Fear of Failure in Chile and Silicon Valley

Techies in Chile are afraid to fail and do not start new technology businesses, assert many advocates of Start-Up Chile, and importing techies from abroad, especially from the USA, including Silicon Valley, will transform the culture. How different is the cultural attitude toward failure in Silicon Valley?

A tech migrant to California observed:

As a Brit who gave up cheerleading the European tech scene to make the pilgrimage to Silicon Valley to live, eat and breath the world’s leading hub for technology startup innovation, I’ve been largely unimpressed and disappointed by the quality of startups here…. Silicon Valley is an incredibly inspiring place to be. Everyone is doing something amazing and trying to change the world, but in reality much of the technology being built here is not changing the world at all, it’s short-sighted and designed for scalability, big exits and big profits….

I’ve come to the conclusion that entrepreneurship in the Valley has become productized, as organizations like Y Combinator attempt to marginalize, commoditize or manufacture a process that is inherently risky…. From an investor’s perspective, it’s a clever model; you put a group of extremely talented and hard working graduates together, give them seed funding, keep them lean and they pivot until they get you a hit and you make your return. But I wonder if the model is counter productive, producing risk averse entrepreneurs who, if they follow the right procedure, are almost guaranteed success in the form of a talent acquisition or exit.

In other words, it is not risky to accept money from investors and there are no possible negative consequences. An entrepreneur accepts a risk only when his own money is ventured. A participant in Start-Up Chile accepts $40,000 and risks a delay in obtaining further financing from the USA or Europe, but the worst thing that can happen is that he enjoys an interesting country for 6 months. How is this inspiring Chileans to leave big companies to start their own ventures?

Silicon Valley is a special place because there are many more investors than in other cities. The USA is a special country because pension funds allocate some of their funds to angel investors and venture capitalists (VCs). The government of Chile employs a Superintendent of Pensions who restricts the investments that managers can make, and it is illegal to invest in startups or a VC fund. Essentially, Start-Up Chile trying to solve a problem caused by another government agency! If Chile wants to change the cultural fear of failure, they must allow pension funds to emulate USA pension managers.

Sabrina M. said of Silicon Valley:

I live here. Why, if there is so much money here, are our libraries shutting down and schools firing needed staff? Can’t these brilliant folks help break down the issues there?

The California state government and the federal government under Obama are insolvent, so opportunities abound for countries with less corruption, small efficient government, and ambitious people unafraid to work hard. Schools and libraries ought to charge users for their services, but capitalism is a foreign concept to many in the USA; the majority of citizens are unwilling to educate themselves and expect government to nurture and care for their needs and wants.

Many profitable businesses are being created in dispersed locations because cheap computers and net connections are becoming ubiquitous. Australia and Israel are small isolated countries that have already succeeded, and others such as Chile and South Africa might emerge, too.

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