8 ms·

Our Startup Would Probably Die If We Were In San Francisco

103 points by marshallhaas 12y ago

faizanbhat 12y ago
Staying somewhere cheap gives you a tangible advantage but also puts you at several intangible disadvantages. At my first startup in the UK, we decided to base out of Birmingham instead of London, which reduced our living expenses by 70% and allowed us to really stretch our seed funding. But we ended up having to commute to London frequently for important meetings. Also, one could argue that we might have accomplished more in less time had we had continuous access to expertise and contacts at scale. Eager to hear other thoughts and experiences.
- sliverstorm 12y ago
  Well, that is naturally going to depend on the balance of work you need to do. If you have 12 months of nose-to-the-grindstone product development ahead of you, social connections are of less value. But if you are still spec'ing your product, or doing testing in focus groups, or other such things you'll benefit from those readily available connections... Maybe I'm dreaming of having a large lab in the countryside, and a tiny office in the city.
- glynjackson 12y ago
  It all depends on the type of business you are in and at what stage your company is at. I'm a freelancer but I have staff. My office is based outside the city, but all my work comes from clients in Manchester and London, UK. The major cities are where the opportunities, networking and money comes from. My sacrifice for cheaper living means higher travel costs, longer work hours and in some cases less credibility. For myself, the offset of living in a low crime area with better schools works for me. But, I can understand why startups decide to work in expensive areas. Wealth breeds wealth.
freeqaz 12y ago
I've thought a lot about this and I feel like it makes sense pre-seed to do this. Save the cash, invest it in the business, and then when you raise money move to San Francisco/Bay Area. It's really tough to grow outside of SF, I feel like. But if you're bootstrapping yourself... Then I can't see many reasons to come to SF.
- marshallhaas 12y ago
  Agreed, San Francisco is probably the worst place to be if you want to bootstrap.
  - rjurney 12y ago
    I don't think so. There are so many early adopter, visionary customers here you can sign up on spec to pay you to develop your product.
    - vonmoltke 12y ago
      Assuming your product appeals to the type of consumers or businesses that inhabit San Francisco.
      - rjurney 12y ago
        What kind of businesses aren't in the Bay Area that you'd want to target?
        kasey_junk 12y ago
        Off the top of my head: large banks, insurance companies, automotive, military contracting, commodity agriculture & energy. [Edit] Actually, this made me think, what precisely is in the bay area that I'd want to target. The obvious answer is companies whose major priorities are VC and/or other acquisition events and the ecosystem they create.
  - brianwawok 12y ago
    I would take SF over Antarctica.
- dyeje 12y ago
  Why is it tough to grow outside of SF? There are plenty of successful internet businesses that are not based in San Francisco.
danso 12y ago
It'd be interesting to see the OP's thoughts on how things would be different if he hadn't started in San Francisco? It may be expensive to live there, but it may be easier to network enough to get the contacts/experience/buzz you need to get seen, compared to starting in St. Louis.
bane 12y ago
I've known a few businesses who "HQ" out of a big city, but usually just with a small sales office. Then they hire almost all of the rest of their staff in very cheap, but talent filled areas. One mistake I've seen over and over again, don't hire your customer facing staff in those cheaper areas. You really want sales staff/etc. To be in the same area as your customer base
- seanflyon 12y ago
  What areas do you consider to be very cheap and talent filled? I always assumed that the expensive areas are expensive because well paid talent is driving up the cost of living (though city attitude towards construction plays a large role as well).
  - bane 12y ago
    Well, depends on what you consider cheap and talented I suppose. For example, there are loads of people in Portland and the surrounding area that are employable for far less than you'd get in the Bay Area (by about 35%). You have to work at it though, it's not as bad as offshoring, but you can't half-ass it. The talent won't go as high as the Bay Area, but you'll probably be able to find folks good enough to make the kind of CRUD apps most of us are making anyways. Here's a list and the cost of living delta vs. San Francisco (which translates into direct salary costs for your business). Portland, OR - 35% cheaper Nashville, TN - 80% cheaper Atlanta, GA - 70% Miami, FL - 50% Tampa, FL - 70% Huntsville, AL - 70% Northern, VA - 20% Blacksburg, VA - 60% Charlottesville, VA - 50% Virginia Beach, VA - 60% Fredericksburg - 40% Richmond - 60% Williamsburg - 50% Phoenix, AZ - 70% Columbus, OH - 80% Tri-cities area, WA - 70% Boston, MA - 20% Newark, NJ - 25% Austin, TX - 70% San Antonio, TX - 80% Ft Meade, MD - 30% Chicago, IL - 40% Minneapolis, MN - 50% Las Vegas, NV - 60% Off the top of my head, if you can't hire people in Austin, Nashville, or Las Vegas, you're doing it wrong. All of those have large tech industries and/or are near large cities with big populations. Nashville is near both a big city and a major national lab. They're also cheap enough that you can basically hire two people for the price of one in San Francisco.
arohner 12y ago
Counterfactuals are very hard to know. At CircleCI, being in SF gave numerous advantages early on. We had multiple paying customers in the first two office buildings. We had multiple customers within walking distance, and many more within cycling distance. Being able to talk to real customers using the app was extremely valuable. Customers aside, there are tons of people willing to help, either through advice or introductions. There's an entire ecosystem who understand startups, and have been there. My failed started before that was in Austin, Tx, and the startup density just wasn't there at the time (2009). Not every developer in SF is as mercenary as you make it sound. For your first employee hire, you might find a single person living in an apartment in SF vs. a family man in St. Louis who has to pay for day care and save for college. Their salary requirements might be comparable. [Edit: my point here is not to say that SF people are only single, and STL people only have kids, but that salaries are a distribution, and that there are places where the SF and STL distributions overlap, based on the individual's experience, desires and stage in their life.]
- JPKab 12y ago
  "Not every developer in SF is as mercenary as you make it sound. For your first employee hire, you might find a single person living in an apartment in SF vs. a family man in St. Louis who has to pay for day care and save for college. Their salary requirements might be comparable." This is based on a ridiculous premise: 1) That a highly paid professional in a city BRIMMING with recruiters and cool new companies throwing themselves at them isn't going to respond to market pressures and/or "the shiny new company" effect when you reach a certain growth point 2) That a "family man in St. Louis" will cost something comparable due to this odd concept unique to flyover country of having a family.... oh wait, people in the Bay Area have kids too. I'm sorry, but there is a huge amount of delusion in San Fran about the advantages of physical proximity. I'm not idiotic enough to believe there aren't huge advantages, but it seems as if there is absolutely no point (that HN folks are willing to acknowledge) where the cost of being in San Fran and having to pay your talent at grossly inflated rates actually MORE THAN CANCELS OUT the benefits.
  - glitch003 12y ago
    There is some quantitative truth to what he said, actually. San Francisco does have more single people than other cities, and in fact has almost 12% more single people than St. Louis does. So probabilistically speaking, there is a higher chance that someone you hire in SF will be single (and therefore more likely to put in looong hours) than someone you hire in St. Louis (who may be strict in going home at 5pm to be with family). Source: SF has 44.7% single people, St. Louis has 32.9% single people http://www.bestplaces.net/docs/studies/solocities_list1.asp http://www.bestplaces.net/docs/studies/solocities_list1.asp
acheron 12y ago
There's also the fact that California is regularly at the bottom of rankings of "business friendly" states. I'd rather locate my business in a state that wants me there.
- smutticus 12y ago
  I've never understood these "business friendly" rankings. If CA is so terrible to businesses, then why are there so many successful businesses in CA?
  - WorldWideWayne 12y ago
    Where there's muck, there's brass.
  - davidw 12y ago
    "Positive network externalities": http://en.wikipedia.org/wiki/Network_effect http://en.wikipedia.org/wiki/Network_effect The bay area has 1) a large, talented workforce, 2) great universities, 3) lots of venture capital, as well as people who have "already done it" to give advice. Plus it's a nice place to live if you don't mind the traffic. Granted, opening an LLC costs X compared to a much cheaper Y in Nevada, but that's ultimately kind of small potatoes compared to all the things in California's favor. That said, I'm more interested in bootstrapping something: what people like patio11, Rob Walling and company have achieved doesn't look like science fiction, and they're doing it in places that are not Silicon Valley.
  - calciphus 12y ago
    Because it is good for workers, and therefore workers who value themselves (or more specifically, understand their value to businesses) will want to live someplace where their rights are more important than their companies. For example: non-compete clauses are unenforceable in California. This makes it "unfriendly" to businesses, but much more appealing to highly skilled workers who don't want to be boxed out of their industry for two years just because they dislike their job and want to quit.
- gamblor956 12y ago
cft 12y ago
The problem is that the massively funded SF/SV start-ups will create the "scorched earth" regime for the bootstrapped ones: try moving to St. Louis and compete with a AirBnB from there? If you get traction, you will have to get VC money, which means moving back to SF or NY.
- JPKab 12y ago
  Why do VCs require companies to be in the city they are in? Can someone please explain this? We are talking about an industry whose product is supposed to transcend physical space, but we have to be located in an ultra expensive city to get funded? Where is the logic?
  - johnrob 12y ago
    It's the same logic in requiring employees to work in the office. It isn't necessary valid, and likewise it's probably slowly eroding over time (probably due the high costs referenced in the article).
  - neilellis 12y ago
    Everything we do as human beings (pretty much) is all about people. So think in people terms, not purely resource or financial terms. People like proximity, they like being able to pop in and see other people. Distance is friction from a business point of view. Just as we see friction in applications as bad, so do business people see friction in business as bad. Distance is friction. I'm bootstrapping in the UK, I love SF and would love to be there (at least part of the year!), there are a lot of advantages to having that much contact with other startups. However, interestingly I notice that people who do what suits them best often seem to overcome geographic and financial obstacles. So I certainly wouldn't want to recommend or even suggest one way as better than the other. You've got to balance what's right for you with what is right for others. On a completely different note it would be great if we could swap the word 'funded' with debt everywhere it's used :-) The two words have very different connotations but mean the same thing (unless someone is just willing to GIVE you money :)) I think the word debt helps people to make more sober judgements.
  - 12y ago
richard_cubano 12y ago
You should have moved to Oakland. There's plenty of cheap real estate there, and it's on BART.
- equalarrow 12y ago
  Oakland is getting expensive too from all the overflow from SF. http://www.sfweekly.com/thesnitch/2014/04/17/confirmed-again-san-francisco-rent-is-too-damn-high-and-oakland-isnt-much-cheaper http://www.sfweekly.com/thesnitch/2014/04/17/confirmed-again... I've heard people calling it the Brooklyn of the Bay Area.
- tptacek 12y ago
  Is there actually "plenty of cheap real estate" in Oakland?
  - koberstein 12y ago
    Depends on what you call "cheap" hahahaha
crazy1van 12y ago
This comparison is impossible to do in any quantifiable sense. The cost savings for leaving SF are quantitative (low rent. lower taxes. etc). The perks for staying in SF are much more abstract (better networking. increased visibility). I don't mean to imply the SF perks aren't worth it, but they will only be quantifiable in hindsight at best.
Iftheshoefits 12y ago
I've often wondered why startups locate in the SF/Bay area instead of elsewhere. Right now outside of truly hot tech areas like SF the hiring scene is stacked heavily in employers' favor: there are fewer job opportunities with fewer companies. That's true even in places like St. Louis (or Austin, or any of a number of other supposedly "hot startup" areas). I get some recruiter-spam from St. Louis and Austin based recruiters looking for candidates for "hot" startups and established businesses in the areas, but these opportunities are all with hospital/medical companies (STL) or corporate-y .NET type stuff (Austin). It's a bit baffling, actually, since my resume pretty clearly puts me far outside of those boxes. It seems to me there's an opportunity there for would-be startups to exploit. On the other hand, the very same phenomenon leads to a kind of resistance: the density of "talent" to draw from reduces substantially outside of the SF/Bay area because a lot of it has already been drawn here to the very same job imbalance.
- guyzero 12y ago
  "I've often wondered why startups locate in the SF/Bay area instead of elsewhere." For a non-trivial number of startups, the founders were already working at a big tech company in the Bay Area before they started their own company. For others it's access to investors or really critical employees. If you want someone who can build Amazon/Facebook/Google-scale datacenters, you're not going to have much luck in St. Louis.
frankus 12y ago
It's probably obvious to most, but I recently came to the realization that if you're paying off debt, a high COL works in your favor, whereas if you're living off cash, it works against you. That means that if you're fresh out of college with lots of student loans, you're doing yourself a disservice if you don't move to a big city and get a high paying job. You can effectively inflate your way out of your debt by making your salary much bigger in comparison (assuming COL and salaries roughly match up). And if you're about to retire (without having Fuck You Money), you should move somewhere cheap, all else equal. The same could be true for many bootstrapped startups.
- bduerst 12y ago
  Slight tangent, but it's sort of the same with investing too. If you're investing or saving 30% of your income, it's better to work somewhere with higher COL / higher pay. This way over time you accrue more wealth than you would if you were working in an area with low COL and lower pay.
- bunderbunder 12y ago
  That only works out if the salary you can make increases in proportion with the cost of living. I haven't lived in a lot of places, but at least based on the few cities I have lived in, I don't believe the two are anywhere near that tightly correlated. For example, consider Milwaukee vs. Chicago. Chicago's a major finance and banking center, and a huge percentage of the people living there are in some kind of profession. Milwaukee's still mostly a blue collar town. This difference shows in the very different costs of living: An apartment in Milwaukee costs about half of what an equivalent one costs in Chicago, restaurants cost less for similar quality meals, drinks are way cheaper, etc. But it does not follow that you can earn twice as much money working as a developer in Chicago. The same job in Chicago might pay a bit better, but the difference is modest. This is because the two cities are so close to each other that at least in tech they're essentially the same job market. There's even a busy commuter train connecting the two cities. In short, it's not necessarily doing yourself a disservice if you don't move to a big city and get a high paying job. You might do yourself an even better service by moving to a small city and getting a high paying job.
ChossMops 12y ago
Er, to be a startup you have to be in a hot, happening city. Otherwise you're just a new business.
sayemm 12y ago
I think this all depends if you're really a "startup" or not. As per Paul Graham's definition: http://paulgraham.com/growth.html http://paulgraham.com/growth.html. Just because you're starting something up doesn't mean you're really swinging for the fences for a big home run. But if you are, your survival depends on deal-making and hardcore talent, so you're at a huge disadvantage by not being in a major tech hub. But if you're focused on building a 7 or low 8-figure business, bootstrapped, and self-funded, and your goal is financial independence/freedom instead of "changing the world", totally agree, starting up outside of SF is a great way to build up and earn those first stripes. I live in San Diego and there are lots of internet millionaires here: http://helenchangwriter.com/2009/11/20/millionaire-internet-marketing-entrepreneurs-thrive-in-san-diego/ http://helenchangwriter.com/2009/11/20/millionaire-internet-...
- josephjrobison 12y ago
  Agreed that the word startup is highly overused to apply to everything from Pinterest to a new marketing company in town - small business is what usually applies to companies not swinging for the fences trying to quickly acquire millions of users.
- parennoob 12y ago
  Wow, this comment really stopped and made me think. I honestly used to think "startup" was used for any new business with an unusual, efficient way of doing business. Now that I know how HN people define it, I guess my inclinations are way more towards small business than startup.
josephjrobison 12y ago
SF vs Austin, COL vs salary difference - deciding between the two in the next few weeks - please help me choose!
- rjurney 12y ago
  If you want to be an entrepreneur, there's no choice at all. You have to move to the bay area.
  - kasey_junk 12y ago
    Correction, if you want to be a bay area VC backed entrepreneur. Oddly there are businesses started in other parts of the world.
    - rjurney 12y ago
      Sure - thats my impression of him.

103 points by marshallhaas 12y ago

Staying somewhere cheap gives you a tangible advantage but also puts you at several intangible disadvantages. At my first startup in the UK, we decided to base out of Birmingham instead of London, which reduced our living expenses by 70% and allowed us to really stretch our seed funding. But we ended up having to commute to London frequently for important meetings. Also, one could argue that we might have accomplished more in less time had we had continuous access to expertise and contacts at scale. Eager to hear other thoughts and experiences.

sliverstorm 12y ago
Well, that is naturally going to depend on the balance of work you need to do. If you have 12 months of nose-to-the-grindstone product development ahead of you, social connections are of less value. But if you are still spec'ing your product, or doing testing in focus groups, or other such things you'll benefit from those readily available connections... Maybe I'm dreaming of having a large lab in the countryside, and a tiny office in the city.
glynjackson 12y ago
It all depends on the type of business you are in and at what stage your company is at. I'm a freelancer but I have staff. My office is based outside the city, but all my work comes from clients in Manchester and London, UK. The major cities are where the opportunities, networking and money comes from. My sacrifice for cheaper living means higher travel costs, longer work hours and in some cases less credibility. For myself, the offset of living in a low crime area with better schools works for me. But, I can understand why startups decide to work in expensive areas. Wealth breeds wealth.

freeqaz 12y ago

I've thought a lot about this and I feel like it makes sense pre-seed to do this. Save the cash, invest it in the business, and then when you raise money move to San Francisco/Bay Area. It's really tough to grow outside of SF, I feel like. But if you're bootstrapping yourself... Then I can't see many reasons to come to SF.

marshallhaas 12y ago
Agreed, San Francisco is probably the worst place to be if you want to bootstrap.
- rjurney 12y ago
  I don't think so. There are so many early adopter, visionary customers here you can sign up on spec to pay you to develop your product.
  - vonmoltke 12y ago
    Assuming your product appeals to the type of consumers or businesses that inhabit San Francisco.
    - rjurney 12y ago
      What kind of businesses aren't in the Bay Area that you'd want to target?
      - kasey_junk 12y ago
        Off the top of my head: large banks, insurance companies, automotive, military contracting, commodity agriculture & energy. [Edit] Actually, this made me think, what precisely is in the bay area that I'd want to target. The obvious answer is companies whose major priorities are VC and/or other acquisition events and the ecosystem they create.
- brianwawok 12y ago
  I would take SF over Antarctica.
dyeje 12y ago
Why is it tough to grow outside of SF? There are plenty of successful internet businesses that are not based in San Francisco.

danso 12y ago

It'd be interesting to see the OP's thoughts on how things would be different if he hadn't started in San Francisco? It may be expensive to live there, but it may be easier to network enough to get the contacts/experience/buzz you need to get seen, compared to starting in St. Louis.

bane 12y ago

I've known a few businesses who "HQ" out of a big city, but usually just with a small sales office. Then they hire almost all of the rest of their staff in very cheap, but talent filled areas. One mistake I've seen over and over again, don't hire your customer facing staff in those cheaper areas. You really want sales staff/etc. To be in the same area as your customer base

seanflyon 12y ago
What areas do you consider to be very cheap and talent filled? I always assumed that the expensive areas are expensive because well paid talent is driving up the cost of living (though city attitude towards construction plays a large role as well).
- bane 12y ago
  Well, depends on what you consider cheap and talented I suppose. For example, there are loads of people in Portland and the surrounding area that are employable for far less than you'd get in the Bay Area (by about 35%). You have to work at it though, it's not as bad as offshoring, but you can't half-ass it. The talent won't go as high as the Bay Area, but you'll probably be able to find folks good enough to make the kind of CRUD apps most of us are making anyways. Here's a list and the cost of living delta vs. San Francisco (which translates into direct salary costs for your business). Portland, OR - 35% cheaper Nashville, TN - 80% cheaper Atlanta, GA - 70% Miami, FL - 50% Tampa, FL - 70% Huntsville, AL - 70% Northern, VA - 20% Blacksburg, VA - 60% Charlottesville, VA - 50% Virginia Beach, VA - 60% Fredericksburg - 40% Richmond - 60% Williamsburg - 50% Phoenix, AZ - 70% Columbus, OH - 80% Tri-cities area, WA - 70% Boston, MA - 20% Newark, NJ - 25% Austin, TX - 70% San Antonio, TX - 80% Ft Meade, MD - 30% Chicago, IL - 40% Minneapolis, MN - 50% Las Vegas, NV - 60% Off the top of my head, if you can't hire people in Austin, Nashville, or Las Vegas, you're doing it wrong. All of those have large tech industries and/or are near large cities with big populations. Nashville is near both a big city and a major national lab. They're also cheap enough that you can basically hire two people for the price of one in San Francisco.

arohner 12y ago

Counterfactuals are very hard to know. At CircleCI, being in SF gave numerous advantages early on. We had multiple paying customers in the first two office buildings. We had multiple customers within walking distance, and many more within cycling distance. Being able to talk to real customers using the app was extremely valuable. Customers aside, there are tons of people willing to help, either through advice or introductions. There's an entire ecosystem who understand startups, and have been there. My failed started before that was in Austin, Tx, and the startup density just wasn't there at the time (2009). Not every developer in SF is as mercenary as you make it sound. For your first employee hire, you might find a single person living in an apartment in SF vs. a family man in St. Louis who has to pay for day care and save for college. Their salary requirements might be comparable. [Edit: my point here is not to say that SF people are only single, and STL people only have kids, but that salaries are a distribution, and that there are places where the SF and STL distributions overlap, based on the individual's experience, desires and stage in their life.]

JPKab 12y ago
"Not every developer in SF is as mercenary as you make it sound. For your first employee hire, you might find a single person living in an apartment in SF vs. a family man in St. Louis who has to pay for day care and save for college. Their salary requirements might be comparable." This is based on a ridiculous premise: 1) That a highly paid professional in a city BRIMMING with recruiters and cool new companies throwing themselves at them isn't going to respond to market pressures and/or "the shiny new company" effect when you reach a certain growth point 2) That a "family man in St. Louis" will cost something comparable due to this odd concept unique to flyover country of having a family.... oh wait, people in the Bay Area have kids too. I'm sorry, but there is a huge amount of delusion in San Fran about the advantages of physical proximity. I'm not idiotic enough to believe there aren't huge advantages, but it seems as if there is absolutely no point (that HN folks are willing to acknowledge) where the cost of being in San Fran and having to pay your talent at grossly inflated rates actually MORE THAN CANCELS OUT the benefits.
- glitch003 12y ago
  There is some quantitative truth to what he said, actually. San Francisco does have more single people than other cities, and in fact has almost 12% more single people than St. Louis does. So probabilistically speaking, there is a higher chance that someone you hire in SF will be single (and therefore more likely to put in looong hours) than someone you hire in St. Louis (who may be strict in going home at 5pm to be with family). Source: SF has 44.7% single people, St. Louis has 32.9% single people http://www.bestplaces.net/docs/studies/solocities_list1.asp http://www.bestplaces.net/docs/studies/solocities_list1.asp

acheron 12y ago

There's also the fact that California is regularly at the bottom of rankings of "business friendly" states. I'd rather locate my business in a state that wants me there.

smutticus 12y ago
I've never understood these "business friendly" rankings. If CA is so terrible to businesses, then why are there so many successful businesses in CA?
- WorldWideWayne 12y ago
  Where there's muck, there's brass.
- davidw 12y ago
  "Positive network externalities": http://en.wikipedia.org/wiki/Network_effect http://en.wikipedia.org/wiki/Network_effect The bay area has 1) a large, talented workforce, 2) great universities, 3) lots of venture capital, as well as people who have "already done it" to give advice. Plus it's a nice place to live if you don't mind the traffic. Granted, opening an LLC costs X compared to a much cheaper Y in Nevada, but that's ultimately kind of small potatoes compared to all the things in California's favor. That said, I'm more interested in bootstrapping something: what people like patio11, Rob Walling and company have achieved doesn't look like science fiction, and they're doing it in places that are not Silicon Valley.
- calciphus 12y ago
  Because it is good for workers, and therefore workers who value themselves (or more specifically, understand their value to businesses) will want to live someplace where their rights are more important than their companies. For example: non-compete clauses are unenforceable in California. This makes it "unfriendly" to businesses, but much more appealing to highly skilled workers who don't want to be boxed out of their industry for two years just because they dislike their job and want to quit.
gamblor956 12y ago

cft 12y ago

The problem is that the massively funded SF/SV start-ups will create the "scorched earth" regime for the bootstrapped ones: try moving to St. Louis and compete with a AirBnB from there? If you get traction, you will have to get VC money, which means moving back to SF or NY.

JPKab 12y ago
Why do VCs require companies to be in the city they are in? Can someone please explain this? We are talking about an industry whose product is supposed to transcend physical space, but we have to be located in an ultra expensive city to get funded? Where is the logic?
- johnrob 12y ago
  It's the same logic in requiring employees to work in the office. It isn't necessary valid, and likewise it's probably slowly eroding over time (probably due the high costs referenced in the article).
- neilellis 12y ago
  Everything we do as human beings (pretty much) is all about people. So think in people terms, not purely resource or financial terms. People like proximity, they like being able to pop in and see other people. Distance is friction from a business point of view. Just as we see friction in applications as bad, so do business people see friction in business as bad. Distance is friction. I'm bootstrapping in the UK, I love SF and would love to be there (at least part of the year!), there are a lot of advantages to having that much contact with other startups. However, interestingly I notice that people who do what suits them best often seem to overcome geographic and financial obstacles. So I certainly wouldn't want to recommend or even suggest one way as better than the other. You've got to balance what's right for you with what is right for others. On a completely different note it would be great if we could swap the word 'funded' with debt everywhere it's used :-) The two words have very different connotations but mean the same thing (unless someone is just willing to GIVE you money :)) I think the word debt helps people to make more sober judgements.
- 12y ago

richard_cubano 12y ago

You should have moved to Oakland. There's plenty of cheap real estate there, and it's on BART.

equalarrow 12y ago
Oakland is getting expensive too from all the overflow from SF. http://www.sfweekly.com/thesnitch/2014/04/17/confirmed-again-san-francisco-rent-is-too-damn-high-and-oakland-isnt-much-cheaper http://www.sfweekly.com/thesnitch/2014/04/17/confirmed-again... I've heard people calling it the Brooklyn of the Bay Area.
tptacek 12y ago
Is there actually "plenty of cheap real estate" in Oakland?
- koberstein 12y ago
  Depends on what you call "cheap" hahahaha

crazy1van 12y ago

This comparison is impossible to do in any quantifiable sense. The cost savings for leaving SF are quantitative (low rent. lower taxes. etc). The perks for staying in SF are much more abstract (better networking. increased visibility). I don't mean to imply the SF perks aren't worth it, but they will only be quantifiable in hindsight at best.

Iftheshoefits 12y ago

I've often wondered why startups locate in the SF/Bay area instead of elsewhere. Right now outside of truly hot tech areas like SF the hiring scene is stacked heavily in employers' favor: there are fewer job opportunities with fewer companies. That's true even in places like St. Louis (or Austin, or any of a number of other supposedly "hot startup" areas). I get some recruiter-spam from St. Louis and Austin based recruiters looking for candidates for "hot" startups and established businesses in the areas, but these opportunities are all with hospital/medical companies (STL) or corporate-y .NET type stuff (Austin). It's a bit baffling, actually, since my resume pretty clearly puts me far outside of those boxes. It seems to me there's an opportunity there for would-be startups to exploit. On the other hand, the very same phenomenon leads to a kind of resistance: the density of "talent" to draw from reduces substantially outside of the SF/Bay area because a lot of it has already been drawn here to the very same job imbalance.

guyzero 12y ago
"I've often wondered why startups locate in the SF/Bay area instead of elsewhere." For a non-trivial number of startups, the founders were already working at a big tech company in the Bay Area before they started their own company. For others it's access to investors or really critical employees. If you want someone who can build Amazon/Facebook/Google-scale datacenters, you're not going to have much luck in St. Louis.

frankus 12y ago

It's probably obvious to most, but I recently came to the realization that if you're paying off debt, a high COL works in your favor, whereas if you're living off cash, it works against you. That means that if you're fresh out of college with lots of student loans, you're doing yourself a disservice if you don't move to a big city and get a high paying job. You can effectively inflate your way out of your debt by making your salary much bigger in comparison (assuming COL and salaries roughly match up). And if you're about to retire (without having Fuck You Money), you should move somewhere cheap, all else equal. The same could be true for many bootstrapped startups.

bduerst 12y ago
Slight tangent, but it's sort of the same with investing too. If you're investing or saving 30% of your income, it's better to work somewhere with higher COL / higher pay. This way over time you accrue more wealth than you would if you were working in an area with low COL and lower pay.
bunderbunder 12y ago
That only works out if the salary you can make increases in proportion with the cost of living. I haven't lived in a lot of places, but at least based on the few cities I have lived in, I don't believe the two are anywhere near that tightly correlated. For example, consider Milwaukee vs. Chicago. Chicago's a major finance and banking center, and a huge percentage of the people living there are in some kind of profession. Milwaukee's still mostly a blue collar town. This difference shows in the very different costs of living: An apartment in Milwaukee costs about half of what an equivalent one costs in Chicago, restaurants cost less for similar quality meals, drinks are way cheaper, etc. But it does not follow that you can earn twice as much money working as a developer in Chicago. The same job in Chicago might pay a bit better, but the difference is modest. This is because the two cities are so close to each other that at least in tech they're essentially the same job market. There's even a busy commuter train connecting the two cities. In short, it's not necessarily doing yourself a disservice if you don't move to a big city and get a high paying job. You might do yourself an even better service by moving to a small city and getting a high paying job.

ChossMops 12y ago

Er, to be a startup you have to be in a hot, happening city. Otherwise you're just a new business.

sayemm 12y ago

I think this all depends if you're really a "startup" or not. As per Paul Graham's definition: http://paulgraham.com/growth.html http://paulgraham.com/growth.html. Just because you're starting something up doesn't mean you're really swinging for the fences for a big home run. But if you are, your survival depends on deal-making and hardcore talent, so you're at a huge disadvantage by not being in a major tech hub. But if you're focused on building a 7 or low 8-figure business, bootstrapped, and self-funded, and your goal is financial independence/freedom instead of "changing the world", totally agree, starting up outside of SF is a great way to build up and earn those first stripes. I live in San Diego and there are lots of internet millionaires here: http://helenchangwriter.com/2009/11/20/millionaire-internet-marketing-entrepreneurs-thrive-in-san-diego/ http://helenchangwriter.com/2009/11/20/millionaire-internet-...

josephjrobison 12y ago
Agreed that the word startup is highly overused to apply to everything from Pinterest to a new marketing company in town - small business is what usually applies to companies not swinging for the fences trying to quickly acquire millions of users.
parennoob 12y ago
Wow, this comment really stopped and made me think. I honestly used to think "startup" was used for any new business with an unusual, efficient way of doing business. Now that I know how HN people define it, I guess my inclinations are way more towards small business than startup.

josephjrobison 12y ago

SF vs Austin, COL vs salary difference - deciding between the two in the next few weeks - please help me choose!

rjurney 12y ago
If you want to be an entrepreneur, there's no choice at all. You have to move to the bay area.
- kasey_junk 12y ago
  Correction, if you want to be a bay area VC backed entrepreneur. Oddly there are businesses started in other parts of the world.
  - rjurney 12y ago
    Sure - thats my impression of him.