Creating the Next Silicon Valley—The Chilean Experiment

1/4/11Follow @sgblank

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a Dickens novel, it can take years to shut down a company.

In addition, in Chile the cost of personal failure is high. If you fail, you’ve failed your family, your community and your country. As a result, societal pressures favor people who avoid risky ventures. Because its entrepreneurs are unlikely to make commitments or definitive statements which they know might be risky, i.e. “we’re going to be a leader in our market” or “our startup will be $100 million in five years,” Chile can’t foster the “reality distortion field” that underlies a dynamic entrepreneurial culture.

I suggested that perhaps using a science analogy could help change Chilean perspectives about the risk and experimentation it takes to build new ventures. Entrepreneurship and incubators could be described as an “Innovation Laboratory” – similar to a scientific laboratory where entrepreneurs develop and test hypothesis (iterative guesses) about new business models. And like science, starting a new venture is not a linear process but one that involves failures, dead ends and changes in direction.

Lessons From the Valley

At one of my presentations the audience was a mix of deans of multiple schools at Catholic University, government officials from the Ministry of the Economy, active entrepreneurs and students. I offered that Silicon Valley’s rise was serendipitous, that you can’t reverse engineer an accidental Entrepreneurial Cluster formed in the Cold War. However, we can point out the elements that made our valley successful, and point out the ones that may be helpful in Chile; the role of Universities and defense-driven university R&D, the rise of venture capital, a failure-tolerant culture and the emerging science of entrepreneurial education. Slides 22, 36, 97 and 117 are the key points.


Come To Chilecon Valley

If you’re serious about understanding centers of entrepreneurship outside the U.S., Chile is now one of the required stops. The progress in the last few years has been nothing short of outstanding.

I’ll be back.

Lessons Learned

  • Chile is trying to engineer an entrepreneurial cluster as a National policy
  • They’ve gotten off to a good start with a committed Ministry of the Economy
  • The universities are on board with passionate faculty and excited students
  • The country needs to build a deeper Venture Capital industry
  • Chilean core industries need to view entrepreneurship as an asset, and technological innovation as an opportunity to leap forward
  • Second chances are hard to come by in current Chilean business climate and culture

Steve Blank is the co-author of The Startup Owner's Manual and author of the Four Steps to the Epiphany, which details his Customer Development process for minimizing risk and optimizing chances for startup success. A retired serial entrepreneur, Steve teaches at Stanford University Engineering School and at U.C. Berkeley's Haas Business School. He blogs at www.steveblank.com. Follow @sgblank

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  • Randy Havre

    Aloha,

    I agree with most of your thoughts having been doing business in Chile for 8 years although I am a VC in Hawaii. The bankruptcy thing is really a big hurdle. (one of my portfolio companies was applying for a small grant from CORFO and they wanted SS#’s for the CEO and Brd) They just recently became a PCT country. Even though, my wife and I have many friends there and I will continue my activities. Mahalo.

  • http://www.thecrowdfundingrevolution.com/ Kevin Lawton

    Hey Steve,

    Love the Chile article. I’d like to see them pick up on an advanced crowdfunding platform, right from the beginning. Fwiw, I’m the author of “The Crowdfunding Revolution | Social Networking Meets Venture Financing”, which besides laying out the rationale for crowdfunding, gives a future road-map.

    Also, I live around the Bay Area and will be giving a talk at Stanford, Wednesday Feb 9. Happy to chat.

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