6 reasons why entrepreneurship thrives in America

[phk]

1. The US does a good job of attracting the best and brightest. American campus's are filled with foreign born professors and students. In fact about 1 in 3 American Nobel Laureates are first generation immigrants.

Most of America's once mature but superstar startups you can think of have been founded or co-founded by first generation immigrants – Google (Russian), Yahoo! (Taiwanese), PayPal (Ukrainian, German, Polish, South African) , eBay (French-born Iranian), Sun Micro (Indian)…the list can go on.
 
2. t’s true that China owes its spectacular growth partly to Beijing’s efficient authoritarianism, where decision-making is ten times faster than in Washington. But can new ideas flourish in a place where people can’t take existing knowledge for granted?
 
3. Stanford and Berkeley yielded Silicon Valley. Strong research institutions will provide the brain, while prestigious schools of business and law will give you the money and connection.
 
4. Europe and Japan have rigid ways of routing people into careers. This makes unconventional paths such as entrepreneurship harder to emerge. The European approach reflects the old idea that each person has a single, definite occupation. Once you find that place, you’d work your whole career for it. This type of society perceives entrepreneurship as a futile detour from your “real” career path.

In Japan, companies recruit only once a year, and they only want recent college grads. Why? Because seniority wage system gives incentive for companies to allocate new positions to low-wage, docile youngsters.
 
The nature of employment in the States makes it a friendlier place for entrepreneurs. Firms hire and fire more freely, workers in turn switch jobs more frequently. When you see your career as a series of different jobs, instead of a lifetime service to a single employer, there’s less risk in becoming independent, because you’re only replacing one segment instead of trashing the whole career. Startups are not the sort of career that people could plan, so you’re more likely to get them in a society where it’s okay to make career decisions on the fly.
 
5. Less business regulation makes the place more attractive to all sorts of companies, including the startups. If your country has lots of business regulations, expect startups to break most of them, because they don’t know what the laws are and don’t have the time find out.
 
For example, many entrepreneurs in America begin in places where it’s not really legal to run a business. HP, Apple, and Google were all run out of garages. Dell was started in a college dorm. If the laws against such things were actually enforced, most entrepreneurs wouldn’t emerge.
 
6. Money matters. Startups elsewhere would struggle to get the funding because they’re not creditworthy. Banks are not going to bet on your imaginary business proposals and lend you money.
 
Entrepreneurs here have much easier access to funding. First, there are thousands of venture capital firms (VC) that are willing to bear the risk and support promising startups.
 
Entrepreneurs can also get money from individual “angel investors”. Facebook might never have got to the point where they could raise millions from VC funds if Zuckerberg hadn’t first received $500,000 from Peter Thiel, the founder of PayPal. This funding pattern is repeated constantly in Silicon Valley. And it’s this pattern that makes Silicon Valley the world’s tech hub.

Sources:
The Social Network
Paul Graham
"How to Be Silicon Valley"
"Why Startups Condense in America"

[Јas]

What's the 7th?

[dead0man]

The America haters aren't going to like this....they won't know why of course, but they won't like it anyway.

[🐒Gods of Prosperity🔱🐲💸]

interesting - I hadn't thought about #4 before, but that does make sense. Are there any education systems in Europe or Asia that are more toward the individuated/self-selected model that one might expect to result in a more dynamic career/opportunity-path?

[opebo]

Ha ha, great news flash from 1996, kind of funny to read now.

[Gustaf]

interesting - I hadn't thought about #4 before, but that does make sense. Are there any education systems in Europe or Asia that are more toward the individuated/self-selected model that one might expect to result in a more dynamic career/opportunity-path?

It's more individual now than it used to be. But people are definitely a lot more tied up in their educational path in Sweden than in, say, the UK.

[Filuwaúrdjan]

interesting - I hadn't thought about #4 before, but that does make sense. Are there any education systems in Europe or Asia that are more toward the individuated/self-selected model that one might expect to result in a more dynamic career/opportunity-path?

It's more individual now than it used to be. But people are definitely a lot more tied up in their educational path in Sweden than in, say, the UK.

Either you mean something different to what I think you do, or you know next to nothing about the education system (and it's impact on life chances) here. Things aren't as rigid as they were before the phasing out of selective state education, but then that would be difficult.

Edit: does that sound overly hostile? It isn't supposed to; I'm stupidly tired at the moment so don't quite know how certain things come across. Persona experience over this issue has left me quite bitter as well, which may not help.
The education system here - taken as a whole and not just the state sector - locks people into certain career paths as much as anywhere else. Much of the pressure and the streaming is not done through official channels, but can't be underestimated. Official claims to the contrary are lies.

[angus]

1. The US does a good job of attracting the best and brightest. American campus's are filled with foreign born professors and students. In fact about 1 in 3 American Nobel Laureates are first generation immigrants.

Most of America's once mature but superstar startups you can think of have been founded or co-founded by first generation immigrants – Google (Russian), Yahoo! (Taiwanese), PayPal (Ukrainian, German, Polish, South African) , eBay (French-born Iranian), Sun Micro (Indian)…the list can go on.

True and well documented. 

Don't forget Nikola Tesla (he moved here after he was duped by edison.  "Son, I'll pay you fifty thousand dollars if you'll come to New York and make my dynamos work," said Edison to Tesla in Paris.  Upon arrival, Tesla went straight to work on Edison's project.  Ten months later, when the dynamos had been improved to Edison's demands, Tesla walked into Edison's office and requested his fifty grand.  Edison told him, "Young Mister Tesla, you are a smart lad, but you apparently don't understand our American sense of humor." 

On a brighter note, Tesla eventually did make fifty grand from Edison, but it took him many, many years at a 28 dollar per week salary.
 

2. t’s true that China owes its spectacular growth partly to Beijing’s efficient authoritarianism, where decision-making is ten times faster than in Washington. But can new ideas flourish in a place where people can’t take existing knowledge for granted?
 

This seeems irrelevant to your overall point.  True, but disconnected.

3. Stanford and Berkeley yielded Silicon Valley. Strong research institutions will provide the brain, while prestigious schools of business and law will give you the money and connection.
 

Much has been written about this phenomenon, and you only provide one example.  It's a good one, but you should strive harder to present the over-arching moral here.  I think it overlaps a bit with point #6.  Maybe you should combine them, or redefine this one.  Or maybe I'm missing your point.

4. Europe and Japan have rigid ways of routing people into careers. ...

Sad, but true.  I've observed this as well.  I worked several years in California for the DOE.  While there, I met a number of Spanish, French, and other Western European colleagues.  Most were diligently striving to become US citizens, and enjoying their productivity here immensely.  We had a number of conversations about this phenomenon.  FWIW, I worked in Amsterdam for a while back in about 2003, and I observed this first-hand.  That system has some advantages, but you are correct to point out its obvious economic disadvantages.
 

5. Less business regulation makes the place more attractive to all sorts of companies, including the startups. If your country has lots of business regulations, expect startups to break most of them, because they don’t know what the laws are and don’t have the time find out.
 
For example, many entrepreneurs in America begin in places where it’s not really legal to run a business. HP, Apple, and Google were all run out of garages. If the laws against such things were actually enforced, most entrepreneurs wouldn’t emerge.

I've always thought the same thing, but this is a little beyond my expertease, so I can't comment intelligently on it.  Still, it's interesting food for thought.
 

6. Money matters. Startups elsewhere would struggle to get the funding because they’re not creditworthy. Banks are not going to bet on your imaginary business proposals and lend you money....

No doubt.

"Money Talks.
 Suckers walk,
 but you can't touch my Three-Lock box."
       --Sammy Hagar

But it's worth noting that the glory days of banking are probably over.  See, for example, yesterday's Washington Post, or Monday's Wall Street Journal.  I wonder how the new regulatory climate will affect R&D.  I guess regulation, like The Force and duct tape, has a dark side, a light side, but it holds the universe together.  It'll be interesting to see whether #6 continues to hold in the decades to come.

[Gustaf]

interesting - I hadn't thought about #4 before, but that does make sense. Are there any education systems in Europe or Asia that are more toward the individuated/self-selected model that one might expect to result in a more dynamic career/opportunity-path?

It's more individual now than it used to be. But people are definitely a lot more tied up in their educational path in Sweden than in, say, the UK.

Either you mean something different to what I think you do, or you know next to nothing about the education system (and it's impact on life chances) here. Things aren't as rigid as they were before the phasing out of selective state education, but then that would be difficult.

Edit: does that sound overly hostile? It isn't supposed to; I'm stupidly tired at the moment so don't quite know how certain things come across. Persona experience over this issue has left me quite bitter as well, which may not help.
The education system here - taken as a whole and not just the state sector - locks people into certain career paths as much as anywhere else. Much of the pressure and the streaming is not done through official channels, but can't be underestimated. Official claims to the contrary are lies.

I think we might be talking about different things here. I go to a business school and I know people who work as bankers in London. People from British universities working with them often have not done economics or finance or anything remotely close to that, but stuff like history or literature. In that sense you're less locked in to a given career path in the UK than in Sweden.

You might be talking about the fact that all those people working as bankers in London have probably graduated from Oxbridge and other such places and that's probably true. I'm well aware of the rigid class structure in Britain and how linked it is to education.

[Filuwaúrdjan]

I think we might be talking about different things here.

Yes, we are. You mean specialism, I was thinking in more general social terms. Yeah, misunderstanding cleared up.

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Not only that, but they will have (for the most part; you always have exceptions, but that doesn't mean you can't generalise) been privately educated up to that point.

[phk]

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What my overarching moral is, is that the entrepreneurship situation is improved if there is more freedom of access. In China they have Wikipedia, Facebook, YouTube censored for example. Readily available access to information is key.

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It was certainly the most solid one.

There is also the UT Corridor in Austin.

[Earth]

The America haters aren't going to like this....they won't know why of course, but they won't like it anyway.

It's okay with everyone that you want to keep your shallow ideas the way they are, it really is.

[Grumpier Than Uncle Joe]

I'm not sure I agree with 5.