7 Reasons Why Silicon Valley's World Domination Is Over

Matthew Bishop (@mattbish)

September 21, 2015

From linkedin.com

Chatting with venture capitalists on Sand Hill Road, or sipping cocktails with entrepreneurs in The Battery, San Francisco's fanciest watering hole for geeks, it is easy to believe that Silicon Valley will be on top of the world forever. But it ain't necessarily so.

True, the Valley has lately improved on its already stellar record of producing world-beating companies. Uber is arguably the most rapidly globalising start-up ever. Raising money for a start-up at a valuation north of $1 billion has become almost routine. And, finally, the rest of the world seems to be taking seriously the broader implications for society of the tech hot spot's economic dominance. Even if this is expressed with a sniffy disapproval - a recent article by a colleague at The Economist likened today's tech tycoons to the 19th Century Robber Barons, dubbing them Silicon Sultans - the key point is that almost no one today doubts that what happens in Silicon Valley matters to the world, and that as the place for important, world-changing entrepreneurial innovation nowhere else comes close to matching it.

Yet pride often comes before a fall. And it turns out that some amazing entrepreneurial innovation is now taking place in the unlikeliest of places. It is possible, perhaps even likely, that some of the next great entrepreneurial breakthroughs will happen there. Not in Silicon Valley.

That is the message of a terrific new book, "From The Other Side of the World", which tells the stories of ground-breaking entrepreneurs in seven countries, Mexico, Nigeria, China, India, Russia, Turkey, and Pakistan. (The original working title was "Steve Jobs Lives in Pakistan", which I rather like.)

Full disclosure: the author, Elmira Bayrasli, is a friend and we debated the arguments of her book several times as she wrote it. I first met her when she was working for Endeavor, a non-profit that supports what it calls "high impact entrepreneurs" in the developing world, creating the sort of networks of advisors and mentors for those entrepreneurs that people in Silicon Valley take for granted but which tend towards the non-existent elsewhere. (A few years ago, I wrote a profile of Endeavor in The Economist.) It is a testament to the success of the organisation abroad that recently it succumbed to demand to provide its services at home in America. (Linda Rottenberg, the co-founder of Endeavor, has penned a best-selling guide on how to be an entrepreneur, called "Crazy is a Compliment: The Power of Zigging When Everyone Else Zags".)

Bayrasli has assembled a colourful cast of characters to illustrate her theme that, despite some considerable obstacles, entrepreneurship is taking off in some of the world's unlikeliest places. There is Bulent Celebi, a Turkish internet entrepreneur, who has figured out how to create a high performance business culture in a country not known for that; Shaffi Mather, whose despair at corrupt public services in Mumbai led him to build a for-profit ambulance business that provides free services to the poor by charging rich customers extra (a fairer trade model that might work well in today's increasingly unequal developed countries); and Yana Yakovleva, whose job requirements included fighting for the rule of law as she built her business in Vladimir Putin's Russia.

By chance, earlier this year at an airport I bumped into Tayo Oviosu, the Nigerian entrepreneur profiled in the book. I was enthralled by his tales of building Paga, a mobile phone-based payments business in Nigeria, a country lacking in many of the basics of retail banking that are taken for granted in developed countries. (Mr Oviosu will be speaking next month at The Economist's conference on fin tech, "The Valley Meets the Street", on the topic of whether financial innovations in the developing world can leap frog ahead of what is available in rich countries such as America.)

There are seven recurring obstacles facing entrepreneurs in developing countries, notes Bayrasli: lack of skilled labour and management, poor infrastructure, lack of collaborative space, monopolies, corruption, weak rule of law, and the resistance of the status quo. But her message is that, to varying degrees but unstoppably, these obstacles are being overcome.

Entrepreneurship is going global, and in many ways globalisation in the process that is making it happen: at the level of ideas, by making global icons of Silicon Valley's greatest entrepreneurs; and practically, by giving entrepreneurs in far flung places access to far bigger markets beyond their national borders. There is also a growing number of entrepreneurs who learnt their trade in Silicon Valley and are now going home to try their luck there.

The Chinese entrepreneur profiled in the book provides the strongest support for its thesis, especially as his firm has gone from strength to strength since Bayrasli finished writing. If you haven't heard of Lei Jun, and his mobile phone company, Xiaomi, you soon will, given how they are giving Apple and Samsung a serious run for their money, especially in the booming markets of the developing world.

As for which of the countries Bayrasli visited for the book is poised to emerge fastest as an entrepreneurial powerhouse, she opts for Mexico, as it seems to be making the most progress across the board in tackling the seven obstacles to success. Put that in your pipe and smoke it, Donald Trump!

Is losing its global dominance bad for Silicon Valley? Not necessarily, Bayrasli rightly points out. Competition may raise everyone's game, and that could be a positive sum rather than a zero sum game, producing winners all round. On the other hand, she warns, there is a trend in Silicon Valley to focus only on solving the problems of the rich, whereas entrepreneurs in the rest of the world tend to focus more on the problems of ordinary people - and maybe it is that second sort of innovation that will prove the better long term bet.

The book ends with a bold prediction: "The next great innovator - the next Steve Jobs - won't be from Silicon Valley, but will come from Mexico, Nigeria, Pakistan, or even Turkey. Indeed, the next Steve Jobs lives in one of those places today." Well, we shall see. Silicon Valley still has plenty of talent and lots of big ideas to work on. But if you are on Sand Hill Road or at the bar in The Battery, it is time to take the possibility seriously.