Creating the Next Silicon Valley - The Chilean Experiment | Hacker News Reader

Creating the Next Silicon Valley - The Chilean Experiment

steveblank.com

66 pointsebun16 comments

When I look at systems of people the first thing I look at is failure: how does the system/individual fail, what sort of feedback loop is there, and how are changes made?

So Steve's statement about the culture not accepting failure was a red flag. His statement that the government was the prime investor was another red flag. (Governments are notorious for not admitting failure. To do so would challenge the their authority and ability) And once he said that bankruptcy laws there were draconian? The red alert started going off. It's simply non-doable.

It's a shame. I love the scenery, and the people are terrific. But a million small failures make a great success, and if you can't fail easily, quickly, and learn from it? You're never going to develop much of anything.

To me the right solution is to have an 'umbrella company' - that startups can live under. By law, they'd be divisions (so bankruptcy law would never get involved). But, internal to the umbrella company, there would be a culture of experimentation & iteration.

Like rejection therapy, the 'umbrella' employees could be encouraged to fail often : Not enough failure implies not enough risk-taking / innovation.

How does that solve the problem of not being able to unilaterally write off a debt obligation?

If you're having to rely on the ability to walk away from a commitment (to a supplier, say), then that needs to be built into the contract initially.

In California (say), where the culture is 'built for failure', the contracts already embed that optionality - meaning that the pricing already has the possibility of default built in. Negotiating the same flexibility elsewhere should just increase the pricing. Just as offering gold-plated guarantees in California should reduce the pricing.

I have been living and working here in Chile for the last 11 years. From my perspective, the biggest obstacle is the shaky, scrabbling middle class (to which I belong). The class separation here is rather pronounced. There's the rich class, which consists of a small share of the society which concentrates obscene wealth (compared to the rest) and is attainable almost exclusively through birth or marriage. Then there's the poor class, which is full of people with scarce resources; they excel at poverty because there's little or no "credit culture" (or whatever it's properly called) here, so they live in debt.

The rest of us belong to the middle class and are being kept on our toes, lest we suddenly join the poor. Any bill that gets passed usually favors either the poor or the rich. If you default on your debt or anything like that, your name and info will end up in Dicom (the local Equifax), which is often enough to bury your prospects of employment indefinitely, even after you've paid off your debt and normalized your situation.

So you see, that's where the fear of failure comes from: if you have a stable, well-paid job, there's not much incentive to risk it for a startup.

Excellent comment. I fear the US is heading down a similar road...

What needs work >> Venture Capital

Given the interesting things going on in the engineering labs I visited and the startups I met, one would have thought the place would have been crawling with VC’s fighting over deals. Instead it felt like the government – through CORFO - was doing most of the risk capital investing.

Not ideal, but better than nothing. Capitalism can get the most solid footing as a sustainable economic system when there is minimal government involvement. Need wealth to create and fuel more wealth.

Didn't much of Silicon Valley's early investment come from the US government, such as the military ?

The US Govt bought things, but it didn't tell folks what to build (for other people).

Govts like to pick winners. So do companies, but with companies, only one has to hit for society to win.

I've spoken to people in the mining industry and Chile does produce technology used in mining. It even exports some of this tech, such as explosives.

What is the Chilean government doing to bring over already established, innovative companies?

It seems that one good way to inject innovation is to introduce companies that can employ young, entrepreneurial Chileans and set examples they can follow in future ventures.

Dear god, stop trying to replicate Silicon Valley elsewhere.

Create a newer, better ecosystem for entrepreneurs. You're pretty much destined to fail if you try to replicate SV. Move the goal posts to something else.

You are right of course, but you should remember that when governments try to spur innovation and entrepreneurship they have to sell the idea to their constituents and to their talented people. It helps to at least have a great cluster to describe to people what innovation could mean. A sort of crazy end goal to consider. But yes, for most direct comparisons smaller countries should like Steve Blank said be looking at Israel, Singapore and Finland.

Honestly, I think the most challenging thing will be to change Chile's cultural fear of failure. That is probably the single best asset that Israeli culture has in spurring innovation. It is just considered the norm.

They are not trying to replicate Silicon Valley but to create an innovation hub for start-ups and entrepreneurship like in other small countries (Israel and Finland is mentioned). "Silicon Valley" is just a recognized name, it's like saying Kleenex for tissues.

Based on the critiques below, Chile should revise its bankruptcy laws, mandate more government procurement from startups and SMEs, encourage partnering with Silicon Valley and other high-tech regions, set up a Silicon Valley incubator like the Nordic countries are doing now, and encourage more university research collaboration with high-growth nations.

Well it's clear what the opportunity is in Chile right now... Teaching entrepreneurship! If you've got a business idea to target that, they'll be lining up to pay you money.

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