Wired's oral history of how the London startup scene came to be is a good reminder that, typically, a city needs some great big exits (acquisition or IPO) to really kickstart an ecosystem. In the case of Silicon Valley, you could perhaps trace things back to Fairchild Semiconductor (1950s). But a more recent example of this phenomenon would be the PayPal Mafia, whose members have gone on to found Tesla, LinkedIn, YouTube, and other companies that you may have heard of.

Put simply: success begets success. When a startup does really well and the founders and employees of that company get rich, it is likely that many will go on to found/fund other successful companies in that same city. In the case of London, that catalytic startup was arguably Skype (at least according to Wired). Microsoft acquired the company in 2011 for $8.5 billion, giving birth to the Skype Mafia. Of course, that wasn't the only ingredient, but it sure helped (excerpt from Wired):

Since 2008, according to data compiled by Dealroom.co, the UK has created 60 unicorns (tech companies valued at $1bn or more) – 35 per cent of the 169 created across Europe and Israel. In the past three years, the UK has created more unicorns (25) than France, Germany, the Netherlands and Sweden combined (19). And London has produced 23 unicorns with a combined value of $132bn, compared with Berlin’s eight, worth $32bn.

The world has changed since Skype was founded. It's now cool to be doing a startup. But given that every city seems to be trying to establish a thriving startup scene, I think it's valuable to point out just how important a single big exit can be, not just for the people within the company, but for the broader city. Easier said than done, right?

Photo by Benjamin Davies on Unsplash

I just finished reading Peter Thiel’s new book, Zero to One: Notes on Startups, or How to Build the Future. For those of you who may not be well-versed in the world of technology geeks, Peter Thiel is an entrepreneur and investor. He was one of the founders of PayPal back in 1998 and was the first outside investor in Facebook in 2004. He invested $500,000 for a 10.2% stake in the company!

While the focus of the book is obviously on technology startups, it’s less about “here’s how you build a startup” (there is no formula) and more about “here’s how to think about the world, humanity, and the future of our civilization.” So even if you’re not a founder, or startup and technology enthusiast, I think you’d still find it really interesting.

As one example, Thiel makes the distinction early on in the book between what he calls “vertical or intensive progress” and “horizontal or extensive progress.” The specific example he gives is of typewriters and word processors. If you take one typewriter and figure out how to make 100 of them, you’ve made horizontal progress. However, if you’ve just replaced typewriters with word processors, you’ve made vertical progress.

In other words, vertical progress is doing new things and horizontal progress is just copying things that we know already work. In the grand scheme of the world, he argues that globalization is really just a form of horizontal progress. The rise of China is a result of them copying what has already worked in developed countries. But the true way to advance our economy and civilization is to not just copy – that’s easy – it’s to do, new, things.

That, of course, is a lot harder to do. But to build the future, you need to build things and do things that haven’t been done before.

Which is why Thiel actually gives $100,000 to a handful of college students every year so that they can drop-out and pursue a startup. In his mind, our education system is just perpetuating the status quo. MBAs move money around without creating anything new. Lawyers just preserve value and mitigate risk, also without creating anything new (Thiel is trained as a lawyer). And so he doesn’t believe that is the best way forward.

This may not sit right with many of you, but questioning the status quo is a prerequisite if you’re trying to do new things.

Wired's oral history of how the London startup scene came to be is a good reminder that, typically, a city needs some great big exits (acquisition or IPO) to really kickstart an ecosystem. In the case of Silicon Valley, you could perhaps trace things back to Fairchild Semiconductor (1950s). But a more recent example of this phenomenon would be the PayPal Mafia, whose members have gone on to found Tesla, LinkedIn, YouTube, and other companies that you may have heard of.

Put simply: success begets success. When a startup does really well and the founders and employees of that company get rich, it is likely that many will go on to found/fund other successful companies in that same city. In the case of London, that catalytic startup was arguably Skype (at least according to Wired). Microsoft acquired the company in 2011 for $8.5 billion, giving birth to the Skype Mafia. Of course, that wasn't the only ingredient, but it sure helped (excerpt from Wired):

Since 2008, according to data compiled by Dealroom.co, the UK has created 60 unicorns (tech companies valued at $1bn or more) – 35 per cent of the 169 created across Europe and Israel. In the past three years, the UK has created more unicorns (25) than France, Germany, the Netherlands and Sweden combined (19). And London has produced 23 unicorns with a combined value of $132bn, compared with Berlin’s eight, worth $32bn.

The world has changed since Skype was founded. It's now cool to be doing a startup. But given that every city seems to be trying to establish a thriving startup scene, I think it's valuable to point out just how important a single big exit can be, not just for the people within the company, but for the broader city. Easier said than done, right?

Photo by Benjamin Davies on Unsplash

I just finished reading Peter Thiel’s new book, Zero to One: Notes on Startups, or How to Build the Future. For those of you who may not be well-versed in the world of technology geeks, Peter Thiel is an entrepreneur and investor. He was one of the founders of PayPal back in 1998 and was the first outside investor in Facebook in 2004. He invested $500,000 for a 10.2% stake in the company!

While the focus of the book is obviously on technology startups, it’s less about “here’s how you build a startup” (there is no formula) and more about “here’s how to think about the world, humanity, and the future of our civilization.” So even if you’re not a founder, or startup and technology enthusiast, I think you’d still find it really interesting.

As one example, Thiel makes the distinction early on in the book between what he calls “vertical or intensive progress” and “horizontal or extensive progress.” The specific example he gives is of typewriters and word processors. If you take one typewriter and figure out how to make 100 of them, you’ve made horizontal progress. However, if you’ve just replaced typewriters with word processors, you’ve made vertical progress.

In other words, vertical progress is doing new things and horizontal progress is just copying things that we know already work. In the grand scheme of the world, he argues that globalization is really just a form of horizontal progress. The rise of China is a result of them copying what has already worked in developed countries. But the true way to advance our economy and civilization is to not just copy – that’s easy – it’s to do, new, things.

That, of course, is a lot harder to do. But to build the future, you need to build things and do things that haven’t been done before.

Which is why Thiel actually gives $100,000 to a handful of college students every year so that they can drop-out and pursue a startup. In his mind, our education system is just perpetuating the status quo. MBAs move money around without creating anything new. Lawyers just preserve value and mitigate risk, also without creating anything new (Thiel is trained as a lawyer). And so he doesn’t believe that is the best way forward.

This may not sit right with many of you, but questioning the status quo is a prerequisite if you’re trying to do new things.