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Sam Altman

Why Silicon Valley Works

3 Nov, 2014

In an op-ed for the Financial Times, Altman describes how Silicon Valley supports startups.

Silicon Valley works because there is such a high density of people working on start-ups and they are inclined to help each other. Other tech hubs have this as well but this is a case of Metcalfe’s law – the utility of a network is proportional to the square of the number of nodes on the network. Silicon Valley has far more nodes in the network than anywhere else.

He also says that Silicon Valley can be replicated elsewhere and is “probably doable with a few thousand people and a reasonable amount of capital.” He says would-be Silicon Valleys should focus on two things: an area where the majority of people care most about start-ups and technology, and on long-term compensation.

A focus on making a lot of money in the long term at the expense of short-term opportunities is essential to building companies that have a huge impact – they take a long time.