The cultural commentary does seem right to me. People in the UK are probably more risk-averse and anti-ambition. There’s also some stuff about the culture of investors, like the thing about US startups making wild claims. This only really works because the investors in the US understand that the claims are nonsense, and VCs don’t sue the companies for fraud (because the companies are typically dead and it’s an iterated game).
Nevertheless I do wonder about the effect of people being able to move to Silicon Valley:
- moving there can be a good move for ambitious young people – it’s surely easier to raise capital, find employees/cofounders, etc
- for most internet businesses, starting in the US rather than the UK can be an advantage – doing business internationally can be harder and the US is 5x the size and wealthier on average.
- given this, there’s a reasonable selection bias in the pool of companies in the UK seeking investment: they are started by people who were ambitious enough to start SV-style startups but weird enough to not be doing it in the US. If those potentially-UK startups in the tail of outcomes are disproportionately being started in the US instead, that’s really going to suck for a VC.
Lots of the claims made by startups to VCs would be considered fraud if they were ever tried in court, which they aren’t because starting such a lawsuit would be terrible for the VC, and the VCs weren’t really defrauded because they correctly understood the claims to be highly exaggerated. The difference here is in cultural standards for what it means for a startup’s claims to be true.
Most of the time they're more "aims" than "claims", are they not? Startups want to capture x% of a market, and they'll say they think they can do it, but probably won't make it sound like they're actually guaranteeing it.
Maybe I'm missing something about startup claims that are actually fraudulent, rather than hopelessly optimistic.
Nevertheless I do wonder about the effect of people being able to move to Silicon Valley:
- moving there can be a good move for ambitious young people – it’s surely easier to raise capital, find employees/cofounders, etc
- for most internet businesses, starting in the US rather than the UK can be an advantage – doing business internationally can be harder and the US is 5x the size and wealthier on average.
- given this, there’s a reasonable selection bias in the pool of companies in the UK seeking investment: they are started by people who were ambitious enough to start SV-style startups but weird enough to not be doing it in the US. If those potentially-UK startups in the tail of outcomes are disproportionately being started in the US instead, that’s really going to suck for a VC.