12/08/2014 02:51 pm ET Updated Feb 04, 2015

Building the Next Silicon Valley: Your Regulations Are My Opportunity

By Dimitri Dadiomov

Jeff Bezos famously said, "Your margin is my opportunity," and built a colossus of American business to take advantage of that. Amazon has become a dominant engine powering Seattle's economy, reshaping downtown Seattle, creating jobs, and helping Seattle beat Austin for the title of America's fastest growing city. Every city around the world envies the tech-powered economic growth Amazon brings to Seattle.

Meanwhile, elsewhere in the world, China's economic growth is slowing down, Europe is a sinking museum, the BRIC countries are under sanction, recession, or both, and the Middle East is on fire. Anywhere you look, you see signs of stagnation and pessimism, except for the one bright shining light of Silicon Valley and the broader world of technology. How can other cities follow Seattle's example in recreating more Silicon Valley-esque technology clusters?

To be sure, there's no shortage of governments attempting to copy Silicon Valley. To name just a few of the clones, New York touts its Silicon Alley, Israel its Silicon Wadi, Los Angeles its Silicon Beach, Nigeria its Silicon Lagoon, Kenya its Silicon Savannah, Bangalore its Silicon Plateau, Santiago its Chilecon Valley. All these governments are aiming to recreate a local cluster of technology innovation that can drive economic development, build an export industry, and create well-paying jobs. These governments dream of someday housing the next Amazon.

Tax breaks and subsidies are expensive and often ineffective, and governments are better off pursuing cost-free changes in regulation to attract tomorrow's pioneers. The cutting edge of technology today is grinding up against many local and federal regulatory barriers in the US. One only has to check the latest technology news to read about Uber and Lyft's highly publicized fights against local taxi commissions, the restrictive regulation of drones by the Federal Aviation Administration, the Food and Drug Administration's clampdown on the 23andMe DNA testing service, or financial regulations imposed on lending, payments and crypto-currency startups. A myriad of regulatory issues faces companies that are pursuing the next world-changing innovations, be it stem cell research, self-driving cars, online education, or other barely-yet-imagined products and services.

If we have learned anything about innovation, it is that fast iteration matters. Trial-and-error matters. Learning-by-doing matters. The path innovations take matters. And therefore each regulatory hurdle that exists in San Francisco is an opportunity for a new, up-and-coming innovation cluster to create the market conditions for building tomorrow's world-changing companies.

Many countries around the world do not share the peculiar American discomfort with centralized industrial policy, and can align regulations around rapid adoption of specific new technologies. These countries can turn industrial policy into a competitive advantage that drives clusters around the next "Big Thing."

  • Need to legalize drone deliveries? Done.
  • Licensing self-driving cars? Let's do it!
  • Electric skateboards restrictions? Those were designed for wheelchairs, sorry. Fixed.
  • Standardized tests restricting MOOC use? We waived it for the schools of the future. Come spend your precious resources educating our youth.
  • You'd like to offer DNA testing to patients in our country? Love it! Not only allowed but embraced by our healthcare system!

These are the conversations that the government of the next Silicon Valley should be having with both budding and established technology companies--today.

Combined with sufficient talent and capital, the cities that host these pioneering new businesses in their first deployments have every advantage in the world to become home to the Amazon of tomorrow.

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