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  • Writer's pictureLeo Wang

Silicon Valley Insights

Updated: Nov 23, 2023

The original Chinese version was published on at HERE
Hemant Parikh on X: "The Power of Tiny Gains 1% better every day 1.01 x 365  = 37.78 1% worse every day 0.99 x 365 = 0.03 https://t.co/iUStIaXabj" / X

Being in the same time and space can limit one’s perspective, so it’s important to frequently change our viewpoint to observe, interact, and reflect. Every trip to Silicon Valley brings me a wealth of observations. I used to pen down “Return from Silicon Valley” on my flight back home, and after three editions, I thought it best to stop at a trilogy. However, this visit granted me many new insights. These insights are not merely a showcase of Silicon Valley itself, but rather the result of meaningful exchanges with like-minded friends during this particular time and space. Hence, this time, the title is not “Return from Silicon Valley,” but “Silicon Valley Insights.”

 

1: Silicon Valley: A World-Class Business Playground


Silicon Valley stands as a world-class platform for commercial endeavors, boasting optimal resources essential for business practices.


Investing in the U.S., we especially hoped to back pure-bred American entrepreneurs. Yet, over time, it’s somewhat disheartening to discover that many entrepreneurs here hail from all corners of the globe – Spain, Mexico, Brazil, Austria, Germany, Scotland, India, China, Korea, Japan, Singapore, and more. I’m not referring to foreigners raised in the U.S. or Chinese-American born citizens, nor international graduates from Stanford or UC Berkeley. I’m talking about entrepreneurs who’ve just landed in Silicon Valley with their projects, teams, or even families, just a week ago.


On closer engagement, you’ll realize that each of these newcomers, freshly arrived from various parts of the world, is exceptionally skilled. They might be top hackers, valedictorians from prestigious universities, pioneers of Bitcoin mining in their country, or successful entrepreneurs ready to restart in the U.S. with a dream that now aims for global reach.


This reminds me of the American Gold Rush, where restless individuals who wouldn’t play by the rules, the so-called “cowboys,” sought their fortune. Perhaps there’s something intrinsic to California that draws in these “cowboys.” The area between San Francisco and San Jose, dubbed Silicon Valley, originated from Fairchild Semiconductor – something I’ve detailed in my “Return from Silicon Valley” series. But today, Silicon Valley has evolved beyond semiconductors; now, the magic is in “software.” Software is the foundation of all modern innovation. Even for semiconductors, the core competitiveness lies in software prowess. The essence of smart hardware, big data, and the Internet of Things (IoT) is also software. You might say hardware without excellent software is junk.


Marc Andreessen, the founder of the modern VC fund A16Z in Silicon Valley, famously said: “Software is eating the world.


Why do “cowboys” from around the globe flock to Silicon Valley? Because they share a “world-class dream.”


Silicon Valley offers the most renowned venture capital, a dense concentration of talent, a mature financial system, a robust legal framework, inspiring success stories, sensitive tech media, and most importantly, a culture of innovation with a high tolerance for failure.


If your ambition is global, where else is more fitting than Silicon Valley? Silicon Valley doesn’t invent technologies; it’s where the commercialization of the world’s newest technologies has the highest success rate. Why?


Because Silicon Valley is a “platform” that provides all the elements for world-class business success. If you have a global vision and ambition, bring your dreams here. Silicon Valley is the testing ground for “cowboys” crazy enough to believe they can change the world. On this platform, every action you take is world-class, including failure.


This insight underscores the “importance of the platform.”

 

2: Systemic innovation is fundamental, as talents, technology, market, and capital are all products of the system.


Despite being one of the youngest nations to be founded, the United States rapidly developed into the world’s most advanced country and one of the most innovative, alongside Israel. The success of the U.S. can be attributed to many factors, not least its Constitution which established a nation rooted in freedom and a federation of states unified by belief and contract. The U.S. is not the most democratic nation, but it is a well-governed democracy that also shoulders the responsibility of defending democracy globally.


The historical success of the U.S. suggests that the founders possessed wisdom, vision, and virtue.

Reflecting on my 12-year departure from Huawei, I now deeply understand the original intentions behind Ren Zhengfei’s promotion of the “Huawei Basic Law”. I suspect Ren was inspired by the successful U.S. system. I believe that any world-class company must have its own “corporate constitution”.


Huawei’s Basic Law evolved from a concept in 1995 to a management outline in 1996 and was officially adopted in 1998. During this time, Huawei underwent massive growth, indicating that good systemic foundations can lead to prosperity.

Silicon Valley’s success is partly due to the stock options system pioneered by companies like Fairchild Semiconductor. This system, which allowed employees to share in the company’s equity, was instrumental in fostering decades of entrepreneurial and investment growth, particularly in Silicon Valley.


The fall of Wang Laboratories serves as a cautionary tale about the dangers of concentrated stock ownership without proper succession planning. Dr. An Wang’s decision to pass leadership to his son led to the departure of key talent, including John Chambers, who left to join Cisco and greatly contributed to its success.


An Wang, an American scientist, inventor, and entrepreneur of Chinese descent, had an inspiring career but also exemplifies the need for innovative equity and incentive structures to attract, retain, and maximize talent.

This realization highlights the paramount importance of systems and structures in organizations.

 

3: When you start caring about politics, it means your business has grown and you’ve entered a new dimension of thinking.


As a child, I didn’t care about politics; my focus was entertainment. During college, it wasn’t politics that interested me but business. Even when I began working, my concerns were Silicon Valley and technology. Initially, as an angel investor, politics remained off my radar; I was absorbed in entrepreneurship and the economy. Now, at 36, after five years of investing, with 3 billion invested and over 200 projects funded, and a new fund reaching 300 million RMB, I’ve started to pay attention to politics.


Zeng Guofan once said that those who aspire to achieve great things must first understand the ‘big picture.’ This ‘big picture’ comprises three elements: vision, rules, and choices.


Vision represents how far and what you can see. Without a broad and far-reaching vision, you cannot grasp the big picture. That’s why it’s important for the youth to explore, read, and interact with mentors—to expand their horizons. Immersing yourself in places like Silicon Valley can open up your perspective.
Rules govern the ‘games’ of this world. To excel in any game, you must understand its rules, which enables strategic planning. Many entrepreneurs are clueless about systems and rules, relying on hard work alone to succeed. But it’s not just hard work that creates great achievements; understanding the political and economic rules is crucial—it’s like having a ‘game guide.’
Choices, though mentioned last, are vital. Many have the vision and understand the rules but fail at making the right choices. History is filled with those who have fallen to greed or indecision—they either took what they shouldn’t have or couldn’t let go when necessary. Those with a true understanding of the big picture know what to take and what to leave.

Studying history and engaging with politics is a great way to cultivate this ‘big picture’ mindset. The recent buzz around the TPP is a case worth studying. Even if you start with a limited view, persistent research can enhance your understanding of the world’s dynamics and China’s strategies, helping you to see the big direction in business and make savvy decisions.


The big picture determines the outcome!


This insight underscores the “importance of understanding the big picture.”

 

4: To progress, we need systematic strategic thinking and corrections; embracing innovation and not fearing mistakes is key.


Consider this: if your business grows its monthly sales profit by 20%, after 12 months, that profit could increase by 7.43 times. All greatness is the accumulation of tiny changes leading to a transformation. Every successful leader knows the importance of small, consistent steps to achieve a great journey.


Innovation demands diligence. Small daily improvements, when sustained over a year, can result in exponential growth. The concept is straightforward, yet few succeed. Why is that? It’s not merely about persistence.


Many entrepreneurs work hard and persevere, but after ten years, some have soared while others haven’t moved. What makes the difference? As mentioned earlier, platforms, systems, and mindsets can cause significant disparities over time. But why do some entrepreneurs expand their reach, improve their systems, and grow their platforms from the same starting line?


It’s not just luck or help from influential people.


The key lies in the fact that many entrepreneurs lack systematic thinking and reflection to develop theories that guide future growth.


Most start out like headless flies, buzzing around aimlessly. Some may stumble upon success by chance, but others may not be so lucky.


Silicon Valley is a talent hub with success stories everywhere. Successful entrepreneurs guide the new generation through advising, board memberships, incubators, and investments. This environment makes it easier for entrepreneurs to receive mentorship and grow rapidly with the concentration of capital and talent, leading to exponential global growth. This is why Silicon Valley has produced young leaders like Facebook’s founder—it’s not a coincidence. Looking back at history, those who achieved greatness started as ordinary as anyone else.


Throughout life, we encounter mentors. But without systematic reflection and thought, growth is stunted. Consistent, reflective thought and its application can lead to joyful progress in life’s marathon. People who think and reflect attract mentors; it’s not by chance but by design.

Mentors prefer to help those who are thoughtful, quick to understand, and quick to progress—the teachable ones.


This realization highlights the “importance of thought.”

 

5: Why do we live, and how should we spend our lives?


I’ve been pondering in Silicon Valley, questioning why I push myself so hard, why I force myself to wake up at 6 am for morning reads and work 16-hour days. I could have a more relaxed life in Shanghai, enjoying simple pleasures and family happiness. So why this relentless drive?


After much thought, I’ve reached a shareable conclusion:


I strive to climb higher to see farther, to gain a greater sense of participation on a larger platform, and to leave a substantial mark on the brief history of humanity that I’m a part of.


So, why do we live? Most people choose to spend their lives on “beautiful” endeavors. What the creator intended for us, what’s “valuable” or “beautiful,” “right” or “wrong,” isn’t clear-cut.

I’m drawn to quantum mechanics for its defiance of “classical physics,” reinforcing my belief that there isn’t a strict script for our lives. I reject the idea that everything is predestined and believe that “everything happens for the best.” What’s done can’t be changed, which I fully accept, but the future holds infinite possibilities we can influence and shape.


In America, there’s a lot of talk about democracy, freedom, human rights, and individualism. If these are correct, why didn’t the creator set them up from the start? Why have so many tragedies occurred throughout history? Maybe in the creator’s eyes, there’s no absolute good or bad, right or wrong, good or evil, just like the virtual characters in a computer game we create.


Perhaps humanity is just an experiment by the creator, who observes silently from outside the system. Each of us is a minor variable in this system, seemingly insignificant, but together our actions determine the world’s direction – each one of us a domino’s starting point.


This world, essentially empty and illusory, where each of us is a piece of code running in the creator’s “computer” system. Our souls and bodies are parts of this code; when we die, the body’s code decays in the system, while the soul’s code is archived, never to be activated again. Hence, the Silicon Valley mantra: You Only Live Once. Even as a code, we only run once. So, life is about changing the world, even if it’s originally virtual. Who knows? Maybe those who’ve maximized their potential get “copied and pasted” by the creator into another, more advanced virtual world after death.


This insight speaks to the “importance of living.”

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