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Silicon Valley's Secret Sauce

Silicon Valley's Secret Sauce

People in the Valley have a culture of helping each other without demanding something in return. This somewhat socialist-seeming behavior actually winds up pushing capitalism into hyperdrive. One of the things that most people misunderstand about capitalism is that the ecosystem is based on trust, and trust is generated when people help each other without expecting a short-term payout.

By Sonia Arrison
02/14/12 8:58 AM PT

Business strategists and government officials routinely visit Silicon Valley in hopes of learning how to emulate the area's wildly successful startup culture. Now, thanks to a new book by LinkedIn Founder Reid Hoffman and entrepreneur Ben Casnocha, the curious can save themselves the plane ticket.

The Start-Up of You, which is written mostly in Hoffman's voice, explains that a successful business and career depends on relationships. An obvious point? Yes, until the authors proceed to argue that everything traditional business books teach you about networking and building professional relationships is probably wrong.

Dale Carnegie overlooked some important truths in his book How to Win Friends and Influence People. "You don't 'win' a friend," argue Hoffman and Casnocha, "A friend is not an asset you own, it's a shared relationship." Likewise, Richard Bolles missed the mark with What Color is Your Parachute? Even Seven Habits of Highly Effective People isn't as effective as it could be. One problem with these books is that they assume a static world where planning to get from A to B is "like crossing a lake in a boat on a calm summer's day." Hoffman and Casnocha have a different view.

Rough Seas

You're "in a chaotic ocean," they explain, and "it's unwise to try to pinpoint a single dream around which your existence evolves." That's not to say that entrepreneurs shouldn't have goals, it's just that they need to be flexible -- and the book has many examples of successful transitions.

For instance, photo-sharing site Flickr was originally started as a multiplayer online game called "Game Neverending." Groupon, which offers discounts on goods and services originally started as a company called "The Point," which allowed people to pledge support for social and civic causes. PayPal began as a company named "Confinity" and changed its focus from PalmPilot payments to making payments online. The message here is that you can make general plans, but you should also be ready to pivot when needed -- something many people have trouble doing.

A good way to find inspiration and support for making your venture successful is to talk with a lot of interesting people. This is so important that Hoffman and Casnocha recommend starting an "interesting people fund" -- money that one puts aside to pay for coffee, lunch, and travel to worthwhile meetings. There are many ways to foster relationships, the pair says, but one of the most important steps is to get to know someone of value without immediately asking them for a favor. This might be difficult for hard-core networkers or stereotypical greedy businessmen to understand, but it is one of the key secrets of Silicon Valley.

Risk Reduction

People in the Valley have a culture of helping each other without demanding something in return. This somewhat socialist-seeming behavior actually winds up pushing capitalism into hyperdrive. One of the things that most people misunderstand about capitalism, which Hoffman and Casnocha explain extremely well, is that the ecosystem is based on trust, and trust is generated when people help each other without expecting a short-term payout. It doesn't mean that there won't be a benefit, but just that it is on time-delay.

"True relationship building in the professional world is like dating," they say, "And with dating, you should always have a long-term perspective." How fitting, then, that this book was released on Valentine's Day. And a book from Silicon Valley entrepreneurs wouldn't be complete without a discussion of risk.

Contrary to popular belief, great entrepreneurs do not have a high tolerance for risk per se. Rather, it is the ability to assess and manage risk that is important. And those who attempt to take the fewest risks are unknowingly putting themselves in a high-risk position. Hoffman and Casnocha explain it as analogous to a vaccine. "By injecting a small bit of flu into your body in the form of a vaccination, you make a big flu outbreak survivable. By introducing regular volatility into your career, you make surprise survivable. You gain the ability to absorb shocks gracefully."

There are many more bits of unconventional but great advice in this book. It would probably be risky to not pick up a copy.


Sonia Arrison is a trustee at Singularity University and author of the book 100 Plus: How the Coming Age of Longevity Will Change Everything, From Careers and Relationships to Family and Faith. Follow her on Twitter @soniaarrison.


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