🌞 Earlywork #42: How America Became The World's Operating System For Tech
feat. Sean Stuart (Investment Analyst @ Aura Group) + roles from Canva, Forage, Finder, TEN13, and EQL + a One Minute Hustle with Hannah Neep
Ello ello Earlyworkers!
Spreading its wings from post-lockdown Sydney is Earlywork #42, a careers newsletter providing free career resources, news, jobs & interviews for young Australians in the tech & startup landscape.
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💡Weekly Cheeky Tip
This has been one of the most fascinating pieces I’ve had the chance to research & write since starting the Earlywork newsletter in September last year.
Particularly stoked to collaborate with the absolute wizard Sean Stuart (Investment Analyst @ Aura Group) in putting this one together.
👀 Peep his cheeky new newsletter at seanography.substack.com for deep-dive investigative journalism into tech news & terminology.
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In a world of seven billion people, there are 143 who have made a billion dollar fortune from starting technology companies.
72 of them live in a 121 km2 stretch of land: Silicon Valley.
Its tentacles extend through optic fibre cables under the sea to every city in the world.
It isn’t just the birthplace of modern day technology – it is also the world’s operating system.
In Los Gatos, California, the world’s entertainment is curated and created for 200 million people.
Take a 14-minute drive and you will arrive at the control room for one billion devices in everyone’s pockets.
Just up the road in Mountain View, California, the world’s information is filed and retrieved for four billion people.
Take a 49-minute drive and you will arrive at the doorstep of where:
15 million Uber rides per day are organised
7 million Airbnb listings are managed
3.6 million DoorDash meals are delivered daily
While this impact is distributed around the world, the key decision makers and lines of code are concentrated in this 121 km2 stretch of land.
Silicon Valley systematically organises our lives by deploying algorithms that control how we get to work, who we go on dates with, and what information we read.
How did a valley that used to plant apple orchards become home to Apple, a metaphorical orchard that has a market capitalisation greater than Italy’s GDP?
The history of Silicon Valley is well documented and better left in the much more capable hands of historians.
In a few sentences, it was the perfect convergence of government funding with skilled scientific researchers and private money.
This led to the cataclysmic discovery that silicon semiconductors were superior to germanium ones.
The first order effect of this discovery was the ability to mass produce silicon semiconductors, which kick-started the personal computer revolution.
The second order effects are us trading Dogecoin on our iPhones.
Now, the basic ingredients to Coca-Cola (carbonated water, sugar, caffeine, caramel colour) aren’t hard to find, but what is the secret recipe locked in that vault in Atlanta?
In a similar vein, the base ingredients to America’s success are population size, educational attainment & capitalism, but in this piece, we want to uncover the non-obvious yet significant factors in its tech success.
Here is how America became the world’s operating system for tech.
⚔️ A Nation of Conflict
The dark side of innovation…
As the cliche goes, necessity is the mother of invention, and for better or for worse, war creates an urgent and high-stakes incentive to innovate.
Formal research into the relationship between the two is limited, but a 2013 study by Georgetown University found a strong association between patent grants and past involvement in war.
And looking at past wars, our friends over in America seem to have a knack for getting into a lot of ‘em… (the necessity of these wars is a whole different can of worms that we’ll descope for now).
The startup community often has a myopic tendency to think about innovation as a phenomenon of the private sector, but throughout these wars, the US military has proved to be a standout counterexample to that perception.
Let’s take their track record in the 20th Century alone.
The US military led or collaborated on several innovations like walkie-talkies, night vision, digital photography, GPS, weather satellites, drones, ...even duct tape!
Perhaps most famously, a 1960s project funded by the US Department of Defense laid the fundamental protocols and foundations for computers to communicate with each other.
Formerly ARPANET, but now a little something called… the internet.
What may start as a military necessity or advantage somehow seems to cross over into commercial or consumer applications.
The secret ingredient: DARPA (the Defense Advanced Research Projects Agency), the US Department of Defence R&D agency focusing on emerging technologies with military applications.
When The Economist calls DARPA “the agency that shaped the modern world”, it’s no surprise that similar models are now being implemented by Germany, the UK, Japan & more.
Golden example: the Moderna COVID-19 vaccine exists today because way back in 2013, DARPA decided to provide a $25M grant to the then-small biotech firm to investigate using messenger RNA to make vaccines (for protection against infectious diseases and in turn, biowarfare).
Financial prioritisation plays a hand here too.
Today, the US spends more on its military than the rest of the top 10 highest spending countries combined, despite not having the largest total military personnel number (Russia, for the trivia nerds out there), with US$20B of the military budget specifically allocated to space and cybersecurity.
When looking for the innovations of tomorrow, watch this space.
🌎 Diverse Perspectives:
We often think of ‘diversity as a modern buzzword, and businesses have only started to wise up to the needs here in the past few decades.
But in America, the underlying competitive advantage of cultural diversity emerged well before this became a high-priority conversation in contemporary media.
Google. Nvidia. PayPal. Youtube. Founded by immigrants.
Facebook. Apple. Amazon. Founded by the children of immigrants.
We talk about the PayPal mafia as the golden standard for a startup breeding the next wave of founders.
But few appreciate that PayPal’s 5 founders were born in 5 different countries and NONE of them are the US (Germany, China, Poland, Ukraine, South Africa, another one to jot down for pub trivia).
You look at the numbers today, and 57% of STEM professionals in Silicon Valley are immigrants, and more broadly across the US, 25% of founders are immigrants.
Immigration is deeply fundamental to the success story of American tech, and this is not a recent shift.
America’s business folklore over the last century is stacked with migrant founders, including Walt Disney, Sun Microsystems, Estee Lauder, Sun Micro, AT&T, eBay, and Yahoo.
But what were the factors that allowed and led these immigrants to come to the US in the first place?
This is a multifaceted story, and despite oscillating attitudes towards immigration in the US, there has been a track record of refugee resettlement programs over the past 100 years that has been instrumental in building this diversity, particularly during WWII and the Cold War.
But in 1965, one legal reform changed the game:
The Immigration and Nationality Act.
By ending the national origin quotas on immigration that previously favoured certain ethnicities, and instead focusing on skilled immigrants & family reunification, the US saw a boom in immigration from countries like China, India, Vietnam, Cambodia and so forth.
To imagine a business and technology landscape in America without these waves of migration is to imagine a fundamentally different planet.
William Kerr nails it in ‘The Gift of Global Talent ’as he notes:
“If we’ve all grown up under the same education system, the same perspective on life, the same TV shows, then it’s harder for us to find something new about the way we’re approaching things.”
Arguably, diverse immigration will be America’s greatest competitive advantage as a tech hub in the decades to come, but the greatest risk here is in how America navigates future immigration policy, particularly for skilled migrants.
🎞 The Hollywood Effect
If you walk into a bar in Palo Alto and ask someone what they do for a living, it is likely they will say something like this:
“We are revolutionising the world by completely disrupting everything”
If you walk into a bar in Surry Hills, Australia, it is likely the answer would be something closer to this (okay, with a dash of exaggeration):
“We are trying to build a low Wi-fi Hallow for 802.11ah chips”
“So what you are saying is you are trying to support the next IoT revolution by securely connecting 25 billion IoT devices to the internet over the next decade?”
Americans have a long history of being masters at selling stories, dreams and products, with deep ties to religious sermons and the archetypical preacher.
In the mid-1700s, 75-80% of Americans visited Church in what was labelled as the ‘evangelical awakening’, anchored in the belief that they were born again by preaching the gospel.
Unlike conservative European churches with hierarchical Roman Catholic tradition, America had a different brand of religion.
It was one of passion, persuasion and personality.
It left a legacy with television evangelists such as Billy Graham to Baptist Ministers such as Martin Luther King.
The line between America’s evangelical brand of religion and sales culture is often blurred.
It has given birth to the oxymoron of ‘millionaire preachers’. Joel Osteen is one of many preachers worth over $100 million.
There is no stigma around selling in America.
It is a culture of the travelling salesman, from Willy Loman in Arthur Miller’s iconic 1950s play to Ray Kroc the road-bound franchisee who grew McDonald’s one pitch at a time.
In 2000, 12% of America’s entire working population worked in sales.
But it’s more than that. America’s entire cultural fabric is based around cinema.
Since the golden age of Hollywood, films have dramatised life turning everything into a grand narrative with a plot and protagonist.
The 1950s epics of Ben Hur, Julius Caesar, Lawrence of Arabia and Spartacus were all grand narratives of one character overcoming impossible odds.
Hollywood has encouraged Americans to see their life through the lens of the protagonist on the hero’s journey, more so than any other country.
Collectively, these rich historical narratives have shaped Americans as some of the best in the world at selling – be it religion, companies, movies, or themselves.
🤑 Extreme Individualism
This sounds like a bad thing (and in some cases, it is).
But at a fundamental level, the notoriously individualistic culture of the US is a core part of its strength in innovation.
A notable Stanford paper by Yuriy Gorodnichenko and Gerard Roland from 2011 looked at the long-run growth rates of societies with cultural individualism versus collectivism, and with a statistically significant trend of higher growth for individualistic societies, offered a pithy explanation for this relationship:
“Individualist culture attaches social status rewards to personal achievements and thus, provides not only monetary incentives for innovation but also social status rewards, leading to higher rates of innovation and economic growth.”
Hang on! China has a more collectivist culture but is still a thriving tech hub, so how does this work?
True, but it also has the world’s largest population, advantages of centralised government for efficient decision making, and has explicitly allocated a lot of government funding to R&D, so there are other factors at play.
So what caused individualism to emerge as the predominant cultural flavour of America in the first place?
There’s no single switch-flipping moment, but trawling through the history logs, the Revolutionary War was a standout event that helped set the stage for individualism at a political level, in terms of freedom of speech, religion and the like.
However, in the evolution of American individualism since then, it is only more recently with the 1960s cultural revolution that this individualism has mutated into the everyday social fabric of consumerism, careers, religion, sexuality, family and education.
And importantly, this permeates not just the rate of innovation, but the style by which the US innovates, with a ruthless focus on competition and contrarian view to legal requirements.
Uber didn’t wait for the taxi industry and government legislation to change.
Airbnb didn’t wait for the hotel industry and government legislation to change.
Of course, this does create problems down the line, as government collaboration becomes a necessary step when you’re uprooting the foundations of local economies.
Case in point: California’s Proposition 22 on the sharing economy.
But ultimately, the individualistic “ask for forgiveness rather than permission” model of innovation does make for higher innovation velocity.
Whether this is always the “right” innovation is another matter.
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Ultimately, we believe these factors have been critical to the blueprint for America’s success as a global innovator, and its resultant legacy, talent pool, capital, and economies of scale, position it well to continue as a dominant innovative force in the years to come.
Beyond this, there is a huge opportunity for the US to better tap into other categories of founder diversity (most notably, gender diversity, where women-only founding teams received just 2.3% of funding in 2020).
But as we look towards the next generation of entrepreneurs in a globalised, remote world, increasingly, we’re seeing headlines and tweets about the next ‘Silicon Valley’ in Europe, the Middle East, Asia, etc.
For countries looking to build a hub for innovation, what is the recipe they should follow?
Stay tuned for Part 2 of this series…
What content would you like us to cover next? Anything we missed? Keen to share your own Weekly Cheeky Tip?
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📚 Trending Topics
Our favourite reads and resources being discussed in the Earlywork community.
The World’s Most Transparent Company Salary List: Buffer publishes EVERY single employee salary and you can read them right here. A frontrunner in what may one day be seen as the norm.
Democratising The Right To Laziness: Abhishek Maran from Folklore Ventures talks about the prospect of a Wall-E world as startups ride the push towards convenience.
Key Takeaways from 65+ Podcast Episodes from The Sachin & Adam Show: Get the top insights into interviews with leading founders and thinkers from our good mates over at the Sachin & Adam Show.
Why The US Isn’t Ready For Clean Energy: A fascinating video from Vox on how dated power grid infrastructure inhibits the adoption of cleantech.
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1️⃣ 🕐 💪 One Minute Hustle
We are back once again with One Minute Hustle, a bite-sized interview with an emerging Australian young startup founder or operator.
This week, let’s get inside the noggin of a young founder tackling the loneliness epidemic for the elderly…
Hannah Neep, Founder @ Close Friends + Strategy & Operations @ Vexev
⚙️ What are you working on?
I'm building a platform that helps older Australians proactively look after their health by building lasting friendships.
As people age, social connections are the key to health and wellbeing - the impact of loneliness on mortality has been shown to be comparable to smoking, physical inactivity, or obesity.
But Australia's older generations are also its loneliest.
🌱 How’d you get started?
Having worked for a while in the aged care and healthcare space, I've been thinking and talking to people for over a year about potential ways to improve the ageing journey.
This year, I decided to take the plunge to start putting pen to paper and testing some offerings in the real world.
Joining the Atto Accelerator has really helped with nailing down my vision and keeping me accountable.
🤔 Why do you do what you do?
Ageing affects everyone in some way, and with more than half of Australia's aged care homes running at a loss, an ageing population, and workforce crunches, it's clear that we need to think about it differently.
Social wellbeing is so closely linked to quality of life and unfortunately, it can be hard to maintain due to big life changes like moving accommodation, caring for a partner, or the onset of disability and chronic disease.
My vision is of a future where it's easy, accessible, and normal for people to proactively build and maintain social connection as they age.
Keen to share your story, or know a young startup founder or operator we should feature next?
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