<div>The “Silicon Valley” in the US is a fascinating place! It is a melting pot of a highly competent talent pool dedicated to developing innovative business models and solutions. The sheer number of people who have serious ambitions of starting a technology-centric start-up is simply mind-boggling. It is a matter of pride for entrepreneurs in Silicon Valley to talk about how many times they have attempted to start a company or even how often they have failed!<br /><br />However, beneath this super energetic plane, is also a stark reality which is equally critical to note. Only less than 1% of all start-ups launched survive for more than 5 years. Most either die, or are acquired within an average life span of 3-5 years. <br /><br />What this also means that the “Valley”, in some sense, is emerging as an “outsourced innovation hub” for larger organisations. Mid-sized and large-cap companies ensure that competing technologies are absorbed as a part of their portfolio early, much before they can become a real threat to their market share. <br /><br />Few entrepreneurs, too, are keen to continue their venture beyond this3-5 year horizon. The combination of high velocity venture funding dynamics coupled with a generally accepted norm of “serial entrepreneurship” drives much of the culture and ecosystem of “THE” Silicon Valley. Furthermore, most of these acquisitions are still done by US based companies, which means innovation remains within their economy. Very seldom are they acquired by someone outside of the US (may be Chinese companies of late, but that is more in real-estate and old economy companies). The average life span of companies born in the Silicon Valley has been reducing drastically over the years with larger companies becoming more and more aggressive in their acquisitions strategies.<br /><br />What this means is that most entrepreneurs ONLY think of how to build and sell their venture and most investors also think of when and how quickly they can exit. There is nothing right or wrong about this model – capitalism has many growth dimensions and this is one of them. <br /><br />However, what Silicon Valley projects as a “successful” model is also something that needs to be carefully observed as the same model and dynamics influence and drive the motives and aspirations of the creative industry across the world. For instance, it has already emerged as a practice to reward and recognize ONLY those companies that are able to raise venture capital, while the rest don’t seem to matter. An extension of this same phenomenon is the buzz around acquisitions. <br /><br />What this seems to foster is a skewed definition of a successful entrepreneur, one which is not related to whether they run the company profitably or with consistent growth in revenues, but one which correlates success to rapidly raise valuation or to how quickly it can be acquired. <br /><br />The question that India’s fledgling start-up ecosystem should be asking is this: What is the right aspiration model for India’s exploding young population and an even younger entrepreneurial ecosystem? Given its very nascent stage, what should the ecosystem encourage and reward? <br /><br />Of course, it is critical to create an environment to show quick financial upside that will inspire more Indians to take the leap of faith required to become an entrepreneur. However, it is equally important to ensure that we balance this with the right role models, who have built successful companies and created brands to be reckoned with, and recognize those ventures who aspire to have a long term vision.<br /><br />India, at this stage, needs a sustainable long-term innovation ecosystem, or at least it needs to ensure that innovation stays within the country to a large extent. As a country, it should not be our ambition to create yet another outsourcing hub-“outsourcing IP innovation” - for the rest of the world!<br /><br />The hard work put in by the first generation of Indian entrepreneurs to ensure that there is a platform for the second generation entrepreneurs should not go waste with an extreme focus on short term aspirations. Entrepreneurs should be encouraged to create, patent, and consume IPs within the country as far as possible. The ecosystem should ALSO reward longer term sustainable ventures who have successfully built companies on sound business principles of revenue growth and profitability, with a great culture and value system.<br /><br />The Israeli model of innovation is one to which we can look-up. Given the size of the Israeli economy and that their total population is just 8 Million, they have smartly aligned themselves 100% with the “Silicon Valley” – since that is what their country needs. We should adopt their innovation model but perhaps not the economics around it in its entirety.<br /><br />We cannot, and certainly should not, blindly follow or mimic the “silicon valley” model. That model has matured and probably saturated now. What the USA perhaps needs today more than innovation is a way to distribute wealth and help others in their innovation journey.<br /><br />India, on the other hand, needs an ecosystem which can create and add value to its economy by retaining, consuming and exporting IP led products/services, instead of just aiming to sell off its innovation/IP/companies to large multi-national companies. <br /><br />The needs and requirements of each country are different, given the stage where they are in their economic life cycle. It’s important we as a collective enterprise, who are part of this creative industry and ecosystem debate, discuss and encourage the right values that are critical for our country at this stage.</div>
