5 ms·

Why Being Outside Silicon Valley is Good for Startups

20 points by terpua 19y ago

dean 19y ago
"IBM is said to love buying Canadian companies like Cognos because of their tremendous employee stickiness. Next time one of my American clients ridicules Canada's pro-employee ways, I'll remind them of this." I didn't know Canada had "pro-employee ways" (whatever that is), let alone that they were being ridiculed for it by Americans. Last time I checked, Canadian companies were just as interested in down-sizing as American companies are. The "employee stickiness" IBM is talking about probably has more to do with the mindset of employees in Canada rather than anything employers or the government might be doing. Maybe Canadians are more reluctant to move cities for a different job than Americans are, but the people I know in IT in Canada, at least, have no qualms about leaving their jobs if they can find something better. Even people at Cognos.
- amichail 19y ago
  "employee stickiness" is a bad sign for employees. It means that finding and keeping a rewarding job is hard.
  - electric 19y ago
    Or that an employee has "stuck" around for long enough to be unemployable elsewhere.
  - hello_moto 19y ago
    Not quite a bad sign. Maybe they're just happy at the place they're working and the employees are loyal people.
    - amichail 19y ago
      Why would you want to be a loyal employee?
      - hello_moto 19y ago
        The employer treated me alright, good benefits, nice working environments. I value trust and connection.
        chaostheory 19y ago
        There are very few companies like that - the names i can come up with are less than the number of fingers that i have...
- electric 19y ago
  "Maybe Canadians are more reluctant to move cities for a different job than Americans are" Canadians love living in Canada and in general move to the US very reluctantly. As a result Canadians have fewer career options relative to their US counterparts. This results in low turnover. You're right, it has nothing to do with a company's "pro-employee" which I assume means "employee-friendly" ways.
  - neilk 19y ago
    I don't think it's true that Canadians move to the States "very reluctantly". For most of my lifetime, it's been a given that the top Canadian talent in any field would eventually move to the States, or spend significant time there. I would bet that most Canadians, even those working in the USA, feel that the USA is a bit messed up on some issues and has an arguably lower quality of life. But it's got an economy that's an order of magnitude bigger and opportunities to match.
    - electric 19y ago
      "For most of my lifetime, it's been a given that the top Canadian talent in any field would eventually move to the States, or spend significant time there." I think that is true in some fields, like the performing arts and untrue in others like engineering esp. telecommunications where top talent is homegrown thanks to the likes of Nortel and now RIM. These people do not want to move and there is a critical mass that hasn't gone away even after the bubble burst.
nickb 19y ago
Couldn't agree more. FInding right employees at right prices is extremely hard to do in the Valley. You're competing with the likes of Google, Facebook etc and it can take forever to fill a position at an inflated price. While you're small and your startup consists of a few founders, there's no better place on Earth to be at but as soon as you get that check from a VC, things are gonna get tough.
suziedw 19y ago
A few clarifications: Canada is generally a country where the concept of "employment at will" does not exist. You want to fire someone? You need to pay severance. We also have human rights legislation that can add to what you must pay if you fire someone who is older, pregnant or has one of a wide range of conditions that can be deemed a disability (drug addiction, alcoholism, depression). There are penalties payable for toxic work places or for firing in a particularly harsh manner. These are many reasons why employers based in the US tend to dislike Canadian employment laws - if you hire the wrong person, you have to pay to get rid of them. Onto the stickiness issue - you're generally right - there is great R&D talent in Ottawa, for example, but very few superstar tech companies at the moment. If you are like most R&D talent and attracted by the quality of work, you're pretty sticky. A related point - thanks to the limited number ofwork Visas to the US, we've become a naturally sticky country for near-shoring talent from India, etc that cannot get a permit to work in the valley. Sticky by geography works for us, too.
- joshwa 19y ago
  Boy, that sure sounds nice! Wish I could have applied some of those laws to my last employer...
  - davidw 19y ago
    It's really a double edged sword with some unintended consequences. Italy has similar (probably stronger) laws. One of the results is that most employers are very, very wary of hiring women of childbearing age.
  - herdrick 19y ago
    When an employment relationship is a bigger commitment, employers are much more hesitant to hire.
- dean 19y ago
  My impression is that what you say about firing someone is true for employees of the government or very large companies. But not really for medium or small companies. And certainly not for startups. And I suspect the U.S. government has similar policies and legislation in place for federal government workers.
neilc 19y ago
> For these reasons many SV VCs, he says, will not fund startups unless at least 50% of their development work is done outside of California. I don't buy that, at least for generous definitions of "many SV VCs". I don't think any intelligent VC would follow a blanket prohibition like that. And at least in my experience, most SV startups do the vast majority of their key engineering work in the Valley.
johnrob 19y ago
Remember the blub vs better languages debates? Chalk one up for better languages, where you get more done with LESS people. Have fun trying to hire java engineers in the valley right now :)
BitGeek 19y ago
The main reason to build outside of silicon valley-- less people poaching your employees, yes, but more importantly: You don't have the bad advice constantly being forced on you. in SV, its like being in a bar full of hot chicks who are constantly coming on to you, and telling you that they will sleep with you, if only you'll get a vasectamy, shave your ballsack, take female hormones, grow your hair out, start dressing in womens clothes, etc-- where each time you do something to please one of them they have another suggestion and two more show up with completely different suggestions. You can never make them happy and none of them will sleep with you, until you have proven yourself to be completely desperate, and wrapped around your finger. So you ultimately end up with an ugly one after being teased by hot chicks to the point of total desperation. Then when they do sleep with you, you find out they have herpes, and a few days later, they start sleeping with your best friend instead and tell you that you have to stop going to bars, or they will make sure you never get laid again. In the end you're screwed, diseased and have wasted several years trying to get laid when you should have been trying to build your business. Only, when I talk about women here I'm talking about VCs and when I talk about changing you I'm talking about really bad business advice. You're left with the choice of running your company into the ground based on their bad advice, or being pushed out of your own company because you wouldn't destroy it for them. No VC realizes that they are incompetent at business and giving their clients bad advice-- the best you can hope for is one that is so busy they aren't paying attention to you. People say you just need to find a good VC-- but the reality is, VCs are like politicians: there are no good ones. If they were decent people they wouldn't be in that line of work. (Not that there's anything wrong with venture investing, just the way its practiced in Silicon Valley is death to high tech startups.) Unless you're a MBA with a marketing focus and cant' write code to save your life, and your only way to make it big is to latch onto some actually talented people and od the high burn rate high profile startup thing-- the Valley is the last place you want to go.
- mwerty 19y ago
  Very unusual analogy. I assume its first or second hand. How do you distinguish the good VCs from the bad?
- pg 19y ago
  Pressure from investors to do stupid things is a real problem, but it's actually less of a problem in SV than anywhere else. You need roughly as much money to do a given startup outside the valley as in it. That means you're roughly as beholden to investors no matter where you are. And stupid as many SV investors are, they are on average smarter than those outside it.
pg 19y ago
The employee retention argument is a misleading one. It only matters if you make it past earlier and much higher hurdles, like creating something novel that users like, and getting funded. Someone who wants to start a startup and avoids SV because it will be harder to retain employees is like someone who wants to become a movie star and avoids LA because the higher crime rate means he'll have to worry about people breaking into his mansion after he succeeds.

20 points by terpua 19y ago

dean 19y ago

"IBM is said to love buying Canadian companies like Cognos because of their tremendous employee stickiness. Next time one of my American clients ridicules Canada's pro-employee ways, I'll remind them of this." I didn't know Canada had "pro-employee ways" (whatever that is), let alone that they were being ridiculed for it by Americans. Last time I checked, Canadian companies were just as interested in down-sizing as American companies are. The "employee stickiness" IBM is talking about probably has more to do with the mindset of employees in Canada rather than anything employers or the government might be doing. Maybe Canadians are more reluctant to move cities for a different job than Americans are, but the people I know in IT in Canada, at least, have no qualms about leaving their jobs if they can find something better. Even people at Cognos.

amichail 19y ago
"employee stickiness" is a bad sign for employees. It means that finding and keeping a rewarding job is hard.
- electric 19y ago
  Or that an employee has "stuck" around for long enough to be unemployable elsewhere.
- hello_moto 19y ago
  Not quite a bad sign. Maybe they're just happy at the place they're working and the employees are loyal people.
  - amichail 19y ago
    Why would you want to be a loyal employee?
    - hello_moto 19y ago
      The employer treated me alright, good benefits, nice working environments. I value trust and connection.
      - chaostheory 19y ago
        There are very few companies like that - the names i can come up with are less than the number of fingers that i have...
electric 19y ago
"Maybe Canadians are more reluctant to move cities for a different job than Americans are" Canadians love living in Canada and in general move to the US very reluctantly. As a result Canadians have fewer career options relative to their US counterparts. This results in low turnover. You're right, it has nothing to do with a company's "pro-employee" which I assume means "employee-friendly" ways.
- neilk 19y ago
  I don't think it's true that Canadians move to the States "very reluctantly". For most of my lifetime, it's been a given that the top Canadian talent in any field would eventually move to the States, or spend significant time there. I would bet that most Canadians, even those working in the USA, feel that the USA is a bit messed up on some issues and has an arguably lower quality of life. But it's got an economy that's an order of magnitude bigger and opportunities to match.
  - electric 19y ago
    "For most of my lifetime, it's been a given that the top Canadian talent in any field would eventually move to the States, or spend significant time there." I think that is true in some fields, like the performing arts and untrue in others like engineering esp. telecommunications where top talent is homegrown thanks to the likes of Nortel and now RIM. These people do not want to move and there is a critical mass that hasn't gone away even after the bubble burst.

nickb 19y ago

Couldn't agree more. FInding right employees at right prices is extremely hard to do in the Valley. You're competing with the likes of Google, Facebook etc and it can take forever to fill a position at an inflated price. While you're small and your startup consists of a few founders, there's no better place on Earth to be at but as soon as you get that check from a VC, things are gonna get tough.

suziedw 19y ago

A few clarifications: Canada is generally a country where the concept of "employment at will" does not exist. You want to fire someone? You need to pay severance. We also have human rights legislation that can add to what you must pay if you fire someone who is older, pregnant or has one of a wide range of conditions that can be deemed a disability (drug addiction, alcoholism, depression). There are penalties payable for toxic work places or for firing in a particularly harsh manner. These are many reasons why employers based in the US tend to dislike Canadian employment laws - if you hire the wrong person, you have to pay to get rid of them. Onto the stickiness issue - you're generally right - there is great R&D talent in Ottawa, for example, but very few superstar tech companies at the moment. If you are like most R&D talent and attracted by the quality of work, you're pretty sticky. A related point - thanks to the limited number ofwork Visas to the US, we've become a naturally sticky country for near-shoring talent from India, etc that cannot get a permit to work in the valley. Sticky by geography works for us, too.

joshwa 19y ago
Boy, that sure sounds nice! Wish I could have applied some of those laws to my last employer...
- davidw 19y ago
  It's really a double edged sword with some unintended consequences. Italy has similar (probably stronger) laws. One of the results is that most employers are very, very wary of hiring women of childbearing age.
- herdrick 19y ago
  When an employment relationship is a bigger commitment, employers are much more hesitant to hire.
dean 19y ago
My impression is that what you say about firing someone is true for employees of the government or very large companies. But not really for medium or small companies. And certainly not for startups. And I suspect the U.S. government has similar policies and legislation in place for federal government workers.

neilc 19y ago

> For these reasons many SV VCs, he says, will not fund startups unless at least 50% of their development work is done outside of California. I don't buy that, at least for generous definitions of "many SV VCs". I don't think any intelligent VC would follow a blanket prohibition like that. And at least in my experience, most SV startups do the vast majority of their key engineering work in the Valley.

johnrob 19y ago

Remember the blub vs better languages debates? Chalk one up for better languages, where you get more done with LESS people. Have fun trying to hire java engineers in the valley right now :)

BitGeek 19y ago

The main reason to build outside of silicon valley-- less people poaching your employees, yes, but more importantly: You don't have the bad advice constantly being forced on you. in SV, its like being in a bar full of hot chicks who are constantly coming on to you, and telling you that they will sleep with you, if only you'll get a vasectamy, shave your ballsack, take female hormones, grow your hair out, start dressing in womens clothes, etc-- where each time you do something to please one of them they have another suggestion and two more show up with completely different suggestions. You can never make them happy and none of them will sleep with you, until you have proven yourself to be completely desperate, and wrapped around your finger. So you ultimately end up with an ugly one after being teased by hot chicks to the point of total desperation. Then when they do sleep with you, you find out they have herpes, and a few days later, they start sleeping with your best friend instead and tell you that you have to stop going to bars, or they will make sure you never get laid again. In the end you're screwed, diseased and have wasted several years trying to get laid when you should have been trying to build your business. Only, when I talk about women here I'm talking about VCs and when I talk about changing you I'm talking about really bad business advice. You're left with the choice of running your company into the ground based on their bad advice, or being pushed out of your own company because you wouldn't destroy it for them. No VC realizes that they are incompetent at business and giving their clients bad advice-- the best you can hope for is one that is so busy they aren't paying attention to you. People say you just need to find a good VC-- but the reality is, VCs are like politicians: there are no good ones. If they were decent people they wouldn't be in that line of work. (Not that there's anything wrong with venture investing, just the way its practiced in Silicon Valley is death to high tech startups.) Unless you're a MBA with a marketing focus and cant' write code to save your life, and your only way to make it big is to latch onto some actually talented people and od the high burn rate high profile startup thing-- the Valley is the last place you want to go.

mwerty 19y ago
Very unusual analogy. I assume its first or second hand. How do you distinguish the good VCs from the bad?
pg 19y ago
Pressure from investors to do stupid things is a real problem, but it's actually less of a problem in SV than anywhere else. You need roughly as much money to do a given startup outside the valley as in it. That means you're roughly as beholden to investors no matter where you are. And stupid as many SV investors are, they are on average smarter than those outside it.

pg 19y ago

The employee retention argument is a misleading one. It only matters if you make it past earlier and much higher hurdles, like creating something novel that users like, and getting funded. Someone who wants to start a startup and avoids SV because it will be harder to retain employees is like someone who wants to become a movie star and avoids LA because the higher crime rate means he'll have to worry about people breaking into his mansion after he succeeds.