The Rainforest by Victor W. Hwang and Greg Horowitt, published by their own imprint Regenwald in 2012, is a book about why some regions produce a steady stream of new companies while others, with similar money and universities, do not. Hwang and Horowitt were Silicon Valley venture investors whose firm, T2 Venture Creation, helped startups grow and advised cities, governments and universities on building startup ecosystems. The book sets out their theory of what makes places like Silicon Valley work.
What is The Rainforest about?
The authors build their argument on a metaphor. Traditional economies work like farms: they are planned, controlled and good at producing known crops. Startup ecosystems work like rainforests: they are messy, diverse and full of unexpected combinations, and new species emerge from the mix. Talent, ideas and capital act as nutrients, and what lets them combine into companies is culture.
The heart of the book is about human behaviour. Hwang and Horowitt argue that people are wired to distrust strangers and stick with their own group, which makes the cost of working with outsiders high. Rainforests grow where social norms push against that instinct: people take chances on newcomers, share information freely, tolerate failure and take a long view. The book lays out a set of axioms describing how ecosystems behave and a set of informal rules that people in successful regions follow, such as dreaming big, listening, trusting others, seeking fair deals and paying help forward. Later chapters discuss the roles of keystone people who connect different groups, and how governments and universities can support an ecosystem without trying to control it.
What sets it apart is its focus on behavioural economics and sociology instead of on infrastructure or funding. It won a gold award in the 2012 Foreword INDIES book awards for business and economics.
What are the main lessons for founders?
- Culture beats infrastructure. A new incubator building does little if people do not trust each other. Founders shape culture every day in how they treat others.
- Build trust with strangers. Take meetings with newcomers, make introductions and honour handshake deals. Every act of trust lowers costs for everyone around you.
- Mix different groups. New companies come from combinations: engineers meeting designers, scientists meeting marketers. Go to events outside your own field.
- Accept failure as normal. Regions that punish failure lose their best founders. Talk openly about your setbacks so others feel free to try.
- Be a connector. People who link groups across industry, culture and class are rare and prized in an ecosystem. Make one introduction a week between people who would never meet otherwise.
Who should read The Rainforest?
It suits founders who care about their local scene, ecosystem builders, accelerator managers, economic development officials and university staff who run entrepreneurship programmes. It also helps investors who want to understand why deals flow more easily in some regions. Founders who have moved from a slow-moving region to a busy hub will recognise many of the patterns.
Skip it if you need practical help with your own company. The book is a theory of regions, and it says almost nothing about building a product or finding customers.
How do you put The Rainforest to work this week?
- Introduce two people from different fields who could help each other, and follow up a week later.
- Accept one meeting with a founder or newcomer you do not know, with nothing expected in return.
- Share one honest story about a failure in your startup at a meetup or online, and invite others to do the same.
To compare your region with the ecosystems the book admires, the Best startup cities directory from Fe/male Switch ranks cities worldwide by their startup scene.
Where does The Rainforest fall short?
The rainforest metaphor carries much of the argument, and the book repeats it many times. The advice for policy makers stays abstract, with few concrete examples of regions that followed the model and what happened next. It also says little about who gets left out of rainforest culture, such as women and minorities, and how informal networks can shut them out. For a founder-led, hands-on guide to building a local community, read Startup Communities.