As a VCpreneur visiting California, I was not attracted by the regular touristic attractions in its main cities! I was more into the entrepreneurial attractions! I had only one week, so I decided to: rent a car to visit the small cities were tech-entrepreneurship and VC was born, attend as many tech meet-ups as possible to interact with the people there and learn more about their experience, visit all accelerators in the valley, and arrange meetings with as many VCs and Entrepreneurs as possible in 1 week! Below you will find the stories of the week!
When I visited California 2 years ago, I was a regular tourist. Although the purpose of the trip was to attend two main events, the first was TechCrunch50 of 2009 (before it became TC-Disrupt) in San Francisco, and the second was Demo Fall of 2009 in San Diego. But other than that, I used the free time I had to visit the main touristic attractions in both cities.
This time it was really different! I “lived” in Silicon Valley for a week! I visited San Francisco (again ), San Mateo, Belmont, Redwood City, Atherton, Menlo Park, Palo Alto, Stanford, Los Altos, Mountain View, Sunnyvale, Cupertino, Saratoga, Santa Clara, Campbell, and San Jose! Which all form what’s usually called “Silicon Valley“.
Excluding San Francisco and San Jose, all others are very small cities, unlike what I was expecting! Each of them has only one small main street where all cafes and restaurants are located. They are all quite, peaceful, and they feel very safe. The best by far was Palo Alto! I loved this city! It’s full of international students attending Stanford. Whenever you get an eye contact with anyone there, he/she smiles!
Half an hour walk in Stanford University Campus was enough to live the stories I read about it, and about the startups that were created there! Unlike Harvard, where students look elegant and aim to become the best corporate CEOs or Lawyers of the world, students in Stanford are more casual, and they seem to study in order to learn more and become able to start their innovative companies, at least the few I met and chatted with.
People used to say that if you walk in any cafe in Palo Alto and start talking to whoever is next to you, he/she will be either an entrepreneur or a VC. I used to say that this is just a myth. So I tried, not only once, but several times! and guess what? It’s not a myth! For example, I met the managing partner of a new VC firm called Double Rock Ventures in a cafe in the University Ave. in Palo Alto.
I attended the Startup Grind Meet-up, something like AmmanTT, Riyadh Geeks and Dubai Tech Nights, where around 200 people attended to listen to Jeff Clavier (SoftTech VC who invested in UStream and Bitly) sharing his story with the audience. I also attended the Founder Showcase which is a demo event where founders pitch their ideas on stage, and a Startup Meetup at the Startup BlackBox House for a group of German entrepreneurs visiting the Valley.
In those meetups and events, I met people who came from all over the world, not only to start their own companies, but also to co-found or join a startup early on! This was news to me! I mean we never thought about this! Every one who is involved in entrepreneurship in our region wants to start his/her own thing. What if you find a really great founder with a really great idea? Why we always resist joining and keep insisting on our own things. Ok, here is how they think about it: Some of them say: I join a great startup, be part of the success story, stay there for 2-3 years, vest my promised equity, then leave to do my own thing. Other say: I have great capabilities and experience, and I don’t have a great idea, so why should I “waste” my time working for a big company, while I can co-found a startup and get good equity!
Anyway, I couldn’t wait to go to the legendary Sandhill Road, the heart of the VC world. I thought it will be a short cozy street with old buildings on both sides with signs of the biggest names in the VC industry. On the contrary, it was a very long road, and in the middle, there are two main areas next to each other, they look like Dubai Internet City, one is called the Sandhill Circle, and the other is called Sandhill Commons. But yes, in this part of the street, you can find a clock tower, where the names of all the big VC firms in there were added.
I also went to Google, Apple, Zynga, and eBay campuses. But the more interesting visits were to: Plug and Play, The Hub, I/O Ventures, RocketSpace, DogPatch Labs, and Startup BlackBox. I met the founders of those places and learned more about their models and the unique offering of each of them.
It seems that the trend there is to start a real estate project to host entrepreneurs and provide them with casual offices and good internet speeds for a year or two, then by having access to all this deal flow, they can develop specific skills like identifying the best founders and the best ideas, knowing exactly what such founders need, and helping them in all possible ways. When they achieve this, the natural next step is to raise a seed fund and become a seed investor or a super angel fund. This is exactly what happened with Plug and Play and The Hub Ventures, and I expect RocketSpace is on the way to do this.
Startup BlackBox is doing the same but with a very unique approach! They are not targeting the Silicon Valley startups, on the contrary, they are targeting international ones that are trying to access the valley. At their big house in Atherton, they host founders from Russia, Sweden, Japan, Germany, etc…, and they offer them an educational week called BlackBox Connect where they get to speak with a group of the best entrepreneurs and professionals in Palo Alto, visit Google, Facebook, Apple, etc… and get connected to the VCs of the Valley. Now, investors are offering them funds to invest in selective international startups! And by the way, this might grow to become a Startup Hotel!
I/O Ventures is founded by a group of successful entrepreneurs who wanted to help other startups. They started with a fund from their own money, and created The Summit Cafe in SF as their public living room, and it’s open for every one to come and enjoy working in an entrepreneurial atmosphere. Selected companies will receive investment from I/O Ventures, and get access to the private incubation space in the back of the cafe.
The most amazing one all all those is DogPatch Labs! It is an initiative by Polaris Ventures. As explained by one of the firm’s partners I met, they offer office space, high internet speeds, coffee and tea for free. Yes, no subscription fees and no rents like all the above mentioned spaces. No investment or equity in return like TechStars, Y-Combinator or DreamIt! Nothing at all!!! It’s totally for free. But why?
Well, because of the fact that starting internet and mobile startups and taking them to the market nowadays is cheaper than ever, and lots of startups actually go from seed/early to exit directly, bypassing series B, C, D, etc… and eliminating the need for tens of millions of early and growth investments, big VCs are struggling now to find such good deals early on.
So the trend now among VCs is to build the relationship with the entrepreneurs very early at the idea stage, so that when the founders get to the point where they need seed/early investment, they will contact the VCs they already know first. In other words, because of the high competition among VCs themselves, a new term evolved called: “Relationship VC”. So if you as a VC don’t have an accelerator, or if you’re not very well connected to existing accelerators, you will never get the good deals. The same concept was discussed with a partner I met at Charles River Ventures who used to be a traditional big ticket investor, but now is more into seed and early stage investments. Polaris Ventures is taking this to the extreme with its DogPatch Labs and is offering all this for free in both Silicon Valley and Boston.
One more thing I want to share with you before I end this long post! People are so crazy about Silicon Valley so that all countries are working on replicating its story, and hope to have the next silicon valley. A book was written about this called: “Boulevard of Broken Dreams“. However, I met a group of crazy innovative people from the Blue Seed who are trying to disrupt all those efforts by bringing everyone to the Valley without the need to enter the USA! Yes! How? Well, they are creating a high-tech visa-free entrepreneurship and technology incubator on an ocean vessel in international waters. Meaning that they are bringing a big ship, and placing it outside the USA sea borders, which is only 20 minutes away from Silicon Valley! So you get the talents and the contacts needed from the valley, and you can also visit if you only have a visit visa (not necessarily a work permit).
Thanks to N2V, that was an amazing eye opening trip to Silicon Valley, I will be working on organizing similar trips to our portfolio companies soon inshallah