Less of a blog more of a dissertation on the ecosystems for startups - such an important piece of work that I had to blog about it.
The “Startup Genome,” created by three young entrepreneurs, Bjoern Herrmann, Max Marmer, and Ertan Dogrultan was a truly huge task. It was no less but to take a comprehensive, data-driven dive into what makes tech startups successful — and not so successful. Absolute gold dust. Here are the top twenty findings to think about and how the rest of the world goes up against Silicon Valley.
Startup Throughput: Perhaps unsurprisingly, the Silicon Valley startup ecosystem continues to lead the way, but the gap is growing smaller every year. Silicon Valley’s ecosystem is currently 3-times bigger than New York City, 4.5-times bigger than London, 12.5-times bigger than Berlin, and 38-times larger than Boulder.
Startup Success Rate: Proportionally, the Silicon Valley ecosystem has 22% more companies in the “scale stage” than in NYC and 54% more than in London.
Availability of Capital: On average, Silicon Valley startups raise two to three-times more money in the first three stages of development: Discovery, Validation, and Efficiency. But in the scale stage, compared to Silicon Valley, New York City startups raise 27% more money and London startups raise 30% more money.
Job Creation: In the Efficiency and Scale stages, Silicon Valley startups create 11 percent more jobs than NYC startups and 38 percent more jobs than London startups.
Risk Profile: The number of high risk companies decreases steadily through the startup lifecycle, except in New York City where the number of high risk companies spikes from 45% to 67%, and has 4x more high risk companies in the scale stage than Silicon Valley.
Product Types: Compared to New York entrepreneurs, Silicon Valley entrepreneurs are 2-times more likely to build games, 50 percent less likely to build marketplaces, 23 percent more likely to be build social networks, 3.5-times more likely to be build infrastructure and 2.5-times less likely to be build financial tools. Compared to entrepreneurs in Silicon Valley, London entrepreneurs are 50 percent more likely to be build eCommerce products, 35 percent less likely to be build social products, 3.5-times less likely to be build products based on user-generated content and 2-times more likely to be build project management software.
Market Type: Silicon Valley entrepreneurs are 13 percent more likely to tackle new markets than London entrepreneurs whereas London entrepreneurs are 21 percent more likely than entrepreneurs in Silicon Valley to tackle existing markets with better products. New York entrepreneurs have the highest proportion of companies trying to resegment existing markets with niche products. They are 30 percent more likely to build something niche than entrepreneurs in London.
Market Size: Entrepreneurs in Silicon Valley are much more “ambitious” than entrepreneurs in New York City and London. Silicon Valley entrepreneurs are 22% more likely to estimate their market size as greater than 10 billion compared to New York City entrepreneurs and 120% more likely than entrepreneurs in London. They are also almost 2x less likely to estimate their market size to be less than 100 million.
Revenue Streams: Subscription is the most popular revenue stream everywhere. Compared to London, Silicon Valley entrepreneurs are 4.4-times more likely for their primary revenue stream to be Lead Generation, 3.6-times more likely for it to be virtual goods and 2.6-times less likely for it to be the rapidly fading model of license fees.
Perceived Competitive Advantage: Compared to Silicon Valley entrepreneurs, New York City entrepreneurs are 4.3-times more likely to consider content their primary competitive advantage, 40 percent more likely for it to be niche focus, and 90 percent less likely for it to be centered around the team. Compared to Silicon Valley entrepreneurs, London entrepreneurs are 58 percent more likely to consider technology their primary competitive advantage and 5.3 less likely to consider user experience to be.
Product Development: London and NYC companies outsource 34 percent more of their product development than Silicon Valley companies.
Adaptability: Pivoting happens much more frequently in Silicon Valley. Pivots happen 45 percent more on average in Silicon Valley than New York City and 33 percent more than London.
Mentorship: The Silicon Valley and New York City ecosystems have more helpful mentors than the London ecosystem. Silicon Valley companies have 46 percent more helpful mentors than companies in London.
Thought Leaders: In Silicon Valley, Steve Blank and Paul Graham are the most popular startup experts. In London, Paul Graham is by far most popular expert and NYC shows their local pride, voting Fred Wilson as their favorite startup expert.
Work Ethic: Companies in Silicon Valley work 35% more than companies in New York City. In Silicon Valley teams work 9.5 hours a day on average vs. 8 hours in London and 7 in New York City.
Founding Team Composition: Silicon Valley founding teams are 34% more likely to be technical heavy than founding teams from NYC. Whereas NYC founding teams are almost 2x as likely to be business heavy than Silicon Valley founding teams.
Founder Education Background: In London most founders have a masters degree, whereas in Silicon Valley and NYC most founders have just an undergraduate degree. But NYC has 2.2x more founders with PhDs than Silicon Valley.
Founder Gender: New York City has almost double the female founders of Silicon Valley and London (80-20 vs 90/10 ratios, respectively).
Founder Age: The average age of founders in all three ecosystems is about the same, with an aggregate average of 33.5.
Founder Experience: Silicon Valley founders have on average started almost twice as many startups as founders from NYC and London.
Founder Motivation: Silicon Valley has 30 percent more founders that want to change the world than London or New York. New York has 50 percent more founders that want to make a good living than Silicon Valley or London. London has twice as many founders that want to make a quick flip than Silicon Valley or New York.
Founder Challenges: New York City startups are 3.7-times less likely for team building to be their biggest challenge, at the same time they are almost twice as likely to consider “having too much do and being over capacity” their biggest challenge.
So what does this same about London.... hmmmm need to think and blog about this :)
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