If you want some good reading on what makes silicon valley the Silicon Valley, read the essay "How to be Silicon Valley" by Paul Graham. Bangalore does have some of these elements - diversity, clusters, a large number of expats etc. It's quickly becoming a true cosmopolitan city in India. You don't need to know the local language (Kannada) to live there. It does have a few good colleges such as IIM and IISC, but no IIT. The real estate boom in Bangalore is a clear indicator of what's going on in the city with regards to the spending power of the middle class and the upper middle class. Most large IT multinationals have a campus in Bangalore. The companies such as Accenture have more people in Bangalore than in the US.
So, what's wrong?
Lack of entrepreneurial mentorship
If you go back to the roots of the early success of the Silicon Valley you will find that the venture capitalists community mentored the entrepreneurs to bring innovation to life. Steve Jobs had an idea, but no business plan. Some of the entrepreneurs became serial entrepreneurs and some became the investors who in turn mentored other entrepreneurs. This cycle continued. I don't see this in Bangalore. Not only the VC funding is not easily accessible (more on this below), but there are no early investors that I see are spotting the trends and mentoring the entrepreneurs.
I spoke to many entrepreneurs in Bangalore. Let me tell you - they do not lack the entrepreneurial spirit. They are hungry and they are foolish. And they are chomping at the bit to work on an exciting idea, but they do lack someone to mentor them and take them through the journey.
Where have all the designers gone?
A couple of years ago I was invited at the National Institute of the Design (NID), a premier design school in India, for a guest lecture. They told me that design is not a discipline that easily attracts good talent in India. They are competing with the engineering schools. India lacks designers. This is the age of experience start-ups. A very few engineers have the right design mindset. If they want to be successful, they absolutely need to work with the designers who are impossible to find and hire. This talent gap is hurting to manifest the vision of a founder into a product that the consumers would love to use. Flipkart and Red Bus are my favorite start-ups but they are few and far between.
Math and Science would only take you so far
It's not just Math and Science that has created the Silicon Valley. It's the right balance of creativity, business acumen, and engineering talent. The schools in India, even today, are not set up to let students be more creative. They are still fixated on Math and Science since they guarantee good jobs. The Silicon Valley entrepreneurs followed their dreams. In the US, it's about studying what you like and chase a career that you are happy with and not to pick a certain kind of education just because they provide good jobs. Unfortunately, creativity is hard to teach. It's ingrained into the culture, society, and the systems. If India has to get this right, this needs to start at the education and a support system that has a place for jobs other than Math and Science.
I have been following the education reforms in India and private sector investment into K-12 schools. They are encouraging. I don't believe Bangalore or India for that matter will have math or science issue anytime soon, but it will certainly have entrepreneurial issues to jump start new companies and manage their ever growing engineering workforce. I was invited to speak at IIM Ahmedabad, one of the best business schools in India. During my conversation with the faculties, I was told that the most pressing issue for the elite business schools in India is to scale their efforts to create the new class of mid-management that can manage the rapidly growing skilled workforce.
Obama keeps saying more and more people in the US should study math and science to be competitive. I don't believe that's the real competition. The real competition is what can you do if you did know math and science or if you had access to people who knew it.
Lack of streamlined access to capital
A lot has been written about this obvious issue and I don't want to beat this further. I just want to highlight that despite of all the money that the individuals and large corporations have earned in India, a very little is being invested into venture capital since the VC framework, processes, and the regulations aren't as streamlined. It's not a level playing field. In the Silicon Valley, the venture money is commodity. If you have a great idea, team, or a product, the investors will run after you to invest into your company. Bangalore is far from this situation. But it shouldn't have to be. What's missing is not the available money but a class of people who can run local funds by investing into the right start-ups. Most US VC firms have set up shops in India, but I don't think that's enough to foster innovation at the grassroots level. Bangalore needs Indian firms to recognize the need for a local VC community that can work with the system to make those funds available to the entrepreneurs.
The picture: I took this picture inside one of the SAP buildings in Bangalore during the week before Diwali.