4 ms·

The startup scene is just a side-effect of all the correct economic, political and social conditions being in the same place. A healthy startup scene is good ev

The startup scene is just a side-effect of all the correct economic, political and social conditions being in the same place. A healthy startup scene is good evidence that your country is strong enough to take risks, but imo not something you can likely just launch into having.

bsaul 7y ago
This is such a true statement, and that’s why i’m mad everytime i hear about governments financing start up scene more or less directly. it makes them feel good, because they’re spending huge amount of money, and the poor results are only seen five years later. They clearly have no clue what an ecosystem is.
- Kalium 7y ago
  In most cases, they're hoping they can take a shortcut and avoid all the long, slow, and most importantly boring-to-voters work of setting the scene for a healthy ecosystem.
- fierarul 7y ago
  +1 to the above comments. Governments that do this are either clueless or thugs. The market doesn't need their money, they need them to define a fair playground and that especially means defining how the state behaves.
  - morningseagulls 7y ago
    >Governments that do this are either clueless or thugs. See hogFeast's comment: https://news.ycombinator.com/item?id=21165893 https://news.ycombinator.com/item?id=21165893 You've basically dissed the governments of the US, the UK and the EU, plus every country mentioned in the SCMP report that Malaysia feels it has to keep up with. Good job.
    - fierarul 7y ago
      My main experience is with Romania where any such project of encouraging incorporating, giving grants, etc are just excuses at spending money, badly. I would make these illegal. Perhaps other governments are better at managing money. Maybe even in a place where things don't work very well the state can still manufacture startups because these companies will get the red carpet from every other institution. They are not representative of the overall economy.
      - morningseagulls 7y ago
        >My main experience is with Romania Fair enough, that would explain your reaction. To be fair, Malaysia is more like Romania than some of the other countries I've mentioned. >just excuses at spending money, badly Yes, and funding startups is just about the perfect excuse, because new businesses often fail. However, the SCMP report also said the government has been giving grants to startups for some time now. Grants to small businesses is something that a lot of governments engage in: it's about trying to create jobs. >Perhaps other governments are better at managing money Nah. Other governments just behave better. Funding new businesses is always a "bad" way of spending money, in that most new businesses fail, and nobody has a good way of figuring out which ones will. >the state can still manufacture startups because these companies will get the red carpet from every other institution. They may get some prestige, but I'm sure a lot of startups fail eventually.
        fierarul 7y ago
        > >the state can still manufacture startups because these companies will get the red carpet from every other institution. > They may get some prestige, but I'm sure a lot of startups fail eventually. Yes, but you are underestimating the ways the state itself may "help" a company fail. Ever had all your accounts blocked for an accounting misunderstanding of $500? Had the state not pay back the money they owe you while they wait on the statute of limitations or companies suing them? Delay VAT refunding thereby reducing your cashflow?
        7y ago
- afarrell 7y ago
  What about the US government funding of Fairchild Semiconductor by purchasing chips from it? What about the US government funding of Palantir via In-Q-Tel?
  - bsaul 7y ago
    At least in those cases they’re eating their own dog food. They’ll have customer expectation on the startup they’re financing, and they know there’s a market, and the company will be able to deliver ( not to mention the fact that those are fields on the border of national security, which means you can’t just rely on private companies on the market)
  - deleted 7y ago
    [deleted]
- lazyjones 7y ago
  > it makes them feel good, In more ways than one would naively assume, I'm sure. Every time a government starts such initiatives to spend a lot of money, some officials will be making plans on how to benefit from it. The sane, clean way to help startup funding is to incentivise it with tax benefits for investors.
jacquesm 7y ago
No, the startup scene is a side effect of a lot of money floating around in a place where there is little job security and surplus of people ready to gamble a couple of years of their life in return for a very small chance at success. Only a small fraction of those people will succeed, but just like with the lottery that will be held up as proof of the system working. The glut of capital and the conditions that shaped Silicon Valley will likely not be paired again for the foreseeable future. That won't stop governments from trying by supplying one part of that equation. If you want to take a healthy startup scene to prove that your country has the 'correct economic, political and social conditions' then I'm in agreement with the exception of the word 'correct', they are not so much correct as unique and replicating those conditions will come at a price that very few countries and their inhabitants would be willing to pay. Consider also that inside the United States many places have already tried to imitate SV and it didn't work there either, and yet, the economic, political and social conditions were identical.
- morningseagulls 7y ago
  >No, the startup scene is a side effect of a lot of money floating around in a place where there is little job security and surplus of people ready to gamble a couple of years of their life in return for a very small chance at success. Exactly, although the people you're describing are just the founders. There are people in the startup scene who're employees, and for them, getting and keeping a job at a startup for a couple of years, say, is a good enough launchpad for their careers in the industry. And there's a surplus of such people that needs to be employed. We're experiencing a glut of highly educated people worldwide and academia simply doesn't have the capacity to absorb them. I think I've read on HN recently that there's more funding for startups than academia overall -- and of course I can't find it again -- but here's an actual comment from HN just two years ago: https://news.ycombinator.com/item?id=15380625 https://news.ycombinator.com/item?id=15380625 >Of the cohort of PhD students I went through with, from a rough guess (I haven't taken exact count), the most common role is now "startup CEO", followed by "engineer at enviable company", followed only then by "teaching and research academic". Startups are the new academia.
- cameronbrown 7y ago
  > No, the startup scene is a side effect of a lot of money floating around in a place where there is little job security and surplus of people ready to gamble a couple of years of their life in return for a very small chance at success, though I'm prepared to admit it'll be very messy without that backup plan. Aka risk taking. For SWEs clearly they've got job security, otherwise they wouldn't do it. Founders are usually well connected and have enough of a cushion to land safely if the startup crashes. Either way there's plenty of job security in SV. > I'm in agreement with the exception of the word 'correct'. I'll agree with you also! Unique is better. > Consider also that inside the United States many places have already tried to imitate SV and it didn't work there either, and yet, the economic, political and social conditions were identical. What? There's so much variance just between cities, let alone states. These things are not equally distributed across the US.
krak12 7y ago
Startup scene is the result of WW2 along the dominant position of the US on the economic miracle of 50-60, that give a chance to create an industry network that will support new initiatives im yhe future. Cant be done with just money like EU and bunch startup gurus want.
hogFeast 7y ago
This isn't accurate. First, this kind of thing has been going on for decades. It has been going on in the US with the govt, particularly the military, funding research. 3i, a relatively large PE/VC investors in Europe, started out as a govt-funded body in the UK (there were parallel bodies to the ICFC...I can't remember what they were). Scottish Enterprise is a huge VC investor (they were an early-stage investor in FanDuel). Second, the concerns that people have are due to issues that are solveable. Controlling how the govt makes appointments, only investing in companies with matched investment from the private sector, etc. It can work. It does work. Third, the issue that this is meant to solve is the fact that capital markets don't work all that well everywhere. This was the case in the US, it was the case in the UK (and is still the case in the UK), and it may be the case here. Either way, it is a fine and logical solution. If you have experience at the coal face, it is often very evident that investors are not good at this kind of thing (the situation that exists in the US where individuals will fund startups is totally unique, it occurs nowhere else).
- morningseagulls 7y ago
  >First, this kind of thing has been going on for decades. Exactly. Silicon Valley itself has its roots in DoD funding. Then, there's a glut of highly-educated STEM people who can do research, and the VC funding. We now have all three in major cities around the world. Surprise, surprise, that's exactly where you would find startup ecosystems.
prostoalex 7y ago
Everybody sees the tip of the iceberg - the venture capitalists and the tech entrepreneurs, but once you dig deeper, there's a need for * strong intellectual property protection, be it patents, trademarks, etc. * minority shareholder protections * some reasonable liquidity structure, allowing employee compensation to have an equity component without excessive tax burden * legal protections around embezzlements, self-dealing and various other self-gratifying schemes which can be employed by management with a large bank account at their hand Those issues don't come up very often in the US, because the rules of the game are quite known.
- cameronbrown 7y ago
  I'd argue this falls under 'political conditions'.

bsaul 7y ago

This is such a true statement, and that’s why i’m mad everytime i hear about governments financing start up scene more or less directly. it makes them feel good, because they’re spending huge amount of money, and the poor results are only seen five years later. They clearly have no clue what an ecosystem is.

Kalium 7y ago
In most cases, they're hoping they can take a shortcut and avoid all the long, slow, and most importantly boring-to-voters work of setting the scene for a healthy ecosystem.
fierarul 7y ago
+1 to the above comments. Governments that do this are either clueless or thugs. The market doesn't need their money, they need them to define a fair playground and that especially means defining how the state behaves.
- morningseagulls 7y ago
  >Governments that do this are either clueless or thugs. See hogFeast's comment: https://news.ycombinator.com/item?id=21165893 https://news.ycombinator.com/item?id=21165893 You've basically dissed the governments of the US, the UK and the EU, plus every country mentioned in the SCMP report that Malaysia feels it has to keep up with. Good job.
  - fierarul 7y ago
    My main experience is with Romania where any such project of encouraging incorporating, giving grants, etc are just excuses at spending money, badly. I would make these illegal. Perhaps other governments are better at managing money. Maybe even in a place where things don't work very well the state can still manufacture startups because these companies will get the red carpet from every other institution. They are not representative of the overall economy.
    - morningseagulls 7y ago
      >My main experience is with Romania Fair enough, that would explain your reaction. To be fair, Malaysia is more like Romania than some of the other countries I've mentioned. >just excuses at spending money, badly Yes, and funding startups is just about the perfect excuse, because new businesses often fail. However, the SCMP report also said the government has been giving grants to startups for some time now. Grants to small businesses is something that a lot of governments engage in: it's about trying to create jobs. >Perhaps other governments are better at managing money Nah. Other governments just behave better. Funding new businesses is always a "bad" way of spending money, in that most new businesses fail, and nobody has a good way of figuring out which ones will. >the state can still manufacture startups because these companies will get the red carpet from every other institution. They may get some prestige, but I'm sure a lot of startups fail eventually.
      - fierarul 7y ago
        > >the state can still manufacture startups because these companies will get the red carpet from every other institution. > They may get some prestige, but I'm sure a lot of startups fail eventually. Yes, but you are underestimating the ways the state itself may "help" a company fail. Ever had all your accounts blocked for an accounting misunderstanding of $500? Had the state not pay back the money they owe you while they wait on the statute of limitations or companies suing them? Delay VAT refunding thereby reducing your cashflow?
        7y ago
afarrell 7y ago
What about the US government funding of Fairchild Semiconductor by purchasing chips from it? What about the US government funding of Palantir via In-Q-Tel?
- bsaul 7y ago
  At least in those cases they’re eating their own dog food. They’ll have customer expectation on the startup they’re financing, and they know there’s a market, and the company will be able to deliver ( not to mention the fact that those are fields on the border of national security, which means you can’t just rely on private companies on the market)
- deleted 7y ago
  [deleted]
lazyjones 7y ago
> it makes them feel good, In more ways than one would naively assume, I'm sure. Every time a government starts such initiatives to spend a lot of money, some officials will be making plans on how to benefit from it. The sane, clean way to help startup funding is to incentivise it with tax benefits for investors.

jacquesm 7y ago

No, the startup scene is a side effect of a lot of money floating around in a place where there is little job security and surplus of people ready to gamble a couple of years of their life in return for a very small chance at success. Only a small fraction of those people will succeed, but just like with the lottery that will be held up as proof of the system working. The glut of capital and the conditions that shaped Silicon Valley will likely not be paired again for the foreseeable future. That won't stop governments from trying by supplying one part of that equation. If you want to take a healthy startup scene to prove that your country has the 'correct economic, political and social conditions' then I'm in agreement with the exception of the word 'correct', they are not so much correct as unique and replicating those conditions will come at a price that very few countries and their inhabitants would be willing to pay. Consider also that inside the United States many places have already tried to imitate SV and it didn't work there either, and yet, the economic, political and social conditions were identical.

morningseagulls 7y ago
>No, the startup scene is a side effect of a lot of money floating around in a place where there is little job security and surplus of people ready to gamble a couple of years of their life in return for a very small chance at success. Exactly, although the people you're describing are just the founders. There are people in the startup scene who're employees, and for them, getting and keeping a job at a startup for a couple of years, say, is a good enough launchpad for their careers in the industry. And there's a surplus of such people that needs to be employed. We're experiencing a glut of highly educated people worldwide and academia simply doesn't have the capacity to absorb them. I think I've read on HN recently that there's more funding for startups than academia overall -- and of course I can't find it again -- but here's an actual comment from HN just two years ago: https://news.ycombinator.com/item?id=15380625 https://news.ycombinator.com/item?id=15380625 >Of the cohort of PhD students I went through with, from a rough guess (I haven't taken exact count), the most common role is now "startup CEO", followed by "engineer at enviable company", followed only then by "teaching and research academic". Startups are the new academia.
cameronbrown 7y ago
> No, the startup scene is a side effect of a lot of money floating around in a place where there is little job security and surplus of people ready to gamble a couple of years of their life in return for a very small chance at success, though I'm prepared to admit it'll be very messy without that backup plan. Aka risk taking. For SWEs clearly they've got job security, otherwise they wouldn't do it. Founders are usually well connected and have enough of a cushion to land safely if the startup crashes. Either way there's plenty of job security in SV. > I'm in agreement with the exception of the word 'correct'. I'll agree with you also! Unique is better. > Consider also that inside the United States many places have already tried to imitate SV and it didn't work there either, and yet, the economic, political and social conditions were identical. What? There's so much variance just between cities, let alone states. These things are not equally distributed across the US.

krak12 7y ago

Startup scene is the result of WW2 along the dominant position of the US on the economic miracle of 50-60, that give a chance to create an industry network that will support new initiatives im yhe future. Cant be done with just money like EU and bunch startup gurus want.

hogFeast 7y ago

This isn't accurate. First, this kind of thing has been going on for decades. It has been going on in the US with the govt, particularly the military, funding research. 3i, a relatively large PE/VC investors in Europe, started out as a govt-funded body in the UK (there were parallel bodies to the ICFC...I can't remember what they were). Scottish Enterprise is a huge VC investor (they were an early-stage investor in FanDuel). Second, the concerns that people have are due to issues that are solveable. Controlling how the govt makes appointments, only investing in companies with matched investment from the private sector, etc. It can work. It does work. Third, the issue that this is meant to solve is the fact that capital markets don't work all that well everywhere. This was the case in the US, it was the case in the UK (and is still the case in the UK), and it may be the case here. Either way, it is a fine and logical solution. If you have experience at the coal face, it is often very evident that investors are not good at this kind of thing (the situation that exists in the US where individuals will fund startups is totally unique, it occurs nowhere else).

morningseagulls 7y ago
>First, this kind of thing has been going on for decades. Exactly. Silicon Valley itself has its roots in DoD funding. Then, there's a glut of highly-educated STEM people who can do research, and the VC funding. We now have all three in major cities around the world. Surprise, surprise, that's exactly where you would find startup ecosystems.

prostoalex 7y ago

Everybody sees the tip of the iceberg - the venture capitalists and the tech entrepreneurs, but once you dig deeper, there's a need for * strong intellectual property protection, be it patents, trademarks, etc. * minority shareholder protections * some reasonable liquidity structure, allowing employee compensation to have an equity component without excessive tax burden * legal protections around embezzlements, self-dealing and various other self-gratifying schemes which can be employed by management with a large bank account at their hand Those issues don't come up very often in the US, because the rules of the game are quite known.

cameronbrown 7y ago
I'd argue this falls under 'political conditions'.