Silicon Valley Badger engineers share their secrets of success
Here’s a story that aptly could be titled, “Only in Silicon Valley.”
Three young entrepreneurs come to Inspovation—a Los Altos, California, venture firm—with a cool idea to create a cheaper alternative to renting cars at airports. The team has an impressive lineage from Harvard, MIT and Princeton. As the conversation continues, the investors find the group is a bit less, um, seasoned than expected: The MIT student just completed his freshman year, while the Harvard and Princeton students just went through orientation week.
Pavan Nigam, a UW-Madison computer science alumnus, WebMD co-founder, and founding partner of Inspovation, tells this story with a mix of amusement and disbelief. Inspovation chose not to invest, but no matter: The young upstarts had already raised $1 million. “Where else in the world can you have three 18-year-olds with a good idea raising a million dollars in a single week?” Nigam asks.
Welcome to Silicon Valley, a land that embraces the proposition of risk and reward like no other. A region once known as the “valley of heart’s delight” for its abundant orchards and fruit production has become the world’s most fertile ground for innovation, with close to 400,000 jobs directly tied to technology and the second-highest concentration of wealth in America.
UW-Madison alumni, and engineers in particular, have played a big role in the region’s success—and have valuable ideas on how Wisconsin can learn from the valley’s winning ingredients. Of the more than 22,000 Badgers in California, about 3,500 are engineers, and more than half of them work in the Bay Area.
Much is made of the unique ecosystem that has been cultivated in the 50-plus years since Hewlett Packard and other corporate heavyweights paved the way for a high-tech haven. Entrepreneurs can find one-stop shopping in the valley for every essential ingredient to startup success. “To me, the Silicon Valley brand tells people that there is no greater place in the world to take a good idea and turn it into money,” says Thomas Werner, CEO of SunPower Inc. in San Jose and a 1982 UW-Madison industrial engineering alumnus. “When you get in line at a Starbucks out here, and you kind of listen for it, it’s almost certain you will hear someone giving a business pitch, or trying to raise money. The density of activity out here is what makes things happen.”
There’s a magical mix of all the right pieces, says Craig Palmer, a 1983 UW-Madison electrical engineering graduate who has enjoyed a long string of success in the valley, most recently as CEO of Wikia. “We’ve got the risk takers who will pick themselves up if they fail and try again,” he says. “We’ve got the capital available to do almost anything.”
Wisconsin can learn from the daring, creative spark that makes the region so successful. The story is especially timely for Madison, which is seeing heightened startup growth, especially among young alumni. Capital Entrepreneurs, for example, is an affiliation of young, tech-influenced startups that already has 50-plus company members in a few short years, most of them started by former UW-Madison students.
So the question for our Silicon Valley success stories: How can Madison go from good to great in its startup culture? Many of the Bay Area alumni observations and ideas could fall into a category called “the Four Ms”—mentors, money, mindset and multidisciplinary thinking. “If you’re looking to capture what we do here, you need serial entrepreneurs who have made a lot of money, stayed in the same communities, and want to continue to stay involved as mentors and advisers,” says Mark Reinstra, a 1988 industrial engineering graduate and attorney with Wilson Sonsoni Goodrich and Rosati, a premier business law firm in San Francisco. “Until you have that cycle of success—‘I made it here, I’m going to stay here, and I want to teach others how I did it’—you’re not going to create the cycle. You need to keep rolling, keep growing.”
Nigam says UW-Madison should more actively recruit mentors among its alumni base. Nigam leads the Badger Entrepreneurship Forum in the Bay Area, a successful networking group that has more than 400 active members, most eager to support each other and their alma mater. “You wouldn’t believe how many people we have in this network who are willing to mentor and help,” Nigam says. “These are CEOs, venture capitalists and founders, along with a lot of younger people, and they could help get more entrepreneurial energy flowing in Wisconsin.”
You need a grow-your-own strategy, says Werner. “A lot of entrepreneurs in the valley have come from universities all over the country, and once they get here, they tend not to leave,” he says. “And that is true of Madison as well.”
The question of “mindset” is especially interesting as it relates to Wisconsin and much of the Midwest. The deeply ingrained aversion to risk, and the stigma of failure, has to change to bring more people and ideas into the startup world. “I think it’s motivation and reward,” says Norman Koo, a 1970 nuclear engineering grad and executive advisor to Liberty Global Inc. “When you’re a young kid, a high school kid out here—and I hear this all the time from my son who is graduating this year—if you try to start a company and fail, you’re a hero. If you do a startup and fail in Green Bay, you’re in deep you-know-what. You don’t want to explain that to relatives at Thanksgiving.”
Getting greater acceptance that risk and failure are inherent to the startup culture—that the majority of new business ventures do ultimately fail—could encourage more people to take the leap, he says.
Sanjeev Chitre, a 1975 electrical and computer engineering graduate and partner with San Jose investment firm The U-Group, says the state and university have to address “the golden rule” and more aggressively pursue venture funding for Wisconsin startups. He says it’s another way UW-Madison alumni can offer support. “We can work with alumni out here and around the country to put together a fund, and it can be a million here, a million there, but the capital has to come first,” Chitre says. “Capital is going to drive your success more than anything else. You have got to create a fertile environment for Wisconsin companies to stay in Wisconsin. That’s your forward thinking.”
Michael Splinter, a 1974 two-degree electrical engineering alumnus and CEO of Applied Materials, says a few high-profile success stories will go a long way to cement Wisconsin’s status as a destination for innovation. Epic Systems in Verona is a fantastic story that should help create satellite successes in the region, he says.
Another benefit Splinter sees for places like Madison is that the explosion of information access means innovation is no longer a place-bound proposition. “In today’s information age, you have access to everybody,” he says. “You don’t have to be in any specific place. Today’s venture capitalists invest anywhere. It really boils down to this: Do you have enough courage and risk-taking to step out and promote that idea, then go sell it to strategic partners and financial investors? This open access is a huge benefit for any region trying to create an entrepreneurial zone.”
Multidisciplinary partnering is another essential ingredient, and Nigam is not convinced by his deep involvement with UW-Madison that it happens enough. “I’m there for lunch sometimes and when sitting down with a business and comp sci professor, I find out it’s the first time they’ve ever met each other—and they’re right across the street from each other,” says Nigam. “Creating some kind of forum for the business, computer science and engineering people to mingle is essential.”
Roy Thiele-Sardina, a 1982 electrical engineering alumnus and general partner of HighBar Ventures in Palo Alto, agrees that partnerships among business, technology and law majors at UW-Madison must happen to create the entrepreneurial alchemy, noting that Stanford University requires engineering-business collaborations in its student competitions. “If you want to see cross-pollination, take a look at Stanford,” he says.
Another matter the valley alumni universally agree about is abandon any notion of “replicating” Silicon Valley, and simply be yourself. The world is loaded with regions ready to stake their claim as the “next Silicon Valley,” including the Silicon Desert (Phoenix), the Silicon Prairie (Omaha), Silicon Hills (Austin), Silicon Alley (New York) and a favorite, Chilecon Valley (Santiago, Chile).
Rather than jumping on that bandwagon—Silicon Glacier, anyone?—Wisconsin should tout its unique attributes and strengths, and better harness its billion-dollar research university to fuel growth. “I think in Wisconsin, the ethics of the people play huge,” says Thiele-Sardina. “There’s a lot to be said for investing in the Midwest, in the sense that they have a work ethic that even by Silicon Valley standards is hard to replicate. People work hard in Silicon Valley because they think they’ll get the stock and get the reward. Based on my dealings in Wisconsin, people work hard because they want to make the idea work, not because they think they’re going to be billionaires.”
Thiele-Sardina says the hands-on, practical nature of the UW-Madison curriculum in the sciences (which he sees firsthand as a judge in the computer science software competition) is another major plus in the entrepreneurial world. “The ability to have that strong technical background and not let people snooker you is one of the real advantages of Wisconsin engineers moving into business,” he says. “The technical background and the hands-on engineering focus at Madison is a real plus.”
Cost of living is a major advantage that should be touted, says Werner. “The cost of living is so bad in the valley,” he says. “When you drive around out here and wonder what a home might cost, you’d be shocked. What you can get a really nice house for in Madison will get you a mailbox out here.”
You can’t replicate Silicon Valley, says Splinter. “But you can replicate the idea behind this place,” he says. “People come out here to try something new and get access to money and people who are smart enough and willing enough to take some risk—and to really reinvent yourself and have the ability to self-criticize. That’s really, really important.”