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The reason the US has freely flowing funding is because the VC has an immense amount of cash from the previous generations of successful Unicorns. So why was it

The reason the US has freely flowing funding is because the VC has an immense amount of cash from the previous generations of successful Unicorns. So why was it (and still is) easier to raise unicorns in the USA ? The thing that separate the internet economy with the traditional is the massive network effects that makes it a winner take all game. And at that game the USA has a massive home advantage with a huge cultural, legal and financially unified market. In Europe you start in a small country then face big barriers to expand out of it, which slows growth enough that you never get to get competitive by the time the much better funded American competitor comes to crush you. And then it's game over, because you only get one shot at being the monopoly. Once you have a Facebook, you can't have a second one, even with all the VC cash, talent & creativity in the world. Notice that the USA did not succeed in building a competitor to Google, Youtube, Facebook, or Amazon, so how could Europe, or anybody else ? Well the Chinese and the Russian could, by banning American monopolies from their own markets, which let them built monopolies on their own, & then attempt to conquer the rest of the world with them. The USA is perfectly aware of this dynamic because faced with TikTok, their first reflex was to try to ban them. And that's what Europe should do, ban American Monopolies. If we would ban facebook, instagram, youtube, etc, we'd have solid equivalents in a year, and from there enough cash flow to fund a next generation of startups.

myfavoritedog 5y ago
As another comment pointed out, the small countries vs US Network effects excuse doesn't really fare well when you look at the successful startup environment of Israel. The USA is perfectly aware of this dynamic because faced with TikTok, their first reflex was to try to ban them. And this take is just hot garbage.
- atq2119 5y ago
  How many unicorns are from Israel, though? Israel should be lauded for managing to be an intensely vibrant and high-tech country, and European countries should try to learn from that, but even that is apparently not quite sufficient. So I think GP has a point.
  - hardolaf 5y ago
    None. But they have tons of startups that provide services to the military-industrial complex which is why they're so successful. They copied the USA's SBIR system but provide much bigger grants.
  - mikevm 5y ago
    https://www.techaviv.com/unicorns https://www.techaviv.com/unicorns
    - boulos 5y ago
      Annoyingly, that list includes companies with Israeli founders that aren’t companies founded in Israel (e.g., WeWork). There’s no need to do that though, there are plenty of Israeli companies! (Oh, I see they have a pie chart of companies in Israel and it’s about 25% by value) It’s also too bad that it excludes public companies or large exits (e.g., Wix and Waze) since those are even better retorts to the “can’t build companies” claim.
zozbot234 5y ago
> Once you have a Facebook, you can't have a second one, even with all the VC cash, talent & creativity in the world. That's not how it works, just look at MySpace. Even sites with a lot of market share are sometimes overtaken by a competitor. The best alternative to Facebook in a fragmented market like Europe is federation across multiple social "hosting" sites with a regional focus, based on standards that are either in place already or being worked on. This can exploit even stronger platform effects than a conventional one-size-fits-all solution like Facebook. Google and YT are in a different position since they're actually solving hard resource problems (Video streaming at scale is hard; building a usable crawl of the Web is also hard); much of their success comes from addressing these in a way that is compelling for users.
- bitcurious 5y ago
  >That's not how it works, just look at MySpace. It recently blew my mind to learn just how small MySpace was. Peak user count was ~75.9 million, total. Facebook has ~2.85 billion active users.
russli1993 5y ago
need to clear up the misconception here: China is not simply banning US companies. With social media and internet content products, there is Chinese law "Measures on the Administration of Internet Information Services". Whether one agrees with the provisions in this law is another story. Lets just talk about purely from a commerce perspective. This law is applied equally to everyone, whether it is a Chinese company or US company. If Google, Facebook and anyone else, want to have a specific product operate in Chinese market, that product need to be compliant to local laws. They will be able to operate if they are in accordance to the law. And many US companies do comply with Chinese laws and have products present in China, such as Microsoft (office365, Azure, Bing, Linkedin etc), Amazon(AWS, Amazon.com, Kindle), Airbnb, Apple (Icloud, app store etc). This law concerns with Internet Information services. There are other digital products too. Database services are very much available in China, Oracle DBs has a dominating market share in China. Adobe, Autodesk, etc. Even for Facebook and Google, I believe they have business operations in China. I know Google have ad sales in China, and have significant revenue. By adhering to this law, the internet information product could have significant differences from the product operating in another country, resulting in companies make two versions of the product, one for international, one for china's market. So Bytedance having douying for China and tiktok for international, is not different from Microsoft having Linkedin China and Linkedin international, or Bing China, Bing international, or Amazon.com China or Amazon.com international. From a pure commerce standpoint, this law is non-discriminatory. Whether its company headquartered in China or foreign, anyone have to do the same thing according to the law. It does not provide any advantages for Chinese over foreign companies. Also how do you define what is Chinese/Foregin company? Bytedance is registered in Cayman Islands and 40% is owned by foreign investors. Maybe you could have Chinese nationals running a company in another country and tried to offer a product in China. For running a product in China, both cases is the same, comply to Chinese laws and regulation then the product can operate in China. The appearance that Chinese companies have advantages over foreign companies comes from a combination of factors: local culture, understanding of the market, much much faster and fierce competition (If speed and competition in international market is 2, in China its 10. For example, Uber left China's market not because of regulatory, regulatory was equal to Didi and uber at the time, but Uber and Didi was locked into extremely heated competition at that time, both sides were pouring money down the drain. It was most likely a business decision. Alibaba's taobao vs Amazon.com, taobao was very competitive and played to the Chinese culture advantage very well. Taobao created 11/11 singles day in 2009 and hit a cord with Chinese people, even becoming a cultural phenomenon). But let say if Google/Facebook funded a team in China to create a targeted product for the Chinese market, they could have a a significant presence in the market.
hardolaf 5y ago
> The reason the US has freely flowing funding is because the VC has an immense amount of cash from the previous generations of successful Unicorns. So why was it (and still is) easier to raise unicorns in the USA ? You're ignoring that all of this money initially came from massive investment by the Defense Advanced Projects Administration (DARPA) which funded the semiconductor industry in its infancy, which funded the creation of the Internet, which funded the creation of mainframes, which funded the creation of personal computers, and continues to provide massive funding to tech companies. Heck, their decision to choose Microsoft DOS over IBM OS/2 for the US DOD literally solidified its rise as the dominant operating system. It's requirement that all parts must be multi-source-able is why AMD and Via were created as additional manufacturers of x86 processors. But it also funded PowerPC and even provided significant funding to ARM. Sure, we don't have much socialism here (USDA farm "subsidies" not included), but we do have very strong, protectionist-welfare capitalism. So you had the combined might of the US government founding the creation of the computing industry. That let companies take massive risks which left tons of people making tons of money before private VC even really became interested. The IPOs of the original tech companies funded the creation of half of the current major VC funds.
- WalterBright 5y ago
  Apple was funded by DARPA? I don't think so.
  - hardolaf 5y ago
    Apple was a zombie before Steve Jobs was rehired. Also, it was initially funded by Mike Markkula who was from Intel which was a company founded with DOD and DARPA backing.
    - WalterBright 5y ago
      I guess that means that since my father was in the military, I owe everything to the military. Right?
- tored 5y ago
gizmondo 5y ago
> Well the Chinese and the Russian could, by banning American monopolies from their own markets, which let them built monopolies on their own, & then attempt to conquer the rest of the world with them. Russia didn't ban American monopolies, they were outcompeted fair and square by the more focused local companies. For some time, at least. It took years for Google to catch up with Yandex in search quality in Russian language, and Facebook's clone is imo still better than Facebook itself in every way, no wonder it's still more popular there.

myfavoritedog 5y ago

As another comment pointed out, the small countries vs US Network effects excuse doesn't really fare well when you look at the successful startup environment of Israel. The USA is perfectly aware of this dynamic because faced with TikTok, their first reflex was to try to ban them. And this take is just hot garbage.

atq2119 5y ago
How many unicorns are from Israel, though? Israel should be lauded for managing to be an intensely vibrant and high-tech country, and European countries should try to learn from that, but even that is apparently not quite sufficient. So I think GP has a point.
- hardolaf 5y ago
  None. But they have tons of startups that provide services to the military-industrial complex which is why they're so successful. They copied the USA's SBIR system but provide much bigger grants.
- mikevm 5y ago
  https://www.techaviv.com/unicorns https://www.techaviv.com/unicorns
  - boulos 5y ago
    Annoyingly, that list includes companies with Israeli founders that aren’t companies founded in Israel (e.g., WeWork). There’s no need to do that though, there are plenty of Israeli companies! (Oh, I see they have a pie chart of companies in Israel and it’s about 25% by value) It’s also too bad that it excludes public companies or large exits (e.g., Wix and Waze) since those are even better retorts to the “can’t build companies” claim.

zozbot234 5y ago

> Once you have a Facebook, you can't have a second one, even with all the VC cash, talent & creativity in the world. That's not how it works, just look at MySpace. Even sites with a lot of market share are sometimes overtaken by a competitor. The best alternative to Facebook in a fragmented market like Europe is federation across multiple social "hosting" sites with a regional focus, based on standards that are either in place already or being worked on. This can exploit even stronger platform effects than a conventional one-size-fits-all solution like Facebook. Google and YT are in a different position since they're actually solving hard resource problems (Video streaming at scale is hard; building a usable crawl of the Web is also hard); much of their success comes from addressing these in a way that is compelling for users.

bitcurious 5y ago
>That's not how it works, just look at MySpace. It recently blew my mind to learn just how small MySpace was. Peak user count was ~75.9 million, total. Facebook has ~2.85 billion active users.

russli1993 5y ago

need to clear up the misconception here: China is not simply banning US companies. With social media and internet content products, there is Chinese law "Measures on the Administration of Internet Information Services". Whether one agrees with the provisions in this law is another story. Lets just talk about purely from a commerce perspective. This law is applied equally to everyone, whether it is a Chinese company or US company. If Google, Facebook and anyone else, want to have a specific product operate in Chinese market, that product need to be compliant to local laws. They will be able to operate if they are in accordance to the law. And many US companies do comply with Chinese laws and have products present in China, such as Microsoft (office365, Azure, Bing, Linkedin etc), Amazon(AWS, Amazon.com, Kindle), Airbnb, Apple (Icloud, app store etc). This law concerns with Internet Information services. There are other digital products too. Database services are very much available in China, Oracle DBs has a dominating market share in China. Adobe, Autodesk, etc. Even for Facebook and Google, I believe they have business operations in China. I know Google have ad sales in China, and have significant revenue. By adhering to this law, the internet information product could have significant differences from the product operating in another country, resulting in companies make two versions of the product, one for international, one for china's market. So Bytedance having douying for China and tiktok for international, is not different from Microsoft having Linkedin China and Linkedin international, or Bing China, Bing international, or Amazon.com China or Amazon.com international. From a pure commerce standpoint, this law is non-discriminatory. Whether its company headquartered in China or foreign, anyone have to do the same thing according to the law. It does not provide any advantages for Chinese over foreign companies. Also how do you define what is Chinese/Foregin company? Bytedance is registered in Cayman Islands and 40% is owned by foreign investors. Maybe you could have Chinese nationals running a company in another country and tried to offer a product in China. For running a product in China, both cases is the same, comply to Chinese laws and regulation then the product can operate in China. The appearance that Chinese companies have advantages over foreign companies comes from a combination of factors: local culture, understanding of the market, much much faster and fierce competition (If speed and competition in international market is 2, in China its 10. For example, Uber left China's market not because of regulatory, regulatory was equal to Didi and uber at the time, but Uber and Didi was locked into extremely heated competition at that time, both sides were pouring money down the drain. It was most likely a business decision. Alibaba's taobao vs Amazon.com, taobao was very competitive and played to the Chinese culture advantage very well. Taobao created 11/11 singles day in 2009 and hit a cord with Chinese people, even becoming a cultural phenomenon). But let say if Google/Facebook funded a team in China to create a targeted product for the Chinese market, they could have a a significant presence in the market.

hardolaf 5y ago

> The reason the US has freely flowing funding is because the VC has an immense amount of cash from the previous generations of successful Unicorns. So why was it (and still is) easier to raise unicorns in the USA ? You're ignoring that all of this money initially came from massive investment by the Defense Advanced Projects Administration (DARPA) which funded the semiconductor industry in its infancy, which funded the creation of the Internet, which funded the creation of mainframes, which funded the creation of personal computers, and continues to provide massive funding to tech companies. Heck, their decision to choose Microsoft DOS over IBM OS/2 for the US DOD literally solidified its rise as the dominant operating system. It's requirement that all parts must be multi-source-able is why AMD and Via were created as additional manufacturers of x86 processors. But it also funded PowerPC and even provided significant funding to ARM. Sure, we don't have much socialism here (USDA farm "subsidies" not included), but we do have very strong, protectionist-welfare capitalism. So you had the combined might of the US government founding the creation of the computing industry. That let companies take massive risks which left tons of people making tons of money before private VC even really became interested. The IPOs of the original tech companies funded the creation of half of the current major VC funds.

WalterBright 5y ago
Apple was funded by DARPA? I don't think so.
- hardolaf 5y ago
  Apple was a zombie before Steve Jobs was rehired. Also, it was initially funded by Mike Markkula who was from Intel which was a company founded with DOD and DARPA backing.
  - WalterBright 5y ago
    I guess that means that since my father was in the military, I owe everything to the military. Right?
tored 5y ago

gizmondo 5y ago

> Well the Chinese and the Russian could, by banning American monopolies from their own markets, which let them built monopolies on their own, & then attempt to conquer the rest of the world with them. Russia didn't ban American monopolies, they were outcompeted fair and square by the more focused local companies. For some time, at least. It took years for Google to catch up with Yandex in search quality in Russian language, and Facebook's clone is imo still better than Facebook itself in every way, no wonder it's still more popular there.