That says it all. Really, that's how YC works - fail fast and cheap, profit from the survivors. Great for VCs, not so much for the cannon fodder.
"We have reserves."
There's a reason why the US tech industry is orders of magnitude larger than the rest of the world, access to capital. Go try to grow a startup in Europe with its risk averse investors, and see how far you get.
You'll start to see this effect even more in the biotech space, where up front access to capital is crucial in developing and testing products/medicines that must go through expensive FDA approval.
Most of developed Europe, except for a few nations, scores well on having low corruption, comparable to or better than the US. Western Europe also widely has a strong social safety net that should be encouraging to entrepreneurs from a life-risk perspective (which may actually result in the exact opposite outcome: a culture of lower risk taking; the culture that will install the world's most elaborate social safety systems, is more likely to be one that aggressively dislikes risk-taking). While only a few small nations in Europe are as wealthy as the US, several more are close enough that the difference shouldn't matter. The problem is that capital is overwhelmingly unwilling to participate in venture investing.
The US not-so-secret sauce is: easy access to risk capital + a culture that has historically strongly encouraged entrepreneurial activity + a massive single market with one core language (that is also conveniently the global language of business, media and culture) + reasonable taxation and regulation policies + strong protection of property rights + ease of market access (low tariffs, low trade barriers, a foreigner can easily start/own a US business from almost anywhere) + very welcoming to foreign capital (few capital controls) + an enormous lead coming out of WW2 (which helped the US be the first to the tech epoch, which has buffered its lead ever since) + the global reserve currency + a massive traditional financial system (great for IPOs, stocks, acquisitions, leverage, etc. - it's why Alibaba is on the NYSE) + 19 of the top 20 universities on earth, and four or five dozen more that are world-class + a very successful university meets business development system (which has helped incubate countless new leading companies and technologies) + inexpensive energy + half a century of built-up knowledge, experience, specialization in every tech segment + a long history of immigration policies that allow people to come to the US and pursue their dreams (Japan and China, the #2 and #3 economies, have overwhelmingly shunned foreigners becoming citizens by comparison; the US tech industry wouldn't be anything remotely close to what it is today without the Andy Groves, Nadellas, Elon Musks, Jensen Huangs or Collisons).
That's the short list. It can't be replicated.
Why? None of the above are specific to software, if the above was the full story, why would the US not also dominate the world in e.g. Autos, Chemistry, Electronics, Batteries etc? There must be other factors. Maybe first-mover advantage, maybe software benefits more from centralisation, from economies of scale than other industries? Other suggestions?
Up until about 2000, when you went to a Silicon Valley VC, you had to have a patent and a working prototype. Using that model, the VC industry as a whole was very profitable from the 1970s to the end of the century. In the 2000s, the VC industry became a net lose. Buying market share until everybody else goes broke is not a net win for investors.
Startups really should have this written on a tin: "We're are experiments to our investors. Our product is an experiment to us. We do not care about you, or helping you, and we will not change the world; our regular marketing copy is just straight-faced lie. The entire stack, from us up to investors' investors, are all running experiments on how to make money fastest."
Now, I'm (somewhat) fine with this. Let experimenters do experimenting. I just hate that the whole ecosystem is consistently lying to regular people.
Though it would be a stretch to say they don't care nor help the users. Of course they need to keep the users hooked/get new users onboard to "grow" and get the investments. And focusing on marketing is not very reasonable since you can say the same about basically every marketing material.
Still, I guess the point is that the customers of such startups must always be prepared of the possibility of the company suddenly shutting down one day and the product ceasing to exist. That's true.
Does it? Competition and survivorship have long been accepted as the premise of capitalism. What I find more disturbing is that we've been told competition will be to the benefit of the consumer, and this focus on network effects means that companies are looking for a way to stay on top WITHOUT the virtue of providing the best benefit.
This leads to Comcast-like situations, with customers that hate their provider but want the product and have no real options. Or Facebook, where people can join get disgusted and join an alternative...that can't provide the desired service because the desired service requires that everyone else be there.
Do you believe that if the government ran the economy (socialism) there would be no corruption?
To return to my point: healthy market competition involves providing value for the consumer. In a healthy market there are low profit margins because high profit margins indicate a change for competition to enter and undercut. Companies competing and failing or falling to competition are not (necessarily) a sign of problem, as an above poster seemed to be saying.
However, companies seeking to find ways to prevent competition or deny it via network effects ARE a sign of an unhealthy market. And companies (as cited by the article and most of the tech-buzz-startup scene) are all about trying to grab that advantage and hold it. Logically the consumer is the one that ultimately suffers, per the very premise of healthy market competition.