[Animats]

"blitzscaling isn’t really a recipe for success but rather survivorship bias masquerading as a strategy."

That says it all. Really, that's how YC works - fail fast and cheap, profit from the survivors. Great for VCs, not so much for the cannon fodder.

"We have reserves."

[ghobs91]

That's better than a tech landscape with no access to venture capital at all, and startups taking 10x longer to reach critical mass, if they even do.

There's a reason why the US tech industry is orders of magnitude larger than the rest of the world, access to capital. Go try to grow a startup in Europe with its risk averse investors, and see how far you get.

You'll start to see this effect even more in the biotech space, where up front access to capital is crucial in developing and testing products/medicines that must go through expensive FDA approval.

[mdorazio]

I'm not convinced that access to capital is the sole, or even primary, reason the US tech industry is much stronger than elsewhere. There are many factors like entrepreneurial culture, low corruption, and established/concentrated support infrastructure that seem a lot more important.

[adventured]

It's one of the two or three biggest reasons, and definitely not the sole reason. The modern system of industrial-scale venture capital available in the US - going back widely four plus decades - is rivaled only by China in the last decade. More broadly that culture of risk capital spans every tier, from the smallest angels to the biggest VC firms. The comprehensive nature of it is exceedingly rare among nations. It's also now a very old phenomenon in the US, going back to the earliest days of the industrial revolution (everyone from Tesla to Edison to Ford were financed by what was essentially venture capital).

Most of developed Europe, except for a few nations, scores well on having low corruption, comparable to or better than the US. Western Europe also widely has a strong social safety net that should be encouraging to entrepreneurs from a life-risk perspective (which may actually result in the exact opposite outcome: a culture of lower risk taking; the culture that will install the world's most elaborate social safety systems, is more likely to be one that aggressively dislikes risk-taking). While only a few small nations in Europe are as wealthy as the US, several more are close enough that the difference shouldn't matter. The problem is that capital is overwhelmingly unwilling to participate in venture investing.

The US not-so-secret sauce is: easy access to risk capital + a culture that has historically strongly encouraged entrepreneurial activity + a massive single market with one core language (that is also conveniently the global language of business, media and culture) + reasonable taxation and regulation policies + strong protection of property rights + ease of market access (low tariffs, low trade barriers, a foreigner can easily start/own a US business from almost anywhere) + very welcoming to foreign capital (few capital controls) + an enormous lead coming out of WW2 (which helped the US be the first to the tech epoch, which has buffered its lead ever since) + the global reserve currency + a massive traditional financial system (great for IPOs, stocks, acquisitions, leverage, etc. - it's why Alibaba is on the NYSE) + 19 of the top 20 universities on earth, and four or five dozen more that are world-class + a very successful university meets business development system (which has helped incubate countless new leading companies and technologies) + inexpensive energy + half a century of built-up knowledge, experience, specialization in every tech segment + a long history of immigration policies that allow people to come to the US and pursue their dreams (Japan and China, the #2 and #3 economies, have overwhelmingly shunned foreigners becoming citizens by comparison; the US tech industry wouldn't be anything remotely close to what it is today without the Andy Groves, Nadellas, Elon Musks, Jensen Huangs or Collisons).

That's the short list. It can't be replicated.

[YorkshireSeason]

Nice list, I agree with it, but I don't think it can be the full story.

Why? None of the above are specific to software, if the above was the full story, why would the US not also dominate the world in e.g. Autos, Chemistry, Electronics, Batteries etc? There must be other factors. Maybe first-mover advantage, maybe software benefits more from centralisation, from economies of scale than other industries? Other suggestions?

[Animats]

What "tech"? Most of what passes as "tech" now is a business model.

Up until about 2000, when you went to a Silicon Valley VC, you had to have a patent and a working prototype. Using that model, the VC industry as a whole was very profitable from the 1970s to the end of the century. In the 2000s, the VC industry became a net lose. Buying market share until everybody else goes broke is not a net win for investors.

[Apocryphon]

Surely VCs would be amenable to reforming their practices and demands upon companies, and be content with less drastic growth targets, to create an environment that is more sustainable and less race to the bottom? No one's calling for them to be abolished, until they've at least tried to fix the conditions they've created.

[TeMPOraL]

Even worse for the users. In this analogy, if startups are cannon fodder, users/customers are the blood that gets spilled.

Startups really should have this written on a tin: "We're are experiments to our investors. Our product is an experiment to us. We do not care about you, or helping you, and we will not change the world; our regular marketing copy is just straight-faced lie. The entire stack, from us up to investors' investors, are all running experiments on how to make money fastest."

Now, I'm (somewhat) fine with this. Let experimenters do experimenting. I just hate that the whole ecosystem is consistently lying to regular people.

[SZJX]

The startup workers as well, I guess. They take tremendous risks.

Though it would be a stretch to say they don't care nor help the users. Of course they need to keep the users hooked/get new users onboard to "grow" and get the investments. And focusing on marketing is not very reasonable since you can say the same about basically every marketing material.

Still, I guess the point is that the customers of such startups must always be prepared of the possibility of the company suddenly shutting down one day and the product ceasing to exist. That's true.

[s17n]

It's not masquerading as a strategy, it is a strategy. There's no "bias" - the fact that the same strategy was employed by a lot of companies that didn't survive doesn't make it a bad strategy, since the whole point of the strategy is to optimize for a small probability of massive success.

[SkyMarshal]

That's the whole VC industry model, not just YC. And it's a more economically healthy model than half of Wall St.'s money makers. Limited downside, comparatively unlimited upside, relatively low systemic risk (eg no TBTF).

[jiveturkey]

Why pick on YC? All angel/VC investment works this way.

[ergothus]

> That says it all.

Does it? Competition and survivorship have long been accepted as the premise of capitalism. What I find more disturbing is that we've been told competition will be to the benefit of the consumer, and this focus on network effects means that companies are looking for a way to stay on top WITHOUT the virtue of providing the best benefit.

This leads to Comcast-like situations, with customers that hate their provider but want the product and have no real options. Or Facebook, where people can join get disgusted and join an alternative...that can't provide the desired service because the desired service requires that everyone else be there.

[WalterBright]

Comcast's dominance is propped up by regulatory capture, not free market capitalism.

[ergothus]

So substitute Amazon, Facebook, or any of the companies that people have many complaints with, yet continue to funnel their business to because competitors can't match the network effects.

[WalterBright]

The last I checked, using Google search is free. What do you think would happen if they started charging for it?

[ergothus]

I'm not sure how citing a single example counters my point, but I'll bite: Searchers aren't the customers of Google, and we have no shortage of stories on HN about Google abusing or potentially abusing their monopoly.

To return to my point: healthy market competition involves providing value for the consumer. In a healthy market there are low profit margins because high profit margins indicate a change for competition to enter and undercut. Companies competing and failing or falling to competition are not (necessarily) a sign of problem, as an above poster seemed to be saying.

However, companies seeking to find ways to prevent competition or deny it via network effects ARE a sign of an unhealthy market. And companies (as cited by the article and most of the tech-buzz-startup scene) are all about trying to grab that advantage and hold it. Logically the consumer is the one that ultimately suffers, per the very premise of healthy market competition.

[Animats]

I can see the day coming when the "sign in" button on "google.com" is a popup, instead of a little box in the upper right. Maybe you can still bypass it, but a dark pattern suggests strongly that you must log in to search.

[WalterSear]

The difference is debatable.

[WalterBright]

Not really. Using the government to make your competition illegal is not free market.

[WalterSear]

There is no free market mechanism that can prevent the sale of the market.

[WalterBright]

That's the government's job. The government fails at it now and then, which is why the citizens need to vigilant and careful in whom they elect.

Do you believe that if the government ran the economy (socialism) there would be no corruption?