Clustering effects are real, even for software. The ability to meet with clients by taking a (relatively) quick trip from SOHO to Chelsea (to initiate, pitch, o

Clustering effects are real, even for software. The ability to meet with clients by taking a (relatively) quick trip from SOHO to Chelsea (to initiate, pitch, or close deals) or the ability to meet with the developers of company that created a service with an API you're going to integrate with is actually helpful ( "warm currents" of communication). Software technology ecosystems could certainly succeed in other places if one could bootstrap them in the first place; the clustering (and self-reinforcing network) effects mean that people gravitate to where the action is already happening. Getting started in a new location is challenging, so only those willing to shoulder additional risk (beyond the often-high risk of starting and running a startup) are going to try.