STANFORD GRADUATE SCHOOL OF BUSINESS

UNIVERSITY OF SYDNEY: SILICON VALLEY TRIP

DECEMBER 1-13, 2008

IBUS6007 International Business Special Project:

Growing the Enterprise: Lessons from Silicon Valley
Personal Reflections - Matthew Bright SID: 200006022

Personal Reflections

Introduction  

The  fortnight  in  December  2008  which  members  of  the  University  of  Sydney  student  group  spent  
studying  the  Silicon  Valley  ecosystem  was  among  the  most  stimulating  learning  experiences  which  I  have  
had  the  pleasure  to  enjoy  in  my  time  at  university  both  inside  and  outside  of  the  classroom.  This  unit  of  
study  lived  up  to  its  description  of  being  a  “problem-­‐based  learning  experience  delivered  globally  in  a  
local  context“.1    

In  my  initial  Expression  of  Interest  in  attending  this  unit  of  study,  I  outlined  my  personal  interest  in  the  
Silicon  Valley  ecosystem  and  my  personal  experience  in  the  early  stages  of  my  career  so  far  in  working  
for  entrepreneurs  and  contributing  to  two  fast-­‐growing  enterprises  (one  start-­‐up  company  and  a  found-­‐
run  firm).    

I  found  that  the  actual  on-­‐the-­‐ground  learning  experience  in  Silicon  Valley  surpassed  my  (already  high)  
expectations  and  culminated  in  an  enjoyable  personal  experience  with  the  group.  The  seminars  and  field  
trips  were  most  engaging  and  I  enjoyed  working  both  with  the  general  group  and  in  my  allocated  group  
tackling  a  consulting  brief  for  Symantec.  I  vested  much  of  the  knowledge  communicated  to  the  group  
and  genuinely  grew  my  knowledge  base  and  personal  skill  set  from  this  intellectually  enriching  
experience.  

For  the  purpose  of  conceptual  clarity2,  I  have  organised  and  summarised  the  key  ideas  which  I  have  
learned  from  this  course3  from  (i)  an  academic-­‐centric  perspective,  (ii)  an  industry-­‐based  perspective;  
and  (iii)  in  my  own  professional  and  personal  development  (with  reference  to  common  themes  
expressed  and  overarching  lessons  taught)4.  

1
 Donnel  Briley,  Professor  of  Marketing,  The  University  of  Sydney,  course  introduction  at  Symantec  headquarters,  Monday  December  1,  2008.  
2
 The  tone  of  this  essay  is  purposely  informal  as  I  feel  it  to  be  the  appropriate  tone  to  communicate  my  personal  learnings  in  this  unit  of  study.  
3
 Box-­‐outs  within  the  document  extend  the  key  ideas  which  I  have  learned  in  relation  to  common  themes  across  speakers  and  events.  
4
 I  anticipate  that  the  ideas  and  concepts  which  I  took  away  from  this  course  may  vary  from  those  of  other  students.  In  my  learning  for  this  
course  I  was  interested  in  largely  intangible  elements  relating  to  the  Valley’s  ecosystem,  the  experience  of  entrepreneurs  and  VCs  and  less-­‐so  in  
structured  academic  learning  which  I  feel  I  have  gained  already  from  classes  at  our  home  institution.  
Academic-­‐based  learning  

In  relation  to  in-­‐classroom  learning,  I  particularly  appreciated  the  opportunity  to  participate  in  the  
Socratic  learning  style  through  the  case  methods  popular  in  US  professional  schools,  as  taught  in  this  
course  by  Professors  Haim  Mendelson5,  Charles  O’Reilly6and  Assistant  Professor  Illya  Strubulaev7.  I  
found  the  lecturer-­‐student  exchanges  to  be  intellectually  stimulating  and  the  case  method  to  be  a  
practical  application  of  the  group’s  analytical  skills  to  quasi  real-­‐world  tasks.  The  seminars  at  Stanford  
struck  me  as  practical,  relevant  and  informed  and  not  rigid  or  dogmatic.  From  each  lecture,  particular  
nuggets  of  wisdom  plugged  in  to  my  existing  knowledge  and  professional  interests.    

From  the  condensed  learning  experiences  where  professors  were  keen  to  impart  their  knowledge  in  a  
nutshell  to  our  student  group,  I  personally  connected  with  the  content  of  Professor  Charles  O’Reilly’s  
lecture  that  reduced  firm  strategy  to  four  slides:    

-­‐ “Customer  Selection:  What  customer  segments  

do  we  choose  to  serve  (and  not  to  serve)?”;  
and    
Key  Ideas  I  Learned:  
-­‐ “Value  proposition:  what  will  we  offer  our   -­‐  Firm  strategy  in  the  Valley  focuses  
customers  and  how  will  we  be  differentiated   inwards  on  internal  venturing  and  less  on  
from  our  competitors?”  and     bolt-­‐on  growth  by  acquisition.    
-­‐  VCs  invest  in  people,  almost  as  much  as  
-­‐ “Value  capture:  how  will  we  make  money?”   good  ideas  
-­‐  Start-­‐up  firm  strategy  is  entirely  linked  to  
Professor  Bruce  McKern’s  lecture  on  strategic  growth   product  monetisation.  
-­‐  The  product  is  important  to  its  
opportunities8  highlighted  the  importance  of  
customers,  not  its  technology.    
organisational  competencies  for  me,  where  “global   -­‐  Entrepreneurial  failure  is  an  acceptable  
firms  tend  to  focus  on  efficiency  and  cooperation,   part  of  the  innovation  dilemma:  a  badge  
which  may  affect  initiative,  when  long-­‐term  it  is  your   of  honour,  the  step  towards  the  next  
organisation’s  competencies  which  allow  you  to   success.    
compete“.    

In  his  lecture  on  Value  Disciplines,  Professor  Haim  

Mendelson’s  comment  that  “Technology  is  not  as  important  to  the  customer  as  the  product  itself”  was  
an  obvious,  but  insightful  opinion.  I  was  also  intrigued  by  Professor  Mendelson’s  singular  slide  which  he  
presented  to  Kleiner  Perkins  for  its  annual  review  –  this  struck  me  as  being  emblematic  of  the  clever  way  
of  doing  business  and  learning  in  the  Valley.  

5
 Haim  Mendelson,  Kleiner  Perkins  Caufield  &  Byers  Professor  of  Electronic  Business  and  Commerce  and  Management,  Stanford  Graduate  
School  of  Business,  lecture  to  The  University  of  Sydney  students,  Monday  December  8,  2008.  
6
 Charles  O’Reilly,  Frank  E.  Buck  Professor  of  Management,  Stanford  Graduate  School  of  Business,  lecture  to  The  University  of  Sydney  students,  
Thursday  December  11,  2008.  
7
 Illya  Strabulaev,  Assistant  Professor  of  Finance,  Stanford  Graduate  School  of  Business,  lecture  to  The  University  of  Sydney  students,  Saturday  
December  6,  2008.    
8
 Professor  Bruce  McKern,  Director  of  Executive  Program  on  US  Business  Leadership  Stanford  GSB,  lecture  to  The  University  of  Sydney  students,  
Thursday  December  11,  2008.  
Early  in  the  course,  Professor  Bill  Miller’s  lecture9  on  the  Silicon  Valley  ecosystem  was  most  informative  
on  the  region’s  inner  workings  with  reference  to  the  business/social/political  environment.  The  statistic  
which  Professor  Miller  mentioned  that  70%  of  leading  Valley  venture  capital  firm  Kleiner  Perkins’s  
portfolio  companies  have  failed  to  date,  tapped  into  our  learnings  from  industry  practitioners.  

Industry-­‐based  learning  

Building  on  Professor  Bill  Miller’s  seminar  on  the  Silicon  Valley  ecosystem,  from  an  executive  education  
perspective  I  found  that  both  Peter  Ziebelman’s  seminar10on  venture  capital  and  the  general  
Entrepreneur  forum11  tapped  into  many  of  the  key  ideas  of  doing  business  in  the  Valley.    

Peter  Ziebelman’s  comment  in  respect  of  successful  and  unsuccessful  portfolio  companies  that  “one  
winner  makes  up  for  all  the  losers”  for  me  summed  up  the  mantra  of  what  keeps  the  lights  on  in  VC  
offices  on  Sand  Hill  Road  in  the  Valley.  I  was  interested  in  
Ziebelman’s  explanation  of  VCs  as  being  useful  to  
Common  Themes  Across  Speakers  and   entrepreneurs  for  an  outsider's  perspective  and  the  
Events   comparison  of  their  collaboration  to  “legal  insider  
trading“.  Having  an  appreciation  for  the  uncertain  nature  
-­‐  The  Silicon  Valley  
of  entrepreneurship  from  my  career  experiences  at  a  start-­‐
business/social/political  ecosystem  is  
friendly  and  facilitative  and  based  on  
up  company  from  the  age  of  18  to  22  (then  with  no  formal  
weak  ties.   business  education)  I  found  it  particularly  refreshing  that  
-­‐  Failure  is  a  badge  of  pride  if  learning   Peter  agreed  that  many  of  his  company’s  investments  
from  failure  is  the  key  to  success.   were  based  more  on  gut  feel  rather  than  rigid  analysis  and  
-­‐  Recession  is  an  opportunity  for  those   that  from  an  operations  perspective  Palo  Alto  Venture  
who  are  poised  for  counter-­‐cyclical   Partners  engages  in  unconventional  methods  both  in  due  
growth.     diligence  and  the  identification  of  investment  
-­‐  Employ  lateral  thinking  in  opportunity   opportunities.12  
identification  and  due  diligence  
-­‐  The  VC/entrepreneur  relationship  is   From  the  Entrepreneur  forum13  I  was  interested  in  proven  
inherently  complex.     entrepreneurs’  pragmatic  assessments  of  the  
VC/entrepreneur  relationship,  such  as  Terrence  Craig‘s  
{Pattern  Builder  CEO  and  founder  (his  third  start-­‐up)}  comment  that  “In  Silicon  Valley  both  
entrepreneurs  and  VCs’  entire  existence  is  built  on  equity,  not  debt  (compared  to  Wall  Street).  “  And  
Jamie  Rapperport’s  (Co-­‐founder  and  EVP,  Business  Development/Marketing,  Vendavo)  comment  on  VC  
lock  ups:  “...they  won’t  let  entrepreneurs  exit  until  the  right  time.  Taking  VC  money  is  a  big  commitment  
to  hitting  for  the  fences.”  Similarly,  Terrence  Craig‘s  comment  in  that  forum  that  “Flameouts  are  a  badge  
of  honour  provided  that  you  learn  from  them”  and  that  many  VCs  prefer  to  do  business  with  serial  failed  
entrepreneurs  in  the  hope  that  their  next  company  will  be  successful  tapped  into  the  ‘failure  as  the  key  
to  success’  mantra  espoused  in  the  Valley.    

9
 Professor  Bill  Miller,  Institute  for  International  Studies,  Stanford  University,  ‘The  Silicon  Valley  Ecosystem’  lecture  to  The  University  of  Sydney  
students,  Tuesday  December  2,  2008.    
10
 Peter  Ziebelman,  Partner,  Palo  Alto  Venture  Partners,  lecture  to  The  University  of  Sydney  students,  Tuesday  December  2.  
11
 Entrepreneur  forum:  “Leading  and  funding  ventures  in  down  economies“,  held  Monday  December  8,  Stanford  University.  
12
 Methods  which  Peter  Ziebelman  mentioned  included  extending  the  due  diligence  process  to  the  team,  competition,  company,  suppliers  and  
customers;  and  monitoring  opportunities  for  portfolio  investments  by  employing  lateral  thinking  to  beat  the  competition  to  good  prospects  
(the  example  which  he  gave  involved  looking  out  for  job  listings  of  Chief  Financial  Officers  in  the  Valley  as  an  indication  for  companies  seeking  
venutre  capital.    
 Entrepreneur  forum:  “Leading  and  funding  ventures  in  down  economies“,  held  Monday  December  8,  Stanford  University.  
13
I  found  it  beneficial  to  listen  to  practical  business  strategy  lessons  direct  from  practitioners,  such  as:  

-­‐ appropriate  rates  of  business  growth:  “doubling  revenue  and  profit  each  year  is  a  health  growth  
rate  for  entrepreneurs  seeking  VC”  (Peter  Zeibelman,  Palo  Alto  Venture  Partners);  

-­‐ corporate  strategy  versus  internal  venturing:  “M&A  is  not  a  strategy  –  it  is  one  tool  to  support  a  
strategy...  acquisitions  and  divestitures  are  not  a  strategy  but  one  tool  to  execute  strategy...  
mergers  and  acquisitions  are  hard.  They  are  not  the  easy  route  to  competitive  advantage.  They  
must  pass  two  tests:  strategic  relevance  and  priority  and  financial  viability.”  14  (Trina  Depel,  Intel  
Capital).    

-­‐ the  informal  network  in  operation  in  the  Valley  is  based  primarily  on  weak  ties:  “The  whole  
Valley  ecosystem  is  built  on  referrals  and  you  are  only  ever  three  phone-­‐calls  away  from  
everyone  else  in  your  backyard.”15  (Terrence  Craig,  Pattern  Builder)  

-­‐ large  companies’  approach  to  incubation  and  development  with  ‘build/partner/  buy’  decisions  
for  products  and  organic  growth  versus  growth  by  acquisition  for  companies  -­‐  it  was  particularly  
interesting  to  see  the  different  requirements  between  Symantec  and  Cisco16;  

-­‐ large  companies‘  strategies  for  weathering  the  recessionary  environment,  including  rebalancing  
recession-­‐resistant  segments,  using  downturn  
to  gain  share  opportunistically  gaining  market  
Overarching  Lessons  that  Emerged  
share,  managing  discretionary  spending  and  
positioning  for  the  upturn;  and     -­‐  The  Valley’s  ecosystem  is  the  nation’s  
most  unique  facilitative  framework  for  
-­‐ informed  opinions  on  whether  the  downturn   innovation.  
may  produce  greater  innovation  and  stronger   -­‐  Downturns  can  produce  innovation  from  
frustration.    
start-­‐ups  in  light  of  ‘doom  and  gloom’  
-­‐  Human  capital  learnings:  ‘T-­‐shaped‘  
information  circulated  in  the  Valley  such  as   workers;  successful  entrepreneurs  can  be  
Sequoia  Capital’s  bearish  ‚  ’R.I.P.  Good  Times’   akin  to  starving  artists.    
presentation17.    

From  a  practical  entrepreneurial  perspective  I  particularly  valued  the  interactions  which  I  had  with  
industry  speakers.  During  the  entrepreneur  forum18  I  had  a  personal  conversation  with  Sean  O’Malley,  
Entrepreneur  in  Residence,  Venrock,  where  he  equated  the  most  successful  examples  of  entrepreneurs  
that  he  had  worked  with  in  his  time  at  Yahoo  and  now  at  Venrock  as  being  similar  to  that  of  starving  
artists,  where  their  aligned  enthusiasm,  appetite  for  risk  and  lack  of  personal  funds  produces  their  best  
work.  I  found  this  to  be  an  intriguing  comment.      

 Professional  and  personal  development  

14
 Trina  Depel,  Intel  Capital,  ‚Venture  funding‘  lecture,  Stanford  Graduate  School  of  Business,  Tuesday  December  9,  2008  
15
 Entrepreneur  forum:  “Leading  and  funding  ventures  in  down  economies“,  held  Monday  December  8,  Stanford  University.  
16
 Cisco  quoted  their  internal  venturing  requirements  as  being  $1  billion  potential  over  3-­‐5  years  for  intrapreneur  projects.  Symantec’s  
requirements  were  $100  million  in  revenue  achievable  within  a  3-­‐5  years  horizon.  
17
 Seqioua  Capital  ‘RIP  Good  Times‘  presentation  to  Seqioua  Capital  portfolio  company  CEOs,  week  commencing  Monday  October  6,  2008  
 Entrepreneur  forum:  “Leading  and  funding  ventures  in  down  economies“,  held  Monday  December  8,  Stanford  University.  
18
From  a  career  development  perspective,  the  most  interesting  idea  to  me  which  I  took  from  the  ‘industry  
field  trip’  component  of  the  course  came  from  Chris  Cowart,  Location  Lead,  Ideo.  Chris  voiced  the  
concept  of  Ideo’s  employees  being  “T-­‐shaped  people”:  human  beings  with  experience  and  expertise  in  a  
discrete  discipline  or  body  of  knowledge  and  a  general  knowledgability  across  the  broader  spectrum  of  
life  and  work  that  is  complementary  to  their  core  skill  sets  and  to  the  company’s  output.  Coming  from  a  
diverse  background  and  having  working  primarily  in  open,  egalitarian  and  progressive  workplaces  I  
found  that  this  concept  clarified  my  personal  career  direction  in  a  discrete  knowledge  discipline  and  my  
accumulation  of  diverse  work  experience  to  date.  

Conclusion  

My  hands-­‐on  learning  experience  in  Silicon  Valley  now  plugs  back  in  to  the  core  teachings  from  The  
University  of  Sydney  on  technology  commercialisation  and  innovation:  what  is  your  product’s  unique  
customer  benefit  /  competitive  advantage?  Is  there  a  marketplace?  Is  there  a  commercial  opportunity?  

The  cover  story  of  the  January  12,  2009  edition  of  Business  Week  asked  (and  answered  its  own)  
question  “What’s  wrong  with  Silicon  Valley  (and  how  to  make  it  right)”.  The  piece  tackles  the  short-­‐
termism  of  web  2.0,  the  need  for  venture  capitalists  to  realign  their  interests  with  break-­‐through  
technologies,  a  shift  away  from  the  me-­‐too  nature  of  web  2.0  by  entrepreneurs  and  the  need  for  
continual  investment  by  large  corporations  in  disruptive  technologies  to  seed  new  markets.  I  feel  that  
based  on  our  on  the  ground  learning  and  research  in  Silicon  Valley  it  is  plausible  to  say  that  the  Valley’s  
ecosystem  solves  its  own  problems  and  can  now  work  towards  spa  the  next  wave  of  innovation  at  the  
start  of  a  new  hype-­‐cycle  to  emerge  from  the  current  recessionary  environment.    

In  summary  I  feel  that  this  unit  of  study  achieved  a  great  balance  between  theory  and  practice  that  
contained  insightful  learning  on  innovation  and  enterprise  in  the  USA’s  most  fruitful  ecosystem  as  
sample  space,  which  I  am  grateful  to  have  participated  in.  Thank  you.    
References

Briley,  D.,  IBUS6007  International  Business  Special  Project:  Growing  the  Enterprise:  Lessons  from  Silicon  
Valley  course  introduction,  Symantec  headquarters,  Monday  December  1,  2008  

Depel,  T.,  ‘Venture  funding‘  lecture,  Tuesday  December  9,  2008,  Stanford  Graduate  School  of  Business  

Entrepreneur  forum:  “Leading  and  funding  ventures  in  down  economies“,  Monday  December  8,  
Stanford  University  

Strabulaev,  I,  Fundamental  of  external  financing’  lecture  to  The  University  of  Sydney  students,  Saturday  
December  6,  2008,  Carnegie  Mellon  West  University  

Mendelson,  H.,  ‘E-­‐marketing  channels’  lecture  to  The  University  of  Sydney  students,  Monday  December  
8,  2008,  Stanford  Graduate  School  of  Business  

Miller,  B.,  ‘The  Silicon  Valley  Ecosystem’  lecture  to  The  University  of  Sydney  students,  Tuesday  
December  2,  2008,  Carnegie  Mellon  West  University  

O’Reilly,  C.,  lecture  to  The  University  of  Sydney  students,  Thursday  December  11,  2008  

McKern,  B.  ,’Strategic  growth  opportunities’  lecture  to  The  University  of  Sydney  students,  Thursday  
December  11,  2008,  Stanford  Graduate  School  of  Business  

Ziebelman,  P.,  ‚Capital  management‘    lecture  to  The  University  of  Sydney  students,  Tuesday  December  
2,  2008,  Carnegie  Mellon  West  University  

Seqioua  Capital  ‘RIP  Good  Times‘  presentation  to  Seqioua  Capital  portfolio  company  CEOs,  week  
commencing  Monday  October  6,  2008  Accessed  Monday  January  19  at  
http://www.techcrunch.com/2008/10/10/sequoia-­‐capitals-­‐56-­‐slide-­‐powerpoint-­‐presentation-­‐of-­‐doom/