Fuzzy Signals

Bangalore: Silicon Valley or Coolie Valley

So last night at dinner, when I had to explain what brought me to Singapore in the mid 1990s (which I won't bore you with for now), we started talking about the conditions for creating a vibrant "high tech" cluster, the classic incarnation of which is Silicon Valley. Since two out of four of us at the table were were accomplished technologists—Toby, my software engineer cum sweetheart, and his boss, the CTO of Applications at Apple computer—this might have been a bit presumptuous. And indeed it was. But my experience is that, while often contemptuous of analysts like me who look at the "bigger picture" in all its fuzziness and abstraction, technologists are not always good observers of their industry. Most lack distance and thus forget to ask the big questions. As Marshall McLuhan paraphrased a Chinese proverb, "I don't know who discovered water, but it sure wasn't fish."

Fortunately the company I was in had both micro and macro pictures in hand. Unfortunately for them, I still gave myself permission to wax on about the essentials in creating a high tech cluster, which is something I did study and then later practice as a venture capitalist in Asia. Summarizing the best research on the topic, I argued that it was important to get all of the basics right: proximity of world-class research universities, a flexible labor pool, the presence of venture/risk capital and other professional services, a high quality of life and attractions for talent, etc. But the thing that made the most difference was that illusive and tricky thing called "culture." San Francisco has always had this, dating back to its embryonic Gold Rush days. It's always been a place where the rules could be transgressed, and where too much history wouldn't get in the way of trying new things. (One of the most interesting talks I heard was from the historian J.S. Holliday connecting the dotcom bubble to earlier experiences like the Gold Rush. Culture is often very local! See his fantastic and beautiful book, Rush for Riches: Gold Fever and the Making of California.)

[This is actually taken during the Klondike Gold Rush in British Columbia, but I liked the picture so much that it won out over others.]

Now culture conversations can regress quite quickly into meaningless pap, just huge generalizations that have little application; more dangerously, the culture card can be used as a slightly cryptic, deterministic and thus ultimately racist weapon. So let me be clear: I'm talking about "high tech" culture, which is a specialized subset, and not an ethnically based one. And as research has shown, these cultures can vary significantly even within a country. Annalee Saxenian wrote the definitive book explaining why Silicon Valley took off while the Boston cluster took a back-seat. (See Regional Advantage: Culture and Competition in Silicon Valley and Route 128

Her thesis was that Silicon Valley rose to the top of the technology game globally because of a particular high tech culture that had (1) a tolerance for risk and failure, both on the part of entrepreneurs and investors; (2) highly interactive social networks, that is, techies who traded ideas and information relatively freely in informal settings... and techies who moved quite a bit from company to company, often going to the competition, in the ebb and flow of their shifting interests, successes or failures with startups and/or established firms. So knowledge bases and social networks were constantly being diversified and refreshed, and collective learning more readily diffused. In other words, creative destruction was allowed to happen, without many top-down and bottom-up constraints (e.g. regulations and social norms.)

Yet back in Singapore, Bangkok or Jakarta, we had both of these things happening. Every time we did our talk on this topic, especially to the government officials in charge of creating their high tech base, their "information super highway" to use the buzzword of the times, I'd often scan the audience to count the number of perturbed, discomfited looks. We'd go through our Power-Point presentation, "10 Factors in Creating a Sustainable High Tech Cluster" (or something trite like that) and #10 would always be "culture". The key points would be tolerance for failure and information-sharing. And always, if bold enough, we'd get a polite but categorical rejection of our culture argument. The gist of their response was usually: we are fine with items 1 though 9—got that shopping list completed— but 10 is just not possible. "Losing 'face' in our culture through any kind of failure", they would conclude, tip-lipped but secretly fearful that we were right, "is just not an option." "We'll find a different way more appropriate to our cultural values and traditions." End of conversation.

The Asian exceptionalism theory, however, died after the Financial Crisis 1997. And lead proponents of this view, like Singapore, are now obsessed with creating the conditions for knowledge-intensive industries to thrive, which includes stimulating a higher appetite for risk-taking. This is why they are "teaching" creativity and have revamped their education curriculum. (An old university professor and mentor of mine, Lee Gass, was part of this.) This is also why they are trying to build an arts industry and more "edgy" atmospherics like neon lights; why they are attracting world-class research, and allowing more personal freedoms, albeit in carefully planned increments. But culture is very hard to change, especially in the course of a few years. Most of the creative Singaporeans I know are still in places like New York or San Francisco. [However more on Singapore another time; I still have lots of admiration for their ability to reinvent themselves, which they have done repeatedly over time.]

India is more interesting, if only because it is a billion people strong versus a city state with just three million people. The recent hype about white collar worker flight to India is almost certainly overblown. The Economist recently did a survey on this, "India's Shining Hopes" (Feb 19/04), and concluded as much. We also get disparaging critiques from within like this article by G V Dasarathi, "Bangalore: Silicon Valley or Coolie Valley?" (March 01, 2004). He writes:

"Silicon Valley companies are based on 'know what.' They know the market, they know the technology and they know what products to make to earn money.

Coolie valley companies are based on 'know how.' They do the software coding for other companies that have the 'know what.' If you tell them what to do, they know how and will do it for you.

Silicon Valley companies invest huge sums of money on R&D. They generate new ideas and are constantly developing new ways of doing things.

Coolie Valley companies have nothing called R&D. They do not generate any new ideas."

[The rant continues...]

Silicon Valley is all about the excitement of creating things out of nothing. Companies like HP actually started in the garages of their founders.

Coolie Valley does not know the meaning of creativity. Some companies are started by people who quit other companies and take some of the parent firm's software development contracts with them.

Silicon Valley's entrepreneurs bet on people, ideas and inventions.

Coolie Valley's entrepreneurs bet on certainties. They start a firm after getting software development contracts."

I think this is unduly harsh and lacking perspective, sounding more like a cynic with an axe to grind. Sure, the author is an Indian working in this business and I am not. While I take his points seriously—and the Indian high tech community should not be complacent—I think India's situation is more complex than this. Not coincidentally, Annalee Saxienan is also a resource for understanding why. Her recent research is focused on studying Indian and Chinese social immigrant high tech networks, and these are the difference that will make the difference in the long run. As anyone who has spent time in the San Francisco Bay Area, there are many successful high tech Indian entrepreneurs running around from many walks of life. And being the global society that it is, it's not surprising then that these same Indians are maintaining ties and links to their home country. Many are going back. Some are keeping a foot in both worlds, recycling their knowledge and leveraging their experience of both places. Sound familiar? See "Brain Drain or Brain Circulation? The Silicon Valley-Asia Connection."

[Bangalore at sunset, relatively smog-free for a change.]

While the bulk of high tech work is service-oriented, while they are doing the dirty backoffice laundry for the industry in India right now, this is more about meeting a market demand in the present and less about the future industry structure. I think while India has many problems, some of them daunting, the most crucial and hard to replicate variable—the ability to innovate, think creatively, and take entrepreneurial risk—is abundantly present in India. The competitive pressures in such a large country ensure this; with scarce resources and money, many Indians have to be innovative out of necessity. That much is self-evident after a few weeks in India. Even if just 2% of the population become high tech innovators, in numerical terms, that's many times more people than Silicon Valley combined. I think the scale of India is something most commentators can't fathom.

I think the biggest problem, as this plaintiff article shows, is the inferiority complex Indian techies seem to have. The biggest problem is not talent, but their mental maps about what is possible. Being a Canadian, I can certainly empathize: we have always had a complex against the bigger and better Americans. Having spent time in India and having studied its history and politics, I can also appreciate why people are cynical, preferring to discount the possibility of a more positive future. (This habit of mind is also a legacy of British Rule, which is perhaps another Canadian-Indian connection. We were colonized too, remember.) It's emotionally easier to handle resignation rather than dashed hopes. And we've seen many new beginnings before: beware in nature, “cynical in her sunrises” wrote Nietzsche. All of that aside, I think this obscures the Long View and some of the major structural things in India's favour. I think India will enter the truly innovative phase of its high tech future within the next decade at least, if not sooner, assuming no major meltdowns occur along the way. Indians are creative, resourceful, innovative, and highly networked. At least some of the Indians returning from their overseas success will not be burdened by restricted horizons, and will be keen to transmit their learning to their home environment. Many stories of this exist already—and this cross-fertilization of both aspirations and acumen will be India's "Regional Advantage."

Posted by nicole at March 7, 2004 01:17 PM