Last night I had a spirited discussion with some friends about US politics. One of our friends was expressing a concern that historically the US has been too “nice”, hopeful, helpful. We have created a culture people want to enjoy, but now we will be taken advantage of and ultimately destroyed. We need to be tougher and not be pushed around. I am not sure I would characterize the US as being “too nice”, but I contest that being collaborative is a liability.

My counter argument is that people are made to collaborate, and maximum value comes when people work together rather than engaging in a winner take all competition. It’s possible for a nation to be collaborative but still thrive even when facing bad actors.

Brief Update (2021): I recently finished Adam Grant’s book Give and Take which I think is excellent. He argues that often we are not in a zero sum game. and that cooperation can often “increase the size of the pie”. He has a nice section where he describes how effective givers can minimize the impact of people who attempt to take advantages of their cooperative nature.

The theoretical underpinnings of this viewpoint comes from game theory which is extensively discussed in the book The Evolution of Cooperation by Robert Axelrod. For people who aren’t into books, Leon Seltzer’s article The prisoner’s dilemma and the “virtues” of tit for tat provides a good summary. My super short summary: in a world ruled by selfishness with no central authority or rule, enlightened self interest can lead to effective cooperation in any situation where the participants believe that they will need to interact with each other in the future. In situations where there will be multiple interactions Tit for Tat ends up having the best long term payout. The algorithm is simple. Start by cooperating, and then mirror back the behavior of your competitor. That means “discipline” bad actors, but also “forgive” them if they are willing to cooperating. [A slight variation has a small random probability of cooperating even if the competitor has defected which can break retaliation cycles which out performance pure tit for tat.] Axelrod found that when facing numerous other algorithms, some of which were designed to take advantage of “cooperative” partners, that tit for tat consistent had the best over all returns when playing in multiple round competitions.

I believe that silicon valley culture is a great example of how this works. In the mid of the 20th century, there were several places that arguably were better positioned than silicon valley to dominate the technology landscape. For example, the Boston area had more capital and a larger educated workforce. Unfortunately for Boston, they also had non-compete employment contracts and people and institutions which were not inclined to collaborate with competitors.

The former dean of Stanford’s School of Engineering Fred Terman was instrumental in shaping the Bay areas technology landscape to be an open system which welcomes people in, encourages collaboration, and allows many people to succeed base on their merits. Terman later tried to help the research triangle in North Carolina and the area around Austin, TX replicate the successes in Silicon Valley. These effects fell far short of the results in the Silicon Valley. I believe this was primarily due to less willingness to collaborate. A secondary issue was that people were more oriented toward large organizations and struggled to take risks (e.g. less entrepreneurial). Other factors that might have contributed was less access to venture capital and a lower density of talent. I actually think access to capital wasn’t significant, because in the early data of Silicon Valley capital was not established… the east coast had much more.

A great example of this culture can be seen in the early days of semi-conductors. Competitors gathered weekly at the Wagon Wheel to swap stories and brag about their successes. Sharing took away some competitive advantage, but everyone benefited because really hard problems only had to be solved once, and everyone could move on to the next challenge. One of the best stories from those days was went Intel was having a serious issue. They were betting the company on a new chip. The chip looked good in prototype form but when they went to mass production the yield rate was extremely low. They spent several months trying to figure out what was going wrong. They couldn’t figure it out. In desperation they shared their difficulties with others at the Wagon Wheel. Engineers from Fairchild, arguably Intel’s biggest competitor of the day offered to help if Intel would provide the beer. The engineer sat down discuss the issue. In the end the engineer’s from Fairchild laughed and then said “Find out who on the line is using hairspray, and get them to stop”. Intel did as requests and their yield rates became viable. It turns out Fairchild’s engineers had chased almost an identical problem for a year before they finally narrowed it down when their yields became acceptable when one of their workers was away from the line for several days. The hair coverings both teams were using weren’t fine enough to contain the micro particles from the hairspray escaping.

For more stories and analysis, check out Steve Blank’s secret history of silicon valley. Technology Review Article Silicon Valley Can’t Be Copied is one of the best articles summarizing what has made the bay area so unique and the home of so many successful startups and Anna Lee Saxenian’s book Regional Advantage identified many of the same characteristics nearly twenty years earlier. Booz-Alan’s analysis identified a Culture of Innovation as being a differentiator, and Accenture attempted to Decode Contradictory Culture Aspects in Silicon Valley.

It’s worth noting that the Silicon Valley has become a magnet for ambitious, highly skilled individuals. As a result there is a higher density of people who can be the core of a successful start-up than anywhere else in the world. These days it’s not that Silicon Valley grows the people who make amazing start-ups, but rather it has an environment that makes it easier than most places to build a start-up, with a huge number of people who have moved into the area to build the next great startup.

There is a nice evolution of trust simulation if you want to experiment with different strategies.