In a recently released movie by Yuri Dud emigrant entrepreneurs share their thoughts on advantages of moving to Silicon Valley.
Knowing some of Yuri’s film characters personally I noticed the difference in feedback they gave during filming and conversations in private. In the film the characters act in a very American way – avoid hot topics and focus on positive aspects.
Meanwhile in private entrepreneurs frankly talk about downsides of living in the States. Nowadays one of them spends half of his time outside of the US, the other one, in fact, returned to Europe a few months ago, the third one has given up on the Americans and builds his own “little Russia” around him.
Therefore I believe it is my duty to spotlight the other side of the gold medal and share the downsides of living in the US in order to protect the new generation of entrepreneurs against the mistakes of their predecessors. I spotted 7 reasons not to move to the Silicon Valley.
1. The police state
Despite the widespread image of Freedom Country, the United States is a tough police state that is the leader in the number of imprisoned people. The incarceration rate in America is 10 times higher than in Finland, Germany or the Netherlands. At least one of the filmed entrepreneurs suffered unjust US law enforcement and organized surveillance. As I told you, we also experienced FBI pressure on Telegram during a trip to San Francisco in 2016.
2. Inaccessible healthcare system
The US healthcare system is inefficient and expensive. As a result, many emigrants fly to Eastern Europe to receive treatment, which is cheaper there. On average, US residents do not seem to be distinguished by strong health: US obesity figures are the highest among developed countries. Possible reasoning: poorly regulated food industry, poor eating habits and continuous stress.
3. Limited cultural life
Silicon Valley is represented by a few villages with limited cultural life. The closest city of San Francisco is not a mega city either, but rather a city with high crime rate and huge number of homeless people. Paradoxically, San Francisco is the only place on Earth considering my whole journey history where I was attacked daytime in the city center.
4. Mediocre secondary education
The quality of secondary education in the United States is lower than in the rest of developed countries. America ranks 38th considering the level of mathematics taught in school (out of 79 countries studied). Top notch American universities win the World Programming Championships thanks to ethnic Chinese, moved to the States after graduating from Chinese secondary schools. China or Russia wins the first places in such competitions much more often.
5. High taxes
The United States is a high-tax country. Prosperous Californians give away over 50% of their earnings to the state. In Eastern Europe direct taxes are much lower than in the US, and in countries like the UAE they are striving to zero. The US passport is a modern economic serfdom. It is the only country in the world that claims income taxes even upon the US citizen left the country. Of course, you can try to give up US citizenship. Nevertheless taken into account Oleg Tinkov example, it does not always work that smoothly.
6. High cost of IT project launch
Silicon Valley is distinguished by high prices not only for real estate, but also for high-tech business launch. Emigrant entrepreneurs would hardly hire local IT specialist. Local programmers are expensive, spoilt and often unable to focus on work assignments due to the massive side project idea flow. As a result, emigrants cooperate with programmers and designers from Eastern Europe, but it’s a challenge due to 10-hour time difference. In this respect, it is much easier to control the IT project being located in Eastern Europe or India time zone.
7. Weak market prospects in the XXI century
The US market is an over-heated and over-regulated segment of the world Internet, representing only 4% of the world’s population. Yet 10 or 20 years ago it seemed that all global projects could have been launched only from Silicon Valley (YouTube and Instagram examples), whereas recent huge success stories in social media happen outside the Silicon Valley (Tik-Tok, Telegram). Couple of weeks ago Indian educational start-up Byju reached USD 10 bn in capitalization. Nowadays India, not the US, represents the largest open Internet market. That is why the proportion of Indian Telegram users exceeds that of any other country. We are glad our HQ is located close by and not on the other side of the globe.
The US is not the best place to live or run the IT business. For all those who want to leave Eastern Europe if there is a choice it is absolutely necessary to consider other options as well. Human rights are much better protected in Northern and Central Europe, whereas the economic growth in the 21st century is concentrated in Asian countries. America’s inexpensive investors’ money still attracts some established entrepreneurs and IT specialists, but today moving to the US is like purchasing an asset at its peak value.