The original Chinese version was published on May 29, 2013 at HERE
Since starting at PreAngel, I've made it a point to visit the U.S., particularly Silicon Valley, once or twice a year. I meet with local VCs, entrepreneurs, leaders of student entrepreneurial groups from Stanford and Berkeley, and heads of various wireless technology organizations. I'm keen to uncover what makes this hub of high-tech public companies unique — what lessons we can take back home to stand out in our “countryside.” At the same time, I wonder if we “country folks” could find our niche in this breeding ground of the world’s brightest minds and perhaps invest in the next Google or Facebook.
The more I visit, the deeper my impressions become. While I've only scratched the surface, the insights Silicon Valley has provided are profound. I'd like to share these with you all.
1: You Only Live Once (YOLO)
My PreAngel investment partner in the U.S. is Boyd, a San Francisco native who speaks fluent Chinese. He shared with me that YOLO, meaning "You Only Live Once," has become a popular mantra in the Bay Area. It's a simple phrase but carries deep significance. If we had all embraced this idea since the day we could think independently, perhaps our lives would look very different today. Many in China's economic backbone are living for others to some extent — for parents, children, or friends. Sometimes, it may seem like you've chosen your life, but in reality, you're living within an image shaped by others. If you're dissatisfied with your life, it's likely because you're not living for yourself. Living well by your standards is the greatest contribution to society. Everyone is unique with different abilities and preferences. If society as a whole lived according to its inner voice, every role would still be filled — possibly even better.
Although YOLO has recently become trendy, it encapsulates a common ideology in Silicon Valley. Many kids from prestigious U.S. institutions have been living by this principle — arguably earlier than our children in China. The society here supports this mindset, which is often misunderstood by parents in China, like dropping out to start a business, quitting a high-paying job to travel with a backpack, marrying someone from a very different background, living as a struggling artist in a rundown apartment, or choosing to be a single mother. When one chooses to live for themselves, they tend to have greater perseverance, which is essentially the dedication needed by entrepreneurs.
YOLO partly explains why Silicon Valley is home to the highest concentration of exceptional entrepreneurs in the world.
2: Rules & Disruptive Innovation
Anyone who has driven in the U.S. knows that traffic rules are taken seriously, resulting in high driving efficiency. For example, Jun Li, a well-known Chinese angel investor in Silicon Valley, mentioned how a visitor from China would always tap the brakes at green lights, fearing sudden traffic from the sides. This precaution may seem normal to those unfamiliar with U.S. driving, but it's unnecessary here. If there's no stop sign or red light, you proceed with confidence, knowing that cross traffic is controlled by their own signals.
This demonstrates how well-designed rules increase efficiency for everyone. Similarly, in entrepreneurship, innovating within a solid framework of rules means you can progress without the fear of underhanded competition.
Healthy disruptive innovation involves upending complacent industries through advancements in technology, design, operations, or business models, all while adhering to a shared set of basic rules. This type of innovation disrupts outdated systems and stagnant businesses, facilitating a natural selection process — a positive regeneration.
Contrast this with some “unhealthy” business practices seen domestically, which could be seen as "rule-breaking" entrepreneurship. These disruptors negatively impact the industry's health and can harm consumer interests. These rule-breakers are like drivers who dash from side roads, risking collision and reducing overall traffic efficiency.
One fundamental difference between our regions could be the motivation behind entrepreneurship. On one side, there's speculation driven by profit, regardless of the damage to the environment, industry, consumers, or society. On the other, entrepreneurship is more ideologically driven. In the Bay Area, the cost of breaking the commonly accepted rules is high, shaping a mindset among entrepreneurs to respect the established framework.
During a talk I gave at Stanford's Business School, invited by Ding Ruoyu, I shared five key beliefs I have about entrepreneurship, and Boyd mentioned that these points show I belong in Silicon Valley. These are as follows:
3: Believe the power of belie
The essence of successful entrepreneurship often lies in the deep conviction one has in their vision and purpose. When an entrepreneur truly lives for their ideals and is driven by a genuine belief in what they are building, this conviction becomes a powerful force. It empowers them to overcome countless challenges, from assembling a team and raising funds, to developing a product, marketing a brand, and selling a service. Even when the entrepreneurial journey is fraught with difficulties, this unwavering belief enables them to carve paths through mountains and persist against all odds.
Many entrepreneurs fail to realize that their faith in their ideals is a wellspring of strength. You might think that it's the enticing vision of your company that draws your team, the prospects of an IPO that attracts investors, your eloquence that wins over customers, or your smooth sailing that garners media attention. However, without the power of belief, these attractions would dissipate amidst the inevitable storms of the market.
In the perilous journey of entrepreneurship, where failure lurks at every corner, the one inexhaustible source of energy is your faith. Therefore, you cannot afford to lose sight of this. If you don’t believe in what you're doing, how can you expect anyone else to believe in it? Looking back at many failed companies, a common denominator is that the founders lost their initial faith, which led to everything else crumbling away.
This narrative emphasizes that the foundational belief in one's purpose is not just a part of the entrepreneurial journey — it is the very core of it. Without it, all strategies, skills, and plans have little ground to stand on. In summary, the faith an entrepreneur has in their vision can be more compelling and attractive than any business model or market opportunity because it fuels the perseverance needed to succeed against all odds.
4: You were chosen
This perspective sheds light on the concept of individuality and the belief that even as an atheist who doesn't subscribe to traditional religious figures, one can still hold a belief in entities or intelligence beyond our understanding, such as aliens or a higher form of life. It aligns with the view that our existence is not shaped by deities but by a series of choices that define our life’s path.
Each person's uniqueness is seen as a result of being “chosen,” which in this context, implies a sense of destiny or pre-determined traits and talents that guide us through life. This could be interpreted as a deterministic viewpoint, where every choice we make is essentially “chosen for us,” suggesting that our lives are a sequence of predestined events.
The question then arises: if our paths are indeed preordained, why not embrace and excel in what we inherently love and are good at? Why does one excel in music, another in socializing, and yet another in management? If these talents and inclinations are somehow “arranged,” the most authentic way to live is to follow what we are naturally drawn to and skilled at.
This belief posits that by pursuing our true passions and strengths, we not only achieve personal happiness but also contribute to the efficiency and betterment of the world. In this worldview, accepting and embracing our true selves is seen as fulfilling our destiny.
The text concludes with an empowering message: we should not blame a higher power for perceived injustices in our lives; rather, we are the architects of our own fate. Our will is equated with the will of the “God” within us. Emphasizing the ethos of “You only live once,” the passage encourages us to be authentic, to take control of our destinies, and to be our own guiding force or “God” in life. This is a call to embrace individualism and to make choices that resonate with our true selves, for in doing so, we align with our life's purpose.
5: Valuation vs Price
The narrative here emphasizes that whether one's aspiration is to live a carefree life by the sea or to embark on a grand venture that could potentially change the world, the most crucial factor is to listen to one’s inner calling and to act upon it with all one’s might. Success is depicted as a natural outcome of such earnest endeavors.
Addressing the concept of value versus price in the context of entrepreneurship and fundraising, the discussion acknowledges the inherent "pricelessness" of a mission-driven venture. However, it also confronts the practicality of assigning a monetary value to a startup when seeking investment. The suggested approach is to not fixate on the ‘price’ or initial valuation too much but to focus on securing ‘Smart Money.’
"Smart Money" refers to investors who not only provide capital but also share the entrepreneur’s vision and can offer valuable resources beyond money. It is implied that entrepreneurs and investors overly concerned with valuation may not be well-aligned. If there’s a significant discrepancy in valuation expectations early on, it’s advised that both parties should simply move on.
The discussion contrasts the valuation dynamics between Silicon Valley and Beijing, noting that while initial valuations for startups might be lower in Silicon Valley, they tend to escalate rapidly by Series A funding, especially once the product is developed and some metrics are established. This can sometimes be puzzling for Beijing investors who might not appreciate the sudden surge in valuation.
The advice concludes with a strategic perspective for entrepreneurs: not to dwell on early-stage valuations but rather to concentrate on creating a solid product with the help of angel investment. It is the creation of value that should be the entrepreneur's main concern, with the expectation that the market will eventually recognize and reward this value with a fitting "valuation."
This reflects a broader entrepreneurial philosophy: start with passion and purpose, secure the right partners and resources early on, build your product, and the value — and consequently the valuation — will follow as you prove your concept and begin to scale.
6: "Sufficient" is Far from Enough
This embodies the spirit of the geek I admire. To me, a geek is someone who pursues excellence to an obsessive degree in a niche area, and this is not limited to the field of technology.
In American culture, particularly in the Bay Area, there's a culture of encouragement. Children, even with small achievements, receive praises like "Amazing" from various quarters, spurring them to do even better. Therefore, in fields like technology, art, product development, and marketing, you'll find many geeks. Particularly in the internet and mobile internet startup realms we're discussing, these geeks have created numerous globally popular innovative products - too many to count!
Now, in an era of advanced business development and intense market competition, where most people's needs are already met, new entrepreneurs either look to disrupt old industries with powerful core technologies or explore emerging markets for new product-induced demands (like the demand for iPhone accessories). However, no matter what, to build a great company, we need a geeky Leader in charge of the product, someone who, like Steve Jobs, pursues perfection to an obsessive degree.
Geeks always see further than the average person because they've experienced and tried far more related products than others, which is a prerequisite for being a geek. Secondly, a geek's expectations for their product are ten times higher than those of existing market products, so they don't release products lightly. But when they do, they bring a "stunning" or "shocking" experience to users, maximizing customer loyalty. Finally, the products brought by geeks are often extensively covered by various media, saving marketing costs and proving the saying, "Fine wine needs no bush."
Even companies like Evernote and Tesla in Silicon Valley nearly perished, precisely because their pursuit of excellence led them to the brink of bankruptcy. But it was also their strong belief that helped them through critical moments, eventually making them outstanding companies that the world admires.
If a company's leader is a geek in a certain field, I'd be very willing to invest in them, doing my utmost to help them with things they're not good at, allowing them to focus on launching a product that wows the world. If a company's leader always thinks "good enough is fine," or being 50% better than the market is great, they might be a decent businessman and build a profitable company. However, they won't create the next Facebook, Tesla, or Google...
7: Imagination & Execution
The allure of Hollywood blockbusters such as "Avatar," "Mission Impossible," "Oblivion," "Star Trek," and "Iron Man" extends beyond their storylines to the immersive experience provided by IMAX and 3D technologies. These films showcase the significant impact of technology on our lives, highlighting Hollywood's creative and executional abilities.
This raises a pertinent question: Why do such epic films mainly come from Hollywood? Is it due to education, environment, or financial resources? Despite having talented individuals, the Chinese film industry hasn't yet achieved the same scale of production or recognition as Hollywood, which benefits from a fifty-year head start in the industry and substantial budgets.
Similarly, in the internet entrepreneurship sector, Silicon Valley leads in creativity and innovation, home to companies like IFTTT, Airbnb, ZipCar, Twitter, Pinterest, Google Glass, and Siri.
Conversations with students from Stanford, UCLA, Berkeley, and others in Silicon Valley provide a key insight: the abundance of startups in Silicon Valley means that while many fail unnoticed, some excel. The entrepreneurial atmosphere attracts a wide array of ventures, creating a gold rush for internet enthusiasts.
This insight is revealing. The Bay Area, with its ideal entrepreneurial environment, attracts the most entrepreneurs. In this competitive market, successful startups gain global recognition and reach impressive valuations.
The lesson here is multi-layered. First, a dense cluster of startups fosters evolutionary pressure that benefits the most adaptable and innovative. It also highlights the importance of a nurturing ecosystem for these companies' growth. Additionally, it emphasizes the cultural aspect, where risk-taking is encouraged, and failure is seen as a learning opportunity. For China or any region aiming to create a similar environment, embracing a risk-tolerant culture, providing a supportive ecosystem, and offering resources for innovation are key factors.
LAST: A story A Chinese VC shared with me that shortly after arriving in Silicon Valley, she met a very smart, young entrepreneur with strong technical skills and a cool product, still in the early stages. She considered investing in the next round. However, after a two-month trip back to China and returning to Silicon Valley, she found out that Facebook had bought the company for $100 million! Confirming this with the founder, she was amazed by Silicon Valley — if you have talent here, giants are ready to pay a premium for strategic acquisitions.
P.S. I'm writing this from the UA857 flight from San Francisco to Shanghai, having paid just $22 for in-flight WiFi via satellite communication. What a thrill!