There are three lessons I would like to draw from the generational entrepreneurship between the USA’s Silicon Valley entrepreneurs and China’s Shenzhen entrepreneurs.
I’m sure there are more lessons, but I would like to focus on two.
The benefit of decoding History is that it gives us the benefit to connect the dots.
Once we understand the lessons of history, we are able to use these lessons to design a better path going forward.
What does the history of entrepreneurs from Silicon Valley and Shenzhen teaches us?
In the USA, the generation of entrepreneurs that came before the existing one, paved the way in terms of experience, breaking barriers, setting examples, creating wealth and passing the baton to the next [current] generation.
So young entrepreneurs in the USA are able to say, my ancestors were entrepreneurs, they made it, my grandfather was an entrepreneur [or professional] and he made it, my parents inherited that legacy and they made something of it, and now I’m here, let me see what dent I can make in the universe.
Young Silicon Valley entrepreneurs have the advantage of heritage and rich lineage. This is why money chases ideas in the USA.
Wealth from previous generations is looking to support the current generation.
Silicon Valley entrepreneurs don’t generally come from poor backgrounds.
Yes they worker hard, they are not afraid to fail, they have the guts to make mistakes, learn from them, and soldier on. This is all well and good because they are not worried about “black tax” because their lineage is alright.
It is easy to say I want to make a dent in the universe when you don’t have the pressures of poverty.
It is easy to say I want to make innovations that will make it easier, affordable and efficient to catch a ride, book accommodation, or share my working space with others.
These ideas and innovations are borne out of a mindset that is not desperate to escape poverty.
The challenges solved by Silicon Valley entrepreneurs, important and necessary as they are, are coming from a mindset of abundance not scarcity.
Let’s look at the idea of Silicon Valley.
The idea for Silicon Valley began during the Great Depression in 1929. Stanford engineering professor Frederick Terman decided to create more jobs opportunities for his students.
He encouraged two of his students, William Hewlett and David Packard to start a business.
Terman then got grants for them so they could create the high-tech company named after them.
Silicon Valley started around the 1930s and the idea was to create an entrepreneurship zone that churns out entrepreneurs, supported with funding, technical research support. The big reason being a solution to create employment following the great depression which saw unemployment reach peak levels of 25%.
Silicon Valley was the antidote to unemployment has been in existence for 90 years.
Let’s look at Shenzhen.
In 1979 Shenzhen became one of China’s first Special Economic Zones and began attracting increasing numbers of people in search of employment, leading to overpopulation.
Since the 1980s, Shenzhen has grown from a fishing town of 30,000 people into a world city and a centre for manufacturing, specialising in electronics and telecommunications.
In 2003, the municipal government announced the strategy of transforming Shenzhen into a ‘culture-based’ city, promoting design and the arts.
By 2005, when most Chinese cities were still developing their manufacturing base, Shenzhen had developed a strategy to transition its economy.
Between 2012–2016, the cultural and creative industries have grown by an average 14% annually: in 2016 they represented 10% of Shenzhen’s GDP.
Compared to Silicon Valley, Shenzhen entrepreneurs don’t have a rich entrepreneurship heritage as they started later than Silicon Valley.
China comes from a relatively poor background. Only in the past 50 years did China start to pull itself out of poverty.
China suffered what is called The Great Famine. The Great Famine or Great Chinese Famine was a period of low agricultural production, food shortages and mass starvation in China, from 1959 to 1961.
If Silicon Valley started around 1930s, it must have been 30 years in the process of creating entrepreneurs and start-ups while China was battling famine in 1959.
Let’s fast-forward to China today.
China has 4.4 million millionaires. They pulled about 80% of it’s population out of extreme poverty. Their unemployment rate is 5.9%. This is remarkable achievement.
The mindset of young Chinese entrepreneurs who are millionaires now has always been, I need to work hard so that I can get out of poverty. I need to succeed so that I can help parents and I escape poverty.
This mindset of escaping poverty is different to the mindset of making a dent in the universe.
If the Silicon Valley benefited from the rich heritage of their entrepreneurship ancestry to be successful, what made Shenzhen entrepreneurs to be successful then?
But how did they achieve this?
If Shenzhen entrepreneurs are millionaires now, what legacy will be they begin to design for the next generation?
Is this what Kai-Fu Lee means when he says in his book AI Superpowers that China has caught up with the USA in terms of AI?
Here is a quote from his book:
“So which country will lead in the broader category of business AI? Today, the United States enjoys a commanding lead (90–10) in this wave, but I believe in five years China will close that gap somewhat (70–30), and the Chinese government has a better shot at putting the power of business AI to good use. The United States has a clear advantage in the most immediate and profitable implementations of the technology: optimizations within banking, insurance, or any industry with lots of structured data that can be mined for better decision-making. Its companies have the raw material and corporate willpower to apply business AI to the problem of maximizing their bottom line.”
But he futher-more cautions:
“At a 2017 conference on artificial intelligence and global security, former Google CEO Eric Schmidt warned participants against complacency when it came to Chinese AI capabilities. Predicting that China would match American AI capabilities in five years, Schmidt was blunt in his assessment: “Trust me, these Chinese people are good. . . . If you have any kind of prejudice or concern that somehow their system and their educational system is not going to produce the kind of people that I’m talking about, you’re wrong.”
China has made remarkable progress in catching up with the world’s superpower.
In the next and last article I want discuss my thoughts on the second and third lessons we can learn from these two cities.
PS: There are questions of democratic and neoliberal principles that critics of China raises every time we discuss China. This is a separate discussion and I’m sure has been better ventilated in other platforms.