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From Bezos to Walton, Big Investors Back Fund for ‘Flyover’ Startups

131 points by petethomas 9y ago

everdev 9y ago
I ran a remote web agency for years and sought talent in flyover states. I found employees who were just as talented as those out here in Silicon Valley but just preferred where they lived. A modest Silicon Valley salary was typically well received since their cost of living was usually much lower.
- aantix 9y ago
  A region where modesty (especially monetary) is highly valued and the region consistently comes in last for VC funding.. https://www.citylab.com/life/2016/02/the-spiky-geography-of-venture-capital-in-the-us/470208/ https://www.citylab.com/life/2016/02/the-spiky-geography-of-...
- Mountain_Skies 9y ago
  The agribusiness sector imports huge amounts of immigrant talent far from the coasts. If you're a potential immigrant in tech, you might prefer San Francisco over Omaha but if your potential employer is in Omaha, you're probably going to pick it over staying at home.
bsder 9y ago
Except that when any of these companies starts getting successful, they always find that they need to move to a more startup-friendly area in order to get to the next level. (see ModCloth, for example). The other problem is that venture money wants "lottery tickets" rather than "sustainable businesses". This is a real problem because there are lots of businesses that cannot access startup capital because they don't have a "10x" story. Causing a large funding increase for "sustainable businesses" would employ far more people than generating one or two new unicorns.
- nl 9y ago
  I'm not familiar with ModCloth but I looked them up and they have Engineering positions open in Pittsburgh (as well as SF). Lots of companies follow the Israeli model: sales and money raising in SV, engineering elsewhere.
- replicatorblog 9y ago
  MailChimp has built a huge business in Atlanta, likely closing in on a billion a year in revenue. Tableau is a billion-dollar business in Provo, Utah, and is not the only big winner there. Dyn built a half billion dollar business in Manchester, NH. Nothing can compete with San Francisco—three of the biggest five tech co's are HQ'd there. But there's really very little keeping entrepreneurs from building a billion-dollar business anywhere, provided there's a decent university nearby. It is MUCH, MUCH, MUCH harder to get funding, but if you can bootstrap, the world is your oyster.
  - zjaffee 9y ago
    The big thing is having access to a big university, where students who attend that university want to stay local. BYU students are attracted to Utah, Georgia has enough universities that produce graduates who want to stay in state. However, we aren't seeing the same happen with UIUC and the state of illinois or University of Michigan with detroit.
  - thousandautumns 9y ago
    Tableau isn't Provo based. You are probably thinking of Qualtrics.
mbesto 9y ago
I live in SV and love the quality of here. Honestly though, the situation for early stage startups here is becoming untenable. My theory is the following: - Seed money is drying up (there's legitimate data to support this) because it's all being saturation in Series Alphabet companies that are all raising on legitimate growth or legitimate track records (but with zero growth and very good connections). - The housing situation is atrocious, and the tech scene is getting older (read -> having kids). - This means employees are saturating towards Google/FB/Apple/etc because that's the only thing you can afford to do in the bay area. When you can afford pay hundreds and thousands of developers $500k all-in packages because your yearly profits alone can sustain the whole of the bay area (looking at you Apple) then it's almost impossible to compete for talent in anything that isn't Google/FB/Apple/etc or a Series Alphabet with strong capital. - The rest of the world has learned all of the failures and lessons of SV and caught up. And yes all of the "inbound content" you created was free consulting to the 5 man shop running out of Madison, WI who is now competing with 3 man Stanford drop-out of the mid 2000's. My bet is on this fund and other similar funds, like the middle market PE funds in tech (PSG, KKR, GSV, etc), Indie.vc, Venture for America, etc. This is the next big horizon in money making tech investing, not the next Instagram...those days are over. It's amazing how many tech companies no one here has heard of but are making very legitimate money and are based in very unconventional locations. Tampa Bay, Minneapolis, Charlotte (and the tech triangle), Knoxville, Orlando, Atlanta, Provo, Boise, St Louis, Denver...you name it. I think we're gonna see many more Bandwidth.com's, MailChimps, Kabbage's, Outcome Healths, etc in the very near future.
- stevenj 9y ago
  Everything I've ever learned about venture capital is centered around the notion that in order for the economics to work, you have to invest in big winners (companies that exit at valuations of hundreds of millions to billions of dollars), such as an Instagram. Do you disagree with that? And/or are you saying that there are many of those kinds of promising startups outside of Silicon Valley to justify these new investment funds? My personal opinion is that there's just too much money chasing too few good companies. In other words, I think many startups, including ones that are worth a billion or more on paper today, will ultimately fail to generate the necessary returns for many VC investors and firms. And as a result, the access to money at all stages will constrain greatly, and sharply.
john_teller02 9y ago
if you think you can build startup culture without immigrants sweat and hard work you are kidding yourself. There is a reason for the way things are.
- dboreham 9y ago
  Not sure why this is being downvoted because ime there are typically very many immigrants in start ups and running them. Myself included. Although, I'm also in a flyover state these days.
thisisit 9y ago
I don't doubt that this is a good thing for the flyover states. But I am little skeptical of the whole goody two shoes and "impact investing" angle. With the amount of money sloshing around it is becoming increasing difficult to find places to generate alpha on investments. While people can be like Softbank and bet money on a unicorn becoming a super-unicorn but the risk reward is skewed. Then there is this: > In other words, if they discover a nascent but promising e-commerce company in Allentown, Pa., they will not only invest in it, but they might also help it establish a relationship with one of the fund’s investors — Mr. Bezos, for example — who might invest even more.
- seltzered_ 9y ago
  Yeah. Worth noting Amazon fulfillment already has a presence in Allentown.
  - longerthoughts 9y ago
    Presence of a fulfillment center doesn't mean much, though. I've been on site at an Amazon fulfillment center and they primarily provide unskilled labor opportunities with a handful of shipped in corporate roles to oversee operations, manage supply chain, etc. Doesn't quite resemble the vision of the fund.
- exolymph 9y ago
  They specifically say that they are not impact investing but seeking strong returns.
jorblumesea 9y ago
The biggest danger to the flyover states is the states themselves. While investment in education remains high, the future doesn't look great. Top tier state research universities are seeing their budgets slashed and faculty poached by the ivys. Declining tax base, reduced federal funding and sadly an anti intellectual voter base will destroy the advancement opportunity of the middle class and hurt American R&D. The coasts meanwhile continue to pour money into investment and state schools. Excellent article on the issue: https://www.theatlantic.com/business/archive/2017/10/midwestern-public-research-universities-funding/542889/ https://www.theatlantic.com/business/archive/2017/10/midwest...
- jstewartmobile 9y ago
  Excellent article from the same coastal thought-bubble that predicted Clinton's 99% chance of victory. Simpler explanation would be that specialties with the luxury of centralizing (ex: investment banking, tech, advertising, certain types of law, etc.) typically do--for all of the obvious reasons. edit: And I did not write this as a celebration of her loss or political flamebait. I wrote it to point out that there is a gaping blind spot in the coastal worldview, which has already had severe real-life consequences.
  - make3 9y ago
    I mean, without addressing your empty ad hominem, are you seriously saying the fact that schools suck has nothing to do with service/intellectual jobs moving elsewhere?
    - jstewartmobile 9y ago
      Ad hominem is after the person, not the thought bubble. Most of the big places are going after IQ more than anything else. Know plenty of local students and interns who went on to take lucrative jobs at big companies with either a state diploma, or no college at all. I don't believe it is coincidental that so many of the founders in this space are college drop-outs.
jstewartmobile 9y ago
I'm in flyover country, and I'm pretty skeptical of this. Seems to me that China, Russia, and Europe are focused on "rolling their own" so to speak--especially after the Snowden leaks. China has already made a lot of progress on that front. India will probably join the party if the visa/offshoring pipeline dries up. If the big 4/5/6 finally end up with some viable international competition, I don't think minting more tech startups is a particularly good long-term plan.
dmode 9y ago
If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when capital eventually tightens in the next few years. Another problem with investing in "flyover" states is that you are spreading your investment across many states and cities, individually any one of them lack the capital and talent concentration to compete with coastal cities. A much better strategy is probably to focus the entire investment portfolio in Chicago or Detroit. Finally, when you scale your startup to 10s of billions, you will need to attract immigrant talent. Which is much easier to do in the coasts.
- kamarg 9y ago
  I think you just hit on part of why they weren't attracting VC money the last decade of easy capital in your second sentence. VCs were afraid of spreading themselves out so they just continued investing in NYC/SF. If the mantra is "don't spread your investments out geographically" and you're already heavily invested in an area, how do people not from that area attract your money? Now that the traditional startup hotspots are over saturated with investors, those who can't set the best terms for themselves in those areas are finally realizing they can likely get better terms in places that aren't currently competing as heavily for VC money.
- deadmetheny 9y ago
  >If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when capital eventually tightens in the next few years. The cost of living is lower here (the Midwest) and outside the coasts in general. It's easier to bootstrap. There's plenty of successful startups that started in the Midwest, they're just not the Big 3. >individually any one of them lack the capital and talent concentration to compete with coastal cities. A much better strategy is probably to focus the entire investment portfolio in Chicago or Detroit And create another SV situation where all of the talent is squeezed into one small geographic area (granted, with less insane building regulations than SV), in an age where we can effectively work from anywhere in the world that we want to? Hard pass. >Finally, when you scale your startup to 10s of billions, you will need to attract immigrant talent. Which is much easier to do in the coasts. I'm not convinced that we actually lack Americans capable of doing the jobs we need to do. Immigration has been increasing in the past 10 years or so in the Midwest though, despite still lagging behind the coasts, for whatever that's worth.
jpao79 9y ago
This seems like a really encouraging initiative. Somewhat tangentially, I also feel like the following ideas would help spread the Silicon Valley fortunes across the US better: 1.) Mainstream the idea of prefab housing built in flyover states/cities and transported to the coasts by truck/rail. It seems incredibly promising. Construction workers can work in a comfortable climate controlled indoor environment, work regular hours at a steady pace, no fighting traffic, live in cost appropriate areas. Basically car/airplane building techniques/uniformity applied to houses with built-in limits on how far it can be outsourced to foreign companies (at some point transportation costs start to outweigh outsourcing advantages). Modular developer working with Google with housing built in East Bay/Sacramento: Factory_OS at Mare Island https://vimeo.com/228412494 https://vimeo.com/228412494 Utah based builder: http://www.guerdonmodularbuildings.com/modular-now-marriotts-modular-initiative/ http://www.guerdonmodularbuildings.com/modular-now-marriotts... with a building in San Jose: http://www.palisadebuilders.com/projects/domain/ http://www.palisadebuilders.com/projects/domain/ 2.) FAANG and WeWork should invest in always on, life-size, fiber-to-fiber Telepresence like video conferencing systems that connect dedicated hallways/open office/meeting spaces Silicon Valley to their corresponding spaces in remote offices instead of attempting to do Google Fiber residential installs to a handful of lucky chosen people. Always on means meetings start immediately without fumbling with the meeting configuration UI. Surreptitious hallway meetings can occur. This would actually work really well for offices in the same Pacific Timezone (i.e. Fresno, Gilroy, Bakersfield, Reno, Las Vegas). Here's an example connection between MIT and Stanford. http://tech.mit.edu/V131/N31/wormhole.html http://tech.mit.edu/V131/N31/wormhole.html
codeonfire 9y ago
Bezos is the worst person to invest in flyover areas. Amazon culture is extremely classist. Every bad stereotype you can think of happens. If you are from a rich family on a coast and went to an ivy you get lots of funding, support, and an easy management job. If you are from flyover country you are supposed to be a robot slave whether working in a warehouse or coding through the weekend. Yeah, if you are from some village in Asia tech companies will help you out and hold you up as an example, but guess where people in flyover states are not from.
QML 9y ago
Imagine if Big Capital started investing in cities instead of companies. That would be a nice thought. Property would be the new stock; hostile takeovers would be fights over the city-government board. Investors would profit when they managed to increase the value of the properties they own. So they start building better public schools, improve the local infrastructure, make the downtown a bit more appealing, etc. -- Hell, why not build a community college, an actual communal one where anyone can freely attend, and have that as the new "church"? Of course there's the issue with gentrification -- which I'm not sure is avoidable given the influx of capital -- but if equal access to these new resources is guaranteed, an investment in cities may perhaps produce compound interest not only for the investors but also for the residents long term. Thoughts?
- eli_gottlieb 9y ago
  This is basically how Big Real Estate already treats most cities.
  - ABCLAW 9y ago
    Yes. Developers that obtain approval for neighbourhood plans operate in exactly this manner, putting in sewage, roads, schools, parks, etc. in order to improve the value of the commercial/residential units they are selling. Additionally, some less 'saleable' improvements end up being included as concessions in negotiation with the local municipal authority to get the development plan approved. Public transit financing in greenfield areas works similarly.
iambateman 9y ago
To me, this feels like a pretty normal market process, more than a giant leap of human goodness. These investors are seeking returns. For the past 6 decades, a tiny area of the country provided great returns. The compacted nature of the “Valley” helped concentrate resources and grow companies. But at some point there is less incremental benefit to stuffing one more tech startup into SF than there is looking “afield” to further reaches of the country. This is a fantastic sign for people like me who live in lowly (but lovable) Columbia SC. For too long, the investment pool has been a drip, even while the talent pool grows. Good job investors. We can’t wait to see you. And if I may, please don’t imply that you’re doing this for any reason other than maximized returns. We’re all adults here.
- saturdaysaint 9y ago
  These are fair points, yet the most prominent names attached to this fund are also pretty active participants in the national political conversation (J.D. Vance, Bezos, Buffet). Vance, who is leading this, is famous for moving back to his home region, beleaguered Appalachia, on mostly altruistic terms. Bezos has been targeted with tweets from the president suggesting a thirst for brute force regulations on Amazon and WaPo for nakedly political reasons. I don't think it's naive to posit that altruism and a concern for the political order are at play here. This group of people suggests to me that they're realizing that having so much of our economy concentrated in a few states is a political vulnerability that can be easily exploited by a demagogue.
cjbenedikt 9y ago
If you ever attended one of its ("Rise of the Rest") events you'd know it's nothing but a Case vanity project. He even describes himself in a fireside chat as a mix of Steve Jobs and Bill Gates....
Balgair 9y ago
Does Texas count as 'flyover'? How about weapons based start-ups? There are a fair few micro-armories that do firearm based products out of TX. Investors would be mindful to watch out for them. Remember that gun with the gyrometers that would turn you into a sniper? Or the 3-D printed guns? Or the 'smart' guns? You may/not be making the world a better place, but you will change it.
- longerthoughts 9y ago
  Energy is the more likely candidate for large-scale startup growth in TX than weapons based start-ups. The energy industry has obviously been important to TX for a long time, but the state of the oil industry creates a gap for new players to fill, either by 1) further automation in the oil industry to improve margins in the face of low oil prices, or 2) embracing the rise of renewable energy tech in a state that has incredibly high renewable potential (solar, wind) and demonstrated investment.
draw_down 9y ago
When you see all the talk of “bargain” talent: remember that so much of what happens is about labor costs. Are Apple employees overpaid? Consider that their work has made it the most valuable company in the world. So are they overpaid, or are other companies simply unable to capitalize upon their talent as well as Apple/Netflix/whoever? Everyone loves capitalism until it’s time to pay someone for their work.
purplezooey 9y ago
Wish this would accelerate. The Bay Area seems incapable of fixing its problems. Just read an article like this one, and you know we're hosed for a long time to come. https://nyti.ms/2kfuPVl https://nyti.ms/2kfuPVl

131 points by petethomas 9y ago

I ran a remote web agency for years and sought talent in flyover states. I found employees who were just as talented as those out here in Silicon Valley but just preferred where they lived. A modest Silicon Valley salary was typically well received since their cost of living was usually much lower.

aantix 9y ago
A region where modesty (especially monetary) is highly valued and the region consistently comes in last for VC funding.. https://www.citylab.com/life/2016/02/the-spiky-geography-of-venture-capital-in-the-us/470208/ https://www.citylab.com/life/2016/02/the-spiky-geography-of-...
Mountain_Skies 9y ago
The agribusiness sector imports huge amounts of immigrant talent far from the coasts. If you're a potential immigrant in tech, you might prefer San Francisco over Omaha but if your potential employer is in Omaha, you're probably going to pick it over staying at home.

bsder 9y ago

Except that when any of these companies starts getting successful, they always find that they need to move to a more startup-friendly area in order to get to the next level. (see ModCloth, for example). The other problem is that venture money wants "lottery tickets" rather than "sustainable businesses". This is a real problem because there are lots of businesses that cannot access startup capital because they don't have a "10x" story. Causing a large funding increase for "sustainable businesses" would employ far more people than generating one or two new unicorns.

nl 9y ago
I'm not familiar with ModCloth but I looked them up and they have Engineering positions open in Pittsburgh (as well as SF). Lots of companies follow the Israeli model: sales and money raising in SV, engineering elsewhere.
replicatorblog 9y ago
MailChimp has built a huge business in Atlanta, likely closing in on a billion a year in revenue. Tableau is a billion-dollar business in Provo, Utah, and is not the only big winner there. Dyn built a half billion dollar business in Manchester, NH. Nothing can compete with San Francisco—three of the biggest five tech co's are HQ'd there. But there's really very little keeping entrepreneurs from building a billion-dollar business anywhere, provided there's a decent university nearby. It is MUCH, MUCH, MUCH harder to get funding, but if you can bootstrap, the world is your oyster.
- zjaffee 9y ago
  The big thing is having access to a big university, where students who attend that university want to stay local. BYU students are attracted to Utah, Georgia has enough universities that produce graduates who want to stay in state. However, we aren't seeing the same happen with UIUC and the state of illinois or University of Michigan with detroit.
- thousandautumns 9y ago
  Tableau isn't Provo based. You are probably thinking of Qualtrics.

mbesto 9y ago

I live in SV and love the quality of here. Honestly though, the situation for early stage startups here is becoming untenable. My theory is the following: - Seed money is drying up (there's legitimate data to support this) because it's all being saturation in Series Alphabet companies that are all raising on legitimate growth or legitimate track records (but with zero growth and very good connections). - The housing situation is atrocious, and the tech scene is getting older (read -> having kids). - This means employees are saturating towards Google/FB/Apple/etc because that's the only thing you can afford to do in the bay area. When you can afford pay hundreds and thousands of developers $500k all-in packages because your yearly profits alone can sustain the whole of the bay area (looking at you Apple) then it's almost impossible to compete for talent in anything that isn't Google/FB/Apple/etc or a Series Alphabet with strong capital. - The rest of the world has learned all of the failures and lessons of SV and caught up. And yes all of the "inbound content" you created was free consulting to the 5 man shop running out of Madison, WI who is now competing with 3 man Stanford drop-out of the mid 2000's. My bet is on this fund and other similar funds, like the middle market PE funds in tech (PSG, KKR, GSV, etc), Indie.vc, Venture for America, etc. This is the next big horizon in money making tech investing, not the next Instagram...those days are over. It's amazing how many tech companies no one here has heard of but are making very legitimate money and are based in very unconventional locations. Tampa Bay, Minneapolis, Charlotte (and the tech triangle), Knoxville, Orlando, Atlanta, Provo, Boise, St Louis, Denver...you name it. I think we're gonna see many more Bandwidth.com's, MailChimps, Kabbage's, Outcome Healths, etc in the very near future.

stevenj 9y ago
Everything I've ever learned about venture capital is centered around the notion that in order for the economics to work, you have to invest in big winners (companies that exit at valuations of hundreds of millions to billions of dollars), such as an Instagram. Do you disagree with that? And/or are you saying that there are many of those kinds of promising startups outside of Silicon Valley to justify these new investment funds? My personal opinion is that there's just too much money chasing too few good companies. In other words, I think many startups, including ones that are worth a billion or more on paper today, will ultimately fail to generate the necessary returns for many VC investors and firms. And as a result, the access to money at all stages will constrain greatly, and sharply.

john_teller02 9y ago

if you think you can build startup culture without immigrants sweat and hard work you are kidding yourself. There is a reason for the way things are.

dboreham 9y ago
Not sure why this is being downvoted because ime there are typically very many immigrants in start ups and running them. Myself included. Although, I'm also in a flyover state these days.

thisisit 9y ago

I don't doubt that this is a good thing for the flyover states. But I am little skeptical of the whole goody two shoes and "impact investing" angle. With the amount of money sloshing around it is becoming increasing difficult to find places to generate alpha on investments. While people can be like Softbank and bet money on a unicorn becoming a super-unicorn but the risk reward is skewed. Then there is this: > In other words, if they discover a nascent but promising e-commerce company in Allentown, Pa., they will not only invest in it, but they might also help it establish a relationship with one of the fund’s investors — Mr. Bezos, for example — who might invest even more.

seltzered_ 9y ago
Yeah. Worth noting Amazon fulfillment already has a presence in Allentown.
- longerthoughts 9y ago
  Presence of a fulfillment center doesn't mean much, though. I've been on site at an Amazon fulfillment center and they primarily provide unskilled labor opportunities with a handful of shipped in corporate roles to oversee operations, manage supply chain, etc. Doesn't quite resemble the vision of the fund.
exolymph 9y ago
They specifically say that they are not impact investing but seeking strong returns.

jorblumesea 9y ago

The biggest danger to the flyover states is the states themselves. While investment in education remains high, the future doesn't look great. Top tier state research universities are seeing their budgets slashed and faculty poached by the ivys. Declining tax base, reduced federal funding and sadly an anti intellectual voter base will destroy the advancement opportunity of the middle class and hurt American R&D. The coasts meanwhile continue to pour money into investment and state schools. Excellent article on the issue: https://www.theatlantic.com/business/archive/2017/10/midwestern-public-research-universities-funding/542889/ https://www.theatlantic.com/business/archive/2017/10/midwest...

jstewartmobile 9y ago
Excellent article from the same coastal thought-bubble that predicted Clinton's 99% chance of victory. Simpler explanation would be that specialties with the luxury of centralizing (ex: investment banking, tech, advertising, certain types of law, etc.) typically do--for all of the obvious reasons. edit: And I did not write this as a celebration of her loss or political flamebait. I wrote it to point out that there is a gaping blind spot in the coastal worldview, which has already had severe real-life consequences.
- make3 9y ago
  I mean, without addressing your empty ad hominem, are you seriously saying the fact that schools suck has nothing to do with service/intellectual jobs moving elsewhere?
  - jstewartmobile 9y ago
    Ad hominem is after the person, not the thought bubble. Most of the big places are going after IQ more than anything else. Know plenty of local students and interns who went on to take lucrative jobs at big companies with either a state diploma, or no college at all. I don't believe it is coincidental that so many of the founders in this space are college drop-outs.

jstewartmobile 9y ago

I'm in flyover country, and I'm pretty skeptical of this. Seems to me that China, Russia, and Europe are focused on "rolling their own" so to speak--especially after the Snowden leaks. China has already made a lot of progress on that front. India will probably join the party if the visa/offshoring pipeline dries up. If the big 4/5/6 finally end up with some viable international competition, I don't think minting more tech startups is a particularly good long-term plan.

dmode 9y ago

If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when capital eventually tightens in the next few years. Another problem with investing in "flyover" states is that you are spreading your investment across many states and cities, individually any one of them lack the capital and talent concentration to compete with coastal cities. A much better strategy is probably to focus the entire investment portfolio in Chicago or Detroit. Finally, when you scale your startup to 10s of billions, you will need to attract immigrant talent. Which is much easier to do in the coasts.

kamarg 9y ago
I think you just hit on part of why they weren't attracting VC money the last decade of easy capital in your second sentence. VCs were afraid of spreading themselves out so they just continued investing in NYC/SF. If the mantra is "don't spread your investments out geographically" and you're already heavily invested in an area, how do people not from that area attract your money? Now that the traditional startup hotspots are over saturated with investors, those who can't set the best terms for themselves in those areas are finally realizing they can likely get better terms in places that aren't currently competing as heavily for VC money.
deadmetheny 9y ago
>If flyover states didn't produce these startups during the last decade of easy capital, I am struggling to see how there would be a new breed of startups when capital eventually tightens in the next few years. The cost of living is lower here (the Midwest) and outside the coasts in general. It's easier to bootstrap. There's plenty of successful startups that started in the Midwest, they're just not the Big 3. >individually any one of them lack the capital and talent concentration to compete with coastal cities. A much better strategy is probably to focus the entire investment portfolio in Chicago or Detroit And create another SV situation where all of the talent is squeezed into one small geographic area (granted, with less insane building regulations than SV), in an age where we can effectively work from anywhere in the world that we want to? Hard pass. >Finally, when you scale your startup to 10s of billions, you will need to attract immigrant talent. Which is much easier to do in the coasts. I'm not convinced that we actually lack Americans capable of doing the jobs we need to do. Immigration has been increasing in the past 10 years or so in the Midwest though, despite still lagging behind the coasts, for whatever that's worth.

jpao79 9y ago

This seems like a really encouraging initiative. Somewhat tangentially, I also feel like the following ideas would help spread the Silicon Valley fortunes across the US better: 1.) Mainstream the idea of prefab housing built in flyover states/cities and transported to the coasts by truck/rail. It seems incredibly promising. Construction workers can work in a comfortable climate controlled indoor environment, work regular hours at a steady pace, no fighting traffic, live in cost appropriate areas. Basically car/airplane building techniques/uniformity applied to houses with built-in limits on how far it can be outsourced to foreign companies (at some point transportation costs start to outweigh outsourcing advantages). Modular developer working with Google with housing built in East Bay/Sacramento: Factory_OS at Mare Island https://vimeo.com/228412494 https://vimeo.com/228412494 Utah based builder: http://www.guerdonmodularbuildings.com/modular-now-marriotts-modular-initiative/ http://www.guerdonmodularbuildings.com/modular-now-marriotts... with a building in San Jose: http://www.palisadebuilders.com/projects/domain/ http://www.palisadebuilders.com/projects/domain/ 2.) FAANG and WeWork should invest in always on, life-size, fiber-to-fiber Telepresence like video conferencing systems that connect dedicated hallways/open office/meeting spaces Silicon Valley to their corresponding spaces in remote offices instead of attempting to do Google Fiber residential installs to a handful of lucky chosen people. Always on means meetings start immediately without fumbling with the meeting configuration UI. Surreptitious hallway meetings can occur. This would actually work really well for offices in the same Pacific Timezone (i.e. Fresno, Gilroy, Bakersfield, Reno, Las Vegas). Here's an example connection between MIT and Stanford. http://tech.mit.edu/V131/N31/wormhole.html http://tech.mit.edu/V131/N31/wormhole.html

codeonfire 9y ago

Bezos is the worst person to invest in flyover areas. Amazon culture is extremely classist. Every bad stereotype you can think of happens. If you are from a rich family on a coast and went to an ivy you get lots of funding, support, and an easy management job. If you are from flyover country you are supposed to be a robot slave whether working in a warehouse or coding through the weekend. Yeah, if you are from some village in Asia tech companies will help you out and hold you up as an example, but guess where people in flyover states are not from.

QML 9y ago

Imagine if Big Capital started investing in cities instead of companies. That would be a nice thought. Property would be the new stock; hostile takeovers would be fights over the city-government board. Investors would profit when they managed to increase the value of the properties they own. So they start building better public schools, improve the local infrastructure, make the downtown a bit more appealing, etc. -- Hell, why not build a community college, an actual communal one where anyone can freely attend, and have that as the new "church"? Of course there's the issue with gentrification -- which I'm not sure is avoidable given the influx of capital -- but if equal access to these new resources is guaranteed, an investment in cities may perhaps produce compound interest not only for the investors but also for the residents long term. Thoughts?

eli_gottlieb 9y ago
This is basically how Big Real Estate already treats most cities.
- ABCLAW 9y ago
  Yes. Developers that obtain approval for neighbourhood plans operate in exactly this manner, putting in sewage, roads, schools, parks, etc. in order to improve the value of the commercial/residential units they are selling. Additionally, some less 'saleable' improvements end up being included as concessions in negotiation with the local municipal authority to get the development plan approved. Public transit financing in greenfield areas works similarly.

iambateman 9y ago

To me, this feels like a pretty normal market process, more than a giant leap of human goodness. These investors are seeking returns. For the past 6 decades, a tiny area of the country provided great returns. The compacted nature of the “Valley” helped concentrate resources and grow companies. But at some point there is less incremental benefit to stuffing one more tech startup into SF than there is looking “afield” to further reaches of the country. This is a fantastic sign for people like me who live in lowly (but lovable) Columbia SC. For too long, the investment pool has been a drip, even while the talent pool grows. Good job investors. We can’t wait to see you. And if I may, please don’t imply that you’re doing this for any reason other than maximized returns. We’re all adults here.

saturdaysaint 9y ago
These are fair points, yet the most prominent names attached to this fund are also pretty active participants in the national political conversation (J.D. Vance, Bezos, Buffet). Vance, who is leading this, is famous for moving back to his home region, beleaguered Appalachia, on mostly altruistic terms. Bezos has been targeted with tweets from the president suggesting a thirst for brute force regulations on Amazon and WaPo for nakedly political reasons. I don't think it's naive to posit that altruism and a concern for the political order are at play here. This group of people suggests to me that they're realizing that having so much of our economy concentrated in a few states is a political vulnerability that can be easily exploited by a demagogue.

cjbenedikt 9y ago

If you ever attended one of its ("Rise of the Rest") events you'd know it's nothing but a Case vanity project. He even describes himself in a fireside chat as a mix of Steve Jobs and Bill Gates....

Balgair 9y ago

Does Texas count as 'flyover'? How about weapons based start-ups? There are a fair few micro-armories that do firearm based products out of TX. Investors would be mindful to watch out for them. Remember that gun with the gyrometers that would turn you into a sniper? Or the 3-D printed guns? Or the 'smart' guns? You may/not be making the world a better place, but you will change it.

longerthoughts 9y ago
Energy is the more likely candidate for large-scale startup growth in TX than weapons based start-ups. The energy industry has obviously been important to TX for a long time, but the state of the oil industry creates a gap for new players to fill, either by 1) further automation in the oil industry to improve margins in the face of low oil prices, or 2) embracing the rise of renewable energy tech in a state that has incredibly high renewable potential (solar, wind) and demonstrated investment.

draw_down 9y ago

When you see all the talk of “bargain” talent: remember that so much of what happens is about labor costs. Are Apple employees overpaid? Consider that their work has made it the most valuable company in the world. So are they overpaid, or are other companies simply unable to capitalize upon their talent as well as Apple/Netflix/whoever? Everyone loves capitalism until it’s time to pay someone for their work.

purplezooey 9y ago

Wish this would accelerate. The Bay Area seems incapable of fixing its problems. Just read an article like this one, and you know we're hosed for a long time to come. https://nyti.ms/2kfuPVl https://nyti.ms/2kfuPVl