Paul Graham, Founder of Y Combinator, Live from Stockholm

Should You Go to Silicon Valley?00:00

Two main questions: Should you go to Silicon Valley? What should Sweden do to thrive as a startup hub?

The first question is thousands of years old. Whenever people work intensely on something, there's one world center: painting in 1870 was Paris, math in 1900 was Göttingen, movies in 1950 was Hollywood. Ambitious people always ask: Should I go there? Answer: Yes, you should. Go for a bit and come back, but at least go.

Reason same as moving within a country: from small village to capital for startups, you benefit from others doing it. Reasoning ignores national borders.

Benefits of moving to the center: best peers, talent pool expands in two dimensions—better people and more of them. They cluster, creating intoxicating concentration. During a YC batch, every dinner feels like this room—exciting, like weekly for 3 months. Gustaf felt he met his people in Silicon Valley.

Practical benefit more important than morale: more serendipitous meetings that prove enormously valuable. Biographies of great people show life-changing serendipitous meetings. Why? More of them, so more outliers; or unplannedness itself is special—planned meetings too conservative, lop off outliers like deliberate startup ideas; or more selection—you decide after first sentences to continue.

Nothing better than serendipitous meetings with people working on ambitious things in big centers for art, math, movies, or startups.

Things move faster in centers: better, more confident, decisive people egg each other on, encourage and compete. Good ideas don't sit—unlike in villages where people half-have ideas, later claim 'I thought of that' when a big startup succeeds.

For startups, special case: Silicon Valley investors decide much faster than European ones, due to better judgment/confidence and competition. More right you are, less time to wait—opportunity times out. Example: Yuri Sagalov invested immediately in Max thinking others would too.

Investors complain: valuations too high, rushed, startups raise instantly, no time to know founders. But empirically, Silicon Valley investors get better returns than European ones despite speed.

Another advantage, even briefly: more respect back home. 'No one is a prophet in their own country'—investors outside Valley assume local startups second-rate (not unique to Sweden). Leaving for Valley reverses this; even announcing Y Combinator acceptance makes them trip over themselves to invest.

Example: Dropbox (2007, Boston batch). Boston VC firm gave encouragement/advice but no money for a year. After Boston demo day, flew to Valley for second demo; Sequoia interested. Boston firm faxed term sheet with blank valuation—'let us invest at any cost.' Too late; Dropbox took Sequoia. Went public first among YC companies in 2018.

Biggest advantage: changes you. Big fish in small pond doesn't know size; in big pond, measure against known big fish like Brian Chesky or Sam Altman. Often good news: 'He's impressive but not different species—I could do it if I worked that hard.' Example with Max here.

Seeing them sets new standard: not 'I'm as good,' but 'I could be like that'—high but definite threshold, no longer impossible, just hard. For ambitious person, nothing better.

Metaphor: Moving to Mount Olympus clears fog—summit visible, quite high but not invisibly high.

Not always; some discouraged. But big fish at YC encourage, seem accessible (Max 'raw terrifying' but practicing). Evidence of Valley advantage: people help for no reason. In Valley, sounds odd like saying in Sweden 'streets clean for no reason.'

Example: Invested in non-YC English companies; one moved to Valley, most surprising was how helpful everyone—conversations end 'What can I do to help?' Not like England, despite English more polite.

Pay it forward culture unique. Evolved because Valley turns nobodies to billionaires fastest—nice to nobodies gets powerful/rich friends. Now 60-year custom, just how people act.

Ron Conway: helps all day, doesn't track if portfolio or favors—operates larger scale, like honesty (no lie-tracking). No conservation law for favors—more favors. PG and Ron exchange favors 20 years; assumes Ron ahead, so does anything he wants.

Subtly, Valley makes you more helpful.

How to Help Stockholm Thrive as a Startup Hub16:01

Same answer: Go to Valley for bit, come back—that's best way to help Stockholm thrive.

Not controversial: 19th century mathematicians didn't boycott Göttingen to 'develop Swedish mathematics.' Government gave fellowships conditional on going abroad to study.

Three ways going then returning helps Sweden:

• Makes your startup better, raises average quality.
• Brings back money from Valley investors.
• Imports Silicon Valley culture—optimal for startups, compatible with Swedish (high trust, lose 'tall poppies').

Optimal way: YC—concentrates Valley distinctives: super density of founders (everyone around is one), instant colleagues more committed to help (YC principle), investor decisions down to minute, all in 4-6 months. Swedish government couldn't design better program at zero cost (funded by Valley investors). Like calling YC API, no sales process.

Startups must come back. Bad news: YC data shows startups returning home half as likely to become unicorns. But:

• Selection bias: measures founder confidence/determination too (more confident move countries).
• Measures valuation, not performance—Bay Area raises at higher valuations.
• Half as well still great: billionaire in Valley vs. 500M (5B SEK)—'billionaire in Sweden.'

Money not everything—once kids, care more about them. Where grow up?

Could make Stockholm Silicon Valley of Europe—job open (no obvious answer to 'where is it?'; cf. no one asks 'Silicon Valley of America').

Stockholm nice but not big/central? Mountain View, CA not big/central—backwater in 1955 (Shockley Semiconductor), geometric center till 2012 (shifted to San Francisco). Needs: place founders want to live + critical mass. Stockholm is that place; may be closer to critical mass than think—don't know till hit it.

Thank you.