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No, it's really not nonsense at all. I honestly couldn't think of a worse place to start a company than Silicon Valley, other than potentially a third world co

No, it's really not nonsense at all. I honestly couldn't think of a worse place to start a company than Silicon Valley, other than potentially a third world country with no internet. Extremely high costs of living, constant talent warfare, and absolutely terrible traffic at peak hours. Unless you're venture backed, stay the hell away from the bay.

brador 14y ago
Care to name a few better places?
- cobrausn 14y ago
  I'll just throw this out there: Kansas City? I am actually wondering if the Google Fiber initiative there will cause a startup boom.
  - brador 14y ago
    Is fast personal internet really that much of a driver? SV has the money, it has the talent, it has the beautiful weather. Yeah the rent sucks, but that's the only downside I know.
    - jes5199 14y ago
      I hate SF weather. Foggy and cold year round. Not that it matters, startup people never see the outdoors.
      - Domenic_S 14y ago
        SF != SV
        jes5199 14y ago
        I'd rather live in a bad city than a nice suburb.
  - NickKampe 14y ago
    When you're talking gigabit speeds, hell yes it is.
    - deleted 14y ago
      [deleted]
- ChuckMcM 14y ago
  I'm going to guess Nick would suggest Missouri :-)
- NickKampe 14y ago
  Kansas City, Austin, Denver, Boulder, Boston, and anywhere near a college campus
majormajor 14y ago
"Talent warfare" cuts both ways—it attracts talent that you could use. As long as people are willing to pay me to work on the California coast, I don't want to move back to the land of 100 degree summers and chilly winters.
paul 14y ago
That explains why all the huge tech companies like google started in places like Kansas, not sv.
- NickKampe 14y ago
  First, Kansas City is located in Missouri, not Kansas. Second, the point in time which Google was created was an entirely different era of the Internet, Silicon Valley, and the world in general. Third, Google was founded while Sergey and Larry were studying at Stanford University, which I've stated in my other comments, is one of the most optimal places to start a company.... Nearby or on a college campus.
  - anamax 14y ago
    > First, Kansas City is located in Missouri, not Kansas. Both Kansas and Missouri have a "Kansas City" and the two cities are adjacent to each other. > Third, Google was founded while Sergey and Larry were studying at Stanford University, which I've stated in my other comments, is one of the most optimal places to start a company.... Nearby or on a college campus. I think that Stanford is a unique and wonderful place, but there are lots of college campus' and a fair number of comparable schools, but only one SV.
  - gms 14y ago
    Ok, how about Facebook, Dropbox, AirBnB...?
    - NickKampe 14y ago
      Facebook was first developed in Massachusetts while Mark was attending Harvard, another top tier educational institute. Dropbox and AirBnB were both YC backed companies, and due to the rules of YC, were essentially "forced" into migrating to the valley.
- jjtheblunt 14y ago
  IBM? Motorola? Monsanto? Most pharmaceuticals? GE? Illumina? There are many big tech companies established and past the startup stage elsewhere, really, some for decades. Google, Apple, Facebook, Oracle align with your assertion but not everything does.
avichal 14y ago
Starting a company is different than building a disruptive startup. Elad is really getting at potentially disruptive startups. Disruptive startups require a supportive ecosystem and often need to burn cash for years before they can monetize. Those sorts of companies are almost impossible to build outside of the ecosystem of Silicon Valley. Starting a small business or starting a nice, healthy enterprise business that makes a few million a year can be done in a lot of places but those are not disruptive startups.
- NickKampe 14y ago
  While I agree that starting a company is vastly different then starting a disruptive startup, other than the valley having a heavier density of VCs what you've stated about supportive startup ecosystems practically not existing anywhere else but in Silicon Valley is utterly false. Just look at New York, while it's honestly pretty much on par with SV in terms of cost of living, it's got a fantastic startup ecosystem in which many startups burn cash equally as fast. Step outside the SV bubble, I'd venture to say that two thirds of the states within the continental US have fantastic and thriving startup communities with plenty of talent and venture funding to boot. You just have to know where to look. As fellow nerds you should realize that with the power of the internet as well as the sheer amount of interconnectivity we now experience, there are virtually no location barriers.
- erichocean 14y ago
  One thing I think SV companies don't try and do is actually figure out how to do disruptive startups that don't burn cash for the first few years. I'm sure that's because money is so readily available in SV, but there's no actual reasons why startups can't be disruptive and still cash-positive early. The main benefit of funding is actually social connections and social proof, not money, in my experience. (If anything, the money is a drawback, because it most cases it causes companies to do stupid things -- grow big when they haven't even figured out the product yet.)
lsc 14y ago
The thing is, the scraps from the talent wars here are, generally speaking, competitive with the best from elsewhere. Yeah, wages are a whole lot higher; but I've moved back and forth from SV to the Sacramento area several times - It's really funny how a 3 hour drive takes me from being a 'meh' employee... middle of the road kind of guy to being the go-to guy; the best on the team. If anything, I think the talent gap makes the pay difference seem small. The cost of living gap isn't as huge as you'd think, either; especially for the childless (and let's be honest; Illegal or not, everyone discriminates against parents. Once you have kids, well, your job just isn't your highest priority anymore, and rightly so.) I mean, in the suburbs around sacramento, you get a reasonable single family home for the price of a silicon valley condo. Let's simplify and say you pay half as much for housing. But housing is a vanishingly small part of a nerd's budget, at least until kids come. Yeah, food, gas and stuff cost a little bit more... call it 10%? not a lot more. Cars, computers, non-real-estate capital goods and gadgets cost the same or are slightly cheaper in slicon valley. I mean, yeah, when it comes time to have kids? you have a point. But for childless nerds? silicon valley looks pretty nice.
- NickKampe 14y ago
  As the founder of a bootstrapped startup, how do you expect to compete with the enormous employee salaries (which I'd like to point out is mostly due to the cost of living) being offered at other SV companies? Not to mention the various perks, such as insurance, meals, and transportation etc. that many SV companies provide. What about commercial real estate? Even in Sacramento, it's just simply not feasible.
  - lsc 14y ago
    >As the founder of a bootstrapped startup, how do you expect to compete with the enormous employee salaries I don't. But I couldn't compete with the salaries in Sacramento, either. Let's put it this way; I paid myself something like $40K last year (salary/profit whatever... I spent $40K on me last year) Obviously, I'm unable to pay market rates for experienced/connected people. Right after the .com crash it was easy. Even through the mid '00s, I was picking up people I knew personally that had worked with me during the dot-com that were now stuck making sandwiches. "I can't give you much of a raise, but I can give you a raise and work that counts as experience towards what you want to do." Of course, that's harder now. My latest two contractors are one very raw recruit who is local, and one reasonably good person that is in the midwest and doesn't want to move. I mean, you find someone that could be good, then you train them, then you give them maximum flexibility and hope they stick around for a while. Yeah, they move on, and that's okay... they then become the best resources for finding your next local raw recruit. (for an example of 'maximum flexibility' I don't have any set hours; my employee shows up at the office maybe once a week, usually unplanned, and he often takes off on vacation with short notice. I mean, yeah, Facebook has 'pet insurance' and they probably tolerate you rolling in at eleven, but they expect you to be in the office most of the time.) But yeah, you hire when the economy is shit, and you do what you can to hold on when the economy is gangbusters. The thing is, the people you want (as customers, mentors, and employees) are thick on the ground here. Like I was saying, for the same skill? I don't even think you pay more here, because standards are just that much higher. > What about commercial real estate? Even in Sacramento, it's just simply not feasible. really? huh. The only reason I don't own a santa clara 'industrial condo' right now is that my credit is shit. (well, that and I don't have a whole heck of a lot to use as a down.) warehouse space here can be had in the $100-$200 per sqft range, and you look at layfayette near el camino (a not awesome part of santa clara, but still, part of santa clara) and you see nice big industrial condos starting at about $150K. You can rent in santa clara, 1000-2000sqft places for $0.50-$1.00 per sqft. (I'm talking essentially industrial units... but that's what I want.) So yeah, uh, I guess I don't really see real-estate as a limiting factor. (I mean, yeah, if you want to be in mountain view, it's rather more expensive. But, I don't see why you would want to be in mountain view where you have to compete with google for real-estate when you can move to Santa Clara and have incredibly cheap power and incredibly cheap dark fiber provided by the city.) Again, I think the key to understanding the economics is that while salaries are higher here, the standards for Engineer skill are proportionally higher as well.

brador 14y ago

Care to name a few better places?

cobrausn 14y ago
I'll just throw this out there: Kansas City? I am actually wondering if the Google Fiber initiative there will cause a startup boom.
- brador 14y ago
  Is fast personal internet really that much of a driver? SV has the money, it has the talent, it has the beautiful weather. Yeah the rent sucks, but that's the only downside I know.
  - jes5199 14y ago
    I hate SF weather. Foggy and cold year round. Not that it matters, startup people never see the outdoors.
    - Domenic_S 14y ago
      SF != SV
      - jes5199 14y ago
        I'd rather live in a bad city than a nice suburb.
- NickKampe 14y ago
  When you're talking gigabit speeds, hell yes it is.
  - deleted 14y ago
    [deleted]
ChuckMcM 14y ago
I'm going to guess Nick would suggest Missouri :-)
NickKampe 14y ago
Kansas City, Austin, Denver, Boulder, Boston, and anywhere near a college campus

majormajor 14y ago

"Talent warfare" cuts both ways—it attracts talent that you could use. As long as people are willing to pay me to work on the California coast, I don't want to move back to the land of 100 degree summers and chilly winters.

paul 14y ago

That explains why all the huge tech companies like google started in places like Kansas, not sv.

NickKampe 14y ago
First, Kansas City is located in Missouri, not Kansas. Second, the point in time which Google was created was an entirely different era of the Internet, Silicon Valley, and the world in general. Third, Google was founded while Sergey and Larry were studying at Stanford University, which I've stated in my other comments, is one of the most optimal places to start a company.... Nearby or on a college campus.
- anamax 14y ago
  > First, Kansas City is located in Missouri, not Kansas. Both Kansas and Missouri have a "Kansas City" and the two cities are adjacent to each other. > Third, Google was founded while Sergey and Larry were studying at Stanford University, which I've stated in my other comments, is one of the most optimal places to start a company.... Nearby or on a college campus. I think that Stanford is a unique and wonderful place, but there are lots of college campus' and a fair number of comparable schools, but only one SV.
- gms 14y ago
  Ok, how about Facebook, Dropbox, AirBnB...?
  - NickKampe 14y ago
    Facebook was first developed in Massachusetts while Mark was attending Harvard, another top tier educational institute. Dropbox and AirBnB were both YC backed companies, and due to the rules of YC, were essentially "forced" into migrating to the valley.
jjtheblunt 14y ago
IBM? Motorola? Monsanto? Most pharmaceuticals? GE? Illumina? There are many big tech companies established and past the startup stage elsewhere, really, some for decades. Google, Apple, Facebook, Oracle align with your assertion but not everything does.

avichal 14y ago

Starting a company is different than building a disruptive startup. Elad is really getting at potentially disruptive startups. Disruptive startups require a supportive ecosystem and often need to burn cash for years before they can monetize. Those sorts of companies are almost impossible to build outside of the ecosystem of Silicon Valley. Starting a small business or starting a nice, healthy enterprise business that makes a few million a year can be done in a lot of places but those are not disruptive startups.

NickKampe 14y ago
While I agree that starting a company is vastly different then starting a disruptive startup, other than the valley having a heavier density of VCs what you've stated about supportive startup ecosystems practically not existing anywhere else but in Silicon Valley is utterly false. Just look at New York, while it's honestly pretty much on par with SV in terms of cost of living, it's got a fantastic startup ecosystem in which many startups burn cash equally as fast. Step outside the SV bubble, I'd venture to say that two thirds of the states within the continental US have fantastic and thriving startup communities with plenty of talent and venture funding to boot. You just have to know where to look. As fellow nerds you should realize that with the power of the internet as well as the sheer amount of interconnectivity we now experience, there are virtually no location barriers.
erichocean 14y ago
One thing I think SV companies don't try and do is actually figure out how to do disruptive startups that don't burn cash for the first few years. I'm sure that's because money is so readily available in SV, but there's no actual reasons why startups can't be disruptive and still cash-positive early. The main benefit of funding is actually social connections and social proof, not money, in my experience. (If anything, the money is a drawback, because it most cases it causes companies to do stupid things -- grow big when they haven't even figured out the product yet.)

lsc 14y ago

The thing is, the scraps from the talent wars here are, generally speaking, competitive with the best from elsewhere. Yeah, wages are a whole lot higher; but I've moved back and forth from SV to the Sacramento area several times - It's really funny how a 3 hour drive takes me from being a 'meh' employee... middle of the road kind of guy to being the go-to guy; the best on the team. If anything, I think the talent gap makes the pay difference seem small. The cost of living gap isn't as huge as you'd think, either; especially for the childless (and let's be honest; Illegal or not, everyone discriminates against parents. Once you have kids, well, your job just isn't your highest priority anymore, and rightly so.) I mean, in the suburbs around sacramento, you get a reasonable single family home for the price of a silicon valley condo. Let's simplify and say you pay half as much for housing. But housing is a vanishingly small part of a nerd's budget, at least until kids come. Yeah, food, gas and stuff cost a little bit more... call it 10%? not a lot more. Cars, computers, non-real-estate capital goods and gadgets cost the same or are slightly cheaper in slicon valley. I mean, yeah, when it comes time to have kids? you have a point. But for childless nerds? silicon valley looks pretty nice.

NickKampe 14y ago
As the founder of a bootstrapped startup, how do you expect to compete with the enormous employee salaries (which I'd like to point out is mostly due to the cost of living) being offered at other SV companies? Not to mention the various perks, such as insurance, meals, and transportation etc. that many SV companies provide. What about commercial real estate? Even in Sacramento, it's just simply not feasible.
- lsc 14y ago
  >As the founder of a bootstrapped startup, how do you expect to compete with the enormous employee salaries I don't. But I couldn't compete with the salaries in Sacramento, either. Let's put it this way; I paid myself something like $40K last year (salary/profit whatever... I spent $40K on me last year) Obviously, I'm unable to pay market rates for experienced/connected people. Right after the .com crash it was easy. Even through the mid '00s, I was picking up people I knew personally that had worked with me during the dot-com that were now stuck making sandwiches. "I can't give you much of a raise, but I can give you a raise and work that counts as experience towards what you want to do." Of course, that's harder now. My latest two contractors are one very raw recruit who is local, and one reasonably good person that is in the midwest and doesn't want to move. I mean, you find someone that could be good, then you train them, then you give them maximum flexibility and hope they stick around for a while. Yeah, they move on, and that's okay... they then become the best resources for finding your next local raw recruit. (for an example of 'maximum flexibility' I don't have any set hours; my employee shows up at the office maybe once a week, usually unplanned, and he often takes off on vacation with short notice. I mean, yeah, Facebook has 'pet insurance' and they probably tolerate you rolling in at eleven, but they expect you to be in the office most of the time.) But yeah, you hire when the economy is shit, and you do what you can to hold on when the economy is gangbusters. The thing is, the people you want (as customers, mentors, and employees) are thick on the ground here. Like I was saying, for the same skill? I don't even think you pay more here, because standards are just that much higher. > What about commercial real estate? Even in Sacramento, it's just simply not feasible. really? huh. The only reason I don't own a santa clara 'industrial condo' right now is that my credit is shit. (well, that and I don't have a whole heck of a lot to use as a down.) warehouse space here can be had in the $100-$200 per sqft range, and you look at layfayette near el camino (a not awesome part of santa clara, but still, part of santa clara) and you see nice big industrial condos starting at about $150K. You can rent in santa clara, 1000-2000sqft places for $0.50-$1.00 per sqft. (I'm talking essentially industrial units... but that's what I want.) So yeah, uh, I guess I don't really see real-estate as a limiting factor. (I mean, yeah, if you want to be in mountain view, it's rather more expensive. But, I don't see why you would want to be in mountain view where you have to compete with google for real-estate when you can move to Santa Clara and have incredibly cheap power and incredibly cheap dark fiber provided by the city.) Again, I think the key to understanding the economics is that while salaries are higher here, the standards for Engineer skill are proportionally higher as well.