Tech Blue Note

Alexis de Tocqueville, a Frenchman who traveled extensively in the US, wrote Democracy in America, widely regarded as the most influential book on sociology and political science of the 19th century US.

Alex Karp, CEO and co-founder of Palantir (Fabrica Ventures’ first exit), recently spoke with Joe Lonsdale, a fellow Palantir co-founder and founder of 8VC, about why he considers himself an “American optimist”. Though born in the US, Karp spent significant time abroad, before re-immigrating to the US, giving him a fresh perspective on the country (like de Tocqueville). And, also like de Tocqueville, Karp has a deep interest in sociology, earning a PhD in neoclassical social theory from Goethe University Frankfurt.

He tries to answer: Why is most enterprise software built in one part of the world, in Silicon Valley?  And why has Silicon Valley succeeded in creating a community that is more important than all other communities combined in the world?

Most of his thoughts revolve around culture (or ecosystem):

* The most clichéd one, but true, you are allowed to fail here

* However, we do not learn to succeed by failing. We learn to win by working in a culture that provides capital, nurtures talented people, teaches them and pushes them to their limits. We learn by working with people who experience ups and downs, and then succeed

* The SV culture is very forgiving to successful people; in most cultures first generation success is dangerous

* Other cultures are often constrained by inter-generational risk taking – most successful US tech entrepreneurs are first-generation achievers

* The US produce crazy-outside the norm people that are risk-taking driven — other cultures tend to reject people that are extreme

* In addition, SV has become a magnet for the most talented individuals in the world (there isn’t a good number 2 choice!) — Rubrik (another Fabrica Ventures investment), which recently IPOed at a $6B valuation, was founded 10 years ago by four poor Indian immigrants

* The deep and sophisticated West Coast tech culture naturally emerged from leading science research universities like Stanford, Caltech, and Berkeley

* There is a general culture of cooperation, because the market is so big and capital abundant

* You can choose the community you are in, but then the rules of this community apply to you, with little intervention of the state

* Job turnover is high, which promotes learning

* Rewards are completely outside the box

* The VC model aligns, in the most possible way, entrepreneurs and investors

* This alignment promotes the creation of extreme valuable things by small groups managed aggressively, with the proceeds split fairly – for instance, 76% of Nvidia employees are millionaires

Conclusion

Just as many can hear and appreciate a blue note, very few can actually play it.

The same goes for a “tech blue note”.