9 ms·

> I still expect a significant % of the $10B+ startups will get created here, so it makes sense for investors to still focus here. But I bet a lot of the ~$100

> I still expect a significant % of the $10B+ startups will get created here, so it makes sense for investors to still focus here. But I bet a lot of the ~$100M startups will happen elsewhere. > There are still some things—e.g great startup executive talent, particular kinds of engineering talent—that are much harder to find outside the bay area. This is spot on and it becomes a real bottle neck if you want to scale your startup beyond $500MM valuation. Obviously you often can’t choose if you want to be a $100M startup or a billion dollar startup, and by the time you’ve passed the $100M mark it can be too late to refocus on the Bay Area and you might lose momentum by dealing with all kinds of things that shouldn’t matter. We’ve run into serious talent recruiting issues when we reached this stage and we “solved” it by opening offices in SF and Mtn View. But it was not ideal and a huge waste of money/time.

smallgovt 8y ago
The flipside of this is that SF's high burn rate kills many startups that otherwise would have been $100M companies. In particular, startups that are margin-sensitive. I totally agree that you often can't choose if you're a $100M or a $1B startup, but if you're a founder, I think it often makes a lot more sense to optimize for the $100M scenario, given that it's more likely. The caveat is the founder who's already made f-u money, and whose true goal is to shoot for the moon.
neonate 8y ago
> by dealing with all kinds of things that shouldn’t matter. Can you give some examples?
- Godel_unicode 8y ago
  The line below that seems like a hint: > We’ve run into serious talent recruiting issues when we reached this stage
  - neonate 8y ago
    Yes, but he said things that "shouldn't matter". Recruiting clearly matters.
- bryanrasmussen 8y ago
  Obviously the things that shouldn't matter are the things that you would normally have all set up in your current location that you need to replicate when you move to a new one. Especially if you happen to move internationally. So - things that shouldn't matter that you would have to do if you moved Get New office. Deal with people that need to staff new office because some of your people won't move. Hiring. If you don't do that then you get an office through some co-working solution and have to deal with whatever requirements there are there. If international - visas etc. If opening local bay area office but keeping your other offices setting up culture to be able to work together between two or more locations. If opening bay area office but closing local dealing with people's issues about moving. For example I would never move to the U.S from Denmark, so I had a job opportunity from a startup that was making the move right at the time and I said no. If I had been hired 6 months before I would have of course refused to move, and they would have had to deal with that.
sytelus 8y ago
Why doesn’t your employees move out of Bay Area with you? Assuming if you keep offering same comp, this would cut down mortgage expenses to half and even gain much better housing in better school areas. It should be no brainer to move out if comp remains same. So you can come in to shop for talent, have them work remotely until they are ready. No need to open expensive offices in Bay Area.
- titanomachy 8y ago
  Not everyone is willing to move. If you're looking for very specialized engineers you might end up with only a single potential hire who is unwilling to uproot his/her family.
- Johnny555 8y ago
  I think part of the reason is the same reason companies stay in the Bay Area -- companies are in the Bay Area because they can find lots of good engineers in the area. Engineers like the area because they can find lots of good companies that want to hire them. No startup is guaranteed to survive, and if you move to Idaho with your company and it fails, it can be difficult to move back to the Bay Area.
- baddox 8y ago
  Why would the assumption be that most people would want to move away from their homes because their current employer wants to save money? Sure, many tech employees probably moved to the Bay Area primarily to find employment, but even if they don’t enjoy other aspects of the area, a place you live in for a while will become your home, and abandoning your home is not an easy or obvious decision to make.
  - wolfgke 8y ago
    > Why would the assumption be that most people would want to move away from their homes because their current employer wants to save money? If the company were willing to give their share of the saved money to the employee, the situation might be different.
  - 8y ago
BadassFractal 8y ago
Your likelihood of being in the 500M+ valuation bracket is so infinitesimally slim, that optimizing for that case is almost pointless.
- stouset 8y ago
  Agree with the assumption, disagree with the conclusion. Optimizing for that as a founder only doesn’t make sense, but when your investor money is trying to chase after $1B+ grand slams to make up for the dozens of failures, it probably makes a lot more sense.
  - BadassFractal 8y ago
    Sure, and optimizing for those massive returns is the VC's problem, not the founder's problem. You're one out of dozens, if not hundreds of their investments. They'll be fine.
- mrnobody_67 8y ago
  the odds of getting to 500m+ probably increase when salaries (and burn rate) are lower and employees aren't cycling through every 18 months...
raverbashing 8y ago
I wonder if the "kinds of engineering talent" issue aren't a bit an issue of finding people that can be trained on the job/betting on the right people instead of just trying to get "person that does this exact thing at FAANG".
- chillacy 8y ago
  I think it could happen if the incentives are set up differently, otherwise right now you spend time and effort training people only to have them change jobs in 2 years at a better company.
  - wolfgke 8y ago
    > I think it could happen if the incentives are set up differently, otherwise right now you spend time and effort training people only to have them change jobs in 2 years at a better company. - Can't you simply make a contract that binds them to your company for a longer time? (I don't know about the law in the US) - Focus the training on technology that is rather specific to your company so that other conpanies are less incentivized to poach the employee because the training that you gave him/her is much less of use for other companies.
  - iovrthoughtthis 8y ago
    Bigger raises. People move because the paybump is often whole multiples of pay rises. Also better managers. We don’t quit jobs as often as we quit managers.
    - noir_lord 8y ago
      Been more remote friendly as well, there are good programmers everywhere often who can't move for reasons beyond their control. Same with UK to an extent, salary differential between north and south is large (even when accounting for cost of living).
      - MRD85 8y ago
amelius 8y ago
> particular kinds of engineering talent—that are much harder to find outside the bay area. Does that also hold for biotech talent?
- jeffasinger 8y ago
  My understanding is that biotech is actually better in Boston than the bay area by a pretty wide margin.
  - DrAwdeOccarim 8y ago
    The difference between Boston and SF for biotech is so interesting. SF has a lot of future-tech looking biotech companies, super cool DNA sequencing, longevity, synthetic biology, whereas the Boston area is much more pragmatic. It is so funny how west coast vs east coast biotech really is--romantic futurism vs pragmatic present. The other way to look at the divide is protein vs nucleic acid. A lot of very interesting MAb and designer protein companies are in the bay area, but all the major CRISPR, mRNA, siRNA companies are in Boston. Sure you have Ionis and Caribou in CA, but that's really it. If you believe the future is in the digital information nature of nucleic acid, Boston is the center of gravity by a huge margin.
    - alexnewman 8y ago
      uhm synthago is here in cali
      - DrAwdeOccarim 8y ago
        Yea, but they're much more of a supplier than a biotech. Like IDT or ATUM.
        alexnewman 8y ago
        Are you sure? I think synthago is critical to crispr technology across the world. I think they are expanding into new fields and are no longer just sending supplies to universities. That story is the old story
xchaotic 8y ago
you've 'wasted' time/money when you had it - at a later stage not at an early stage when every penny is critical. SO IMO you've proven that it was the right choice/sequence

smallgovt 8y ago

The flipside of this is that SF's high burn rate kills many startups that otherwise would have been $100M companies. In particular, startups that are margin-sensitive. I totally agree that you often can't choose if you're a $100M or a $1B startup, but if you're a founder, I think it often makes a lot more sense to optimize for the $100M scenario, given that it's more likely. The caveat is the founder who's already made f-u money, and whose true goal is to shoot for the moon.

neonate 8y ago

> by dealing with all kinds of things that shouldn’t matter. Can you give some examples?

Godel_unicode 8y ago
The line below that seems like a hint: > We’ve run into serious talent recruiting issues when we reached this stage
- neonate 8y ago
  Yes, but he said things that "shouldn't matter". Recruiting clearly matters.
bryanrasmussen 8y ago
Obviously the things that shouldn't matter are the things that you would normally have all set up in your current location that you need to replicate when you move to a new one. Especially if you happen to move internationally. So - things that shouldn't matter that you would have to do if you moved Get New office. Deal with people that need to staff new office because some of your people won't move. Hiring. If you don't do that then you get an office through some co-working solution and have to deal with whatever requirements there are there. If international - visas etc. If opening local bay area office but keeping your other offices setting up culture to be able to work together between two or more locations. If opening bay area office but closing local dealing with people's issues about moving. For example I would never move to the U.S from Denmark, so I had a job opportunity from a startup that was making the move right at the time and I said no. If I had been hired 6 months before I would have of course refused to move, and they would have had to deal with that.

sytelus 8y ago

Why doesn’t your employees move out of Bay Area with you? Assuming if you keep offering same comp, this would cut down mortgage expenses to half and even gain much better housing in better school areas. It should be no brainer to move out if comp remains same. So you can come in to shop for talent, have them work remotely until they are ready. No need to open expensive offices in Bay Area.

titanomachy 8y ago
Not everyone is willing to move. If you're looking for very specialized engineers you might end up with only a single potential hire who is unwilling to uproot his/her family.
Johnny555 8y ago
I think part of the reason is the same reason companies stay in the Bay Area -- companies are in the Bay Area because they can find lots of good engineers in the area. Engineers like the area because they can find lots of good companies that want to hire them. No startup is guaranteed to survive, and if you move to Idaho with your company and it fails, it can be difficult to move back to the Bay Area.
baddox 8y ago
Why would the assumption be that most people would want to move away from their homes because their current employer wants to save money? Sure, many tech employees probably moved to the Bay Area primarily to find employment, but even if they don’t enjoy other aspects of the area, a place you live in for a while will become your home, and abandoning your home is not an easy or obvious decision to make.
- wolfgke 8y ago
  > Why would the assumption be that most people would want to move away from their homes because their current employer wants to save money? If the company were willing to give their share of the saved money to the employee, the situation might be different.
- 8y ago

BadassFractal 8y ago

Your likelihood of being in the 500M+ valuation bracket is so infinitesimally slim, that optimizing for that case is almost pointless.

stouset 8y ago
Agree with the assumption, disagree with the conclusion. Optimizing for that as a founder only doesn’t make sense, but when your investor money is trying to chase after $1B+ grand slams to make up for the dozens of failures, it probably makes a lot more sense.
- BadassFractal 8y ago
  Sure, and optimizing for those massive returns is the VC's problem, not the founder's problem. You're one out of dozens, if not hundreds of their investments. They'll be fine.
mrnobody_67 8y ago
the odds of getting to 500m+ probably increase when salaries (and burn rate) are lower and employees aren't cycling through every 18 months...

raverbashing 8y ago

I wonder if the "kinds of engineering talent" issue aren't a bit an issue of finding people that can be trained on the job/betting on the right people instead of just trying to get "person that does this exact thing at FAANG".

chillacy 8y ago
I think it could happen if the incentives are set up differently, otherwise right now you spend time and effort training people only to have them change jobs in 2 years at a better company.
- wolfgke 8y ago
  > I think it could happen if the incentives are set up differently, otherwise right now you spend time and effort training people only to have them change jobs in 2 years at a better company. - Can't you simply make a contract that binds them to your company for a longer time? (I don't know about the law in the US) - Focus the training on technology that is rather specific to your company so that other conpanies are less incentivized to poach the employee because the training that you gave him/her is much less of use for other companies.
- iovrthoughtthis 8y ago
  Bigger raises. People move because the paybump is often whole multiples of pay rises. Also better managers. We don’t quit jobs as often as we quit managers.
  - noir_lord 8y ago
    Been more remote friendly as well, there are good programmers everywhere often who can't move for reasons beyond their control. Same with UK to an extent, salary differential between north and south is large (even when accounting for cost of living).
    - MRD85 8y ago

amelius 8y ago

> particular kinds of engineering talent—that are much harder to find outside the bay area. Does that also hold for biotech talent?

jeffasinger 8y ago
My understanding is that biotech is actually better in Boston than the bay area by a pretty wide margin.
- DrAwdeOccarim 8y ago
  The difference between Boston and SF for biotech is so interesting. SF has a lot of future-tech looking biotech companies, super cool DNA sequencing, longevity, synthetic biology, whereas the Boston area is much more pragmatic. It is so funny how west coast vs east coast biotech really is--romantic futurism vs pragmatic present. The other way to look at the divide is protein vs nucleic acid. A lot of very interesting MAb and designer protein companies are in the bay area, but all the major CRISPR, mRNA, siRNA companies are in Boston. Sure you have Ionis and Caribou in CA, but that's really it. If you believe the future is in the digital information nature of nucleic acid, Boston is the center of gravity by a huge margin.
  - alexnewman 8y ago
    uhm synthago is here in cali
    - DrAwdeOccarim 8y ago
      Yea, but they're much more of a supplier than a biotech. Like IDT or ATUM.
      - alexnewman 8y ago
        Are you sure? I think synthago is critical to crispr technology across the world. I think they are expanding into new fields and are no longer just sending supplies to universities. That story is the old story

xchaotic 8y ago

you've 'wasted' time/money when you had it - at a later stage not at an early stage when every penny is critical. SO IMO you've proven that it was the right choice/sequence