| The word you’re looking for in narrow vs broad is scale. The more heavily regulated and concentrated European capital markets and more challenging regulatory environments tend to make broad risks less attractive, leading directly to more entrepreneurs betting on readily available opportunities. This is simple incentive: the higher the risk the more you need a sure bet to take the risk or help just as importantly convince those with venture capital take the risk with you. This risk management choke tends to encourage more specialized or “narrow focuses” as you have identified. So, you see risk directly shaping the types of companies that are built, and the nature of the businesses that get created tends to be different. Unfortunately, narrow, more certain companies tend to work better in specialized markets, limiting their scale, so while you end up with many leading companies you also tend to miss out on broad transformational events and ground floor opportunities. This is my own theory and learning, so very open to criticism. The American system tends to be messy, wasteful and speculative with a great deal of highs and lows and a lot of failures. The high lubrication of liberal employment laws, liberal bankruptcy policies, and a culture of small angel investors in many cities encourages experimentation. The downsides are obvious, but the huge amount of experimentation is what drives the economy, as there also exists a massive and ready acquisition pool of large companies and private equity ready to exit those founders. That generally creates a virtuous cycle that is much larger than its equivalents in Europe, furthering the advantage of scale (just look at ycombinator: blank checks and plug-and-play support for good ideas is almost taken for granted in the US). The cost is a huge, wasteful and messy system that tends to deprioritize labor and financial stability for its workers on the whole for this system, but that’s one of the benefits. Of course all of this is later stages, as the sources of funding for most startups in the world in the earliest stages are in fact banks and personal savings: https://www.ondeck.com/resources/startups-really-get-money-s... So I really think a lot of the effect is in the amplification of early stage experimentation that gets traction not necessarily in the support of early stage experiments prior to investment worthiness. This whole question deserves and even deeper comparison. I do not mean to advocate for deregulation, just make an observation of what is working (and what is not). |