6 ms·

Tech Startups Don’t Need the Valley Unless They Need VC

64 points by jasonlbaptiste 18y ago

jasonlbaptiste 18y ago
It's one reason to go to the valley, but not the only one. When I moved to the valley last year, everyone asked me why? I said "People". Those people could be new friends at other startups, future talent for my company, future informal advisors, potential investors, or an awesome bartender at the Olde Pro in Palo Alto. The Valley exposed me to people that I couldn't have met anywhere else. If you love technology and startups, you should probably give it a shot out there. Just because you move doesn't mean you'll have magic VC genies grant you three rounds of funding. You will definitely meet some awesome people along the way.
- jwilliams 18y ago
  Agreed. I live over in Australia -- My cofounder and I are in Bay Area (visiting) and the access to having access to the people/minds here is astounding... And as you allude to - it's not just hackers, it's a whole ecosystem of people that can contribute to your idea.
- zhyder 18y ago
  Agree about the other benefits in addition to access to VCs, but it's still arguable if they're worth the higher cost of living. If you're a bootstrapped startup, you'll hit ramen profitability much sooner elsewhere. When you have an infinite runway, you'll have infinite time to find people as well :).
  - garply 18y ago
    To me the valley seems like a good place to grow if you're already profitable and can't find enough talent in whatever location you started. For a business with a few guys doing product development in an apartment and counting every penny, I just don't see the justification for the cost of living.
  - hedgehog 18y ago
    OTOH being out here is great for meeting other startup minded technical & business people. You're out here too, what's your experience been?
  - pg 18y ago
    Living in the Valley is not especially expensive for founders. Buying a house in the Valley is notoriously expensive, because there is so much speculation built into prices (even now). But renting a two-bedroom apartment in Mountain View is no more expensive for equivalent quality of life than in Boston. We gave groups the same amount of money in Boston cycles as in Bay Area cycles, and we never noticed any difference in how long it lasted.
    - staunch 18y ago
      It may be similar to Boston, but it's far more expensive than living in many other parts of the country (or state).
      - jacoblyles 18y ago
        My father's mortgage payment in North Carolina is one-third of my (shared!) rent payment in San Diego. When I hear of my younger friends buying houses back home, I am reminded of the real monetary costs of the life I lead.
      - Goladus 18y ago
        If you can overcome the drawbacks of being away from a creative urban center, you can save a lot of money on housing. http://utica.craigslist.org/apa/1077482911.html http://utica.craigslist.org/apa/1077482911.html $695/mo for a 2-bedroom apartment. Not a great neighborhood but could be worse. You'd be lucky to share a bedroom for $350 a month in Boston. Many other expenses don't change much, though, like food, and some go up, like heating and electricity. And in Utica, the chance of overhearing someone talking about PhD-level computer science while you're out to eat is virtually zero.
    - jasonlbaptiste 18y ago
      Living in the valley was actually much cheaper for me than Miami. That's from housing to my car (the lease was cheaper out there, so I waited till I was situated to get one) to food (jack in the box value menu ftw). I'd suggest living with others, as the 1 bedrooms do seem to be higher priced to rent. Gas is never fun, but that's most of California. Take the 22 or 522 bus. It runs 24/7 down el camino and costs 60 bucks a month for an unlimited pass.
- ghshephard 18y ago
  Definitely about the people. Unless you are the founder of a company, you are never working for the _current_ company, but instead are working for the next company (in which you will be a founder, or an early stage employee that gets a good chunk of equity) - you need to demonstrate that you are someone they want to hire. With the possible exception of craigslist, where they manage to accomplish heroic feats with very little in the way of staff, any company that is eyeballing $1B+ market-cap will grow to hundreds, and possibly thousands of employees. Where else on earth can you find such a concentration of DBAs, Sysadmins, Designers, Tech-Friendly-Lawyers, Developers, Product Manager who have all three of the following characteristics: o Very, Very good at their job. o Real world experience in several major companies. o And, most importantly, willing to go to work for a "lets throw caution to the wind" startup. Change is the only constant in the valley. People here, for whatever reason, are just comfortable changing jobs, sharing information, and building new things. The weather is astoundingly good. Never too hot or too cold - 350 / 365 days in the year. And the other 15 usually mean having to actually turn on your heater or open a window on a warm summer night. The peninsula, for the most part, does suck in terms of lifestyle. There are exceptions (Murphy Street in Sunnyvale, Good portions of San Francisco, downtown San Jose on a Saturday night) - but, in general, it's mile upon mile of suburbia and strip malls. This is not Manhattan or downtown Vancouver. (On the flip side, with few distractions there is more time to get work done) The major downside is that unless you are filthy rich or already a home owner, the only sane strategy (unless you don't mind commuting for 90-120 minutes each morning) is to rent. With all that said, if what you are looking to do is grow a company organically, and have your eyes set on something more sane like a $10mm-$100mm market cap over 5-10 years, there are probably a lot of ways to succeed without being in the middle of it all.
mattj 18y ago
Is it surprising in any way that a bunch of people not from the valley say that being in the valley isn't important?
- patio11 18y ago
  The rebuttal writes itself, doesn't it.
- paulgb 18y ago
  No more surprising than the fact that so many people in the valley say being in the valley is important. I notice that in the bay area, or at least SF, "startup" is assumed to mean a web site or web app of some sort. So when I hear claims that the bay area is the best place for a startup, I don't necessarily disagree, but I parse "startup" as "web app startup".
sachinag 18y ago
Your probability of success is higher in the Valley. Doesn't mean you can't be successful elsewhere. I don't understand why people can't reconcile these two statements. If you like your lifestyle where you are, by all means, stay. If you can find investors, lawyers, and accountants (assuming you want them) that you trust, stay where you are. But if you're just a couple of crazy kids with a work ethic and an idea to change the world, and if you are willing to do everything possible to give your startup the highest probability of success, go to the Valley.
- patio11 18y ago
  Your probability of success is higher in the Valley Your probability of flipping heads is higher than your probability of rolling 1 on a six-sided die: X = .5, Y =~ .167. I have yet to even hear of a good setup for measuring X or Y, to say nothing of actual numbers for them, for measuring "probability of success in a startup". Heck, I have never even heard a defensible universalizable definition of success for a startup. Incidentally, and this has always bothered me about statements like "give your X the highest probability of Y": do people routinely get the opportunity to run a simple random sample of startups, marry a simple random sample of women, raise a simple random sample of children, etc? No? Then why do we bastardize statistics in this manner.
  - sachinag 18y ago
    Look, you get one bite at the apple per idea/situation. A random sample isn't an appropriate counter-factual. Your job as an entrepreneur is to maximize your chances for success given the situation at hand. I suppose "chances for success" wouldn't have set you off, and I acknowledge that. But we're at the point where we mock people for using "beg the question" incorrectly and ignore the substance of the argument, which isn't really productive for others reading this thread.
    - trapper 18y ago
      The only people I have heard that say this, travelling around the world, meeting multiple 9+ digit exit entrepreneurs and tons of 7+, are the ones that started in SV. I tend to think based on what I read that there are a lot more large exits inside SV than outside. But, there seem to be a lot more early deaths and me-too companies there as well. Are you optimising for the wrong solution (insane exits)? [edit: early deaths = companies, not people]
garply 18y ago
The guy in the video makes a point about external funding: a lot of well-known, large tech companies accepted money only after they were already profitable and did so in order to expand. That seems really sane to me - capital seems like a magnifier for a process that either produces money or consumes money. I suspect a lot of companies that succeed with external money would have succeeded without it and that a lot of companies that fail without external money would have failed with it.
blackguardx 18y ago
Some people like Silicon Valley, some people don't. To each his own. Silicon Valley has a huge population of smart tech workers. There are certainly advantages to running a tech startup there. Other aspects of the area detract from the quality of life, however. I live in the bay area, but can't stand Silicon Valley's feeling of endless suburbia. I don't think strip malls and sprawling apartment complexes make a good living environment for me. Some people prefer it, however. Silicon Valley is for them. It is not for me.
menloparkbum 18y ago
There is not much substance to this article. It doesn't really even build on the title. It's just a bunch of quotes about VC funding and startup culture by a couple bloggers who live in Wisconsin and China. And, a video of a random investor from Texas. I feel like they're riffing about an imagined startup culture that died out in 2001.
- dejb 18y ago
  Maybe it isn't what you meant but to me you post comes off as... "What would they know. They aren't from the valley"
  - menloparkbum 18y ago
    I really just meant what I posted - there isn't much to the article. On the other hand, there is some truth to your comment. Aside from the guy who lives in China, there wasn't anything that suggested the authors had even been to California. There are real disadvantages to living in Silicon Valley, and they didn't mention any of them. Instead, they brought up things like work culture and being showered with VC dollars, which actually aren't the big problems.
- riferguson 18y ago
  Dude, Google is your friend. Mike was being coy when he described himself as a "former Microsoft employee", but dismissing him as a "random investor from Texas" is silly. http://people.forbes.com/profile/michael-j-maples/49137 http://people.forbes.com/profile/michael-j-maples/49137 http://query.nytimes.com/gst/fullpage.html?res=990CE2D81038F936A25756C0A963958260 http://query.nytimes.com/gst/fullpage.html?res=990CE2D81038F... http://www.alibre.com/corporate/management.asp http://www.alibre.com/corporate/management.asp
vaksel 18y ago
I disagree. Have you taken a look at the culture in the valley? They are all about helping each other. i.e. I think this story was told at LeWeb. Seesmic founder lets Friendfeed guys know that their products would work really well together. The Friendfeed guys call back and tell him to drop by to discuss it. Loic hops into his car, drives 10 minutes to the Friendfeed offices, and after an hour or so of meetings, Friendfeed adds Seesmic to their site. Outside of the valley, something like this isn't possible. The spirit of startups lets companies be a lot more relaxed and open to new possibilities.
- nostrademons 18y ago
  ...outside the Valley, most people have heard of neither FriendFeed nor Seesmic. ;-) The big advantage of living outside the valley is that you're closer to real customers - people who don't live and breathe technology 24/7. That can help you or hurt you, depending on your target market. Could something like MySpace, AOL or PlentyOfFish have started inside the Valley, considering that they succeeded by catering to idiots?
  - pg 18y ago
    There are plenty of nontechnical people in SV too. There are dentists and cooks and policemen here just like everywhere else. AOL, incidentally, did not cater to idiots initially. Before the web it was something a lot of hackers used.
  - asdflkj 18y ago
    The problem with catering to idiots is that unless you're an idiot yourself--the particular kind of idiot comprising your target market--you have no idea what your customers want. Also, this approach would probably be too demoralizing to sustain for anyone without the record-label-executive state of mind, which is the opposite of the hacker state of mind.
- axod 18y ago
  >> Outside of the valley, something like this isn't possible. We do have email, IRC, etc etc these days.
deleted 18y ago
[deleted]
deleted 18y ago
[deleted]
macco 18y ago
Of course tech startup don't NEED the Valley, but to me(German resident) it seams that the Valley is a good place to be for a tech startup.
jdrock 18y ago
"..and forces entrepreneurs to build a startup that can make it as a business from day one." I think the conclusion borders on comedic. Only a miniscule # of companies should not be thinking of this way.
racy_rick 18y ago
This inspired me: Looking for a great city to start you startup? http://news.ycombinator.com/item?id=518379 http://news.ycombinator.com/item?id=518379
rjurney 18y ago
Silicon valley is unacceptable because Norcal has great white sharks, which scare the pants off me and I can't live by the ocean and not surf :(

It's one reason to go to the valley, but not the only one. When I moved to the valley last year, everyone asked me why? I said "People". Those people could be new friends at other startups, future talent for my company, future informal advisors, potential investors, or an awesome bartender at the Olde Pro in Palo Alto. The Valley exposed me to people that I couldn't have met anywhere else. If you love technology and startups, you should probably give it a shot out there. Just because you move doesn't mean you'll have magic VC genies grant you three rounds of funding. You will definitely meet some awesome people along the way.

jwilliams 18y ago
Agreed. I live over in Australia -- My cofounder and I are in Bay Area (visiting) and the access to having access to the people/minds here is astounding... And as you allude to - it's not just hackers, it's a whole ecosystem of people that can contribute to your idea.
zhyder 18y ago
Agree about the other benefits in addition to access to VCs, but it's still arguable if they're worth the higher cost of living. If you're a bootstrapped startup, you'll hit ramen profitability much sooner elsewhere. When you have an infinite runway, you'll have infinite time to find people as well :).
- garply 18y ago
  To me the valley seems like a good place to grow if you're already profitable and can't find enough talent in whatever location you started. For a business with a few guys doing product development in an apartment and counting every penny, I just don't see the justification for the cost of living.
- hedgehog 18y ago
  OTOH being out here is great for meeting other startup minded technical & business people. You're out here too, what's your experience been?
- pg 18y ago
  Living in the Valley is not especially expensive for founders. Buying a house in the Valley is notoriously expensive, because there is so much speculation built into prices (even now). But renting a two-bedroom apartment in Mountain View is no more expensive for equivalent quality of life than in Boston. We gave groups the same amount of money in Boston cycles as in Bay Area cycles, and we never noticed any difference in how long it lasted.
  - staunch 18y ago
    It may be similar to Boston, but it's far more expensive than living in many other parts of the country (or state).
    - jacoblyles 18y ago
      My father's mortgage payment in North Carolina is one-third of my (shared!) rent payment in San Diego. When I hear of my younger friends buying houses back home, I am reminded of the real monetary costs of the life I lead.
    - Goladus 18y ago
      If you can overcome the drawbacks of being away from a creative urban center, you can save a lot of money on housing. http://utica.craigslist.org/apa/1077482911.html http://utica.craigslist.org/apa/1077482911.html $695/mo for a 2-bedroom apartment. Not a great neighborhood but could be worse. You'd be lucky to share a bedroom for $350 a month in Boston. Many other expenses don't change much, though, like food, and some go up, like heating and electricity. And in Utica, the chance of overhearing someone talking about PhD-level computer science while you're out to eat is virtually zero.
  - jasonlbaptiste 18y ago
    Living in the valley was actually much cheaper for me than Miami. That's from housing to my car (the lease was cheaper out there, so I waited till I was situated to get one) to food (jack in the box value menu ftw). I'd suggest living with others, as the 1 bedrooms do seem to be higher priced to rent. Gas is never fun, but that's most of California. Take the 22 or 522 bus. It runs 24/7 down el camino and costs 60 bucks a month for an unlimited pass.
ghshephard 18y ago
Definitely about the people. Unless you are the founder of a company, you are never working for the _current_ company, but instead are working for the next company (in which you will be a founder, or an early stage employee that gets a good chunk of equity) - you need to demonstrate that you are someone they want to hire. With the possible exception of craigslist, where they manage to accomplish heroic feats with very little in the way of staff, any company that is eyeballing $1B+ market-cap will grow to hundreds, and possibly thousands of employees. Where else on earth can you find such a concentration of DBAs, Sysadmins, Designers, Tech-Friendly-Lawyers, Developers, Product Manager who have all three of the following characteristics: o Very, Very good at their job. o Real world experience in several major companies. o And, most importantly, willing to go to work for a "lets throw caution to the wind" startup. Change is the only constant in the valley. People here, for whatever reason, are just comfortable changing jobs, sharing information, and building new things. The weather is astoundingly good. Never too hot or too cold - 350 / 365 days in the year. And the other 15 usually mean having to actually turn on your heater or open a window on a warm summer night. The peninsula, for the most part, does suck in terms of lifestyle. There are exceptions (Murphy Street in Sunnyvale, Good portions of San Francisco, downtown San Jose on a Saturday night) - but, in general, it's mile upon mile of suburbia and strip malls. This is not Manhattan or downtown Vancouver. (On the flip side, with few distractions there is more time to get work done) The major downside is that unless you are filthy rich or already a home owner, the only sane strategy (unless you don't mind commuting for 90-120 minutes each morning) is to rent. With all that said, if what you are looking to do is grow a company organically, and have your eyes set on something more sane like a $10mm-$100mm market cap over 5-10 years, there are probably a lot of ways to succeed without being in the middle of it all.

mattj 18y ago

Is it surprising in any way that a bunch of people not from the valley say that being in the valley isn't important?

patio11 18y ago
The rebuttal writes itself, doesn't it.
paulgb 18y ago
No more surprising than the fact that so many people in the valley say being in the valley is important. I notice that in the bay area, or at least SF, "startup" is assumed to mean a web site or web app of some sort. So when I hear claims that the bay area is the best place for a startup, I don't necessarily disagree, but I parse "startup" as "web app startup".

sachinag 18y ago

Your probability of success is higher in the Valley. Doesn't mean you can't be successful elsewhere. I don't understand why people can't reconcile these two statements. If you like your lifestyle where you are, by all means, stay. If you can find investors, lawyers, and accountants (assuming you want them) that you trust, stay where you are. But if you're just a couple of crazy kids with a work ethic and an idea to change the world, and if you are willing to do everything possible to give your startup the highest probability of success, go to the Valley.

patio11 18y ago
Your probability of success is higher in the Valley Your probability of flipping heads is higher than your probability of rolling 1 on a six-sided die: X = .5, Y =~ .167. I have yet to even hear of a good setup for measuring X or Y, to say nothing of actual numbers for them, for measuring "probability of success in a startup". Heck, I have never even heard a defensible universalizable definition of success for a startup. Incidentally, and this has always bothered me about statements like "give your X the highest probability of Y": do people routinely get the opportunity to run a simple random sample of startups, marry a simple random sample of women, raise a simple random sample of children, etc? No? Then why do we bastardize statistics in this manner.
- sachinag 18y ago
  Look, you get one bite at the apple per idea/situation. A random sample isn't an appropriate counter-factual. Your job as an entrepreneur is to maximize your chances for success given the situation at hand. I suppose "chances for success" wouldn't have set you off, and I acknowledge that. But we're at the point where we mock people for using "beg the question" incorrectly and ignore the substance of the argument, which isn't really productive for others reading this thread.
  - trapper 18y ago
    The only people I have heard that say this, travelling around the world, meeting multiple 9+ digit exit entrepreneurs and tons of 7+, are the ones that started in SV. I tend to think based on what I read that there are a lot more large exits inside SV than outside. But, there seem to be a lot more early deaths and me-too companies there as well. Are you optimising for the wrong solution (insane exits)? [edit: early deaths = companies, not people]

garply 18y ago

The guy in the video makes a point about external funding: a lot of well-known, large tech companies accepted money only after they were already profitable and did so in order to expand. That seems really sane to me - capital seems like a magnifier for a process that either produces money or consumes money. I suspect a lot of companies that succeed with external money would have succeeded without it and that a lot of companies that fail without external money would have failed with it.

blackguardx 18y ago

Some people like Silicon Valley, some people don't. To each his own. Silicon Valley has a huge population of smart tech workers. There are certainly advantages to running a tech startup there. Other aspects of the area detract from the quality of life, however. I live in the bay area, but can't stand Silicon Valley's feeling of endless suburbia. I don't think strip malls and sprawling apartment complexes make a good living environment for me. Some people prefer it, however. Silicon Valley is for them. It is not for me.

menloparkbum 18y ago

There is not much substance to this article. It doesn't really even build on the title. It's just a bunch of quotes about VC funding and startup culture by a couple bloggers who live in Wisconsin and China. And, a video of a random investor from Texas. I feel like they're riffing about an imagined startup culture that died out in 2001.

dejb 18y ago
Maybe it isn't what you meant but to me you post comes off as... "What would they know. They aren't from the valley"
- menloparkbum 18y ago
  I really just meant what I posted - there isn't much to the article. On the other hand, there is some truth to your comment. Aside from the guy who lives in China, there wasn't anything that suggested the authors had even been to California. There are real disadvantages to living in Silicon Valley, and they didn't mention any of them. Instead, they brought up things like work culture and being showered with VC dollars, which actually aren't the big problems.
riferguson 18y ago
Dude, Google is your friend. Mike was being coy when he described himself as a "former Microsoft employee", but dismissing him as a "random investor from Texas" is silly. http://people.forbes.com/profile/michael-j-maples/49137 http://people.forbes.com/profile/michael-j-maples/49137 http://query.nytimes.com/gst/fullpage.html?res=990CE2D81038F936A25756C0A963958260 http://query.nytimes.com/gst/fullpage.html?res=990CE2D81038F... http://www.alibre.com/corporate/management.asp http://www.alibre.com/corporate/management.asp

vaksel 18y ago

I disagree. Have you taken a look at the culture in the valley? They are all about helping each other. i.e. I think this story was told at LeWeb. Seesmic founder lets Friendfeed guys know that their products would work really well together. The Friendfeed guys call back and tell him to drop by to discuss it. Loic hops into his car, drives 10 minutes to the Friendfeed offices, and after an hour or so of meetings, Friendfeed adds Seesmic to their site. Outside of the valley, something like this isn't possible. The spirit of startups lets companies be a lot more relaxed and open to new possibilities.

nostrademons 18y ago
...outside the Valley, most people have heard of neither FriendFeed nor Seesmic. ;-) The big advantage of living outside the valley is that you're closer to real customers - people who don't live and breathe technology 24/7. That can help you or hurt you, depending on your target market. Could something like MySpace, AOL or PlentyOfFish have started inside the Valley, considering that they succeeded by catering to idiots?
- pg 18y ago
  There are plenty of nontechnical people in SV too. There are dentists and cooks and policemen here just like everywhere else. AOL, incidentally, did not cater to idiots initially. Before the web it was something a lot of hackers used.
- asdflkj 18y ago
  The problem with catering to idiots is that unless you're an idiot yourself--the particular kind of idiot comprising your target market--you have no idea what your customers want. Also, this approach would probably be too demoralizing to sustain for anyone without the record-label-executive state of mind, which is the opposite of the hacker state of mind.
axod 18y ago
>> Outside of the valley, something like this isn't possible. We do have email, IRC, etc etc these days.

deleted 18y ago

[deleted]

deleted 18y ago

[deleted]

macco 18y ago

Of course tech startup don't NEED the Valley, but to me(German resident) it seams that the Valley is a good place to be for a tech startup.

jdrock 18y ago

"..and forces entrepreneurs to build a startup that can make it as a business from day one." I think the conclusion borders on comedic. Only a miniscule # of companies should not be thinking of this way.

racy_rick 18y ago

This inspired me: Looking for a great city to start you startup? http://news.ycombinator.com/item?id=518379 http://news.ycombinator.com/item?id=518379

rjurney 18y ago

Silicon valley is unacceptable because Norcal has great white sharks, which scare the pants off me and I can't live by the ocean and not surf :(