Silicon Valley values innovation and risk-taking over manufacturing
When Prime Minister Narendra Modi heads out to Silicon Valley later this month on a journey that can euphoniously be dubbed NaMo goes to SiVa, he will arrive at what is arguably the world's technological Kailash. Used metonymously to describe a high-tech entrepot, Silicon Valley is an empire of the mind. It does not exist on a map.Unlike Hollywood or Disneyworld, there is no signage announcing it. It does not have a zip code or an airline destination tag.
Geographically, it is centred in Santa Clara Valley. But Silicon Valley now stretches from San Francisco Bay all the way south of San Jose, incorporating now familiar tech havens such as Mountain View, where Google is based; Palo Alto, home of Stanford University; and Fremont, where Tesla has a plant. These cities are host to scores of tech companies and trillions of dollars in wealth, and are among the prime minister's likely pit stops.
A confection of academic excellence, military needs, technological savvy, and capital infusion helped create the famed and thriving Silicon Valley ecosystem that is coveted round the world. Such silicon envy has spawned modest imitators. They range from America's own Silicon Dominion (Northern Virginia), Silicon Triangle (North Carolina) and Silicon Necklace (around Boston) to India's Silicon Plateau (Bengaluru) and Israel's Silicon Wadi.More recent copycats include European hopefuls, ranging from Silicon Fen (Cambridge, England) and Silicon Glen (Livingstone, Scotland) to Santiago's Chilecon Valley and Malaysia's Teknopolis.
Can there be another Silicon Valley beyond the original? Of course. Many city-states across the world have the business credentials and scientific finesse needed to fire up high-tech crucibles, particularly since the world is awash with venture money. Capitals flows are far easier than when Arthur Rock funded Fairchild Semiconductors in the late 1950s to ignite Silicon Valley. But here's some thing that may be a little harder to find in many parts of the world, particularly Asia: the agreeable acceptance of failure that is part of the Silicon Valley ethos.
Much of Silicon Valley is built on a culture of risk-taking. Central to its lore is not stigmatising honest failure. Young geeks who have burnt through millions in failed ventures move on to second and third start-ups with the understanding among investors and venture capitalists that for every Google and Facebook, there are hundreds of ideas that die face down and end in zilch. In countries such as India, where farmers commit suicide because they owe Rs 2 lakh with no recourse to bankruptcy and rebuilding credit, or Korea, where pride and principle is hewn into every enterprise, failure on borrowed capital is tantamount to dishonour.
For PM Modi, the temptation to underscore the trip with visits to signature companies such as Google and Tesla and hob-nob with its billionaire founders and Indian gearheads will be great. But to understand the Silicon Valley ethos and ecosystem of ideas, innovation, capital infusion, and academic backing, he needs to turn up at one of those start-ups that are where Facebook or Intel were when they began, trying to haul themselves up by the bootstraps. Scores of them are headed by tech entrepreneurs of Indian origin.
At Virtual Power Systems located in a Santa Clara incubator, CEO Shankar Ramamurthy is locked in earnest conversation with potential clients even as a few employees are hunched over computers.Two other `dudes' are locked in a pinball game to unwind. Another is chowing down takeout food. Most of them are dressed in khakis or shorts and T-shirt, the Valley's de rigueur uniform. It is a time in the company's life that will decide whether its intelligent software-driven smart grid to deliver power efficiently will be validated.
If it comes through, vast riches will result for its founders, employees and investors.
If not, it will be just another addition to the Valley's graveyard of start-ups.
Another important thing to note is that Silicon Valley is not about manufacturing.
In fact, very little manufacturing goes on here. Tesla, which Modi is pencilled to vis it, is one of the few that have returned man ufacturing to the area, in part because its volumes are still low and it scavenged the detritus of Detroit. But Apple decamped from its Fremont plant in 1992 and Intel shut down its chip fabrication plant in 2009. Although there is much caterwaul ing in the US about the flight of manufac turing jobs, investors milk more value out of innovation than manufacturing. The Uday Deb most famous example is the Apple iPhone, made en masse in China, whose $600 price tag nets only $20 for the manufacturer.
Of course, the prime minister's em phasis on `Made in India' suggests he wants to chip away at China's near monop oly as the world's factory. But India needs to be picky about what it will manufac ture. Why should India make industrial grade, environmentally detrimental man hole covers for the world, a job China is all too ready to give up even as it aspires to India's advantages as an Anglophone country with managerial bench strength? Not to speak of automation destroying manufacturing jobs by the thousands.
It is interesting that despite China's greater economic prowess, there are more managers and executives of Indi an origin across the world, including in the US and in Silicon Valley . This is a testament to the Indian intellectual and academic depth that distinguishes it as a knowledge power rather than a manu facturing hub. Sure, the knowledge economy alone is not going to bring the 500 million jobs India needs, but Silicon Valley will be a good reminder that a country should never give up its intellec tual capital.
