#489 Why Silicon Valley Still Wins: Dr. Andrey Kunov on What Emerging Markets Miss

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Mehmet: Hello and welcome back to a new episode of the CTO Show with Mehmet today. I'm very pleased joining me from the West Coast in the US, Dr. Andrey Kunov. Dr. Andrey, thank you very much for being here with me today. The way I love to do it, I keep it to my guests to introduce themselves, but [00:01:00] you're doing some very special work for startups, for technology, and you are actually in the heart of Silicon Valley talking to me today.

So I will leave, you know, the intro for you. Tell me a little bit more about your journey and then we can start the conversation from there. So the floor is yours. 

Andrey: Thank you very much. First of all, m Matt, I wanted to thank you for inviting me to your podcast, uh, and sharing your time with me. I really appreciate that.

Uh, every time when somebody calls me doctor, I feel a little bit like an imposter. You know, doctors are the people who are supposed to treat people, uh, out of, you know, medical conditions. I'm not that kind of doctor, right? I just got my PhD from Stanford University in political Science, uh, and, uh, economics.

So, uh, my doctor is all about, uh, scientific knowledge and being a scientist in the past, but I. [00:02:00] I've been doing, uh, mostly pursuing entrepreneurship career for the last, uh, at least 15 years when I started my first company, which is called Silicon Valley Innovation Center. And then I started another company, which is called Brio Link.

So I consider myself to be a serial entrepreneur, uh, being in the middle of Silicon Valley. It helps you with lots of interesting perspectives with the lots of people who live here and build new technology companies. So that's what I am all about. I was born in Kazakhstan, uh, 53 years ago, and then I came to Silicon Valley, uh, in the middle, in the mid nineties, uh, as a young student at Stanford.

I got my master's degree, uh, first at Stanford, and then I was accepted to a doctoral program. Uh, that's where a doctor comes from. Uh, and then when I graduated in 2008, I, um, [00:03:00] I was like thinking, what should I do? You know, I published a few books in the past. I've been thinking about being a researcher for a long time.

I did some quite a bit of research, uh, mostly on the topics of political economy, you know, uh, something that, um, uh, kind of, um, it's a, it's a science that exists between economics and political science. But then eventually I decided that entrepreneurship is, uh, uh, probably the most interesting career in life.

And, uh, your audiences, those who are entrepreneurs, they can probably share that kind of sentiment, that running your own business, being responsible for your own life, for your own, uh, uh, financial success is one of the most exhilarating things in life. And that's what I decided to do for the rest of my life, and that's what I've been doing since then.

Mehmet: Great. Uh, I can resonate [00:04:00] from my own journey also, Andrey, um, regarding the entrepreneurship, it's, it's, it's the best thing that someone can do, not only from financial perspective, you know, it's like, you know, you just do and create something and then you grow it, and then you take it to the next level. Um, you, you know, your journey is, is really fascinating and, um, I think there's a lot of lessons that we can learn from and you've been like, in different disciplines and I'm always, um, you know, curious to understand and know, like from all these things together.

What's the common thread like you, you mentioned about different domains and sub-domains now and later entrepreneurship, right? What do you think is the, the common thread when you try to put all that knowledge that you have built all these years together? 

Andrey: Well, I guess in my case specifically, a common threat would be, um, an opportunity [00:05:00] to come up with your own ideas.

To start from, what is it that you want to do in life, right? Uh, and then trying to materialize those ideas, manifest them in the world, uh, and make those ideas valuable products, or in my case, these are services and solutions. And then, uh, offer them to the world. You know, learn all the necessary technologies and approaches that make it possible for you, not just to, um, uh, fantasize about your ideas, but actually, as I said, materialize them in some kind of implementation and then offer them to, um, uh, to your potential clients or your customers.

So that's, I guess what has always been absolutely interesting for me. Even when I did science, it was a similar, uh, similar. Uh, uh, threat for [00:06:00] me, uh, similar motivation that I could come up with some, uh, scientific hypothesis, uh, about the way how world works and test those hypothesis, uh, with, uh, the data, with, uh, empirical evidence and then try to publish that.

You know, for a scientist, it's a publication in a reputable magazine or journal is the, probably the biggest motivation and a reward because that's how you've been judged by the world. How good you are, you know, if your ideas really explain the way how world works in business, it's not like that. Uh, in most cases, nobody cares.

You know how many publications you have, unless you want to invent, of course, something that can potentially be patentable or you could. Um, do your research for the purpose of [00:07:00] inventing new product. I guess this is how, uh, the entire AI revolution has started. Uh, a lot of scientists did a lot of very hard research before, uh, open AI was able to materialize that in a large language model in GPT that now everybody is using.

So in that regard, research is also important for many, many technology companies. 

Mehmet: I'm happy you mentioned innovation. I'm happy you mentioned also about ai. Now it applies by the way, in science and you know, in entrepreneurship and we hear this word a lot and you know, as someone who work. Partially and later on fully as a, uh, in go-to market.

So we use for example, yeah, like, look, this company has this disruptive technology. Now the word disruptive. And [00:08:00] here, because for you, you have this double-edged being an entrepreneur and being also a, a scientist. So do you think, like some people now consider the word disruption as a buzzword. And let me ask you like in a more straight way what really a disruption is when we talk about technology today.

Andrey: Right. Yeah, that's a really good question. Mehmed, thank you for asking it. I could approach that question, like you said, from two different angles, from the business point of view, but also more from like an academic point of view. What is a disruption? I think disruption has become, has been a, a, a buzzword for many years since, uh, uh, it's been, it became popularized, uh, by, um, different people, but specifically, uh, what's his name?

Uh, it was the book, uh, that became popular. Um, I'm trying to remember the name of, uh, that Harvard [00:09:00] professor who published a book on this particular topic. Um, and, uh, um, uh, it just escaped my, my, my, my memory, the, the name of that book. But I will remember that, uh, in a second. So, to, uh, answer your question.

What disruption is all about? Uh, essentially, um, if you look at it from the sort of a research point of view, disruptive technologies are the ones that can be both, um, much more successful in terms of, uh, their quality of the solutions that they bring to the market, but also from the point of view of price, right?

Large companies, the reason why it's called disruptive is because large businesses find it extremely difficult to be disruptive. And what is the reason? Uh, for large companies not being able to, uh, [00:10:00] in most cases, create disruptive solutions? It's because, uh, most of those companies operate based on large markets and large, uh, profits.

Margins that they have to generate, right? Disruptive solutions are not like that. They usually get originated in a small markets and sometimes with no profits at all. So large companies find it difficult to create a solution that and, and sustain the solutions that are not bringing them any profits. As a matter of fact, they have to think about it as a sort of going backwards in their history of success.

Uh, to become a small startup that can operate on a small budget with the very uncertain market, a lot of risks that are usually associated with new disruptive products, no large company would want to do that. [00:11:00] Obviously, right. So startups, uh, on the other hand, are capable of doing that and they have a huge advantage in inventing new risky products that have no markets in the beginning, right?

So once they establish that solution, and if that solution or product has a very significant potential value, that still needs to be discovered with the market, startups can afford doing that because there is no other way for, uh, uh, for those companies to be become successful. Uh, and, uh, other than actually keep reinventing.

So it's usually in the DNA of any startup company, successful startup company to take a risk with new, unproven. Products, large companies cannot do that. But once that product becomes [00:12:00] successful, and then the startup continues to develop and create essentially the market for themselves with the low margins, it's really difficult to compete with those companies.

Think about Amazon, for example. Now it's pretty much like a monopoly here in the retail, uh, markets, uh, in the United States, but for a long time, Amazon was just a bookseller, essentially. Jeff Bezos, when he started this company, it mean in, in mid nineties, you know, he, uh, raised, uh, a few million dollars for that online shop, essentially for books.

Of course, it, it looked like a small startup, right? But why did they win? Why, how were they able to, uh, outcompete the largest retailers in the world and chains of those retailers, uh, in the [00:13:00] us? Well, that's because Jeff Bezos was able to keep his startup growing without any profits for many, many, many years.

And the investors were okay with that. Every time when large retailers would approach the fast growing Amazon and Jeff Bezos in person and tell him, okay, well, maybe you are growing fast, but you are not making any profits for so many years. He would always smile and he would say, uh, your profit is my opportunity.

Meaning that startups can reinvest all the money that they get from, you know, their sales into their growth. And in many cases, most cases, I would say growth for startups is more important than becoming profitable. Right. That's how you capture as large markets as possible. Same happened with, uh, other [00:14:00] famous startups like Uber, right?

Right. Or Airbnb. You look at all of them. The first ingredient for success is to come up with the product that solves a problem on the market that nobody else does, right? Like you have a small monopoly from the very beginning. That's what Peter Thiel. Famously, uh, advertised in, uh, kind of made, uh, made an argument in his book from zero to one, uh, where he said that, uh, if you want to become a successful as a startup, you have to find a problem where there is really no solution.

And when you have a solution, that kind of a solution has to be, uh, like a small monopoly on the market, uh, um, in this way, when you offer this unique value proposition that nobody else has thought about, profit is the last thing that you should think about, right? The first [00:15:00] important thing is to think about the growth of that solution.

That's where disruption is coming from, from your opportunity to grow without being profitable. No large company can afford that, or no existing company on the market, which has to generate profit. That's the reason. For their existence. Right? For existence of any company. Um, but startups are not typical companies.

They can grow for a long time being supported by investment money on the market, um, without, uh, trying to extract profit. Because profitability makes your company more vulnerable in many ways, to competition. Those companies that are, that have a different cost structure in their business, those who are, let's say, more efficient in terms of their costs or maybe those who are [00:16:00] larger in terms of their markets, they can come and squeeze you out of that market, right?

But if you are small and if you can afford to grow without being profitable and offering a unique solution that no competition. He's capable of quickly and easily replicating. Um, uh, that's what makes you disruptive. 

Mehmet: Great. I think the book you were referring to because 

Andrey: Navigator's Dilemma. 

Mehmet: Yes, exactly.

Yeah, yeah, yeah, yeah. Now, now lot of things Christians, you know, you Yeah, lots of thing. You mentioned Andrey, which sparked immediately a few questions in my mind. So of course, you know, the zero to one and trying to get something where you become Monopoly. And I think there are a lot of companies that they have done.

And you mentioned Amazon, you mentioned Uber, and I think at some stage now I was reading, um. [00:17:00] I was doing the, the, the, the power law the other, the other day. And some of the stories that came is that sometimes, and here sometimes putting kind of an investor hat versus a accelerator hat versus an entrepreneur hat.

But you know, the thing is people, they say, okay, we get you Andrey. We need to be disruptive. We need to come with something that no one else, you know, came up with before, but in such times where. Knowledge is abundant. AI made everything easy. How I can be disruptive and maybe someone would go and say, when Google came, they were not the first ones to, um, you know, invent the search engine, but they managed to get the zero to one moment also themselves, you know, trying, of course I know the, I know like how it should be answered, but I would love to hear it from the expert from you.

Andrey: So the question is, uh, uh, in the abundance of knowledge, how can [00:18:00] you still have something unique, right? Yes. When everybody can know everything, 

Mehmet: right?

Andrey: Uh, well, um, that's a another really good question. Thank you for asking that, Mik. My answer to that would be, it really doesn't matter much. The knowledge by itself does not create companies. The knowledge is the only works like a vector, giving you the right direction where you have to be going. That's what the knowledge is good for.

If you don't have any knowledge, it's very easy to make a wrong direction where you're gonna spend your life, your time, right? If you don't know the markets, you don't know your customers. So all of that unique expertise that you can extract from AI is only good [00:19:00] enough to help you with the direction where you wanna go.

But the rest of the, uh, journey, I would say 99%. It's not about knowledge, it's about your stamina. It's about your persistence. It's about execution. 

Mehmet: Mm-hmm. 

Andrey: A lot of people who know where to go, they don't because they're always afraid or they just don't have. That guts that separates entrepreneurs risk taking, uh, from the rest of the crowd.

And if you are a true entrepreneur, the 99% of your journey will be about your ability to put that knowledge to action. 'cause most people stop at that point. They might, they like good at criticizing. Mm-hmm. It's because it's very easy, right. To trash any new idea. You can always find vulnerabilities, [00:20:00] risks, why you are doing that?

Just go get a job. Right? That's what you get from that advice that you get from all of your relatives when you decide to start a company. Like why are you doing these crazy ideas? That's kind of a normal reaction that you will get as an entrepreneur from the most of the world, because that's what the world only knows.

How many successful entrepreneurs have you met in person in your life? Well, you might be different because you are, you know, you have a podcast where you talk. But I would say the probability of meeting a person who is a successful, uh, successfully started his own company is very low because 99% mean more than 9, 99 0.9% of all people.

They do not have the right mindset, um, uh, for executing [00:21:00] your business. It's not just about the knowledge. So, um, AI is like any other, a good technology tool that can be helpful to you as an entrepreneur, but it does not make the life of entrepreneur any easier. Meaning that, um, you still have to set up your business.

You still have to find your customers. You still have to, um, learn all the important elements of be, of, of success, right? How to raise capital, how to manage those investors, how to manage your team and so on. Like tons of questions that are absolutely, um, they depend on you. They don't depend on ai. They don't depend on even your competition.

They're only a question how you design your [00:22:00] business and how you execute that design, that strategy, uh, that you build for yourself. So, in my opinion, ai, of course, it helps with knowledge for those talents. Who are out there maybe in a very difficult circumstances of their life, they don't have money, they don't have, uh, any support from their relatives, they have nothing.

But if they have access to, uh, uh, artificial intelligence and models that they can talk to and they can get that knowledge, which can help you to start your business, that is a huge advantage to discover more, uh, uh, talents out there who are willing to start a business. But they were just born in adverse circumstances of their life.

And, and here is another point, ed, which is very important. Business and entrepreneurship is not a zero sum [00:23:00] game like politics. It's not a negative sum game like wars where everybody's wars off when they finish the war. Like most of the wars are like that. You know, when people kill each other. You know, that we see, unfortunately, things like that happen around the world in game theory.

That's what, what is called negative sum game. When we play a game with each other, when we interact with each other and both of us, uh, walk away being worse, uh, in a worse situation than we were before we started that game. That's a negative sum, right? Right. And we just distribute that negativity between each other.

These are wars. Politics is zero sum. It's when I win, you lose. You win. I lose. When you add that together, there's zero. Um, what is left, right? Business is a positive sum game. So the more [00:24:00] entrepreneurs you know, the better your life will be. All things equal. The more businesses are out there selling their products, the better potentially your life as a consumer or another entrepreneur will be.

So when I hear that there is more entrepreneurs out there, even in my line of business, I'm only happy about that. You know, of course there is a such thing as competition. Yes. That keeps you in line, right? It keeps you, uh, being a disciplined person because you know that if you are not delivering your products or solutions to the market efficiently, there will be somebody else who is smarter or stronger or more aggressive than you are who can take your spot.

Yes, that's true. But if you kind of, uh, rise above that immediate fear of competition and think about how much positive value [00:25:00] competition brings to your life, for example, it validates. What you are doing. If you are doing something where there is completely no competition, there's always a risk there that perhaps, uh, the lack of competition means that, uh, uh, nobody wants that new disruptive solution that you are thinking about.

So, competition is always important and good, but when you rise above that immediate fear of competition, you can quickly see that the world of business is about creating new values, material and non-material values that get distributed across the entire society, across the entire world. And being a part of that game makes me feel much better.

'cause I'm even happy when I meet my competitors, you know, when I can talk to them. And if we can be honest with each other, we can learn a lot from each other without hating each other, right? Because [00:26:00] we're not in the war. Exactly. We are just, you know, competing with each other and being, and we can be friendly and even happy on occasion meeting people who are doing the same business as you are.

So my point in the end, uh, to answer your question is that, uh, you shouldn't worry about other people knowing what you know. 'cause it doesn't really matter that much. What matters is whether you have the guts to walk the walk, so to say, and not just talk the talk. Right. 'cause most people can talk the talk and very, very few people can walk the walk.

Mehmet: Walk. Absolutely. Absolutely. I was one of them, by the way, uh, who talked to talk. I, I confess. But yeah, you need, you need to take the step and, and, um, you know, try, try out. Um, now I want to ask you, Andrey, about your work with the Silicon Valley Innovation Center. [00:27:00] Um, so. What, what kind of founders, what kind of entrepreneurs you're looking for to, to, to support.

And you know, like if you can also walk us through why they come to you, how you help them, and, you know, uh, how also you, you, you try also to put them into the ecosystem as a whole. I would love to hear that from you. 

Andrey: Uh, absolutely. Yes. So I started this company about, uh, 15 years ago. And before that I used to work at Stanford University.

I was, uh, an executive director of, uh, um, a research center. Part of my responsibilities back then was to, uh, among other things was to organize executive education programs for, uh, groups of, uh, companies and universities that would want to come visit Stanford and learn something new from, uh, Stanford [00:28:00] faculty.

So, uh, some of those people kept asking me, can you do something outside of Stanford? Can you organize a program, not just with Stanford professors? But with the local companies who could share their knowledge, uh, their expertise, how they run their businesses, how they started their businesses, you know, questions like that.

You know, learning from the horse mouth, so to say, from the origin. I think in Japan, they even have a special word for that. I remember hosting some Japanese clients and they said, uh, they said that word. I just, I don't, don't speak, uh, Japanese myself. But, uh, it just shows the appreciation from the opportunity of the opportunity of learning from the source.

So I looked around, I couldn't find anybody who would be doing that kind of education, you know? Uh, it was something really, uh, new, uh, at least for me. [00:29:00] So at some point when I understood that nobody has been doing that, I quit my job. I. From Stanford and, uh, I decided to start this company in order to give an opportunity for, um, uh, company leaders from other parts of the world to come to Silicon Valley and meet, uh, with startups, meet with established technology companies, and learn something valuable from them.

Now, the catch was, uh, uh, the problem was why would those companies be meeting with my clients? You know, they are not like tourist destinations. There is no Eiffel Tower in Silicon Valley, right? It's just businesses. They run their own, develop their own products and so on. I quickly discovered, actually, after a few years of working with them, I discovered the reasons.

If those startups or even established technology [00:30:00] companies would be able to, uh, meet with my clients for the purpose of establishing, uh, um, a jointly, um, how should I say that mutually, uh, beneficial relationships and sales specifically, they would be way more open to, uh, work with me. So I started focusing on those opportunities on the market that would be mutually rewarding.

You know, that win-win positive sum that I mentioned would be at every, um, opportunity that would, I would, uh, open up not only for my clients that are established companies around the world, I. More like traditional companies, but also for the local tech companies, when those startups could find an opportunity for being, uh, acquired by my clients [00:31:00] or for, um, uh, finding investment from corporate, uh, DC arms of my clients or just becoming a partner for distributing their new solutions to the mm-hmm.

Uh, uh, client base of my clients. So I started discovering all of those opportunities that both sides would be interested in, and that was kind of the most important, uh, insight for me. Why there is a, there might be a mutually beneficial type of relationships here that I can monetize in the form of educational programs.

Um, and, and your question was how do I help those startups? Well, 

Mehmet: yeah, 

Andrey: I, I just mentioned a, a few of those ways, how we do help start, we do help startups. Um, one of the ways, um, [00:32:00] how we, we do that is when we work with our corporate clients for the purpose of, uh, what I call, uh, startup scouting. We reach out to those startups that fit the interest of our clients and we, uh, facilitate those opportunities for investment and acquisition.

Mm-hmm. And startups are always on the lookout for additional capital and sometimes on occasion, uh, they are not against of being sold, uh, to a larger company. Right. There are lots of serial entrepreneurs. Who prefer to, not just to get stuck with one single company, but create multiple ones. Uh, some of those entrepreneurs are just really good about starting companies and bringing them to a certain market value, uh, after [00:33:00] which they are not that good.

You know, it's one thing to be, uh, a really good innovator and it's another, totally, another thing to be an executioner, right? You get some really good people, uh, with large companies that can be both. Sometimes it's possible. I don't know, like Facebook, mark Zuckerberg, you know, he started the company and then he was able to run this company for quite a long while, right?

Or Steve Jobs, or, you know, many names come to mind, but the majority of entrepreneurs. Technology entrepreneurs, they're not like that. They can start companies really well, but then they get bored at some point. So that is when my clients come in and, um, uh, either invest or acquire those companies, making them a part of a larger, uh, entity.

And this way, uh, a more established traditional companies, [00:34:00] they can sort of rejuvenate your themselves with the new blood, so to say, uh, that they get, uh, by acquiring new companies. You know, m and a departments are very active for, you know, large, successful companies every time when they want to. Uh, find the new solution.

I'll just give you one example. Sure. I've been working with one very large French pharmaceutical company very recently. I'm not gonna name their name, but you know, it's pretty easy to find who they are. Uh, they're probably the largest, uh, pharmaceutical company in France and perhaps one of the largest in Europe.

So that company, uh, wanted to, uh, come to Silicon Valley and bring their directors, top people to Silicon Valley to sign a few contracts with the large. Technology companies here. But another reason why they wanted to [00:35:00] come over was that they wanted to meet with startups that are developing new AI solutions for accelerating drug discovery.

Hmm. You know, this is something that you can try to build in-house, and I'm sure many pharmaceuticals do that, of course, do a lot of experiments. But another way, how you can reduce your costs of internal r and d uh, efforts is to go out and explore what they call open innovation approach. What is open innovation?

Well, essentially you don't try to reinvent a wheel in-house because sometimes you don't have the right people, or it's more expensive. There may be, might be many reasons why open innovation is better than in-house innovation. This is when you go out and look at. The companies that were just formed recently at startups.

And what do they have in your particular [00:36:00] zone of interest in, in the case of new drug discovery? So, uh, solutions, uh, there are plenty of companies who are trying to run multiple experiments. So a large corporation can look at those opportunities at those startups as a kind of outsourcing in some ways, their r and d efforts, and doing that with way less expenses, costs than, uh, you would do that if you were running it inside, right?

I mean, it all varies, of course, of course. Um, but, uh, in many cases the success of startups completely depends on, uh, the creation of the new, uh, market value. Right in-house. Sometimes it's harder to, um, validate the creation of the market value. Uh, in the open market, it's pretty easy, uh, because it's a separate [00:37:00] company.

If they don't create anything new, you know, they don't deserve anything from their investors and so on. So this is the reason why we've been helping, uh, that large corporation to identify this, um, new startups in drug discovery. Um, and I know that there are some good conversations that we help build between them.

This is how we help startups. I. 

Mehmet: Great. Now you mentioned, uh, something about different, um, different geographies and different, uh, ecosystems. Um, before we hit the record button, I was telling you how, in a passionate way about my visits to, to Silicon Valley before now. Oh, you should 

Andrey: definitely come. 

Mehmet: Yeah. I have a dilemma within me to be frank.

Uh, Andrey, and maybe you can help me, so. Sure. Um, and this, I'm asking it for, for, of course for the audience as well. Silicon Valley, despite what people say, is still, in my [00:38:00] opinion, the capital of technology innovation. Now, secret sauce, I think I know it, but maybe this is the first part of the question. Why still no other ecosystem was able to replicate Silicon Valley first, second.

In emerging markets where I am based here, I am in, in, in the Middle East in Dubai, and we've seen like other places where they want ly and with all the government support, all the thing to become another tech hub. Right. What may, do you think the mistake is just copying Silicon Valley as is and trying it to implement it somewhere else, or there's a secret source for Silicon Valley and companies should aim for Silicon Valley as a first step and then try to go elsewhere?

What? What do you think?

Andrey: Let me [00:39:00] just give you my own thoughts about that. Of course. Sure. Everybody would have their own, uh, ideas about the secret sauce of anything. Right? Uh, well, why, let me ask you this question. Why nobody was able to create the same tasteful ants as French. Can, you know, what is their secret sauce for their French cuisine?

Or you go to, like, you live in Dubai, right? Uh, why Dubai has the tallest building in the world and nobody was able to build a, a taller building so far. At least we will see about the future, of course. Right? Uh, there are lots of places out there that are famous. For something that they are really unique about, like they might have a competitive, unfair, competitive advantage like the French people for example.

What is their [00:40:00] unfair competitive advantage because they love good food, I think. Right? That's to start from, um, what is unfair advantage of Dubai when it comes to architecture and tourism? Well, it's because, you know, I just was crossing Dubai Airport. It's amazing how fast you can walk through that airport with the people you know, being friendly to you.

This is by design of course, right? Like the leadership of, uh, UAE and Dubai specifically, they care about customer tourist experience. So they bring a lots of things that can augment a tourist experience in a place that used to be a desert. What, 40 years ago, 50 years ago, right? There was nothing, I guess like a small village probably, uh, where Dubai was standing.

And now look at that. It's, uh, you know, every time I [00:41:00] come to Dubai, I, I am like, wow, amazing. Silicon Valley is also a place like that. You know, it just happened to be a place where you get, um, uh, a combination, not necessarily fully, intentionally done. A combination, uh, of different factors, right? What are those factors and what are those factors that are difficult to replicate?

Uh, and after I describe them to you, I will just give you my opinion how other regions should think about this. Including Dubai, by the way. And I, and by the way, I work a lot with Saudi Arabia. Yes. So they're trying to build their vibrant ecosystem of startups and technologies and diversify their economy.

So I can kind of compare what's happening in Silicon Valley and what, uh, other regions like [00:42:00] Saudi Arabia or uh, Emirates are working to build. In Silicon Valley, you have several important factors that are difficult to replicate. And, and for that reason, trying to create, uh, a copy of Silicon Valley is not a good idea.

You have to invent your own version of Silicon Valley where your factors will work. In the US it is a large market. For example, people in the United States, the population of the US are generally. Are open to adopt new technologies when they come to the market, right? You could look at other countries where people might not be that interested in new technologies.

They might be more interested in, in a traditional way of life. So it might be more difficult to, um, uh, to um, uh, distribute your new technology [00:43:00] products. But the US is very open in general, right? And it's a large market. So that's one important condition. Another important condition is that the US laws.

Legislation in general are very friendly for business. United States in general has been built as a country, almost like a paradise for entrepreneurship. I mean, there are lots of issues, of course. I don't want to say that the US is just a paradise. No, not at all. There are a lot of problems and I could talk about that forever, but still, overall, when you look at legislation specifically, how much, um, protection for the property rights mm-hmm.

Are being given? Mm-hmm. In the us That is another important factor specifically for intellectual property rights because technology businesses, they're usually built with a big gap in the [00:44:00] beginning for your, uh, uh, revenues, right? Like you need to raise capital. Uh, when you have an idea, in order to raise capital, you have to show your investors how you can protect your idea against competition, right?

Like unfair competition. So you have to be able to file a patent, all of that stuff, what they call ip, uh, rights, intellectual property rights in the us. It's really good, right? So then the other factor is human capital. United States is really friendly to people like me. In general. It used to be, I mean, things change over time.

Right now there are riots in Los Angeles for some illegal immigrants. Well, I came to this country legally, so it's, it's quite different. I came as a student and then I got my, uh, green card, and then I got my citizenship. But generally speaking, again, without paying too much attention to what's [00:45:00] happening right now, uh, United States has historically been very friendly to immigrants.

Right. And look at who has been creating, who've been creating most of the technology startups, uh, over the last bunch of years, decades. It's people like me, immigrants. Uh, 70% of all startups have immigrants, uh, as their founders in Silicon Valley. Then another factor is a good education. Silicon Valley has Stanford, it has Berkeley, it has Santa Clara, it has San Francisco universities.

So all of those universities are like factories. You know, uh, creating new graduates, those who have knowledge, who have hunger for building new businesses. Business schools are amazing. So those people, when they [00:46:00] graduate, they're the ones who go to set up and establish new companies. So I just gave you already a few, like four or five.

Factors. Of course it doesn't hurt that a climate is very nice here as well, right? It's pretty warm throughout the year. So you can enjoy your life of being an entrepreneur, uh, here without like freezing to death. You know? There are places like that that I used to live as well, uh, which is not that either, but still it's just, you know, a as a combination of all of those facts.

The other thing that I would add to that, once you establish a bunch of companies in one place, there is a synergy between them. People can quit one job and then they jump to work in another company and then they jump quickly to another company and so on. So once you establish, uh, an ecosystem of investors, universities, and companies, [00:47:00] they start reinforcing each other, which is also a very important factor, what they call network effect.

Right. . Or flywheel. Flywheel, yes. Yeah. Flywheel starts happening when you have a ground for network effect. And a network effect is a very simple idea. It's when you add more users to any product or any system, and adding more users is not diluting the value of that system. It's actually adding more value so that that's where synergy happens, right?

So all of these factors need Silicon Valley. What it is, of course, the fact that the government used to help Silicon Valley in the past a lot, like the department of uh, defense used to put large contracts for semiconductor companies during the Cold War, also added a lot of government capital. That was then later kind of diffused across multiple companies.

Uh, all of that put together, [00:48:00] including the presence of a lot of venture capital. Makes Silicon Valley absolutely unique phenomenon. Even within the United States. Trying to replicate Silicon Valley doesn't, does not make much sense in my opinion. Ed, what makes sense is something different is to analyze how those underlying factors work with each other.

Where does that, um, synergy and network effect come from when you add venture capital and very friendly rules for investors? With the friendly rules for entrepreneurs, for example, right? You just try to understand why Silicon Valley is successful, not replicating everything, but understanding the underlying logic.

And then you can replicate that logic. Yes. Depending on what kind of combination of similar factors you can, uh, implement [00:49:00] in your particular country or in your particular region. Like, let's just take an example of, uh, Dubai where you are, right? Dubai did not have a lot of amazing universities, uh, when it started, right?

It did not have a lot of, um, um, uh, a lot of people living in, in, um, uh, Emirates, right? Like the population was not that large, but what they were, and then so on, you could kind of go through the whole list. But the point is this. Once you start understanding the logic of what you need, what you have missing, asking entrepreneurs like, what do you want to have in order to be successful in our part of the world?

They will tell you. What they need. All you need to have is to have a direct and open, honest dialogue with the people who are capable of creating amazing companies and products. And they will tell you what they need. And then [00:50:00] you just do that. You know, you create a financial center where you protect their interest, you create amazing offices, you create, you bring more, uh, human capital, right?

You invite investors. Uh, you give those investors certain protection sometimes or maybe certain, uh, tax, um, incentives. And then there you are, you already have something that can work similar to Silicon Valley, even though the combination of those factors can be quite different. 

Mehmet: Right. It's, it's all about, yeah, like, uh, um, you mentioned something which I nod my head, maybe you, you noticed the early adopters, right?

So I, I think this is the biggest, um, edge, um, that after analyzing, I just posted on, uh, LinkedIn a couple of days ago. 'cause I was having this discussion with someone and asking me like, what do you think? I said, yeah, look, [00:51:00] it's an emerging market as we call it, like an emerging, uh, startup hub. Whether here, Dubai, Riyadh in Saudi Arabia, and you know, other emerging hubs.

So each one, as you said, like it has its own edge. I would say the thing that we are missing, and I repeat this and there is no look like this is gonna take years. And I tell people like, you forget something. Silicon Valley didn't become what is Silicon Valley in one day. Exactly. Exactly. It took, took, it took, it took years and yeah, so, so the early adopters and coming again from the business side, it's, it's the big thing, and this is why I tell people, maybe if you're a local founder here in the region, maybe it's.

Logical depends on what you're doing, of course, to go and see if you find these early adopters somewhere, because you can, they become your reference. They become, you know, like, Hey, like this customer in the US is using my solution or my product, and hey, like, would you use it? Like I, I have now the social proof [00:52:00] as they call it.

Um, I, I, I highly believe in this. I a hundred percent agree and I'm happy you put all these combinations of multiple things. Mm-hmm. Plus how we can not copy paste, but as you said, like we take the best of what we have and try to do something. Yeah. And then build this bridge. And a, again, I'm a big believer that no single hub can work alone.

You, we need to, to collaborate on a global level that's. Right. So we need to collaborate on a global level. Now you mentioned something about, you know, uh, and maybe we're almost done, I would say, but this is the part that I don't want to miss in this conversation today, which is related to, to, to venture capital and, you know, investing in companies.

In your point of view, and with what AI is doing currently, where do you think is the genuine and the real? Innovation breakthrough worth backing [00:53:00] up today in this space, specifically, 

Andrey: what AI is doing right now is absolutely amazing, especially for new entrepreneurs. Uh, it allows you to rely less on capital from my point of view and rely more on your talent when it comes to designing new solutions.

AI is like electricity. Uh, people compare it to something that is very fluid, and yet you can take as much of it as you need and you can infuse that into your product, or maybe you can build a whole product out of AI solutions. Right? The, the most interesting from my point of view, uh, opportunities are coming from agent ai.

Uh, right now, AI is just, works like a brain, right? That brain that is smarter than me, uh, smarter than any was. But it doesn't have legs. It doesn't have hands, it doesn't have eyes, it doesn't have a mouth. So to say [00:54:00] it cannot act yet, but we're gonna see that change really, really soon. Maybe by the end of this year, we're already going to see some really interesting AI agents.

Now, you take, agents are different than just AI because they can do stuff, right, right. On your behalf as a consumer, but also as an entrepreneur. Now you can populate your company with agents. Now you can start a company as a sole entrepreneur if you are really, really good, right? And then you can employ ai, help you build your business, or even become your product if you know what you're doing.

Um, uh, what I'm trying to say is that. Uh, you don't have to rely that much on capital, uh, anymore, uh, because the capital, what was the capital good for in the past, in most of the startups? Why would you need to have a lot of capital? One of the main reasons in the [00:55:00] past was that you can hire a lot of smart people who require a lot of money to pay them so that they come join your team.

Well, now AI can alleviate that problem a lot because now you can employ artificial intelligence instead of a lot of, uh, smart people if you know what you're doing, of course, right? So you can build products and you can reach markets without giving away too much of your, uh, company to investors.

Relationships with investors are always difficult. You know, they will always tell you that it's like a marriage, you know, like your capital gets married with the ca, with the talents and so on. They forget to tell you that that marriage always ends up with the divorce at some point, right? Because they have to exit from your business.

And sometimes this divorce is very amicable and friendly. You know, when you go public or when you sell your company for a [00:56:00] price that you as an entrepreneur find advantageous. But in many cases it's not like that. In most cases, it's not like that. So inviting an investor to your business, you gotta be really careful and have a lot of experience in how you can handle that relationship, you know, that kind of marriage.

Uh, so using artificial intelligence for the purpose of developing your business, for the purpose of creating your product and distributing it across the market gives the biggest promise to the early starting, uh, first time entrepreneurs. That's what I would encourage people to do, learn more, rely on your ability to understand where AI is going, and try to preempt that future with what you are developing and employ as much artificial intelligence as possible instead of wasting capital on your company, because the [00:57:00] future will be much brighter than the past.

That's what I personally believe in Mead when it comes to artificial intelligence, specifically Agen, but also the fact that, uh, you know, I don't know if you heard, uh, the last interview, uh, Sam Altman from OpenAI, um, when he was asked, um, I think it was like a Sequoia conference. He was asked like, what do you see?

How do you see the future for ai, uh, near future? So his first answer was what I said, like the agents. We'll probably dominate the markets very soon, but after that it will be ability of AI to, uh, reinvent itself, essentially doing research on itself. That's what will propel us to super intelligence potentially in the future.

I totally believe that we have a chance to achieve superintelligence, uh, like, uh, Sam Altman said within [00:58:00] a few thousand days. I think that's how he formulated it. Uh, you know, a few years. Essentially think about the future where, uh, AI will have a status of super intelligence, meaning that we will have so much of abundance of that intelligence and, and knowledge.

Knowledge is not going to be a barrier for even now. It's not anymore, right? It's pretty much abundant. Only what is necessary is your, uh, desire. To learn new things, uh, from, uh, with the help of ai, the help of other, uh, sources of knowledge. So, um, my point is that AI is making life of entrepreneurs much easier, not more difficult, and you have to take an at full advantage of that by learning.

You know, on YouTube there are tons of, uh, new resources. And, and by the way, I am [00:59:00] myself. I'm starting a new resource, uh, very soon as well. We will be curating a lot of knowledge, uh, on specific practical solutions that can help you automate your business in different ways. Automation means you don't have to rely on Capital One and, uh, uh, you don't have to rely that much on talent.

Two, meaning that you can build, in some cases the entire business. Based on, um, artificial intelligence if you know how to do that. So this is what we will be doing very soon. And I hope that I would be able to invite your audiences to come visit our new resources, uh, for that matter as well. I don't know if I completely answered your question or not.

Mehmet: Yes, you did. Absolutely. You did Andrey. And, uh, you know, we would, uh. You know, if, if by the time this episode goes out, uh, if we have the links, anyway, I gotta put the link to your, uh, link in do profile [01:00:00] and, uh, to your, um, you know, to, to the company also website. So I'm sure they will be able to follow that from there.

Well, Andrey, like really, it was a very rich, I I learned a lot from you today. It was very, uh, engaging discussion. I, this is you, you ask about like, how many entrepreneurs you see in your life. I'm very lucky because when I decided to, and it wasn't on purpose, it happened like, just I would say by destiny, which, uh, because I wanted this, is that I start to talk to a lot of entrepreneurs.

I start to talk to a lot of, uh, business leaders, experts like yourself. And, uh, this what will, what makes you know this, uh, podcast for me fun. And again, thank you very much. So I think the place to go, Andrey, is to find you on the, uh, LinkedIn and website. Am I correct? 

Andrey: Yeah, the easiest way to find me is LinkedIn, Andrey Kunov, uh, on LinkedIn.

Uh, there's also a website, brio link.com, where we develop custom AI solutions for [01:01:00] our corporate clients. Uh, there's, uh, my first company, which is, uh, Silicon valley.center, uh, Silicon Valley Innovation Center. Um, that's where you can find me or you can shoot me a message on Telegram. Pretty much everywhere people can find me easily.

And, uh, I wanted to say Mcma again. Sure. Thank you very much for inviting me. You have this very interesting business where, uh, uh, talking the talk means walking the walk. You know, not very often you can find a business like that, where actually interviewing people gives you an opportunity to build a business for yourself.

Mehmet: Yeah, absolutely. This is, this is good to hear this from you also, Andrey, I really appreciate this. So for the audience, don't worry. Every link, every, uh, resource would be available for you in the show notes. And again, thank you very much Andrey. So this is usually how I end my episodes. This is for the audience.

Uh, if you just discovered this podcast by luck, thank you for passing by. I [01:02:00] hope you enjoyed it. If you did, so give me a small favor, uh, subscribe, share it with your friends and colleagues because you are trying to do the network effect that Andreya was mentioning before. And if you are one of the people who keeps coming again and again, thank you very much.

Thank you for taking the show this year to a new high level of being in multiple countries. Top 200 Apple Podcast charts into the entrepreneurship, um, category. I couldn't do this without. Two. First my guest, second you the audience. Thank you very much. I really appreciate all the help that you do. And as I say, always stay tuned for a new episode very soon.

Thank you. Bye-bye. Thank you