What's here? I have to look at this thing, too. I was thinking to myself, maybe I can be so enthralling that they look at me instead of the giant silly looking picture. I'll try.
I'm going to talk about two questions today that many of you have probably wondered about. The first one is about you. Should you go to Silicon Valley? The second one is about Sweden. What should Sweden do to thrive as a startup hub?
Well, the first question is a lot older than startups. In fact, it's thousands of years old. Whenever there's something that people are working on very intensely, there's usually one place in the world, it's the center of that thing. So for painting in 1870, it was Paris. For math in 1900, it was Göttingen. And for movies in 1950, it was Hollywood.
Everyone, every ambitious person working on those things at those times had the same question you have. The same question startup founders have. Should I go there? And the answer is the same now as it always is. Yes, you should. You can go there for a bit and then come back, but you should at least go.
The reason is the same reason it's worthwhile to move within one country. If you were living in a small village and you were interested in startups, obviously you'd benefit from moving to the capital, right, where there'd be a lot of other people doing it or at least somebody else doing it. Well, that doesn't change when you're moving across a dotted line on a map, right? That reasoning doesn't even know the dotted line is there.
What exactly do you get when you move to the big center? The answer to that question is always the same, too. You get the best peers. And in fact, the talent pool expands in two dimensions. The people are better and there's also a lot more of them. And on top of that, they tend to cluster in certain places. And so the resulting concentration of talent is, I mean, it's really intoxicating, honestly.
Like during a YC batch, every dinner feels like this in this room. It's true, isn't it? Is Gustaf here? This is what it feels like in YC. Imagine like this every week for 3 months. So I mean it's actually pretty good that this feels like a YC dinner. That's a high standard to meet.
It's very exciting to be in the same place as a lot of people working on the same thing as you. If you're working on something that not a lot of people are working on, Gustaf mentioned this when he got to Silicon Valley. He felt like finally he'd met his people.
But there's also a practical benefit that's much more important than the effect on your morale. You have a lot more serendipitous meetings that turn out to be valuable. I am still not sure why this is so, but serendipitous meetings seem to be enormously important. If you read biographies of people who've done great things, you constantly see examples of some serendipitous meeting that changes their whole life.
It's such, I don't understand why actually, why are unplanned meetings, why do they seem to be so much more valuable than planned meetings. It could be because there are simply more of them. And so of course if there are more unplanned meetings than planned then more of the outliers will be the unplanned kind.
Or maybe, excitingly, maybe there's something especially good about unplannedness. Wouldn't that be cool? Maybe it's because planned meetings are too conservative. Maybe planned meetings lop off the outliers just like deliberately trying to find startup ideas lops off the outliers. You have to have a reason for the meeting beforehand and that makes you too conservative.
Or maybe it's because there's more selection in unplanned meetings if you think about how unplanned meetings happen. You can decide after the first few sentences whether you keep having the conversation or not, right? And so if the first few sentences like, 'Oh, you're interested in that too? Oh my gosh, we need to talk.' Right?
But there's something about serendipitous meetings. Like if you're working on something ambitious, there's nothing in the world that's better than serendipitous meetings with people who are working on the same stuff. And in one of the big centers for art or math or movies or startups, you just have more of them.
Things also tend to move faster in the big centers because the people are better. They're more confident and thus more decisive. They also tend to egg one another on. They both encourage and compete with one another. And that means when someone who has a good idea doesn't sit on it.
That's the problem with the people out in the villages, right? They sort of half have these ideas. In fact, when there's some big startup 10 years later, they're like, 'I thought of that.' Right? Villages all over the world, there's people who half had an idea, but they didn't do anything about it. And they're like, 'How come that guy's so famous and I'm not?' Right.
For startup founders especially, there's a special case of this moving faster that's really, really valuable in Silicon Valley. Investors in Silicon Valley. Have any of you tried to raise funding from investors in Europe? Well let me tell you, investors in Silicon Valley decide a lot faster.
Not just because they're better and thus more confident. It's also because there's much more competition. An investor who decides that it would be a good idea to invest in a startup really cannot sit on that idea because the more right this investor is, the more likely that opportunity is to time out, right? That's a very unusual situation where the more right you are, the less time you can wait.
That's why Yuri Sagalov, who we know, Yuri Sagalov is fabulous. That's why he invested immediately on meeting Max because he thought, you know, anybody else who meets this guy is going to invest in him. I better do it right now. So that's a very characteristic story. That's how things work in the valley.
The investors complain. Investors always complain. Valuations are too high. We're too rushed. All these startups raise money instantly. We have to decide right away. We don't have time to really meet them and get to know them. But you know what? It doesn't seem to hurt them empirically. Silicon Valley investors get better returns than European investors despite having to decide so quickly. So, they may grumble, but they're fine.
Incidentally, another advantage of moving to the great center, even briefly, is that you'll get a lot more respect back home. As Jesus said, no one is a prophet in their own country. And there may be no group more dedicated to upholding this principle than investors outside Silicon Valley.
Investors outside Silicon Valley implicitly assume that any local startup is second rate. It's not a uniquely Swedish problem. It's the same everywhere. So if you leave for Silicon Valley, you make this rule operate in reverse. You automatically rise in investors' opinion. I've seen this happen over and over again and sometimes it's really funny.
You don't even have to move. As soon as you announce, as soon as you tell them that you've been accepted by Y Combinator, often suddenly they're tripping over themselves to try and invest in you because they knew once you go to the big city, that's it, right? Everybody's going to know about you.
This happened with Dropbox in the summer of 2007. It's a very funny story. And Dropbox was from Boston and this was a Boston batch, right? Well, for the past year, a big Boston VC firm had been keeping a benevolent eye on them, offering them lots of encouragement and advice, not money, just encouragement and advice, right?
Well, because the Boston investors were so lame, we used to fly the Boston startups out to Silicon Valley for a second demo day after the Boston Demo Day so they could actually raise money. And when Dropbox went out to Silicon Valley, they came to the attention of Sequoia.
Well, when the Boston VC firm found out that Sequoia was interested, their opinion of Dropbox changed so fast that they probably gave themselves whiplash. They sent Drew, the founder, a term sheet. They faxed it to him. Anybody even remember what a fax machine is? They faxed him a term sheet with a blank valuation. Let us invest.
They went from not investing at all to let us invest at any cost. But it was too late. Drew went with Sequoia. In 2018, they were the first YC company to go public.
As it always happens though, the biggest advantage of moving to one of these centers is not what it does for you, but what it does to you. When you're a big fish in a small pond, you don't even know how big a fish you are. But when you move to a big pond, to the big pond, you know, this whole point is now kind of obviated because you've now met Max. But I'll tell you what I was going to say anyway.
When you move to a big pond, you can measure yourself up against known big fish and you can see how big a fish you are. Surprisingly often, the news is good. Surprisingly often you'll see Brian Chesky or Sam Altman, right? And think to yourself, all right, this guy is, yeah, really impressive. But he's not a different species from me. I could do what he did if I worked that hard.
It's so funny. You've just had this happen right here in front of you with Max, didn't you? Because honestly, he's pretty much as big a fish as they get. He's a Swedish fish. I can't believe I got to see that. I didn't plan that.
