If you're going to San Francisco ... John Jones shares some lessons from a trip to the centre of the tech universe

Applicable director John Jones shares his experiences of going to Silicon Valley – and lessons New Zealand companies can learn from what is happening there.

Sometimes the best reason to go somewhere new is to discover that most of our preconceptions are bollix. Heading to San Francisco I imagined Americans as always loud, California always sunny and that their TSA wouldn’t consider Marmite a hazardous substance – that last one’s a long story.

But it was my utopian idea of Californian weather that was first on the chopping block; descending through cloud into SFO from Auckland I happened to glance outside the very moment the runway appeared through heavy mist and we walloped down hard – worst landing I’ve ever experienced – arriving in the sort of cold showery weather apparently common to San Francisco city. It had been quite a bumpy flight, and I'd been disappointed that my favourite show – Air Crash Investigation – wasn't available on the in-flight entertainment; now I'd arrived for the first time in California, and it felt like Wellington.

So what did possess me to drop into the land of Google, Apple and Hempcon? Curiosity, mainly; being a New Zealand business owner in tech there were many questions on my mind, the main ones being:

  • How accessible is the San Fran tech scene for a Kiwi SME?
  • What kind of tech business would be viable in the US market?
  • What would the chances be for a Kiwi startup seeking funding over there?

Three weeks of going to meetups and events, attending Lean Startup Week and talking to as many people as I could went a long way towards answering these; here are some reflections.

Accessibility

Overall I’d say the tech and startup scene in San Francisco is more accessible than many might imagine. Meetup groups are very open and informal, just like in New Zealand, and people there are mostly approachable and willing to help. At the first meetup I attended I met the Supply Chain Manager from Cisco who, after chatting for a while, offered to connect me to a logistics company that might have an interest in software we’d built. While most people lead busy lives and want to filter out time wasters, there is a great culture in tech of being positive and helpful. Obviously getting in the door with the big guns of Silicon Valley would be a lot harder, but it’s totally viable to work your way in from the edges over time.

Kiwi Landing Pad (KLP) is a fantastic help for any company exploring SF opportunities; just having a low-cost professional office space in the city, and a few Kiwis around to ask newbie questions of, is great. I did wonder though why every time I used a desk there it had vanished by the next time I came in; I discovered on my last day that everything was being sold on Craigslist prior to moving to a new fully-furnished space.

Pier 27.

Suitability

In an environment that attracts a lot of the world’s top talent and companies, the question to ask yourself is ‘why’? Why would your offer stand out? Our core business is online software and app building. I could hang out in San Fran, build a network and start doing business. It would be viable, however in that market there are players of every size and shape imaginable, so it would be tough to stand out and really scale. What to me looks to have more potential, and has been a proven formula for many – often below the radar – New Zealand success stories, is to have a best-in-the-world product in a narrow but high-value vertical, and then to directly sell into the US, and beyond.

While there I was able to validate that a product suite we’ve built meets this criteria and to get some great advice about starting out in the US market. One insight that’s broadly applicable is that, for a market vertical software strategy, San Francisco may well not be the best destination. Choosing your location for a US base should instead be determined by the natural hub of your target industry.

Funding

Going to a Startup’s Showcase live pitch what stood out to me, other than the weird nightclub environment that it was held in, was the quality of some startups. Many had existing teams of 20+ people, sometimes including high-end research scientists, and were developing genuinely ground-breaking technologies.

The funding question was one I asked a lot of people and, in essence, it seems there is a lot of funding around, but there are two key factors to getting it. Firstly knowing the right people, and secondly having the right startup. In a city where every man, his dog, and his dogs fleas, have a startup idea, ideas alone are worthless. Being able to get out, prove something’s value, thoroughly validate it, build a high-quality team around it and develop some unique IP; all of these factors speak to investors. Of course, having a founder who can do a great pitch helps a lot too.

Lean Startup Week

Lean Startup Week sits in that very accessible zone of the tech scene in San Francisco, though the main conference days are so huge that networking feels less natural. The most enjoyable part of the week was actually the unconference on the first day, just because it involved working in much smaller interactive groups. The conference speaker format of successful tech entrepreneurs sharing gems of wisdom is hard to stay engaged with; except when they’re funny or in some other way entertaining. If there was one big takeaway I’d note from the conference, it was the pushback against a strictly MVP (Minimum Viable Product) focus. This started with Guy Kawasaki’s comments that products needed to be MVVVP (Viable, Valuable & Validated), and many of the other speakers picked up on this and reinforced it in their own talks.

The environment

Well, to start with the good, if you like lots of neat and tidy tree-lined suburbs with quality American housing, patches of glittering office buildings, parks, attractive shopping centres, café and dining areas bathed in Californian sunshine, then the various little towns dotted down the valley, like San Mateo, Palo Alto, Cupertino and so forth – right down to San Jose – are probably for you. Having said that, most twenty something's appear to prefer living like sardines in a cold, congested, dirty city full of homeless people that, in many places, smells bad and feels unsafe. For the privilege of such “culture” they’ll pay around $4,000 US a month for a tiny studio apartment and put up with the hassle of reverse commuting out of San Francisco on the Caltrain – which looks somewhat bullet-like but is only about as fast as a bullet that’s just passed through a cow – down to those beautiful tech suburbs that are far too uncool to actually live in. The desire of these mostly younger tech employees to live in San Francisco itself is now drawing many tech companies to set up offices in the city, rather than down in the traditional ‘silicon valley’. The resulting pressure on real-estate has made even the most urine-soaked little alleyway into a golden investment.

Of course not all of San Francisco is as bad as I’m making it sound; if you went straight to the touristy areas along the waterfront, walked up and down the Embarcadero, took a ferry to Alcatraz, cycled the Golden Gate Bridge to Sausalito, and looked around the financial district and the beautiful hilly areas of tightly packed classic villas you’d leave thinking San Francisco was one of coolest little cities in the world. Ultimately it’s a city of contrasts; the people I stayed with kept referring to ‘income disparity’; the fact that there are a lot of ‘working poor’, and sick or unemployed desperately poor, right alongside a high concentration of millionaires and billionaires.

Overall I found the experience of spending time there normalised a lot of the hype, but some things are genuinely mind-blowing. Stanford was one of those. It’s hard to imagine a more beautiful university, with its classic stone buildings, flourishing gardens, tree-lined roads, water features and vast wooded parkland areas. And then there’s the technology, expertise and equipment contained within; including one of the world’s top particle accelerators. Another thing that amazed me was, in meeting up with a Kiwi working in the Health Apps department of Apple, hearing that apart from its massive head office complex – Infinite Loop – Apple also taken over pretty much all of the office buildings in Cupertino.

Alcatraz.

Take home

My biggest take home from San Francisco was that New Zealand is awesome; when it’s not shaking. However, there are great opportunities in the US because even narrow verticals represent an almost unlimited market. But as a place to live and work, while I expected to return with a big dose of FOMO, the opposite was true. I could never quite look past all the hardship and filth at the bottom of American society; I returned appreciative of a country that has a social safety net, a low-density population and a generally great way of life.

So, my preconceptions were dispelled, connections seeded, a new market opportunity discovered and my gratitude for the country I live in was deepened. For a flightless bird, I feel I got a lot of value from my first landing in SF.