No idea if Mr. Thiel is right in this decade, but long term silicon valley has lost its main advantage: silicon.
The physical business of building computer parts, especially chips, involves a lot of hard science and deep magic and requires a kind of priesthood steeped in that magic. SV's original success was built on this -- it got rich because it is where the silicon priests lived. But now things have evolved so the it is the Chinese who know how to build the computers and (sometimes) the Californians program them.
Except writing apps is not really deep magic, and is something that can be done anywhere. So SVs advantages move to ever more nebulous things like networking and mentorship -- which are also human universals that happen everywhere.
Two elements of 'Silicon' remain vibrant in Silicon Valley, even if the Fabs are all gone: First, the Design software and the design itself is still largely in place here. Companies like Cadence, Synopsis, Intel, nVidia, AMD, and many other chip firms still draw on Silicon Valley's work force to design the most complex chips.
Second, the equipment that is capable of fabricating the most complex chips is almost exclusively developed here. Companies like Applied Materials, Lam Research, and KLA-Tencor make the machines that perform mind boggling feats of physics and chemistry[0]. Those companies are currently dominating 3 of the 5 top spots for revenues globally. One of the other 5 is in the Netherlands (ASML), the other in Japan (Tokyo Electron).
So the actual fabs (along with their Superfund legacy) are gone. But the Silicon innovators are still here and thriving.
Sure, design happens in SV, but "design" is something you can do on a laptop (well, as long as you have a beefy box somewhere else on the network to run the layout step.) It's similar to how NYC is the capitol of fashion design: yes, a lot of designers have congregated there, but any individual designer can still do their job anywhere else in the world without much hindrance.
That's not like how SV used to be: before automated layout, design and fabrication were forced to be vertically integrated—you needed a real fab to iterate your design against. So the designers needed to stay where the fabs were, and the fabs would get built where the designers were.
Uncoupling the two means that the fabs can go where it's cheap, and IC design is now just another kind of whiteboard-driven engineering, rather than a kind of monastic ritual performed within a warehouse-sized machine.
It's a shame that this happened, but you can see how it did.
Those chips were built on the fervor of people imagining what we could someday do with them. They could create a connected world, solve and create so many problems on a global scale...it's not super surprising that their successors went on to do those things.
What is surprising, and shameful, is how investors reacted, buying into the mania hook line and sinker. There cannot be a Bell Labs or Fairchild Semi in silicon valley today, because they could not promise 10,000,000% user growth and a massive acquisition in N years.
It seems like the market equivalent of snorting pixie sticks instead of eating a balanced meal, but I'm not the person with billions of dollars to swing around.
> There cannot be a Bell Labs or Fairchild Semi in silicon valley today, because they could not promise 10,000,000% user growth and a massive acquisition in N years.
Sure there can, they just can't have VC as a part of their business plan.
Thankfully, more and more startups are realizing that VC is not their only option, nor usually their best one.
Good point - they will still need someone to front a lot of money, though. Talent and film-deposition facilities ain't cheap.
I guess they could go with a Bajillionaire Patron, or get funding through usury. Sorry, those aren't even close to fair comparisons, but 'bootstrapping' does seem pretty out of reach these days, for people who don't already have 8-10 figures laying around.
I've always understood the real "bootstrapping" story to be "we build a successful business around a product we don't really care about in order to fun an R&D department that can build the products we do care about."
Google's R+D arms are arguably in the same broad category as Bell Labs was when it started out. We just need to wait 50 years to see if we will view them the same way in hindsight.
How is Fairchild Semiconductor so different from PayPal? Both have insanely influential and successful alumni. I could have picked General Magic (Pierre Omidyar, Andy Rubin, ...) but they are less well known.
How is Bell Labs so different from Google X? How is Bell Labs any different from IBM San Jose Research (SQL, photoresists, Gray+Agrawal, relational databases, reliable databases, ...)
Silicon Valley has not been about the raw production of silicon chips for over 30 years now.
It's been about software and design of hardware for at least that long.
You're also ignoring the networking advantages (personal, career, and business) that proximity provides. They are not trivial. It's why SV has stuck around post dot-com.
It's almost like the VCs in whatchamacallit road tell everybody else to telecommute, but they themselves don't care much about moving around to keep an eye on the troops.
Lazy bas --- err, I mean, damn efficient, well done, old beans.
(Screw the cattle who have to deal with the fallout. Not adding value.)
An argument can be made that when it was first called Silicon Valley it should have been called Metal Oxide Valley. Originally, SV lived off defense, then made disk drives and now Google, Apple, Facebook, Oracle, ... reign supreme. I think SV will continue to shape shift. It is however, getting kinda expensive.
Andy Grove would agree with you [1]. He argued that a lot of valuable innovation occurs during the scaling/manufacturing process. If you offshore that step, all of the proficiency and innovation that occurs 'at the bench' develops - and is capitalized upon - elsewhere.
One of the attributes of The Valley that are not easily reproduced is the forced cross pollination of knowledge and experience among the tech work force. This is forced through layoffs as companies, industries and the economy run through their cycles. This cross pollination leads to several outcomes: 1. the workforce is diverse in experience; 2. employees tend to work harder and longer hours in order to keep their job; 3. employees that are released from projects that they still believed in are more likely to take that project elsewhere, or, seek funding themselves.
These cycles work like a bellows, re-shuffling engineering teams en masse and thereby fueling innovation. It's actually pretty painful, but is an important factor and remains unique not in the fact that it happens, but in the scale that it happens in The Valley.
I'm not convinced that is unique to the Valley. In fact, I think the Valley is significantly worse than many other places for cross-industry "pollination". Take New York - the tech industry stands alongside media, fashion, finance, intermingling with them all. By comparison the Valley is "pure tech", and that bubble sometimes shows.
I believe whats special in the Valley that I have not seen anywhere is the sheer concentration of startups, investors and qualified people and the willingness for them to share.
Sharing comes in many formats in the valley of knowledge, their own startup, contacts and advise.
The last two are the hardest to find elsewhere at the scale that you see in SV, I havent found it in Asia I havent found it in Europe... this for me is the competitive advantage of being in the Valley
Is there a model for this? I'm asking because cross pollination can happen through other means. High density of conferences, strength of networks among other means.
This argument is reminiscent of reformations and the political landscape of Europe way back when.
This is already happening. Just look at the drone industry.
DJI, founded in Shenzen, has 87% market share at the most popular price point, and 48% share in the next closest. This is an $8B market and will likely double or triple in the coming years. US companies won the web, but China is making a run for the IoT.
With the greatest respect for Mr. Thiel and his accomplishments I'm skeptical.
I've travelled the world and my experience is that very few places in the world have America's, often irrational, can-do attitude, appetite for new venture risk, and societal acceptance of new venture failure as an important part of the entrepreneurial process.
I just don't think it's that easy to graft these cultural norms to other cultures, let alone replicate the new venture capital, both human and monetary.
As someone in London I wouldn't be on hacker news to 'keep my finger on the pulse' if I believed otherwise.
Europe may or may not have the culture you are suggesting, China might have that hunger but no business started there is safe from gov control, Russia has that control without the economic growth, a lot of places are too small.
But...there's probably a dozen cities in the US where you could get everything you can in SV (ok, maybe not the monoculture, the crazy VCs, the crazy cost of living, and tens of thousands of programmers). There are massive advantages to getting out of the Valley, someone is going to realize that, if it hasn't been obvious for a decade.
I wonder why Chicago isn't more of a major destination for tech companies. The city is highly walkable, has excellent transportation infrastructure, and low cost nice housing is plentiful within an hour commute by train or car. You can get a nice house for less than 200k, apartment rent is around 600 - 1000 a month. In the city, there are a lot of old 3-4 story houses that have been converted to each floor being a rental unit, for about 1200.
Because mostly only big companies choose their destination. For the rest it's where they live when they found the company. So if more people in Chicago found tech companies you'll get more tech companies. That's the reason SV is a self-feeding machine. People work at one of the many startups or big companies here, get experience, get money, and then part of them start their own companies. That's the circle that drives SV and because it gets stronger each time it's hard for any other city or region to really catch up.
Your description made think of the slime mold map of the Tokyo transportation system [1] albeit with a different set of inputs.
As with any organic, self propelled, system.. it matures and growth turns to maintenance, and eventually decay. Is the general argument here that SV has become a victim of it's massive organic growth, has it eaten up one of it's resources (housing, healthy diversity, etc) to the point where another city/system can now flourish??
Having lived in Chicago, I think it's probably because the city government is corrupt, the Cook county government is corrupt, the suburban county governments are corrupt, all their municipalities are corrupt, and the whole region is going bankrupt from it. People look at Detroit, and think Chicago may be next. They don't want to put their eggs in the same basket as a time bomb, or an egg-sucking weasel. The only thing that has saved it so far is that it is a nice, affordable place to live.
There are billboards on the state border encouraging people to live in Indiana (live in Gary?!) because Indiana isn't going bankrupt.
And it isn't just the obvious form of corruption that everyone can see and hate on, like Blagojevich trying to outright sell a vacant senate seat. It's also the subtle form that pays public employees slightly too much to do not quite enough, and then a pension that gives them even more for doing even less, while their replacement adds even more to the burden. You can't just fire all those people and take away their pensions, because then you can't provide municipal services to your residents, and that is more acutely painful than being slowly bled to death.
Edit:
In slight support of those billboards and some cousin posts, Indianapolis is one of the most affordable cities in the US for buying housing. And the pool for tech talent is largely untapped.
Public transit sucks, though. The city has a huge area and is almost completely flat, so it has taken extreme advantage of its ability to sprawl. Any sudden spike in growth will immediately lead to commuting nightmare traffic, all around the entire city.
Public finance problems in Chicago are a product of unrealistic pension guarantees. You can call that "corruption", but by that definition many other major metros in the USA are equally "corrupt".
The Chicago and Illinois Democratic party machines are almost certainly corrupt (or just rife with corruption), like most single-party states. But it's not clear to me how this impacts ordinary life for citizens.
Indianapolis is fine. I generally think, if you're going to move to a Midwestern city with no critical mass of tech companies, you might just consider throwing a dart. There are more tech workers in Chicago than Indianapolis, but in no Midwestern city are you going to exhaust the supply.
We generally need to get away from the notion that the locale in which you start your company is make-or-break. What we don't need to do is suggest that there's a Midwestern Ur-city where everyone needs to go.
By that measure, yes, I do think most of the major metros in the US are corrupt. It is a by-product of the loss of genuinely productive jobs in the country, and the rise of the "jobs" that had to replace them, because as a nation, the U.S. is violently allergic to any form of "unearned" welfare system. So the largest portion of the welfare system takes the form of pointless, overpaid, make-work government jobs. The military-industrial complex is similar, providing jobs for people leaving the military with no experience applicable towards ordinary businesses. It's welfare for veterans, but they have to work for it, so that's okay.
It impacts ordinary citizens by raising their taxes and making the siting of production facilities in that locale even less attractive to companies, which tends to compound the problem. Real jobs leave. Fake jobs spring up. Companies that offer real jobs get squeezed harder to pay for the fake jobs. When they finally reach a breaking point, they leave and take the jobs with them. Spiral further down and repeat.
This gets thrown around on HN a lot, but the root cause of the problem is the implicit and seemingly unassailable assumption that everyone has to work in order to eat. People actually get angry at the idea that someone might get the minimum portion of life's necessities without sweating on them first.
Until that is addressed, no city in the US is totally safe for a business founded to do productive work, and the safest cities are those where enough new businesses are founded to employ all the people who would otherwise be forced to do make-work jobs to survive. And I think that's why people want to found companies in places that are already considered to be friendly to startups. The tightness of the labor market is not a bug; it's a feature. It means that more of your taxes go to infrastructure and vital services, and less to stealth welfare.
The best place to start a business is one that doesn't need for you to start it there.
Because it doesn't have the people and that's all that really matters. SV is self-fulfilling at this point: talented programmers and entrepreneurs flock to the Bay because that's where the talented programmers and entrepreneurs are.
Yes, there are talented programmers in every metropolitan area but the Bay has significantly more of them than anywhere else.
Yet SV companies complain the loudest about having a hard time finding talent. In large part, I suspect, because of decreasing amounts of talent that want to put up with the area.
I believe that's just selection bias. The media - especially the media most of us here are likely to read - focus on SV tech companies. Next to an article about SV startup complaining about lack of talent, you won't find an article about startup from Kraków, Poland complaining about the same, because who cares.
I.e. "loudest" isn't really the right word to describe the only group that is even allowed to speak publicly.
True, but part of the reason talent is so expensive is because companies have to compete for it. I would not call a market where good people regularly pull down multiple offers one that is good for employers or one where talent is readily available.
University of Chicago isn't a bad school. I am, however, straining to think of another Chicago research university. But then compare it to Stanford+Cal+UCSF and it just isn't a fair fight.
An underrated advantage in SV is its top tier legal and capital talent. WSGR, Cooley, Fenwick, ... are outstanding. For VCs you can start with Sequoia at the top and work your way all the way down to angels. L+S did a demo in Andy Bechtolsheim's garage and walked away with a check for $250,000. That just ain't happening in Chicago.
Chicago is one of the legal and finance centers of the entire country. Unlike SFBA, it's a trading center (it was the heart of the HFT phenomenon). Some of the largest law firms in the world are headquartered here.
What you're really trying to say is that there's no venture capital market here. That's true. (And, as a result, there's no real venture law here). Venture capital is a rounding error in the global financial markets. Don't extrapolate lack of VC to lack of capital.
Obviously, none of this is helpful for tech companies that want to raise a round in Chicago. If you plan on raising, you should probably at least start in SFBA or NYC.
No, I'm not saying there's no VC in Chicago. But SV had about 2000 'funding rounds' in 2016. Chicago had about 200. SV just dominates VC and you need VC not just C to start companies.
But this isn't the 70s+80s anymore when frankly you had to be in SV. Nowadays there are tremendous advantages to being here but you can be successful elsewhere. Instead, today SV competes for the market rather than owns its.
We're actually saying the same thing: there is no serious community of VC funding in Chicago. I'm just saying that's not because Chicago isn't a capital/finance center.
As for the topic, I think Thiel is a pompous twit. What I will say is that places like Chicago can be quite competitive by being less competitive and more organic. Here, it's I'm doing Snapchat meets Uber. Not quite Dot Com but awfully close. A YC side effect.
If you've got a real idea, it doesn't become real by being here despite here having huge advantages. Was Zuckerberg wrong for picking up his toys and moving to a rental in Palo Alto? Not really. But Xero isn't here. Hell, Xero isn't even American.
So it's kind've like Hollywood. For a few decades, they had tremendous advantages. Now Hollywood competes and other cities do production and location work. But Hollywood is still central to the industry and will be for the foreseeable future.
UChicago is an excellent school, right up there with Stanford and the Ivys, and you're forgetting Northwestern, UIUC, Wisconsin - Madison, Michigan - Ann Arbor, Purdue, and plenty others.
There's a good reason I've never met anyone from the University of Chicago in Silicon Valley. It doesn't have an engineering school. I have met two people from Moscow State University (quite a bit further, no?) in Silicon Valley. It does have an engineering school.
There are dozens of us! Dozens! As CS is under physical sciences rather than engineering, we come away with less differential equations experience than those in the engineering tradition, but also much more systems programming. I wouldn’t trade it for anything. Lots of people went to big tech companies - we may just have lower risk tolerance/entrepreneurialism than Stanford.
The graduate rankings for CS aren’t great, but the CS faculty are teachers first and researchers second; this may be to your advantage as an undergrad who is not eyeing a career in academia.
It has 5500 undergraduates, and until the last 5 years or so, less than 100 of them were CS students. So yeah, you won’t see as many of us out in the world as you will graduates of a school with 25k students.
It’s also a global institution in a cloister 7 miles/45+ CTA minutes from the nearest part of Chicago that white professionals set foot in (extremely segregated city); its effect on the city as a whole is going to be muted. People come from all over the world and then promptly disperse all over the world.
I finally visited Chicago a few years ago. I probably can't handle your winters but otherwise, it's a great city, accent on city. My brother made sure he shot baskets on Obama's court. I sail, and unfortunately, we (family thing) got there about two weeks before the boats got put into the water; so no beer can racing for me.
I hope Chicago or Saint Louis gets Amazon's second HQ but not at too great a cost.
It has a CS program, but it's not a great CS program. Aspiring engineers in Chicago tend to go to Champaign or Madison. UIC has a competent, serious research-university engineering program that is adequate to the region but not a standout on the national scale.
(Northwestern, the other top-tier Chicago school, does have an engineering program).
We should probably dispense with the notion that regions "need" engineering schools to feed a tech industry. That is probably not generally how it works. Portland has a thriving tech scene, but not many people travel for engineering school in Portland. Boston has world-class engineering schools, and an anemic tech scene.
I drove 'wglb to our Matasano reunion (which is amazing) yesterday night and he pointed out to me that UChicago has a seriously excellent theoretical computer science department; it's just not as competitive a applied science program.
Chicago is amongst the bloodiest cities in the developed world. Last year over 700 people were murdered and over 3,000 were shot in Chicago. Most cases are never resolved.
In contrast, the entirety of Canada has about 500-600 homicides per year.
Doesn't seem too far fetched[1] if you read it as a nice house under 200k within an hour of Chicago.
I don't know enough about Chicago to know exactly how far our an hour's drive is or to know exactly what 'nice' means in this context but it seems like there are areas where the median price is quite a bit lower than 200k.
Those are not generally places where a tech worker is going to buy a house. Let's just stick with "housing in Chicago is significantly cheaper than housing in SFBA or NYC".
It is extremely unlikely that any amount of tech investment in Chicago would make 1000/mo apartments hard to find. Chicago is enormous, and has underinvested, relatively low-density neighborhoods stretching for multiples of the dimensions of San Francisco.
Logan Square apartments would get more expensive, but the market would respond to that the way it did with Lincoln Park, Wicker Park, Bucktown, and Ukranian Village: by gentrifying westward into Humboldt Park, Hermosa, and Belmont-Cragin.
Tokyo waves hello and says, in a friendly but firm tone of voice, that the decision to not built up is political and not based on earthquake-resistant buildings being an engineering technology humanity lacks access to.
Meh, it doesn't have the geographic limits that you get on the coast. The only geographical feature hemming in the city is the lake. You have essentially unlimited space to expand in all other directions. It would be hard to get skyrocketing rents outside of the immediate downtown area.
But mostly Chicago just sucks. Its all the shitty parts of the midwest without any of the good ones. What you really want is Indianapolis, Columbus, Minneapolis, Louisville, etc...
> But mostly Chicago just sucks. Its all the shitty parts of the midwest without any of the good ones. What you really want is Indianapolis, Columbus, Minneapolis, Louisville, etc...
It is worth keeping in mind that SV's focus is only one area of employment for programmers.
The major Northeast hubs have tons of programmers. The difference is that a lot of them work for the financial industry, government contractors, pharma, and the "unsexy" sort of older tech companies.
This is good for finding somewhere with a lot of programmers but the downside is that the employment market is just as tight here and COL/salary is nearly as high.
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If you're looking for somewhere that actually offers you payroll savings but still has a good enough talent pool to be able to find employees fairly easily, that list is pretty small and arguably getting smaller.
A lot of the trendier secondary cities for this (ex: Denver, Portland, Austin) are themselves getting very expensive, very quickly.
I agree that there are nice options in the US and you'll have a much more comfortable life. But if you want to learn as much as you can, if you want to have as many options as you could possible have, and quiet frankly earn as much as you could, you'll likely should move to SV and no other place in the US will even come close to that. The bleeding edge of technology is and will be in SV and China (and China is not really an option for most people).
You can learn an unbelievable amount sitting in your room in your underwear and work with and on world class projects. There are more free resources than ever before, location is not a constraint.
The difference is largely in the domain knowledge. You can learn just as much about web or mobile development on the web as you can at Google (more, probably, since Google's stack is largely proprietary and bound by lots of legacy code). You can learn as much about databases and programming languages. You can even learn all the machine-learning algorithms you'll need.
But you won't learn as much about search as you would at Google, or about logistics as you would at Amazon, or about psychological manipulation as you would at Facebook. All that knowledge is locked up in the corporations that profit from it, and if all your software knowledge is based on what's publicly available, you probably wouldn't even know it exists. You might learn how deep learning works and how to apply it to MNIST digits from a web tutorial, but you won't learn anything about how to apply it to other problem domains or even what those other problem domains it can be applied to are from it.
And economic returns are all based on supply & demand, so if you're supplying a service that everybody else can learn too, your economic returns are bounded by what all those other people are willing to work for. The big bucks accumulates to monopolies, those firms and the people who work within them who know things that nobody else does.
Coursea is a complement but not a substitute for actually working on significant systems, which you are much more likely to do in SV than a random remote contract or local small business.
The resources you can have are so limited in comparison what you can do if you are on the right project with the right people at for example Google. You will not find a free or open project that will be able to compete with the data, resources, and knowledge you will find there. Besides that it's much faster to learn from someone who knows than finding the right material online. And in the end most world-class projects will have someone that works or worked in SV in them because that's where they got a lot of their experience.
IF your goal is to work for google, facebook, Amazon or Microsoft, then yes, Google is a great place to be.
But if your goal is to work for next decades google, Apple, etc, then no, Google is not the place to be.
Start working on Bitcoin. Start working on Ethereum. Get to the cutting edge.
Everything you do at google right now is about 10 years out of date (and I'm including machine learning and all their "cutting edge" AI stuff) and targeted at supporting their existing established business.
Take this from someone who has been on the cutting edge for 30+ years-- the challenge for most people is that the cutting edge changes, and you have to be paying attention to follow it... by the time you learn mobile development, surprise, there's bitcoin! (as an example.)
That's what I'm working on right now. It's just that I can use all this expertise around me to do it. Everything repeats in technology and what you learned can and will be applied to new trends like Ethereum.
I don't recommend anyone to really go to Google to work on the future (besides perhaps if you want to get an edge in AI). It's just that SV has a lot of people that have accumulated experience while building Google, FB, etc and that helps a lot no matter what comes next. You get a lot of experience and people able and willing to take risks which is a nice basis to build something new.
Rocket Internet has the (self) funding, the netlog creators have funding ( Twoo / Netlog / Realo / facebox / redbox), drupal got funding in America ( fast growing tech company in the USA),...
We only have public companies here who are throwing pennies at startups ( 25 k) including the governement.
Most of this was because the top most talent of every third world company wanted and came to the USA. Once they arrived at the US, they used their disproportionate quality of human capital and combined with the immigrant zeal to prove themselves they can succeed at life by doing great things in a new country.
In the past the decade, it has become impossible for most of India and China's best people to come to the US due to very long Green card wait times.
From the Indian perspective alone. Billion dollar start ups and entrepreneurial ventures are popping up all over the country. Even a decade back this was impossible to even think of.
My guess is US is will gradually lose its grip being the economic super power of the world as China and India eat their lunch. It won't happen over a throw of switch, it will be a very gradual prolonged process.
China is a funny one. For sure there is 'hustle'... I was scammed many a time in Beijing... But there is this really important cultral dimension in China called "guanxi".
It's not easy to summarise the importance and pervasiveness of guanxi... from a Western perspective it could be described as corruption but it's more like a social currency that is involved in any important transaction.
Ahah, the old eastern asian vague social structure narrative. You'd be surprised how closely knitted Chinese companies are with SV, and how they replicated the SV in every possible way, even the interview process.
So I will say guanxi is not an noticeable factor here. If you look back, how many SV startups are funded by people with a lot of resources, under the name of, networking? Does that count as your definition of social currency? In fact, guanxi, or 关系, in Chinese means connections. Sounds familiar, isn't it?
The reason China has a huge startup scene is not that hard to understand if you are willing to come out of your idealogical/cultural bubble:
1. Presence of GFW. It bars the competition from outside of China.
2. Cheap local talents. They work twice the hours, but possible rewarded with 1/2 or 1/3 of what their SV counterparts are earning. The Chinese system allows such exploitation, while not anywhere else in the world.
3. Vast market. There are 1B cellphone users in China, that alone could sustain several 100B companies.
I'm happy to start a conversation as long as you don't resort to ad hominem which "if you are willing to come out of your idealogical(sic)/cultural bubble" certainly seems like.
Exactly why do you think I'm in an ideological or cultural bubble?
What personal experiences in China's new venture scene can you share with everyone on HN that does not involve guanxi at all?
Lastly I disagree with your assertion that guanxi is simply "connections" or "networks". Granted I am a westerner but I dealt with Chinese manufacturers and business partners for several years and my personal experience is that guanxi is much more than what you are implying.
So guanxi is the local equivalent to networking and reciprocity, the same sort of communal relationships which exist in any society. China, being a developing former communist state, has a highly corrupt environment which effects how guanxi is practiced. There, an explanation of a universal phenomenon in a localized setting, without Orientalism.
Also, not mentioned on that list is DJI, which is pretty dominant in the drone space, and it was only founded in 2006. I know it's not a software startup, but you'd be hard-pressed to say it's not a tech company.
China is a different case. Any successful tech company will be ruthlessly copied and scaled in China by mercantilist policies which work quite well.
But there are no Chinese brands that are widespread household names out of China. Even if a billion Chinese use renren the rest of the world uses Facebook (and maybe vk). Even if a billion Chinese use Baidu the rest of the world uses google (and maybe yahoo, in Japan, for some reason).
Just walk around a BestBuy in the US and you'll quickly realize how many Chinese brands there are: TP-Link routers, Huawei routers and phones, Lenovo laptops, Hisense TVs, ZTE phones, DJI drones, Haier appliances, Ninebot scooters, Instantpot press cookers, etc. If you also count brands owned by Chinese companies than include GE appliances and Motorola, Alcatel, Blackberry smartphones.
Go on Amazon.com and Chinese brands are bestsellers in many electronic categories: Anker/Sunvalleytek in phone accessories, Yi in action cameras and dash cams and security cameras, TCL in televisions, etc.
Also the rest of the world isn't just US. Chinese smartphone brands have 50% marketshare world wide. Xiaomi, Huawei, OPPO are growing fast in South Asia, South East Asian and MENA. Transsion (you've probably never even heard of this company) owns phone brands that dominate Africa and is the marketshare leader there. Chinese home appliance and consumer electronic brands are also big in non-western countries.
Could he just be pandering to his hosts? The concentration of talent and a whole ecosystem that supports entrepreneurs is a significant advantage. It will take time for any other region to amass the same advantages.
Talent is remote and talent is willing to move, especially when they can make an extra 50% through cost of living differences. That ecosystem produces some great stuff, but a lot of it is garbage. Those advantages are perhaps overstated unless your goal is to move to SV and become a unicorn. It's almost tautological.
That's inherent to the process of all creation and business starting. 90% of everything is garbage. That's a case where there's nothing unique about Silicon Valley. I'm sure you're at least vaguely aware of the very high failure rate of all new businesses within just a five year span.
Or see: last 200 years of industrial history. There were hundreds of automakers just in Detroit in the US, experimenting with just about everything they could. Most of it was garbage. It's a required part of the process of experimentation. If someone stands up and proclaims that aspect is stupid and a waste and they know better (they'd never make such mistakes, they'd never need to perform such wasteful experimentation), well, at least then you know who you're dealing with.
It was an observation, not a normative statement. The only part anyone really cares about is the 10%, so if your goal isn't to have an ecosystem that is always churning through stuff, that aspect isn't a huge advantage.
There's no such thing as an ecosystem that isn't always churning through stuff (other than a dead one). The premise you're floating doesn't exist.
Silicon Valley's 10% is better than the 10% anyone else produces. It also does it at a higher volume simultaneously. That's why it's Silicon Valley and nobody has managed to match it in the last 50 years.
But some of that ecosystem is just dead slack. It exists because it exists, because part of how SV works is VCs have to find new winners and people want to change jobs and have more options. If that is not your main goal, you don't need the ecosystem.
SV is good at what it does, it's the best at what it does, but that's orthogonal to building a great company. We believe it's necessary because that's how it has been done.
Well, yea, hence silicon valley. Like begets like - if there's a place where all the best engineers are hanging out, why wouldn't a budding engineer head out there? This is literally why I moved to San Francisco from Houston :P
And then, the best of the best engineers making oodles of money are probably not going to want to live in like, Michigan, growing tech sector or no. Give up good weather, quick access to great vacation spots (mexico, vegas, anythign over the pacific, all the national/state parks...), legalized weed, etc? Nah man.
edit: My language is assertive but I am very open to being challenged on this.
Sure, you're making a mistake that is very common around HN. You're conflating technology and programming. If you wanted to study chemistry and be a chemical engineer, Houston is absolutely where you would be flocking to instead of SF. I think the next big tech market is going to be medical and genetics which means Minneapolis and Boston are the places to be watching.
My bet is that still it will be in USA. Among many other things, there's no shame in "failing" in USA. Investors and banks take a chance, fully knowing that most will fail.
In a lot of countries failure will follow you for the rest of your life. Not to mention that you'll be broke owing to banks, friends and tax authorities.
There are only half a dozen or so nations on the planet that can compete with the US at all when it comes to technology start-ups. Nobody else has enough of the required ingredients. For example Sweden has something very interesting going on - yet they are very unlikely to ever produce a Facebook or Google, the fractured European market and cultural system and their tiny local population base is a very big friction point (unless they go after the US market early on, as with Spotify, becoming a proxy US start-up).
The rapid lead that the large, unified market of the US + Canada provides, is extraordinary. Only China offers something competitive to that and as an outsider you can't move to China and form successful large start-ups (which is why among their major tech companies, there are no cultural foreigners or non-Chinese running businesses like Tencent, Baidu, Alibaba, Didi, Alipay, etc and there never will be). The US + Canada = near $21 trillion in economy, with extremely high disposable income levels, that mostly all uses/understands English.
Fundamentally this is why Europe has struggled so immensely to produce new tech giants in the last 20 years, compared to the US or China. It's not the lack of risk-seeking capital; although that's less than in the US, there is still enough. There is some cultural restraint depending on the country. Mostly though, it's because of how extremely difficult it is to adopt to all the various nation by nation differences early into the life of a product and acquire market dominance in enough of them to then have a strong foundation from which to springboard globally.
There really is no rational reason why the phenomenon of Silicon Valley should exist. And at this point if there were anything special Silicon Valley knew that nobody else did, that knowledge has been pretty widely disseminated. And yet for all that, I suspect he's still wrong.
That’s not a bad thing. Having more places of innovation is better for everyone. Hopefully, we’ll see more world class research universities too. A Stanford University (or two), for example, in every location.
My wife previously worked at Harvard Business School and currently works at Stanford. One of the big differences she noticed is that Stanford encourages students to start their company, while HBS steers their grads towards Wall Street.
This is not a profound statement, but rather obvious. If may calculations are right, there are roughly 6 billion 993 million people outside of Silicon Valley
Why did Silicon Valley ever become what it is, and why did it continue to be dominant in the tech industry for so long, when there were billions of people outside of Silicon Valley the entire time?
Clearly population numbers are not sufficient in themselves to explain why the situation will change.
Thanks for the down votes. But if you haven't realized, the world has changed dramatically since valley became Valley. There is a lot more wealth distribution around the world and technology is easily accessible. Look at the 50s and look at now and see how Asia has emerged as a dominant economic force. China is #2 in total GDP, and India is #7. Couple this with the fact that these two countries have unlimited workforce, it is quite obvious that big growth companies will start forming outside of the US, often focused on their local market. And capitalizing in capturing a lion's share of the local economic growth. And that's exactly what's happening. Alibaba, Tencent, Didi, Ola, FlipKart, OYO rooms, Grab.
This is not some profound statement from Thiel, but something very obvious.
Look back to the 1980's. I remember watching news clips on TV of people smashing up Japanese electronics because they were taking over the US. It was plainly obvious they were going to displace the US as the leading economic power. Hell! They were buying up all the largest buildings in the US!!
It is not about "displacing the US". It is about a monopoly being over. Which means, there will be big tech companies from SV, but also from China, India, Indonesia, Korea, Europe etc. etc. And it is already true. Chinese companies raised $56bn last year.
The world is also significantly different from 80s. China's GDP in 1980 was $200 bn. Now it is $11 trillion
Silicon Valley is not dominant now. It is merely perceived as dominant by a cult of silicon valley, which exists primarily in the heads of people who live in SV.
The physical business of building computer parts, especially chips, involves a lot of hard science and deep magic and requires a kind of priesthood steeped in that magic. SV's original success was built on this -- it got rich because it is where the silicon priests lived. But now things have evolved so the it is the Chinese who know how to build the computers and (sometimes) the Californians program them.
Except writing apps is not really deep magic, and is something that can be done anywhere. So SVs advantages move to ever more nebulous things like networking and mentorship -- which are also human universals that happen everywhere.