Silicon Valley can’t save the world, but a federated model with
rich toolkit can.
I grew up near Palo Alto, so if I
had a bias, it should be that Palo Alto is the epicentre of the tech
world. And as ‘all things tech’ come
to be understood as the driver of growth in business, like a massive snowball
picking up speed down the mountain, it should be more important what’s
happening in and around Palo Alto.
And yet the world is becoming more
and more flat. Entrepreneurs who
change not just the world, but major industries, can come from any corner on
the planet. Skype put Estonia on
the map. Nathalie Kaspersky put Russia
on the map. Daniel Ek – Sweden. Mark Shuttleworth South Africa. Roman Stanek who has sold to Sun, HP and
now is backed by Andreesen Horowitz, the number 1 venture fund in the valley,
the Czech Republic, etc etc etc.
But what Palo Alto does very well is
to say, ‘if you aren’t a Delaware Corp, if your accounts aren’t done in US
Gaap, if your angels didn’t hail from Stanford, and you don’t know where the
University Café is, then we don’t think we can engage with you. It structures the unstructured data of
start-ups. And the cartographers
always win. Those who structure
industries make all the money as they create a self-fulfilling loop. ‘I define what’s good; therefore what’s good
comes to me’. As a marketer, I tip my
hat to Silicon Valley.
So God help you if you are from
Odessa, Doha or Cairo, and don’t land and stay at San Francisco Airport. You don’t stand a chance.
Or do you?
The world is driven by networks
today, but it is also driven by the tug of rope between the incumbents in every
industry and their eying up the ascendancy of the challengers. This David and Goliath struggle is always
epic, and defines how broad prosperity travels through the populace. The new David’s seek to solve problems
that they can perceive in society, and so mass adoption of their solutions
tends to be good for most of the population.
Entrepreneurs have to be inclusive in their approach or they may fail to
find a market. So the essential
challenge that David brings to Goliath is to open up. The winners of the last generation’s game
establishes Goliath as the king pin.
But there is always another round.
There’s always another subversive entrepreneur who seeks to topple all
of the established winners and incumbents and create a new order of
things. And I’ve worked with a few of
the big ones; it’s an awesome battle to witness up close.
In one vision of the future, ‘big
tech’ and mostly US tech by the way takes over every industry as Amazon has
taken over storage and books, Apple music and telecoms, Google advertising, and
you get the picture. But there is
another version of the future whereby large enterprise get wise to the game and
lean in to the tech challenge. They
realise that tech is no longer an industry, but a layer. And the CEO’s of those large industries
embrace that layer. They crave those
digital revenues whether they are radio stations, banks, telcos, retail shops,
airlines or health care firms. And
they suss out that the problem lies in the business model that they’ve been
working to. Innovation is not about
technology but economics; otherwise, we’d all be flying the Concorde – we’re
not; we’re stuffed into jumbo jets.
Case in point: Kodak and Polaroid and Instagram were in
the same industry. And yet they didn’t
have a dialogue Instagram was organised
around the consumer, and the former were working for their suppliers.
Size used to drive market
power. You couldn’t be small or young,
and be listened to. I’m a record
label, so I’m big, and you, artist, are small.
Take it or leave it. But then
canny David’s decided to play a trick on those old Goliaths. They changed the rules of the game. They realised that the world had gone
network. Business was no longer
linear. It wasn’t that I sold, you
bought, and one of us had to win, but that we were participating in a
transaction with multiple parties:
consumer of music, artist, distributor etc. Someone needed to organise those economics,
and David stepped up to the plate.
Enter Apple which broke the hold
that mobile telecoms firms’ had on the consumer. Enter Spotify who exploded a market enabling
mass discovery by reducing the cost of production and distribution but also by
organising the economics for the ecosystem at the heart of the music industry.
Enter Monitise whose CEO and Founder
Alastair Lukies said a very basic thing at the beginning of his 10 year
journey: ‘If mobile banking is going to
work, it has to work for everyone – the telco, the bank, and the individual who
gets a lower cost of capital’. Watch
out Western Union who’ll charge you 22% if you’re poor. More than 1,000 financial institutions are
now serviced by Monitise who have bought their US competitor and been backed by
VISA 5 times. Monitise created the
economics for the mobile banking industry; that’s why it’s experiencing the
biggest J curve in UK tech industry history.
But how do you repeat the success of
a Monitise over and over again.
Where’s the entrepreneur factory?
How do we breed in the right software in the mindset? Truth is that there have always been great
entrepreneurs throughout history distributed around the world. But the infrastructure for releasing their
gift is not evenly distributed around the world. And Palo Alto exerts a very firm control.
Once upon a time, Britain took over
the world. It cleverly said, ‘The
language is English, and the civil service works like this, and the currency is
the pound.’ They structured their
universe, and the benefits came back multipled, reinforcing their place at the
centre of the world they touched.
Today’s challenge to take Palo Alto
to the world is no different. The
cartographers win. As Wayne Gretzky
said, ‘a good hockey player plays to where the puck is, but a great one plays
to where it is going.’ We must grab
hold of where the world is going, and internalise that future vision in order
to play our best game today.
We must opensource the tools to
win. Our corporates must become a
legitimate highway for the digital cars who are looking for distribution. We must desire to become the industry
architects and to position our companies as the operating systems of their
A couple of years ago, I set up a
venture capital fund. We have found
great British entrepreneurs to back.
But what I hadn’t fully internalised at the beginning was the game
despite 25 years working in the tech industry.
The ‘game’ for every European tech venture capitalist is to back a
start-up and sell it to a US big tech firm.
That’s it. It’s actually not
creative. But I didn’t get into venture
capital to sell to the Americans.
We must change the rules of the
game. We must aspire to organise
industries. If we genuinely know
where that puck is going, then the game we play today is not a Palo Alto-centric
one. It’s a game of disruptive
economics with open-sourced productivity
tools. The software is actually in the
brains of the entrepreneurs and the CEO’s of large corporates who will dominate
this next decade. Whose code are you
--- Julie Meyer is the founder of