Intro (01:34)

Bertrand: Welcome to episode 23 of tech deciphered. This would be our second episode of our trilogy around Silicon Valley. If you remember how  previous episode, episode 22 was about what is Silicon valley, as well as what brought us there. For this episode, we’re going to talk about the myth of Silicon Valley versus reality. And we are going to share with you seven myths that we have seen over these years, and we believe come a long way explaining how Silicon valley really work.

Nuno: This started in some ways  with an article I wrote, I think in 2016 and I have four myths in that article. So today we’re going to expand on that. Bertrand has come up with a couple more and that whole story started  with two things, one with an entrepreneur that reached out to me and I used to have a lot of requests on LinkedIn via email  semi warm intros from friends about someone from another was coming to Silicon valley or was visiting, was going to come to Silicon valley to visit and meet with potential customers or investors.

But this particular entrepreneur that shall go un-named reached out to me and we had several people in common. It was a relatively cold reach out. And then he just sent me a follow-up message saying, I’m going there for a visit. Can you introduce me to Google, Facebook, all these companies. And I was like, why am I bugged by this? And as I started thinking through it I started actually taking it one step further, which was, I am bugged by it because people have this understanding of Silicon valley that is fundamentally wrong. And that’s where this whole mythology came from.  In some ways we had people that we knew in common.

We had acquaintances, not even really close friends, but I did not know this person. And that was one of the first things that bugged me. It’s like, why is he asking me for things? I introduced him to people why? I don’t know this guy.  And so again, I started going through it, and the second trigger for me to write this article, the myths of the Bay area back in 2016 which is still on Medium  if you want to take a look at it, I was about to be doing a keynote for an organization that I was a co-founder of called west to west, which was really linking  Portugal to Silicon valley, the two west coast as we call them and really helping entrepreneurs figure out how to best go to market in the U S how to best connect with talents in US, customers, potential investors, et cetera.

So I came up with four  myths that really helped me frame in some ways, a little bit of my messaging back to entrepreneurs that are not classically from Silicon valley, but are coming here. And maybe we’ll start with the first one, and go from there. 

Myth 1 – Laid back (04:25)

The first myth I really identified was that the bay area is laid back.

There’s this clear notion from around the world. It’s like people in the Bay area  are laid back. And a lot of this mythology is around for example, the way we dress that we wear hoodies that we have t-shirts that were pretty informal in how we dress, even in front of investors that we’re trying to raise money from, et cetera.

Bertrand: Specially  in front of investors. 

Nuno: Specially in front of investors. And that is precisely the point to what Bertrand was saying, which is the Bay Area is laid back in a very precise manner, which is it’s not laid back. It’s just a different dress code. If you  show up for a meeting with an investor in Sand hill road, Silicon valley, and you’re wearing a blazer, a jacket, et cetera, immediately, the investor will know you’re not from here.

The reason by the way that we wear a whole lot of hoodies is  the bay a area is a bit of a strange  climate, depending on where you live. Like San Francisco is a bit drizzly and all of that. So hoodie makes a lot of sense in effect, right? Because there’s changes of temperature that are dramatic during the day because you want to cut the wind.

And sometimes it’s pretty windy because it’s drizzly as well. It doesn’t rain heavily, but it’s drizzly. And so that’s one of the reasons why we do wear hoodies and  somehow people got confused, they confused what we dressed and how we apparently talked to each other with fundamentally the mindset. I would say the Bay area is very intense in some ways.

If laid back, it is a laid back in a specific manner. I had a friend of mine who used to characterize it as aggressively laid back and what he meant by that is it’s laid back in a very specific manner. If you behave in a different way, you’re already strange, certainly in the entrepreneurial and VC space, obviously, as we’ve discussed in our previous episode, the bay area does have corporate world and does have the entrepreneurial world, which don’t always touch.

But certainly in the entrepreneur and VC world the dress code and how we behave is in some ways a bit formatted. It is cool that I can wear t-shirts almost all the time. I think the classic way for a VC to dress is kaki and shirt. I sometimes break that as well, cause I’m a cool kid, so I will go t-shirt hoodie, and go in even a more relaxed way than most of my colleagues in the venture capital world.

But in some ways the dress code was what led me initially to this myth.

Bertrand: Yes. And if we stay to the VC side, of course you need your north face vest or, Patagonia jacket.  Yeah, it’s pretty funny. It’s when you start to see that at scale, how everyone  looks the same in the same category, so you can immediately guess who is a developer, for instance, they are the one wearing shorts and having a t- shirt  or if you are a VC we talk about the vest, the jacket, jeans.  And if you are the entrepreneur yes don’t wear a blazer , don’t wear a jacket typically that’s not what you would do.  Personally that’s one side I like that you  don’t need to do too much to wear too much. It’s way more casual. It’s probably more connected to how people naturally live and dress, but at the same time, when it’s enforced in some ways, that’s when it starts to feel weird.

And I’ve seen that. I still remember 20  20 years ago, early in my career, when I showed up in France, actually in an investor meeting as an entrepreneur,  with  a jacket   one investor told me that I was not a real entrepreneur because I was wearing a jacket. And that was in 1999, maybe I forgot  but my point is when it’s enforced that’s when it start to be very weird and to be frank really wrong. But you have to be aware of the codes because if you are totally  out of what is typical and expected yes. You would just stand out and usually you want to stand out for the right reason.

Nuno: The standing out piece is if you have a very specific way that you like to dress and a very specific way that is  different and you stick systematically to it, that might work over time, people will get used to it. Kevin Systrom was  a great example. He was well-dressed most of the time  which in Silicon valley was almost a blasphemy and others have followed suit on that, which is a bit of a double pun there.  But in some ways it has to be part of your personality. I think obviously if it is part of your personality, you should do it. It shouldn’t be just a gimmick. But you need to be careful to your point Bertrand

Bertrand: Yeah. And please be careful. Don’t just dress up like Steve jobs  with your black pullover,  blue jeans. 

Nuno:  With a turtle neck.

Bertrand: Exactly the turtle neck. have seen some in China, some in Silicon Valley dress up like this and usually it didn’t end up  very well for those that were just plainly copying Steve Jobs  .

I would say may he rest in peace and please just let him be, and don’t try to copy, try to be slightly original because when it’s too much, it’s too much.

Nuno: Yeah, the second lateral part of the aggressively laid back, et cetera, is also attitudinal on how we behave here. That part’s really important. I think a lot of people like, yeah, we’re all very relaxed around how we communicate with each other,  how we show up to meetings, et cetera.

Actually, not really people need to show up on time, be it a call, video call in person. Responsiveness is pretty important in keeping  momentum. So if someone sends you an email, they’re a potential customer and you want to show momentum. You should reply quite quickly, right? Even somehow showing effort in doing so.

Like for example, if you’re European company and you get an email at 11:00 PM, you still saw the email, getting back to the person in Silicon valley, actually at 11:00 PM might be a positive thing because people are like, okay, this person is making an effort, to keep up with me and to address my concerns and to be playing a little bit more around my time zones.

I was just interestingly enough, exchanging emails with someone I’m helping in a program that works with European entrepreneurs, actually Portuguese entrepreneurs. And I did the last edition. I’m now preparing to do the second edition of the program and I was telling the person who’s organizing can we for once actually put calls with these guys at 10:00 PM and 11:00 PM, and it’s not, I’m being a douchebag or an asshole. I’m just trying to make sure that these guys were being prepared to go to market in the US understand that they need to start working in US time, including west coast time.

And honestly, we have to adapt to the rest of the world. We wake up pretty early in the bay area. We started working early in the bay area as well. But don’t ask us to do calls at 5:00 AM or 6:00 AM. You guys do calls at 10:00 PM  because you also shoot it out. In particular if you’re trying to get me as a customer, et cetera.

Bertrand: Yeah, I’m certainly a big believer that both sides have to make an effort. And that means that on the west coast, you end up waking up early usually, especially the more you work with Europe. And in Europe, if you are  targeting the US, but you only do 5:00 PM CET central European time,  that’s not enough to get deals, at least if you target the west coast.  And if  we go back to being late in meetings, yeah, I think that’s pretty important. Me if I do a physical meeting, I try to be there in advance actually to be there a few minutes in advance. And that’s usually how it works because if you want to be on time and not be late you have to be in advance.

That’s very hard initially for French people, maybe for Spanish or people from Italy, from Southern Europe. But you have to do it. It’s really the game here and you have to send emails  or messages if you have  to be late by a few minutes. If you are late by really quite some time 10 minutes plus already have to propose a way out of the meeting  if people need that, especially if it’s people you don’t know.

Nuno: And that is an important point. I’ve worked in Europe and Asia and here like you Bertrand, I’d say my latitude in working in Portugal was 20, 30 minutes. My latitude in Asia was maybe 10 to 20, depending on the country. Some countries are worse than others. There’s obviously china was a different ball game, Indonesia as well, but like in Korea, in Japan, it was obviously being on time was important.

But here in the US and particularly in the bay area, it’s very simple at five minutes in, I’ll send you an email at 10. If you’re not around, I’m out.  If it’s a zoom call, et cetera. And even if it’s a meeting and if I have something after that, you might as well reschedule.  So again, the latitude we have here for this in some ways it’s more British than the British as I call it, which is we try to be on time.  We try to respect everyone’s time. I think there was almost an obsession with respecting people’s time here. If you’ve wasted someone’s 15 minutes or 20 minutes, you apologize. Because it was 15, 20 minutes that person could have done something altogether different. And there’s a little bit of that there that aggressiveness of laid back is in there as well.

Bertrand: And I think It’s part of efficiency. if you  have to pack your agenda with a lot of   meetings, 15 minutes meetings, 30 minutes meetings, one hour meetings, the only way to make it work is to be very strict. And that’s the way to get the most of your day. So there is some logic it’s not just to be painful is that some people truly have 10, 15, 20 meetings a day, and you have to acknowledge that and be respectful of that. And the whole system can work if you play by that game.  And on your point on  same day email, I forgot who I was talking to but he was referencing to me, a type of entrepreneur who was going to answer nights and weekends versus the entrepreneur not answering nights and weekends.

And that’s a world of difference. People will judge you based on, are you answering emails nights and weekends? And I think that’s truly part of the game if you are an entrepreneur, if you are a top VC, or if you are a member of the exec team, because business has to move, the show is going on. You have to keep stuff moving. And people make very clear difference very quickly, and you get a reputation and if you don’t get the right reputation, it will hurt you pretty big time when it’s time to get deals.

Nuno: And it generates  momentum back to the point I was making. If people are used to that and they’re used to that pace, they will try and abide by it as well. So if you have a counter party, a potential partnership, a potential customer, et cetera, they’ll try and mirror you in some ways and be faster. And that will also create that speed that we obviously want in those cases.

So again, it’s very positive that you do that and people get impressed just on that, just on responsiveness. Now it doesn’t mean that you are always on your email. It doesn’t mean that you’re on email all the time and you don’t  do anything else, but If you have a chance to look at it, if you have a chance to just in the middle of your Sunday afternoon, and you’re not doing anything anyway, just go through your emails and respond. It’s great. Also having clear rules, I know an entrepreneur that’s very aggressive around his email management he gets too much stuff. So he does emails first thing in the morning and then late in the afternoon and everyone knows that’s what he does. And he does that on weekends as well. But he’s clear about that when he is talking to anyone, he is clear that’s how he works. Okay. Just because he wants to focus the rest of his time on stuff. From that moment on, people work to a schedule, which is great as well, because in some ways they get used to the whole cadence of it.

And this guy is just very famous. Just to be clear. It’s not some guy who just showed up and he’s doing his first startup. He’s done an incredibly successful startup.  His first one was a unicorn slash Decacorn. This one is a unicorn. So we’re talking about that type of thing.

Then you can dictate a little bit to how you like working, but until then you have do a lot of these strange things.

Bertrand: And just to insist on it, especially it’s even more true if you are running a global business,   you have to be responsive. Me when I’m dealing with Europe, for sure first thing in the morning i’m answering emails as fast as I can to make sure that I’m not losing time with people in Europe, if I’m dealing with Asia careful to check my mails until late in the evening, because I want to make sure that we are not wasting a day because I decided not to check emails at that point. So I might make decision between important emails, less important emails, urgent not urgent, of course  but that part of the game is critical. You have to know how work if you are working in a global business 

Myth 2 – Not transactional (16:11)

Nuno: Shall we go to the second myth?

Bertrand: Of course. Another myth,  our myth two  is about the Bay area, Silicon valley, not being transactional.  I think  it cannot be further from the truth. The bay area is transactional, of course it might not be always direct. But there is some expectation. There is some quid pro quo.  It’s part of the game if you want to maintain your network you might not do stuff immediately for something in return, but you of course want to play the game properly and people will remember. And I would say, let’s not forget  on this point is that America is transactional. By nature all of America is very transactional and that’s key to remember if you are from Asia, if you’re from Europe, where typically there is a lot more relationship building. Especially if you take China, if you take Japan. but even in France.  I’m sure in Portugal Nuno there is a decent amount of relationship building.  Here it’s definitely very different. There is a lot of transactional side  for everything and I don’t think it’s good or bad.

I think it’s relatively efficient. It means if you are new that you stand more of a chance because people would just question the value of the transaction you propose, not wonder a lot about how does they know you? How long have they been knowing you, can they trust you? There is a more trust by default as long as you deliver what’s promised and relatively quickly, but that’s something to really keep in mind. America is transactional that makes things easier, early on,  that might make things more difficult later on, because as easily they could sign your first deal they can easily leave your business either as an employee or as a customer or as a supplier.  

Of course, that comes with downside, but at least when you are trying to get in and if you understand the game that can certainly bring some level of efficiency.

Nuno: This myth of the bay area not being transactional is anchored on language, which is quite interesting because people are relatively soft-spoken in the first few meetings they have with you. They’re very nice or apparently very nice. And you’re like, oh, this person likes to shoot the breeze as we say, we just talk about things in life and whatever, which we often do in Europe. I just had a meeting  with Chinese up and coming venture capitalist. And, we had a 45 minutes meeting and I honestly don’t know what that meeting was about. It was an interesting meeting, but it seemed like the person was picking my brain and I’m like, you only pick my brain once for free right after this, what do we do? 

But there are some keywords you should pay attention to one key word I started or key sentence rather that I started really hearing over and over again, as I was thinking about this  myth  was people will often say, how can I be of help or how can I be helpful?  And for the longest time, maybe a year or so, I thought, oh, very nice people they’re asking me how can they help me? That’s not what that sentence means. What that sentence means in the bay area is what can I do for you, and what can you do for me at a later stage that makes this interesting to me, it’s almost the definition of the transaction.  So it’s not like I’m saying I’m going to be of help to you. It’s if I am of help to you, what will you do for me? Thought in another way in a more crass way. Typically New York probably that’s what you would get is what’s in it for me.  Why would I do anything for you? And what is it that you want me to do for you. Again, you know, east coast I think sometimes it’s a bit easier to figure out, cause  you know, there’s less sort of filtering going on. The bay area is more filtering, but it’s the same message literally it’s just put in a nicer way. And it took me, as I said, quite a bit of time to figure that out. And once I figured that out, it’s very simple.

I don’t waste anyone’s time. If I’m meeting with a fellow VC or an entrepreneur or someone who can do anything for me, a service provider, et cetera. I am very clear around why are we having this conversation? Now it gets to a point where you might have friends and you are literally just shooting the breeze. So you’re no longer defining transactions, but that’s friendship. That’s no longer business, right? In business you have to be very clear if you are providing value to the person you’ve asked to meet, or if you’re asking specifically for something that you need, that at some point might be valuable to that person. So again, very transactional defined. 

Both you and I Bertrand we’ve lived in China and China is actually a very transactional place. I’ve spent a lot of time in Shanghai is an incredibly transactional place. And this is a different level of transaction, right? This is, as you said, the US is transactional by nature. I think the bay area is as transactional as the  east  coast, New York, et cetera. Sometimes people get confused with the language that’s used,  which is a little bit softer, but the level of transaction that is implied in that language is the same. There’s really no difference.

Bertrand: And I think that’s a big difference. You touched about it between west coast and east coast and especially in New York city.  New York, people are much more in your face, are much more explicit about what they want. And I think that it’s more clear for a first timer in the US if you start in New York city, it will be much easier to get around on the business side, because there is much less niceties, subtleties, stuff you should understand by reading between the lines.

And we’ll talk more about it in another one of our myth. But you have to be very careful in Silicon valley about trying to understand the language, read the tea leaves properly as we might say in China, read between the lines in some other culture, because not everything is very obvious when it is said here.

Nuno: So a couple of things that I would highlight out of this myth; takeaways for you that are listening to us. One, assuming this is indeed transactional. So the myth is that it’s not transactional, but it is indeed transactional respect very much the time of anyone that you’re reaching out to, the time to meet them, the time to ask for something via email and all the other elements of that. Secondly, if you want something out of that person, be very clear on what’s in it for that person, at least in your mind, you don’t need to be explicit about it with the person, but at least in your mind, frame how that would be mutually advantageous. 

And then in terms of actions, there’s a couple of actions that you should follow. So for example, so don’t take introductions to people for granted. The classic, oh, I saw that you know, this person on LinkedIn, can you introduce us? Why should I introduce you? What’s the benefit to this other person that you’re asking me to introduce you, of meeting you? What’s the benefit to me. So in that point, you have three parties involved in this in some ways. 

I personally do double opt-in almost all the time.

That means that if you asked me for an intro to the other person. If I agreed to do that intro, I will first ping that person one-on-one without CC-ing you, without involving you and ask that person, if they want to meet you. And only if that person wants to meet you or interact with you or an intro to you, I will introduce you both.  that’s a good practice. A lot of people in Silicon valley work like that. And it’s a good practice because none of the parties is forced into this. And it’s not me just sending an email and CCing the person that I’m introducing, oh, I’m introducing you to whatever. And I have given no context to that person before which, in the end ends up being quite negative potentially over time.

The second element of that is be clear in your communications in particular, if it’s email messages, et cetera, be very precise about what do you want from that person and how are you going to be a value to them? So I always  ask  be it with entrepreneurs that I’ve invested in, et cetera, prepare for me an email with these two or three paragraphs describing what the company does, what’s distinctive about what you do, potentially, what is a value add to the company or the person that I’m introducing you to. So be very clear and sharp around that. 

Now it is also true. There is a lot of, giving value. I think you Bertrand  call it good karma. The value of moving it forward, of paying forward as the expression is used in the US, you pay it forward. You’ve been benefited by people that helped you and et cetera. And you’re doing now this for other people, for other generations, for new entrepreneurs. That also exists, but be very cautious in how you use it, because normally the paying it forward comes with some degree of a prior existing relationship with a person. So it’s not like I just met you today and you’re already asking me for a big favor. I don’t know you, but someone I’ve met and I’ve known for maybe six months, nine months, and we’ve had a good rapport and good relationship maybe that’s a good point to say, could you please help me with this? I really want to reach that person, and I am not sure how to do it best. Can you help me frame this? And can you effectively put your brand at the table to help me connect with that person?  And that can work. That can work quite well.

Bertrand: Yes. And to jump again on the email, an intro email, and how you have to make it efficient to the point. But not too short either, I’m amazed how often people send me intro emails that are missing most of what’s necessary for the other side to make sense. They don’t put dollar values. They might talk about what they do, but not what they want or why we should care. It’s really amazing. 

And on the other side, some are sending you, like 20 lines to read. Come on, people have other stuff to do So you have to be more succinct at that. It’s, for me, quite amazing how people don’t really get that right balance at this stage. And I think a lot of this is trying to put yourself in the other person shoe. You have to have some empathy for the other side, you are not just like taking. People have other  things to do. So you need to adjust to them and you need to understand how that ecosystem is working. And here it’s around efficiency and being relatively to the point, especially when you are reaching for an intro  or if you are doing a pitch meeting.   You have to be efficient.

Nuno: And don’t forget that every time you ask someone, to do an intro for you, that person is putting their reputation also on the line in some ways. And I know it’s shocking, but they are. So if I’m saying, let me introduce you to this person. The person on the other side is like, okay, this must be someone that Nuno wants to meet or Nuno  wants me to meet or Nuno wants me to interact with and course I’ll make the time to interact with them. So in principle, there’s a pre disposal to doing it hopefully if my brand is good and if I’m a good reputation and credible, and I have a good relationship with that person. So I can’t do this for everyone under the sun, because unavoidably, there are going to be people that are going to waste the other person’s time.

Unavoidably. There are going to be companies that are not really interesting to the other  person on the other side, and at some point you start getting measured on that as well. And that also exists in Silicon valley. Sometimes I get people that send me interest to a company I could potentially invest in. If I look at two or three companies, four companies systematically that are fundamentally not great or crap to put it in a more crass way. At some point in time, I’m going to be like, oh, ignoring the emails I get from this person for intros.  So again, we live on reputation here. We live on this notion of trust on the quality of what we do in terms of our own work, but also in terms of the quality of the people that we introduce to others. So again very thoughtful about that.

Myth 3- Self-Confidence and Assertiveness (27:22)

In terms of myth three, there’s often a view that this place Silicon valley, the bay area is made on self confidence and assertiveness. And that I think comes from a variety of things. It comes from people being great sales men and women  from tonality, the level of noise of most entrepreneurs here in the bay area, the way they promote themselves, the way they promote their brand, et cetera, it comes from storytelling. There’s always stories. There’s actually mythology in of itself. The story behind Twitter, the story behind Instagram, there’s a mythology that gets created by founders, by their PR agencies, by journalists, because that’s what sells. That’s the cool part, right? Elon Musk being this amazing superhero, our new Tony stark, right? The new Iron Man .

Obviously, this is not true. I often say, and I left McKinsey, which I think is probably  the epitome of how true this is. I think this is more of the other way around, this place is a place that’s made out of insecure overachievers. And that is part of the reason for the success of Silicon valley. And what I mean by that is it’s people that are tremendous overachievers across everything they do. It’s not unheard of that someone starts doing marathons or iron man, and at some point in time they become world champions and they win championships and they’re super competitive. 

So it’s a very competitive place, but in some ways it’s fueled by this insecurity, by the insecurity of having a role in society here, it’s difficult for an entrepreneur to be super successful. Exit the market for a couple of years and come back and still be known. You’re as good as the last thing you did. If today I went around and asked, for people like Scott McNealy, who obviously was CEO of Sun for a very long time. People like John Doerr was one of the most amazing venture capitalists. We talked about him in the past, the guy who led me to becoming a venture capitalist myself many now don’t know who they are, because they’re not as visible. They’re not on the news. And these people did history. So history here is measured,  by one or two years, it’s not measured by the last five or 10 in some ways and that means a couple of things. 

One, it means that. Once I’ve done some success, after a period of time, maybe I’ll go and become a beach bum for a while, et cetera. I will come back to the wheel, the hamster wheel, as I call it, I’ll come back because that’s the only way I will be relevant. I’ll come back from my next startup. I’ll come back to be a VC . I’ll come back to be an angel investor. And that’s part of the secrets of success of Silicon valley. It’s this flywheel that insecurity generates of people going back to it and doing the same thing over and over again, although they might have been already super mega successful. And that should not be confused again with salesmanship, with tonality, with storytelling, that’s always going to be part of Silicon valley. It’s actually part of the US as we’ve discussed before, it’s a country built on marketing and sales and therefore creating noise, being visible, well-known matters a lot, creating that brand.

Bertrand: Yes. I think you make a good point to remind everyone that storytelling, salesmanship, it’s a key part of the US, that’s the very definition of America, USA. It’s around telling the story well, even if it’s very empty behind the scene, even if there is not much, at the very least usually, typically people are good at that. And of course, sometimes they will, but it’s a key part of the game. You cannot just say, I will be just data. For instance, of course data is key, but you have to mix it with a story because everyone expects the story. Everyone expects some good or even great level of salesmanship. So you have to up your game and especially key for other cultures, especially in Asia, but also in Europe where you are used to be quite humble not to promote yourself or your company so much. So that’s definitely a key part of the game all over the USA, including Silicon Valley. But as you say, that’s one side of the coin.

Maybe another piece to talk about in this myth number three is the importance of the language. And we briefly talked about it in a previous myth,  it’s very special I would say to Silicon valley – language.

And when I talk about language  first thing obviously, you have to speak good English. You cannot be a very bad English speaker. People have other things to do, have a lot of opportunities everywhere. So there is some bar to speak proper English and obviously if you are absolutely so truly exceptional and everything maybe they will cut some slack, but up to a point to be very clear. And the same with your accent. Yes, accent is fine, but at some point beware be careful  know that people will also look at that. Even if you hear lot of accents from all over the world, you have to step-by-step invest, if you want to be truly part of the ecosystem, to improve your accent.

But I would say the bigger point is really around what do word means. And here, you have to learn that when people say, for instance your product is okay or your product is good. It’s a very bad sign, actually. That might be the right word in the French language to make you feel good and happy.

This is not the right word, good or okay, that you want to hear in Silicon valley in a meeting, after a meeting. Because  if your product is just okay, actually you should hear it’s awesome. 

Nuno: Awesome is the keyword. Yes. 

Bertrand: Awesome or great. That’s your basic level of resistance. If you don’t clear that bar, you suck so bad, you are in trouble. But they won’t tell you in your face. It will be just very nice. It’s okay. It’s good. But ultimately it means that we never be a second meeting and ultimately what you want to hear is that people on the other side want a second meeting. If you don’t have that clear, next step that is  proposed to you, it means that, yeah its over.  Whatever has been said, even if there was a lot of niceties it doesn’t work. It’s over and good luck next time. 

So that’s a huge difference versus east coast or New York city it will be in your face. Your product sucks. It’s crap. And some like Steve jobs, Bill gates of fame will play that game, but they where UFO’s in Silicon Valley. Most people don’t behave like that at all. So that is something to keep in mind. And if you plan to play that game in Silicon valley, good luck with that, if you’re not Steve Jobs or  Bill Gates, because people won’t accept it, won’t like it

Nuno: And there’s another side to that. Obviously language and epistemology is like its own thing in the bay area.  But there’s another side to it, which is words that have meaning in other parts of the world that here have almost no meaning.  And sometimes I like 10, 15 minutes into conversation and can figure out if you’ve spent a lot of time in the bay area or not, without even knowing just by the language you’re using what you’re saying, words like innovation. 

It’s very rare, certainly in the startup and venture capital world, maybe in the big corporate world, people can talk about that. And obviously we have non-tech companies here as we’ve discussed in the last episode, but if you talk about innovation, it’s like, what do you mean innovation? A startup wouldn’t talk about,  I don’t remember the last time I heard a startup talking about innovation or use the word innovative, or we are innovating. What does that mean? 

I mean, of course they are, it’s almost like it’s a word you wouldn’t use. It doesn’t make any actual sense to use it. 

Digital in many mechanisms, we talk about digital transformation and all of that stuff.

Again, very non-tech word, right? For tech companies. It’s it is digital in principle by nature with some exceptions. So again, a word that you don’t see being used here. So again adapt the language. There’s no other way to do it, except experience except listening to people, listening to their podcasts like ours, hopefully interacting and seeing what words resonate and don’t resonate. I remember when I was at Deloitte consulting way back when, and we’re almost becoming Braxton, we got a little tool that we could use to check our words in our PowerPoints, which was a bullshit meter. It was just a funny tool. We didn’t really use it, but it was like figuring out, all these words seem like consultees or bullshit and here in the bay area  there’s a lot of that, but you need to understand that the ones that do exist have had a meaning attached to them and using them sometime is a way for you to actually show that you get this place and getting the place matters a lot to create credibility, trust, and relationships over time.

Bertrand: Yes. And that’s funny that you use these two words innovation or head of innovation as well as digital transformation, because when someone says these words in front of me, I’m running as fast as I can the other way because I know I am going to waste my time. And I don’t want to hear about it. 

Me, I’m all about digital native, myself investing in digital native companies, building a digital native company.  It’s only for the a big corporates that are trying  to reinvent themselves. But what I mean is that ultimately it you truly have a problem. If you are not digitally native in your process, in your organization, in how you work. It means you are late by five, 10, 15, 20 years. 

One thing I noticed maybe is that I’m hearing that more in Europe than in the US and they have some of this in US, but I  feel in Europe, for instance, it’s a cult. The cult of the head of innovations, the cult of digital transformation. 

Cult  coming, of course, with a lot of very expensive consultants. And that’s very, for me, scary because it’s already, in some ways showing some level of abdication. Yes. I’m not a digital native company and wow. That’s trouble then, that’s what it means. And look at what happened during COVID. Good luck if you are not optimized and suddenly you have to all work remotely and make the business running. So yeah,  some words are anathema here.

Nuno: Yes, and it’s very funny cause Aaron Levy from box put a tweet the other day I found really good, which is software eats the world except handbags because obviously Bernard Arnault was the richest man in the world for a small period of time. But that’s about it, right? Software  eats the world except handbags or luxury goods. 

Myth 4 – Ton of Capital Available (37:29)

Moving maybe to myth number four, Bertrand do you wanna take us through it?

 Bertrand: Myth number four, there’s a ton of capital to invest in startups available in the bay.  So of course there is a lot of capital available to invest in the bay. The question is it capital that will be interested to invest in your business, in your idea, in your project?  And that’s a big gap. It’s not because there is a lot of money that it’s easy to get. It might be easy to get for some, if you are a repeat entrepreneur, if you have followed all the right  codes of Silicon Valley . Let’s say being a Stanford MBA, with a Y Combinator company, but if you are outside of what’s typical, then it might be much harder, especially if you’re coming from outside the US  and why is that, simply because everyone is rushing there. So the bar is higher and higher. You have to follow the codes like everyone else.  

So that’s something keep in mind. I forgot the latest numbers, but Silicon Valley  is probably about 40%+ of all capital raised in the US, a huge chunk of what’s raised in the world. It’s home, as we discussed previously to a lot of the top biggest tech companies in the world. So there is a lot of competition to get access to this capital. So yes, a lot of capital, it doesn’t mean it’s easy to get access to it.

Nuno: And this came from two logics. One is the logic of course, right? I’m a Ukrainian company I can raise from Silicon valley. And the question I would ask is why, and there’s two elements to this.

One is there’s a lot of capital here, but it has a preference to invest in companies around here eventually in companies in the US and that preference is very logical. 

If you look at history as a second element early on, if you look at venture capital, it was really a business that was built on relationships and then logic that I could affect your business or help your business as a venture capitalist. If you’re in the vicinity of me, it used to be the 30 mile rule. If you’re a 30 mile drive from me, it’s easy for me to go on. Talk to you and meet you and see your team and help you, et cetera, et cetera. So 

That part obviously now has changed. We have more and more multi geography investors like myself. We have a lot more and more open investors to other parts of the world, but still the root of it is still there. The root of how can we give value as investors to the startups we invest in, if we’re very far from them, how can we give value to a company if  they’re in markets that we don’t understand, and at the same time, how do we reap the benefits of that? And just to be very clear, the US market is huge and it’s often the number one revenue market for a lot of companies that are global in nature.

So being huge in terms of just revenue potential, being huge in terms of possibilities and most importantly, being huge in terms of ability to liquidate, be it through an IPO or sell yourself to another company, is very significant. So if you have no story, as I would call it for the US, if your company has no link to the US, be it resources, be it business, revenues,  connections and partnerships in the US, it’s difficult to raise from here, because then I’m thinking if I’m an investor that’s focused on US why would I invest in you? there is no connection. And the interesting thing is I always use actually App Annie as a great example, because you guys were able to raise money in the US  from investors in the US early on when you didn’t have necessarily significant operations in the US but you had significant business in the US. Do you want to talk a little bit more about that?

Bertrand: Of course I’m happy to share. What was clear is that early on we had  probably around 50% of our business with US companies, and not just US companies, but blue chip US companies from Microsoft to Zynga, to Electronic Arts, to Facebook. So when you can claim significant dollar value, and as you remember in the US, dollar is king. Dollar revenues, it’s a big difference for everyone because you are real  for  investors . The other piece, is that I had an American mindset even at the time I was not living there, because I actually to come study here, did my MBA was always very connected with the American  culture at every level, not just business wise. So had the rapport and also my team, I had American, British people. 

So basically we were very easily connecting to American investors. But that’s where I want to also highlight that if you’re not in that situation, it’s very dangerous to go too fast to silicon valley  investors. Typically, you want to raise locally first, early on, build a local investor base who understand the constraints of the local market.   Even if you’re not selling to the local market, you probably have a team at least operationally, you are operational in that local market,  in term of building the products, for instance, then step by step a more regional investors  and then at some point investors who can bridge the gap with the US and then ultimately US investors. 

If you go too fast to US investors you will get burnt.  Right now with Covid  the big benefit is that american investors, Silicon Valley  investors who used to only investing 30 miles away have changed. At the very least now the whole of the US is their playground, but when they go beyond, when they go to Europe, when they go to Asia, and they have no one in their team with true  experience in these markets, it’s going to be bad because on the other side, local  entrepreneurs will not have as we just discussed the same experience, cultural acclimatation with US investors, US business culture,  and it can go dramatically wrong, pretty quickly, misunderstandings pile up, different expectations pile up. 

So I think it’s very key to work with people like you Nuno, or people like me in some ways who are multicultural that can bridge the gap. And if you are not careful with that, it’s really going to hurt so much the relation, that it will be big troubles. So that would be definitely for me a piece of advice, work with local investors, with regional, global investors, work with American investors, but go step by step so that you don’t get into big cultural difference, and many American investors right now, it’s for their first time they are investing  outside the US and I’m expecting many of them will come back and will stop investing outside the US because it didn’t work out for them. They were not able to find the right entrepreneurs. There was mismatch in expectation, in culture.

Nuno: And to finish just on this point, you don’t need to raise from here to be successful. And there are many paths to success, sometimes not even raising money is also a path to success.  So if your story is a story that is around: we’re going to dominate the middle east or we’re going to dominate Central and Eastern Europe. We think the US market is too red ocean for us. So there’s too much competition. 

That makes sense, but then raise again to Bertrand’s point from local or regional investors in your area rather than here. And don’t get, dazzled by, oh, I get a Silicon valley investor. Great. But what’s the story in the US, right? Why are you raising from someone here? So again, horses for courses, figure out what are the right investors for you, and what’s the right strategy for you. You can build really successful businesses that do not touch the US. China is a great example of that,  you know, there’s so many incredible Chinese companies that live on the Chinese market, and that is literally it, and they’re well-served by Chinese investors. So again, just be very thoughtful around that. 

Bertrand: As you said early on , US is pretty often the biggest market in a lot of industries and sectors so not going there might be a strategic mistake ultimately for your business, if you intend to dominate your industry. And in term of exit, as we discussed exit opportunities, be they acquisition, IPO, if you have a deeper presence in the US will be much more present and also more valuable because multiples here are higher than in the rest of the world.

Nuno: Correct. But you can build amazing companies in big markets elsewhere. And I think China in the late nineties, early nineties , and to be honest, even in the late nineties  as well, how many companies were doing taxonomy copies and just becoming bigger than the companies they were copying just by addressing China. So again, I think there’s a little bit of, again, this maybe is an extra myth that we haven’t really framed, but there is a little bit of mythology of getting American or Silicon Valley, Sand Hill road, as we call it investors on board. In some cases, it really does not matter. And although I agree with you, the US market is big by and of itself,  there’s other really big markets that you can conquer and become huge on without having to necessarily compete.

Bertrand: Yeah, sorry, I was not saying you need to work with Silicon Valley  investors. I was more saying in many situations, many industries, it ends up being the biggest market. And I think you’re totally right for China, but I think we have to be very careful because it’s also really an exception, the ways they control their market, the way they block entrance to their market. 

Nuno: I could give a Southeast Asia examples, right? Grab, Tokopedia etcetera. So I don’t know, again, I think there’s unicorns that can be created focused on regions that are not here, that don’t need to be here, where you don’t need to compete here for a variety of reasons. So that’s the only thing I would leave at the table. So not everything needs to have a US story.

Bertrand: That’s a great point. And I think it really depends on your type of business. The easier it scales,  the faster it can scale, the less it depends on the local marketing, local ecosystem, the more US probably will be part of the story, but if it’s more regional, more local, more capital intensive, more culturally sensitive, then yes you might  more easily forget the US especially if your home market like China or your regional market like South East Asia is big enough.

Myth 5 – Everyone is Amazing (47:31)

Nuno: Indeed, let’s move to the next one, which is one that we’ve added to the list, which I think Bertrand and I are very fond of which is this notion that everyone is amazing in Silicon valley, right? The quality of people here is the best in the world. And everyone’s incredible. 

This myth is a little bit nuanced  and the reason why it’s nuanced is I would say in all honesty that some of the best talent in the world, certainly in technology is here. I would say the top end talent of the world in many areas from software developers, engineers, scientists, growth hackers, product managers, marketeers, many other areas are here in the bay area. 

I would also say that the average is probably the highest in the world as well. I think honestly, the bay area is one of the most competitive places on earth. And as we’ve mentioned in previous episodes of tech deciphered, it’s also a place where there’s a lot of specialization. So their specialisms that sometimes only start appearing in other regions of the world several years after they’re created here, sales operations, a lot of dimensions around how you do things in a more specialized manner. 

That said, and that’s why we have this myth again, as I said, it’s a nuanced myth. There’s actually a huge variance from person to person. And it took me a while to figure this out. There’s a lot of people in the bay area that are fundamentally not very good at their jobs that are actually pretty bad at their jobs. And some of them are very difficult to identify. The reason why they’re difficult to identify is at some point in time, they may have gotten lucky and they got momentum. They joined a startup or a scale up company. They got into a senior role because there was no one around to take that role. And they jump. I call those people the people that are the jumpers, they’re just jumping around. 

And you can look at their resumes and you can figure out if people are jumping every two years or a year and a half. It’s very difficult to make a dent in the company you’re in, even at Silicon valley speed as I say. If you’re only there for a year to two years very difficult. So sometimes you have to ask, okay, this person seems to have  the most perfect resume. They’ve gone through Google and Facebook and all these companies. But really question what experience and achievement they actually had there. Where are they promoted? Did they go to the next level? And you’ll figure out that actually some of these people are not good at all at their jobs. They’re just people that, again, rode a wave. They were amazing surfers that moving from company to company. 

The second type of people that we see here that I think are not great for the brand, at least of Silicon valley are the lateral people. As I call them people that happen to live here. They happen to live here, but if you look at what they do on a day to day, maybe they at some point worked for one of the big corporate tech companies. Maybe today they’re working with startups and they’re doing a variety of things with startups. But if you look at where they spend their time, it’s  likely that they will spend their time mostly with companies that are not from here, mostly with startups that are not from here, mostly with investors that are not from here.  And that’s already sort of a yellow on the way to a red flag. 

The reason for that is these are people that are really leveraging the fact that they’re Silicon valley insiders, so to speak, because they live here and they’ve lived here for a very long time, but they actually, because of the point we made earlier in our conversation, are no longer relevant to the networks that exist here, because they don’t have any manifestations in startups or venture capital or other companies that are actually based here. So there are sort of on the edges of the networks, they used to be inside the networks and they’re selling their access to people from outside and helping them do go to market than us and helping them expand to the us, et cetera. Some of these people are good and they’re decent. Some of these people are not, they’re just trying to take your money and effectively make sure that they’re selling the whole innovation. Remember the word we don’t use here? Innovation paradigm in Silicon valley.

Bertrand: To go back to the history of Silicon valley that we discussed in last episode  there is also a gold rush mentality, so people from all over the US, all over the world, saw gold in tech, in startups and that doesn’t mean they knew shit about technologies they knew shit about how to run a good business.

It just means that they saw money from far away and they rush into here. And that’s their only qualification. And obviously  that usually doesn’t work like this. You need to have some talent to be successful, but for some reason some people managed to stick around for quite some time with no real  qualification, and me for instance, I would say you have two categories of people.

 One, is the talkers, the good talkers . And don’t forget in the US people are great at talking at marketing, at self marketing. So you have quite a bit of them. And especially from outside, you might think they are great. Without understanding quickly enough that actually they don’t deliver, and some people might survive like this one year, two years, at a company. 

Another category for me are the parrots: people who have done one job in a previous company,  and it was a great company, so it gives them some great reputation, but they don’t fully understand the root cause of the success of their function or that company. And so when they come to your company, they try to apply very stupidly the same rules, the same playbook without understanding how this playbook was originally created, why it worked or didn’t work. And as a result how you should apply it to your next job and your next company. So they are just parroting what they learnt in their previous  company without  fully understanding it. And these people are very dangerous because they are going to send your business to total disaster while at the same time, having all the words, all the quote on quote, experience, to say that it works  there and they have done this, and it worked fantastically and, you are starting, you might not know, and you are believing them. And step-by-steps they are sending  the company to the wall. And of course, obviously they might not care or they might not realize. So for me, talkers, parrots , that’s really 2 categories you want to be careful here.

And at the end of the day, as we said, there is really a huge variance from great to absolutely not great. Probably more than anywhere else in some ways. I agree with you, the average is higher, but at the same time, I believe in some other places you might have actually a much more narrow band from okay to good, that actually gives you much less surprise on people you hire. And here you might go from the truly great to the truly shitty devious gold-miners bringing your company to the wall as fast as they can.

Nuno: And just to close the loop on this, and then we’ll move to our next myth. It is very rare to meet people in Silicon valley that can create playbooks from scratch. I always differentiate between what I would call builders and optimizers. There’s a lot of optimizers here in particularly the corporate world. If you’re going to hire someone coming from some of the top corporate tech companies here in the bay area, the Googles, Facebooks, VMware’s, et cetera of the world. You’re likely getting an optimizer. It’s very rare that you get from those companies, the large ones, someone created things from scratch. The other thing I object to is the term playbook. I keep having to use it because it’s such a prevalent term in Silicon valley. Otherwise people would miss construe my view of the market. I prefer using the term operating models. Playbooks for me are very rules-based approaches, things that have been benchmarked, databases of what you should do in specific cases.

And I prefer the term operating models because it includes people, includes organizations, it includes all those organizations make decisions and work together. And it includes even cultural aspects on how the organization functions. Again very few people can do that in Silicon valley.

Myth 6 – Failure Always Rewarded (55:17)

Maybe moving to myth number six. The myth around failure being always rewarded in Silicon valley.

And is that true, Bertrand?

Bertrand: I would say, I guess it depends how many times you fail once, twice, three times, four times. It also depends how you failed.  Is it because you were crazy hardworking but bad luck or is it because you didn’t work hard ? Did you burn a lot of people along  the way,  employees, customers, shareholders, investors. So I would say that, yes, typically it’s not frowned upon, like in other places. Take France 20 years ago, take maybe corporate America decades ago. So it’s definitely something that is more accepted. 

And especially in the long-term  I have seen investors who fellow entrepreneurs, who failed, but failed well. And as a result they keep investing in their business, thinking at some point they will get it right. It’s definitely something possible. 

But again, depends how often, depends how you fail. It depends obviously what lessons have you learnt from failing and  can you share these lessons? Can you build on them? That would be critical so you’re not seen as just failing always for the same reason.

Nuno: Totally agree. And assuming 90% plus of startups do fail, there is an failure in general, certainly in the venture capital world, angel investors and investors in general, that said, you nailed it at the beginning. It depends on how many times you failed, how you failed. And everyone’s getting really smart about this. Investors are getting smarter about it. They were really going deep in due diligence and understanding the reasons for failure, why it happened. What did it show about you? What did you learn? How did you move on? 

But actually, if you’re trying to attract, for example, talent and employees to your company, people are also getting pretty smart about this. Okay. You failed two times, but why, so the questions will come. It’s not just that you failed and that’s like amazing. If you have succeeded, it’s an easier story, right? So it’s, in some ways, success is still valued above failure. It’s just, I think there is more tolerance to failure, but if you had a huge success in your last startup, your possibility to raise money quickly at scale is unlimited almost. And that sometimes goes without saying, but we should say it. It’s not like failure is valued over, no. Failure is not valued over success. Success is valued above failure. There is a little bit more tolerance to failure, but it’s more nuanced. It needs to be understood. And over time, if you’ve done four startups and all your startups were miserable failures, and you never gave back any money to your investors, the chances of you raising one after that is  slim to say zero, so difficult. Again, there is tolerance, but it’s not unlimited.

Bertrand: And as you said, it’s not just convincing investors for instance. But it’s employees I would say that the first thing actually you should keep in mind, it’s employees. How do you build your team? So yeah,   you have to be careful with that. 

But at the same time I personally feel that’s a great part of Silicon valley,  there is a high risk high reward mentality. And we’ll talk more, in a way about this in myth seven, but the acceptance of failure comes from that. You know, that in a way to make an omelette, you need to break a few eggs. So to make a great company at some point, there is Darwinism. There is natural selection. There is fight. Good idea, you immediately see dozen plus companies going after it. So ultimately, that’s why it’s not just a good idea, it needs execution and teams and everything. But my point is that there is that culture of risk tolerance  and that’s a key part of the game.

Nuno: And again, just to remember, we were talking about mythology  earlier, there is also the mythology around storytelling of very successful companies that are apparently very successful for a long period of time. Some of them from Silicon valley, some of them are not. And at a certain point in time they just fail miserably.

And it’s not necessarily fraud. There are also cases of fraud, but it’s not necessarily fraud. Just the company didn’t have the implicit value that was put to them by investors. And they never realized that value in any way. And there’s so many examples of this. Companies that raised hundreds of million dollars, sometimes even billions, that just implode that actually just either go bankrupt or sell for fraction  of any money they’ve ever raised. And again, it is important to understand that, again, that salesmanship, that mythology at a certain point in time also gets caught up with you. In some ways the truth normally wins. There is no new economy. There’s no new way of doing business. Things always end up having a cost and the truth will show up at a certain point in time. 

The other thing as well, and maybe just to finish this point is there is incredible comeback stories. So there are people that did stuff   that was like borderline  some went to jail, some didn’t, let’s not name names. Most of them don’t make huge comebacks, but several do come back. And you know, I have a bunch of people in my mind and people that I actually do respect that, actually had some tough legal moments and they came back and they show that they’re exceptional at what they do, it’s just, they did something really silly and hopefully they won’t do it again. So there is also a little bit of tolerance to that. The comeback story, the redemption story is possible in the US, it is also possible here in the bay area. 

But again, I would say less probable than the “you’re done and you can go and live somewhere else, please” story. And in particular, if you’ve done fraud or if you’ve had legal issues  and a bunch of other stuff. 

Myth 7 – “Changing the World…” (1:00:49)

And maybe we move to our last myth, which is Silicon valley is all about “changing the world”. And the reality is, it’s not about truly changing the world, but again, it’s a very nuanced, very “the devil’s in the detail” type of myth. I would say there is more likelihood of there being a startup in Silicon valley that is truly changing the world. Be it in healthcare, energy, or other areas, than in any other part of the world, but there’s a lot of startups here. There’s a lot of companies here. And the only thing that is true of almost all of them is they’re trying to make a ridiculous amount of money. 

And that’s the play. Venture capital is not super well-developed here because we’re all really nice people who want to fuel really intelligent entrepreneurs in getting to their next stage. Venture capital is significant in the bay area because people have made a lot of money and want to continue making a lot of money on these investments. They want to have returns on their investment that are ridiculous and silly and not seen in other asset classes. That is it. This is the essence of capitalism. The US is the essence of capitalism.

Bertrand: I cannot agree more with this.  I think Steve Jobs best demonstrated what you can call the reality distortion field, the ability  to make you dream about a future, to make you believe in a product being something that it might not truly be, at least not yet. And what was exceptional with him is that he delivered the goods step by step. 

But a lot of people just took the reality distortion field part, without delivering the goods and that’s where it gets dangerous.  And one way it has been I believe abused is that “changing the world” type of story, because at some point in Silicon Valley , I’m not sure it’s true today, but few years ago, everyone was changing the world. That was the official mission statement of the company.  And at some point obviously when everyone does it, that’s becoming ridiculous, because not every social media app, news app, blah, blah, blah, is going to change the world. And that’s fine. Not everyone is going to be the next transformative  invention that is going to truly change the world. I think we want obviously some of them, but  at the same time, a lot of companies are truly useful even if they’re not really changing the world. And I think that a lot of employees maybe were dreaming for this, were pushing for this, and the entrepreneurs realize that not only you get employees, but you get more media attention and stuff, but at some point, there has been I believe some come back. 

If you take a WeWork for instance, and actually they are from New York not from Silicon Valley . A lot of employees felt really misled at so many levels. And realized that ultimately there was maybe much less changing the world than was thought . So realized that, yeah, a lot of the story, a lot of the feel-good type of talk was just that: feel good. But it was not really what was happening behind the scene. 

And I think people want to be less naive about some of this.  Where I’m amazed is that again, some of this, is really what’s so special about America, that ability to market, to sell to create reality distortion fields. So you would guess that  specially Americans are used to it by now, and know how to decode behind the scene what is truly mean, or want to learn more to make sure it’s real. But no, I think a lot of people bought it,  that’s something to keep in mind. 

As you said there are no other places where you change the world more than in Silicon Valley.  At the same time, not every company, not every startup is truly changing the world, but guess what? That’s fine. That’s fine.

Nuno: It is fine. 

Conclusion (1:04:49)

Thank you Bertrand . And with this, we come to the end of our episode 23. In the next episode, the last episode in our trilogy, we will go into our love and hate relationship with Silicon valley. The things we hate, the things we love here, and also we will discuss the transition that is happening here. Is there an Exodus? Is there no Exodus?  What is happening to Silicon valley. Please join us in the next episode of tech deciphered.

Bertrand: Thank you Nuno.