The Silicon Valley Habitat
The Silicon Valley habitat is the place that emphasizes creating and developing innovative businesses. However, the story of the region is not about technological advances and breakthroughs despite that many do occur in the Silicon Valley, like, for instance, the first successful microcomputer produced by Apple or the Xerox’s graphical user interface.
Despite that many refer to Silicon Valley as a mindset, more than a century ago Alfred Marshall proposed to call an “industrial region” that localizes highly technological companies in one area, therefore, largely influencing the demand for the specialized services and labour. For example, there are similar regions around the world, such as the region for the production of watches in Switzerland, clothing in Milan, beers in Bavaria, or machine tools in Germany (Lee 2000, p. 4).
In the framework of Silicon Valley, there are some features that best describe the historical and developmental value of the region regarding business opportunities. One of such features in knowledge intensity that characterizes the region’s ability to ‘breed’ new products and ideas. The second feature is the high quality of the labour force such as scientists, engineers, and entrepreneurs (Lee 2000, p. 8).
The third important feature is the environment that supports businesses taking risks despite failure because the majority of entrepreneurs fail in their first attempts to establish themselves, the business environment in the Silicon Valley does not oppose the possibility of failure. The fourth beneficial feature is the open business environment that welcomes the majority of entrepreneurs that can add value to the region. Lastly, Silicon Valley is characterized by the high quality of life since the region attracts wealthy members of the society interested in investing in potentially successful businesses (Lee 2000, p. 11).
Entrepreneurial and Innovative Opportunities
The example of Salesforce shows that entrepreneurship is a concept that can bring business to the next level, and Silicon Valley provides companies with a framework of business opportunities that expand with each year. As stated in the Forbes article by Tom Taulli (2014), an entrepreneur that considers going to the Silicon Valley to develop his or her business should ‘take a one-way flight” (para. 2).
Business opportunities in the region are endless – from the return of manufacturing to the increased demand for the digital health industry development. Therefore, Salesforce has a great opportunity in the current environment of Silicon Valley that calls for more business diversity. Additionally, the current trend in the Valley’s business opportunities is challenging the Wall Street by increasing the share of the financial service market with the involvement of Information Technologies that facilitate a more efficient flow of financial resources with fewer fees.
Critical Start-up Success Factors
Critical start-up success factors in Silicon Valley span across a range of aspects businesses should pay attention. For example, start-ups that have shorter names and include words associated with technological advances are much more likely to succeed in Silicon Valley. Also, startups that patent their innovations are much more likely to succeed, similarly to startups that are incorporated.
Cooperation with business accelerators and incubators is also considered one of the keys to success in Silicon Valley. Business accelerators take start-ups from an idea to the end product through mentoring and investing in the production or development process. Business incubators, on the other hand, help start-ups in the initial phase of idea development by facilitating them ‘stand on their feet’ before the phase of investments and development occurs. Shared workspaces can provide start-ups with an ability to collaborate with other start-ups in the sphere to exchange ideas and a possible partnership.
Angel investors and micro VCs are unique methods of investing in businesses and contributing to their success. Micro VCs are called ‘seed-stage VCs’ that predominantly invest into start-ups on the earliest stages of their development. On the other hand, Angel investors offer financial support in return for the ownership equity or convertible debt. Academic programs and governmental initiatives provide start-ups with support in the form of grants that allow businesses to pass onto another level of their development.
The Importance of Social Networks
Businesses’ presence in social networks is an integral part of success. Regarding start-up businesses, social networks are appealing for the opportunity to promote the company without spending too many costs on other forms of advertisement.
The Entrepreneur article by Hayson Demers (2016) mentioned a list of small start-up businesses that were able to take their marketing campaigns to the next level in comparison with bigger companies able to invest millions into the advertisement (para. 2). The list included companies like Magic Leap, Operator, and Liveliest that used the feature of ‘newness’ that characterized their business because the main bulk of social media users find new ideas and concepts appealing.
Managing Growth and Entrepreneurial Exits
Growth management is what makes a start-up successful, especially in an environment such as Silicon Valley. Once start-ups begin gaining momentum, they put the majority of their focus on bringing the product to customers and forget about the importance of talent development, fundraising, creation of a scalable management model, quality control system development, and monitoring numbers.
Growth management is associated with setting a focused mindset that will lead the startup through the new stages of its development. Hunting for talent and investing in its training is one of the most important aspects of startup development because of the increase in the employee ‘count’ should rather be qualitative than quantitative.
Entrepreneurial exit implies a founder of a private start-up was leaving the business he or she helped to create. By establishing a cohesive entrepreneurial exit plan, a start-up will be able to transfer the ownership of a company to another owner without losing on business opportunities.
Additionally, exit plans and strategies make sure that a company is prepared for a contract coming to an end, which is especially relevant in the context of Silicon Valley environment. Entrepreneurial exit strategies can include a range of activities such as assets returns, employee transfers, and other conditions that should accompany the termination of a contract between a company and its former owner.
Reference List
Demers, J 2016, 5 startups that are killing it with social media marketing.
Lee, C-M 2000, The Silicon Valley edge: A habitat for innovation and entrepreneurship, Stanford Business Books, Stanford.
Taulli, T 2014, Should you start your business in Silicon Valley. Web.