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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) * <.moc.liamg. .ta. .nhojovadle.> 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.
    • He would probably argue that the Eastern Europeans are winning programming contests because they are not working at startups.

      In general, I would not expect American students to win such contests - if you are an American student, the tuition meter is probably running, whereas it seems student is a semi-permanent occupation in Europe (how long was Linus Torvalds a perma-student?).
    • by swv3752 (187722)
      If you filter out the remedial courses that US Uni's offer to get US students up to speed, they are better than most foreign Uni's. In Japan, College is the time to party, while in the US, High School is the time to party.
      • Bahahahaha! Yes, American college students, they never party! They are all studiously sitting at their desks every Saturday night, because they got all that partying out of the way in high school. It's not like they're living away from home for the first time, and are able to party even MORE frequently/ferociously. /sarcasm
      • by Zeinfeld (263942)
        If you filter out the remedial courses that US Uni's offer to get US students up to speed, they are better than most foreign Uni's. In Japan, College is the time to party, while in the US, High School is the time to party.

        It all depends where you measure. Paul Graham appears to be basing his experience on MIT. Unfortunately the US only has one MIT and only five or so universities in the same class for technology.

        The US Ivy League is unfortunately not world class in technology. The same is true of Oxford

    • by lbrandy (923907) on Monday June 12, 2006 @08:47AM (#15516227)
      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?!

      It's about quantity. If Chinese Universities were able to handle the demand of top Chinese students, they wouldn't flood to American universities by the thousands. There are top universities around the world, but if you write down all the "tier 1" universities in a particular discipline, more than half of them will be in America.
      • by jc42 (318812) on Monday June 12, 2006 @09:28AM (#15516396) Homepage Journal
        There are top universities around the world, but if you write down all the "tier 1" universities in a particular discipline, more than half of them will be in America.

        Good point, which gets lost in most discussions like this.

        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.

        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. It's not just George Bush; 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.

        Meanwhile, people make jokes about how education is now America's major export industry. Funny how a country can make and export something that they don't like to use at home.

        • 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.

        • 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 esc

    • 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.
      • 17th Century: Sweden/Ottoman Empire/Spain (in their respective spheres)
        18th Century: France
        19th Century: Britain
        20th Century: USA
        21st Century: China?

        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. Still, its got the size and if distribution of wealth improves they might create their own market...

        Besides, they had their empire from about 1500 BC to 500 AD. ;)
        • 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

      • 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.
        • 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 morie (227571) on Monday June 12, 2006 @08:55AM (#15516261) Homepage
      I used to work for a european university. We had quite an impressive standing in europe, but were nowhere near the top of the list woldwide, which is dominated by US universities. This was a non-US list based on the opinion of academic peers. The list of most funded universities is almost exclusively US and UK universities.

      So, as much as I hate chaufinism (either US or otherwise), this is not it but just a basic truth.
    • 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 e
    • The thing is, there are some really good schools in the US. Harvard, Yale, MIT. There are also some really bad schools. The elite ones are really good, I think the state run universities are the ones that give the entire country a bad reputation. On average, the schools aren't that good. But companies don't pay attention to those schools. They pay attention to the top schools.
    • by dhall (1252)
      And you rate the US universities by the fact that a few of your classes had little value? Do you think his statement is inclusive of all universities? State Universities or private colleges? Ivy League calibur or run of the mill JuCo, or even State University? And were the classes required or did you choose them for your own curriculum? There's a reason why several countries state sponsor their best and brightest to attend our colleges, and those who do attend maximize their experience. You don't see
    • 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.

      Maybe that was your problem. At the college level, the learning is up to you.
      I don't want to souns cliche, but you get out of it what you put into it. Really.
      American universities attract people and ideas from all over the world. If you can't learn in an environment like that, maybe you should stick to playing video games.
    • 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
    • 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).
    • I question the validity of lists like these, but Shanghai Jiao Tong University's annual Academic Ranking of World Universities [sjtu.edu.cn]--originally compiled in order to help improve China's own system of higher education--is very well-regarded and frequently cited among international liberal arts and sciences academics.

      Glancing casually through the list, it looks like the majority of the "best" are from the US, including Harvard, Columbia, Stanford, etc. Methodology and other goodies here [sjtu.edu.cn].
    • I think funding is a big factor here. There are quite a number of very well funded US universities. Naturally these can afford better facilities and (in no small part due to the aforementioned facilities) have an easier time attracting the smartest people around the globe.

      Does this mean that you automatically get a better education at these universities? Maybe, maybe not. Anecdotical evidence among some of my friends who went to the US to finish their master's degree suggests that it's not any better or wor
    • >4. American Universities Are Better.

      They had a program on Channel 4 called "God's next Army". It was about a university that was built just to churn out Christian fundies into government/law/media so that they can change the US to thier beliefs.

      I would of taken it with a pinch of salt except that quite a few people from this school have made it into the US Government (some in key places) and the school had serious backing by major far-right Christians/groups. It's just an example it seems.

      What was inter
  • by Anonymous Coward on Monday June 12, 2006 @08:42AM (#15516207)
    Duh! It's because American companies can negotiate better deals with the Coca-Cola Co. (or PepsiCo if they prefer it), which enables them to have those free drink machines. Free drinks draws in the geeks, which results in heavily caffeinated smart people. Wrangle a few MBAs together to lord over them and you have a successful startup.
  • 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).
    • 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 dea

      • Is Britain really a significant economic, political, or military power anymore?

        It may not be an economic or military power any more, but it certainly is a political one. British politicians have an amazing influence over world affairs relative to the size of the country. And when he chooses to Tony Blair can have more influence over the American public than Bush...
        • Get over yourself.

          Living in the UK, I see the arrogance all the time, all the while charging other countries with being arrogant. Britain once ruled over a quarter of the world, but after WW1 and WW2 significantly lost control over the world, as well as most of her economic power. During the wars, she had to sell most of her investments over seas, to defeat Germany.

          It is over, the US is a superpower, and only China has any similar strength.
      • In answer to your question, yes, the UK remains a significant economic, political and military power. For example, the UK is currently the world's fifth largest economy (despite having a population of only ~60m). It is a permanent member of the UN Security Council, which is still the world's pre-eminent international decision-making body. It has a nuclear deterrent and maintains powerful armed forces. The US is, of course, much more powerful economically, politically and militarily. And the Brits are much m
    • Bay Area-centric (Score:5, Interesting)

      by amightywind (691887) on Monday June 12, 2006 @09:45AM (#15516483) Journal

      As a European I find the article rather America-centric.

      As an American I find this article to be Bay Area-centric. Silicon Valley ceased being an engine of significant economic growth after the dotcom bust. It is unlikely to return to its former glory. It is kind of humourous that pundits like Paul Graham are still taking victory laps for an era of growth in Silicon Valley he had little to do with. In the US the economies of the southwest and southeast are much more vital.

      • by Animats (122034)

        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 bus

      • Re:Bay Area-centric (Score:4, Informative)

        by superdude72 (322167) on Monday June 12, 2006 @03:22PM (#15518862)
        Silicon Valley ceased being an engine of significant economic growth after the dotcom bust.

        Ahem?

        VC Funding by region, Q1 2006 [pwcmoneytree.com]

        Silicon Valley startups still receive more VC funding than the next four largest regions combined. Why is this? Stanford and UC Berkeley nearby? The pretty scenery? The affordable housing? In part. But mostly, it's because tens of billions of dollars in VC money resides within a few blocks on Sand Hill Road. And for the most part, VCs don't have any reason to leave the area in search of investments. The Web browser was invented in Illinois, but when it came time to found Netscape, the founders moved West because this is where the VC money lives. That hasn't changed.
    • 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 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?
    • Not necessarily.

      From my point of view as an American, there are a few exceptional schools in Europe (Oxford and Cambridge coming to mind the most quickly), while the rest of the schools are equally excellent thanks to a unified education system.

      As a whole Europe's education system is remarkably good, but very few schools stand out as being on top of all the others. In mind, this is a good thing, as America's perceptions of what the 'good' schools are is becoming increasingly distorted in my mind --- the Iv
      • 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 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.

    • Weak stereotyping (Score:2, Redundant)

      by amightywind (691887)

      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.

      Horse dung. The World Cup only highlights that America's best atheletes play American football, baseball, and basketball. If they played soccer (your football) their size and speed would transform the game.

      But the US style has it's problems. US companies wind up as slaves to the markets and often damage their engineering skills. The

    • by SparkyTWP (556246) <(phatcoq) (at) (insightbb.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 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.
  • One more reason could be that US has fewer bureaucratic barriers comparing to that in Ukraine or Russia for example.
    • by cerberusss (660701) on Monday June 12, 2006 @09:07AM (#15516305) Homepage Journal
      US has fewer bureaucratic barriers

      Actually, here in the Netherlands, I have spoken to a few businessmen which deal or have dealt with the US. They all find dealing with the Americans an enormously bureaucratic process. Also note that lots of rules come from overseas from our point of view, Sarbanes-Oxley comes to mind.

      To start a company in the Netherlands, you do two things:

      • visit the local Chamber of Commerce and spend 10 minutes to tell your new business its name
      • Fill in one (1) form and send it to the (equivalent of the) IRS for a VAT-number
      That's it. How unbureaucrative can you get?
      • Dealing with any foreign country involves a higher order bureaucratic process than doing business domestically don't you think?

        It was trivially easy to set up my company in the U.S. as well - sending 2 letters: one to apply for a Tax ID number and one to go on file with my local state government. I guess the gist of the idea is what happens next - how much restrictions you have, what kind of taxes and fees you have to pay, what kind of funding is available that kind of thing.
      • Paperwork is the same here in the states and our taxes are a lot lower. And small businesses = huge tax breaks.

        The "bureaucratic processes" you are talking about will not matter dependant on location, crossing national lines will always invoke said processes.

        (and besides ... we pay a lot less taxes, and when you take into account that small business gets large tax breaks in america... it's a win!)
      • It's the same process here except that you don't need to visit the Chamber of Commerce. I founded a non-profit corporation once, and it involved filling out just one form. Later, when the time came to dissolve it, it again took only one form.

        It's true that Sarbanes-Oxley complicates things, but that's mostly for large businesses. It has all kinds of exemptions for small businesses and startups, and even most labor laws don't apply to companies below a certain size. If I had to guess, I'd say your friend fro
  • by maxme (946026) on Monday June 12, 2006 @08:56AM (#15516265) Homepage Journal
    It's much easier to find investors in USA than in Europe (i'm speaking as a french entrepreneur who tested the both side of Atlantic to run it's own business).
  • You know, it could also be something to do with the fact that the US is the world's largest economy.
  • 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
  • by Draracle (977916) on Monday June 12, 2006 @08:59AM (#15516275)
    In America you can put a rock in a box, give it a name, and make millions. Why would you not want to start a company in a nation with that level of purchase discretion? "Now with more sodium -- Sweet Jesus!!!"
  • I'm not bashing the USA, but I do think that Americans get a very distorted view of the world because:

    a) The USA is very big. If you take into consideration population size then things can look quite different.

    b) For some reason, Americans tend to compare themselves with developing countries rather than other first world countries.
    • I was under the impression that the US creates more new companies each year than Europe.

      Are you saying that's not correct?

      Actually, I would suspect that the developing countries create more new companies each year than "other first world countries" do.
    • by jbeaupre (752124) on Monday June 12, 2006 @10:55AM (#15516871)
      One of the reasons I believe Americans become insular is the large size AND homogenaity. Hop in a car, pick a random direction, drive for a day. There's a pretty good chance you're still in the US, with Canada similar enough to fool you. Hop out and you'll likely be able to speak to a local, in English, with accent variation significantly less than within the UK. If you really wanted to, you can probably find a job in a week or less (you might be at McDonalds, but you can get a job), get an apartment, watch the same tv shows, and so on.

      My point is that most Americans, even ones who travel, have no concept of any other way of life. That's not a criticism, just an observation. If everyone in Europe spoke the same language, ate the same food, etc, etc, we'd be saying the same about them. We don't have a concept of neighboring countries, except Canada and Mexico, because we never bump into any.
  • 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?
    • 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 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.
  • 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 dpbsmith (263124) on Monday June 12, 2006 @09:13AM (#15516327) Homepage
    Decades ago, companies stayed where they were started. They certainly stayed in the country where they started and they often kept their headquarters or a major plant where they started.

    Movie producers run out to California, mostly to escape legal process servers because a patent cartel wanted to price-gouge them for the unlicensed cameras they were using, stayed, and founded Hollywood.

    A guy named Chesney starts up a business in Pittfield, MA and GE ends up headquartered there, and employing tens of thousands of people prior to Neutron Jack Welch.

    Digital Equipment Corporation starts up in Maynard because the guys who founded it were connected with MIT, and there was cheap space in an old mill there... and grow in that location to a multi-billion-dollar company.

    But I can easily see an unstable state in which the United States continues to be a good place for startups, for the reasons mentioned, but all of the really economically important activity gets moved overseas just as the company begins to take hold. Over time, of course, that will undermine all the things that make the U. S. a great place for startups, but not immediately... just as U. S. researchers continue to win Nobel prizes for work performed under conditions that existed in the U. S. decades ago.

    Tangentially, New England is a great place for startups because of the existence hundreds of small, independent machine shops that can do prototype work. I believe those shops are a long-lived legacy of a century or two ago when New England and its mills were the most sophisticated industries in the U. S. I wonder whether anyone in the state government is paying attention to the care and feeding of those small businesses?
  • I am not sure american universities are better, but they certainly are different. I have had the opportunity to take a few classes at KUL in Belgium (the "best" and largest university in the country). I would say students here LEARN the same things we do at universities in America, but they don't DO anything. In the US, courses consisted of a lot of work....exercises/homeworks, multiple tests/exams/quizzes in a quarter/semester, and labs + lab reports (often as frequent as one per week). In Belgium, you
  • 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 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.
    • Perhaps not (Score:3, Insightful)

      by cartman (18204)
      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-Sax

  • Don't forget about unions. They are all about letting the cream rise to the top... Wait a second, no they aren't. Oh well.
  • ... and it has dynamic typing for careers...

    Excellent! I've been looking for a new career! I dynamically type 65-180 WPM.
  • 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 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.
    • 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 wouldn't necessarily call that an American phenomenon. For instance, an interesting study showed that Latin Americans who immigrate to the US are horrifed by estate taxes...even when the estate taxes don't kick in until the estate is worth $1mil.

      The estate tax is purely a tax on the wealthy, so its eliminat
  • I think it's also our history as a capitalist country. Countries that aren't used to it will hesitate to invest in something, especially if they've been burned. For example, the MMM [wikipedia.org] company in Russia was just a large pyramid scheme, but most people weren't aware of the warning signs that it was a scam. Not surprisingly, the whole thing collapsed and many people lost their money. Afterwards, few people wanted to invest in a start-up again. In America, a decade later, is this starting to change. Over here, af
  • by argoff (142580) on Monday June 12, 2006 @09:50AM (#15516507)
    I hate to say this, but the US is in deep troubble at least for the next 2-8 years. With fiat money, way over extended housing debt, heavy bond debt, an account deficit of 7%, and now the carry trade unwinding behind 100's of trillions (with a T) in derivatives contracts - it won't be long before all freakin satanic hell breaks loose in US financial markets.

    The bad news, is that I don't think there is anything that can stop an economic collapse, the good news is that I think after the collapse the US has the highest potential of any country in the world for a spectacular recovery assuming that people don't panic and impose all sorts of controls that take away economic freedoms.

    (PS, those people who have written off gold and silver as barbaric immature monitary systems are going to be in for a very rude awakening, he he)
  • police state?huh? (Score:2, Insightful)

    by minus_273 (174041)
    " 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
    • Re:police state?huh? (Score:3, Interesting)

      by jerald_hams (725369)
      I spent my childhood in the Soviet Union. My family were refuseniks (denied permission to leave the USSR in 1979, pariahs of the state until we finally got out in 1989). Several members of my family in my grandparents' generation were "vanished" (one for teaching Hebrew, another for "subverting the communist economic system" by selling black-market pants). Though I didn't personally experience the worst of the USSR (Stalin's reign), I am familiar enough with the crimes of the USSR to discern when another co
  • 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.

    • Re:biz in Europe (Score:3, Informative)

      by vidarh (309115)
      #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
  • Immigration ? (Score:5, Informative)

    by Builder (103701) on Monday June 12, 2006 @11:14AM (#15516992)
    Mr Graham states that one driver of startups is the fact that America allows immigration. That's at odds with my own story.

    When I was growing up, all I ever wanted to do was move to the USA. When I finished school, my parents could not afford to send me to university, so I had to start work straight out of school. I spent 5 years working my way from cable laying guy to networks guy to Unix guy, and then tried to move to the USA. After 2 years of trying, I gave up and moved to the UK.

    Next year, I will _finally_ be eligible to apply for an H1B visa, but I won't be. Because I don't have a degree, I need 12 years work experience. The first 8 years of that experience are no longer technically relevant to anything I do today. Sure, it taught me a lot about dealing with people and integrating into the 'real world', but I don't see how that is relevant since I would have been eligible for entry fresh out of university with none of that experience.

    Even if I did want to apply, I would have no guarantee of permanent settlement. I would have to 'emmigrate' to the USA knowing that if the company I was working for went under, or declared a loss for a number of years running, or laid off too many other people, I would have to pack my life back into boxes and go home. 30 is too damn old to be taking that kind of chance.

    I took that chance coming to the UK at 25, and even then I was almost guaranteed permanent settlement when I moved here. It was certainly never tied to the company that I moved here to work for. At 25, I could take those risks, but not anymore.

    So instead of adding to the US economy, I've got a successful life adding to the UK economy. Overall, the US immigration policy is NOWHERE near as friendly as many places in Europe.
  • From an European... (Score:3, Informative)

    by orzetto (545509) on Monday June 12, 2006 @12:40PM (#15517652)

    I am an European, born and grown up in Italy and living in Norway.

    The US Allows Immigration

    In my experience I have not seen any country being so fiendish at visitors as the US. The mega-fence on the border with Mexico is one example. The continuous controls for what-the-hell-they-are-looking for at airports is another. Then again I have not been to Uzbekistan or Iran.

    The US Is a Rich Country

    Comes down on how you define "rich". I was definitely not impressed (in fact, a bit disappointed) by American infrastructure. In 2004 I could not even call Europe from a public phone in Chicago airport (maybe I hit a streak of broken phones). The same year, a conference I attended in Austin, TX had 5,000 participants and not a single Internet connection available. Then again, Italy is worse, but America is not really so impressive.

    The US Is Not (Yet) a Police State

    See above for the requests of fingerprints, the queues when entering the country and the like. They gathered so much data about me they probably know me better than my mother.

    You Can Fire People in America

    That's why I am staying here, thanks. I prefer to be able to plan my life beyond this week. Of course you can fire people in Europe, only you cannot fire at a whim. If you don't have a good reasons you can get sued, which happens way more often in the US than in Italy (about 10 cases a year for 58 million people; not sure about the US but I suspect it's way higher).

    America Is Not Too Fussy

    Who said it is illegal to work in your garage? What laws should prevent it? Why would that swiss lady report to the police the start-up in the garage? Have you Americans this sort of laws? For I am totally unaware of such laws in Italy, Norway or elsewhere. Of course, if the start-up is a mechanic workshop that keeps the neighbourhood up all night, people have a right to protest, but it does not seem to be the case discussed in TFA.

    However, for better or worse it looks as if Europe will in a few decades speak a single language

    This is the most ludicrous claim ever. Italy has been under foreign domination for 1,500 years (Ostrogoths, Byzantines, Franks, French, Northmen, Arabs, Spaniards, French, Germans, and a bunch of others I cannot remember), and we got at most a few words. Thinking that a country can shift language as often as a geek changes his underwear is patently insane. And changing for what, English? Wake up, you will all soon have to learn Chinese!

    A friend of mine started a company in Germany in the early 90s, and was shocked to discover, among many other regulations, that you needed $20,000 in capital to incorporate.

    I do not know American or German law in much detail, but in Italy (and presumably in Germany as well) there are different levels of incorporation. To start a SpA ("shareholder society") you need about 100,000 euros in capital; if you cannot make it, you have to limit yourself to a Srl (limited-responsibility company). The difference is in practice small; the friend probably looked at the GmbH level in Germany and thought it was the minimum threshold; instead, that threshold is meant for investors to be sure they are investing in a company that actually has capital, and not an Enron of some sort. Then again, I am not much in the details.

If money can't buy happiness, I guess you'll just have to rent it.

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