In this chapter, we will outline some of the main characteristics of the way innovation works in Silicon Valley, particularly in the context of startups. Features such as Think Big, disruptive innovation, innovation approaches, and innovation differences between hightech ventures will be described and explained. The development from idea to product, from upstream to downstream innovation, is the core of the analysis and illustrates the microlevel of our ‘Silicon Valley Innovation & Startup Model’. The second part of the chapter reports on the model elements that were decisive pull and push factors for Dutch entrepreneurs to start their new venture in Silicon Valley.

Think big

“Small is beautiful” is definitely not part of the Silicon Valley frame of mind. Quite the opposite: scalability is seen as the key to successful innovation and entrepreneurship. Think Big is the leading motto which mirrors an ambitious business climate that aims high and sets ambitious goals. It indicates that startups should not be satisfied with limited product impact and poor market share, but should shoot for the moon. The corresponding idea is to trigger entrepreneurial heuristics that go beyond the here and now and address real issues. Think Big shows the drive to grow one's business and to get rid of hurdles that block growth. It implies leadership, mission, direction, focus, and above all an innovative and visionary product portfolio. But it is more than entrepreneurial psychology alone. Investment logic is at least as important. As we will outline in chapter 6, VCs go for substantial returns on their startup investments. In order to reduce uncertainty, a fast growth perspective can win them over. The better the growth perspective, the easier it will be for new ventures to raise VC funding. Setting low goals, so the belief goes, will result in mediocre outcomes. It will bring about underperformance. That is not the world of smart VCs, neither, of course, of ambitious startups. VCs are interested in making money, and that can be done by one of two exit strategies. Either an IPO (an initial public offering, i.e. a stock market launch), or sell the company.

VCs not only want fast growth but they also expect fast returns on their investments which inevitably results in short (18-24 months) runways for startups.