America: A Survival Guide for the Newcomers

This blog is for challengers and dreamers; for people of passion and explorers who never stop; for self-cultivators improving world around them; for hard-workers paving their way to the better future; for optimists looking into the distance with a squint and a smile; for life-hackers with good sense of humor.

For everybody who loves freedom, believes in America and its values.

I moved to America with my wife and two children in 2011 when I was almost 40. Nothing special: hundreds of thousands from all over the world take their chance every year searching for better life and opportunities. Of course, our story is unique as it is of any other immigrant coming to this country with their hopes and faith.

Like for millions and millions around the world for us America is the Wonderland, the place where almost everything is possible… There are a lot of myths around this country, which I don’t think necessarily a bad thing. The Newcomers just need to be prepared that not everything that they know about this country is truth, or at least a whole truth. That is why I want to start my story with the myths.

1. Myths about America.

a) Melting Pot

Most of the people from the Old World believe America is lack of traditions. As soon as you come over and give up your cultural biases, you are ready to join the like-minded and equally thinking crowd.

Many of the Newcomers, whom I met think about America as of a refuge, where you can escape form your home country political / economical or social oppression. So for them – this country is like a fresh air, they truly believe they can easily change themselves; giving up their prejudices and habits is pretty much out of a question…

But time explains it all. For those who move at the age after 16, native traditions and culture continue to be almost ineradicable (and the older they are when they move – the harder it is to adapt). They continue to live their culture, feel and breath it. The Melting Pot simply can’t handle it… Social media on their native languages becomes their second life.

With all the strange and unfamiliar sports and TV shows, adult Newcomers drift toward their national communities, that luckily thrive around the country, especially on East and West coast immigration hubs. Ethnic clubs, communities, groups or even colleagues of the same nationality attract like a magnet. As a proverb puts it “Dry bread at home is better than roast meat abroad”.

When I plunged into the life of my national ethnic community in Bay Area I was completely shocked how diverse and versatile it was. Sometime it feels that you never leave your home country. It’s fun! Whoa!

Meanwhile, American life is full of traditions: sport, entertainment, and food. But this side of life is made of the unique native language and jokes; stories that go around by word of mouth; characters of the Star Wars and their sayings; political anecdotes that you never would lough at unless you were born with them… Making long story short, informal life of millions of ordinary Americans remains quite impenetrable to the adult Newcomers and gets adopted in little increments through their whole life.

But… You never become a 100% American.

b) America is a law-abiding nation.

No! It sounds weak! Law-abidance is a second nature of America.

Compliance with law is a social norm, which is learnt at mother’s knees. Alongside the powerful enforcement system, abidance truly makes this ethnically and socially diverse country united!

As the Newcomer you will be surprised that this bulwark of democracy has the incarceration rate in the world: 0.7% of the total population, which is 5 times higher than average in the world! Imagine how costly it is to maintain one of the strongest nation’s traditions.

The upside of the ubiquitous law-abidance is incredible. First and foremost, it means equality. No matter how reach you are, your superiority never extends beyond your private property. When you are outdoors, at public places – you are part of the People.

And this country belongs to the People: luxury hotels and resorts, gulf clubs and high-end shopping malls; their doors are ajar. This is what I really love about America: is not for the jet set elite…

There is also a flip side of the law-abidance: Americans don’t ever think unlawfully… (I am talking of course about the overwhelming majority. There is always a small percentage of people with the criminal mentality, but it’s completely different story). Unlawfulness does not represent even a tiny fraction of American everyday humor or folklore.

When we just came to the US and my son started at middle school, he realized that his informal jokes that may even slightly impugn the inviolability of the law or – to some extend – the status and the reputation of the institutions call a completely silent reaction… He learnt pretty fast that anything, which goes across the law or an accepted norm may not even be a subject of a joke.

c) America has the most efficient economy in the world

I have a major in Economics. Back at college economic efficiency was the main area of my studies. Most of the personalities in modern economic science are Americans. So I can say without exaggeration that most of the Economics is about the American economy.

American economic science created the notion of Economic man. It’s all about rationality and how to circumvent the deviant human behavior. Economic man is an ideal and almost sacral character of the economic science. If it ever existed, all the laws of the rational economic theory become true.

The major threat to Economic man is asymmetry of information. It means that if I know more than you, I will always win and you – will lose. And what is it leading to? Monopoly and domination. So for the thriving Economic man the asymmetry of information should be eradicated.

Fighting against the asymmetry of information (read: for transparency), as well as against monopolies (they produce the asymmetry) has become the pivot of national economic policy for the decades. And the method of such fighting – a widespread promotion of competition in all spheres of life.

All-embracing competition that permeates every single area of business, political and personal life with all its advantages is a horrendously expensive social norm. Not every other nation in the world can afford it and no other nation practices it with such a scale. How then other nations manage to be efficient and successful?

Actually, because of the thrift and frugality that are in mentality of many successful small nations around the world. Inherited cultural traits. Look at the tiny European countries, Singapore or even Japan... Everything they do, event without competition is of a highest quality. It’s just an affair of honor for an ordinary worker to do things conscientiously and in good faith, very often to the detriment of himself.

Those nations don’t need competition in all spheres of their lives to be efficient. And they usually don’t have that many resources to do it in American style. Think about 1.5-year long multi-billion dollar presidential campaigns… Is it worth spending such a significant share of national GDP to select a government, which is a priory efficient, no matter who wins? Because prime-minister flies the regular airline flights…

d) America is an individualistic society

For most people around the world America is imagined to be the realm of freedom and individualism. A country, where the individual will and atomism dominate and drive all spheres of the national life. But, is it so in reality?

Depending on the cultural background of the foreigners, their judgments about American individualism may be good, bad or mixed. People’s opinions are usually biased by moral foundations and cultural traditions in their own countries. Most importantly, what is the cognitive imperative behind those judgments?

In fact, it’s simple: the individualism (vs collectivism) is measured on the scale of relationship of people and government. To which extend the individuals are ready to delegate their rights and responsibilities to their governments.

From this perspective American individualism is deeply rooted in the founding principles of this country. Government in this country is a product of the Social agreement. Unlike any other place in the world, it was primarily designed by the Founding fathers to defend the rights of the individuals.

And this is the most contrasting cultural trait of America. Majority of nations in the world were formed historically to protect their lands and borders. Under the permanent external threat, collective interests of the national states were often put above the individual rights.

However, speaking of the individualism as an absolute value, American mentality and social structure are far from being atomistic. Being creators and challengers by nature, Americans constantly seek for cooperation, because great things are not done alone. Ability of Americans to coordinate with each other, build informal organizations and teams is phenomenal.

The whole American society is literally woven from various self-managed groups, clubs, associations and networks. Each and almost every American is a member of several organizations at once: a college fraternity, a neighborhood association, local church congregation and charity, sport fans club, political party of course and so on. The list stretches endlessly...

Without being included into those networks and not having that much of the social assets, the Newcomer is helpless. Welcome to America! Connections and social reputation matter a lot in this country. Sometime I think – the social assets value even more than the individualism…

e) America is a country of the highest consumption standards

We all inherited the XX-century stereotype that everything - the largest, the fastest, the most expensive etc on Earth is in America. America pioneered consumerism and made all its achievements available to everybody. Availability of wealth in this country is completely unmatched.

The question is whether this material abundance is an equivalent of the high-standard consumption? The answer is not necessarily. Here is why.

Most of American wealth is commoditized. It means that very often it’s missing those tiny individual and personalized features that old-style European goods have. Is it so important? Yes and no – depending on your cultural background.

Commoditization is a great thing for the economy; it drives better competition and minimizes the costs. Eventually the commoditized economy generates more value, profits and overall wealth.

For example, some of the simple home appliances are pretty much the same across the country. Thanks to Home Depot and other similar chains you would not need to get accustomed to a different toilet model when visiting your friend’s house in another town. There are just two or three of them all over the place and they are high quality, functional and cheap.

The same way - with many other things. Until recently the whole country was using almost one single model of the home thermostats (Welcome Nest! Now there are two…).

Why should all that mundane stuff be diverse? Doesn’t make any sense… It’s just economically inefficient!

Be prepared to change your value system: think big. Trappings in this country are much less important than anywhere in the world.

Was surprised how little attention Americans pay to things that seem really important in other parts of the world. For example, fine clothes, elegant household items. Convenience and practicality are the king…

The lifestyle itself may seem not a “dolce vita” at all: too much work and quite little leisure…

In reality the focus just shifts to other values … large family houses (2.5 bigger than in Europe); number and size of cars (almost 1.5 higher per capita than in other developed countries). And most important – achievements and self-realization. Good news, there are plenty of opportunities here. True.

*****

With all its myths and realities America continues to be the most unique country in human history. Competition, democracy and freedom as well as relatively superficial traditions drive the boldest experiments and manifestations in business, political and social life. In the cases when other countries national ecosystems would collapse from the strain, America finds inexhaustible resources for compromise, reconciliation and – a new round of development.

2. What does it mean to survive in America?

We are all born with talents and capabilities to become prosperous and achieve our life goals. There is no doubt that working hard we are always able to make our living, no matter what. Under reasonable circumstances our potential goes far beyond the survival. And this is not just about the standard of living. There is much more than that. “Man does not live by bread alone”.

It’s all about self-realization

In my opinion the key is full self-realization. The feeling of life comfort and satisfaction that can only be reached through ability to act, be creative and apply all the personal capabilities to a full extend. It often comes with the recognition, whether it is just a small circle of the like-minded companions and friends or much broader crowd – depending on the calling.

For every individual “full realization” to a great extend depends on being “in the right place at the right time”. And it is never too late to find that unique set of circumstances that gives oneself the best chance for self-discovery. “Ask and it will be given to you; seek and you will find; knock and the door will be open to you”.

Immigration is a challenge that makes you stronger

Immigration might become an important step toward self-realization, however it is often a hardship and a challenge. It’s much harder to achieve something in a foreign country in a non-native language environment. But the challenge creates an opportunity, it helps mobilize yourself and reveal internal resources that you may not even be aware of…

Language and cultural barriers as well as all the possible privations of the transition period overall may become quite beneficial. They provide additional incentives for self-development and realization (long live to Challenge and Response theory!).

There is a place for everyone…

What makes America by far the main destination for immigration? First and foremost, it is the largest single marketplace in the world. Therefore it attracts enormous amount of talents.

Comparing to many smaller countries American economy is highly diversified. There is a sustainable demand for businesses that simply do not exist within the smaller-scale national ecosystems. In the international division of labor some economies tend to specialize on some goods and services, while America produces almost everything.

Due to its unique geo-political role, American economy is the largest contributor to the world’s R&D (28% of the global expenses). In practical terms it means ongoing innovations that drive constant evolution of the technological landscape and emergence of economical and business opportunities.

Being the richest and most diverse economy in the world, America provides the best opportunities to achieve personal ambitions.

…but first make sure to get it

With that, settling down in the new country takes a decent amount of time for adaptation, looking around and making a careful choice of further professional development.

Transferring for work is a great advantage, since an employer takes care of the technical side of the re-location, including the visa. Moving to this country otherwise (to study or to start a business, for example) might be quite a challenge. Usually it requires a financial cushion to get along, nothing to say about obtaining the legal status.

Whether it is a work, a business or a study – all these opportunities are discussed further in the blog. After all the goal of the relocation is to become successful, realize yourself and build the future for your family. This generally speaking means the survival.

3. First dive into new culture: Stanford Business School

American higher education is an undisputable worldwide leader. Its success is not just the matter of the efficient structure, diversity and financial sustainability. Strong connections with the industries, outstanding research capabilities and governmental support make higher education one of the pivots of the American economy.

MBA is a hot American export good

Essentially, education is a highly lucrative export good as well. International focus of American education is especially noticeable in certain products, for example, MBA. It was invented in America more than a century ago. Nowadays it best reflects the essence of American economy, business and style of life.

Over 20% of all international students come to this country for study every year. Thousands of ambitious and vigorous young people return back to their countries to become the local leaders. Most of them adapt American mentality and system of values. What a great source for American global influence!

“Change the world”. Stanford edition

Having gone through program at one of the best business schools in the country, I fully realize its ideological impact. Stanford GSB motto “Change the world” is written at each desk at the school. Although it’s becoming a little bit of a cliché, it still well translates the spirit of the business education.

The typical MBA program consists of the educational cases that provide a superb overview of the business relationships, and challenges of the companies’ genesis and growth. Learning materials use the actual names, dates, dollar values etc. You meet the real people in classes – American heroes, who started companies, made them go public and earned millions. Knowledge is coming through live communication, which makes the entire approach unbeatable.

American MBA programs are increasingly expensive, yet it’s a great buy. To get the most of them, serious preparation is a must. Look into what you really want to learn and make a careful selection of classes. People you meet and cases you read will eventually help you get on the right track.

Your future career begins in the classroom

Stanford MBA classes can be roughly divided into three major groups: Entrepreneurship, Organizational Behavior and Analytical disciplines. All of them are the world class, but first two groups undoubtedly stand out.

Entrepreneurial classes are the top notch. They throw you in the midst of the Silicon Valley startup culture and environment. Is starting a business your goal after the school? Forget everything else, just grab as many of those classes as possible (the best are assigned by lottery). You will have a great chance to graduate as a founding member of a trendy startup.

Organizational behavior classes were my personal revelation. As an educational and scientific hub of Silicon Valley, Stanford has its own scientific school of interpersonal dynamics. And the credo of the University is learning by doing, i.e. you combine learning with a lot of practice.

One of the most famous MBA classes at Stanford is called “touchy-feely”. It is designed to have you experience the whole life drama within one term. Sleepless nights, closed-doors weekends at the remote retreats, hours of the emotional outpouring and tears... Sounds like the drama plot? But it is a reality and one of the most memorable experiences of the program.

For my friends pursuing corporate careers organizational behavior classes at Stanford helped a lot in self-discovery and better understanding of personal strengths.

Unity of opposites

Top American business schools absorb the best talents from all over the country and the world. Young leaders who used to be number one in study and sport – all come together… to prove and further improve their leadership qualities. In such a dense environment competition for power and authority transforms in a very unusual way.

I like the analogy that characterizes the Silicon Valley in general. Imagine nine black balls and one – white. It naturally attracts attention… Now let’s take 10 balls – all of them of different colors and sizes. Quite the opposite effect – none of them actually stands out.

Overwhelming diversity of the talents is akin to the example with the colored balls. It surprisingly leads to a very unexpected phenomenon. The crowd of prodigy young people starts to gravitate toward a certain set of common features. So instead of exploding diversity there comes a cultivation of similarity. Most strongly it manifests in the dress code and a kind of a humble behavior.

Alongside the fascinating learning experience, certain uniformity of life principles and style become the hallmark of the whole MBA community. It creates the physiological intimacy in relationships that stay pretty stable over time.

As one professor at Stanford pointed out joking: “Statistically over 80% of Stanford GSB grads remain in Bay Area. I don’t know what all of them are doing here… May be consulting each other”. There's a grain of truth in every joke. Undoubtedly, one of the most valuable assets of the business education in America is the network and connections.

Overall period of life spent at the MBA program is quite inspiring. It shifts the mindset and gives the new vision that eventually helps get off the ground. However, excitement of the program is over and now it is time to jump into real life. Time doesn’t wait! Plenty of opportunities are out there.

4. Find the dream job

Most of the immigrants come to this country to work hard, make money and realize themselves. Luckily, there are a lot of possible career options, just make sure to choose the best fitting personal talents and professional background.

Let’s start with the labor market. There are corporations, small and medium businesses, and self-employment opportunities. What is good and bad about each of these segments?

Corporations

Large business is the backbone of American economy. It produces 55% of national wealth (measured in GDP) and gives employment to 43% of the entire workforce. Importantly, productivity in large business is 1.5 times more than on average in economy. Therefore the wages in corporate sector are also higher.

American corporations are definitely a concentration of economic power. What makes their overall role especially important is the capital market. 90% of its $ 21 trillion retirement dollars are invested in corporations. Economical prosperity and wealth of the corporations predetermines the well-being of the nation in retirement.

The special status of the corporations (i.e. traded companies) provides an easy access to the capital and strategic governmental support. Nobody is interested in things going wrong in this sector!

On the flip side – it gives corporations an excessive strength and financial cushion that sometime leads to economic inefficiency.

What is in it for you?

What does it all mean in terms of the work opportunities? In fact, corporations are the dream employers because of the higher salaries and outstanding benefits like sponsored 401k plans and health insurance. They seem to provide a great potential for professional and career growth.

Is it all so good in reality as it may sound? Well…

In my personal opinion, the degree of comfort at work is in direct ratio with the personal impact. The key here is ability to make tangible contributions to the overall result. Organizational structures and corporate bureaucracies should not be the stumbling blocks for the individual creativity and initiative.

Overall, flexibility and adaptability of the organization usually have an inverse correlation with its rate of growth.

At early stage every business has the maximum capacity for creativity and exploration. It is usually the period of the hardest work and dedication. What makes the entire early team contribute to the fullest extent possible? Usually, it is the unique spirit of the common cause and true passion to get things done.

With the growth more and more efforts are spent on the coordination. This is what economists call “transactional costs”, when the energy is allocated to overcome an internal friction. The larger organization is, the less direct are the connections between its members. Coordination starts consuming the overwhelming share of the internal activities.

20 to 80 rule? Yep. With knobs on

With the growth, organization gradually evolves from “all members contribute to the fullest extent” to a 20-80 rule. It’s when 20 percent of the members produce 80 percent of the result. The other 80 percent members’ participation is more about filling in the internal environment, mediating informational exchange and ensuring efficient coordination.

Of course the 20 percent part cannot exist and operate without the rest 80 percent. However there is always a delicate balance when both parts effectively cooperate. Unfortunately, at certain point of continuous organizational development the growing mass of the corporate bureaucracy oppresses the most productive 20 percent of its workforce. Coordination mechanisms become too cumbersome to dramatically widen the gap between the creative initiatives ant the end result.

Corporate reorganization is a mess. No matter what HR says

In my personal observations the crucial moment for the corporate evolution is when the double-digit trajectory turns into low growth or no growth at all. Shareholders continue to expect and require an increasing market evaluation… But it’s all about growth, which is no longer, a reality. Here comes a dual remedy called corporate reorganizations and M&A.

The first brings costs-cuts and personnel layouts. The common idea behind it is to ensure the continuous bottom-line boost in absence of the organic increase in revenues.

Acquisitions (made at the stagnant phase of business) usually aim at making up a one-time magic revenue jump. They are usually accompanied by painful integrations and again – restructuring and personnel layouts.

Finding oneself in a company undergoing the period of corporate reorganizations is a bummer. It is especially hard for people of passion with an internal drive to create and push things forward.

Getting back to the 20-80 rule, how it may work in an organization that undergoes consecutive 10-15% job cuts year after year (HP)? It would be a surprise to find at least any group or division that manages to keep the spirit of creativity and efficiency in such circumstances. In fact, employment in the restructuring corporations turns into a constant struggle for survival. Seems like far from being a dream environment for self-realization…

To make the long story short, working for a corporation and feeling great is a matter of life cycle of the business. You are lucky to catch a period of its fast growth. But the truth of life is that it doesn’t last forever. Don’t let it take you by surprise and don’t blame anybody when the situation starts to change for the worse. Be ready to resign and move on.

Small and medium business (SMB)

The role of SMB is absolutely crucial in modern economy. Here is some high-level statistics about this sector. Small and medium businesses employ 56 million people in this country. Alongside 22 million self-employed, it totals 57% of all employed workforce in the US.

It is widely recognized that SMB sector has been playing the leading role in American economical recovery after 2008 recession. Since then every 2 out of 3 jobs were created by SMB.

Due to its vibrant and dynamic nature SMB is a great place to work, learn and grow. There has been so much said about advantages of the SMB as an employment opportunity…

Working with SMB’s is an incomparable learning experience

First of all, it’s a big impact that you may have on the overall performance of the company. With flat and flexible organizational structure, proximity of the decision-makers, relationship between efforts and result is pretty straightforward.

Next, variety of duties and incredible opportunity to learn all aspects of the business inside out. Working for a small company allows quickly obtaining the new skills and finding specialty that you would really love. And if entrepreneurship is your calling, small company probably gives the best vision of the entire business and how it is operated.

Lastly and very important, when the business is growing, joining it at early stage may bring extraordinary benefits later on. This is how enthusiasts that started in the small cohorts of like-minded people with companies that later became Google, Apple or PayPal – made their fortunes.

Of course, not all small and medium businesses are alike. There are generally -accepted classifications by the number of employees, revenue size and industry. From the perspective of professional development and self-realization the main criteria is the growth potential.

SMB is a spirit of America

The dominant category of SMB by number of enterprises is mom-and-pop shops. Over 5 million of these very small companies employ about 20 million people or 15% of the total workforce.

America is really great for this type of business. Market is huge, infrastructure is super-efficient and workforce is highly mobile. A lot of immigrants apply their talent and skills in this sector. Local domestic and food services, construction, small retail and transportation are literally flooded with immigrants and legal aliens.

With almost no entry barriers and very low growth potential mom-and-pop shops sector is over-competitive. As well it has the highest closure rate: almost 30% a year. Although the entrepreneurs are not going away, they just recuperate and start the new ventures… Isn’t it in the spirit of America?!

What is special about the growth potential?

The opposite spectrum of the SMB field is the companies with the strong growth potential. This sub-segment cannot be categorized easily by the headcount. Some of them are founded as the tiny startups and end up going public at average age of less than 10 years. Others are acquired when they are yet on the rise.

These companies are the American treasure. They bring in most of the disruptive energy to the American economy. They hunt for innovations, because ability to innovate and move fast is their main competitive advantage.

Fast growing SMB companies do not emerge and exist in isolation. As a rule, the large businesses are their closest partners and supporters. Corporations are naturally slow innovators; they are in need for a constant external force to help them drive the change.

Partnerships with the large business is the key

Most usual case is when a small or medium business develops new technology and partners with a corporation to market it. In this scenario the innovation is leveraged by the massive sales organization of a larger partner.

Less often a small company overplays the big boys in marketing and sales. These examples were pretty common in early Internet age, when the large businesses were unfamiliar with the emerging media space. But time goes on; corporations are becoming pretty agile players online, pouring big bucks into Internet. So it’s getting harder for SMB’s to rely solely on the unique sales and marketing strategies.

Finally, startups may disrupt the whole new market. In this case they would innovate both in technology and marketing. Eventually it would lead to emergence of the new industry. Situations like that happen every other decade: computer industry and Internet are the two recent examples. Biotech is the new rising star.

In all these scenarios small and medium disruptive companies actively utilize existing infrastructure: education, finance, telecom and all other industries. Success of SMB’s is crucially dependent on the overall effectiveness of the economy.

Next to the large businesses, another important component of SMB development and growth is the unique entrepreneurial environment in America. Thousands of individuals tempting their fate are the perfect source for natural selection. Some build successful companies, others – work shoulder to shoulder with them and encourage the overall progress.

Ballpark statistics: 9 out of 10 Silicon Valley startups fail. This number is very speculative though. The next chapter is there to shed some light into the problem.

Self-employment in Silicon Valley

“Fail often, fail fast”. This Silicon Valley mantra has become a byword. For those coming here to tempt their fates, it sounds like an encouragement. The feeling of not being alone in the cohort of people who have tried but not succeeded, maintains this unique common touch and spirit of this place.

Steve Blank compares Silicon Valley with Ancient Greece and Italian Renaissance (http://steveblank.com/2011/02/22/a-visitors-guide-to-silicon-valley/). Indeed, the amount of creative energy in Silicon Valley is unbelievable. This is the place of tremendous success that makes governments around the world envious and eager enough to struggle replicating its effective business model.

After you have happened to stay and live in Silicon Valley, learn its culture your perception of this place will most probably change. You will get insights on its daily routine, hard work, and tough competition. And these things are extremely important to get more robust vision of your personal opportunities.

Most investors do not make money in Silicon Valley

One of those insights is that venture capital companies don’t make much profit in Silicon Valley. It was one of the entrepreneurial classes in Stanford, when I first heard it and back then didn’t pay much attention. I thought it could have been a statistical error or someone’s subjective judgment.

With such abundance of talents and ideas VC business in Silicon Valley must be an investment bonanza. And this seems to be one of the most common stereotypes.

Low returns complains from Sand Hill companies sound especially odd with 10x rule, which all of them strictly follow. Each company in their portfolio should be a prospect for 10x rule, i.e. bring 10 times more money in exit than it was invested.

Why 10x? Because 9 of 10 startups fail. And the one that succeeds should be able to pay off for all 10. Mark Andreessen puts it best: http://pmarchive.com/truth_about_vcs_part1.html.

So what is the problem with the low returns in VC industry? As a matter of fact, this is not the problem of the entire VC industry. 15-20 leading companies (http://www.svdaily.com/capital.html) make good returns to their LP’s. However, the rest of the industry – dozens of smaller funds are not doing so well. Most of them either loose money or return no profits at all.

Only 2% in global IPO proceeds accounted for Silicon Valley based companies in 2014

One of the decent indicators for a prudent investor is the number of IPO’s by Silicon Valley companies. According to renaissancecapital.com in 2014 “US IPO market set a 14-year record”. 209 American companies went public that year with almost $50B in proceeds.

Surprisingly, only 36 companies (or 17%) are from Silicon Valley with 9% share in total proceeds. Pretty modest result, isn’t it? In global scale the Silicon Valley contribution looks even less noticeable: Silicon Valley companies made just 2% in 2014 worldwide IPO’s proceeds.

With that venture capital continues to flow in Silicon Valley. The main sources of it are trillion-dollar institutional investors whose policy is to allocate small percent of funds to risky investments. Yet we are looking at billions of dollars every year. In certain sense VC industry in Silicon Valley won’t be short of money any time soon.

The pressure of hot money inflates the bubbles. High expectations result in larger capital supply. More projects get sucked into pipeline, although not all of high quality. During the latest boom started around 2010 it generated new phenomenon when loss-making companies became worth billions of dollars and even some of them went public (Twitter).

Acquisitions keep Silicon Valley startup ecosystem afloat

With all its attractiveness IPO as an exit strategy is a hard nut to crack. Excessive regulation, dependence on old East coast money and institutions – all that Silicon Valley VC’s do not really like. Therefore they successfully utilize another effective exit strategy for their portfolio companies – acquisitions. Ability of Silicon Valley VC’s to sell the companies is unbelievable and not without reason…

Looking at the top tech startups acquirers over past 6 years (http://www.forbes.com/sites/jasonhesse/2014/10/07/here-are-techs-top-acquirers-of-private-businesses-ranked-year-by-year/) most of them are from Silicon Valley: Google, Yahoo, Facebook, Cisco, Apple. All of them were startups sometime ago and dealt with the same VC’s. Successful tech corporations that regularly acquire startups are an inherent and indispensable part of the entire ecosystem of Silicon Valley.

The apparent availability of capital in Silicon Valley attracts a lot of entrepreneurs from all over the world. Many of them come over to raise funds for their ventures. However there are unwritten rules that can only be learned through personal experience.

Startup gets funded when it proves that it doesn’t need money

As strange as it may sound, one of those rules is that VC’s give money only when a company actually … doesn’t need money. Growth is the major investment attractor in Silicon Valley. If a startup proves it may grow without external financing and that scale is just a matter of time, here is where VC’s are stepping in. Their business is to leverage the growth potential when the business concept has already been proved.

Many bright individuals jump into entrepreneurship in Silicon Valley with just a business idea. They sincerely believe that demonstrating professionalism and passion would help them conquer Sand Hill. Usually it simply doesn’t work this way.

Sand Hill does back the early stage projects and over past several years invest more money then ever into seed stage. However, in order to get the seed money directly from VC’s an entrepreneur has to be an insider, i.e. to have successful exits or achievements in the past and to be recognized in the meritocracy of Silicon Valley.

It’s not just all about fundraising

Being a first time entrepreneur in Silicon Valley automatically moves you to a lower level of the investment “food chain”. You would need to persuade angels first to give you the seed money. However today the institute of business angels became a little diluted in Silicon Valley due to the rapid development of crowd-funding platforms.

In the past the angels had been not just investors, but also mentors. Nowadays ability to share the risk and invest very little has transformed the angelship more into the gamble.

The typical case nowadays is when a dozen of private investors pool up their funds to finance the seed round of $150-200k (the median financing in 2014). With the average investment of $5-10k the exposure to risk is minimal.

Easier access to money through various crowd-funding platforms doesn’t increase the chances for success. Statistically the number of startups hitting series B and C is not growing that fast. It means that availability of seed funding just raises the failure ration among the early stage companies.

Many entrepreneurs are eager to raise the seed round through thick and thin. They are convinced it is a first step up the fundraising ladder. It would then be followed by series A, B and so long. It is definitely not the case. Easy seed money jeopardizes the business, because it may lead a start-up in the wrong direction.

Popular believe that Silicon Valley is a fundraising Mecca is false. Silicon Valley is more about networking, establishing contacts, building partnerships and initial traction. Early success brings the recognition and the money just follows.

Team up with the incumbents

One of the most important and unique assets of Silicon Valley is a large cohort of people actively seeking co-found a company and to have a skin in the start-up game. Many of them are high net-worth individuals who made their money through successful exits with other companies. Having been early investors, mentors or employees in successful startups in the past, they have experience, connections and money to kick-start the new business.

Just to give an idea, recent IPO of Facebook created 1,000 new millionaires. This is just example, although one of the largest. There have been significant acquisitions or IPO’s in Silicon Valley in almost every single area of business. And all the beneficiaries of those exits are out there. Teaming up with one of those guys is a great luck and opportunity.

The best way to get in touch is to attend one of the Silicon Valley accelerators programs: 500 Startups, Plug’n’Play are the largest. They provide access to the resources for free (some of them even invest a little money). Most importantly, there are regular mentorship sessions, meetups and presentations. Over a course of 2-3 moths it is a great chance to refine a business idea, build an investor deck, polish an elevator-speech and get ready to move forward.

Accelerators don’t guarantee neither success nor funding after the program. However they provide an intensive exposure to the experienced startup community. And it is worth a lot.

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Silicon Valley attracts a lot of experienced and novice entrepreneurs every year, seeking to start their own businesses. Their number significantly outweighs the quantity of funded startups, nothing to say about businesses reaching equity rounds of financing. Even though many entrepreneurs fail to build successful businesses, their experience is in no way discouraging.

Most of them assimilate in the ecosystem of Silicon Valley. Some join other startups and medium size growing companies, others – pursue corporate careers. Entrepreneurial experience and passion always stay with them as their greatest asset. As time passes, they may launch new endeavors since it is never too late in Silicon Valley to start a business and rediscover oneself.

5. Taboo topics

America is a free country. But freedom doesn’t mean anarchy. It has been shown above that law is above all over here. It is good to know though that beside just letter of the law there are plenty of unwritten norms and rules that everyone follows.

One of those norms is that there are topics that you cannot openly talk about. So called “taboo topics” exist in every society. But in the most democratic country in the world it is all about being politically correct and not being offensive.

Emancipation of different social groups and minorities in American society has happen very rapidly over past decades. Social rights of these groups now top political agenda. However, in everyday language conversations about gender, sexuality and race are almost non-existent. Since opinions continue to be quite polarized it has become a matter of correctness not to touch those topics at all.

Disorders and disabilities

One of those “taboo topics” in America less known to foreigners is disorders and disabilities. On the surface it is quite simple: try not to notice anything that might seem “abnormal” in surrounding people. Unless it is a certain form of self-expression (which very often may be a case) outward or behavioral abnormality may be caused by some disorder or disability. Even slightly incorrect reference to it may be offensive.

America is a country of highly developed healthcare research system. It has revealed and described a variety of different disorders. You would be totally surprised to learn about some of them in daily conversations. People around the world live their lives being completely unaware of their hidden disorders. In America they would become patients and would be treated accordingly…

Lifestyles and diets

Russia struggled a lot in its history from famines and food shortages. It is broadly reflected in the language. One of the proverbs I learned at mother’s knee was “bread around the head”. It is not that topical nowadays, but still forms a certain attitude towards the bread and food in general.

When I came to America I learned that bread (and wheat in general) is a source of gluten and overall addictive. I tried to argue at first, but it turned out completely useless and only spoiled my reputation.

Later, I learned about different diets that people follow including sophisticated forms of veganism and ended up becoming a vegetarian myself. Diets as well as life-styles are the forms of self-expression. Any attempt to impose personal conviction on this matter may be perceived by some people as offensive.

Northern California is especially notorious about various types of diets as well as extraordinary and remarkable life-styles. Be ready to hear quite special and sometime weird stories. Sooner or later it will no longer feel strange. As awkward as it may sound - adopting own unique life-style is the best way not to stand out in Bay Area:).

Politics

One of the traditional taboo topics is the politics. It has been extremely politically incorrect to ask someone which party they support. And it has been graciously allowed to foreigners to make that mistake. Since a foreigner apparently does not belong to any political camp, it’s been a vent for an average American to express their views.

Noteworthy, when you find yourself within the crown of either republicans or democrats they speak about politics pretty openly (republicans do much more than democrats though). To me this is the crucial distinction of Politics from other taboo topics. You may at least hear what people think and passionately argue about.

Be yourself and come up smiling

Different taboo topics along with other cultural nuances often become the subject of confusion for the newcomers. However, being a foreigner is always an excuse. After all the language causes even more embarrassments. It is not native and there is nothing at all that can be done about it.

It always helps to think about it from the following perspective. A century ago America was yet a multilingual country. A group of first generation immigrants speaking with accent was dominant. Language was never an issue to reach a common understanding.

With all this America is much easier immigration destination than any other country in the world. It’s a country of immigrants. So being different culturally and linguistically may never be a stumbling block for personal growth and development in this country.

The universal recipe is to be yourself and come up smiling. This is a country of smiling people. Optimism is American credo that drives the nation.

6. Conclusion

This blog is mainly about self-realization and how important it is to follow the calling. Every year a lot of people around the world leave their native countries and start endeavors oversees to discover their own Way.

Nowadays America continues to be the most diverse and dynamic economy around the world. Unlike other large markets like Europe or China for example, America is quite open for the newcomers, because it is a country of immigrants.

Immigration has always been a great challenge. However it is also an opportunity to shake up a personal potential and re-discover oneself. A need to overcome hardship and adapt to new life situation open the second wind:).

There are several most common ways to start the life in the new country. Employment or cross-border corporate transfer is a straightforward opportunity, which makes transition relatively easy.

Getting an education is a smooth and reliable way to reestablish oneself in the new country. Most of the educational programs in this country are well designed to put students in touch with the industry. Pursuing master or doctoral degrees allows making a solid step up the career ladder. As a very special case MBA even gives a chance to co-found startup right in the classroom.

Finally, the most challenging way is to start a business. If it is of success – this country is all yours because America loves successful entrepreneurs. If it fails – time and efforts would never be spent in vain. Entrepreneurship is an awesome opportunity to integrate, build personal connections and reputation. And of course, taking a chance in Silicon Valley is especially beneficial. As Guy Kawasaki puts it “there is no better place to fail the world than in Silicon Valley”:) (http://guykawasaki.com/how_to_kick_sil/).

With all that I wish a great luck and success to every immigrant tempting their fates in this country.