East Asia Challenges Silicon Valley with Old-School Innovation Tactics

East Asia is challenging Silicon Valley - by being like Silicon Valley used to be

Silicon Valley has been a universal symbol of innovation for decades. Because of its reputation, governments around the world have tried to foster their own versions by investing heavily in tech hubs. These efforts, which include Silicon Beach in Los Angeles, Silicon Island in Malaysia and Silicon Roundabout in the UK, have not always worked. But some places, particularly parts of east Asia, have seen their own Silicon Valleys flourish. China has the world's second-largest venture capital market, scores of startups, and cutting-edge tech to challenge Silicon Valley. Japan and Korea have also become some of the most active corporate venture capital investors in the world. At the same time, these challenger ecosystems possess some of the attributes of Silicon Valley in its heyday. More, in some ways, than Silicon Valley itself does these days. The scale of Silicon Valley remains unparalleled, at least for now. In 2024, the region's market capitalisation (the value of companies' publicly traded shares) had reached US$14.3 trillion (£11 trillion). This is comparable to the entire GDP of China, the world's second-largest economy. But Silicon Valley is no longer a counter-cultural world of startups in garages, where small, disruptive organisations build world-changing products on a shoestring. It has morphed into a land of Goliaths, not Davids. Cups of instant noodles have, for many, been replaced by açaí bowls, and office all-nighters with wellbeing workshops and digital detox retreats. Stalwart investors, such as Sequoia's Mike Moritz, have complained that Silicon Valley tech workers have become "lazy and entitled". Meanwhile, the work ethic and laser focus of tech workers elsewhere has advanced. About ten years ago, Chinese tech's working hours were described as "996" - working from 9am to 9pm six days a week. They are now referred to as "007", a schedule where employees work from midnight to midnight, seven days a week. 'Good artists copy, great artists steal' The history of Silicon Valley is one of hungry challengers disrobing the big, boring incumbents. Apple raised equity investment from Xerox, then a leading print production corporation, and used the access to Xerox's Palo Alto Research Center to take inspiration from the company's plans for a computer that had a graphical user interface. Apple later refined the software for the Macintosh, giving it its edge. In 1996, Jobs famously said: "Picasso had a saying - 'Good artists copy; great artists steal' - and we have always been shameless about stealing great ideas." Today, the Goliaths leading Silicon Valley have huge intellectual property portfolios to defend. And they are outraged when their tech is taken. OpenAI, the American company that made ChatGPT, has even asked the US government to declare Chinese AI firm DeepSeek "state controlled" and to outlaw its use in the US. Huawei and Bytedance's TikTok have faced similar calls in the past. In western media, much of the focus on the moment DeepSeek disrupted the AI landscape has been about how it rattled Silicon Valley. But there has been less coverage on how it has instigated instant rivals within China. Days after Deepseek's release, Chinese tech company Alibaba announced that its AI model was superior. And China recently launched Manus, a fully autonomous AI agent that fully replaces rather than assists humans. China's answer to Silicon Valley is what Taiwanese businessman, Kai-fu Lee, calls "gladiatorial entrepreneurship". This is where founders constantly innovate because as soon as their product is released, they know it will be copied and reverse engineered. The system as a whole benefits from the intense competition, the way Silicon Valley did in its ascent. The students have become the teacher Silicon Valley used to be known for its counter culture and its outsized vision of how tech can transform the globe. This is epitomised by Masayoshi Son, a former student of Silicon Valley from east Asia who is the founder and CEO of Japanese firm SoftBank. He first came to Silicon Valley in the early 1980s and quickly integrated into the Silicon Valley way of business. Son launched his own startup when he returned to Japan, modelled on what he experienced in the few years he lived in California. With this, Softbank was born as a software distributor. SoftBank's Vision Fund is now the largest venture capital fund in the world, with over US$100 billion (£77.5 billion) in capital. Son's giant fund and impatient style of investing have contributed to change in Silicon Valley. Ballooning valuations and the use of exploding term sheets (investment offers that expire within a matter of days) are increasingly the norm. Son is stylised as a classic outsider. Gambling Man, a recently published book from the former editor of the Financial Times, Lionel Barber, details how Son is not "really Japanese" (he's ethnically Korean) and has long touted this challenger narrative. Now as one of the biggest investors in Silicon Valley, he is pushy, confrontational and has a huge vision for how technologies such as AI can change the world. He is the purveyor of that grand vision and an advocate for the risk-taking that is synonymous with "classic" Silicon Valley. Meanwhile, China's AI gladiators innovate constantly in their bid to overtake the once hungry American behemoths who are now forced to call on the state to help shore-up their position. The contrasting trajectories raise questions about who should now become more like whom if they are to win the global technology race.

East Asia is challenging Silicon Valley by being like Silicon Valley used to be

Silicon Valley has been a universal symbol of innovation for decades. Because of its reputation, governments around the world have tried to foster their own versions by investing heavily in tech hubs. These efforts, which include Silicon Beach in Los Angeles, Silicon Island in Malaysia and Silicon Roundabout in the UK, have not always worked. But some places, particularly parts of East Asia, have seen their own Silicon Valleys flourish. China has the world's second-largest venture capital market, scores of startups, and cutting-edge tech to challenge Silicon Valley. Japan and Korea have also become some of the most active corporate venture capital investors in the world. At the same time, these challenger ecosystems possess some of the attributes of Silicon Valley in its heyday. More, in some ways, than Silicon Valley itself does these days. The scale of Silicon Valley remains unparalleled, at least for now. In 2024, the region's market capitalization (the value of companies' publicly traded shares) had reached US$14.3 trillion (£11 trillion). This is comparable to the entire GDP of China, the world's second-largest economy. But Silicon Valley is no longer a counter-cultural world of startups in garages, where small, disruptive organizations build world-changing products on a shoestring. It has morphed into a land of Goliaths, not Davids. Cups of instant noodles have, for many, been replaced by açaí bowls, and office all-nighters with well-being workshops and digital detox retreats. Stalwart investors, such as Sequoia's Mike Moritz, have complained that Silicon Valley tech workers have become "lazy and entitled". Meanwhile, the work ethic and laser focus of tech workers elsewhere has advanced. About ten years ago, Chinese tech's working hours were described as "996" -- working from 9am to 9pm six days a week. They are now referred to as "007," a schedule where employees work from midnight to midnight, seven days a week. 'Good artists copy, great artists steal' The history of Silicon Valley is one of hungry challengers disrobing the big, boring incumbents. Apple raised equity investment from Xerox, then a leading print production corporation, and used the access to Xerox's Palo Alto Research Center to take inspiration from the company's plans for a computer that had a graphical user interface. Apple later refined the software for the Macintosh, giving it its edge. In 1996, Jobs famously said: "Picasso had a saying -- "Good artists copy; great artists steal' -- and we have always been shameless about stealing great ideas." Today, the Goliaths leading Silicon Valley have huge intellectual property portfolios to defend. And they are outraged when their tech is taken. OpenAI, the American company that made ChatGPT, has even asked the US government to declare Chinese AI firm DeepSeek "state controlled" and to outlaw its use in the US. Huawei and Bytedance's TikTok have faced similar calls in the past. In western media, much of the focus on the moment DeepSeek disrupted the AI landscape has been about how it rattled Silicon Valley. But there has been less coverage on how it has instigated instant rivals within China. Days after Deepseek's release, Chinese tech company Alibaba announced that its AI model was superior. And China recently launched Manus, a fully autonomous AI agent that fully replaces rather than assists humans. China's answer to Silicon Valley is what Taiwanese businessman, Kai-fu Lee, calls "gladiatorial entrepreneurship". This is where founders constantly innovate because as soon as their product is released, they know it will be copied and reverse engineered. The system as a whole benefits from the intense competition, the way Silicon Valley did in its ascent. The students have become the teacher Silicon Valley used to be known for its counter culture and its outsized vision of how tech can transform the globe. This is epitomized by Masayoshi Son, a former student of Silicon Valley from East Asia who is the founder and CEO of Japanese firm SoftBank. He first came to Silicon Valley in the early 1980s and quickly integrated into the Silicon Valley way of business. Son launched his own startup when he returned to Japan, modeled on what he experienced in the few years he lived in California. With this, Softbank was born as a software distributor. SoftBank's Vision Fund is now the largest venture capital fund in the world, with over US$100 billion (£77.5 billion) in capital. Son's giant fund and impatient style of investing have contributed to change in Silicon Valley. Ballooning valuations and the use of exploding term sheets (investment offers that expire within a matter of days) are increasingly the norm. Son is stylized as a classic outsider. Gambling Man, a recently published book from the former editor of the Financial Times, Lionel Barber, details how Son is not "really Japanese" (he's ethnically Korean) and has long touted this challenger narrative. Now as one of the biggest investors in Silicon Valley, he is pushy, confrontational and has a huge vision for how technologies such as AI can change the world. He is the purveyor of that grand vision and an advocate for the risk-taking that is synonymous with "classic" Silicon Valley. Meanwhile, China's AI gladiators innovate constantly in their bid to overtake the once hungry American behemoths who are now forced to call on the state to help shore-up their position. The contrasting trajectories raise questions about who should now become more like whom if they are to win the global technology race.