Embed the innovation lessons of Silicon Valley into your startup

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew.

Rousing words from President Abraham Lincoln, taken from his 1862 annual address to Congress. It’s a call to action which resonates with the current Brexit-driven economic uncertainty, causing a dip in investor confidence which will undoubtedly mean pulling back the innovation engine and startups, and replaced by a focus on short-term expediency.

However, research shows that focusing on short-term aspirations typically yields only short-term results, whilst those seeking significant startup breakthroughs will both identify the big ideas and generate incremental ideas along the way.

These are uncertain times, startups are struggling to find the right balance between caution and optimism. No one knows what will happen next, and it is crazy to operate your business as though you do. But the more volatile the times, the more essential it is to keep your options open. Thus, taking less risk (closing down innovation options) is actually more dangerous than investing to preserve a number of future-focused options.

A strong sense of the possible is essential to driving innovation. Whilst the image of the swashbuckling, risk-taking, buccaneering entrepreneur is somewhat of a caricature, positive energy and exuberance makes a refreshing change from the constant stream of maudlin and misery in the news at present. We are running a severe optimism deficit, and encouraging innovation maybe counter intuitive, but it’s what is needed at present.

There is never a lacking of confidence in Silicon Valley, the Santa Clara area in the southern San Francisco Bay Area, home to many of the world’s largest tech businesses. It’s the hub of the tech startup innovation eco-system, accounting for one-third of all of VC investment in the U.S.

It was in the Valley that the silicon-based integrated circuit, the microprocessor and the microcomputer, were first developed, spawning the philosophy that runs through the Valley’s past and present to ‘play’ with novel technology.

The phrase Silicon Valley is attributed to Don Hoefler who first used the term as the title of a series of articles in the trade newspaper Electronic News, on January 11, 1971. The moniker quickly gained widespread use in the early 1980s, with the introduction of the PC and related hardware and software products for the consumer market.

A powerful sense of regional solidarity accompanied the rise of Silicon Valley, building on the foundations from Stanford University. During the 1940s and 1950s, Frederick Terman, Stanford’s dean of engineering, encouraged faculty and graduates to start their own companies, as what would become Silicon Valley grew up around the Stanford campus. Terman, together with William Stockley, a founder of Bell Labs, are often called ‘the fathers of Silicon Valley’.

Terman and Stockley aimed to provide local employment opportunities for graduating students, promoting Stanford’s labs for use as an office park, named the Stanford Research Park. Leases were limited to high tech companies. Terman also found venture capital for technology start-ups.

One of the major success stories was Hewlett-Packard. Founded in Packard’s garage by Stanford graduates William Hewlett and David Packard, Hewlett-Packard moved its offices into the Stanford Research Park in 1953. Other early tenants included Eastman Kodal, General Electric and Lockheed.

Fast forward to 1975, and the Homebrew Computer Club was an informal group of electronic enthusiasts and technically minded hobbyists who gathered to trade parts, circuits and information supporting the DIY construction of computing devices. It was started by Gordon French and Fred Moore, who met at Menlo Park, where Thomas Edison had his labs – in the Valley.

They both were interested in maintaining an open forum for people to work together on making computers more accessible to everyone. The first meeting was held March 1975 at French’s garage. Steve Wozniak and Steve Jobs credit that first meeting with inspiring them to design the original Apple I computer. As a result, the first preview of the Apple I was given at the Homebrew Computer Club.

Today, there are many global tech innovators based in the Valley, let’s take a look at their innovation philosophy, and what we take take into our own startup endeavours.

Google set up in Silicon Valley at Menlo Park in January 1996 as a research project by Larry Page and Sergey Brin when they were both PhD students at Stanford. While conventional search engines ranked results by counting how many times the search terms appeared on the page, the two theorised about a better system that analysed the relationships between websites.

They called this new technology ‘Page Rank’, it determined a website’s relevance by the number of pages, and the importance of those pages, that linked back to the original site. That was their core, founding innovation. Since then, the growth and expansion has been fuelled by an underlying innovation philosophy, which includes the following focus:

1. Focus on the user, not the competition Product design decisions should always be made around solving customers’ problems, not by how much money it will make. Design a great useful user experience, and the revenue will follow. ‘Launch, then keep listening’ was Google’s early ethos, leading to iterative learning and development.

2. Think 10X If you come into work every day and improve your process a little each day, you only achieve incremental progress. If you want innovative change, you need to think about how to change things by 10X. Think bigger than what you think is possible. No matter how ambitious the plan, you have to roll up your sleeves and start somewhere, but then think big. A 10x goal forces you to rethink an idea entirely. It pushes you beyond existing models and forces you to totally reimagine how to approach it.

3. Bet on unique insights Google has unique insights because they see the world through a certain lens that no one else has. Don’t get stuck innovating your own existing products when you could have the next big idea, look across other domains for business model innovation.

4. 20% Time Give your employees 20% of their time to focus on the items they are most passionate about. When the ideas are shared around, people spend their 20% devoting their energies to the best ones, creating a self-governing and self-regulating environment. This truly allows everyone in the organisation the time to act on their innovative spirit.

5. Use the 70/20/10 model Google were firm believers in a concept introduced in the early days: the 70/20/10 model. Simply put, it means that:

70% of projects are dedicated to the core business
20% of projects are related to the core business
10% of projects are unrelated to the core business

They had a few goals in mind here. One is that this model is a helpful way to allocate resources as they thought about the big picture of the business each year. It held the focus on core needs while also encouraging a healthy stretch into new and related areas.

Just as importantly, the 70/20/10 model supports a culture of ‘yes’ rather than ‘no’. It promotes ‘what-if?’ thinking. This positive framework feeds the core business while also encouraging new ideas and big dreams that can become huge wins for the company – those 10x moonshots. In the long run, a few of those unrelated 10% ideas will turn into core businesses that become part of the 70%.

Just down the road from Google in Palo Alto, Elon Musk has the Tesla HQ. Musk invested heavily in Tesla, founded by Martin Eberhard and Marc Tarpenning. Tesla is a quixotic venture, a niche electric car company in a nation addicted to petrol. In 2010 it became the first American car company to float on the stock market since Ford in 1956, and his focus on renewable energy solutions kicked in.

Musk is an irrepressible Howard Hughes like figure, but his timeline reveals a whopping sixteen failures since 1995 on his journey to date. That’s nearly an obstacle every twenty months, at least one every other year epic failures, but he’s endured, so how did he keep he innovation ideology in Tesla in such a turbulent environment?

1. Never give up attitude One eminent trait of Musk is that no matter what the obstacle is, he never gives up. Musk is exceptionally self-driven, he displays outright determination to continue and keep moving forward through all disparities. Persistence is very important. You should not give up unless you are forced to give up.

2. Insane work ethic Musk is a hardcore workaholic person. He believes that there is no shortcut to success. He works for 100 hours a week and has been doing so for over many years. He once said, If other people are putting in 40 hours in a week, and you’re putting in 100, you will achieve in four months what it takes others a year to achieve.

3. Aim for the big picture Musk has targeted exceedingly challenging obstacles, ready to take big risks and has no short-term gains in sight. There was a time when no one believed in his ideas, but this did not get his spirits down. In the words of Muhammad Ali, Impossible is just a big word thrown around by small men who find it easier to live in the world they’ve been given than to explore the power they have to change it. Musk’s enormous ambition to do what everyone says can’t be done means he’s always targeted disrupting systems instead of innovating incrementally.

4. Work on the ground level Musk possesses the ability to think at the system level of design. He knows exactly what he wants and sits with his team, he is the connection between the market demands and engineers’ interest. He believes he will know about the working of the product better if he gets his hands dirty by working with the engineers on the ground. He himself test-drives many of the changes to Tesla cars.

5. A ‘crystal clear’ massively transformative purpose Part of Musk’s ability to motivate his team to do great things is his crystal-clear ‘Massively Transformative Purpose’, which drives him. Musk’s MTP for Tesla is to accelerate the world’s transition to sustainable energy. Every product Tesla brings to market is focused on this vision and backed by a Master Plan Musk wrote over 10 years ago.

The ideology of Google and Tesla is actually very rare. Think of the other names we associate with entrepreneurship and innovation this century, they’re people who’ve built amazing operating systems, devices, websites or social-media platforms. Amazing innovations yes, but not with the impact Google and Tesla have achieved. Both have the entrepreneurial spark that emphasises experimentation, rapid learning and constant improvement, they are Pacesetters guiding the field.

In a world where there’s an army of ‘Uber for X’ clones, startups working on high impact and daring ideas need to make their mark. Ground-breaking companies with sweeping visions and big hairy audacious goals operate under the influence of outsize creative thinking, and employ audacious strategies.

With new startups popping up practically every day, yours needs to be truly innovative, going beyond the basics of introducing a product, looking-to-the-horizon, fired up by disruptive thinking, yielding bold ideas to make something happen.

You need to see what everybody has seen and think what nobody has thought, and don’t live your life in the rear view mirror – it tells you where you’ve been, not where you can go looking forward. Taking on board some of the innovation learnings from Google and Tesla will help you get there.

There’s a starman, waiting in the sky

The Falcon Heavy’s boosters burned for 154 seconds before they jettisoned into space. The main rocket pushed on. Four minutes later, the nose cone opened to reveal its payload: a cherry-red electric Tesla Roadster with the top down. The sports car stereo’s playlist included Bowie’s Space Oddity, Life on Mars and Starman.

The image is startling, incongruous, barmy. A car in space. At the wheel is a spacesuit, seatbelt on. Earth hangs behind it. The image jars like bad Photoshop. But it is real. A PR stunt for the ages.

It was all brought to you by Elon Musk, the South African-born entrepreneur and founder of Paypal, electric car company Tesla, and SpaceX,  manufacturer of the Falcon Heavy, the most powerful rocket on earth. The event is a stepping-stone to Mars.

The scene is spawned from Musk’s entrepreneurial bravado, endeavour and ego. It is human folly and genius rolled into one. Life on Earth feels precarious, so we took to the stars. The heavens navigated by a dummy astronaut in an electric car, with a handy note for aliens – Made on Earth by humans – imprinted on the circuit board.

Musk sold online payments firm Paypal for $1.5bn ten years ago and has evolved into the most iconic of entrepreneurs since Steve Jobs, capturing the public imagination as a crazy-mad-genius figure – part industrialist, part scientist, part philanthropist, part superhero.

Musk is known for his ability to come up with otherworldly ideas and then pursue them with vigour, emotion, intelligence and self-discipline. He has grabbed the private space flight and electric car industries, ventured into solar energy and artificial intelligence, and promised super-high speed magnetic train travel, in a tube, underground. Oh, and he plans to colonise Mars.

Most take Musk’s more wild ambitions and boasts about the future he will create with a pinch of salt. His companies have missed deadline after deadline and recorded massive financial losses. But popularity of Tesla’s electric cars, and the launch of the Falcon Heavy capped a string of successes that say, you know what, this bloke is making impossible stuff happen.

As a young boy, he was obsessed with science fiction novels and anything you could run an electric current through – hence the nod to Nikola Tesla. Ditching his education, he founded Zip2, an online newspaper platform, selling it in 1999 to Compaq for $300m. Musk ploughed his share into an online bank, X.com. which became Paypal. In 2002, Paypal sold to eBay for $1.5bn. At 31, Musk netted $165m and ploughed it all into three startups: Tesla, SpaceX, and a solar energy company called Solar City.

In 2004, Musk invested heavily in Tesla, founded a year earlier by Martin Eberhard and Marc Tarpenning. Tesla is a quixotic venture, a niche electric car company in a nation addicted to petrol. Musk set out a top-down plan for a low-cost, mass-market electric car. Having received hefty Government bailouts, in 2010 it became the first American car company to float on the stock market since Ford in 1956.

But serious production delays on its low-cost Model 3 have compounded years of losses – $675.4m loss in the last quarter of 2017, more than five times worse than the previous year, although revenue climbed 44% to $3.3 billion.

But to those who admire him, Musk is a visionary, an irrepressible Howard Hughes-like figure revolutionising entrepreneur. His two latest ventures, Neuralink and OpenAI, take him into the world of artificial intelligence – which he regards as the biggest threat to humanity.

With an estimated net worth of $12.7Bn and a clutch of projects we’d all give our give our right arm to be involved with, what makes him tick? Job search firm Paysa gathered speeches and transcripts of interviews from Musk. It put over 2,500 words through the IBM Watson Personality Insights API to perform an analysis. So, what are Musk’s top five traits? According to the study, they are intellect, immoderation, cautiousness, emotionality and altruism. Other traits Musk possesses include orderliness, self-discipline, self-efficacy and being cooperative.

An interesting analysis, but how do they manifest into his everyday habits and behaviours? From my own research, here is what is in Musk’s entrepreneurial dna, and the takeaways we can learn from.

Never give up attitude One eminent trait of Musk is that no matter what the obstacle is, he never gives up. Musk is exceptionally motivated and self-driven. Unlike other ordinary men, he displays outright determination to continue and keep moving forward through all disparities. Musk has a clear idea of what he wants and is wholeheartedly driven to do the right thing in achieving what he desires. Persistence is very important. You should not give up unless you are forced to give up.

Insane work ethic Musk is a hardcore workaholic person. He believes that there is no shortcut to success. He works for 100 hours a week and has been doing so for over many years. He once said, If other people are putting in 40 hours in a week, and you’re putting in 100, you will achieve in four months what it takes others a year to achieve.

Aim for the big picture Musk has targeted exceedingly challenging obstacles, ready to take big risks and has no short-term gains in sight. There was a time when no one believed in his ideas, but this did not get his spirits down. He believed in himself. He is targeting to place a man on Mars and wants to retire on Mars with 80,000 other colonists. He says, I’d like to die on Mars, just not on impact!

In the words of Muhammad Ali, Impossible is just a big word thrown around by small men who find it easier to live in the world they’ve been given than to explore the power they have to change it. Musk’s enormous ambition to do what everyone says can’t be done far exceeds everyone around him. Doing the impossible starts with having a grand, albeit crazy, vision. He aims for breakthroughs instead of incremental improvements. He’s always targeted disrupting systems instead of innovating incrementally.

Work on the ground level Musk possesses the ability to think at the system level of design. He knows exactly what he wants and sits with his team, he is the connection between the market demands and engineers’ interest. Musk seems to be a taskmaster but his attitude sets the culture of the team. He believes he will know about the working of the product better if he gets his hands dirty by working with the engineers on the ground. He himself test-drives many of the changes to Tesla cars.

Believes in self-analysis Musk believes in self-analysis and critical thinking about oneself. He believes that people do not think critically enough. It is one of the reasons for their failure. They take too many things for granted and be true without enough basis in that belief. Don’t delude yourself into thinking something’s working when it’s not, or you’ll get fixated on a bad solution.

Deep-rooted passion I didn’t go into the rocket business, the car business, or the solar business thinking, ‘This is a great opportunity.’ I just thought, in order to make a difference, something needed to be done. I wanted to create something substantially better than what came before. Musk only tackles those problems where he has deep rooted passion and conviction.

A ‘crystal clear’ massively transformative purpose Part of Musk’s ability to motivate his team to do great things is his crystal-clear ‘Massively Transformative Purpose’, which drives each of his companies. Musk’s MTP for Tesla is to accelerate the world’s transition to sustainable energy. To this end, every product Tesla brings to market is focused on this vision and backed by a Master Plan Musk wrote over ten years ago. Have a vision, make it happen.

Be audacious What he has done is something that very few living people can claim: Painstakingly bulldozed, with no experience whatsoever, into two fields with ridiculously high barriers to entry – car manufacturing (Tesla) and rocketry (SpaceX) – and created the best products in those industries. In the process, he’s managed to sell the world on his capability to achieve objectives so lofty that from the mouth of anyone else, they’d be called fantasies.

Focus on signals, not on noise Musk never invests in advertising, preferring to spend on research, design, development and production. He stresses that many businesses get confused and deviate their focus from things that make their products and services better. Musk believes that all the efforts that are not resulting in better products or services should be stopped. Many of Musk’s most entrepreneurial characteristics are behaviour choices within your own control.

Be a constant learner Musk reads the way most people watch TV. Musk is the definition of a bookworm. An avid reader from a young age, when he was in grade school he was reading ten hours a day. His childhood reading included Isaac Asimov’s Foundation series from which he drew the lesson that you should try to take the set of actions that are likely to prolong civilization, minimize the probability of a dark age and reduce the length of a dark age if there is one. The books are centered around the work of a fictional visionary named Hari Seldon. This has been his guiding principle for life.

He is tirelessly, unflaggingly optimistic Musk also has an ace up his sleeve – he has a strong glass-half-full mentality, ignoring the doubters and naysayers. The secret to his innovation lies in his enthusiasm. If you wake up in the morning and think the future is going to be better, it is a bright day. Otherwise, it’s not.

Be clear about your purpose I try to do useful things. That’s a nice aspiration. And useful means it is of value to the rest of society. Are they useful things that work and make people’s lives better, make the future seem better, and actually are better, too? I think we should try to make the future better.

This is the ideology of Musk, and though basic, it’s actually very rare. Think of the other names we associate with entrepreneurship and innovation this century, they’re people who’ve built operating systems, devices, websites or social-media platforms. Amazing innovations yes, but not with the impact Musk seeks to achieve.

Falcon Heavy was an extraordinary technical achievement with flamboyance and a touch of playfulness that is typical of Musk, but it should not be mistaken for a lack of seriousness. Musk is not simply having fun building rockets and fast car, nor is he running businesses just to become wealthy or bear rivals. He wants to open up fundamental opportunities for humanity. Creating either of these companies would be a signal achievement, that the same person should have built and run them in parallel is remarkable.

But by no means should Musk count his high-torque photovoltaic astro-turbo chickens yet, like all entrepreneurial ventures there is room for failure. I suspect he needs what I call James Bond luck. He needs to dodge the avalanche, avoid the gunfire, ski off the cliff, pull the ripcord and glide to safety into deep, blue, warm water below, so that he can save the world.

But maybe he can. He has the entrepreneurial spark that emphasises experimentation, rapid learning and constant improvement. He’s more than just ideas and allure. Elon is a rare business leader who is interested in mankind as a whole and wants to explore how tech can change the world we live in.

Pacesetters guide the field. It may not matter in the end of you don’t win, but it brings people along. And if Musk personally doesn’t deal the death blow to the internal combustion engine, he will always have a lovely red car in space to console himself.