Evan Reas, in his Startup Hoodlum blog writes about why Silicon Valley is so good at generating startups. He explains that Silicon Valley is a successful entrepreneurial culture because it runs on “repeated interaction and strong connectedness”. In game theory terms, you’ve got a game that has many rounds between players who have essentially perfect information about how the other players behave. In other words, Silicon Valley entrepreneurs know the people that they need to build the teams that they need to get their projects off the ground, and they know they can trust them because everybody in the community knows who is trustworthy.
“Essentially: trust someone until they screw you over and then never trust that person again.”
It’s really that simple, given a close-knit business world. The other point that he makes is that since everyone in Silicon Valley is closely connected by the network, it’s easy to build teams of people who know one another’s abilities and are able to trust one another implicitly.
This is something that we will all work on building in our local economies. Social Media connectedness among business people will mean that business ethics, good and bad, will be widely known in the networks entrepreneurs function within. Competence will be known and celebrated. We’ll all become more successful and able to try out more interesting ideas.
