America's Startup Scene Is Looking Anemic | Hacker News Reader

America's Startup Scene Is Looking Anemic

bloomberg.com

147 pointspetethomas255 comments

This is misleading.

A 'startup' is a high growth type business, typically funded by VC (or something like that) and has nothing to do with the regular kinds of 'small companies' which are things like restaurants, cafes, contractors, small businesses etc..

The vast majority of new, small businesses in America are not very closely related to our modern view of 'startups'.

It's not healthy to equate the two - as the 'startup' scene in America is actually very vibrant, while there may be an issue with small business formation.

As for the later - it's not necessarily bad.

While I was at an F50 handset maker - we noticed that Spain and S. Europe countries opted for 'individual' service package, while UK, France, Germany opted for 'business' packages.

Our research revealed something interesting: Spain and S. European countries just had large numbers of people 'self employed' or employed in small businesses, while W. Europe had many more people employed in large businesses.

There are substantial advantages in having many large businesses as there things that one cannot do unless one is at a certain scale. Think: airplanes, automobiles etc. etc..

The S. European economies suffer from a lack of ability to compete on this basis: the ability for people to work together in large teams to develop sophisticated products at scale. Vast numbers of people don't even recognize the kind of professionalism and specialization required to work in these organizations - and I means even simple things like product management, product marketing, a bunch of basic financial ops roles etc...

Of course there are concerns about big corps with all the market power snuffing out smaller competition, and the lack of real innovation in bigger firms ... there's a host of issues there ...

But to compare 'small business' with 'startup' is not very useful, and to assume that 'small business' = 'good' across the board is not necessarily helpful either.

The subject requires a little bit of nuance.

ie from the article: "Tech businesses, unlike corner stores, tend to be high-growth businesses that employ lots of people."

Uhh, no. Car manufacturers (and other manufacturers) 'employ a lot of people'. Tech employs very few in relative terms, for example.

I think it's more troubling that small business formation is declining than you think. Small businesses provide a way for smart and hard-working people to improve their financial situation when they don't have other options available to them. Startups mainly help people who could have gotten a 6 figure job to potentially make even more. I'm not trying to criticize startups, but I think it's clear that a society where people can move out of poverty is a better one than a society where people remain in poverty but can move from the middle to the upper class.

> a society where people can move out of poverty is a better one than a society where people remain in poverty but can move from the middle to the upper class

This is a very subjective claim. I would certainly prefer to live in the latter country and so do most people I know (and we do, by moving from Canada to the US in much larger numbers per capita than vice versa).

this is a very limited mindset. Poor people that are not able to move into middle class will in the long run cause a lot of instability. Poverty and level of education are correlated. Living in a democracy with more people being poorer opens the door to populists with short sighted politics (hi Donald)

But, it was not so much poor who ended up voting for Trump. He has same support among middle class and rich. The main predictor is race and secondary smaller is gender, not so much poverty.

One interesting citation that partially backs up both you and the parent - http://fivethirtyeight.com/features/education-not-income-pre...

The vast majority of new, small businesses in America are not very closely related to our modern view of 'startups'.

No, a startup is simply a business that is in the processing of "starting up" its business activities. Tech, growth rate, etc., has nothing to do with it. SV keeps trying to redefine the word, but the rest of America just isn't going along with it.

I get what you are saying but I don't agree with your pigeonholing of the definition of "startup". I really don't think all startups are high growth at all. I think that high growth startups are definitely a niche, but I don't think that they are what define startups and startup culture.

Even though I see where you are coming from, my view is a little bit more reality based: startup culture is very intertwined with VC and such kinds of investment - and 'by the numbers' - they must be high growth.

Put another way - there is so, so much risk with VC (and such) investment - that the kind of 'regular to medium growth' businesses are actually economic failures for most VC's.

So imagine you have a 'startup' that you grew over 10 years to 100 employees and profitability - even if you made your investors 'some return' - it actually may not be enough return to justify the implicit risk.

So when you adjust for risk ... it's actually not a win. This is something that a lot of founders struggle with understanding.

Anyhow - so my view is - startup = high growth as a matter of pragmatism.

But yes, bootstrapped, mid-growth tech companies don't really fit with the 'small business' profile (aka contractors, cafes) as well so you have a point either way.

"Startup culture" is entwined with VC culture because the notion of businesses wanting to remain in an unprofitable state in perpetuity (i.e., in perpetual "startup state") was unheard of in the past. Most businesses try to move past the startup phase in their first few months or weeks of operation.

At first I thought this comment was right on the money, but then I read the article.

"... the decline in new retail businesses isn’t an acute crisis. More worrying, however, is the decline in high-tech business formation. Tech businesses, unlike corner stores, tend to be high-growth businesses...."

Sonnyblarney, did you read the article before posting?

One big trend I've noticed is that small businesses (startups and slow growth businesses alike) are much more likely to do business with startups. A decline in small business is a positive (not good) feedback loop that adversely affects startups.

Consolidation in many sectors is out of control, not just tech. Finance, media, healthcare come to mind, but it's really endemic because fewer small businesses means fewer customers, longer sales cycles, more bureaucracy to navigate and therefore fewer startups.

Putting this in the broader geopolitical context, government antitrust actions are nowhere in sight. National champions, a la Putin & Xi Jinping, and subsidized state-owned enterprises (SOE) will eat the free market's lunch, in the short run, every time. Economic liberalism is really in a difficult spot because globalization has opened our markets to this kind of exploitation.

> A 'startup' is a high growth type business, typically funded by VC

What you are describing is a pump-and-dump, which actually is the most vibrant sector of the US economy, but that is not a good thing.

> A 'startup' is a high growth type business

No. Not all startups are meant to be high growth but they are still startups.

Then it's not a startup, just a small business. That's basically the thing that makes a small or medium-sized business a startup.

No, what makes a business a startup is that it is in the processing of "starting up" its business activities (meaning those activities which are intended to generate revenue).

Most businesses succeed in making it to that point within a few weeks or months (though not necessarily to a point of profitability).

Nobody considers a new restaurant or gas station to be a startup, man. You can have your own definition if you want, but it's not the one everyone else is using.

That's a strawman.

"A startup is usually a company designed to effectively develop and validate a scalable business model"

https://en.wikipedia.org/wiki/Startup_company

It still does require "high growth"

It's not a strawman, it's a counter example. Under his definition, a new gas station or restaurant clearly count as startups.

You made a correct observation.

Small business generally has lower productivity than medium and large business. When politicians put their hope in small business as job creator, those jobs have lover productivity.

It's good to have vibrant small business sector, but you can't expect it to bring exceptional growth.

You have data to back that up? I don't know that to be true. I've seen many small businesses that have much higher productivity per employee than that of larger businesses.

Productivity is not a function of 'how much stuff employees accomplish' - it's more like a measure of profits or economic value creation per employee.

So yes, small company employees are 'really productive' in the 'working' sense, but economically, not so much.

Other than at hedge funds and maybe some other very niche businesses (law firms?) ... the megabucks comes at a certain scale.

Low productivity is what creates that growth. Inefficiency is the whole point, as for every $50,000 of inefficiency for a small business, that's another job created.

> The S. European economies suffer from a lack of ability to compete on this basis: the ability for people to work together in large teams to develop sophisticated products at scale. Vast numbers of people don't even recognize the kind of professionalism and specialization required to work in these organizations - and I means even simple things like product management, product marketing, a bunch of basic financial ops roles etc...

Would you mind providing a source on this point? Intuitively I thought of it as a cultural issue regarding work ethics and vacation time. This is a bit surprising to me.

Great point, felt your argument was very astute.

However, really small nit: I think you meant to use e.g. instead of i.e.

e.g. = For example: i.e. = That is:

I could see i.e. working where you used it but I think you intended it as e.g.

Thanks again for your thoughts!

> It's not healthy to equate the two - as the 'startup' scene in America is actually very vibrant, while there may be an issue with small business formation

A very valid and smart observation. I read the subject title and I was like "What????". No country is even remotely close to the US with respect to startups.

Having been a software developer since the 80s, and an ISV in developer tools for a large portion of that, here's what I'm seeing:

- Very few companies want to take a chance on software products coming from smaller ISVs. There's been a great deal of consolidation, and companies are scared to use anything that doesn't already have serious backing and market penetration. Reasons cited often include not being able to hire developers or other IT people to manage the software, or concerns about the longevity of the ISV. In contrast, back in the 80s you had products like FoxPro being created by tiny Fox Software in Perrysburg, Ohio that went on to become some of the biggest developer tools for PCs. This attitude of not wanting to use something because of some other tangential factor was simply not in play. If you could solve someone's problem well, you had a customer.

- Somebody touched on advertising in one of the comments, and this cannot be understated. There is simply no reliable way to find your audience today that doesn't involve "spray and pray" with one's (already-limited) advertising budget. Advertising used to be a great way for smaller ISVs to become known and announce to the world that they were the "real deal". You would start out in the back of a popular magazine that targeted your potential customers with a B&W 1/4 page ad, and then move up as sales increased. It's just very, very hard to get your product in front of the right people that are making the purchasing decisions, and even when you do, the first issue above still comes into play.

- There were options like shareware for ISVs that were just getting started and didn't have any money at all for advertising or promotion. Many great applications started out as shareware and went on to become commercial successes. The key difference with open source here is the expectation that you were supposed to pay for the product if you used it, as well as, obviously, a lack of source code.

Of course, all of this is a giant feedback loop that accelerates over time, and here we are with a few software companies completely dominating various spaces. It could be that this is where all industries eventually end up, but it certainly is not ideal for small business creation. The part I find the most disheartening is that I'm not even sure if this is something that is specific to the software industry, in which case we're dealing with macro issues and software developers are really lacking any tools to buck the trends or change course.

> There is simply no reliable way to find your audience today that doesn't involve "spray and pray"

The strategy to get customers IS the startup idea.

This one subject is the place to focus 90% of your creative energy, it never came for free. And it won’t involve “spray and pray”

I think you misunderstood my second point. When advertising in magazines, you already knew who your customers were - they were those that were reading the magazine (the publishers all gave out circulation numbers, of which I'm sure many were fudged a bit). Combined with my first point in my original post, you pretty much had an "in" at that point if you at least had a demo/trial version of your software that someone could get. For example, one of the first things I would do when getting a new copy of DBMS or Data Based Advisor magazine would be to head to the back of the magazine to see what kind of new software was being advertised. Yeah, it was the section that looked like the "see if you can draw Tippy the Turtle" ads in other magazines, but people looked at them and they worked.

So, perhaps, what we're seeing in the software industry is a result of the collapse of the media industry and targeted magazines...

Not only magazines but BBSs too, speaking of shareware. The volume of new software was low enough that you could publish to a BBS and if it wasn't completely awful, it'd get distributed. Today you can't get a dozen organic downloads on the App Store without some kind of promotion or virality hack.

In the early days of computing there were a small number of highly technical early adopters who were easily reached. Now, there’s a vast market of almost the entire population, supporting technology companies worth hundreds of billions.

Product categories that worked [for tiny startups] in the early days don’t work now, but there are vastly more opportunities (especially in vertical markets) then ever before

By the way - cryptocurrency is one area with primitive tools and a similar user base to the early days of computing.

The same product categories definitely do exist (I know I changed your wording there a bit). In fact, many of the software companies that advertised back then still exist today in those same categories. The main difference is that today they advertise in ways that are out of reach for most ad budgets.

It's the "reachability" that is so difficult, not deciding which category one wants to target.

Bang. You nailed it.

my perspective is the appetite for risk has collapsed in the USA. Partially due to the high cost of housing & medical services, but I think it's a broader social trend.

I agree, but the big question is "why ?". And, more importantly, why has the appetite for risk collapsed so much in the software industry, an industry that has traditionally been the beneficiary of very, very low bootstrapping costs. It's cheaper than ever to lease dedicated machines with tons of memory, disk space, and bandwidth, as well as very cheap to purchase machines for in-house use.

2. See 1. We aren't disconnected from social trends.

The cost of change is huge, because the cost of a software developer's time is extremely expensive. We are tightly networked into cities where the cost of housing is 2-8x elsewhere in the country. So that two week integration costs something like $7-10,000 to execute on.

The other interesting thing is the volume, the raw size of the software we have today. We have tens, hundreds of thousands of lines of code - and it's getting spread out in distributed systems.

1. I will make a flat statement without more than a basic justification... it's extremely expensive to live in the US and achieve a healthy life without extreme amounts of risk. Health care costs are absurd. Housing costs in a region with adequate city services is absurd. Housing costs in a region where you can find a job when you lose your current one is absurd. In the US therefore, most people have to orient on survival far more than they did 30 years ago.

For justification, I refer the reader to the Guardian. But. I also have spent time reading memoirs of different people who lived 1940-1990 and taking a note of how easily they could rent/buy/move/find work. It's far easier than anyone I've met my age. Those times are gone, gone, gone. Today, talk to most anybody who just graduated college, and you will hear a story of how finding work was hard.

Another aspect that is playing out is that the Boomers and "Greatest" generation basically vacuumed up a lot of the wealth and power, siloed it into their children or or haven't really released it themselves.

And when you're worried about your health care and mortgages, you don't really have a reasonable way to take a new risk on your own.

And when your employees are insisting on living in expensive places that mitigate risk, you pay the cost and refuse to take the risks, because they are stupid expensive.

All good points. We definitely have some parasitical forces in our economy, and they are taking their toll. Anyone that says otherwise isn't really paying attention.

As someone that experienced a wonderful time coming into the software industry in the late 80s, it's all very depressing. I want this same experience for young people today, but it's very hard to fight such macro trends. I think the answer is going to have to be at some point "stop playing this version of the game".

It's very very tense right now, under the surface. It would be very interesting to know what proportions of the population broken out by 5-year segments have adequate employment and stable housing. I have a notion that things are going to unwind in a rapid exothermic way at a certain critical level of age & responsibility. At 18 you can tolerate a fair bit of risk; at 35, married with a kid, you want to move out of "survival" mode. I would guess that as the "millenials" trailing edge gets into mid-late 20s, changes will be aggressively pushed to a far harder degree. The post-millenial generation is said to be a fair bit socially different (but I havn't looked into how that change is transpiring) - and they will have an even shorter end of the stick.

Speculatively, an interesting project would be to build out a dashboard to deduce instability based on age & employment.

None of that relates to software, but we see software face to face. I think software is the most affluent part of society right now in general. Other industries appear to be much more unequal with their workers much more exploited.

The capital class wants most people to be extremely risk averse so they can take the whole upside of everything. For them ideally every bit of economic activity you do is insured by them.

The capital class has more control over politics and culture than (possibly) ever, although the dam is starting to break, as you see with more and more independent musicians, restaurants, etc. I.e. we’re close to the crest, not sure if we just passed it or are about to.

A new york billionaire who was born wealthy convinced millions of middle class (or worse) Americans in the midwest to vote for him.

and yet somehow I don't think we are even close to the peak.

Saturation?

Think of any idea. Think of your best idea.

I'd bet you money it's either been done, or is being worked on right now by someone else.

I think others share this understanding, and en masse it can lead to a more cautious approach to business development. If you know your business idea either exists, or will exist before you, then you should only take the leap if you have a really, really good product. It does not suffice to just be "first" nowadays (if you can even be first at all).

I can't really argue with any of that, and it may very well be the reason for much of the stagnation. However, I also think that people underestimate how much hasn't been done yet, or hasn't been done in different, interesting ways. There are a lot of good ideas from the past that have languished and could be used for innovative approaches to all sorts of software.

Totally agree. There's a ton of opportunity still out there, it's just not as flashy as the last 10 years.

I think there's definitely saturation in terms of the short-term money wins, such as creating software for a particular vertical. You see accelerators funding the same things, over and over again.

But what is interesting is that very few people are doing really ground-breaking, long-term projects, where everything is thrown out and started over from scratch. I think the reason is, one, it's not readily-profitable, and two, that technology has expanded so much that it's hard to see the big picture. You can't "throw it all out" unless you already know it all -- and nobody knows it all anymore.

Also, with the increase in consumption, there's a lack of creativity in newer generations and a lack of understanding that "if they don't like it they can make it themselves." Part of that is creation is so sophisticated that it seems daunting to start and the other part is that people are getting more accustomed to the idea that these things will just be handed to them, pre-packaged and complete.

If somebody’s already doing it, you’re too late to capture the critical mass of the market. If nobody is already doing it, that proves there is no market for the product. This is the logic trap that keeps me from doing a risky startup!

A great approach to find a good opportunity is to look at the failed business ideas of 10 years ago. The reasons they failed back then may not be valid today because of 10 years of tech progress.

"Already been done" is a quitter's excuse not to enter the market. If you care about the problem, you should be able to compete.

Yea, I didn't say anything to the contrary.

In fact, I am the owner of a business in an industry which was heavily saturated. There were already companies doing exactly what we do, before we started. I just knew we could do it a lot better. We're making money already and haven't made a single sales call, or put a single advertisement out there. We're on schedule to be profitable this year. I'm not going to be the next Zuckerberg with this business, but I recognized there is plenty of opportunity in the software world despite it not being as flashy perhaps, as the last 10 years.

I'm just saying that this type of environment is going to be much less "hot" than when the playing field is wide open. The early days of iOS were a gold rush. That's cooled off significantly, yet who knows when the next Facebook, Instagram, or Snapchat will appear.

> I'm not going to be the next Zuckerberg

What does that mean?

If I'm not getting rich, what the hell is the point? I can work half as hard doing bullshit for some big tech company.

"Getting rich" is a relative term.

Am I going to significantly increase my earnings by owning this business? Yes.

Am I going to be buying a penthouse on 5th Ave. and driving a Ferrari to the office? No.

I'll add this additional insight into why I have always wanted to a build a business:

A business is a machine. Built correctly, you can step away from this machine and it will continue to run, and create wealth for you. Even if that wealth is modest, it is wealth that can be provided to you at no cost of TIME. This gives you back your TIME, to either work a 9-5 or create another machine. Er, business.

(Obviously building the machine can take a lot of time. Not an insignificant point).

What do you mean by “no cost of time”. I’ve always thought if you own a business, you need to be dedicating your time to keeping it going or it’s going to fail. Where are these mystical businesses that you just own and collect checks every week?

EDIT: I don’t doubt you, but i just can’t think of an example!

So to cover the obvious case first - If your business is successful enough, you hire a CEO, employees, etc, and hand off daily operations to them. Of course, you as the owner are involved in the company still, but the majority of your time should be free to tackle other issues. Elon Musk is a good example of someone who has done this. He has multiple companies, working on different issues. Of course each company you start takes a significant up-front cost of your time. But the more successful the company comes, the more likely you are to be able to onboard employees who can give you back your time. Clearly, this is only possible once you have "made it big", and it's not really the type of business I am speaking about.

The other type of "autonomous" business is a SAAS business. The idea here is that you build a software service that generates revenue. This revenue should come in the form of monthly subscriptions to your service. If you can keep your costs down (i.e. do the work yourself, and don't hire full time employees), then once your system is stable, it should be able to generate income with relatively minor investments to your time. Obviously again with this case, a significant UPFRONT effort must be made to develop a system that provides enough value to customers, that they will pay for it.

I've been working on my business now for over 2 years. It's been a side project that has consumed a healthy majority of my spare time outside of my 9-5. I'm on track to break-even in revenue/costs in 3-4 months. Around that time frame, I also expect to be "feature complete" with version 1.0.

This should sustain at least a year, if not longer, of minimal time investment. Sure, I might need to fix a bug here or there, or investigate a connectivity issue or something that I simply can't 100% protect against... But the system has been developed from the ground up for long term stability, and reliability.

It's been running now for 2 years, and I've had basically no issues that I've needed to fix. It's been all feature development. By the end of this year I can pretty much guarantee I will be hands free, spending less than 3 hours a week, making more money than I spend.

That is the goal. Build something that can run (mostly) by itself, that generates more income than it costs to run.

p.s. Knowing myself, because I love what I do, I'll continue to work on it just for fun. But there's immense peace of mind knowing I don't have to.

Thank you for your detailed example. I’d still characterize your investment in it as very active rather than passive. If you’re willing to share, I’m curious about how much effort you think you’d have to put into it, for how long, before this SAAS business is able to totally replace whatever your main source of income is, and you can, as your primary job, sit back and watch your bank account grow.

It's absolutely a very active investment from when I started it, to now. But very soon I will be stepping away, and letting it run for potentially a year, if not longer, generating income and clients without any (minimal, 3h/week) effort.

I have worked on this business for the last 2.5 years, as a side project. In that time I have switched jobs (9-5) and learned 2 new programming languages, in completely different domains. It's meant a lot of evenings, and weekends, that I would have otherwise been doing something else, I ended up working on this business. So no, it didn't just magically create itself and start generating income. There was a very real time investment that has had to happen.

All in all, it's hard to put a total hourly estimate on it. I think the easiest way to think about it is like this:

If I could work on this full time, I would estimate it would take me 8 months of solid, full time work (50 hour weeks) to get where I am now (to a point where it's generating a healthy income, and I can step away from it because it's feature rich enough to support the client base). Possibly faster since, all the context switching I've been doing with my day job really does slow me down.

I am NOT saying that the income is enough to survive on. I'm saying after roughly 8 months of solid 50 hour weeks is how long it would take to create a product that has enough value that it can generate an income that matches it's recurring costs (hosting costs mostly). That's the "break even" point past which everything else is just profit.

I'm sure there are people on HN who have built something much faster, and made much more. This is just my experience.

By no means does it mean I will be making enough this year to quit my day job. My hope is that by the end of the year, I should be generating about $300-500 a month in pure, after expense, profit. I'll take that, and put it in an index fund.

I’ll take the bet. How much are you offering?

Good question. Could it be fear of failure, I'm thinking. And made more so due to the media hyping up the overnight successes (a lot of it earlier, still happens now), but now with some failures publicly seen, wannabes starting to see that it is not all roses and laurels (to mix a metaphor)?

I like your comment for its balance, but on point #1 it seems the value trade-off really depends on the problem. For example there are lots of start-up companies to manage cloud infrastructure that seem to have no trouble finding customers, even though it's unlikely they will all survive. The solution has enough value it outweighs vendor risk.

In other problem spaces you can change the cost calculus for users by focussing on ease of adoption. Specifically the blocker in some cases is that companies are afraid the risk of a vendor going away makes the integration cost a bad investment. You can change that trade-off by making adoption as easy as possible at the cost of some other aspect of your product. MySQL and MongoDB are good examples of product success achieved through focus on ease of initial integration (at the cost of other features like transactional integrity).

I would argue that MySQL became popular because it was free, not because it was particularly better technology. We were, and still are, in that space (database engines), and experienced it all first-hand. It's really, really hard to compete with free, especially when you're talking about adoption rates and customer numbers with potential customers.

To make that argument it's necessary to compare against other free DBMS implementations. MySQL and MongoDB lead the pack against other FOSS products and have for quite some time. (That's quite different from saying that they are well-suited for a particular purpose, which is a different matter entirely.)

[0] https://db-engines.com/en/ranking/relational+dbms [1] https://db-engines.com/en/ranking/document+store

MySQL also fit really well with PHP because the connection creation overhead without any type of pool is very low. Both technologies scale down well.

At least they used to. Lately I can’t keep even a tiny MySQL instance stable without a 1gb server.

Thanks for that insight. I hadn’t considered the connection mechanics with MySQL as a usability point for PHP.

I often cite the traceability of early PHP and it’s one-file-per-url policy as usability features. Many of these features have been lost in modern PHP. A similar thing has happened with JS. There seems to be an opportunity for a back-to-the-roots platform that brings these things back.

Before I discovered Elixir, I actually had every intention of building something along those lines.

I was going to have an index.php that was only used in dev for routing, but when you wanted to go to production it would generate paths that you'd load into nginx...which when directly to each individual .php file behind the scenes.

Entire goal was back-to-the-roots speed.

If you can stomach JavaScript,

I wrote a pretty aggressively don't-move-any-data-you-don't-have-to based web application server...

https://github.com/erikpukinskis/browser-bridge

... with exactly that intention, of "ok just religiously only move exactly the memory I have to to feed a web browser".

I need to take another look at Elixir....

How much of point 1 is because there's been a shift to hosted software? When the norm is hosted software + regular updates/on-going development, then the backing company is a lot more important vs. buy-once-and-go software off the shelf

I don't know the answer to that, but SAAS sites that take a bunch of investor money, burn through it, and then abruptly shut down probably aren't helping with those concerns.

However, what I do know is that SAAS is one of the most important advances we've seen for ISVs in the last 20 years. SAAS can be a great leveler for software companies because a) it prevents piracy, which is big problem with desktop software, b) it's generally easier to develop and deploy, and c) it is universally available to all types of client machines.

The main problem that I see with SAAS is that dominant players have used it to lock customers into their service by making it hard to get at their data or move from one service to the other, but I'm not sure that this was less prevalent with desktop software. We've sold embedded database engine products for years now, and we constantly encountered vendors that wanted ways to lock down their databases so that customers couldn't casually access their own data using an ODBC driver, etc.

> The source of the decline in startup dynamism isn’t yet known

Please... massive redistribution of wealth to the already wealthy strangles both potential entrepreneurship and the customer base it would have attracted since they don't have disposable income. Let's not play stupid here.

The fact that we have any activity at all shows the indomitable spirit of American entrepreneurialism. Further, the fact that so many Americans ever start businesses without the safety net of healthcare goes to show that we are a nation of optimistic maniacs. The wasted potential economic energy in this country is a tragedy of colossal proportions.

Startups supported my married couples are generally the path to success, assuming investors are absent.

One of you works a job that provides income and benefits for both of you, while the other works on a startup. Assuming most of what you need is a time investment, this is an approach that works for a lot of households to bootstrap.

Higher startup costs make it tougher though.

Can confirm...wife started a franchise with a brick and mortar presence. I hold down the stable income. Also have the help of parents to look after our baby, as sometimes I need to help her on nights/weekends.

The same is true for other franchisee's we've met (1 remains the breadwinner). If you bought into an existing one that already generates revenue, then sometimes both spouses work there full time. But that means you need to have had $$$ in the first place.

We know of one franchisee who's wife is a stay at home mom. He quit his job to start one...less than a year with slow growth, he closed the center and went back to a traditional salaried job. He didn't pick a good location for exponential growth, but IMHO he had enough steady growth and would have been profitable if he could stick around for another few months.

  The wasted potential economic energy in 
  this country is a tragedy of colossal proportions.

Interesting observation.

Now hypothetically lets imagine for the sake of argument we've a safety net of the likes of somewhere on the spectrum between France and one of the Scandinavian countries.

All else equal, do you think the American entrepreneurial dynamism you see now would still be around if we had one such welfare state-lite?

Or do you think people would grow lackadaisical? Have there been studies on this sort of thing?

I'm not implying that its necessarily bad but this comes up a lot in discussions of UBI and such. Tangentially, just last week there was a discussion on how labor laws make life difficult for startups in France.[1] The discussion there makes you wonder perhaps the issues surrounding what actually spurs the indomitable entrepreneurial instinct is more complex than it seems on the surface.[2]

[1]

Macron Vowed to Make France a ‘Startup Nation.’ Is It Getting There? (nytimes.com)

https://news.ycombinator.com/item?id=17169314

[2]

https://news.ycombinator.com/item?id=17169740

It's interesting to see the differences in the difficulties in starting a business in the US vs. Europe.

It is "easier" to start a business in the US, but it is riskier because of the general weakness of the social safety net (healthcare, social helps, free childcare, etc.).

Plenty of people were born into wealth or have enough saved up that they could afford to take a risk. The safety net enabled people in lower socioeconomic classes, who didn't have the birthright benefits to survive a tumble, to take the same type of risks that the upper classes could. The erosion of the net effectively killed the bottom of the ladder

The extreme downvoting probably reflect the affluent upbringing of a large portion of the HN community.

As someone who was raised in the bottom of the socioeconomic classes it's interesting and a bit frustrating talking to people who don't understand what risk taking meant for us versus people with more money and a safety net.

For me, many of the risks I took to get to this point would've involved either bankruptcy or my death if they had failed. When I talked to my coworkers on how they feel people should rise up the ladder, they didn't seem to get that the people that made it simply had a good roll of the dice.

This is an underreported and unfortunately minimized part of the story of most successes.

For example, Bill Gates had a solid financial backing when he left Harvard: http://philip.greenspun.com/bg/

> [Bill Gates' Great-Grandfather] Maxwell founded Seattle's National City Bank in 1906. His son, James Willard Maxwell was also a banker and established a million-dollar trust fund for William (Bill) Henry Gates III.

Bezos' parents kicked money into what would become Amazon:

> The first initial start-up capital for Amazon.com came primarily from my parents, and they invested a large fraction of their life savings in what became Amazon.com

And Musk started with very little - at one point seeing if could get by on a dollar a day if it came to that. Or Kalanick who things went bad enough for that he was forced to move back in with his parents as an adult, and then later to Thailand for a lower cost of living. Or Dell who worked as a dish washer and newspaper boy - eventually using those funds to drop out of college to focus on his booming computer assembly/upgrade 'business' he was running out of his dorm room.

Musk absolutely didn't start from "very little": https://www.mercurynews.com/2014/04/10/2014-rocket-man-the-o...

> After [Musk's parents] divorced in 1980, Elon mostly lived with his father, who says he owned thoroughbred horses, a yacht, several houses and a Cessna. One of their homes was in Waterkloof, a leafy suburb of Pretoria that was popular with foreign diplomats.

> Wanderlust ran on both sides of the family. On holidays, Errol [Musk's Dad] and his kids would travel, he said: to Europe, Hong Kong, throughout the United States. Or they’d take the plane to Lake Tanganyika, where Errol had a stake in an emerald mine. Elon would later get his own pilot’s license, but he no longer has time to fly.

> While wealthy South Africans typically hired maids and gardeners, Errol decided that his children would do chores and cook their own food, taking shifts.

Michael Dell: http://www.notablebiographies.com/news/Ca-Ge/Dell-Michael.ht...

> In 1984, as a first-year college student in Austin, Texas, Michael Dell borrowed $1,000 from his parents to start a computer accessories business.

To put this in perspective, in 2015 less than 30% of Americans have $1000 in their savings: https://www.gobankingrates.com/banking/savings-account/62-pe...

Kalanick's parents: https://www.recode.net/2017/5/27/15705290/bonnie-kalanick-mo...

> From teaming over complex science projects like building a real electrical transformer to giving him his first experience programming computers, [Kalanick's dad] had been the one to bring home early computers for his tech-curious son to fiddle with.

You know I could provide more detail on the Musk thing (look up his relationship with his now estranged father - you're presenting a woefully misleading tale) but really I don't think you care. You're arguing here that Dell getting $1000 from his parents is something? $1000 is literally 2 weeks of overtime working at a McDonalds for the federal minimum wage - $7.25.

I don't entirely understand why people do this. It just seems pitiable. Rather than learn from others, people seem more interested in trying to look for reasons why they can't achieve.

> $1000 is literally 2 weeks of overtime working at a McDonalds for the federal minimum wage - $7.25.

If you don't have to do anything else with that money.

My parents couldn't have spared 1000 bucks just because when I was younger.

Musk grew up wealthy. He's the child of rich white south africans.

He was in college! In college now a days the the average kid is going to have thousands in his bank account due to the way student loans are tossed out like candy. Or in the case where that is not true, taking two weeks off to work, or even staying in college and getting in internship and people can easily get thousands on their own. There are just so many sad excuses.

It's important to remember that $1000 in 1984 went a lot further than it does now, especially when there was a fair amount more opportunity back then. Statistically speaking the United States is among the lowest in social mobility.

This is why pointing to these people is futile because not only did they have large advantages that many others did not, but they are also largely the exception to the norm. It's the survivorship bias in action.

Unemployment today is lower than it's been since the 1960s. And today vastly more people are wealthier than they've ever been. Saying there was more opportunity in the 1980s is bizarrely out of touch with reality. In the 80s, he was in college. Now a days anybody in college, which is something that's practically guaranteed to anybody that wants to and is willing to do remotely decent in high school, has access to thousands of dollars - if not directly from our excessive loans, then they can simply take a couple of weeks and work at their leisure. Or they can stay with a normal school schedule and work an internship, at a lab, or whatever else - easily earning many thousands.

I also started from the bottom and experienced plenty of adversity on the way up, yet I feel that my path is very replicable. We live in a nation where if you do well, even in a shit school, that's a fast track to admittance to a top tier university where you'll invariably have all the financial aid in the world, and then some, available literally [and exploitatively] at the click of a button. And from there success is not really in question so long as you major in something that's commercially viable.

And in that regard it's not really an economic issue as much as a social issue. People that come from families with no value for education, or individuals that themselves don't take their education seriously are obviously going to struggle. But those actions are something beyond socioeconomic reasons - as the same is true of somebody born into a rich family - though granted in that case the individual will obviously have more resources to rely on to subsidize his failure.

While I'm sure your circumstances may have dictated such, I'm not really understanding what you're talking about with such a high cost of failure. When I failed, and I did, it simply meant it was time to get a job and work myself up to be able to take shot #x. When one 'sticks', you're set and can use that to enable your future shots.

"When I failed, and I did, it simply meant it was time to get a job and work myself up to be able to take shot #x"

Years ago I did some real estate deals together with a few guys from rich families. The first deal went bad leaving me with debt that lasted more than 10 years to pay off. The other guys got more money from family, did a few more deals that went well and are now successful businessmen. When you don't have money you often can't afford to fail in the same way wealthy people can. The consequences are much more severe.

I think we might have very different experiences and definitions as what counts as the bottom

My bottom was having very little money in my name, with parents that were poor and disabled as a result of the hardships of being fishermen. I had barely enough to take care of my family and go to college (with financial aid) as a result of other very personal circumstances. Even then, I had to make a choice.

I could either spend some of that money on my failing health and never graduate from college, or focus on my education and hope I can fix it later. I went with the latter. Financial aid can only go so far when you're one medical issue away from disaster.

When I finally got a career I had to have multiple rotting and infected teeth extracted because I couldn't afford to get them fixed prior. My family had a history of bad dental issues and I managed to hit it hard.

This is what I mean by the bottom. If my dental issues had gotten worse, then I would've been screwed. This is the reality for a lot of people that grow up in poverty. It doesn't necessarily matter if we can get financial aid when there are other circumstances stopping us, affecting our education or worse.

Your parents were fishermen? Mine too. I grew up in Cordova, AK and fished until I was 20 and realized that I was not tough enough to do it year round. Winter fishing fucking broke me.

Anyway, I feel ya. I lucked out on my teeth but I didn't see a dentist for 15 years and when I did I had a dead tooth and some root canals to be done.

Both my mother and father were deep into the fishing business so a lot of my time as a kid was spent on their boat. It absolutely destroyed both of their bodies and their backs due to the daily rigors, so I have immense respect for those people that are able to do so and survive.

Yeah definitely a very different experience. I lived in the urban city with a mostly absent single parent enjoying fine cuisine like ramen and iceberg lettuce - actually pretty good eating! Probably a bit late now, but you can often get free dental and medical treatment at universities! My parent ended up getting cancer (and getting over it) largely through these programs.

Free treatment requires you to be in the right place with the funds to seek treatment though. I lived in an area where most of the free treatment we could get was a decent drive out of town and largely only covered children.

There were no universities near me that offered treatment and believe me, that was one of the first things I tried. You were lucky that you had the opportunity to get that free treatment; an option I didn't have. I'm sorry your parent had to deal with cancer, thankfully that's one way my parents have been lucky so far in.

Why not take a grey hound? I mean I just don't understand this. You can get anywhere in the country for what amounts to a few hours of minimum wage work. I'm damn sure going to be doing that if my teeth were getting to the point that it was becoming a health crisis! This is the thing that confuses me in general. People do have this immense opportunity all around them. But they always find a reason for not doing something. And these reasons never seem particularly compelling.

And there is no reason to be sorry for anything I went through. As bizarre as it is, I would not have had my life any other way and I doubt even my parent would have. No doubt as a part of the cancer it caused them to reevaluate their life and after I had gone off to college they started taking night classes at a community college for nursing, and succeeded and have now worked their way up to very comfortable middle class, starting with little more than a high school degree in their late 30s. Also caused them to catch the Jesus a bit hard, but hey if it completes their life then more power to them.

The public transit in the US is incredibly poor if you're not living in the middle of a large city. Acting like everyone has the opportunity to take a gray hound is rather naive and in my case, again, I didn't have the option nor the funds to do so.

You don't find these reasons compelling because you can't seem to understand that a lot of options are entirely circumstancial. For people that even do have the option to take a bus, you're effectively asking them to lose their job or stop taking care of their family for possibly an entire day. An option a lot of people don't have when they live paycheck to paycheck.

Okay, if I'm naive please enlighten me. Here is how things look from my view here. There are Greyhound stations in literally every single state, and certainly extremely close to near all coastal areas. Stating it's impossible to save up enough to take literally a day off to save your health is something I literally cannot believe. Work 80 hours for a week or two. If you can't get the hours, get a second job. It's not a longterm thing - just enough to get you what you need. What am I missing?

The beautiful thing about this country is that there are practically infinite possibilities and opportunities. Obtaining them can often involve a good deal of blood, sweat, and tears - but they're there. That's the thing that I find frustrating - sayings like 'when opportunity knocks' are idiotic. Opportunity doesn't knock. It's something that must be aggressively sought out, captured, and then chased after once it escapes which it frequently will - like tricky little bastard it is. People seem to believe that others just have things happen for them, or that they were born into fortunate circumstance. In some cases that's true. In the vast majority, it is not. Things are not given, they are taken.

> The extreme downvoting probably reflect the affluent upbringing of a large portion of the HN community.

No, it's just hardcore techno-libertarian insanity.

Yes exactly. People harp on cryptocurrencies for their rampant scams and problems. They are correct. But it's still competitive because our current system is embroiled with significant corruption.

I think the US is middle of the pack in terms of entrepreneurialism [1], but it's a hard thing to define and measure and there are a lot of confounding factors and other such around these measures. I suspect it's impossible to get a meaningful comparison unless the countries being compared are very similar.

[1] https://blog.approvedindex.co.uk/2015/06/25/map-entrepreneur...

The anti-immigration campaign doesn’t help startups either.

The majority of startup founders are immigrants[1], benefiting from the longtime American ideal that America welcomes immigrants. Smart potential immigrants can start companies in other countries.

[1]https://www.statista.com/chart/14065/countries-of-origin-of-...

America is fine with people immigrating legally - always has been. The perception that America doesn't have any talent is rather recent. The reason companies are started here is due to a number of factors, most importantly the lack of corruption (say compared to Italy), the legal system, and how the class system works. You can actually move up. It doesn't help that you can earn more on the higher end, too. Compare Swedes in US vs Swedes in Sweden. FB UK to FB USA.

>>You can actually move up.

What is the proof for it. Evidence shows that the US is one of the worst countries for 'moving up'

https://en.wikipedia.org/wiki/Social_mobility#/media/File:Th...

America has nearly half of the World's millionaires, and 2017 1.1 million NEW millionaires were created.

http://publications.credit-suisse.com/tasks/render/file/inde...

How does that demonstrate moving up? If you come from wealth you are also likely to become wealthy yourself. That's the opposite of moving up. A millionaire who has 2 children and gives them a million each has just made 2 more millionaires.

Moving up requires people from lower wealth backgrounds moving up and the evidence clearly demonstrates that the US is one of the western countries where this happens the least.

The linked document is new money, as in people who weren't millionaires previously. Since we're discussing startups, where would you consider the best place to be to create a business?

>Moving up requires people from lower wealth backgrounds moving up and the evidence clearly demonstrates that the US is one of the western countries where this happens the least. 1,000,000+ people annually immigrate. Clearly it's a terrible place for your family.

No the linked document looks at two things new wealth and new millionaires. The new millionaires are not necessarily just the ones from new wealth and there is no stipulation that they are self made millionaires so my previous point holds. The US is a great country for those that start out with wealth advantages but not so great for those that start out very low.

If you want to compare immigration figures as a measure of how great a place is then lets take the EU. The EU is roughly similar to the US in terms of GDP. In 2016 there was about 2,000,000+ immigrants from outside the EU to the EU suggesting that it's a more popular destination. If however we take a more realistic measure of net migration (migration as a percentage of population) then the US is 29th on the list behind many European countries but also such noticeably desired locations such as the UAE.

Migration are not a great measure of whether a country is a great place to move up through society.

https://www.cia.gov/library/publications/the-world-factbook/...

The EU is a series of countries, that's a moving goal post. Only Germany comes close to the US with immigration figures and the US is nearly triple their figures, and has ~40 million immigrants total, more than any European country not to mention that Europe as a whole is extremely racist compared to the US.

In your opinion which European country is best for startups?

Totally agree.

What's really going on is that Californian tech companies have a very hard time getting American talent from outside California to destroy their quality of living by relocating to California.

What's left is the purposeful manipulative lie that foreigner talent is needed in the United States beyond whatever level of immigration is current. The lie part is that they really mean California, not the United States.

Disclaimer: that conjecture above is something I learned from a straight-talking American executive in Qualcomm ~14 years ago after relocating from Motorola Labs, outside California.

American universities are (currently, if not for long) the best in the world. A big reason for that is because smart people from all over the world come to American universities.

Those smart people come to America in part because of its multicultural society. You can come from India or Germany or Japan and live your life in the US (again, presently, but it's changing) much more easily than in other, more homogeneous countries.

That multiculturalism is what is being destroyed, to the United States economy's great detriment.

(The H-1B visa situation is orthogonal. Yes, the lottery system needs reform, and no America shouldn't be importing young mid-to-low level tech employees from abroad to lower the pay of other tech employees. But the war on immigration has a much larger arc than that. Sergey Brin's parents came to the US for its acceptance of immigrants and its values. THAT is what is being destroyed.)

>That multiculturalism is what is being destroyed, to the United States economy's great detriment. The economy is doing extremely well.

>(The H-1B visa situation is orthogonal. Yes, the lottery system needs reform, and no America shouldn't be importing young mid-to-low level tech employees from abroad to lower the pay of other tech employees. Eliminate it already. The H-1B is massively abused by corrupt companies that exploit their workers and lobby to increase quota limits. The O visas have no quota, if they're exceptional people as these companies claim then use that.

>But the war on immigration has a much larger arc than that. Sergey Brin's parents came to the US for its acceptance of immigrants and its values. THAT is what is being destroyed.

As did Steve Job's parents. They came to America and became Americans, as it should be, and they also didn't over stay a visa or sneak in. Conflating those that do with those that don't is immensely dishonest. It seems like anything less than amnesty and open borders is a "war". It's all about exploitation, especially for the undocumented.

That number sounded surprising to me, so I decided to read the paper that it's sourced from which is available here [1]. The first company they listed is SpaceX which of course is true. The next is Mu Sigma [2]. According to Wiki at least that company was founded in Bangalore. The next company was Palantir [3] which is Peter Thiel, so okay. The next is [4] Zenefits, which at least according to Wiki again was founded exclusively by an American. Shooting what seems to be 50% on the first 4 companies they list makes me kind of wonder about the accuracy of their numbers?

I'm not sure how they generated their list or numbers, but it does not seem well supported. I'm also unsure how they picked their 87 companies given that their are hundreds of companies with revenues north of $1 billion (which was their metric), that were of course all at one time or another just a twinkle in somebody's imagination.

[1] - http://nfap.com/wp-content/uploads/2016/03/Immigrants-and-Bi...

[2] - https://en.wikipedia.org/wiki/Mu_Sigma

[3] - https://en.wikipedia.org/wiki/Palantir_Technologies

[4] - https://en.wikipedia.org/wiki/Zenefits

Let's say "Many of America's tech companies were founded by immigrants, or the children of immigrants." Google, Sergey Brin Intel, Andy Grove Sun, Vinod Khosla Dropbox, Arash Ferdowsi

Note that all of those came through Stanford or MIT. America's elite universities are hotbeds of immigrant talent that other countries would like to siphon off.

The current war on america's multiculturalism (in pursuit of votes and political power) threatens to deeply damage America's universities, and thus its tech economy.

I think there's a difference between the sort of high-skill and/or wealthy immigrants that create billion dollar tech companies and the low-skill immigrants that americans are mostly mad about.

There seems to be very little distinction though when those high-skilled immigrants are being chased out of the country all the same, or start to avoid America because of that fear.

There is wide and abundant distinction that the left seems to willfully ignore with immense effort -- the distinction between legal and illegal immigrants. The argument was never anti-immigration, it was always anti-illegal immigration and anti-unrestrained immigration.

This nuance is important.

This nuance has been erased by an administration that has canceled programs for legal immigration, then used that retroactively-illegal status to deport people who have been here for decades.

Perhaps for you the distinction is important, but in terms of policy, there is no difference at all.

I hadn’t heard of this going on and it is very alarming. Could you point me to some resources to better educate myself on the matter? Thank you.

You can start here: https://www.aclu.org/blog/immigrants-rights/deportation-and-...

Except when enforcing these policies they always seem to target those of darker skin - irregardless of the actual status of their immigration.

That distinction is actually not the point. The point is that legal and high-skilled immigrants want to come to America because of America's multiculturalism.

If you start kicking out all the people who are brown or muslim or otherwise different, you hurt the society and make it harder for the legal high-skilled immigrants to live here.

(Not to mention that for three decades American politicians and corporations encouraged immigrants to come here and work without status. And that Irish and Italian immigrants came here 100 years ago before there was any immigration law; if today's republicans existed in 1900-1930, they would have demonized Irish and Italians for votes too.)

Oh? Is that why nativists oppose the H1B visa without supporting alternative means of high-skill immigration?

As a brown person it's become abundantly clear that the Stephen Miller, Steve Bannon view on immigration is certainly mad about something - and it's not skill.

I don't think they're mad, per se. They just want to get votes for their party, and xenophobia works. It divides the country, and amplifies hate, but it gets votes for their party.

An H1B is a temporary worker visa. So even if someone did start a company while on that visa, it’s not an immigration visa.

An H1B is a Visa with intent to immigrate. A TN1 is a non-immigration temporary worker visa. You need to do things to follow through on that intent, but it's still an option.

Strict immigration policies necessarily affect both groups even if they are meant to target low-skill immigrants. At the very least, it creates an unwelcoming environment that would discourage the high-skill immigrants from considering the move.

And too bad anti-immigrant policies target both.

And one is within our laws and one isn’t.

I don't think they check people's bank accounts when they hold mass trials for them at the border.

Or when they hold "trials" for 3-year olds.

I think if they're crossing the border we already know roughly what their bank account is.

Not that it matters because a person's worth is not defined by how much money they have... but also we don't know?

To add to this, competition with the already wealthy is hard enough as-is, but when large, well-known companies have FREE offshoots in your domain, it’s almost impossible for a company to survive.

Can Snapchat compete with Facebook/Instagram stories? Can a startup compete with Google Analytics? Can OfferUp compete with eBay? The list goes on...

I think that might be a different mindset I have often observed between my EU ans my US friends; US friends keep talking about competition and becoming market leader etc, my EU friends just want to run long term companies. I know many people here who run sites for 15-20 years that make enough every year since inception for a comfortable (meaning building pension and saving) 3-4 people company. Even with free offshoots in the domain that were already there sometimes when they started.

You definitely can compete with huge companies that have no or automated support; you probably cannot beat them, but you can sustain a good profitable company for a long time and they might buy you in the end if they see you grow in your region while they do not.

Competing with free is challenging, but maybe there are other examples to choose from. Snapchat doesn't cost money for consumers to use it, same as Facebook. That's not due to competition with Facebook, and arguably it's not competing with a Facebook offshoot either. There are a number of analytics platforms depending on what you're looking for (eg Mixpanel and New Relic) that come to mind readily. eBay faces competition from a little company called Amazon.

I'm an average software developer in the USA. Would you please provide some examples of how my wealth is being redistributed to the already wealthy?

There is a class of people who make obscene amounts of money while introducing systemic risks into the economy.

When the inevitable blowup happens (like in 2008), then these people keep their bonuses of tens or hundreds of millions of dollars while the losses are socialized, which means you're on the hook and your tax money is used to bail out "too big to fail" banks, insurance companies and auto companies.

10 years later people are still talking about a "recovery".

The money supply has been diluted via money printing (so-called "quantitative easing") which is still being done in EU and Japan on a massive scale.

The already wealthy are positioned much closer to the money spigots (by being able to get money at much lower interest rates), and can therefore do "carry-trades". Basically a license to print money.

Money printing and interest rates kept at an artificially low rate deprives from savers and pensioners of income they would otherwise have.

What does the CEO of your company make?

A lot more than me, but that's not him taking my wealth. I'm in a voluntary relationship with his company, I've agreed to my salary, and if I'm unhappy with my pay, I'm free to find other work.

He's (well, the shareholders) still taking the surplus value of the work of all employees while they did most of said work. And you may be in a voluntary relationship but for many people, such a relationship is required to survive and it may not be so easy to find work elsewhere (especially when you're not in tech).

Do you allow for this to work both ways? For example, when the company tanks, the shareholders take the brunt of the losses, while most of the employees (at least the types of employees that are on HN) likely move on to another job at another company without much trouble...

You can't count the upsides for the shareholders without counting the downsides as well.

How do they "take the brunt of the losses" when the company tanks in a limited liability model ? unless you mean the actual loss of their stocks, and (at least most of the time) the lack of compensation for them ? because in that case what they're losing are the very tokens of ownership that allowed them to extract the aforementioned surplus value unfairly - the tokens that in my view should mainly belong to the actual value producers.

That's not to say that investors shouldn't be compensated for their initial risks when an actual funds injection is required, mind you; but them being compensated ad vitam eternam - and more generally, them actually owning the structure - makes very little sense morally for me (and beyond "morally", I don't see how this can result in anything else than progressive concentration of wealth society-wide in the long term).

You also assume people can "move on to another job" without too much trouble; again, that may hold true in tech or similar popular domains but it's far from true for a lot of people.

That presumes the job market is perfectly efficient but inn reality it isn't. Back in 2015 Apple and Google (among others) being convicted of breaking the law to suppress wages. It was broken before that lawsuit however, and you can bet that the job market hasn't magically been fixed since they settled.

http://fortune.com/2015/09/03/koh-anti-poach-order/

It's not voluntary if you can't eat if you stop working.

Nor have health care.

working is compulsory, working for a particular company is not.

When the problem persists to all companies you could work for, does it really matter which one you're at?

it doesn't have anything to do with the company. before companies existed you still had to work to survive. it was of a different nature, but you have always had to gather and manage resources to stay alive.

Yes, and I'm not disputing that. What we're discussing though is the fact that CEOs make around 200x what their employees make and that you are required to help them uphold their standard of living if you want to eat or have health care regardless of which CEO you work for.

[citation needed]

271:1 (down from previous years) https://www.cnbc.com/2018/01/22/heres-how-much-ceo-pay-has-i...

>I'm in a voluntary relationship with his company

>I'm free to find other work.

A corporation is a model of communist dictatorship. The higher-ups control the means of production, they take your labor according to your ability and give to you your need (as determined by them.) In the sense that existing in a communist dictatorship is 'voluntary' then your work for the company is voluntary. And in the sense that being able to move from one communist dictatorship to another communist dictatorship is free then you are free.

> A corporation is a model of communist dictatorship.

That explains why communists revered Marx! He explained to them how it all works!

A lot, but he also provides a lot more value than I do.

The level of stockholm syndrome of the American worker is astounding and depressing

But does he provide x200 more value than you?

Think of it this way, if there was two hundred of you all working together, would he still be adding more value than you?

Most likely, yes. The CEO is the public face of the company. (S)He attracts both investors & customers either through direct hands-on interactions or by providing stability and confidence.

Put it this way:

- Would you feel comfortable investing your money with a company run by 200 engineers?

- Would you feel comfortable entering into a contract or purchasing agreement with a company run by 200 engineers?

https://www.epi.org/productivity-pay-gap/

Its totally not because the 1% has captured all the value created by increased productivity over the past 50 years. Definitely not.

Yes. Yes. Yes. Yes. Yes. Yes. A thousand times Yes. At least in a healthy company.

What exactly do you think separates companies like Oracle and Microsoft? Oracle has hundreds of very talented engineers. But their position in the market is stagnating.

This is hard for HN types to accept, but Engineers are not the people in software companies producing value. No individual person is producing value. Its a combination of the leadership who can lay down a plan toward something that produces value, and the line workers who can actually produce it. Both are necessary.

Here's the difference: If you need to replace an engineer, go for it. Who cares. There are millions of us. We're code-monkeys. If you need to replace a CEO, you better be careful. Github couldn't even find a good CEO, so they sold out. If you're not careful, you might get a Larry Ellison or a Marissa Meyer instead of a Satya Nadella or a Tim Cook.

Successfully leading companies legitimately requires personality characteristics that are present in less than 1% of the population. I would guarantee that if we dissected the brains of enough C-suite people from successful companies, we'd see some sort of genetic or brain matter similarities, probably something resembling sociopathism.

I don't think the marketplace makes a distinction between "good" and "bad" CEOs with regards to pay, compensation, and rewards. Stock valuations are speculative and a declaration of faith that you can sell the stock for more than what you paid. Good leadership is often unrecognizable until there's a crisis.

That's roughly true. And there's a good reason behind it: Its very difficult to tell when someone will be a good CEO. Hell, its really difficult to tell when anyone will be actually great at the job they're being hired for.

At least with an engineer, you can be hired by someone who could more-or-less do the job you're being hired for. Senior engineers hire entry-level devs. The CTO hires team leads. Who hires the CEO?

Often, there's no one in the company who is adequately prepared for that role, because the role doesn't have a job description. It doesn't have bullet points of what you do every day. Your job is to lead the company, set the expectations, set the results, for everyone else. That's the role of the c-suite.

i think we over-attribute the success's of companies based on the talent of both their CEO and their employees.

Here are some examples: I've worked in the gaming industry at big company for 5 years. I've seen a ton of games fail and few succeed. I was on the most successful game team that made hundreds of millions of dollars. And, I don't believe our team was more talented than all the other teams. We simply had the right market timing with exactly the right game, inexorably leading to an enormous success. Within this company many other teams built clones, executed just as well if not better and yet, none of those games received the success as the first one with the right timing.

"I've always found that the harder I work the more luck I seem to have."

Market acceptance controls whether a company might fail. It doesn't control whether a company might succeed.

Well said. I think the reason it's easy to feel that people at the C-Suite don't produce value is the "leadership" qualities that matter are very hard to define, and success or failure often doesn't make itself clear until months or years down the road.

As a lower-level employee, sometimes you think that the company would be successful without a leader, or even is successful in spite of poor leadership - while that may sometimes be true, much of what happens at that level is hard to understand unless you've been there

Why not work on starting a company instead of working for people you consider unfair?

Many of us have families to support, and can't afford to take the risk (especially with the poor social safety nets in the United States).

Would you contribute money to other people so they can take risks? If so, maybe consider becoming a backer to a company.

In the 1950's, American CEO's earned about 11 times as much as the median employee at their firm. Today it's about 200x. Are you claiming that the gap in value contributed between CEOs and employees has increased by a factor of 20 in that time? Do you have any evidence for this?

Absent any, I think it is much more reasonable to conclude that there's little to no justification for current CEO compensation and that they draw their current compensations mostly "because they can".

You have to keep up with the increasing sophistication of lies enabling business, so perhaps? (not sure I should put /s here as I am torn if I meant it seriously or as a satire; it's kinda blurry these days)

Why do boards and shareholders agree to that?

EDIT: So collusion amongst CEOs explains why boards agree to it. Why do shareholders?

Who is on the board? Boards are mostly made up of CEOs of other companies. Agreeing to excessive compensation is a "you scratch my back, I'll scratch yours" situation.

Because they are also CEOs at large companies and also want bloated salaries so they approve them for their counterparts.

Because the average shareholder has negligible say in the operations of the company or who makes up the board.

Groupthink.

So what. How is CEO pay any of your concern. It sounds like jealousy. For large companies, CEO pay is insignificant to the total company’s revenues. If the CEO make $1 that would suddenly result in money to pay more to employees. $10,000,000 salary divided among 20,000 workers and each worker gets $200 extra which is and extra $17 per month.

The his focus on CEO pay is nothing more than old-fashioned class warfare jealousy. Think how much more money workers could make if we cut payroll taxes by 20% — a lot more than if they paid the CEO $1. But those on the left complaining about CEO pay would go apoplectic just discussing tax cuts. Because the issue isn’t really about pay, it’s an ideological thing.

Aww how cute, the CEO defends paying his employees 50,000 while he makes 10,000,000. "Its just jealousy folks!"

I'm sure Louis XVI was thinking the same thing right before the public summarily removed his head from his body.

Could somebody else provide the same amount of value (as your CEO) for a much lower salary? In principle at least, employees (including CEOs) shouldn't be compensated according to the "value" they provide, but instead only paid the minimum necessary to prevent them from quitting, or at least from quitting too frequently.

How is this value being measured? There is no counterfactual.

If you are a software engineer in the US, you are the wealthy.

If you happen to work for FAANG in Silicon Valley.

Otherwise, dream on.

A lot of professions make more: all doctors/dentists, 50% of lawyers, higher-level university administrators, most MBAs (mid-management and up).

Heck, even some cops in large metropolitan areas can pull 200K+ (with overtime)

This is honestly the most damaging form of false consciousness that pervades the tech industry. Yes, in terms of income, they’re better off than many people in the workforce, but in class terms they are labor.

In whose class terms

What's your definition of wealthy?

Because many software developers in SV might make over 100K (most do) but have vastly less money left over to actually save compared to someone earning less than half that in other places.

I recently considered an opportunity in SV and after getting over the initial shock of how much they thought I was worth, I realized I as in better economic shape staying where I am and earning what appears to be a lot less. And I'm not what I'd consider wealthy at all.

I recently saw an article here on HN about a guy who worked for Google for 10 years then quit and started his own company. He says in that decade he saved 100K, and my thought was, that's all, for 10 years at Google? I earn a lot less than he did, but I'm saving at nearly triple that rate.

> Because many software developers in SV might make over 100K (most do) but have vastly less money left over to actually save compared to someone earning less than half that in other places.

That's just not true.

If you're working in SF on 100k/year, your pay after tax is 5750. Spending 2k/month on rent leaves you with 3750/month, which is almost the pay before tax of someone on half that.

When you add up how much a life costs in SF compared to many other places (and in my case I was comparing to life in a large West-European city where I currently live, and where driving/owning a car is a rarity, where healthcare is ubiquitous and relatively inexpensive), there is a significant economic advantage when earning nearly half what you'd earn in SF.

I'm not just talking about rent (which, incidentally, for my family, 2K per month is much lower than the rent we were looking at to accommodate our kids and private life without roommates in SF), but also about how much you spend on your transportation or gas every day, your healthcare premiums and deductibles, cost of groceries and entertainment, auto mortgages and/or insurance for 2 cars (because 1 car for a family wouldn't cut it there).... and the answer becomes obvious.

What adult is paying 2k in rent in SV, with 4 roommates that may be possible... If you want to live like that fine but most of America can afford to buy a substantial house for 2k a month.

I don't live in SF, I had a cursory google and came up with [0] for 2100/month. My point was that even spending that amount on rent, and paying tax on a 100k salary, that you still have more left over at that point than someone on 50k a year will _gross_ and have to pay rent and taxes out of. The commenter I replied to said:

> many software developers in SV might make over 100K (most do) but have vastly less money left over to actually save compared to someone earning less than half that in other places.

Not that he couldn't afford to buy a substantial house in SF.

[0] https://www.zillow.com/homedetails/411A-Lincoln-Way-San-Fran...

Sure and I bet you could find a $500/mo room in a crack house. Doesn't mean a working professional would be willing to live there.

Frankly a realistic number is $3000/mo for a 1BR and my point is that you could own an incredible home in most of the country for that price. People in SV have Stockholm Syndrome and justify the horrendous cost of living, rampant homelessness, insane working hours etc. with their cries of "but look at all my stock options!"

Meanwhile their counterparts in places like Austin make over $100k, can easily own a substantial home, have excellent life-work balance and shocker... have SUBSTANTIAL SAVINGS as well.

1) There are lots of people that are really bad at saving.

2) $100k could be liquid savings in cash, with the rest in GSUs or diversified investments.

To be more wealthy than 50% of the planet, you need a net worth of... $2,223 USD.

https://qz.com/848181/half-of-all-adults-in-the-world-have-l...

He might have only 100k in cash, but he probably has more than 500k in stock

How much do you pay for rent? Who does that rent go to? How much do you pay for your car payment? Who does that go to? How much of your paycheck goes to health care 'insurance'? Who does that go to? How much do you spend on frivolous items/entertainment that is owned by a mega-corp? How much did you pay for college tuition?

How much of any of that do you think goes into lining the pockets of the highest person in the corporate food chain?

If you don't see the issue you are being willfully ignorant.

Stop it.

I was hell banned on HN for mentioning it so this will be my last post, but think about royalties. Do you get any of the things you build?

Or if you left your job, would you be legally required to delete all your work and have to pay tax money on an illiquid second-class asset that only has a percentage chance of payout(the startup scam).

As for HN, I love engineers and have been on HN for over a decade, but this site is the same as startups and ycombinator in general. Built for VCs to extract value out of engineers and the public.

Your comment would imply that there would be a correlation between high entrepreneurship and high income equality, but the exact opposite seems to be the case. And I think there's even a simple reason for this. The fact people can raise tens of millions of dollars for ideas as stupid as a DRM'd fruit juice packet opener machine is a result of the fact that there's a lot of people with a lot of money looking to invest in pretty much anything.

Maybe there's an argument to be made that they're investing these stupid ideas in lieu of other options that could be more desirable by one metric or another, but the excess of money is I think, without question, what drove the meteoric rise in entrepreneurship. When nobody has the surplus of money to invest in ideas, it's tough to get the capital to go out and try to make them happen.

The share of young high tech companies seems pretty consistent over the decades, with the exception of dot com, which was no doubt an aberration. Not the norm.

Also, it has ALWAYS been a tremendous risk and challenge starting your own venture. Likely always will be, because there is also tremendous rewards for making it happen. If anything, right now seems like one of the easiest / best times to start a high tech venture in history. Plentiful angel and VC capital. Incredible resources and examples teaching you how to do it (YC, incubators, internet). Flexible tools that can scale up and down depending on company size / need (AWS, open source technologies, facebook / google ads).

To put things in context, I just finished Shoe Dog - the story of Phil Knight / Nike - back in the 60's they didn't even have the concept of VC. His biggest challenge was just getting someone to loan him a little cash so he could finance his inventory which was flying off the shelf! The point is that entrepreneurship is destined to be about tackling a very hard problem that nobody else has solved before - in the 60's that was simply getting financing to fund expansion. Today it's something different. In both cases though, it requires being on the edge and pushing the boundary. I would rather be alive today, playing this game. While the gatekeepers are still around, they have much less power than they used to.

The lack of disposable income is greatly overstated. In the US, the median disposable income is ~$1000 per month. This is the money left over after all normal middle class expenses are accounted for i.e. money you can save or spend on luxuries. And the average disposable income is twice the median.

While it is true that there are many Americans with little or no disposable income, that does not apply to the majority of Americans.

Redistribution of wealth is bad enough to begin with, but redistributing it to pad the coffers of political patrons and harebrained unproductive finance that destroys rather than produces wealth really shows you how messed up the system can get.

It seems the productive end up paying immense tax and rent burdens to the unproductive tending moats and establishing political capture and networks, for the supremely undesirable service of making everything worse.

Is it playing stupid or is it careful journalism? Causality is quite hard to prove in a case such as this. While we do have a correlation between lack of broad wealth distribution and lack of entrepreneurial dynamism, it seems to me that such a broad category of economics as "# of young firms" is going to be beholden to numerous variables, including legal climate, taxes, new platforms to innovate upon, anti-competitive practices by the big 5, and a general misallocation of talent where our brightest minds are working on how to increase ad revenue, not increase society's overall well-being.

Can you give any model to explain cause and effect, how what you say effects startup? IMHO, If anything, then abundance of free capital should stimulates startups through avaliable capital investment, easy money. So I'd tribute the change in startups due to information technology becoming more mature and having less opportunities.

Question: What do the wealthy people do with their fortunes?

Hint: They’re not letting it sit idle in their savings account.

True. They're giving it to other rich people in the hopes of making even more money. Or they stash it in the Bahamas.

I agree with you, that some of the money is being reinvested and "average" people benefit from it. The statistics however are speaking against you. The rich are getting richer and the poor are getting poorer in nearly all first world countries. Trickle-down economics don't work.

The more important question is how did the wealthy get their fortunes. I think the last I checked, 2/3rds of them inherited it. Some hard work there.

https://www.cnbc.com/id/49167533

So what. Should we lobotomize ultra high IQ children in order to level the playing field? Genetics and finances are unfair. However, some janitor’s kid could become a millionaire if he can execute on good ideas. Some milkionaire’s kid can become broke if she doesn’t manage the money well.

Stop being jealous— what someone else has doesn’t affect you. You can still create your own wealth.

The odds are stacked against both in those scenarios. Some janitors kid is unlikely to execute on good ideas, as he has nothing to fall back on if things go wrong, so he is unlikely to take the risk in the first place.

Meanwhile, some millionaire's kid is also unlikely to end up broke even if they criminally mismanage (see current POTUS as a prime example)

>lobotomize ultra high IQ children

Who said anything about high IQ? You think kids who inherit their parent's money have high IQs?

>However, some janitor’s kid could become a millionaire if he can execute on good ideas.

He could win the lottery too.

>Some milkionaire’s kid

Freudian slip.

>what someone else has doesn’t affect you.

Maybe so, maybe not, but if I have something a rich kid wants, like say a software idea, they can easily ruin me through lawsuits.

>can become broke if she doesn’t manage the money well.

Yes, but I'll bet bad choices from a millionaire's kid has a less likelihood of ruin than bad choices from a janitor's kid.

Are you one of those people who think that's a fresh insight that The Atlantic or New Yorker or Piketty came up with recently?

Or are you aware of Marx's concept of dialectical contradictions in capitalism eventually leading to its downfall?

https://en.wikipedia.org/wiki/Immiseration_thesis

Yes. The concentration of wealth is like a virus killing its host.

The wealthy get handouts? What redistribution?

brilliant comment. I literally just hit the reply button to tell you that

The data stops in 2013,

There was huge growth in tech startups in 2013 - 2015

I agree we have an issue with anticompetitive behaviors and monopolistic practices though.

Even if the data does not stretch to 2015, the data start way back in the 70' which is enough to see a trend.

> Tech businesses, unlike corner stores, tend to be high-growth businesses that employ lots of people.

I always thought the key characteristic of a startup is of scale. For example, Instagram had less than 20 employees when Facebook bought them. Those 20 people played a role in the (inevitable) destruction of Kodak and the loss of 20,000 jobs.

An angle this article didn't cover is the change in how the rest of America sees Silicon Valley entrepreneurs. It's usually not positive anymore and that affects how high school aged kids think about their future..

Perhaps what they meant is on a per company, not per revenue basis. But I agree - a significant portion of the productivity value of a startup is job destruction of in traditional industries. Small companies have higher marginal utility from each employee. It's an uncomfortable truth that the article seems to ignore.

Coming at this from the data science/healthcare research field, I see a number of factors reducing the number of startups. First, healthcare has a number of barriers to entry for technological innovation, including very large bureaucracies in the VA, medicare, medicaid, insurance companies, and many other large, slow-moving entities. It's possible to entrench yourself in one of these bureaucracies and do great changes, but there is a maddeningly slow pace of uptake of changes. Second, you have a vast amount of talent and capability being locked up in guild-like systems, where MD students with brilliant minds are being closeted to study the highly specific anatomical structures they will probably never use, for a massive bill to boot. What if we reduced all of our training programs by 50% in time (and cost to the student), in favor of a leaner, more practical approach to clinical work? Again, the massive bureaucracy of healthcare is slowing down innovation.

So, where DO we see innovation for healthcare? Primarily, it's coming from the labs of academic researchers or its coming from big biotech companies like Pharma, biomedical device firms, etc. Yet, these academics or biotech companies are fundamentally linked with the massive bureaucracies of healthcare, their clients and customer-base.

On top of all of that, keep in mind in healthcare, we have very tight restrictions on use of protected healthcare information. It's hard to study anything, you need very detailed analysis plans and IRB approval before you can even begin to gather/pull the data.

What's the way out for healthcare start-ups/innovators? It's a tricky question, I think we need more open-source work, we need streamlining of bureaucracy, and much more of the talent in this sphere needs to be put to work on the issues that matter. If universal healthcare is ever passed, we will need massive levels of talent reallocation to innovate and drive costs down.

What a time to be in healthcare. We have the best science we've ever had, we have the best diagnostics and treatments and tests we've ever had, and yet we also have arguably the greatest challenges and the most potential for improvement we've ever seen in healthcare. Anyone reading this who is interested in tech, I'd encourage you to join this 1/6th of the economy which is ever-present and only set to increase in prominence with the aging of our western societies.

Publishing prices would be nice too. If I could shop minor medical procedures it would free me up significantly.

I did a small iphone app just for that - https://itunes.apple.com/us/app/u-s-medical-prices/id1376580...

I would like to see changes like this happen. Unfortunately, I don't think we'll see substantial changes until our healthcare system gets worse and there is collective realization that the current system is massively wasteful.

I'm skeptical that much of the current innovation matters though. If you look at where improvements in life expectancy come from it's mostly from relatively simple things: sanitation improvements, reduced childhood mortality, statins for preventing heart disease, decline of smoking over the last few decades, and wide spread vaccination. We've found most of the low hanging fruit in terms of procedures, and much of medicine has very little effect on length or quality of life.

I think the big problems in healthcare are administrative and financial rather than medical.

One problem we are facing is that it's very hard to compete in online advertising with a small budget. I feel we did a really good job at building the software with a small team that would cost a large established company at least $600,000 to develop but I don't know a good way to do a similar thing with advertising and growing yo 10k users.

Why can’t you raise funding? If you truly have a great product with product/market fit, and established LTV greater than CAC, then you are a perfect investment for a VC who just needs to pour some gas on the fire.

This is exactly the kind of problem a Series A is meant to solve.

On the other hand, if the problem is your competitors are VC funded and are spending more than LTV on CAC, then (1) that sucks, but eventually they will burn out, and (2) you need to find ways to compete with more finely targeted ads that result in higher CTR to outweigh the bid differentials. Or, you need to raise the price of your product to increase LTV in line with the inflated CAC.

Our attempts to raise funding essentially investors want us to grow to 10k users.

With our limited budget we have seen pretty good customer acquisition cost. I can't share exact numbers but lower than $10 for targeted ads.

We spent our money already on development and it looks like it could be $80,000 or more to reach the goals to get investors interested.

We are trying WeFunfer currently as well.

We have no competitors right now. Everyone else is doing screen time management with rigid controls etc. Our innovation is the integration with learning sites and rewarding the child/student with Internet access after they meet goals.

Thanks for giving me a quick marketing 101 we are not good at this part of things.

You could try an affiliate program, if you can make the offer payouts good enough. That way the affiliates front the ad cost and you only need to pay them for conversions.

Also, $80k is really not much when talking about investment. I would suggest talking to some angel investors and trying to raise a seed round with convertible notes, either $25k per investor or one or two investors at $100k, both of which are common deal sizes for early stage companies.

Show them the CAC and LTV numbers in the pitch meetings.

All that said... I would be looking for growth from non-advertising channels. Specifically I would be looking at partnerships with schools, which reduces your problem to negotiating deals with a finite number of institutions. I would just straight up cold call school administrators and pitch the product. If you do it right, each school could onboard multiple users (parents) to your platform. This way you only need to worry about reaching N/K schools, instead of N parents.

Have you written documentation/POCs specifically targeting ERate funding?

More specifics... https://www.fcc.gov/general/e-rate-schools-libraries-usf-pro...

ERate has a 5 year cycle for rural school districts. The problem you are solving is a very real one. Also I would look to people like LightSpeed (produce Rocket appliances) for bundling. Possibly see if you can provide a "service" on Clover as well. Good luck.

I took a look at your site. I would also recommend a chrome extension with easy management in G Suite. 10k customers is one rural school district for you. Many, many of them don't do Apple but use G Suite, since it's free, along with Chromebooks.

We have not looked at E Rate yet but we have been at a few conferences and related to K12 space with Clever - they are really good people. We originally were targeted to parents and only recently have tried tapping into the school space. It's not easy to get the word out to the right people, for example we get rejected by Peach Jar for many districts and have $1500 of funds sitting there until we can find a strategy.

I will grant you K-12 is difficult to break into. This is advice for specifically Georgia. I am not familiar with other states. Clever is a path through teachers. Teachers generally push joining Clever not Ed Boards or parents. ERate is a path through district boards. Parents don't care or understand what/how technology is being used in the classroom. They see iPad, Surface, Chromebook and generally think that most kids can access the same stuff they can on the internet. It is really locked down and usually through Lightspeed Rocket, Palo Alto, Cisco Umbrella/OpenDNS. Many push DNS through Umbrella or forcesafesearch.google.com. Make sure you accessible. Accessible also means you are categorized as "safe". "unknown" or "unsafe" will keep you out of schools.

Chrome extensions, chrome extensions, chrome extensions. I cannot stress this enough. This is the "hidden application pool" that students, teachers, and principals pull from. There is a cottage industry that does nothing but figure out extensions to create, disguise them as "informational sites/extensions" in order to give kids access to games so that they can show ads. It is a constant thorn in the side of IT.

If you have a chrome extension ...teachers will find you.

Most ERate customers make purchases on 5 year contracts or a "buy once keep forever" model...month to month is a pariah. This is due to the fact that with ERate government funds projects, software, and infrastructure can be purchased. ERate funding is viewed like the lottery.

In Georgia at least there is a state run "Tech" board (email list) where different techs exchange ideas. They make recommendations to the individual school boards. You get someone to champion you there and you will pick up several districts.

...again good luck.

You can create a token right outside of securities law. DAICO seems like a good candidate. The ambiguity is extra risk, but the SEC says they are only going after ICOs.

The key to getting the most bang for your buck for advertising is in undiscovered channels. If you only advertise through mature efficient channels you will pay more for less. If you are a startup with little money that is not where you should be.

Is this similar to guerilla marketing? How do I find such channels - although asking that may be stupid because they are "undisclosed"? I am BAD at marketing!!

They’re not “undisclosed”, they are just untapped.

Consider Instagram, there was a time when it didn’t have as much advertisement as it does now. In those days you could cheaply advertise a product through someone with a high follower count. As more people started doing this, demand went up and so did prices, and then standardization came in. Now it takes big money to advertise effectively on Instagram.

Is this studycity.org?

Yes. Any feed back is appreciated it's okay to be critical and we know we are not perfect.

I'm not familiar with the space in the slightest. My guess is if you can't raise a seed round in this market, you either don't know how to do it or your business is not promising enough.

Have you filled in a YC application? If you send me that I can probably spot the problem very quickly. Email is gomox.ar (with the free Google email).

We applied for YC 2017 but didn't get accepted. I don't know if we still have access to the application we submitted.

You usually get a copy in your e-mail when you submit.

Relatedly : a rarefaction of unicorns ? https://avc.com/2018/05/a-changing-of-the-guard/

Most of them will be deemed securities and the SEC will take action.

My two cents:

The 90s and 00s were a very unique time in business and tech history. With just a computer, internet connection, and knowledge of a few programming languages, anybody could start a site or an app. Because they were among the first to do it, they got rich.

Nowadays, although the cost of computing is way down (more people have computers/mobiles and cloud computing is dirt cheap compared to the on-site hosting a decade or two ago), the necessary complexity for a novel IT product is way, way up.

For example, social networks are pretty much complete. You have the big one (FB), the lightweight (TW), the pictures (IG), the secret (SNAP), and so on. Go ahead and try to make your own social network. Your costs are next to nothing but you will probably not become the next Facebook Snapchat.

However, there is a lot of opportunity in the ML/AI spaces as well as with electronics and IoT. That requires a further investment in education/training as well as capital expenses (GPU/TPU/cloud for ML, hardware costs for electronics). So the barriers to the weekend coder are much higher, even though the opportunity exists.

Likewise, working in higher education with a close relationship to the state has revealed enormous opportunities, but they require extensive knowledge of grant writing, local codes, etc. More barriers to entry, but nothing insurmountable.

In short, there’s still gold in them hills. But mining ain’t what it used to be.

I would say you're pretty close to the truth here, but the issue I have with this picture is that there are still tons of issues with the existing software that dominates various industries. So, why can't an upstart software company cause issues for the existing players ? To me, that's the real issue here: we have dominant players, but they aren't necessarily producing the best solutions. This indicates that the dominant players are building walls that are preventing competition.

I think that ties into the example from the article where the writer hypothesizes a software service that could be replicated by a FAANG, and the resulting discouragement prevents the service from being either created or replicated.

Just out of curiosity, what services would you consider insufficiently provided by the big tech companies?

I think you're right.

On your second point, "insufficiently" is not the word I would use because most software titles from major publishers are feature-rich, but have some pretty glaring quality issues.

iTunes and MS Outlook are specific examples that come to mind, although I'm sure the list is much longer than that.

Good examples. As per iTunes, I used to use it extensively. Probably spent hundreds of dollars over time. And yet I almost exclusively use Spotify now. Although the issue with both is that those businesses exist at the mercy of a few very large labels, so even though somebody could come up with an iTunes/Spotify clone - even in a weekend hack - they would have a near zero chance of getting a label to sign with it, much less enough to reasonably compete with Apple or Spotify. So while they get to enjoy their oligopoly, the reality of the situation isn’t entirely their fault, either.

As per outlook, I use it for work. I work at a big university and higher education moves VERY SLOWLY, so in my case even if a fantastic competitor to Outlook existed, we probably wouldn’t adopt it because we’re comfortable with our Microsoft contract, and even if the prospect was raised of changing email clients, it would probably take a decade to even happen.

I don’t see too much danger with either example. My parents had far less choice when it came to, say, televisions and cars. But things turned out all right.

I get what you're saying, but I'm not sure if televisions and cars are the right comparison since both tend to be capital-intensive endeavors, which has, traditionally, not been the case with software and why it has been sort of this "gateway to wealth creation" that was more similar to pursuits like music or literature.

In the past few years, I've seen a lot of stories about developers leaving software to do other more traditional startups. When one sees a story about someone leaving software to start a bakery or restaurant , we should all be very, very worried. ;-)

The current low cost of capital favors legacy companies and fewer, overfunded startups. Once the next recession hits there will be a premium on efficiency again.

Maybe because it doesn’t take a company to test product/market fit anymore? A single developer can build an entire app on something like Heroku or AWS Serverless and use that to test the market, rather than needing to build a whole company to get to MVP.

That said, the fact we need far fewer people to build tech products means that most of the economic gains those companies would have distributed to workers just go to the platforms...

Can’t say I’m surprised.

When the mobile app market began and cloud computing was becoming a thing and social media was connecting more people than ever, it seemed like everyone suddenly had an idea for a hot new app.

I remember fielding calls from people who wanted mobile apps developed when they had no business being in this industry. Many of them seemed like the types who would be easily swayed by stories of people becoming overnight millionaires off of one simple app.

I remember Startup Weekend events were blowing up all across the country and people would go to these events and take them very seriously, no matter how ridiculous or derivative the ideas pitched were.

I remember reading articles hypothesizing about where “The Next Silicon Valley” would be, and people trying very hard to host “events” to make their hometowns into that. Of course, Silicon Valley itself had become nothing more than a cesspool of startups with ideas built on short term thinking and fastest possible growth.

A startup scene built on hype like this is not sustainable, at least not without a major pullback at some point.

I don't think their chart is very convincing. So there's less high-tech startups than in the 1999-2001 era, why is that a problem? I'd be a bit worried if we did have that same spike. And it seems to me that tech giants are bad for a lot of reasons but I'm not sure how they disincentivize startup formation. They do lots of competitor buyouts so they probably do reduce the average lifespan of startups but I would think that just slightly moves the risk/reward of creating a startup down.

To me the chart reads that the problem with startups is in every sector except for tech. In that case perhaps we should look at economy-wide reasons for a slowdown in entrepreneurship. Considering the number one predictive factor for entrepreneurship is receiving an inheritance or gift maybe we should look at whether we're placing people in too precarious of a position to take on the risk required in starting out on your own.

> That’s worrisome, because small business was traditionally one of the main gateways to the middle class. Without the option of starting a corner store, Americans without high skills or advanced degrees will find it that much harder to maintain comfortable lifestyles. Instead, many will have to seek jobs from large corporations, depriving them of personal autonomy and possibly driving down wages due to the increased competition for jobs.

oh please.

> But it’s also possible that the high-tech sector is becoming dominated by a few big players, leaving less room for innovators to break in. Tech titans like Amazon, Facebook Inc., Apple Inc., Alphabet (Google) and Microsoft have grown to staggering size

Bingo.

Conglomeration is just awful.

> regulators might take a second look at options to reduce the dominance of the big players.

Nope. After Microsoft the big tech companies learned to pay their bribes like everyone else. Too much lobbying now.

If you view the graph for number of "high tech" startups the performance has been relatively flat for decades, save for the dot-com bubble. It is concerning that one of the principal drivers of wealth is floundering, but in terms of the impact on the tech scene, this article is more sensational than scary.

The most recent assortment of high-flying tech unicorns were mostly started during the 2008-2011 period. Great startups tend to get their start in the depths of a recession, where perhaps economic conditions force founders to take risks and practice uncommon business creativity. We haven't had a recession in a while; I wonder if the talent that would oridinarily start a startup has chosen the relative comforts of existing large businesses.

Of course it is. More and more markets are becoming oligopolies with high barriers to entry and high costs to consumers.

We need a new trustbusting government to clear out the cruft.

Ive wanted to start a company for years on various projects but have failed to find the sales network to help me put any of them forth into motion. That in combination with the fact that bigger players are more well funded and I dont have the realistic means or support to bootstrap my idea. Maybe everyone else feels the same way.

Poorly designed securities regulation prevents private capital formation except by giving up your ideas or company to accredited investors or getting funded through a bank which is impossible unless you are already wealthy. Accredited investor laws need to be abolished and the funding portals need to go up to 10 million and need to be exempted from state regulation.

There is no reason to stab in the dark re: a cause. Wealth concentration is the cause. Break up the big 4 and you will cause a massive wealth redistribution by the unleashing competition that has been stifled in tech.

Any actual data to support this?

Non-AMP Link: https://www.bloomberg.com/view/articles/2018-06-07/america-s...

I'm yet to find a single AMP page that I didn't hate. Don't know why Google keeps pushing it on me. At least in my country, data is ridiculously cheap - I can't spend a few MBs on a page if I want to read it

Damned if you do, damned if you don’t.

Thanks so much, I was wondering why the page looked that much broken!

Thanks! Updated.

If mighty Apple centres its main event on emoticons and ways to take better selfies, there is a big big big problem with the direction of capitalism (and mankind) for sure.

There is so much wrong with that statement, I don't even know where to begin.

I also had the same thought about Apple's recent WWDC, but at the same time, there are complex techs being implemented behind those fancy graphics too. I don't know what to make of it. But, what is it ? Are people going out of innovative ideas that can actually do something meaningful for the society ?

If people have limited vision and all they got out of that keynote was “emoticons” and “selfies,” then there is a big problem with the direction of people.

You do realize that a large number of computing advances were created to support the playing of games right? Still other advances were the result of trying to make kids movies.

For years, gamers drove the video card industry. Now look at what GPUs are doing for machine learning and other important areas.

People like you are frustrating because they seem to lack any vision or imagination. They’d see the original iMac as a colored gimmick; failing to recognize at the time the implications to society (suddenly everyone wants a computer in their kitchen or living room because it’s so “cute.”) Or the touchscreen; I am sure you were one of those who failed to see the advantages over a hardware keyboard.

And the pattern repeats: “emoji and selfies.” And, with that, you reveal a complete failure to understand how the future happens.

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