Take-aways from a week in the Valley: Serendipity

Last week I spent a few days in San Francisco attending Facebook’s f8 conference and reconnecting with friends and colleagues. While I have long advocated that emerging tech hubs should not seek to copy “The Valley”, my trip provided some new insights into what makes SF and The Valley such a unique place:

It all comes down to density. Density of entrepreneurs and startups. Density of investors. Density of both of these groups together in a very small footprint between a small city of under 1 million people and a broader area that is only 30 miles long by 15 miles wide.

The density leads to serendipity of encounters. Standing in a street corner near the CalTrain station in the city I saw Phil Libin of Evernote/General Catalyst, Bubba of DFJ, Charles Hudson and the founder of Data Collective all within 5 minutes of each other. It literally felt like my Twitter VC feed come to life.

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In Palo Alto, while doing the obligatory coffee meeting at Blue Bottle I ran into an old acquaintance whom I had missed earlier in the week, while waiting for another VC colleague to arrive.

The f8 pre-conference breakfast was an amazing amalgamation of capital. I joked with one of the organizers that billions in VC money (and personal wealth) had convened into a small space for bad coffee and free Oculus gear.

This level of serendipity is almost impossible to replicate in any other tech hub. I’ve written about how spaces like Second Home in London or The Factory in Berlin are trying to create this serendipity around lighthouses but in The Valley it just happens naturally, effortlessly, seamlessly. These encounters lead to denser networks, to greater flow of ideas (and deal flow), to the unplanned collisions from which success seems to emerge.

A friend, who also happens to be a great VC, was walking me through his four most recent deals. As he explained it, every single entrepreneur he had just written big checks for was either someone he had worked with in the past, someone he had funded in the past, or someone he regularly went skiing with through the blend of social/professional community that The Valley embodies. The depth of the ecosystem allows for that.

This serendipity and density is made even harder in large metropolitan hubs like London (where the money is still mainly in Mayfair even if the entrepreneurs are a 30-minute tube ride in Shoreditch) and New York. Smaller cities like Berlin and Stockholm might be better at driving these chance encounters. Conferences like DLD, WebSummit, Founders Forum are fabricated but efficient proxies for this serendipity.

More importantly, the ecosystem also shifts. It seems that every VC I spoke to now has office space in both the Palo Alto area and in “The City.” A lot more activity is now happening in San Francisco proper and the investor community has shifted their center of gravity from Sand Hill to San Francisco, spending a few days in each. As one Partner put it: “We realized we were spending too many days in coffee shops in SOMA and not enough time together as a team, so it made more sense to have our own space to host but also meet and catch up with my Partners.”

In Europe this geographic shift is part of the challenge as Berlin, Stockholm, Paris or Madrid all require regular visits to stay close to the entrepreneurial ecosystem, the angels and the local funders. The speed of the shift from Palo Alto to San Francisco is what surprised me most in this last visit.

Finally, the amount of influence of a small piece of the US on the rest of the world is mind-boggling. If you Google the “famous” Rosewood hotel on Sand Hill road, Google Maps brings up this image.

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Squint and you can see that NEA, Sequoia, KPCB, A16Z are all located in slightly mundane suburban office buildings within walking distance of each other. We are talking about the highest concentration of VC Assets Under Management in a space of less than square mile where a bunch of white dudes (and I am purposely generalizing here to make a point) are deciding which disruptive technology to fund next. That decision will have impact well beyond Sand Hill, Palo Alto, California or the US. On a hit-rate basis, those decisions will disrupt and transform many of our lives in the decades to come. No pressure guys…

The Valley is unique, its history of innovation is amazing, and it would be close to impossible for any other Tech Hub to rebuild what decades have created. What I took away from last week though, was that we, founders and funders in other hubs, can learn from the benefits of density, serendipity and shifting centers of gravity while we ourselves seek to build, back, scale ideas that also seek to change the world.

Thanks for the good times San Francisco. See you soon.

Partner at @2150-vc backing technologies that make our world more resilient and sustainable. Salvadoran-born Londoner. YGL of the @wef Father ^3

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