A Local Revolution?
paulgraham.com
A Local Revolution?
1–10 of 101 posts
Re: A Local Revolution?
#2I appreciate the caution expressed in the essay; that it is unclear both that an event is on its way and that location is necessarily decided. No doubt SV is the capital of startups, but I still think in the world of startups it is slightly different than Hollywood or Wall Street because you can do it with little money or connections. The distribution of startups across the world remains to be seen, but I agree often it will depend on who is offering the money.
To address the randomness of the revolution, I sincerely hope someone out there is developing some kind of portal to find all of these neat tools being developed. There are several YC apps in faq.html that, when put together, give many people no reason to really have any desktop software at all.
Re: A Local Revolution?
#3> There are already signs that startups may not spread particularly well. The spread of startups seems to be proceeding slower than the spread of the Industrial Revolution
Government was much smaller at the time of the Industrial Revolution.
The theory of "regulatory capture" says that government is responsive to those firms that are affected by government regulation and have the money to buy favorable legislation.
Thus, it's much easier for big-dumb-and-slow firms to use government to put roadblocks in the way of startups than it was for inefficient firms to put roadblocks in the way of factory production 200 years ago.
Want to sell wine over the Internet? The established players will make sure that it's illegal for you to do so.
Want to cut a deal with your early stage employees where they get no pay for 6 months? It's illegal in most places to not pay someone a wage. In MA it's illegal to fire someone for blatant incompetence and they pay them their final paycheck on the regularly scheduled payroll 4 days later - you need to hand them a physical check then and there.
Want to buy a bunch of servers? In a lot of locales (MA, again), you have to pay taxes on the assets every year.
Want to sell real estate on the Internet? Hope you're a licensed broker!
Want to write an expert system that generates legal documents? You'd better have passed the bar exam. Actually, wait, even though that was good enough for Lincoln, these days you need to have actually ATTENDED lay school - a mere demonstration of proficiency is not enough.
Etc., etc., etc.
If this is how things are in the free-wheeling US, I imagine that it's far worse in Europe.
I think that people across the globe have what it takes to launch startups. I just think that the legal culture makes it very hard in most places.
Re: A Local Revolution?
#4I felt the effect of being in Silicon Valley the moment I moved out here. The area is not only teeming with endless talent, energy, and enthusiasm, but (and this is important) we have an entire culture that makes this talent, energy, and enthusiasm possible in the first place.
When I moved to San Francisco from Chicago, I felt the change immediately. People simply get me out here. They understand why I'm doing what I'm doing. They ask intelligent, insightful questions. They give me invaluable advice. They share their knowledge freely. And they do all of this because they believe in -- and belong to -- the same amazing culture that I now do.
Re: A Local Revolution?
#5Yes, industrialisation "spread" in the sense that it was possible to use an engine anywhere, but in practice most countries developed tightly clustered industrial areas (as in heavy industry being the predominant economic engine), while others areas of the country remained either agricultural or mercantile or service economies.
The reality is that in any human endeavour (steel production, summer blockbusters, LCD screen manufacture, grunge, salmon farming, dadaism) there are clusters of activity - they do not preclude the activity being carried elsewhere, but the people who do carry out the activity at the cluster have both synergy gains, and act as a magnet so create a snowball effect.
Obviously the SV is a cluster of excellence for startups. Why is this expected to have a social impact, even if they do represent a new economic phase? (which personally I doubt - the numbers of people involved are just too small). I don't get it.
Re: A Local Revolution?
#6The other question to consider is if the revolution is local, does that really matter for the society at large? The startups are creating value for the rest of society, regardless of where the startups are located. Using the internet as the means of distribution, decouples the location of the business from the consumers of the product, thus allowing the startups to have a central location.
The business revolution will only matter for a subset of companies, mostly software companies.
Re: A Local Revolution?
#7"Startups don't seem to spread so well, partly because they're more a social than a technical phenomenon"
It's this social aspect that makes me think startups will spread beyond some major centers. The Internet has proven to be great for "finding the others," be it for social/political/transactional kin.
Also, as pg suggested in an earlier essay, vc is only growing less necessary for many startups. The shrinking dependence on vc, and the social lubrication of the Internet suggests more startups will bloom in all sorts of places.
Re: A Local Revolution?
#8 In practice I doubt any government would have the balls to try thisA few thoughts:
This isn't a revolution if it is localized.
Also, there might be a way to create a government that had the will needed.
It is going to get easier to start countries. Rich individuals like the leaders of Qatar are buying their way into a good university system, e.g. http://www.qatar.cmu.edu/
These two trends mean an empowered individual could start kickstart a startup hub with a clean slate of government. Immigration law, taxes, and other burdens could be removed, making it particularly appealing.
Schools for the kids of founders and university employees would be the hardest part, because we haven't seen an efficient pattern for schooling that is also effective.
Re: A Local Revolution?
#9"The most likely scenario is (1) that no government will successfully establish a startup hub"
Take a look at HaiDian/ZhongGuanCun in Beijing, chock full of startups big and small. From my understanding, the reason entrepreneurs flocked there originally was because HaiDian offered huge tax breaks versus the rest of China (for the explicit purpose of developing a high-tech industry).
In my eyes, HaiDian is a huge counter-example for the first point--not forgetting of course that the economic climate in China is one of urbanization unseen since the American Industrial Revolution.
Re: A Local Revolution?
#10The essay's stated thesis is that the Valley is and will continue to be a hub for startups because of the abundance of Venture Capital and talent, both of which are produced by previous startups, maintaining a strong cycle of success. At the same time, the essay points out that Seattle is a center because Gates and Allen wanted to move back home, and it has been suggested in past essays that Venture Capital is increasingly less necessary for startups.
My impression is that PG has unintentionally suggested that the current state of high housing prices and less Venture Capital could easily reduce the Valley's role in the startup market. The way for other cities to capitalize on this is to convince smaller, upcoming companies to move "back home", or not relocate to the Valley in the first place. As some commenters have pointed out, other states may have legislation that is less inviting to startups, and these should be repealed.
Ultimately, startups will probably flourish wherever smart, ambitious people want to live, as long as the government treats them well.