Business Forum: Why MSP isn't Silicon Valley and why that's OK

Over the past two years I have spent a lot of time in Silicon Valley. The CEO of an Internet of Things platform company there invited me to participate in thought leadership discussions. From there I joined a San Francisco-based accelerator where today I mentor five Silicon Valley start-up CEOs.

During this same time I've also worked with three Minnesota start-ups in the same advisory fashion. I've had the opportunity to observe the two tech ecosystems from the point of view of that most critical element of a tech community: the start-up founder. My conclusion, like it or not: MSP is not like Silicon Valley.

The perception is that if you aren't in Silicon Valley, you aren't innovating. As a result, regional tech leaders everywhere make claims that they are just like Silicon Valley — or even better, as was recently the case in Minnesota when Forbes reported that the state was tops in tech job growth.

In Silicon Valley I work with founders from the U.K., India, Canada, Germany and the U.S. They all tell me the same thing when I ask them why they came to Silicon Valley: There's no place else like it. The Valley ecosystem is comprehensive. The web of personal connections enables things to move much faster. "There isn't anything I need that is not right here," one CEO told me. "Coders, marketing people, investors, customers — they are all just across town." My last accelerator class had founders from seven countries and three continents — and they all believe: "Silicon Valley is the place to be for tech companies."

Venture capitalists believe this to the point of operational direction. When I counseled one founder to tap into his hometown network in Toronto for engineers, I was surprised to find out that his investors directed him to hire only in the Valley. It's not that they want to be able to quickly meet everyone face to face; it's that they trust the Valley's fast-paced tech lifestyle and the intense drive for success it creates.

Investors are perhaps the biggest difference between MSP and Silicon Valley. One of the chief executives in Silicon Valley summarized it for me. VCs in other markets focus on traditional "traction" numbers like revenue, number of contracted customers and earnings. "Early round Silicon Valley VCs are more like angels," he said, referring to how angel investors tend to be more willing to trust their gut instincts. They still want proof points and "pilot customers, but they move much faster with more cash and this drives the entire Valley ecosystem."

My Minnesota start-up CEOs, on the other hand, are frustrated with the pace of fund­raising. We have fewer funding sources, and they move on more traditional metrics. As a result, the transition from early proof points to scale is harder, and the whole process slows down. This is, of course, all about risk-taking. Silicon Valley investors have more experience that gives them confidence to move fast before they lose their opportunity.

MSP isn't just like Silicon Valley, and it's not something to which we should aspire. Other places have tried and end up trying to become something they are not because they don't have the time it takes and they don't have the right ingredients to create such an ecosystem.

But we can still be a fast-growing tech business economy. Fast is relative, and we can grow faster and more steadily than others over the long haul if we focus on our unique capabilities and cultural strengths. We are more diverse in our business types and markets served. We are renowned for med-tech innovation. We have a unique confluence of aerospace, industrial control and agricultural businesses cohabitating with world-class health care providers and payers. We have two of the premier retail brands in the world here in Target and Best Buy. This diversity gives us talented resources from adjacent groups that can create disruption where technology overlaps normally disparate applications, e.g. med-tech/health care with consumer experience leads to digital health innovation.

Finally, we have a culture that believes hard work pays off over time. We are more cautious here; both our technologists and investors move slower. The steadier pace allows more diversity in our tech ecosystem supporting the longer developments of medical devices, industrial controls and agricultural technology. When I asked one Valley CEO about medical devices he said, "We live the lean start-up process here: build-test-learn — and quickly. Learning from failures can hurt people in medical development. It doesn't work here."

MSP also needs to be open to change. We are strong enough to take more risks. We are smart and experienced enough to move quicker. Our resources are deep enough to make mistakes and get right back onto the next challenge. We should learn from and work with Silicon Valley, not fight it.

The world is a more competitive place today than it has ever been and we need to find new ways to win — in our markets. If we do we will can become a global destination for those pursuing economic growth in the technology marketplace. Then we actually will be like Silicon Valley.