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Why Startups Condense in America 565

Posted by Hemos
from the finding-the-why dept.
bariswheel writes "The controversial genius developer/writer/entertainer Paul Graham writes an insightful piece on Why Startups Condense in America. Here's the skinny: "The US allows immigration, it is a rich country, it is not (yet) a police state, the universities are better, you can fire people, work is less identified with employment, it is not too fussy, it has a large domestic market, it has venture funding, and it has dynamic typing for careers. Inquire for details within."
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Why Startups Condense in America

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  • by eldavojohn (898314) * <eldavojohn.gmail@com> on Monday June 12, 2006 @08:40AM (#15516199) Journal
    Another good article by an intelligent man.

    But I don't agree with all of it:
    4. American Universities Are Better.
    That's odd, all the studies and anecdotal evidence presented to me suggest otherwise. I don't think the universities themselves are better, you're just more likely to make better contacts here than abroad. And the only reason for that is because Americans have money and a lot of them use it to invest (as Paul pointed out).

    I've been through undergrad and grad schools in the US and I have to say that there were more than a few courses where I didn't learn anything.

    Why is he asking about Universities in Europe? What about Eastern Europe or the Ukraine or Russia? What about the results to the programming challenge that everyone made a big fuss about? What about China's Universities?!

    I'm not as confident about the US as Mr. Graham is. In fact, I'm kind of afraid when someone like him writes an article like this because it feels like we're creating a false sense of security as an industry leader.
  • startups (Score:5, Insightful)

    by 56ker (566853) on Monday June 12, 2006 @08:47AM (#15516226) Homepage Journal
    As a European I find the article rather America-centric. Here for example in the UK about 10% of people are self-employed. Yes, technically those are pretty much all "startups". Here however most people don't have the desire to chase VC funding, float on the stock market or found an international company (as a number of US startups have).

    Of course part of the problem (both in the US and over here) is that a lot of businesses tend to have a blinkered restricted view of just selling/dealing with their domestic market (which of course in the US is larger) rather than doing business globally (which in a lot of businesses is the best way to grow).
  • by damburger (981828) on Monday June 12, 2006 @08:48AM (#15516229)
    The guys evidence that there aren't any good Universities in Europe, is that American professors can't name any aside from Cambridge?

    Does this say more about higher education in Europe or the US?
  • by sien (35268) on Monday June 12, 2006 @08:48AM (#15516232) Homepage
    There are national characteristics - the fact that the World Cup is repeatedly won by a small group of nations that manage to maintain a style over years also shows this.

    But the US style has it's problems. US companies wind up as slaves to the markets and often damage their engineering skills. The problems in the US car industry show this. While the German car industry has come up with fuel injection, ABS braking and constant four wheel drive over the past 20 years the US industry has invented the cupholder and the SUV.

    Likewise, somehow the Japanese are great craftsmen. This skill is reflected in the quality of Toyota's manufacturing and the remarkable qualities in Japanese portable electronics. Apple may have invented the ipod, but the walkman and the transistor radio all came out Japan.

    It's good that the world is like this. Countries specialise. But presuming that one companies system is superior for everything to all the others is silly. The best is what is created when the systems work together - as in the computer industry where the parts are made in Asia and the software comes from all over the world, and in particular from the US.

  • by gowen (141411) <gwowen@gmail.com> on Monday June 12, 2006 @08:49AM (#15516237) Homepage Journal
    American Exceptionalism (or any other Exceptionalism through history, British Exceptionalism in particular) has never needed, or wanted, hard evidence. Like Manifest Destiny, it simply relies on an assertion of superiority, backed up by the evidence of being the most powerful country in the World, (like Britain was in the 19th Century, or France in the 18th).

    The only trouble with this is, it blinds us to what makes those empires really succesful -- natural resources, opportunism and good old blind luck, in the form of historical happenstance.
  • by bariswheel (854806) on Monday June 12, 2006 @08:56AM (#15516271) Homepage
    lots of bitter, negative opinions on this one. To add to the discussion instead of criticizing (which is fine - in small doses), I believe government (or lack thereof) is key for innovation. If you have an oppressive regime luring over you, there will be minimal startups; people will have little incentive to innovate, or fear to innovate. What he's trying to do in this article is to find commonalities within the 'American persona' to find out whether Silicon Valley is clonable. I believe That's the root of his thesis. He addresses personality traits such as Americans being free spirited risk takers, and it's a point well taken. "Startups are the kind of thing people don't plan, so you're more likely to get them in a society where it's ok to make career decisions on the fly." - P. Graham
  • Re:Oil and dollars (Score:2, Insightful)

    by LnxAddct (679316) <sgk25@drexel.edu> on Monday June 12, 2006 @08:58AM (#15516274)
    Illegal immigration is a whole other story, we still allow millions of legit immigrants every year.
    Regards,
    Steve
  • by rolfwind (528248) on Monday June 12, 2006 @08:59AM (#15516277)
    I usually like reading Paul Graham's essays but I agree with you on the "4. American Universities Are Better" part. Europe has a long and prestigious history with universities.

    Does he have extensive and long experience with foreign universities to ascertain this? Or is it simple chest-thumping of an American, just like the screaming about America having the "justice system in the world" during the OJ trial - I forget who started that, but it was repeated by some talking head on the news/talkshows almost everyday during that period. That is one scary thought! When I think of american (civil) justice, I know the winner, the man with deeper pockets.

    Personally, I would say the system really depends where you go to. Overall, I would just rate them lower because of the cost as compared to other universities I could go to in Europe without bankrupting myself for years to come.
  • by gvc (167165) on Monday June 12, 2006 @09:08AM (#15516308)
    You need a great university to seed a silicon valley, and so far there are few outside the US. I asked a handful of American computer science professors which universities in Europe were most admired, and they all basically said "Cambridge" followed by a long pause while they tried to think of others. There don't seem to be many universities elsewhere that compare with the best in America, at least in technology.


    And this survey demonstrates what, other than the parochialism of the American computer science professors with whom Graham happens to be acquainted?
  • Laws are it. (Score:5, Insightful)

    by hsmith (818216) on Monday June 12, 2006 @09:10AM (#15516312)
    To start a corporation in America all you have to do is file out a simple form and mail in a cheap fee. I started mine for a whole $100 in costs to the gov't. While it is more than I want to pay, it isn't bad. I pay less in taxes than foreign counterparts, so I have more to actually invest into my company to grow it, another great reason why it is easier to start a small business in America. Employment laws as well. In France it takes 2 years to fire someone. If someone is destroying my small business, they can be out the door that day (well, depends on the state really). THere are tons of other reasons, but ease of doing business, ability to put your own capital into your business is def up there. Look how many businesses are started by those w/o college educations, it isn't the schools.
  • by Opportunist (166417) on Monday June 12, 2006 @09:10AM (#15516316)
    Yes, it's easier to get slave workers (well, not really slaves, you have to shelter and feed slaves while with "normal" workers you can pay them less than shelter&food would cost you), it's easier to get investors, it's less bureaucratic hassle and so on. It's easier to get the biz rolling.

    But with the patent laws and the legal system around it, opening a biz in the US is risky. As soon as you're actually starting to make money, some corporation will cover you with suits 'til you hand it over for a nickle or a dime because some harebrained patent they got offers them a foot into that door.

    In other words, startups are the risk-free way of "innovation" for corps. If it doesn't fly, it doesn't cost them money. If it does, hand it over!
  • by jbeaupre (752124) on Monday June 12, 2006 @09:13AM (#15516328)
    With an attitude like that, I can understand why you'd favor more protection.
  • by backslashdot (95548) on Monday June 12, 2006 @09:20AM (#15516356)
    That's odd, all the studies and anecdotal evidence presented to me suggest otherwise. I don't think the universities themselves are better, you're just more likely to make better contacts here than abroad. And the only reason for that is because Americans have money and a lot of them use it to invest (as Paul pointed out).

    Differing from your opinion, I agree with the entire article 100% (including the assertion that our universities are better), BUT .. I do not like the way the article was written. I wish he had used more statistics and numerics than just, for example "half the people in silicon valley have accents". How about showing us the stats of how productive they are etc. The numbers can't be that hard to find. Just because you have references at the end of an article doesnt really boost the usefulness much. Reason i am saying this is that without facts and numerics people who sort of disagree haven't really anything tanglible to be convinced by. And those who already agree, well they don't have reinforcing data they can use in convincing others.

    That said it's a good article in that it puts things to forefront that maybe people (especially those in other countries) will research or utilize.
  • Faulty logic (Score:3, Insightful)

    by deanj (519759) on Monday June 12, 2006 @09:20AM (#15516357)
    The faulty logic in this article is a good reason just to pass it up

    From the article:

    "it is not (yet) a police state"

    Why is it there are people in this country are screaming and yelling about their imagined "police state", yet want to leave the other countries in the world to people who want to turn the whole world into a police state?
  • by Average_Joe_Sixpack (534373) on Monday June 12, 2006 @09:26AM (#15516382)
    US and Canadian Universities are better because most are run like corporations. They are able to attract top academic and research talent from around the globe with higher salaries, which of course draws tops students from around the globe (ie brain drain).
  • by mcmonkey (96054) on Monday June 12, 2006 @09:27AM (#15516384) Homepage
    As a European I find the article rather America-centric.

    Yes, We USAans are self-centered, self-absorbed, and generally think very highly of ourselves. Just like those in the European countries many of us came from.

    In the realm of international relations, how many countries are riding the coat tails of long dead empires? Why should any outside of France have any care for what goes on inside of France? And what about the English? They're guilty more than anyone. Okay, at one time the UK was a big deal, but that time is over. Is Britain really a significant economic, political, or military power anymore? Certainly not to the extent you think of yourselves.

    For a European to raise the charge of 'America-centric' seems the height of 'it takes one to know one.' I don't deny the charge, but when you point one finger at me, you have three pointing back at yourself.

  • by SparkyTWP (556246) <phatcoqNO@SPAMinsightbb.com> on Monday June 12, 2006 @09:27AM (#15516387) Homepage
    The transistor radio was invented in America. Japan was just the first to make them affordable to the point that everyone could buy one. If I remember correctly, part of this is because the profit margin on transistors in other areas was much higher than what you could get from selling radios, so the manufacturers here didn't pay a lot of attention to it.
  • by costas (38724) on Monday June 12, 2006 @09:27AM (#15516388) Homepage
    I think TFA has a very narrow view of the rest of the world. Yes, the US has succeeded brilliantly in creating and fostering a start-up culture (where everyone else has failed) but his reasons, are well, mis-informed and a bit narrow-minded. Let me put in my $.02 and €0,02 as well:
    • Immigration: The US has a great immigration policy, but it's not really that much different from a lot of advanced Western countries, esp. when it comes to skilled workers (researchers, college graduates, etc). E.g., the UK has a much larger talent pool it can draw from for immigrants (esp. Commonwealth citizens) yet there have been very few successful UK startups. Same could be said for Germany, the Nordic countries, and most of Southern Europe.
    • The US is a rich country: so is most of Western Europe, Australia, NZ, Southeast Asia, Japan, etc. Arguably the latter regions have even better infrastructure than the US.
    • The US is not a police state: again, neither is any EU member or the rest of Western Europe. Still, the only big European startup as of late has been Skype, and even that was US-funded.
    • American Universities are better: absolutely, but not for the reasons stated. American universities are just more free to make money from their R&D, unlike most say European ones. Since they can run research for profit they can also hire the best professors and researchers they can find and that creates a virtuous cycle. In Europe for example, most research schools are state institutions and thus professor salaries are set to a nationwide scale. Plus it's much harder to profit from R&D.
    • You can fire people in America: labor mobility is not a US invention. If you are faced with stifling labor laws, you can work around them. You can use contractors, bankruptcy law, subsidies, the list goes on. Plus, Anglo-Saxon countries with liberal labor laws (UK, Australia), still haven't fostered startups that well.
    The rest of the list is even more wooly than these bits. Here's my take as to why the US does startups better:
    • Failure is an option: there is less if any stigma associated with failure, making the option of going to work for a startup a much less negative one.
    • The market does not favor incumbents: unless you are trying to create a new market, it's much harder to compete with incumbent competitors outside the US, as they are usually politically protected (for fear of loss of jobs, political gains, what-have-you). If you think AT&T has a strong lobby in DC, consider what would happen if say the Ministry of Communications was the one running AT&T. That still is (directly or indirectly, through equity stakes) the case in most of Europe.
    • There's no history of startups: nothing attracts people like success and when you don't have your local Netscape or Yahoo or Google to draw inspiration from and try to immitate their success, you are that much less likely to try to start up a company.
  • by Noryungi (70322) on Monday June 12, 2006 @09:34AM (#15516421) Homepage Journal
    And one factor that should not be underestimated is that the U.S. Government has been willing -- and able -- to bankroll a lot of scientific projects for the past 50+ years. Think about it:

    1. The Manhattan Project: start of nuclear energy. Immediate military applications, of course.
    2. The ENIAC, first electronic computer: first model bought by the U.S. Census Bureau, second model bought by the N.S.A.
    3. The Apollo program: biggest space-race project of all times, with benefits too numerous to list here, from electronics to materials to aerospace engineering (including military applications, of course).
    4. The Internet: bankrolled by DARPA, then by the NSF, both US Governement agencies.
    5. Nano-technology, the Genome Project, etc... etc...


    Don't forget that, for many years, the USA have been at the forefront of technology and science because the US Governement -- meaning you, Happy American Tax-Payers! -- has been very happy to sign big, fat juicy checks to US corporations, US Universities, US Think Tanks, etc. Also, the US Governement was able to do this because, right after the end of WWII, the USA were one of the very rare country in the world with industries left intact and a lot of natural resources.

    Now that the US Governement is pretty much anti-science, and that the US debt is soaring to ever more dangerous summits, I am not so sure the USA can maintain their advance on the rest of the world. But we'll see.
  • by Skater (41976) on Monday June 12, 2006 @09:37AM (#15516442) Homepage Journal
    Also many of those Japanese cars with such great quality are built...in the US. Toyota and Honda both have several plants in the US.
  • by MarkWatson (189759) on Monday June 12, 2006 @09:42AM (#15516453) Homepage
    Two childhood friends both struck it big (20+M and 300+M) starting software companies, so the American dream does happen.

    However, the statistics are against you if your goal is to become very rich - but it is the possibilty that motivates people.

    Here in the USA, we have an interesting cultural/political phenomenon: many lower middle class people strongly support the republican party whose policies are very biased towrads helping the very rich. I think that part of this phenomenon occurs because people dream of having a great idea and striking it rich.

    I think that having one's own business is a good idea (http://mark-watson.blogspot.com/2006/04/owning-yo ur-own-business.html) but only if you do it for the right reasons.
  • by Psiren (6145) on Monday June 12, 2006 @09:46AM (#15516488)
    there are a few exceptional schools in Europe (Oxford and Cambridge coming to mind the most quickly)

    Speaking as someone who works in one of the Oxbridge Colleges, I can tell you that what you see from the outside is nothing like what you see on the inside. If I were ever to have kids, I would strongly suggest they avoid either Oxford or Cambridge as a potential place of study.

    The place is rife with incompetentence, and absolutely dogged with bureaucracy, politics and backstabbing. I can't understand how the word hasn't got out. It seems to be an extrordinarily well kept secret.
  • by Richthofen80 (412488) on Monday June 12, 2006 @09:48AM (#15516498) Homepage
    This is bollocks. If that's the case then the fall of an economy should be based just on the same amount of luck.

    If you want to read a story about how an economy is not a matter of resources or luck, but rather how little or much a government meddles in the economy, read about Zimbabwe.

    http://news.bbc.co.uk/2/hi/business/2780775.stm [bbc.co.uk]

    Economies are based on the decisions of its citizens... a million little decisions controls the tide of the economy. When a hands-off, rational minded government or political climate takes place, economies do better. When a meddling, irrational government takes seed, then that's what you get.

    If natural resources take such a huge stance, why are most of the oil producing nations still 'poor'?

    Your reference to the empires of 100+ years ago doesn't apply because the wealth of that period was 'exported', a.k.a. stolen and redistributed. The American 'exceptionalism' you quote was by large not built on Empire wealth but by the wealth of industry of its citizens. And that itself is pretty exceptional.
  • police state?huh? (Score:2, Insightful)

    by minus_273 (174041) <aaaaa.SPAM@yahoo@com> on Monday June 12, 2006 @09:52AM (#15516524) Journal
    " it is a rich country, it is not (yet) a police state,"

    I am going to hazard a guess that the person who stuck "ye"t in there has lived his or her entire life in a free western country and has little or no understanding of what a police state really is. All this person knows is 1. bush bad , 2. bad is police state, therefore bush = police state. This reminds me of every college kid who knows 1. bad 2. bad is nazi, therefore if you disagree with me you are a nazi.

    Idiotic use of extreme terms like this just erodes any meaning they may have. Its is about as effective in conveying meaning as the F-word if you use it as almost every other word.
  • by Guido von Guido (548827) on Monday June 12, 2006 @09:52AM (#15516528)
    The place is rife with incompetentence, and absolutely dogged with bureaucracy, politics and backstabbing.

    I think you've just described every institution of higher learning known to mankind.

  • by LWATCDR (28044) on Monday June 12, 2006 @09:58AM (#15516556) Homepage Journal
    "While the German car industry has come up with fuel injection, ABS braking and constant four wheel drive over the past 20 years the US industry has invented the cupholder and the SUV."
    Not exactly... GM had fuel injection in the 1950s. All wheel drive was developed in Germany because Audi competed heavily in rally racing. A from of racing that isn't all that popular in the US. Not to mention that AWD isn't all the great of an addition to most cars. It eats more gas and is expensive to maintain. It is good for people that like to drive fast in really bad weather. As far as US contributions to the Automotive art? Pollution controls are a huge one. The US had pollution controls on auto decades before anyone else did. As such they paid for the majority of the development costs.
    "Likewise, somehow the Japanese are great craftsmen. This skill is reflected in the quality of Toyota's manufacturing and the remarkable qualities in Japanese portable electronics. Apple may have invented the ipod, but the walkman and the transistor radio all came out Japan."
    The transistor radio came out the US. The Transistor came out of the US. http://en.wikipedia.org/wiki/Transistor-Radio [wikipedia.org] "The first commercial transistor radio, the Regency TR-1, was announced on October 18, 1954 by the Regency Division of Industrial Development Engineering Associates of Indianapolis, Indiana".
    Followed by, "Transistor radios did not achieve mass popularity until the early 1960s when prices of some models fell below $20, then below $10 as markets became flooded with radios from Hong Kong."
    One of the big jokes about "Transistor radios from Japan" was the Transistor wars. Japanese companies would advertise how many transistors they put in the radios, so they would put in extra transistors that really did nothing. I guess they thought more was better even if it really wasn't. Honda and Toyota both build cars in the US now. According to consumer reports many US cars are now more reliable than most cars from EU countries now. Toyota, Honda, BMW, and VW all build cars in the US now. You may say that Toyota and Honda have a culture of high quality in automotive production how ever to make the claim that it is cultural sort of ignores Suzuki which really doesn't have that high of a reliability rating or Nissan which while makes some very good cars also has some that have gotten poor reliability ratings. the US does seem to have a remarkable history of innovation. Some countries like the UK has a great history of destroying innovation. Read about Frank Whittle sometime. The real key to the the success the US has is that is seems to be willing to adapt to change and to take the best of other cultures and allow it to become part of the US culture.

    You are just repeating tired stereotypes that mean nothing and are frankly just not true.
  • weak (Score:2, Insightful)

    by argStyopa (232550) on Monday June 12, 2006 @10:00AM (#15516569) Journal
    Startups happen in clusters. There are a lot of them in Silicon Valley and Boston, and few in Chicago or Miami. A country that wants startups will probably also have to reproduce whatever makes these clusters form.

    While I agree with the overall tenor of his presentation, starting with a number of begged questions weakens his argument.

    1) Startups happen ALL OVER THE COUNTRY. He maybe right about 'clustering' when you're talking about certain industries, but in a country where The above paragraph makes a LOT more sense (and is factually more supportable) if instead of "Startups", you read "The cool trendy startups that we like to talk about". In fact, Raleigh-Durham and Austin are (like SFO) in the top quartile of VC investment but he doesn't seem to think they are "cool" enough to discuss.

    2) "The US allows immigration, it is a rich country, it is not (yet) a police state..."
    Please. I'm sure the horse is dead, so you can stop beating it with your non sequitur stick. Anyone who connects the "US" and "police state" in a sentence merely illustrates how little they know about an actual police state. I understand it's very important to continue the shtick so PERHAPS your side has a chance to win an election sometime in the next half-dozen years, but you'd be much more persuasive if you left your political baggage at home with your pom-poms.

    3) (Paraphrasing) "German Universities suck because there are no Jews there." That's just plain stupid. Aside from the overt racism of the statement, then why aren't we all heading pell-mell for the universities in Israel? Perhaps there's only a certain 'dose' of Jewishness that we need, and too much is somehow poisonous (hands waving dramatically)?

    4) "You can fire people in America" - I think he's absolutely right, but isn't using our academic system a particularly BAD example? If he's willing to venture into the speculative fiction of the US becoming a police state, his omission here is the deletorious effect of Affirmative Action, and a litigious society where where a woman or minority is fired, their first thought is "hm, I wonder if it was my race/sex/preference/etc." and not "What did I do wrong?".

    5) "In the US it's ok to be overtly ambitious, and in most of Europe it's not. But this can't be an intrinsically European quality; previous generations of Europeans were as ambitious as Americans. What happened?" They left Europe and came to America?

    5) "Silicon Valley is too far from San Francisco....The best thing would be if the silicon valley were not merely closer to the interesting city, but interesting itself.... (The suburbs are) the worst sort of strip development...The kind of people you want to attract to your silicon valley like to get around by train, bicycle, and on foot." No projection there, no sir. Funny, I'd think that the people you'd want to attract people that are interesting, intuitive, hard working, conscientious people...not just smarmy, self-important, elitist black-clad coastal urbanites. I didn't realize Greenpeace membership is required for this job sir, would donating to the Nature Conservancy be enough?
    Pssst, Paul: there are a lot of interesting startups in what you'd call boring, flyover country. Telecommuting means that you can have outstanding information-based companies in Granite Falls, MN, Paragould, AR, or even Nampa, ID. In fact, a lot of people may even PREFER rural or small-town life, but they probably drive pickups or something (shudder).

    6) Immigration - this is just utopian and thus nearly valueless. The US already has the most open immigration system (even in these days of leather-clad jackbooted thugs summarily executing everyone trying to enter the country). He spent the previous ten paragraphs talking about how the US system is unique, particularly because of its poor educational system compared to other countries, and then when discussing the US's requirement of a college degree for entry he uses examples of....Americans. Circularity anyone?
  • by JohnsonJohnson (524590) on Monday June 12, 2006 @10:01AM (#15516583)

    Aside from Graham's tendency to extrapolate wildly from a sample size of one: "I felt oppressed as a geek/nerd in high school therefore America oppresses geeks/nerds in high school", "I was successful in a computer tech startup using LISP therefore successful computer tech startups should use LISP", "I now have enough money to indulge my eccentricities and a stage on which to let the stream of my ego's consciousness spew forth without worry about the consequences, therefore I must be a public intellectual". Like Chomsky, I'm sure Mr. Graham is certifiably brilliant within his chosen field of study. Like Dr. Chomsky, Graham tends to mistake brilliance within one field with the capability to achieve deep understanding and useful insight on a variety of unrelated topics.

    As a simple counterexample to the current topic I'd offer India's IT sector. Although India has a few world class schools they are nowhere near as numerous as in the US, India does not have a large immigrant population, India's red tape while improving is still closer in style to "in Soviet Russia" than the Rand's libertarian paradise etc. However start up businesses in India are booming, mostly as spin offs of subsidiaries of American tech companies. Likewise Taiwan's semiconductor and electronics manufacturing industry has largely shed its foreign owned component and can be considered a startup success story. Not all start ups form in little red barns, or unkempt Cambridge, MA apartments; Intel formed from disgruntled Fairchild employees, as did Zilog and in a generation or two similar stories are likely to be common in the Indian tech sector.

    However the above is not a rigorous counterargument, and is not meant to be. My larger point is merely that if one narrows one view enough the world can seem remarkably simple. And then one starts to believe any story that can explain that simple world. Fortunately most of us have enough of a sense of shame to keep those stories to ourselves. Perhaps Mr. Graham, and Dr. Chomsky and many other public intellectuals should spend their efforts looking into what particular combination of genetics and environment lead to a pathological inability to refrain from espousing cranky theories in public.

  • biz in Europe (Score:4, Insightful)

    by fpedraza (757989) on Monday June 12, 2006 @10:03AM (#15516597)

    I don't know about Asia or other regions, but these are my thoughts about the relative difficulty of starting business in Europe:

    #1 reason: Government is an obstacle rather than help or even better: JUST DON'T MESSING TOO MUCH. Bussinesses in Europe has to comply with municipal, state, country and european community regulation. Municipal laws are often vary a lot whithin even the same province. The local government has to give permission and get taxes (not cheap) just to open the company's door. Also the nation's government. And guess what? They are not exactly very fast nor cheap. The high costs of starting a bussiness make it very difficult for people who is not already rich or other bussiness who have already a lot of money! Paradox of social-democracy? Government as reverse Robin-Hood?

    Other:

    - the "progressive" taxes system doesnt award personal effort and risk. The taxes for businesses are as high as 30% or 35% of profits, even higher for wealthy individuals (Social Security not included). Where does this force capital to go? Easy question: any other place.

    - Public workers are impossible to fire. Once they pass their exams they can even just not go to work and they will keep their salary and benefits forever. Not the best to stimulate efficiency and speed. They also have higher salaries than private companies employees. Young people here dream about working for the government.

    - Trade unions degenerated to political parties. Their leaders and representants are too busy doing nothing and helping #1 in their labor to increase regulation.

    - We spend about 40% of the E.U budget subsidizing the low-margin, low-innovation, low-tech agricultural sector. This money should be better in their legitimate propietaries' pockets thus lowering the high tax pressure on business and individuals. As a side effect we screw up emerging economies with our protectionism (OK, maybe also the USA)

    - We have literally dozens of different languages. I dont think this is necessarily wrong, it's just a consecuence of our history. But the really stupid thing is the politicians are very busy trying to revitalize dead or semi-dead languages and dialects like galician, basque and catalan to have another more justification to fight with other regions, get local privileges, and keeping their positions. Of course these languages are studied in schools, diminishing the time young people should rather use studying maths, literature, economics, english or whatever. Mix this with governmet regulation and you get a lot more overhead for business.

    - We dont fight strong enough against terrorism, instead we let the terrorists (convicted killers included) form political parties and negotiate with our governmets as equals. Shame on us. Insecurity scares the capital who tends to go away.

    It's not that is easy to start a bussiness in the United States because they are rich: they are rich because is easy to start a bussiness.

  • by gowen (141411) <gwowen@gmail.com> on Monday June 12, 2006 @10:28AM (#15516725) Homepage Journal
    When a hands-off, rational minded government or political climate takes place, economies do better.
    Well, they do better than Robert Mugabe, certainly. But the standard of living in Scandinavia, where social democracy and government intervention, are consistently higher than the USA. If you compare yourself to Mugabe, no wonder you do well. It's completely juvenile to compare the best of one system with the worst of another. Government intervention doesn't inevitably lead to the genocidal excesses of Robert Mugabe.

    Now, what about the laissez-faire free market that was instituted in Albania after the fall of communism? Answer: the whole economy collapsed under the weight of Ponzi schemes and Enron accounting. Go read "Eat The Rich" by P.J. O'Rourke (hardly anyone's idea of a socialist) and learn that your simplistic reasoning isn't actuall born out by studying a range of countries.
  • by gowen (141411) <gwowen@gmail.com> on Monday June 12, 2006 @10:40AM (#15516782) Homepage Journal
    Yes, but that money has to come from somewhere: specifically, it comes from students.

    What good does it do to have excellent professors, if 50% of your population can't afford to be educated at a decent college. How much does it cost for a three year undergraduate course at Stanford or Yale? Despite Grahams assertions of class mobility, the finest educations in America are largely (a small number of scholarships aside) the exclusive preserve of the upper middle classes and above.
  • by Anonymous Coward on Monday June 12, 2006 @10:43AM (#15516800)
    If people knew how easy it was to disrupt an economy. They'd probably get a redundancy system like the internet. We're this [] close to going back to bartering, people!
  • by Mr. Underbridge (666784) on Monday June 12, 2006 @10:48AM (#15516825)
    For some reason, most people will read a sentence like "America has many of the world's top universities" and think it said "No country but America has a top university."

    This is mostly a sign of the abject level of the teaching of basic logic at schools around the world. In America, too, because most Americans will misread things in the same way.


    Well, the resason for the confusion is because, if you read "Top University" as "Top 10" or something like that, the statements are basically synonymous. According to most rankings, America does have a near monopoly at the very top, though Oxford and Cambridge will always be there, and the best Asian universities are certainly improving very rapidly. According to this [sjtu.edu.cn], America has 8 of the top 10 and 17 of the top 20. So I'd forgive someone of the "error" of believing all the top universities are American. I'm not saying it's a good thing, but it's not far off.

    What I've always found especially curious is the mismatch of the American higher-education system with the open and blatant anti-education attitude of much of the American public.

    That's a bit of an oversimplification. Pretty much the *entire* American public is pro-education. Some of them simply differ on *what should be taught*, which is a pretty significant distinction. And there are a handful of very conservative American universities - not many, but some - so even the most conservative Americans support education and send their kids off to college. And also, the Bible-thumping crowd is a very vocal minority, but a minority nonetheless. I believe the average American doesn't really care about the whole evolution thing to get very riled up.

    signs of education and intelligence are carefully hidden by most American politicians, because they understand that this would be a major flaw to a huge fraction of the voters.

    I'd say that's a little off too. It's more that the southern and rural voters I believe you're referring to - who may lack sophistication, but not intelligence - don't take well to condescending intellectuals *at all*. Like, say, John Kerry, who came off that way. Contrast that with Bill Clinton, who is brilliant but not condescending, and got on very well with voters of all classes.

    To disclose, I grew up in the south, went to undergrad at a bottom-tier university, grad school at a top-10 American school, and now live in a major city on the east coast. So I've seen a few different perspectives on the whole "Education in America" thing.

  • by spectrokid (660550) on Monday June 12, 2006 @11:00AM (#15516905) Homepage
    AES, the encryption algorithm, was invented at a Belgian university. A country like this, with less inhabitants than NYC cannot afford to have universities leading the world in all kinds of disciplines. This is a big problem for European universities: every country wants a silicon valley, AND a biotech center, AND nanotech,... But really they can't afford it, and therefore the money gets spread out too thin. If you work with small groups and good funding you can beat the world in a niche discipline, just like the AES guys did.
  • by I Like Pudding (323363) on Monday June 12, 2006 @11:02AM (#15516912)
    Reminds me of '99 in America. IT is currently a boom industry in India. This attracts all sorts of "frontrunners", if you will, who are in it purely for the payout. The workers with this mentality usually aren't worth their curry, whatever their country of origin may be.
  • France (Score:5, Insightful)

    by tverbeek (457094) on Monday June 12, 2006 @11:15AM (#15516995) Homepage
    The start-ups would all be happening in France except that they don't have a word for "entrepreneur".

    No, really! Type that into Babelfish and ask for an English-to-French translation, and it spits the same word back at you. OK, maybe it's in French dictionaries, but it's obviously one of those words that they're always borrowing from other languages (e.g. the days of the week sound suspiciously like the Italian names).
  • by ultranova (717540) on Monday June 12, 2006 @11:39AM (#15517201)

    I can't necessarily see China succeeding on the level of the previous empires, though, due to their foreign dependencies for resources, oil, and markets.

    On the other hand, a hunger for resources has always been an essential ingredient for creating empires. Without it, it's easier and more comfortable to simply sit home and defend what you already have. That's one of the reasons why Europe launched expeditions while China didn't: European powers were searching for a sea route to better import spices from far east, while China lacked nothing.

    Don't forget, the European colonial empires were created for getting resources, not for their own sake. And if it did not depend (or think it's about to depend - the whole peak oil thing) from foreign oil, would USA bother messing with the rest of the world ? Heck, the Japanese were happy to stay on their island until the US gave them a rude awakening, and then built an empire to compensate for a lack of native resources.

    It isn't enough that you are capable of building an empire, you also need a motivation for doing so.

  • by alienmole (15522) on Monday June 12, 2006 @11:40AM (#15517207)

    For some reason, most people will read a sentence like "America has many of the world's top universities" and think it said "No country but America has a top university."

    This is mostly a sign of the abject level of the teaching of basic logic at schools around the world. In America, too, because most Americans will misread things in the same way.

    You can't really teach this out of people. It's a cognitive heuristic which saves on brainpower, which is deeply embedded in the human psyche. The only way to escape it is with large doses of intelligence: larger than most people possess. The core issue is about compression as a way to aid comprehension: to make a sentence like "America has many of the world's top universities" tractable - easier to reason about and remember - it has to be translated into something simpler. The most obvious example is "America == top universities". There's an obvious loss of information here, but arguably, the main point has been retained. A lot of human silliness is explained by this trick.

  • by contrar1an (976880) on Monday June 12, 2006 @11:45AM (#15517245)
    > ...because they understand that this would be a major flaw...

    I assert that they want to avoid appearing "privileged". Of course, privileged and smart don't automatically go together. But, they appear to for the average American.

    Everyone in America wants to be rich, but, one of the dominant American political parties has spent decades and tons of money enrolling people in the concept that rich people are evil. Politicians reasonably want to avoid appearing evil.

  • by smitty_one_each (243267) * on Monday June 12, 2006 @11:49AM (#15517285) Homepage Journal
    Consider Nicholas Cage's character in Wild at Heart:
    Guy at Nightclub: You look like a clown in that stupid jacket.
    Sailor: This is a snakeskin jacket! And for me it's a symbol of my individuality, and my belief... in personal freedom.

    The US bias in the individual vs. society question is relatively more in favor of the individual than Asia and Europe.

    Talking to my lovely German wife, I was shocked to discover that, if you own a bookstore in Germany, you can't be open whenever you want, or sell books at your desired price point.

    Sure, there are restrictions on such activity in the US. You can't just offer books at next-to-nothing indefinitely, to break the market. My perception, however, is that the amount of government interference in the market is substantially lower in the US than elsewhere.

    Government is the second oldest business. Can't have it stifling the rest.
  • by alienmole (15522) on Monday June 12, 2006 @11:56AM (#15517336)
    The survey itself isn't the proof of the claim, it's merely a kind of illustration, which requires that you already recognize the underlying point. So, what are the European universities most admired in computer science, anyway? Graham has a point, although I'm not sure he's fully explored all the reasons: a big one is simply the size of the U.S. as a homogeneous market which mostly communicates in a single language.
  • by Anonymous Coward on Monday June 12, 2006 @12:23PM (#15517520)
    Let me quote Wikipedia:
    "Following the war, Sweden took advantage of its natural resources and lack of war damage, making it possible to expand its industry to supply the rebuilding of Europe, leading it to be one of the richest countries in the world by 1960. Sweden was part of the Marshall Plan but continued to stay non-aligned during the Cold War, and is still not a member of any military alliance. During most of the post-war era, the country was ruled by the Swedish Social Democratic Party that established a welfare state, striving for a "well being for all"-policy. Following a recession in the early 1990s some socialist policies were relaxed."

    Even socialists need some time to ruin the economy of a country with natural resources as rich as that of Sweden, country unscarred by war, and one not participating in arms race of Cold War. But they still manage to do it: After war Sweden was 3rd country with best GDP per capita. Now it's 19th and still falling.

    Greetings from another "socialist paradise" - Poland.
  • by Anonymous Coward on Monday June 12, 2006 @12:28PM (#15517568)
    Any dispassionate (read: non-flag waving) look at American exceptionalism reveals much was imported. Einstein and Teller for example, not counting fields Americans appear to lay claim to without proof or reflection. The Web for another example. Regarding the implication America is 'hands off' on business, where? You have some of the strongest pro-business, anti-citizen legislation in the world. Mandatory employee drug testing, DRM, DCMA, these all distort the 'natural' marketplace for employee and products, but since it's the environment to which you're accustomed it feels natural as air. Natural it's not, far from it. Finally, thanks for again demonstrating a national blind spot the size of Texas in thinking the best business environment is necessarily the best social environment. The world's largest prison population, a medical system which bankrupts its citizens regularly, the most aggressive military adventurism on the planet, all speak otherwise.
  • by Nazmun (590998) on Monday June 12, 2006 @12:53PM (#15517745) Homepage
    THe marriage thing will no longer work at all. Neither will the getting sponsored part if you've already moved in here illegally. During the later half the clinton administration, a new bill was added that barred illegal immigrants from legalizing themselves should they have spent any time here illegaly. If ti was fairly short, under a month or so they would be barred for a year or so. The next level they'd be barred from staying here for ten years.

    Gaining illegal entry from foreign countries via airport is also quite difficult.
  • by Animats (122034) on Monday June 12, 2006 @02:04PM (#15518214) Homepage

    Silicon Valley ceased being an engine of significant economic growth after the dotcom bust. It is unlikely to return to its former glory.

    I'm writing this from within walking distance of downtown Palo Alto, and I tend to agree. It's really discouraging. Five years after the dot-com crash, there are still empty industrial parks for lease. The big reseach centers are gone. Xerox PARC is gone. Interval Research is gone. IBM Almaden Research is emptying out. DEC SRL and DEC WRL are gone. HP's real business today is printer ink. Intel is still around, but the new fabs aren't here, and they seem to be out of ideas anyway.

    Most growth seems to be in companies that deliver advertising - Google, A9, and their ilk. Startups tend to be "me-too" operations scrabbling for market share in crowded markets.

    Yet there's so much to be done. How about producing a personal computer that just doesn't break? Something with hardware and software immune to attack. Satisfaction guaranteed or your money back. Or electric cars with serious range. Or safe nuclear power plants. But that's not what people are working on.

  • Perhaps not (Score:3, Insightful)

    by cartman (18204) on Monday June 12, 2006 @03:43PM (#15519026)
    I agree with some of your points. Many of the advantages listed for the U.S. in the original article are also shared by Europe. For example, the EU is filled with rich states that aren't police states.

    However some of your points underestimate the differences between the two regions:

    You can fire people in America: labor mobility is not a US invention. If you are faced with stifling labor laws, you can work around them. You can use contractors, bankruptcy law, subsidies, the list goes on. Plus, Anglo-Saxon countries with liberal labor laws (UK, Australia), still haven't fostered startups that well.

    Labor mobility may not be an American invention but America is the place where it is currently practiced. Of course there are ways of "getting around" anti-mobility laws, as there are ways of geting around any laws, but law avoidance (like tax avoidance) is costly, difficult, and incomplete. Just saying that you can "work around" laws greatly understates the difficulty in so doing. In many countries of the EU, firing someone or laying them off is practically impossible.

    The market does not favor incumbents: unless you are trying to create a new market, it's much harder to compete with incumbent competitors outside the US, as they are usually politically protected (for fear of loss of jobs, political gains, what-have-you). If you think AT&T has a strong lobby in DC, consider what would happen if say the Ministry of Communications was the one running AT&T. That still is (directly or indirectly, through equity stakes) the case in most of Europe.

    There are far fewer large tech incumbents in Europe than in the US. Obviously every country has a phone company but most European countries do not have an IBM, Microsoft, or Cisco.

    Failure is an option: there is less if any stigma associated with failure, making the option of going to work for a startup a much less negative one.

    In my experience foreigners are as tolerant of failure as Americans. In fact foreigners are probably more tolerant of failure because career success is less important in most countries than in the U.S.

    Furthermore, it has been my experience that many or most employees of silicon valley startups are Asian or European. Even some of the founders of companies in silicon valley are foreign. If foreign people were terrified of failure then they would not come to the US to fail, only to be sent slinking home. Bear in mind that many people working in silicon valley companies are employed using H1-B visas which means that if the company fails then their visa is revoked and they must return home immediately--implying to their fellows that they went to silicon valley, tried, failed, and were booted out of the place. If they were afraid of failure then they wouldn't take a risk like that.

    Since foreigners are as likely as Americans to work at silicon valley startups, cultural differences between employees can't be the reason behind silicon valley's success. The fact that the employees are from all over the world, but the companies are American, suggests that the difference is economic not cultural.

    I believe the primary reason there are more large startups in the US is because there is far more venture capital. It's natural that Europeans would be terrified of failing in Europe because the enterpreneurs there must bear the risk entirely by themselves. If you wish to raise money for a startup in Europe then you must risk all of your personal savings, and your house--and even then you really wouldn't have enough money to fund the startup. In America you use somebody else's money, and the risk to you is greatly decreased. Of course, if you accept venture capital then the potential rewards are also decreased, but if the startup succeeds then you'll be filthy rich anyway and you won't worry about the 33% cut of your massive fortune that must now be paid to ventu

  • by timothy (36799) on Monday June 12, 2006 @04:03PM (#15519166) Homepage Journal
    Two small comments on your comment :)

    1) Re: the "megafence" on the southern border of the U.S.: remember, no such fence exists right now. There are fenced portions of the border, but most of it is basically freely passable (though the landscape itself is forbidding across West Texas and Arizona at least). Note, too, that even if there was a "perfect" (impregnable) fortress-fence stretching the whole way, and likewise keeping out those pesky Canadians, it would not contradict the claim that the U.S. allows immigration (and in healthy numbers!). Allowing immigration does not imply a freely permeable border. Mexico (perhaps in reaction to U.S. rules) has fairly stringent rules about Americans (and others) in Mexico, too; for more than border-area excursions (I think 60 miles / 48 hours), Americans are supposed to get paperwork done in advance to clear it. I have seen little complaint about this exercise of Mexican sovereignity. OTOH, at least in El Paso / Juarez, there is abundant foot- and car-traffic across the various official border crossing points, and the hassle is minimal in my limited experience (either direction, for people of American or Mexican citizenship). But you can't carry a gun from dangerous Texas into ultra-safe Juarez.

    2) A 5,000-person conference in Austin with no Internet connection, in 2004?! That's hard to believe :) Seems hard to go more than 10 feet in Austin without being in at least *someone's* open wi-fi zone, including the delicatessen chain (Jason's? Katz's?) that has free wifi at all locations.

    Cheers,

    timothy
  • by Anonymous Coward on Tuesday June 13, 2006 @12:48AM (#15521886)
    I moved from the US to Australia and now that I have been here for about 3 years.. Australia has good universities, decent infrastructure (at least for IT), flexible labor laws and a very enlightened immigration policy.. but no worthwile startups and innovation, and I think I know why.

    - There is a culture of 'cooperation' and not standing out with a seemingly endless discussion about 'Australian' values. I put cooperation in quotes because it's very ethnocentric here - people who look different, act different or think different are shunned and ridiculed. When politicians talk about ethnic minorities, they use words like 'thugs' and 'grubs' - words that would get land an American senator in some very deep sh*t. In short, if you're anything other than a beer swilling, sports loving caucasian, you're going to be very uncomfortable in Australia.

    - America is a meritocracy. Most Americans sill grow up believing that we can achieve our full potential, even though this might not be true. But it does create a competitive environment and we have role models who became something out of nothing.. Australians and Europeans do not have this advantage.. that's why European arguments about labor laws are always couched in 'them' vs 'us' terms, whereas Americans know that the 'them' and 'us' are very interchangeable.

    - It is amazing how competent most American workers are even at the most mundane jobs. Travel elsewhere in the world, book train tickets, plane tickets, try to get your phone or car fixed and you'll realize what I'm talking about. Work elsewhere and you'll realize that we take our management skills for granted. It took 11 months for me two switch from one phone company to another here in Sydney... and over six months to resolve a credit card dispute.. I can't get a simple answer from my health insurance company about whether I'm covered for ambulances in other states... I could go on..

    - Ambitious or creative Australians who want to make it know that they have to leave the country. Australia has the highest emigration rate in the developed world (something like 60,000 people a year leave, mostly for the UK and the US).

    - You don't know the meaning of the word 'anti-intellectual' until you've lived in Australia.

    I have nothing against Australia - I think the life here is great if you're not worried about not being creative or you're not ambitious and just want a good life. For me my entire sense of self worth rests on what I produce, so I know it's not for me.

    I used to think that America has a thin margin on the rest of the world in terms of innovation and leadership, but travelling around and living in different parts of the world (including most of western Europe, India, China, Australia and New Zealand), I know now that we have nothing to fear in the near future. We're still a magnet for talented people, we treat our immigrants with respect, we have critical mass and a very strong skill base. It's easy to come down on America, because we don't have anything to compare ourselves to, but sometimes it helps to give ourselves a pat on the back. America is not perfect, but I can't wait to go back.

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