style is not alien to the EU, it is just farther along the bureaucratic mindset spectrum than the older members not ˝blessed˝ with a Communist past.
Even Silicon Roundabout in London, which is touted as possibly the centre which could give Silicon Valley a run for its money, see ˝Candy and Monsters˝, and which had a more organic start than many government-initiated centres, runs the risk of bogging down in government-driven initiatives focused on redeveloping blighted cityscapes.
Committee-spawned Silicon Valley knock-offs miss the point of its success. Silicon Valley works because it was allowed to work, not because it was made to work.
1. No Master Plan
Silicon Valley didn’t require eight government entities to debate, plan and execute its birth. There was no master plan to make this the world’s tech centre. It just happened. People were attracted to the area because of Stanford University and its graduates, its climate, and its early residents, but they stayed and multiplied because the government basically got out of the way, and they were allowed to morph, pivot and fail their way to success.
2. State of Mind
Silicon Valley founders had big ideas and even bigger ambitions. They wanted to start revolutions, do away with whole industries, change economies, and ultimately change the world. However, it’s hard to conquer the world speaking only Croatian, French, Spanish or German. You won’t dominate world markets if you aspire to be the biggest in Zagreb, Budapest, London or Amsterdam. You can’t transform economies if you are deathly afraid of losing legacy industries and you can’t change the world by being derivative.
3. Openness
Very few startup founders actually hailed from Silicon Valley or Northern California. More than half the start-ups were founded by immigrants to the United States, which helped their companies think and act globally. Silicon Valley is about open doors – in offices, at borders, among competitors and between jobs – all of which make most Europeans nervous.
4. Fear of Failure
Those who claim that Silicon Valley doesn’t have a fear of failure are wrong. Fear of seeing one’s dream go up in flames is perfectly healthy for the company, its employees and its investors. Silicon Valley does fear failure but it doesn’t stigmatize it. Founders who have failed are allowed to learn from their mistakes and often go on to create startling successes. That isn’t usually the case in most European corporate cultures where going off on one’s own is unusual, but failing is almost unforgiveable. This stigmatization is unfortunate for many reasons not least of all because it stifles the preservation of startup inter-generational knowledge on which success is often built.
5. Flexibility
Flexibility is the requirement which most Europeans find most difficult to swallow. Even if they could limit their propensity for master planning, embrace global thinking and hire for world domination, welcome more openness and even accept failure, most Europeans would go apoplectic if they had to accept a 25% attrition rate.
Silicon Valley works for many reasons which Croatia and much of Europe just can’t stomach to copy, but which are necessary for any serious attempt at emulating it, and hopefully eventually beating it. The intangibles bring success, not the buildings, and definitely not the committees.
Until we realize this and make the necessary mental transitions we can forget about building our own Croatian Silicon Valleys.
Life is about choices, and up until now we have chosen to focus our resources and energy on building ˝Janitorial Valleys˝ and their equivalents. Change won’t come with prime ministerial junkets but with real leadership, vision and refocused priorities.
This is a translation. Read source article in Banka.hr here