Comment by native_samples

I've talked to entrepreneurs about this over the years and even met a professor whose entire field of study (at that time) was why Europe/rest of world doesn't produce tech firms at the same rate as the USA. He had two explanations that seemed plausible:

1. The USA has a culture of granting equity to early employees. Equity grants are highly motivating. Such grants are expected and standardized. Rest of the world doesn't. Even as late as 2006, the Zürich tax authorities were needing extra time and special procedures to figure out what to do about Googler's equity and stock grants because a US firm setting up shop there was the first time they'd had to deal with this kind of compensation structure.

Evidence: one of the very few tech firms to get big in Europe (ARM) did grant equity to early employees.

2. USA is a large internal free market and this is a big deal.

ARM is a descendent of a computer company called Acorn. In the 1980s the UK was able to hold its own against US tech companies, in fact, Acorn RISC machines were in some ways technologically quite superior to the the US machines. I remember when I was a little kid, the teachers were constantly asking me to fix the school computers in various ways. The Acorn machines simply did not break, ever (well, maybe there were occasional issues with the printers). They were also easy to use and had a consistent UI, some great apps. Feeling kinda nostalgic to remember them really. The IBM PCs were just broken dreck that the schools put up with because they got them cheap via some subsidized scheme and had some unique apps, and Macs were nowhere to be seen.

Within a decade that situation had reversed and the Acorns were being pulled out. Why? Well, Acorn hit financial problems, partly because they were unable to sell into Europe due to bureaucracy and paperwork, and partly due to a failed attempt to expand into the USA, stymied partly by the same problems. The US firms didn't face this problem because of the ease of interstate commerce, so they were able to get big enough quickly enough that they could invest more into their tech and also hire the big legal/logistics teams necessary to move into foreign markets. The complexity of this is a large fixed cost, but the size you can get to before you have to tackle it isn't.

So, Acorn died off and ARM ended up taking on the low end microcontroller market. ARM grew quietly, getting big enough in a boring market that it could sell and hire internationally, and then the smartphone revolution hit and it grew very quickly. Why was it able to grow so quickly? Partly because by then it'd reached a size where it could do things like ... hire chip design teams in the USA. The UK is a country with 1/5th the population, after all.