Startups happen in clusters. There are a lot of them in Silicon Valley and Boston, and few in Chicago or Miami. A country that wants startups will probably also have to reproduce whatever makes these clusters form.
I’ve claimed that the recipe is a great university near a town smart people like. If you set up those conditions within the US, startups will form as inevitably as water droplets condense on a cold piece of metal. But when I consider what it would take to reproduce Silicon Valley in another country, it’s clear the US is a particularly humid environment. Startups condense more easily here.
It is by no means a lost cause to try to create a silicon valley in another country. There’s room not merely to equal Silicon Valley, but to surpass it. But if you want to do that, you have to understand the advantages startups get from being in America.
1. The US Allows Immigration.
For example, I doubt it would be possible to reproduce Silicon Valley in Japan, because one of Silicon Valley’s most distinctive features is immigration. Half the people there speak with accents. And the Japanese don’t like immigration. When they think about how to make a Japanese silicon valley, I suspect they unconsciously frame it as how to make one consisting only of Japanese people. This way of framing the question probably guarantees failure.
A silicon valley has to be a mecca for the smart and the ambitious, and you can’t have a mecca if you don’t let people into it.
Of course, it’s not saying much that America is more open to immigration than Japan. Immigration policy is one area where a competitor could do better.
2. The US Is a Rich Country.
I could see India one day producing a rival to Silicon Valley. Obviously they have the right people: you can tell that by the number of Indians in the current Silicon Valley. The problem with India itself is that it’s still so poor.
In poor countries, things we take for granted are missing. A friend of mine visiting India sprained her ankle falling down the steps in a railway station. When she turned to see what had happened, she found the steps were all different heights. In industrialized countries we walk down steps our whole lives and never think about this, because there’s an infrastructure that prevents such a staircase from being built.
The US has never been so poor as some countries are now. There have never been swarms of beggars in the streets of American cities. So we have no data about what it takes to get from the swarms-of-beggars stage to the silicon-valley stage. Could you have both at once, or does there have to be some baseline prosperity before you get a silicon valley?
I suspect there is some speed limit to the evolution of an economy. Economies are made out of people, and attitudes can only change a certain amount per generation. [1]
3. The US Is Not (Yet) a Police State.
Another country I could see wanting to have a silicon valley is China. But I doubt they could do it yet either. China still seems to be a police state, and although present rulers seem enlightened compared to the last, even enlightened despotism can probably only get you part way toward being a great economic power.
more from the author – Paul Graham (VC)
