Kevin Surace breaks down why Silicon Valley dominates: willingness to bet on terrible odds. A napkin-stage startup has a 1 in 1,000 chance of survival. Angel funding improves it to 1 in 100. Venture capital at $5 million pushes it to 1 in 10. Disruptive ideas require accepting odds most people won't take.
Silicon Valley became Silicon Valley because of this one thing, and it's exactly why most people never make it. Innovation isn't obviously limited to Silicon Valley, but Silicon Valley clearly has taken a lead since the 1970s in innovating around technology more than any other area. One of the things that is different is the willingness to take risk, and that's what disruptive innovation is about. You cannot disruptively innovate your industry or other industries without taking some risks. And so the rule of thumb in Silicon Valley is when you start a company on a napkin, usually on a napkin with a friend, and you get a little bit of, you know, friends and family money, $100K, $200K, whatever it is, your chance of success is some number at that point, like 1 in 1,000. It's very low. And then you finally go out and get a little bit of real money, maybe several hundred K from angels, and now your chance of success is 1 in 100. And finally, you get venture money, meaning $5 million or more, let's say. And now your chance of success is about 1 in 10. So the day you start sitting at a coffee shop and writing something on a napkin, well, you are sure you're going to change the world. Statistically, the chance is about 1 in 1,000. You have to be willing to take that chance.
