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The Rainforest: The Secret to Building the Next Silicon Valley
What makes places like Silicon Valley tick?
Can we replicate that magic in other places?
How do you foster innovation in your own networks?
Discover the answers in this groundbreaking book from two of the world's leading experts at the intersection of venture capital and global development. Victor W. Hwang and Greg Horowitt propose a radical new theory to explain the nature of "innovation ecosystems": human networks that generate extraordinary creativity and output. They argue that free market thinking fails to consider the impact of human nature on the innovation process. This ambitious work challenges the basic assumptions that economists have held for over a century.
The authors argue that such ecosystems - what they call Rainforests - can only thrive when certain cultural behaviors unlock human potential. People in Rainforests belong to "tribes of trust" and follow a secret unwritten code: the Rules of the Rainforest. The theory of the Rainforest is influenced by several breakthrough ideas in academia, including insights on sociobiology from Harvard, economic transactions from the University of Chicago, and design theory from Stanford.
With an unorthodox and entertaining narrative, the book reveals the mysterious mechanisms of Rainforests. Furthermore, the authors provide practical tools for readers to design, build, and sustain new innovation ecosystems. The Rainforest will transform the way you think about technology, business, and leadership.
Can we replicate that magic in other places?
How do you foster innovation in your own networks?
Discover the answers in this groundbreaking book from two of the world's leading experts at the intersection of venture capital and global development. Victor W. Hwang and Greg Horowitt propose a radical new theory to explain the nature of "innovation ecosystems": human networks that generate extraordinary creativity and output. They argue that free market thinking fails to consider the impact of human nature on the innovation process. This ambitious work challenges the basic assumptions that economists have held for over a century.
The authors argue that such ecosystems - what they call Rainforests - can only thrive when certain cultural behaviors unlock human potential. People in Rainforests belong to "tribes of trust" and follow a secret unwritten code: the Rules of the Rainforest. The theory of the Rainforest is influenced by several breakthrough ideas in academia, including insights on sociobiology from Harvard, economic transactions from the University of Chicago, and design theory from Stanford.
With an unorthodox and entertaining narrative, the book reveals the mysterious mechanisms of Rainforests. Furthermore, the authors provide practical tools for readers to design, build, and sustain new innovation ecosystems. The Rainforest will transform the way you think about technology, business, and leadership.
304 pages, ebook
First published February 21, 2012
65 people are currently reading
501 people want to read
About the author
Victor W. Hwang
6 books13 followersVictor W. Hwang is an economic growth expert. His ideas have shaped the economic lives of millions of people worldwide.
His work has helped over 300 communities, cities, states, companies, and even entire countries in creating greater economic prosperity.
His economic development clients have included the World Bank, Ford Foundation, Inter-American Development Bank, and the U.S. Agency for International Development. He has also worked with corporate clients seeking to grow entrepreneurial innovation, including Accenture, IBM, and Microsoft.
He is founder and CEO of Victor H & Co, an economic growth consultancy.
He is founder and CEO of Right to Start, a campaign fighting to rebuild the economy by making entrepreneurial opportunity available to all.
Previously, he was Vice President of Entrepreneurship at the Kauffman Foundation, the world’s leading philanthropy supporting entrepreneurs with an endowment of $2 billion. At Kauffman, he led initiatives that impacted over 200,000 entrepreneurs, including efforts in catalyzing capital formation, transforming economic development practices, launching a national policy roadmap, and breaking barriers for underserved entrepreneurs.
His work has helped over 300 communities, cities, states, companies, and even entire countries in creating greater economic prosperity.
His economic development clients have included the World Bank, Ford Foundation, Inter-American Development Bank, and the U.S. Agency for International Development. He has also worked with corporate clients seeking to grow entrepreneurial innovation, including Accenture, IBM, and Microsoft.
He is founder and CEO of Victor H & Co, an economic growth consultancy.
He is founder and CEO of Right to Start, a campaign fighting to rebuild the economy by making entrepreneurial opportunity available to all.
Previously, he was Vice President of Entrepreneurship at the Kauffman Foundation, the world’s leading philanthropy supporting entrepreneurs with an endowment of $2 billion. At Kauffman, he led initiatives that impacted over 200,000 entrepreneurs, including efforts in catalyzing capital formation, transforming economic development practices, launching a national policy roadmap, and breaking barriers for underserved entrepreneurs.
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Displaying 1 - 22 of 22 reviews
December 1, 2014
This was an interesting book on a very valuable topic: how to build the next Silicon Valley. The authors are venture capitalists and gave a unique perspective on how to build the next Silicon Valley. Frankly, I’m not sure if they will help any policy planner or nation to build a Silicon Valley but the book itself was a valiant feat.
Traditional perspectives focus on fiscal or monetary policy to build a dynamic region but other views from a systems perspective or an ecosystems perspective have been around for a while. This book uses the concept of a Rainforest to get the idea across.
In the book, Silicon Valley’s innovation is a result of its wild environment, which is known as the rainforest. And the point of the book is that the rules of the rainforest are hard to replicate and go against conventional wisdom, therefore you should follow the rules they lay out. You can insert all the studies and books on Silicon Valley’s unique culture here to get the gist.
Since my take is that the authors said the same perspectives already expounded on from the systems of innovation perspective in a different way, I didn’t find it too interesting. Indeed, Silicon Valley is a different kind of place. Perhaps, this book may reach policy planners around the world and push them to actually dare and try to be different but that would be too much to ask.
Finally, I listened to this book on audio. If I would have read it, I might have found it more profound.
May 17, 2017
There may be nothing really new in this book about ecosystems, but the messages are strong and clear. You may need an infrastructure, but without culture, nothing will happen, no innovation will emerge. And as usual, here are my notes / extracts.
"Despite hundreds of books and thousands of papers on the subject, real-world innovation is little understood. […] Having the right ingredients will not necessarily result in successful innovation. You need to prepare those raw ingredients, combining them in just the right way. […] We argue that the two pillars of innovation’s conventional wisdom – free markets and clusters – are unable to provide comprehensive answers to the mystery of systemic innovation." [Pages 18-20]
"The world of innovation does not happen at the macro-level. Innovation is a “body contact sport.” It is a micro-level phenomenon. When applied to innovation, rational choice theory might make sense if you’re a theorist thinking abstractly about the way the world should work. It does not accurately describe the way the world actually works." [Page 37]
"You cannot understand the macro without understanding the micro. […] the world is far more complicated – one must deal with a range of complex social and psychological factors, personal networks, and information flows." [Page 48] "One lesson of the Rainforest is that outcomes cannot be engineered. […] Serendipity itself cannot be engineered but an environment that is conducive to serendipity can be." [Page 65]
“Governments and corporations often try to incentivize innovation by focusing on financial mechanisms, such as tax breaks, subsidies, grants and loans. But overall, this strategy has been poor. They cannot be only the ends in themselves.” [Page 127]
And the authors claim what are needed are 7 rules [Page 156]: – Break the rules and dream – Open doors and listen – Trust and be trusted – Experiment and iterate together – Seek fairness, not advantage. – Err, fail and persist. – Pay it forward.
Again the authors remind us that “innovation is chaotic, serendipitous and uncontrollable, so processes that are linear and controlled are rarely self-sustaining. In contrast, what we strive for in a Rainforest is a system that yields immense impact, is low-cost, and generates internal sustainability. The only possible way to achieve these goals is to build a community of innovators where transaction costs have been reduced through the creation of trust, social norms, connectivity and diversity.” [Page 183] So their recipe is not so much a recipe as a cure. In fact they say “rather than thinking like macroeconomists, to change behavior, we must think like psychiatrists […] We build rainforests by shaping the outward behavior of innovators. Over time, those behaviors can create changes in attitude, and eventually, the changes in attitude can lead to change in beliefs”. [Page 200-1]
In their epilogue, the authors explain that “Perhaps, instead of fighting the chaos, we need to become more comfortable with it. Perhaps we just need a better map. The Rules of the Rainforest provide a useful map – one that shows the way to balance the freedom of chaos with the beauty of collaboration. […] It requires a ‘joyful participation’ in the ups and downs, the mistakes and the failures that are inevitable. Thus, love is like a solution to chaos. ” [page 280] They use a magnificent quotation from Richard Feynman to whom a student asked to write a message to his mother so that she would be interested in science. Here it is: “Tell your son to stop trying to fill your head with science – for to fill your hear with love is enough. Richard Feynman (the man you watched on BBC ‘Horizon'”.
I conclude here with their chapter about venture capital. It may indeed be their best chapter, even if the topic has produced probably hundreds of books and thousands of articles… The subtitle of the chapter is “Big V, Little C” and their quote to begin the chapter is “if you want to make money, do private equity. If you want to have fun, do venture capital”. They then borrow to AnnaLee Saxenian: “In Boston it was the entrepreneurs who dressed nicely and showed up on time to impress the investors. In Silicon Valley it was the opposite.” […] “In other words, the venture – that is the startup – is always more important than the capital, with a Big V and a Little C.” [Pages 218-21]
They explain why investing in the seed and early stage is costly for venture capitalists. “It’s better to buy a wonderful company at a fair price than a fair company at a wonderful price. […] Investing earlier in a deal must be counter-balanced by a strong potential of a massively disproportionate payout at the end. Otherwise, it is simply not worth the risk. […] Lowered transaction costs due to trust and social norms make high-risk seed-stage and early-stage venture capital more profitable [in Silicon Valley].” [Pages 228-29] In other areas, subsidized capital plays a role. But it does not mean VC should not be understood: “There are two ways to build a venture fund. One takes as little as thirty minutes to learn. The other can take twenty years or more. The short course is to learn the formal legal structuring and financial processes of a typical venture fund. […] the more difficult and time-consuming course is to learn the human behavioral dynamics that happen in and around venture funds. […] Questions such as:
– how do you treat others in situations where mistakes and failures happen almost daily?
– how to build a reputation for trust, candor and integrity when millions of dollars are at stake?
– what type of value can you provide an entrepreneur who probably knows far more about the business than you do?
– how do you actively listen to an entrepreneur, and then see beyond their words to the true prospects of a company?
– how do you know when a CEO is not fit to run a company anymore?
– how do you help a tiny company build life-or-death relationships with huge, powerful customers or strategic partners?”
It reminds me what I learnt 20 years ago: it takes 5 years and $10M to make an investor.
"Despite hundreds of books and thousands of papers on the subject, real-world innovation is little understood. […] Having the right ingredients will not necessarily result in successful innovation. You need to prepare those raw ingredients, combining them in just the right way. […] We argue that the two pillars of innovation’s conventional wisdom – free markets and clusters – are unable to provide comprehensive answers to the mystery of systemic innovation." [Pages 18-20]
"The world of innovation does not happen at the macro-level. Innovation is a “body contact sport.” It is a micro-level phenomenon. When applied to innovation, rational choice theory might make sense if you’re a theorist thinking abstractly about the way the world should work. It does not accurately describe the way the world actually works." [Page 37]
"You cannot understand the macro without understanding the micro. […] the world is far more complicated – one must deal with a range of complex social and psychological factors, personal networks, and information flows." [Page 48] "One lesson of the Rainforest is that outcomes cannot be engineered. […] Serendipity itself cannot be engineered but an environment that is conducive to serendipity can be." [Page 65]
“Governments and corporations often try to incentivize innovation by focusing on financial mechanisms, such as tax breaks, subsidies, grants and loans. But overall, this strategy has been poor. They cannot be only the ends in themselves.” [Page 127]
And the authors claim what are needed are 7 rules [Page 156]: – Break the rules and dream – Open doors and listen – Trust and be trusted – Experiment and iterate together – Seek fairness, not advantage. – Err, fail and persist. – Pay it forward.
Again the authors remind us that “innovation is chaotic, serendipitous and uncontrollable, so processes that are linear and controlled are rarely self-sustaining. In contrast, what we strive for in a Rainforest is a system that yields immense impact, is low-cost, and generates internal sustainability. The only possible way to achieve these goals is to build a community of innovators where transaction costs have been reduced through the creation of trust, social norms, connectivity and diversity.” [Page 183] So their recipe is not so much a recipe as a cure. In fact they say “rather than thinking like macroeconomists, to change behavior, we must think like psychiatrists […] We build rainforests by shaping the outward behavior of innovators. Over time, those behaviors can create changes in attitude, and eventually, the changes in attitude can lead to change in beliefs”. [Page 200-1]
In their epilogue, the authors explain that “Perhaps, instead of fighting the chaos, we need to become more comfortable with it. Perhaps we just need a better map. The Rules of the Rainforest provide a useful map – one that shows the way to balance the freedom of chaos with the beauty of collaboration. […] It requires a ‘joyful participation’ in the ups and downs, the mistakes and the failures that are inevitable. Thus, love is like a solution to chaos. ” [page 280] They use a magnificent quotation from Richard Feynman to whom a student asked to write a message to his mother so that she would be interested in science. Here it is: “Tell your son to stop trying to fill your head with science – for to fill your hear with love is enough. Richard Feynman (the man you watched on BBC ‘Horizon'”.
I conclude here with their chapter about venture capital. It may indeed be their best chapter, even if the topic has produced probably hundreds of books and thousands of articles… The subtitle of the chapter is “Big V, Little C” and their quote to begin the chapter is “if you want to make money, do private equity. If you want to have fun, do venture capital”. They then borrow to AnnaLee Saxenian: “In Boston it was the entrepreneurs who dressed nicely and showed up on time to impress the investors. In Silicon Valley it was the opposite.” […] “In other words, the venture – that is the startup – is always more important than the capital, with a Big V and a Little C.” [Pages 218-21]
They explain why investing in the seed and early stage is costly for venture capitalists. “It’s better to buy a wonderful company at a fair price than a fair company at a wonderful price. […] Investing earlier in a deal must be counter-balanced by a strong potential of a massively disproportionate payout at the end. Otherwise, it is simply not worth the risk. […] Lowered transaction costs due to trust and social norms make high-risk seed-stage and early-stage venture capital more profitable [in Silicon Valley].” [Pages 228-29] In other areas, subsidized capital plays a role. But it does not mean VC should not be understood: “There are two ways to build a venture fund. One takes as little as thirty minutes to learn. The other can take twenty years or more. The short course is to learn the formal legal structuring and financial processes of a typical venture fund. […] the more difficult and time-consuming course is to learn the human behavioral dynamics that happen in and around venture funds. […] Questions such as:
– how do you treat others in situations where mistakes and failures happen almost daily?
– how to build a reputation for trust, candor and integrity when millions of dollars are at stake?
– what type of value can you provide an entrepreneur who probably knows far more about the business than you do?
– how do you actively listen to an entrepreneur, and then see beyond their words to the true prospects of a company?
– how do you know when a CEO is not fit to run a company anymore?
– how do you help a tiny company build life-or-death relationships with huge, powerful customers or strategic partners?”
It reminds me what I learnt 20 years ago: it takes 5 years and $10M to make an investor.
January 5, 2025
A fabulous read - highly recommended
My sense is “The Rainforest” is an easy recommendation. Why? Victor and Greg have created a beautiful lens with which to consider innovation, and innovation ecosystems. The book does a great job of explaining and making the reader aware of systems and components that underly and enable innovation to occur. For that reason and more it is an easy book to recommend reading.
My sense is “The Rainforest” is an easy recommendation. Why? Victor and Greg have created a beautiful lens with which to consider innovation, and innovation ecosystems. The book does a great job of explaining and making the reader aware of systems and components that underly and enable innovation to occur. For that reason and more it is an easy book to recommend reading.
December 28, 2025
This is definitely a must-read for those who are into startup communities or want to understand "what's so special" about the Silicon Valley. It defies a lot of common sense by explaining that what you need to replicate is not the technology, but rather a way of "cooperating within competition".
The book is very stimulating in itself and benefits from the first-handed experience of the authors, who speak about something they have been trying to do for many years: recreating the conditions for innovation outside the Valley and the US. Where it fails its promises is when it attempts to give a vision of the entire problem, with a series of almost-metaphysical "zooms and pans" (in their own words) that end up being confusing.
The book is very stimulating in itself and benefits from the first-handed experience of the authors, who speak about something they have been trying to do for many years: recreating the conditions for innovation outside the Valley and the US. Where it fails its promises is when it attempts to give a vision of the entire problem, with a series of almost-metaphysical "zooms and pans" (in their own words) that end up being confusing.
April 30, 2012
It is an exceitement that telegraphs from these venture capitalists about their ideas to spur innovation. Yeah, you need resources, money and idea and all getting sticky together. Not actually earth-shattering. And the book is bulked out with a lot of half-page images so irrelevant to at times appear that they were selected at random. The whole thing could/should have been a lean, mean article in Forune or somewhere.
May 26, 2021
Strong exploration of what makes productive ecosystems and helping to understand the inner workings of innovation hubs. Great insights.
March 16, 2023
کتاب عملا یک کتاب فرهنگی بود. تاکید زیاد بر اهمیت بیشتر فرهنگ از مسائل مالی در کسب و کار. متاسفانه در دنیای مدیریت و کسب و کار با اینکه با آدم سر و کار داریم اما دنیای آکادمیک اصلا ویژگی های انسانی رو در معادلاتش در نظر نمی گیره. "فرق زیادی هست بین چیزی که علم میدونه و اتفاقی که واقعا می افته". این کتاب تاکید زیادی بر شناخت صحیح از ویژگی های انسانی داشت و تاثیر این ویژگی ها بر شکل گیری روابط بین سه ماده خام نوآوری یعنی سرمایه،استعداد و ایده.
همه دستورالعمل های کتاب برای ایجاد محیطی است که بتوان راحت تر با بقیه آدم ها ارتباط برقرار کرد. سلسله مراتب خاصی در برقراری ارتباط وجود نداره و آدم ها با انواع تنوع ها در کنار هم کار می کنند و به هم اعتماد دارند.
همه دستورالعمل های کتاب برای ایجاد محیطی است که بتوان راحت تر با بقیه آدم ها ارتباط برقرار کرد. سلسله مراتب خاصی در برقراری ارتباط وجود نداره و آدم ها با انواع تنوع ها در کنار هم کار می کنند و به هم اعتماد دارند.
July 10, 2017
Fantastic book! I have enjoyed learning about the Rainforest model through Victor's writing and speaking. Frankly, all too often the traditional framework around building entrepreneurial ecosystem's is flawed in its expectation that inputs and outputs look like normal economic development models. The Rainforest is different, its messy, and it takes a wholly different value set.
Thanks for writing this!
Thanks for writing this!
September 25, 2018
Amazing read on startup ecosystems, I like the ideas that Hwang introduces while describing those ecosystems as live forests, it makes sense and helps those who wants to understand how entrepreneurs, companies, governments, investors, etc collaborates between each other.
Want to read
July 3, 2022Tutti sanno che l'ecosistema più straordinario al mondo è adesso quello della silicon valley, pochi sanno che si è ispirato ai distretti industriali italiani e loro cooperative. gli americani sono andati ad osservareli negli anni settanta - l'ecosistema renderà un migliore livello di resilienza.
March 17, 2023
Để trả lời cho câu hỏi về sự thành công của Thung lũng Silicon, trong khi những nơi khác cố gắng bắt chước nó nhưng lại thất bại, tác giả đã đưa ra mô hình Rừng Mưa.
Cuốn sách tìm hiểu những gì rộng lớn nhất từ kinh tế vĩ mô, cho đến những gì nhỏ nhất như tâm lý học con người và vi sinh học, để chứng minh cho những luận điểm của mô hình.
Bạn có thể áp dụng Rừng Mưa ở mọi cấp độ tùy thuộc vào tầm nhìn và khả năng của bạn. Nếu bạn là một sinh viên, Rừng Mưa có thể đơn giản là một nhóm các cộng sự ở Đại học. Nếu bạn là doanh nhân, Rừng Mưa có thể là công ty bạn, hoặc tập hợp các công ty có liên quan.
Nhìn chung, cuốn sách khá hữu ích nếu bạn đang tìm kiếm một giải pháp để phá bỏ những điều ngăn cản sự sáng tạo, sự cải tiến trong tập thể.
Cuốn sách tìm hiểu những gì rộng lớn nhất từ kinh tế vĩ mô, cho đến những gì nhỏ nhất như tâm lý học con người và vi sinh học, để chứng minh cho những luận điểm của mô hình.
Bạn có thể áp dụng Rừng Mưa ở mọi cấp độ tùy thuộc vào tầm nhìn và khả năng của bạn. Nếu bạn là một sinh viên, Rừng Mưa có thể đơn giản là một nhóm các cộng sự ở Đại học. Nếu bạn là doanh nhân, Rừng Mưa có thể là công ty bạn, hoặc tập hợp các công ty có liên quan.
Nhìn chung, cuốn sách khá hữu ích nếu bạn đang tìm kiếm một giải pháp để phá bỏ những điều ngăn cản sự sáng tạo, sự cải tiến trong tập thể.
September 23, 2018
Excellent book. Highly recommended for entrepreneurs and aspiring entrepreneurs.
April 11, 2024
Livro muito interessante para o trabalho de estímulo à ecossistemas de inovação.
April 20, 2013
It's a rare feat in professional literature to speak effectively to audiences outside the primary field of study. The Rainforest is remarkable for its deftness in marshaling compelling insights from dozens of disciplines - biology, history, ecology, psychology, sociology ... even science fiction! - to illustrate a paradigm shift from the realm of entrepreneurship that both entrepreneurs and lay readers will find beneficial in daily practice. Hwang and Horowitt are in a league with Gladwell and Lehrer in their ability to convey complex ideas in an elegant and highly readable manner that never oversimplifies, respecting the complexity, dynamism and downright messiness of the systemic approach to understanding innovation they detail. And their ideas are superb, too. The challenges to conventional wisdom and the artificial rationalism of traditional economic theory come fast and furious, resulting in a more nuanced perspective on capital and capitalism than this lay reader has previously encountered. Trust and promiscuous engagement with a broad and deeply interconnected social network are the foundations of the Rainforest, a fantastic metaphor for understanding the delicate balance of variables that allows truly innovative organizations to thrive and to ... innovate. Although the authors focus discussion of innovation ecosystems chiefly on their wheelhouse of the technology industry (itself an admittedly broad enterprise), their insights into the conditions that favor teams of humans combining their strengths to realize marvels beyond the sum of their individual capacities are broadly applicable to any field that seeks to surpass the limitations of its past. A future monograph extending the concept of the Rainforest to public and higher education's capacity to engage in teaching and learning innovations is one I envisioned eagerly while reading this book and pondering its messages. Lastly, one strong measure of this book's power is the fact that I needed to invest in two copies before writing this review. My first copy, purchased immediately upon its publication last year, was immediately snatched up by my business school colleagues and circulated among them for so long that I gave up waiting for its return. As soon as the audio version was released, I downloaded a copy from Audible to read with my ears on my daily commute. Luckily, my hard copy found its way back to my office just long enough for me to review the book's many illustrations, which aren't easily conveyed in spoken word, before heading off to find another reader.
March 24, 2016
The Rainforest as described here is the innovation & commercialization ecosystem in Silicon Valley with its unique rules which result in abundant startup creation. Leaders in the Rainforest are called "keystones" and have the role of "hyper-connectors." - "Leaders in the Rainforest must engineer serendipity" is one of the most memorable lines. The authors argue that such an economic ecosystem can be created elsewhere, but one cannot simply throw money & resources at the problem and expect the next Silicon Valley to emerge.
April 25, 2012
Interesting analysis of the factors that drive clusters of innovation. Compares Chicago to San Diego using Silicon Valley as a baseline. I've lived, worked and started businesses in all three cities. I agree with most of the authors' conclusions. However, I feel the book would benefit from more quantitative analysis and a further exploration into the mechanisms for capital formation for entrepreneurial endeavors.
March 2, 2015
Superior book. Highly recommend. In a very easy style, Victor Hwang relates the human and cultural components of how Silicon Valley came to be. More so, he explains the culture that needs to be present for other communities across America (and the world) to become innovative centers. Very distant message from the traditional recruitment, industrial cluster style of economic development largely practiced today.
April 27, 2024
Writing is drawn-out and meandering with very weak correlations between the points, making the title misleading. Should have named the book: different stories and studies on general economics, start-up companies and human behaviors.
"Those are certainly all words". Lots of words yet few info. Waste of time to read closely, better skim.
"Those are certainly all words". Lots of words yet few info. Waste of time to read closely, better skim.
May 3, 2016
Talks about why and how Silicon Valley become what it is, and why in that location. Compares other geographies and their characteristics at that time to understand why Silicon Valley happened where it did and looks at all the contributing factors to its succes
September 21, 2012
Very fucking good !
March 23, 2014
Absolutely amazing book. Thank you very much Victor!
January 18, 2016
I'd give it 10 stars if I could.
Displaying 1 - 22 of 22 reviews