Bangalore and Silicon Valley

Abinandanan has put links to Paul Graham’s articles on ‘How to be Silicon Valley’, and prompted me to write this article.

For the last three years I am living in Bangalore. Prior to that I was living in the Bay Area in US (close to Silicon Valley). I have always wondered how we could ever achieve anything close to Silicon Valley here in Bangalore. Keeping all that hype aside, where Bangalore is called ‘Silicon Valley of India’, the ground realities suggest a complete different story. Bangalore is not even remotely close to Silicon Valley in any respect. The factors like number of IT companies, the number of engineers employed, etc, are not the right parameters for the comparison. I am citing some of reasons below. I don’t want to be exhaustive.

We don’t have technology VCs

VCs who have presence and money in Bangalore do not fund product making startups. Why? Because they do not have people on board who have been product making entrepreneurs before. They invest in companies they are good at, like, IT services, BPO services, .com, etc. When they hear the word ‘technology’ or ‘product’, they balk. Not because they are not interested, but because they do not understand the implications and the consequences of such businesses- there have not been many precedents out of India. Most other VCs in India are pure private equity players, bankers who have opened a small arm of VC. There nothing ‘venture’ about them. They don’t take risks of funding early stage companies. Instead they continue to stick to private equity. I am not complaining. They do what they know best. Unless we see a major chunk of technology companies in Bangalore go successful, we will not be able to spawn new technology companies. Those US-based VCs that have an office in Bangalore, they are still unsure on what to do. Should they invest? If they should, should they stick to Indian model (of being a private equity player) or should they stick to Silicon Valley model (but then there is no ecosystem)?

We don’t have rich technocrats

We do have rich people in Bangalore but we do not have rich technocrats. Even those supposed technocrats, after achieving the success, tend to believe that they were an exception and that the norm is ‘Bangalore cannot produce technology companies’ and hence continue the trend of supporting less-risky businesses.

We don’t have too many nerds

Nerds are those people who don’t care much for the employment but rather work for sheer thrill and kicks they get out of doing something extraordinary, however impractical. Many engineers in India, even those would-have-been-nerds, get into the pressures of financial security, family issues, building a home, buying a car, etc, and seem to suppress their nerdy characters to become normal.

We don’t have good university-industry collaboration

I cannot say we do not have good universities. There are good universities in India, but I think we do not have university-industry collaboration which is vital for getting the right kind of ecosystem.

We don’t have the necessary infrastructure

While Bangalore is good for a technology startup in many respects, despite the drawbacks I listed above, it is not ideal for travel, commute, and is less preferred by people who have made money and want to relax. Infrastructure of Bangalore is not conducive for a smooth life and poses lot of impediments. Not that any other city in India is better, but if we want to see anything close to Silicon Valley here in Bangalore, proactive, concerted and aggressive measures need to be taken up to make this city conducive for such a ecosystem.

I am radical in my approach. I propose we move the entire defense units out of Bangalore and use that space to create approachable parks, large and wide roads, government and corporate buildings with wide parking spaces. With proper planning, and without being too greedy about filling it with concrete, one can come up a much better planned city for Bangalore. For every tree that is cut down, plant four new ones. Also, please don’t throw garbage and plastic on the streets. They clog up the drainage during monsoon season and damage our roads perpetually.

We have too many service-oriented companies

This is my pet peeve against Indian companies. We have been able to produce great service-oriented companies through Infosys, TCS, Wipro, etc. But that’s where we stopped. All the new companies that spawn in Bangalore take them to be the role models and continue doing the same. Even VCs and the so called technocrats want that. What is wrong with services? In short, it is not a scaleable business. If a services company does $2 Billion revenues with (say) 50,000 engineers, to get to $20 Billion in revenue, they need to hire 500,000 engineers. How can this city support such an organization?

And size is extremely important for services industry. IBM, Accenture, Infosys, TCS, etc, leverage their size to bag more and more orders. Compare this with a technology startup. A small group of individuals can make a big difference and if successful can create mega industries with very few people. This will throw out rich technocrats who in turn can spawn more technology companies.

From my own experiences as an entrepreneur, I can say that there is lot of truth in what Paul Graham has to say. You can’t create Silicon Valley where there are no rich people to fund your startups. Also, you need an atmosphere of nerds. Both are lacking in Bangalore. Does that mean we just sit back and say, ‘Yes, we lose the fight’? Not really. In spite of all the data and all the indications that you can’t recreate a Silicon Valley here in Bangalore, we ask ourselves why not?

Some look at things that are, and ask why. I dream of things that never were and ask why not? - George Bernard Shaw

An entrepreneur starts out asking himself why not.

Conclusion:

One can create Silicon Valley here, and it may take a long time, and may be, it will take a different shape and form and may not necessarily follow Paul Graham’s Silicon Valley. For anything to happen, someone has to start and persevere. If some of us succeed, and in turn spawn many such companies here in Bangalore, then another Paul Graham will write an article 20 years from now as to why Bangalore cannot be recreated anywhere else.