
A Local Revolution? - dbul
http://www.paulgraham.com/revolution.html
======
tjic
> 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.

~~~
prospero
Why is it bad that in order to automatically generate binding legal documents,
someone involved needs to be educated in the subtleties of legal language? A
walking, talking lawyer _should_ be personally responsible for the quality of
the documents being generated. If there's no such person, you're putting the
onus of validation on the client, which I think misses the entire point.

In most of these cases, it's not the government protecting existing companies,
it's the government protecting the naive population. You won't fire someone
after six months of unpaid labor, but someone else will. Your expert system
might create air-tight contracts, but someone else will cut corners.

These laws do not exist solely to frustrate you. Part of being in a uniformly
free society is ensuring that naive people are not at the mercy of the better
informed or less scrupulous. Things can't work any other way.

~~~
tjic
> Why is it bad that in order to automatically generate binding legal
> documents, someone involved needs to be educated in the subtleties of legal
> language?

I wouldn't put up a huge stink if the law was "you must pass the bar exam".

However, the law is "you must attend 3 years of law school".

> These laws do not exist solely to frustrate you

Agreed. They exist to decrease the supply of lawyers, thus increasing the
price that lawyers can demand.

Frustrating me is just a side effect.

~~~
prospero
I know a fair number of newly-minted laywers, and my understanding is that
most of the concrete material tested in the bar exam is taught in the summer
following graduation from law school. Law school is largely concerned with
abstract concepts that are important, but more difficult to test.

I sympathize with your frustration, but the reason for the prerequisites could
just as easily be that they don't believe they can create a test which
properly encompasses everything a lawyer should know.

Also, at least in San Francisco, the job market seems to be saturated with
lawyers, even before the economy went south.

------
ChristianPerry
I 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.

~~~
ojbyrne
The flip side of that is there's a complete lack of any criticism, and to me
it feels like that will be its downfall (Detroit met its downfall, and so will
Silicon Valley). A recent case in point is the whole DiggBar controversy. I'd
suggest that the criticism has come entirely from outsiders or people "not of
the valley," Meanwhile there's been a whole tide of "digg is taking over the
world," "digg is growing up" from the usual denizens of the echo chamber. And
then there's Robert Scoble - a one-man black hole of uncritical praise for all
things SV. Add to that the complete disappearance of IPOs or anything
resembling an exit (in fact the big trend now seems to be the opposite of
exits -- Stumbleupon, Skype) and this piece feels a bit pollyanna-ish.

~~~
pg
You must have seen a strange slice of the Valley. People here think much more
critically about startups than in the rest of the US. People in Nebraska
aren't worrying about Twitter's business model.

~~~
davidw
You must have spent some time 'out west' during the Viaweb acquisition. How
much did you see of the valley in those years? I lived in San Francisco in
1999 and early 2000, and thought things were actually pretty crazy. I don't
think I knew anyone who wasn't doing something related to computers, and there
was a very unhealthy "free money! wheeee!" attitude amongst a lot of people,
so much of it was being sloshed around in a way that obviously wasn't
sustainable.

Also, there were virtually no children, no old people, not many "middle class"
people... it all just struck me as very out of kilter.

That's not to say that there aren't lots of good things, or that the area is a
bad place or somewhere people shouldn't go, just that it has its downsides
too. I got the feeling that it has never really cast off the 'gold rush'
mentality: get in, get rich, get out. Sure, some do stay and make it their
home (you, for instance), but so many move on that I never felt much sense of
community, something that I do enjoy over here in Italy, and have found more
of in other towns in the US.

> People in Nebraska aren't worrying about Twitter's business model.

They're busy getting rich with more traditional stuff that they understand:

<http://en.wikipedia.org/wiki/Warren_Buffett>

------
pedalpete
At the beginning, there is always a 'center', but that does not negate the
influence of the other districts. I suspect that PG has gotten caught up in a
bit of the valley hype.

There are many more counterexamples. Microsoft (does it not count because it
was pre-internet?) was a start-up outside the valley at one point. MySpace
didn't start out in the valley. So why skype? because a valley company
overpaid significantly for them? (I love skype though, i just don't think they
are the best counterexample).

Detroit thought it had all the 'talent' and 'knowledge' in building cars, and
then got it handed to them on both sides, cheaper and better from Asia, more
expensive luxurious and better from Europe.

No question the valley has investors, and very talented ones at that. As costs
for internet start-ups decreases, amazing open-source technologies like hadoop
continue to spread, and talent realizes they can excel anywhere, why would the
valley continue to as the center?

What will be the draw to keep people in the valley? Angel financing can now
accomplish what only VC could a few years ago, and that continues to change.
Ideas are not limited to the valley, technology is not limited, for many
start-ups their are no physical goods, and when there are, those are created
overseas.

So, though Silicon Valley may be the center today, what will make it the
center tomorrow?

~~~
j2d2
This comment seems to disregard the point of PG's essay. He's describing a
network effect. Just as it's hard to create a startup community (not a single
startup, as in your examples) you need the types of people who build startups
present or on their way. The valley is full of people who are interested in
startups and work with them to some capacity. It would be difficult to attract
someone interested in startups to move to New Haven when there is already so
much attraction to the valley. It's true, you could start a startup anywhere.
It's probably going to happen in the valley.

~~~
pedalpete
Does network effect require a hub? Or will their be only one 'connector'?

------
old-gregg
When you interpret Paul's "startup" as a "newborn Internet media company" the
essay makes a lot of sense, especially the comparison to movie business.

But if you interpret "startup" as "newborn consumer electronics company" or a
"newborn software company" or anything else more generic not squeezed into a
web page it falls short: first, the percentage of GDP generated by internet
media is miniscule, the whole thing isn't that big, it's a sizable niche in a
software development world but not more. For instance, when measuring life in
"robotic startups" one may conclude the SV is not relevant, but Boston very
much is, and Japan is taking over the world, I'm sure Trevor would agree with
some of this.

~~~
emmett
The kind of companies Paul is talking about appear to be software companies,
in general. More new software companies originate in Silicon Valley than
anywhere else in the world by a wide margin. Most new software companies
(Google, for example) tend to be internet companies, but that's just because
the internet is the most sensible way to distribute most software now.

------
dant
I think pg has misjudged what stage of the start-up revolution we're in.

He notes that the industrial revolution spread quickly because there were
geographical areas with middle class populations and cultures that let people
keep the large sums of money they made. He also notes that the culture
necessary for large numbers of start-ups is not present in many areas.

IMO, we're no way near the railroad stage of the start-up revolution. I think
we're in the early renaissance. The valley is like Venice in the 1400s. It's a
very localised concentration of merchant traders and a culture of what we now
call "modern values", meanwhile the rest Europe is living in the "dark ages".
It wasn't until the plague spread across Europe and gave the surviving working
classes more influence that the culture started to change. Even then, it's
another 300 years before society really starts to change.

Looking at Europe in the 1400 hundreds you might well have thought that
Venetian style modernism would be a very localised revolution and that these
new fangled "banks" would only ever be established in small areas.

Start-ups are not the "railroads" of the industrial revolution. They are the
"banks" of the industrial revolution.

~~~
BerislavLopac
The main problem with PG's article is that he is, as always, overly focused on
startups. For something to be a revolution, it has to last for a while
(otherwise it's just a rebellion, and a failed one on top of it), which is
something directly opposite to the nature of startups.

By definition, startups don't last -- they either disappear (either by failing
or M&A), or they stop being startups and turn into "regular" companies. But,
that being said, I still think that Paul is on to something -- the future
model of a succesful company is not a large multinational conglomerate like
IBM, Microsoft or Shell, which is too large for its own good and where, like
with dinosaurs, it takes ages for a signal to travel from limb to brain and
back.

Instead, I believe that the future of companies lie in small, flexible and
agile companies which have simple operations and global reach. This doesn't
mean that a successful company should somehow prevent its own growth -- but it
should grow in small units, sprouting new, smaller companies which operate on
their own.

My favo(u)rite example, which proves that this model works, is the Virgin
Group, which includes lots of small to medium sized companies which operate in
a number of different industries. For a traditional, centralized company such
diversity would be a suicide, but in this case the companies are connected by
the common brand and its messages.

------
newhouseb
"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.

~~~
benmathes
PG does appear to assume ease of movement by potential founders to current
startup hubs. Large cultural and language barriers remove this ease of
movement. Perhaps a more rigorous claim is that there will be very few startup
hubs per largely-different (culture,language) region.

------
biohacker42
Two nit picks:

1\. Innovation over the past couple centuries has not spread evenly. Cities
always got a disproportional deal. That is why even today small towns all over
the developing AND developed world are still losing people to the big cities.

2\. A big part of the high-tech startup concentration seems to be VC
clustering. But if startups are to be a truly revolutionary change I hope we
get away from the investor model and move closer to the paying customer model.
And this would make the valley's regional advantage smaller.

~~~
olefoo
Especially nowadays, with the direct costs of a web-based software startup
approaching zero; there is no reason for fincanciers to be the bottleneck.
When three motivated people working out of their homes can build a fully
functional site; the direct costs to the founders aren't that different from
their living expenses and there is no need for large amounts of capital until
after product development is completed.

The main advantage of regional hubs is that of social density; easy access to
expertise and enough demand for experts that they can survive and thrive.

------
ivankirigin

      In practice I doubt any government would have the balls to try this

I'm a bit surprised to see a metaphor about testicles used.

A 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.

------
icey
Am I the only one who sees the irony that so much localization is required for
an industry that specializes in remotely connecting resources?

~~~
jodrellblank
I do wonder if future improvements in communications technology will render
the need to go to Silicon Valley moot.

If FutureHN can provide both a valleyesque enthusiastic social network and a
contact with investors, will the benefits of migrating to S.Valley become less
important?

~~~
icey
It'll certainly be interesting to watch. I'd like to move to SV, but it's not
really practical for me for a variety of reasons. So I'll keep plugging away
out here; I don't really need investors (yet), but the idea of having so much
technical talent in one place is really what makes Silicon Valley so unique in
the world.

------
davidw
I'd still like to see you talk some more about the economic factors that point
to startups being very common (Coase et al). In other words, what fundamentals
have changed so that starting your own company is the best option for a
sizable number of people. I think to predict a true revolution, you'd have to
demonstrate that these conditions don't just exist in a particular high tech
sector with amazingly low capital requirements, but across a much broader
swath of the business world. For one thing, will capital requirements drop in
other sectors too? Or is the web just a blip, and eventually capital
requirements will eventually rise again as it takes more 'stuff' just to get
off the ground? What other things come into play that mean that more people
will strike out on their own. Are there historical precedents?

------
acegopher
All industries have "centers":

finance -- New York, Boston automobiles -- Detroit entertainment -- LA etc.

There are natural reasons for that: new companies are often founded by execs
who think they can do better than the big companies they leave, infrastructure
gets built up that benefits all in that given industry, talent begins to
congregate in those areas, etc.

I think that different types of startups might be congregated around different
geographic locales: biomedical startups would likely flourish near big
research hospitals, etc. Service industry startups likely aren't clustered:
restaurants, etc.

With technology startups, yes there is a natural clustering in Silicon Valley
and Boston, but I think that's because tech startups are fairly new. I hear
lots of good things coming out of Chicago, Austin, Columbus, Minneapolis, and
elsewhere. It's definitely spreading.

~~~
nihilocrat
This is on the line of why I think this article is actually pretty weak; it's
acting like a bunch of known, understood factors are somehow new and
revolutionary.

------
frossie
Yes, 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.

------
thesethings
"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.

------
dbul
I 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.

~~~
pedalpete
You must have posted this while I was putting out my rant below. I agree,
though I'm confused by your last 'desktop software' comment.

~~~
dbul
Which part?

Just as an example, let's say a school teacher uses her computer for email,
web browsing, managing files, photo editing, and maintaining her second grade
web site. Gmail, (some browser), dropbox, snipshot, and splashup/weebly would
be all she needs.

If all these websites were somehow organized in a way that said teacher can
easily find them, then I think a 'startup revolution' would be more likely:
people could go to a central website to browse for startup that meets their
needs.

------
rgr23
"People are dramatically more productive as founders or early employees of
startups—imagine how much less Larry and Sergey would have achieved if they'd
gone to work for a big company—and that scale of improvement can change social
customs."

I question this assertion. I'd bet a single Google engineer who makes a 1%
improvement in adsense targeting can create more economic value than most
startup founders.

~~~
david927
Exactly. Productivity only matters when it's directed properly. A brilliant
MIT student working 20 hour days on some silly mash-up is not nearly as
productive as a slow and obtuse engineer in some large corporation working 6
hours days. It's the results that count.

I would argue the contrary case to Paul's; I think that Silicon Valley has
slowed down growth. They make it a lottery that you can win with having a
cool, quick hit. The money in the valley has little love for hard problems and
a lot of love for fads, much like record producers.

~~~
dbul
This sounds nice in theory, but I don't think it is always true. There are
techies who have a career and those who have a job. It is better to get as
many who have a job doing what they are passionate about, because they are
probably wasting their time at their job.

And I wish that at least one of the 100+ companies that have come out of YC
were IPO bound. I tried to hint that we were of that mindset when we had
applied, no cigar. I'm not really sure why YC continues to advance sites which
seem to go against their own "Derivative Idea" rule for why startups fail
(e.g. this round: a group bookmarking site, a themed video site which
piggybacks on YouTube). It would be interesting if YC decided to have one
round where they choose nothing but "hard problems" with huge potential.

~~~
david927
I couldn't agree more about YC. The application questions would change to
"we're only interested in single founders, but we will consider a technical
co-founder." I think it also just makes sense for the "spray and pay" style to
fund 1000 startups focusing on hard problems with the potential of 1 making up
for it all.

When we hit it, dbul, you and I can put this together. Deal? :-)

------
bokonist
_(1) that no government will successfully establish a startup hub_

What about the Pearl Delta and Shanghai's Pudong district? Both seem to be
smashing successes.

 _There are two very different types of startup._

I don't buy that there is a hard distinction between different types of
startups (or even between startups and small businesses).

Any small business that tries to grow will create a differentiated offering.
An ice cream shop might promote a special flavor, a restaurant will develop a
certain vibe, a furniture company will create signature ergonomic chairs, a
web form company will create an awesome UI, etc. The amount of uniqueness of
the offering can be plotted along a continuum. When it passes a certain point,
we call it a "tech startup".

The special thing about Silicon Valley is that it attracts a ton of many
smart, talented, ambitious people. Therefore the offerings of their businesses
tend to be very novel and differentiated. The supply of brilliant innovators
is limited so it is not necessarily possible to replicate this everywhere (but
I am guessing the world is very significantly under performing its potential).

Edit:

Perhaps another way of saying this is:

1) A startup is a small business that attempts to scale by developing a new
technique (that technique can be a product or a way of doing operations).

2) Different sectors of the economy have different opportunities for
developing new techniques. It's harder to develop new techniques in
agriculture than in software.

3) In the absence of high transportation costs, industries tend to cluster (
autos in Detroit, entertainment in Hollywood, finance in New York, energy in
Houston, education in Boston, software in Silicon Valley).

4) Silicon Valley has a cluster of industries that natural have a high level
of new technique development (software and electronics). Therefore Silicon
Valley has many startups.

That said, now I'm not sure I buy my own argument. Silicon Valley seems to
have the most innovative companies in every industry. In addition to software
startups, there are energy startups, automobile startups, etc. So Silicon
Valley really is a cluster of companies that specialize in innovation. Perhaps
the thing that limits the spread of Silicon Valley magic is that there are
only so many innovative people, and only Silicon Valley has been able to
attract a critical mass.

------
david927
I agree technology may represent a new economic phase -- but startups are just
the way they're introduced. And it has nothing to do with productivity and
everything to do with uniqueness of vision. If big companies did more things
like Google's 20% project, you'd have the same effect.

Also, I think you ignored that VC is becoming less and less important. And as
it gets less important, the big funding hubs will become less important. I see
a future of micro-equity and the big hits coming out of everywhere.

Also, the hubs have a horrible self-delusional feedback loop. Once you get an
entire environment that thinks the same way, these feedback loops are
inevitable and you spiral into silliness, e.g. Twitter.

------
rgoddard
The 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.

~~~
pg
The fact that the Industrial Revolution was localized mattered a lot to the
regions that were left behind. It made them the victims in the ensuing era of
colonialism.

~~~
david927
That's true, but meaningless. History is only our friend when it applies. A
lot of technology is now software based and thanks to the web, it is
immediately distributed evenly to all those who have computers with internet
access. While that still leaves out a large chunk of the world, it gives no
substantial benefit to the place where the technology was born.

~~~
eugenejen
Open source and internet help to spread software source. But the mindset of
how a piece of software solve users' problems are still limited the location
that the software is created.

It will be more like a culture barrier. For a culture that has no sense of
custom satisfaction, the user interface for e-commerce will never be as good
as Apple or Amazon. We as technologists sometime forget a lot of our
assumptions are based on our environment.

~~~
david927
That's a perfect reply. You're absolutely right, but I know a lot of companies
who've made a fortune doing "Ebay for Switzerland", etc. Businesses will step
in to fill that gap to a certain extent but the applications themselves
reflect the hub culture. Excellent point.

------
kaens
Regarding spreading, it seems to me that location doesn't matter as much as it
could. I've never lived in the Valley, or in any other stereotypical "tech
hub" though, so I could be wrong there.

I'm currently working for what I consider to be a startup in a small town in
the UK. We're making software that is applicable to a specific industry, and
the industry is _very_ hungry for it. I'm currently the only programmer.

What looks like the probable course for us (and probably for other people like
us - people starting up software dev stuff in smaller areas), is that once
we've sold what we're working on right now, we'll probably move on to doing
more interesting things, and form a small software development house of sorts.

What we're doing right now would be utterly impossible without the internet,
if only due to communication-over-distance issues.

I think that the stereotypical "startup" is just the start of what we'll
continue to see as more and more people realize that they can make their
livelihood online. What I'm doing doesn't fit the stereotypical startup mold,
but is the type of thing that I think we'll see more and more of, assuming
nothing majorly bad happens to the internet or society in general.

------
webwright
I'd LOVE to have outsource a few hours worth of google research to plot the
founding locations of all of the startups on these lists:

[http://startup.partnerup.com/2009/04/08/complete-list-
of-q1-...](http://startup.partnerup.com/2009/04/08/complete-list-
of-q1-2009-web-internet-tech-acquisitions-companies-bought-and-sold/)
[http://startup.partnerup.com/2009/01/06/complete-
list-2008-w...](http://startup.partnerup.com/2009/01/06/complete-
list-2008-web-tech-internet-acquisitions/)
[http://startup.partnerup.com/2008/01/02/2007-acquisitions-
we...](http://startup.partnerup.com/2008/01/02/2007-acquisitions-web-internet-
technology/)

Of course, SV would dominate, but I wonder by how much. It'd be REALLY
interesting to see it as a ratio to total startups started, but I think that'd
be a harder # to come by.

I think startup success is fueled by how many people have the desire to start
something up and access to early-stage funding. The Valley clearly dominates
the latter, but it seems (anecdotally) that hackers who want to spin something
up are becoming more commonplace in non-valley locations.

------
ynniv
The 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.

------
barryfandango
Starting little businesses to write microblogging and photo sharing websites
does not matter in the scope of human history. Comparing web startups to the
industrial revolution?! You gotta be kidding me, I don't care how much ajax or
standards compliance or user generated content your social grocery networking
website has, you're deluding yourself.

------
markessien
On the other hand, it's easy to break into the startup industry from anywhere
in the world. You just need to gain a certain number of customers and
following, and you will be noticed. Contrast that with the film industry,
where the need for expensive equipment means that financing is critical to
every venture.

It makes sense for the film industry to be concentrated in hubs because of the
huge expenses in each film. It does not make sense for startups, because such
expenses don't exist, and the need for connections, while important, is not
critical.

So, though the trend may look like it's going towards major hubs for now, over
time this will normalise itself as those players who are not able to go to the
startup hubs will fragment and create successful companies all over.

There will be few major hubs for technology startups - but they won't be ever
as concentrated as hollywood - simply because there is no need for them to be
so.

------
abhinav
I wonder if a smaller local revolution has happened before: formation and
spread of great research universities. Govts have tried to set up great
research universities by will, China is trying hard, India is making small
steps, so are places like Germany. But they have not succeeded yet. Even in a
small country like UK, only 3 great universities have emerged.

Within US, Stanford is today a great research university but it was not so in
1945. Great luck like the combination of cold war spending and the idea of
steeples of excellence by Terman made it happen. Uni. of Florida or ASU may be
today aspiring to greatness, but they are fighting the 'locality' of research
universities. Maybe some random events will help them out.

~~~
zandorg
"only 3 great universities have emerged."

Do you mean Oxford, Cambridge, UCL?

Oxford & Cambridge are not 1 university, there are a lot of different
colleges.

------
jleyank
Nobody seemed to mention (in a quick read) that the local/legal environment
influences whether startups fly or not. Boston was a startup hub well before
Silicon Valley was flying, but it's my understanding that IP and labor law in
MA is (far?) more favorable to the employer than the employee - as compared to
California.

If you're going to look for an environment that has "movement" of ideas and
people, the environment has to be conducive to this. California has done well,
but might strangle itself on commuting costs, the lack of infrastructure and
the costs of living there.

It'll be hard for states to favor new vs. old businesses, but there's 50 of
them out there, and a number of them will probably give it a go at some point.

------
galactus
Information technology is still just a fraction of the whole world economy. I
don't think it is big enough for anyone to have the slightest idea of what the
world will be like when we actually become an information-based economy.

I think the point that people like the google founders were many many times
more productive than their equally-smart employees counterpat is important,
but I think the same contrast can be found on people working on their free
software projects compared to people working on their day-job projects.

I personally think that things like free software will have much more impact
in the future economic revolutions than the concept of "start-up".

* sorry for my weak english :/

------
mattmaroon
It is pretty neat to wonder if, during the Industrial Revolution, people had
nearly-free ways to ship their manufactured products and electricity, if
there'd have been more than a few hubs, or if it would have worked out about
the same.

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raintrees
I am keeping my eyes on Boulder, CO. From what I hear, good university, good
business climate, willing to take initiatives (Smart Grid being rolled out as
we type).

Now if they only had ocean access... :)

~~~
mscarborough
Boulder _is_ a good example of how to foster a tech hub. Wired had a print
story about this a few months back, but I couldn't find it on their site.
Though they did claim that Colorado's Front Range is an optimal site for a new
SV. Given time, I agree.

I can say that there is a very open and supportive start-up culture here
(Boulder & Denver metro). Tech Meetups and LUG groups are pretty active; the
new-tech group based in Boulder routinely overfills 300-seat auditoriums and
is expanding to handle the traffic. Most tech folks here have the mentality of
wanting others to succeed, no matter if it is with our own companies or with a
different one. We are happy to share knowledge.

Sorry no beachfront though, you'd have to settle for the best mountain sports
anywhere.

------
madair
If you want to see startup revolution as the norm, just go to Asia. I'm sure
Paul Graham has seen the scale of small business across the Mideast, China,
Southeast Asia, for that matter the whole world, I just haven't been to South
America so I can't speak about that.

It's kinda helpful to look past your own borders sometimes. There's a lot more
lint in the world than just in your own belly button.

------
fredwilson
as i told Paul when he sent me this essay, he's got it all wrong. silicon
valley's rate of startup growth is slowing and the rate of startup growth in
many of the leading cities of the world (london, bejing, mumbai, banglore, new
york, tel aviv, berlin, etc) is increasing. i think Paul's view has been
skewed by living in Boston and Silicon Valley. Boston's startup ecosystem has
been in decline for almost ten years now and when compared to Silicon Valley,
it looks like game over. But if you chart the number of new startups funded by
angels and VCs in all these cities since 1995, you'll see the right picture. I
did that for my web 2.0 keynote and if i can find the chart, i'll post a link
here

------
Remake
Let's move to New Zealand. Auckland is a beautiful city and NZ has 0% tax rate
on capital gain.

------
mechanician
Excellent essay, as usual. Question: does this imply that Silicon Valley will
continue to grow as a result of being the dominant location for startups? And
if so, is there a point at which its size will diminish its superiority?

------
xiaoma
What about the spread of existing hubs? How much bigger is Silicon Valley than
it was a couple of decades ago? How many start-ups and how much land will it
encompass in another 20 years?

------
pageman
Paul, this post gives me hope. I'm now in a university belt and we're about to
turn up the research heat and our students are seriously looking into startups
- perhaps your localization will materialize before our very eyes. And yes,
still no Silicon Valley equivalent to contend with at the moment!

------
Ardit20
_If so, this revolution is going to be particularly revolutionary_ lol every
revolution is revolutionary that is why it is called a revolution and I doubt
you may have a particular revolutionary revolution lol

Anyway, you may say that the intellectual revolution of the enlightenment was
local, it started in Italy and remained there for a while, some century I
think. But this is not a start up revolution, it is a technological
revolution, the revolution is not the start up culture but the advances made
in communication technology. As such it is not any different than the
industrial revolution as far as the importing of technological aspects is
concerned. Nor is it any different from a power plant, every nation must have
internet and with Italian internet comes Italian Google, which as it happens I
think it is libero.it although that might be more like yahoo than google. So
perhaps now the start up culture is localised to silicon valley, but I doubt
it will be long until a silicon valley appears in London or Rome or Berlin.

