5 ms·

Seems specious to me. SV is a centre for innovation because of two major things: Funding and Talent. So firstly, it's unlikely that any VC's are going to move

by adwf 13y ago

Seems specious to me. SV is a centre for innovation because of two major things: Funding and Talent. So firstly, it's unlikely that any VC's are going to move out because their personal rents are too high, while there's still the high concentration of talented people in the area. They might branch out to other locations, but personal choices over where to live are usually about far more than just money. So the Funding is unlikely to relocate. It's possible they might start encouraging businesses to move further afield to increase their survivability, but ultimately a lot of founders will take <$30k salary when starting a company and accept any hardship in order to succeed. So suggesting that corporate finances at startups are suffering because of high rent is also a shaky premise. There may be a few borderline companies that fail "just before" they "would've made it big", but that'll be true at any burn rate. If anything, investors probably like high rents because it forces higher burn rates and hence encourages startups to generate revenue or flip quickly. Either of which is preferable to a long, drawn out investment with no end in sight. It's not like Detroit where a combination of cheaper manufacturing elsewhere and a lack of demand for US cars, led to necessary relocation/offshoring/downsizing. I can't see there ever being a lack of demand for what SV produces. Businesses. Unless people start running out of ideas in and of themselves, I can't see how it'll die any time soon.

michaelochurch 13y ago
So the Funding is unlikely to relocate. I agree. ultimately a lot of founders will take <$30k salary when starting a company and accept any hardship in order to succeed. So suggesting that corporate finances at startups are suffering because of high rent is also a shaky premise. Most of those people have no other options. You don't want to fund people (in general; obviously there are outliers with 150+ IQs and fucked-up careers, I was one and, who knows, may be one in the future) who don't have other options. You want to fund people who could actually get the $250k hedge fund quant jobs. They'll come down to a savings-neutral (with no children) $125k, but not $30k. Not in the Valley. The people who'll take $30k in the Valley are (a) rich kids with parental sources, and (b) the truly desperate. Founders are not an exception. If anything, investors probably like high rents because it forces higher burn rates and hence encourages startups to generate revenue or flip quickly. True, but the real reason VCs want to stay in one area (and keep their companies there) is that the collusion among VCs would be dangerous and possibly legally hazardous if it happened on paper instead of through a mouth-to-mouth social network. I can't see there ever being a lack of demand for what SV produces. Businesses. The whole country produces businesses: restaurants, cleaning companies, indie bookstores. Most HNers find those lines of work uninspiring-- and starting one of those is way riskier to one's tech career than working at Google. Oh, and those businesses tend to get crushed by big corporations (see: WalMart) and landlords and changing trends. So, there's no lack of businesses being generated in the US. What there is a lack of is inspiring and truly innovative businesses, but SV is no longer producing inspiring companies, so what use is it?
- jes5199 13y ago
  > in general; obviously there are outliers with 150+ IQs and fucked-up careers Is that really the exception? I only know a handful of founders, but none of them had stable careers before they started doing the founder-game. Most of them were working in fits and starts, or were in college but dropped out. Has anyone done a survey of this?
- ktd 13y ago
  >Most of those people have no other options. You don't want to fund people (in general; obviously there are outliers with 150+ IQs and fucked-up careers, I was one and, who knows, may be one in the future) who don't have other options. http://www.paulgraham.com/marginal.html http://www.paulgraham.com/marginal.html
  - michaelochurch 13y ago
    I don't disagree. The problem is that the incapable and highly capable (who both fail in typical, micromanaged, closed-allocation type environments) get lumped together and there are fewer of the latter. The profiling (see: job-hopper stigma) really hurts those of us who've had a lot of failures or mistakes but have good reasons. If you really need A+ players (not just the A- and B+ players who become executives) this costs you. But VC-istan is just another version of the corporate ladder and most of these VC-funded startups don't need outlier excellence, so a person like me might not be worth the trouble. VC culture is about commoditizing founders and companies (and especially engineers) and it has worked at creating a world in which A+ players (the people who originally built SV because they didn't fit anywhere else) aren't really needed.
- yuhong 13y ago
  Of course, this does not mean that bootstrapping is the only option. Good VCs are not impossible (as far as I know). What do you think of this BTW: http://blog.ycombinator.com/new-yc-partner-investment-policy http://blog.ycombinator.com/new-yc-partner-investment-policy
eloisant 13y ago
I agree on funding, but talent (1) can be found elsewhere (2) is much easier to attract when you're not in Silicon Valley, competing with thousands of other great companies. Talent is in Silicon Valley only because opportunities, and opportunities are in Silicon Valley only because of funding.
- adwf 13y ago
  Yes that's perfectly true, but the initial funding frequently requires the talent to go find the money. Take YC for example; Many people from Europe would love it if YC accepted applications from London or Berlin - and - let them stay there for the duration. But instead if they want to join, they're required to move out to California for a while. Because it's not possible (or at least, easily feasible) for PG to run it remotely, or franchise, or double-up each year, etc... It's the sheer concentration of talent and capital that gives SV its lead imo. I wouldn't necessarily go there just looking for a job, but I certainly would when looking for funding, even though that would be an international leap for me. Then if the startup fails, there's dozens of others looking for talented people of any skillset in the area, there may not necessarily be so elsewhere. Then after a while, you can go try founding another startup of your own. The safety net of being able to easily jump to another startup can't be underestimated. NB: Also note that SV has international reputation that can't be understated either. I can imagine shifting from London to SV for funding, but it's a much harder sell to shift to Austin just because the rent is cheaper. If I'm following the rent rather than the funding/talent, why not move elsewhere within my own country?
- deleted 13y ago
  [deleted]

by adwf 13y ago

michaelochurch 13y ago

So the Funding is unlikely to relocate. I agree. ultimately a lot of founders will take <$30k salary when starting a company and accept any hardship in order to succeed. So suggesting that corporate finances at startups are suffering because of high rent is also a shaky premise. Most of those people have no other options. You don't want to fund people (in general; obviously there are outliers with 150+ IQs and fucked-up careers, I was one and, who knows, may be one in the future) who don't have other options. You want to fund people who could actually get the $250k hedge fund quant jobs. They'll come down to a savings-neutral (with no children) $125k, but not $30k. Not in the Valley. The people who'll take $30k in the Valley are (a) rich kids with parental sources, and (b) the truly desperate. Founders are not an exception. If anything, investors probably like high rents because it forces higher burn rates and hence encourages startups to generate revenue or flip quickly. True, but the real reason VCs want to stay in one area (and keep their companies there) is that the collusion among VCs would be dangerous and possibly legally hazardous if it happened on paper instead of through a mouth-to-mouth social network. I can't see there ever being a lack of demand for what SV produces. Businesses. The whole country produces businesses: restaurants, cleaning companies, indie bookstores. Most HNers find those lines of work uninspiring-- and starting one of those is way riskier to one's tech career than working at Google. Oh, and those businesses tend to get crushed by big corporations (see: WalMart) and landlords and changing trends. So, there's no lack of businesses being generated in the US. What there is a lack of is inspiring and truly innovative businesses, but SV is no longer producing inspiring companies, so what use is it?

jes5199 13y ago
> in general; obviously there are outliers with 150+ IQs and fucked-up careers Is that really the exception? I only know a handful of founders, but none of them had stable careers before they started doing the founder-game. Most of them were working in fits and starts, or were in college but dropped out. Has anyone done a survey of this?
ktd 13y ago
>Most of those people have no other options. You don't want to fund people (in general; obviously there are outliers with 150+ IQs and fucked-up careers, I was one and, who knows, may be one in the future) who don't have other options. http://www.paulgraham.com/marginal.html http://www.paulgraham.com/marginal.html
- michaelochurch 13y ago
  I don't disagree. The problem is that the incapable and highly capable (who both fail in typical, micromanaged, closed-allocation type environments) get lumped together and there are fewer of the latter. The profiling (see: job-hopper stigma) really hurts those of us who've had a lot of failures or mistakes but have good reasons. If you really need A+ players (not just the A- and B+ players who become executives) this costs you. But VC-istan is just another version of the corporate ladder and most of these VC-funded startups don't need outlier excellence, so a person like me might not be worth the trouble. VC culture is about commoditizing founders and companies (and especially engineers) and it has worked at creating a world in which A+ players (the people who originally built SV because they didn't fit anywhere else) aren't really needed.
yuhong 13y ago
Of course, this does not mean that bootstrapping is the only option. Good VCs are not impossible (as far as I know). What do you think of this BTW: http://blog.ycombinator.com/new-yc-partner-investment-policy http://blog.ycombinator.com/new-yc-partner-investment-policy

eloisant 13y ago

I agree on funding, but talent (1) can be found elsewhere (2) is much easier to attract when you're not in Silicon Valley, competing with thousands of other great companies. Talent is in Silicon Valley only because opportunities, and opportunities are in Silicon Valley only because of funding.

adwf 13y ago
Yes that's perfectly true, but the initial funding frequently requires the talent to go find the money. Take YC for example; Many people from Europe would love it if YC accepted applications from London or Berlin - and - let them stay there for the duration. But instead if they want to join, they're required to move out to California for a while. Because it's not possible (or at least, easily feasible) for PG to run it remotely, or franchise, or double-up each year, etc... It's the sheer concentration of talent and capital that gives SV its lead imo. I wouldn't necessarily go there just looking for a job, but I certainly would when looking for funding, even though that would be an international leap for me. Then if the startup fails, there's dozens of others looking for talented people of any skillset in the area, there may not necessarily be so elsewhere. Then after a while, you can go try founding another startup of your own. The safety net of being able to easily jump to another startup can't be underestimated. NB: Also note that SV has international reputation that can't be understated either. I can imagine shifting from London to SV for funding, but it's a much harder sell to shift to Austin just because the rent is cheaper. If I'm following the rent rather than the funding/talent, why not move elsewhere within my own country?
deleted 13y ago
[deleted]