Research in Silicon Valley on IT startups and growth

Posted by Niek Huizenga on September 22, 2011

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For the coming six weeks I’m going to work on a research project in Silicon Valley.

Silicon Valley is renown for its IT innovations and the high number of entrepreneurs. Almost all famous and successful IT companies are founded and located on a strip of 50 km stretching form San Francisco to San Jose.

The name Silicon Valley comes from the early semiconductor industry that was concentrated in this area in the seventies. Companies like Intel produced microchips based on silicon (the basic components of computers). The growing demand of computers resulted in a boom of related industries like software, user interface design and at a later stage the Internet. There are many stories and movies about the rise of IBM, Apple and Microsoft during the eighties/nineties (the movie “Pirates of Silicon Valley” is a must-see). After 2000 (the Internet period) giants like Google, Yahoo and Facebook appeared out of nothing. The next champions are already waiting for their era of world domination.

It is not a coincidence why almost all disruptive IT innovations have their origin in Silicon Valley. The innovation guru Paul Graham describes the main reason for this. He explains that when there is a critical mass of like-minded creative people working on similar problems it sets off a chain reaction of innovations. Silicon Valley can be compared with Florence during the Golden Age. At that time Florence was a hotspot that attracted artists and scientists from all over the world. Florence was an excellent environment for geniuses like da Vinci and Michelangelo to develop. As is Silicon Valley for today’s geniuses Steve Jobs, Bill Gates, Mark Zuckerberg and many more to come.

Starting an IT company in Silicon Valley means that you have the ambition to become big. But the journey from an idea to a multi billion-dollar company is a very complex rollercoaster ride. The successful stories are known, but 99% never makes it to serious growth and died trying. Many academics are trying to explain why some companies become successful while others don’t. Is this a black box or can the genome of success be decoded? The ambitious Startup Genome project is trying to do it.

In my research I am going to make a comparison between young growing IT companies from Silicon Valley and the Netherlands. Growing IT companies are defined as companies that are in the transition of becoming a professional organization and experience a significantly growth in numbers of employees and customers. This phase is often accompanied with venture capital (VC) and the recruitment of experienced specialists.

The main objective of my research is to understand what an entrepreneur drives to make a business grow, what the role is of financial, human and social capital and what other elements obstructs or stimulates growth. I am going to conduct interviews with several growing entrepreneurs and VC’s in Silicon Valley and the Netherlands. The two datasets are compared and I hope to find differences in the area of personality, culture, availability of resources and other external factors that affects growth. This knowledge may explain why the Netherlands I lacking behind in the number of growing firms.

During my stay in Silicon Valley I will publish a new blog every week on my latest findings and experiences. Please feel free to contact me for information, suggestions or critique.

Mail: / Twitter: @nhuizenga

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