20 ms·

Why Silicon Valley Works

294 points by philip1209 12y ago

jbail 12y ago
Good article. It provoked a thought: In an increasingly digital world, how long will physical proximity be an advantage? The notion that a region could somehow have its own brand of patriotism centered around startup success merely due to density is somewhat difficult to rationalize. You can't deny SV's success relative to other technology hubs, but I'm wondering how far in the future physical proximity will continue to carry such a steep advantage
- uniformlyrandom 12y ago
  > how long will physical proximity be an advantage There is a number of articles and research papers on the subject. In short, distance matters even within the same building.
anateus 12y ago
Two sentences early on are problematic: "One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. " If Sam had said "you need them in Silicon Valley much less than anywhere else" it would be a true statement. But in an article I strongly agree with, this sort of thing... I'm not even sure what to call it, misinformation? Makes the rest ring hollow. The networks here have vastly lower costs of entry and way fewer secret handshakes. But they still have them, and for many groups of people those costs are much higher than the median. It would have been easy to acknowledge that without diminishing the core point.
- swamp40 12y ago
  I dunno - he explains his reasoning in the same paragraph: "It’s standard practice to ask people you’ve just met for help – and as long as you aren’t annoying about it, they usually don’t mind."
  - scobar 12y ago
    The problem, I imagine, this creates is thousands of requests for help from innocently ignorant founders to a single valuable connection in SV. Each founder may only make one naive request, but important individuals are bombarded by enough to exhaust them. I admire the patience of those who continue to offer thoughtful advice and feedback, but I imagine it's quite tiring. I think resources like Sama's free startup class at Standford are a great solution.
- scobar 12y ago
  I agree that accessing the right networks will help tremendously, but I also believe that Sama's statement is accurate. One doesn't need pre-existing connections. This almost subtle, yet much more important condition was included shortly after the quote you mentioned: "If you build something good, people will help you." A grand vision alone won't get someone nearly as far as it may have in the late 90s. A prototype that is nearing that vision with each quickly released new iteration seems to be the entry barrier for someone with no pre-existing connections.
- ch4s3 12y ago
  I took his statement as hyperbole to make the point that those connections are less important in SV. But I don't know him, so its just my inference.
- csallen 12y ago
  I don't think he's saying that there is no network, or that the using the network isn't helpful. It seems like his primary point here is that your relationship to this network doesn't need to be pre-existing. If you know nobody in SV, but build something great, you will quickly get to know people.
- hackuser 12y ago
  But he goes on to describe the Y Combinator insider network as extremely valuable, which seems to contradict the statement you quote: > Our network works because it has very strong connections. Founders are generally closer to their earliest investors and less close to their later investors. They are closest of all to the peers they were around when struggling to get their start. Therefore, YC founders are typically willing to do anything they can to help another YC founder. ... > I often ask founders what surprised them most about going through YC, and a common answer is the degree to which YC is a "meta-company". ... the connection is so strong that alumni companies get significant benefits from each other. Most YC founders tell us they get more help from other YC founders than all other friends of the company, advisors and investors put together.
- benmathes 12y ago
  You're right that it's partially true. Why the idealistic spin from @sama? Consider the incentives. One of YC's macro strengths is a silicon valley onramp.
- mathattack 12y ago
  My impression is that Silicon Valley (like NYC) is a destination. Move to St. Louis and everyone asks where you went to high school. Not here. It doesn't take long to make a name, and there's a tradition of helping "the next one."
ch4s3 12y ago
This is a pretty thoughtful and to the point article. You might summarize it by saying that SV success is defined by Community and Capital. It makes a lot of sense that rich networks backed by money make an area successful. It would be interesting to explore the effect of capital from within the community vs external capital inflow.
lolwutf 12y ago
'I wrote this for the FT, but it's behind a paywall. Since I wrote it, I feel like it's probably ok for me to post it here.' If the FT paid you to write it, I feel like it's probably not ok to post it where you'd like.
- aganders3 12y ago
  It's better not to go on feel either way. In most cases, a freelance writer retains copyright and the publication that paid for the work (in this case FT) is given an implicit license to use it.
- anateus 12y ago
  Since he's not an FT employee, it's likely this could fit under the category of work made for hire, but unless his contract explicitly specified this is case, I believe he would retain the copyright: http://en.wikipedia.org/wiki/Copyright_law_of_the_United_States#First_owner_of_copyright http://en.wikipedia.org/wiki/Copyright_law_of_the_United_Sta...
- jgrahamc 12y ago
  Depends on the contract. Here's the contract I've been bound by when writing freelance for The Guardian: You grant irrevocably and unconditionally to GNM the following rights ("the licence") to use, publish, transmit or license the contribution throughout the world. Unless expressly identified otherwise, all rights granted in this licence shall subsist for the full period of copyright in the contribution including all renewals, reversions, extensions and revivals of such period and shall be exclusive. With the exception of Spot Sales where royalties are payable as set out below, GNM pays freelances commission fees covering all of the following rights. The value of these rights is reviewed annually. 1 Right to use, publish or transmit the contribution in all editions of the relevant Licensed Publications anywhere in the world. 2 Non-exclusive right after use in the Licensed Publications to publish the contribution in Guardian Weekly and similar publications and in other collections of material published by GNM in paper form and on-line anywhere in the world. 3 Non-exclusive right to use, store, publish or transmit the contribution in internal archives and databases and External Archives and databases including but not limited to CD-ROMs and websites published by GNM and/or third party databases and/or archive publishers. 4 Right to authorise the Newspaper Licensing Agency ("NLA") to distribute or license the distribution of the contribution for the NLA's licensed acts and purposes as amended from time to time. 5 Right to Syndicate throughout the world after use in the Licensed Publications. For the avoidance of doubt such Syndication rights include the right to enter into contracts with third parties under which such third parties may reproduce content previously published by GNM. 6 Right to make Spot Sales throughout the world for a period of 3 months after use in the Licensed Publications and the non-exclusive right to make Spot Sales thereafter. Attributable revenue shall be split between you and GNM on a 50:50 basis and your share shall be remitted to you within 28 days of each sale. All other rights are reserved by you.
joshhart 12y ago
My biggest concern with Silicon Valley is that it will become so expensive that many potential startups are prevented from coming here. Sam also stated that housing costs were the biggest weakness. I wonder what YC could do about this problem for it's companies. I think it would be interesting for YC to build a few high-rise live-work spaces for smaller YC companies to foster and grow the tightly-knit community. Maybe like a high-tech college campus?
- ojbyrne 12y ago
  Not sure where they would build "high-rise" anything - zoning laws would preclude that in most places in the bay area.
  - mahyarm 12y ago
    Political action to allow higher density?
- kqr2 12y ago
  Recent thread on So You Want To Fix The Housing Crisis: https://news.ycombinator.com/item?id=8549454 https://news.ycombinator.com/item?id=8549454 Basically, people need to vote if they want to see any changes.
- nerfhammer 12y ago
  > build a few high-rise The dominant political view in the area is that building high-rise anything anywhere is something that should be stopped at all costs
  - _delirium 12y ago
    True in much of Silicon Valley (especially places like Palo Alto, which want to retain a suburban layout), but there's some moderate densification going on in San Jose. It lulled for a bit during the financial crisis because a bunch of projects' financing fell through—some apartments under construction had work stopped for ~2 years. But construction seems to be back in swing again now.
batbomb 12y ago
>> The focus in Silicon Valley on long-term compensation is also important. Nearly everyone wants to get rich but they’re willing to wait to do so. Conspicuous consumption isn’t that cool; not too many people drive Ferraris or talk about their vacation homes. Instead, they talk about how healthy they are, their diets, or the climbing gym.
- hawkice 12y ago
  I'm no fitness master myself, but, far from begrudging the paleo-crossfit-organicos out there on their latest PR (am I using the lingo right?), I'd like to say, from those of us nodding and smiling: Being healthy is great! Keep it up! :)
  - Dewie 12y ago
    I think that the point is that it is the new status-symbol. In my experience (not Silicon Valley), status symbols in the form of material possessions have taken a back seat to status symbols in the form of fitness and "experiential materialism" (frequent travelling, exotic and varied experiences).
    - hawkice 12y ago
      I don't disagree with the thrust of what you are saying, and I am particularly amused that in the age of almost infinite variation deliverable through the internet there is a kind of odd counter-signalling effect to avoiding that (I also like travel and have been doing it constantly for more than a year, though, so what do I know). Describing physical fitness as "the new status-symbol" seems pretty bizarre to me, though. As a status symbol it probably predates humanity.
      - batbomb 12y ago
        Physical fitness itself isn't a status symbol, per se. How people conduct their personal physical fitness is what has elevated it to a status symbol. Things like when, where, how often, how public, what activities/exercises, and even what they wear to work... that's the new status symbol. A ridiculous recent example is the Trulia co-founder rowing to Hawaii with his wife for the cause of... wait for it.... the fight against sugar.
sparkzilla 12y ago
For anyone interested, I have compiled many of Sam's interviews at http://newslines.org/sam-altman/ http://newslines.org/sam-altman/
steven2012 12y ago
No. The reason why Silicon Valley works is because of the intense greed that it provokes amongst everyone that comes here. Maybe "greed" is too strong of a word, because people aren't necessarily selfish, maybe "money-focused" is probably more accurate. And because anyone can come here and become a millionaire/billionaire, it draws in an immense number of hard-working people which just generally increase the level of competence, and unfortunately competitiveness, which has a positive feedback loop which causes these smart people to want to work even harder over time. Outside Silicon Valley, all you hear about is billionaires being made day-after-day, and smart people they look at this nonsense and think "I can do that". Once the come to Silicon Valley, they get sucked into a vortex of work and money-focus that is so strong that the only way to get ahead is by working long hours and taking risks. Think about it this way: a person who makes 120k/yr with 2 kids and a spouse who stays at home will be considered the "working poor" here. I feel sorry for anyone who tells me they have a spouse, 2 kids and a house in any place other than NYC, and are contemplating moving to the Bay Area. Everything is priced perfectly to the point where no one can afford to live in a good neighborhood with a good commute with good schools. It's like the CAP theorum, except it's more like "Good Job, Good Neighborhood, Good commute: pick one" (unless you're rich). So, in order to get ahead, both spouses need to work, and they need to work very good jobs with long hours in order to "make it well". If you have Dual Income No Kids, it's a bit easier, but you still need to deal with oppressive traffic and high rent. It's so expensive, that all you do is think about money. And you fall into fallacies where if both spouses make #120k/yr, for a total of basically $250k/yr, you start thinking "why don't I feel rich?" or "why am I working so hard with nothing to show for it?" It's because you work 10 hr days, and then you're spending 2 hrs a day commuting, and you get into a zone where all you do is think about work, and how to buy the next iPhone because at least you have something to show for your money. Meanwhile, none of my friends outside of SV have iPhone 6's let along iPhone 5S's, many are still using iPhone 4's which are perfectly good but a bit slow, but you wouldn't be caught dead in SV with one of those relics. So all of this money-focus necessarily squeezes out as much productivity from the best and smartest in Silicon Valley, which is why you have so much success here. If you compare SV to place like Japan or China, where the population is generally better educated, you don't get anywhere near the same level of productivity. In Japan you get high prices and long work, but there's no payoff like there is with Silicon Valley because of the social impedances, so you'll never have a Silicon Valley in Japan. In other places that purport to be another SV, even places like Austin, there just isn't the same level of greed/money focus like you have here, so I don't think you'll be able to get as much productivity. It's the sky-high prices, work-life imbalance, the startup-millionaire stories that create this unique pressure cooker environment that can't be duplicated.
7Figures2Commas 12y ago
> One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. Silicon Valley is a community of outsiders that have come together. If you build something good, people will help you. It’s standard practice to ask people you’ve just met for help – and as long as you aren’t annoying about it, they usually don’t mind. There's some truth to this, but it's not entirely accurate. The spectrum of who, what, when, where, why and how is very broad here. The top of the food chain in Silicon Valley is just as insular as Wall Street, Hollywood, etc. > Yes, the approximately 700 YC companies are all totally independent legal entities – but the connection is so strong that alumni companies get significant benefits from each other. Not often discussed: some of those benefits are benefits until they're not. A lot of accelerator-backed startups count other startups from the same accelerator as their largest customer segment and a source of early sales traction. When the business cycle turns and "other startups" is no longer a viable customer segment, however, a lot of startups are going to see their sales decimated because they have little to no diversification. > Unlike other cities where people are mostly focused on cash compensation for this year, in Silicon Valley more people talk about equity than salaries (assuming, of course, that they can afford the wildly-out-of-control housing costs, which is probably the biggest weakness here right now). This is simply not true. Most angel and venture-backed startups in the Bay Area today offer early employees miniscule amounts of equity, and engineers demand market rate compensation (where market rate compensation equals "what Google or Facebook would pay me if I could get a job there"). If you're a startup offering higher equity in lieu of salary, you will have a very difficult time hiring in the Bay Area. Most engineers are hip to the fact that this isn't likely to work out in their favor.
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zoba 12y ago
Another reason I think the valley works so well is the audience its news outlets have. If you have a great product but can't get news coverage on it, its going to be hard to get growth without a large marketing budget. However, if you're friends with a friend of a Techcrunch write, its much easier to get covered and start to get a core group of users who love your product - and are tech savvy enough to understand that features that don't exist yet will be coming, and they should be patient. If you try to bootstrap a startup without using SV's media outlets (as would be the case for people who don't have connections to these folks), you're going to have a much harder time.
- basher 12y ago
  Is asking tech journalists you've just met to write about your startup considered annoying?
  - Emphaticdotco 12y ago
    All depends on the "how". If you make the effort to show that you understand their coverage niche, and make sure that you actually fit into it, and also have (or can package) your story as something newsworthy then go for it.
- ig1 12y ago
  I think you're vastly over estimating the impact of tech news sites. A decent front page article on techcrunch will get you a couple of thousand visitors, the vast majority of which won't be in your core customer group. The main advantage of tech news sites is that they're read by potential investors, partners, employees, etc. rather than because they get you users. You really need to get your early users through graft, tech news coverage won't really help you except in exceptional circumstances.
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thebyrd 12y ago
"not too many people drive Ferraris or talk about their vacation homes" unless you're in Palo Alto, Atherton, Woodside, Saratoga, Los Gatos, Los Altos, etc. That's probably why there's been a geographic shift to SF.
AndrewKemendo 12y ago
Sam misses some hugely critical pieces, for example: 1. Good IT infrastructure 2. Plurality of high tech companies' headquarters 3. Proximity to major technology focused academic institutions 4. Legal infrastructure that enables innovation All discussed previously here: http://www.enterpriseirregulars.com/25271/silicon-valley%E2%80%99s-defining-characteristics/ http://www.enterpriseirregulars.com/25271/silicon-valley%E2%... and here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=124508 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=124508
dba7dba 12y ago
"Nearly everyone wants to get rich but they’re willing to wait to do so. ... A focus on making a lot of money in the long term at the expense of short-term opportunities is essential to building companies that have a huge impact – they take a long time." Sounds like a good advice for CEOs and politicians in DC. Focusing on the long term goals...
dsugarman 12y ago
I think the physical location is kind of a fallacy. For example, there are so many super smart and talented developers in DC working for government contractors because they may not be exposed to the startup option. Most people now have to move to Silicon Valley to focus on long term compensation, but often there is a stronger force of their local network (friend, family & significant others) who keep them stationed near by. Having quality startups in new geographical areas is probably the key ingredient to bringing in talent and capital, not the other way around.
- throwmeaway21 12y ago
  > so many super smart and talented developers in DC As one of those developers working in DC I can tell without a doubt that the majority of us do it because we get paid a large amount of money. I make more here than I ever could in Silicon Valley. Plus the cost of living is around half. Last I checked a one bedroom in SF was around $4k per month. I pay just over $2.5k here in DC (with a parking spot!).
michaelvkpdx 12y ago
The premise here is that Silicon Valley "works". What do you mean by "works"? If you mean creating artificial wealth for a small group of already-rich folk, yes, it works. If you mean transforming one of the most naturally advantaged landscapes on earth into a traffic-choked sea of concrete where people do little more than work at creating new ways to buy and sell stuff, yes, it works. If you mean polluting what was once the most democratic communications vehicle available with social drivel and advertising, it works. If you mean creating innovations that truly improve humanity, the Valley extremely inefficient. If you mean demonstrating that humans don't need a pleasant natural environment to survive, the Valley is on the right track. The one thing the Valley works very well at is self-congratulation, especially among the wealthy.
- tim333 12y ago
  >truly improve humanity, the Valley extremely inefficient I think Intel, Google and Facebook have improved humanity though your tastes may vary and I enjoy Apple's shiny stuff. Those have a market cap of $1.4 tr and it's hard to think of anywhere else with similar output. Maybe like democracy it's the worse possible system apart from all the other ones?
  - michaelvkpdx 12y ago
    market cap != quality of life. The Valley works well at convincing people that fake money is equal to the quality of real life. Market caps have nothing to do with happiness, health, and interpersonal relationships.
    - parasubvert 12y ago
      Market caps aren't fake money, a significant (majority?) portion is actually real money that has been exchanged in their name. It represents wealth. My experience with family life is that happiness, health, and interpersonal relationships are generally much harder to sustain without some wealth. Not impossible, but harder.
  - freshflowers 12y ago
larrys 12y ago
"I wrote this for the FT, but it's behind a paywall. Since I wrote it, I feel like it's probably ok for me to post it here." Well legally it's either ok and the contract (written or otherwise) allows you to post a copy or it doesn't.
derwiki 12y ago
Interesting to hear YC classes framed as "we help each other." I thought there was a fair bit of internal fighting to end up as a "featured startup" from the batch. Conversely, my startup just went through the Hackers and Founders accelerator, where each startup is given equity in the other startups in the class. This is a great incentive to help the other founders in your incubator.
graycat 12y ago
From http://www.avc.com/a_vc/2013/02/venture-capital-returns.html#disqus_thread http://www.avc.com/a_vc/2013/02/venture-capital-returns.html... at least on average, there is some serious question if Silicon Valley "works" at all well. For > One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. Well, as I recall, Sam, from one of your lectures in your current course at Stanford, both Marc Andreesseen and Ron Conway made it quite clear that they no longer take proposals from "over the transom" and, instead, learn about new investments only from their "network". Sounds quite closed and not very "open" and, instead, like an echo chamber from the past with not a very good view of the future. Or, NSF, NIH, and DARPA will take proposals from strangers, but not Sand Hill Road.
- twic 12y ago
  I'd be interested to see a comparison of something like "dollars of revenue at ten years of age per dollar of initial investment" between Silicon Valley startups and newly formed companies of other kinds. That seems like a reasonable measure of the actual worth of a company to me, and so a decent test of whether Silicon Valley works or not. Looking at valuations or even market caps is much less useful, because that tells you more about what's going on in investors' minds than in reality.
  - graycat 12y ago
    You have a point, but in this context necessarily works has to mean making money for the limited partners (LPs) and, there, more money than the alternatives, e.g., an index fund of the NYSE. Well, follow the link I gave to AVC.com and Fred Wilson's table of data there and have to conclude that on average information technology venture capital, and, thus, nearly necessarily also Silicon Valley, doesn't work very well. I did mention NSF, etc.: There, Ike wanted pictures. The U-2 was not getting it done. So, one day Lockheed's Kelly Johnson walked in with a pile of papers and proposed a new plane, fly at 80,000+ feet, at Mach 3+, for 2000+ miles without refueling, and essentially impossible to shoot down. The project was approved; the plane flew as planned; and we got the pictures. So, Kelly had a very ambitious start-up, and delivered as planned, with the project approved from work essentially just on paper. Such work can be done. Other cases include the F-117, GPS, passive sonar, Keyhole (essentially a Hubble but before Hubble and aimed at earth instead of space). It really is possible to do accurate evaluations of ambitious projects just on paper and, then, go forward with a quite high batting average. And this fact does partly respond to your point. Well, NSF, NIH, DARPA, CIA, DoE, etc. can work this way, but Silicon Valley just flatly refuses to. Instead, they want another SnapChat with traction and f'get about anything more, and that means that they can't do the really valuable projects. And that's why, on average, they don't make the big bucks.
calgaryeng 12y ago
This is only tangentially related to "Why Silicon Valley Works", but am I the only person who is frustrated by "famous" VC's saying that "founders should stop worrying about their valuation"? I can't get over this. This is like a used car salesman telling you not to worry about the cost of the car, just to remember that there are free weather mats included! I feel that there is a connection here as to "why Silicon Valley" works from the perspective of VC's in a position to influence founders. However I'm not feeling particularly eloquent today and haven't fully formed these ideas.
- Bahamut 12y ago
  I thought about the valuation problem for a little bit when my company finished raising its Series B, and I came to the conclusion of not worrying about the valuation independent of hearing the quotes, as an engineer. Here's the important point - the valuation means little until an exit. Any valuation beforehand is only a step in that direction. All work needs to be done to maximize the value of the company in preparation for that day - anything along the way is a distraction from that end goal. Granted, it is a necessary distraction for many of these companies, since they require VC funding in order to expand operations.
rvn1045 12y ago
'This seems like the future to me – large groups of independent companies, loosely tied together.' This could also work against YC (Or many startups in the valley) very easily. I mean all these companies are being created in a time of easy money, what happens when the money dries out? Will they all fail? Since they are so correlated with each other's success.
- rhizome 12y ago
  Will they all fail? Not all of them, no, but a lot will.
general_failure 12y ago
Another weakness of the valley is the lack of a visa. We would have atleast 5 times the number of startups, if there was an easy way to remain in the united states and start a company for immigrants.
axavuj05 12y ago
Throw-away account for obvious reasons: > "Silicon Valley works because there is such a high density of people working on start-ups and they are inclined to help each other" Bull shit. With all due respect to Sam--who no doubt knows what he's doing and saying and has become very successful--he is undoubtedly living in a bubble of his own. While I've found people generally open to the idea of chatting over a coffee, I've run across very few people that go out of their way to help. In fact, I more often find people who will either offer to help, and don't, or are so self-absorbed that they can't stop talking about how great/impressive they or their startup is without bothering to ask about you or what you're doing. I've even asked for a meeting with and gotten the following response: "I'm very busy. Let me know how you think you can help me and I'll think about it." I've been trying to tell myself that it's just my luck: That it's not socio-economic or pedigree based (race or school) or that some people here don't have basic people skills and don't know how to carry on a conversation. That maybe it's just the luck of the draw that I run into more people that I'd classify as "ass holes" than not, but I'm coming--very late--to a sad reality: it is about socio-economic status--even more than that, it is about pedigree (yes, both race and the school you went to). It is about manners--most people don't have them. AND, it's about gender as well! I'm not a woman, but I'm willing to bet that if I was a woman, things would be a shit ton harder for me than they already are. I'm not a 20-something white male that went to Stanford and it's impossible for me to imagine how hard things would be if I had a vagina [0]. These are things we don't want to talk about. Thank god a conversation about gender is taking place, but there's another conversation about elitism and race that hasn't even started yet. > "One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network." Complete and utter bull. Maybe in Sam's world, sure! White? 20-something? No-kids? Harvard/Stanford? B2C? Let’s chat! Early-40's/Late-30's? Not-white? Married w/ kids? Not-Harvard/Stanford? B2B? Nope. (Don't bother to apply to YC either). The reason Silicon Valley works is because there's a new-boys network that helps out those that check most of the right boxes. But here’s the good news: There are other networks. Networks of people in their 40’s. Networks of people that are from a specific ethnic group. Networks of people that went to the same (non-Harvard/Stanford) business school as you that are willing to help out. Are most of these networks as big and powerful as the circles Sam roles in? Absolutely not. But are they out there? Yes. One of the marvels of Silicon Valley is that because there are so many people out here, there’s a semi-decent chance you might find someone in one of these networks that will meet you for a coffee, offer to help, and try to make something happen for you. Is it likely? No, but possible, yes? And that—the possibility of something working out despite the odds—is what entrepreneurship is about. [0] - What It's Like Raising Money As A Woman In Silicon Valley (http://www.forbes.com/sites/jeffbercovici/2014/08/07/what-its-like-raising-money-as-a-woman-in-tech/ http://www.forbes.com/sites/jeffbercovici/2014/08/07/what-it...)
whiddershins 12y ago
I love the way people in the Startup community talk about how New York is oriented around finance. It is totally true, from the perspective of a certain group of people. New York also has a history and cultural identity that puts monetary success and business above other concerns that can arguably be traced back to its founding by Dutch traders as New Amsterdam. That said, New York is only oriented culturally around finance from the perspective of a tiny subgroup of self-important people. The overwhelming majority of people living, working, and creating in NYC do not feel that "finance" dominates the culture, the connections, or the emphasis. New York is the dominant hub (or close to it) for several genres of music, for television, for fashion, for theater, for many counter-culture political movements, textiles ... the list goes on and on and it will be boring if I continue to explain. Basically, it's the kind of thing you can say if you really know nothing about New York.
- cylinder 12y ago
  Well put. I live here and can go months before meeting someone who works in finance. There are lots of big corporations here as well as lots of artistic/creative jobs.
- jknightco 12y ago
  Thank you for this. I absolutely can't stand the comparison between the two environments. According to NYC's labor statistics [1], Finance as a whole (including all of commercial and investment banking, insurance, and real estate) makes up about 12.5% of the city's private sector jobs, and employs about as many people as the NYC local government does. For comparison, the Education and Health Services sector employs almost twice as many people (~24%), and Leisure and Hospitality about the same (11.4%). Its much harder to find good statistics on the Bay Area because its comprised of so many different municipalities, but I would bet the Tech industry employs way more than 12.5% of private sector employees there. There's also no real "runner-up" in the region; Finance is one of the industries here, Tech is the industry in the Bay Area. [1] http://labor.ny.gov/stats/nyc/index.shtm http://labor.ny.gov/stats/nyc/index.shtm
schtinky 12y ago
> Conspicuous consumption isn’t that cool; not too many people drive Ferraris 99.9% sure I saw Sam pulling out of De Anza College at SUS 2014 in a Lotus Elise.
Cacti 12y ago
As a software developer not-in-SV, life is great. I don't make a shit-ton (~90) but my spouse also works (~50), (and we are both young) we have no debt, our insurance is fantastic, our commute is about 15 minutes each, our house is 1/5th the cost of SV, and we are in a very good neighborhood (meaning public school district is better than any private school unless you're going for ivy prep), and shopping for practically anything is about 5 minutes away. Oh and neither of us work more than 40 hours a week. So... yeah. There is actual life outside of SV.
2D 12y ago
It strikes me, as do a few other posts and comments from YC that this is an incredibly American centric view of the world. I've heard PG say "just consider moving here" but without a visa as a startup that's very difficult.
WWKong 12y ago
It does work if you are a VC. Tons of talented folks living in dorm like conditions (some living out their car), working long hours, in the hopes of striking it rich one day. Most fail. Some succeed proped by blogs owned by VCs. It is a nice machinery. The world mostly gets another music discovery app or another ad targeting company.
pikachu_is_cool 12y ago
The Silicon Valley works because of the toxic culture of "work until you die". [1] [1] I grew up there. Never going back.
mempko 12y ago
I would like to ask a.radical question. Is Silicon Valley actually working? Because if you throw a lot of money at something, even if it is bad, will make it better. Given the amount of money banks an investors are throwing at the valkey, is it successful given the output?
deleted 12y ago
[deleted]

294 points by philip1209 12y ago

jbail 12y ago

Good article. It provoked a thought: In an increasingly digital world, how long will physical proximity be an advantage? The notion that a region could somehow have its own brand of patriotism centered around startup success merely due to density is somewhat difficult to rationalize. You can't deny SV's success relative to other technology hubs, but I'm wondering how far in the future physical proximity will continue to carry such a steep advantage

uniformlyrandom 12y ago
> how long will physical proximity be an advantage There is a number of articles and research papers on the subject. In short, distance matters even within the same building.

anateus 12y ago

Two sentences early on are problematic: "One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. " If Sam had said "you need them in Silicon Valley much less than anywhere else" it would be a true statement. But in an article I strongly agree with, this sort of thing... I'm not even sure what to call it, misinformation? Makes the rest ring hollow. The networks here have vastly lower costs of entry and way fewer secret handshakes. But they still have them, and for many groups of people those costs are much higher than the median. It would have been easy to acknowledge that without diminishing the core point.

swamp40 12y ago
I dunno - he explains his reasoning in the same paragraph: "It’s standard practice to ask people you’ve just met for help – and as long as you aren’t annoying about it, they usually don’t mind."
- scobar 12y ago
  The problem, I imagine, this creates is thousands of requests for help from innocently ignorant founders to a single valuable connection in SV. Each founder may only make one naive request, but important individuals are bombarded by enough to exhaust them. I admire the patience of those who continue to offer thoughtful advice and feedback, but I imagine it's quite tiring. I think resources like Sama's free startup class at Standford are a great solution.
scobar 12y ago
I agree that accessing the right networks will help tremendously, but I also believe that Sama's statement is accurate. One doesn't need pre-existing connections. This almost subtle, yet much more important condition was included shortly after the quote you mentioned: "If you build something good, people will help you." A grand vision alone won't get someone nearly as far as it may have in the late 90s. A prototype that is nearing that vision with each quickly released new iteration seems to be the entry barrier for someone with no pre-existing connections.
ch4s3 12y ago
I took his statement as hyperbole to make the point that those connections are less important in SV. But I don't know him, so its just my inference.
csallen 12y ago
I don't think he's saying that there is no network, or that the using the network isn't helpful. It seems like his primary point here is that your relationship to this network doesn't need to be pre-existing. If you know nobody in SV, but build something great, you will quickly get to know people.
hackuser 12y ago
But he goes on to describe the Y Combinator insider network as extremely valuable, which seems to contradict the statement you quote: > Our network works because it has very strong connections. Founders are generally closer to their earliest investors and less close to their later investors. They are closest of all to the peers they were around when struggling to get their start. Therefore, YC founders are typically willing to do anything they can to help another YC founder. ... > I often ask founders what surprised them most about going through YC, and a common answer is the degree to which YC is a "meta-company". ... the connection is so strong that alumni companies get significant benefits from each other. Most YC founders tell us they get more help from other YC founders than all other friends of the company, advisors and investors put together.
benmathes 12y ago
You're right that it's partially true. Why the idealistic spin from @sama? Consider the incentives. One of YC's macro strengths is a silicon valley onramp.
mathattack 12y ago
My impression is that Silicon Valley (like NYC) is a destination. Move to St. Louis and everyone asks where you went to high school. Not here. It doesn't take long to make a name, and there's a tradition of helping "the next one."

ch4s3 12y ago

This is a pretty thoughtful and to the point article. You might summarize it by saying that SV success is defined by Community and Capital. It makes a lot of sense that rich networks backed by money make an area successful. It would be interesting to explore the effect of capital from within the community vs external capital inflow.

lolwutf 12y ago

'I wrote this for the FT, but it's behind a paywall. Since I wrote it, I feel like it's probably ok for me to post it here.' If the FT paid you to write it, I feel like it's probably not ok to post it where you'd like.

aganders3 12y ago
It's better not to go on feel either way. In most cases, a freelance writer retains copyright and the publication that paid for the work (in this case FT) is given an implicit license to use it.
anateus 12y ago
Since he's not an FT employee, it's likely this could fit under the category of work made for hire, but unless his contract explicitly specified this is case, I believe he would retain the copyright: http://en.wikipedia.org/wiki/Copyright_law_of_the_United_States#First_owner_of_copyright http://en.wikipedia.org/wiki/Copyright_law_of_the_United_Sta...
jgrahamc 12y ago
Depends on the contract. Here's the contract I've been bound by when writing freelance for The Guardian: You grant irrevocably and unconditionally to GNM the following rights ("the licence") to use, publish, transmit or license the contribution throughout the world. Unless expressly identified otherwise, all rights granted in this licence shall subsist for the full period of copyright in the contribution including all renewals, reversions, extensions and revivals of such period and shall be exclusive. With the exception of Spot Sales where royalties are payable as set out below, GNM pays freelances commission fees covering all of the following rights. The value of these rights is reviewed annually. 1 Right to use, publish or transmit the contribution in all editions of the relevant Licensed Publications anywhere in the world. 2 Non-exclusive right after use in the Licensed Publications to publish the contribution in Guardian Weekly and similar publications and in other collections of material published by GNM in paper form and on-line anywhere in the world. 3 Non-exclusive right to use, store, publish or transmit the contribution in internal archives and databases and External Archives and databases including but not limited to CD-ROMs and websites published by GNM and/or third party databases and/or archive publishers. 4 Right to authorise the Newspaper Licensing Agency ("NLA") to distribute or license the distribution of the contribution for the NLA's licensed acts and purposes as amended from time to time. 5 Right to Syndicate throughout the world after use in the Licensed Publications. For the avoidance of doubt such Syndication rights include the right to enter into contracts with third parties under which such third parties may reproduce content previously published by GNM. 6 Right to make Spot Sales throughout the world for a period of 3 months after use in the Licensed Publications and the non-exclusive right to make Spot Sales thereafter. Attributable revenue shall be split between you and GNM on a 50:50 basis and your share shall be remitted to you within 28 days of each sale. All other rights are reserved by you.

joshhart 12y ago

My biggest concern with Silicon Valley is that it will become so expensive that many potential startups are prevented from coming here. Sam also stated that housing costs were the biggest weakness. I wonder what YC could do about this problem for it's companies. I think it would be interesting for YC to build a few high-rise live-work spaces for smaller YC companies to foster and grow the tightly-knit community. Maybe like a high-tech college campus?

ojbyrne 12y ago
Not sure where they would build "high-rise" anything - zoning laws would preclude that in most places in the bay area.
- mahyarm 12y ago
  Political action to allow higher density?
kqr2 12y ago
Recent thread on So You Want To Fix The Housing Crisis: https://news.ycombinator.com/item?id=8549454 https://news.ycombinator.com/item?id=8549454 Basically, people need to vote if they want to see any changes.
nerfhammer 12y ago
> build a few high-rise The dominant political view in the area is that building high-rise anything anywhere is something that should be stopped at all costs
- _delirium 12y ago
  True in much of Silicon Valley (especially places like Palo Alto, which want to retain a suburban layout), but there's some moderate densification going on in San Jose. It lulled for a bit during the financial crisis because a bunch of projects' financing fell through—some apartments under construction had work stopped for ~2 years. But construction seems to be back in swing again now.

batbomb 12y ago

>> The focus in Silicon Valley on long-term compensation is also important. Nearly everyone wants to get rich but they’re willing to wait to do so. Conspicuous consumption isn’t that cool; not too many people drive Ferraris or talk about their vacation homes. Instead, they talk about how healthy they are, their diets, or the climbing gym.

hawkice 12y ago
I'm no fitness master myself, but, far from begrudging the paleo-crossfit-organicos out there on their latest PR (am I using the lingo right?), I'd like to say, from those of us nodding and smiling: Being healthy is great! Keep it up! :)
- Dewie 12y ago
  I think that the point is that it is the new status-symbol. In my experience (not Silicon Valley), status symbols in the form of material possessions have taken a back seat to status symbols in the form of fitness and "experiential materialism" (frequent travelling, exotic and varied experiences).
  - hawkice 12y ago
    I don't disagree with the thrust of what you are saying, and I am particularly amused that in the age of almost infinite variation deliverable through the internet there is a kind of odd counter-signalling effect to avoiding that (I also like travel and have been doing it constantly for more than a year, though, so what do I know). Describing physical fitness as "the new status-symbol" seems pretty bizarre to me, though. As a status symbol it probably predates humanity.
    - batbomb 12y ago
      Physical fitness itself isn't a status symbol, per se. How people conduct their personal physical fitness is what has elevated it to a status symbol. Things like when, where, how often, how public, what activities/exercises, and even what they wear to work... that's the new status symbol. A ridiculous recent example is the Trulia co-founder rowing to Hawaii with his wife for the cause of... wait for it.... the fight against sugar.

sparkzilla 12y ago

For anyone interested, I have compiled many of Sam's interviews at http://newslines.org/sam-altman/ http://newslines.org/sam-altman/

steven2012 12y ago

No. The reason why Silicon Valley works is because of the intense greed that it provokes amongst everyone that comes here. Maybe "greed" is too strong of a word, because people aren't necessarily selfish, maybe "money-focused" is probably more accurate. And because anyone can come here and become a millionaire/billionaire, it draws in an immense number of hard-working people which just generally increase the level of competence, and unfortunately competitiveness, which has a positive feedback loop which causes these smart people to want to work even harder over time. Outside Silicon Valley, all you hear about is billionaires being made day-after-day, and smart people they look at this nonsense and think "I can do that". Once the come to Silicon Valley, they get sucked into a vortex of work and money-focus that is so strong that the only way to get ahead is by working long hours and taking risks. Think about it this way: a person who makes 120k/yr with 2 kids and a spouse who stays at home will be considered the "working poor" here. I feel sorry for anyone who tells me they have a spouse, 2 kids and a house in any place other than NYC, and are contemplating moving to the Bay Area. Everything is priced perfectly to the point where no one can afford to live in a good neighborhood with a good commute with good schools. It's like the CAP theorum, except it's more like "Good Job, Good Neighborhood, Good commute: pick one" (unless you're rich). So, in order to get ahead, both spouses need to work, and they need to work very good jobs with long hours in order to "make it well". If you have Dual Income No Kids, it's a bit easier, but you still need to deal with oppressive traffic and high rent. It's so expensive, that all you do is think about money. And you fall into fallacies where if both spouses make #120k/yr, for a total of basically $250k/yr, you start thinking "why don't I feel rich?" or "why am I working so hard with nothing to show for it?" It's because you work 10 hr days, and then you're spending 2 hrs a day commuting, and you get into a zone where all you do is think about work, and how to buy the next iPhone because at least you have something to show for your money. Meanwhile, none of my friends outside of SV have iPhone 6's let along iPhone 5S's, many are still using iPhone 4's which are perfectly good but a bit slow, but you wouldn't be caught dead in SV with one of those relics. So all of this money-focus necessarily squeezes out as much productivity from the best and smartest in Silicon Valley, which is why you have so much success here. If you compare SV to place like Japan or China, where the population is generally better educated, you don't get anywhere near the same level of productivity. In Japan you get high prices and long work, but there's no payoff like there is with Silicon Valley because of the social impedances, so you'll never have a Silicon Valley in Japan. In other places that purport to be another SV, even places like Austin, there just isn't the same level of greed/money focus like you have here, so I don't think you'll be able to get as much productivity. It's the sky-high prices, work-life imbalance, the startup-millionaire stories that create this unique pressure cooker environment that can't be duplicated.

7Figures2Commas 12y ago

> One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. Silicon Valley is a community of outsiders that have come together. If you build something good, people will help you. It’s standard practice to ask people you’ve just met for help – and as long as you aren’t annoying about it, they usually don’t mind. There's some truth to this, but it's not entirely accurate. The spectrum of who, what, when, where, why and how is very broad here. The top of the food chain in Silicon Valley is just as insular as Wall Street, Hollywood, etc. > Yes, the approximately 700 YC companies are all totally independent legal entities – but the connection is so strong that alumni companies get significant benefits from each other. Not often discussed: some of those benefits are benefits until they're not. A lot of accelerator-backed startups count other startups from the same accelerator as their largest customer segment and a source of early sales traction. When the business cycle turns and "other startups" is no longer a viable customer segment, however, a lot of startups are going to see their sales decimated because they have little to no diversification. > Unlike other cities where people are mostly focused on cash compensation for this year, in Silicon Valley more people talk about equity than salaries (assuming, of course, that they can afford the wildly-out-of-control housing costs, which is probably the biggest weakness here right now). This is simply not true. Most angel and venture-backed startups in the Bay Area today offer early employees miniscule amounts of equity, and engineers demand market rate compensation (where market rate compensation equals "what Google or Facebook would pay me if I could get a job there"). If you're a startup offering higher equity in lieu of salary, you will have a very difficult time hiring in the Bay Area. Most engineers are hip to the fact that this isn't likely to work out in their favor.

deleted 12y ago

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zoba 12y ago

Another reason I think the valley works so well is the audience its news outlets have. If you have a great product but can't get news coverage on it, its going to be hard to get growth without a large marketing budget. However, if you're friends with a friend of a Techcrunch write, its much easier to get covered and start to get a core group of users who love your product - and are tech savvy enough to understand that features that don't exist yet will be coming, and they should be patient. If you try to bootstrap a startup without using SV's media outlets (as would be the case for people who don't have connections to these folks), you're going to have a much harder time.

basher 12y ago
Is asking tech journalists you've just met to write about your startup considered annoying?
- Emphaticdotco 12y ago
  All depends on the "how". If you make the effort to show that you understand their coverage niche, and make sure that you actually fit into it, and also have (or can package) your story as something newsworthy then go for it.
ig1 12y ago
I think you're vastly over estimating the impact of tech news sites. A decent front page article on techcrunch will get you a couple of thousand visitors, the vast majority of which won't be in your core customer group. The main advantage of tech news sites is that they're read by potential investors, partners, employees, etc. rather than because they get you users. You really need to get your early users through graft, tech news coverage won't really help you except in exceptional circumstances.

deleted 12y ago

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thebyrd 12y ago

"not too many people drive Ferraris or talk about their vacation homes" unless you're in Palo Alto, Atherton, Woodside, Saratoga, Los Gatos, Los Altos, etc. That's probably why there's been a geographic shift to SF.

AndrewKemendo 12y ago

Sam misses some hugely critical pieces, for example: 1. Good IT infrastructure 2. Plurality of high tech companies' headquarters 3. Proximity to major technology focused academic institutions 4. Legal infrastructure that enables innovation All discussed previously here: http://www.enterpriseirregulars.com/25271/silicon-valley%E2%80%99s-defining-characteristics/ http://www.enterpriseirregulars.com/25271/silicon-valley%E2%... and here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=124508 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=124508

dba7dba 12y ago

"Nearly everyone wants to get rich but they’re willing to wait to do so. ... A focus on making a lot of money in the long term at the expense of short-term opportunities is essential to building companies that have a huge impact – they take a long time." Sounds like a good advice for CEOs and politicians in DC. Focusing on the long term goals...

dsugarman 12y ago

I think the physical location is kind of a fallacy. For example, there are so many super smart and talented developers in DC working for government contractors because they may not be exposed to the startup option. Most people now have to move to Silicon Valley to focus on long term compensation, but often there is a stronger force of their local network (friend, family & significant others) who keep them stationed near by. Having quality startups in new geographical areas is probably the key ingredient to bringing in talent and capital, not the other way around.

throwmeaway21 12y ago
> so many super smart and talented developers in DC As one of those developers working in DC I can tell without a doubt that the majority of us do it because we get paid a large amount of money. I make more here than I ever could in Silicon Valley. Plus the cost of living is around half. Last I checked a one bedroom in SF was around $4k per month. I pay just over $2.5k here in DC (with a parking spot!).

michaelvkpdx 12y ago

The premise here is that Silicon Valley "works". What do you mean by "works"? If you mean creating artificial wealth for a small group of already-rich folk, yes, it works. If you mean transforming one of the most naturally advantaged landscapes on earth into a traffic-choked sea of concrete where people do little more than work at creating new ways to buy and sell stuff, yes, it works. If you mean polluting what was once the most democratic communications vehicle available with social drivel and advertising, it works. If you mean creating innovations that truly improve humanity, the Valley extremely inefficient. If you mean demonstrating that humans don't need a pleasant natural environment to survive, the Valley is on the right track. The one thing the Valley works very well at is self-congratulation, especially among the wealthy.

tim333 12y ago
>truly improve humanity, the Valley extremely inefficient I think Intel, Google and Facebook have improved humanity though your tastes may vary and I enjoy Apple's shiny stuff. Those have a market cap of $1.4 tr and it's hard to think of anywhere else with similar output. Maybe like democracy it's the worse possible system apart from all the other ones?
- michaelvkpdx 12y ago
  market cap != quality of life. The Valley works well at convincing people that fake money is equal to the quality of real life. Market caps have nothing to do with happiness, health, and interpersonal relationships.
  - parasubvert 12y ago
    Market caps aren't fake money, a significant (majority?) portion is actually real money that has been exchanged in their name. It represents wealth. My experience with family life is that happiness, health, and interpersonal relationships are generally much harder to sustain without some wealth. Not impossible, but harder.
- freshflowers 12y ago

larrys 12y ago

"I wrote this for the FT, but it's behind a paywall. Since I wrote it, I feel like it's probably ok for me to post it here." Well legally it's either ok and the contract (written or otherwise) allows you to post a copy or it doesn't.

derwiki 12y ago

Interesting to hear YC classes framed as "we help each other." I thought there was a fair bit of internal fighting to end up as a "featured startup" from the batch. Conversely, my startup just went through the Hackers and Founders accelerator, where each startup is given equity in the other startups in the class. This is a great incentive to help the other founders in your incubator.

graycat 12y ago

From http://www.avc.com/a_vc/2013/02/venture-capital-returns.html#disqus_thread http://www.avc.com/a_vc/2013/02/venture-capital-returns.html... at least on average, there is some serious question if Silicon Valley "works" at all well. For > One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. Well, as I recall, Sam, from one of your lectures in your current course at Stanford, both Marc Andreesseen and Ron Conway made it quite clear that they no longer take proposals from "over the transom" and, instead, learn about new investments only from their "network". Sounds quite closed and not very "open" and, instead, like an echo chamber from the past with not a very good view of the future. Or, NSF, NIH, and DARPA will take proposals from strangers, but not Sand Hill Road.

twic 12y ago
I'd be interested to see a comparison of something like "dollars of revenue at ten years of age per dollar of initial investment" between Silicon Valley startups and newly formed companies of other kinds. That seems like a reasonable measure of the actual worth of a company to me, and so a decent test of whether Silicon Valley works or not. Looking at valuations or even market caps is much less useful, because that tells you more about what's going on in investors' minds than in reality.
- graycat 12y ago
  You have a point, but in this context necessarily works has to mean making money for the limited partners (LPs) and, there, more money than the alternatives, e.g., an index fund of the NYSE. Well, follow the link I gave to AVC.com and Fred Wilson's table of data there and have to conclude that on average information technology venture capital, and, thus, nearly necessarily also Silicon Valley, doesn't work very well. I did mention NSF, etc.: There, Ike wanted pictures. The U-2 was not getting it done. So, one day Lockheed's Kelly Johnson walked in with a pile of papers and proposed a new plane, fly at 80,000+ feet, at Mach 3+, for 2000+ miles without refueling, and essentially impossible to shoot down. The project was approved; the plane flew as planned; and we got the pictures. So, Kelly had a very ambitious start-up, and delivered as planned, with the project approved from work essentially just on paper. Such work can be done. Other cases include the F-117, GPS, passive sonar, Keyhole (essentially a Hubble but before Hubble and aimed at earth instead of space). It really is possible to do accurate evaluations of ambitious projects just on paper and, then, go forward with a quite high batting average. And this fact does partly respond to your point. Well, NSF, NIH, DARPA, CIA, DoE, etc. can work this way, but Silicon Valley just flatly refuses to. Instead, they want another SnapChat with traction and f'get about anything more, and that means that they can't do the really valuable projects. And that's why, on average, they don't make the big bucks.

calgaryeng 12y ago

This is only tangentially related to "Why Silicon Valley Works", but am I the only person who is frustrated by "famous" VC's saying that "founders should stop worrying about their valuation"? I can't get over this. This is like a used car salesman telling you not to worry about the cost of the car, just to remember that there are free weather mats included! I feel that there is a connection here as to "why Silicon Valley" works from the perspective of VC's in a position to influence founders. However I'm not feeling particularly eloquent today and haven't fully formed these ideas.

Bahamut 12y ago
I thought about the valuation problem for a little bit when my company finished raising its Series B, and I came to the conclusion of not worrying about the valuation independent of hearing the quotes, as an engineer. Here's the important point - the valuation means little until an exit. Any valuation beforehand is only a step in that direction. All work needs to be done to maximize the value of the company in preparation for that day - anything along the way is a distraction from that end goal. Granted, it is a necessary distraction for many of these companies, since they require VC funding in order to expand operations.

rvn1045 12y ago

'This seems like the future to me – large groups of independent companies, loosely tied together.' This could also work against YC (Or many startups in the valley) very easily. I mean all these companies are being created in a time of easy money, what happens when the money dries out? Will they all fail? Since they are so correlated with each other's success.

rhizome 12y ago
Will they all fail? Not all of them, no, but a lot will.

general_failure 12y ago

Another weakness of the valley is the lack of a visa. We would have atleast 5 times the number of startups, if there was an easy way to remain in the united states and start a company for immigrants.

axavuj05 12y ago

Throw-away account for obvious reasons: > "Silicon Valley works because there is such a high density of people working on start-ups and they are inclined to help each other" Bull shit. With all due respect to Sam--who no doubt knows what he's doing and saying and has become very successful--he is undoubtedly living in a bubble of his own. While I've found people generally open to the idea of chatting over a coffee, I've run across very few people that go out of their way to help. In fact, I more often find people who will either offer to help, and don't, or are so self-absorbed that they can't stop talking about how great/impressive they or their startup is without bothering to ask about you or what you're doing. I've even asked for a meeting with and gotten the following response: "I'm very busy. Let me know how you think you can help me and I'll think about it." I've been trying to tell myself that it's just my luck: That it's not socio-economic or pedigree based (race or school) or that some people here don't have basic people skills and don't know how to carry on a conversation. That maybe it's just the luck of the draw that I run into more people that I'd classify as "ass holes" than not, but I'm coming--very late--to a sad reality: it is about socio-economic status--even more than that, it is about pedigree (yes, both race and the school you went to). It is about manners--most people don't have them. AND, it's about gender as well! I'm not a woman, but I'm willing to bet that if I was a woman, things would be a shit ton harder for me than they already are. I'm not a 20-something white male that went to Stanford and it's impossible for me to imagine how hard things would be if I had a vagina [0]. These are things we don't want to talk about. Thank god a conversation about gender is taking place, but there's another conversation about elitism and race that hasn't even started yet. > "One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network." Complete and utter bull. Maybe in Sam's world, sure! White? 20-something? No-kids? Harvard/Stanford? B2C? Let’s chat! Early-40's/Late-30's? Not-white? Married w/ kids? Not-Harvard/Stanford? B2B? Nope. (Don't bother to apply to YC either). The reason Silicon Valley works is because there's a new-boys network that helps out those that check most of the right boxes. But here’s the good news: There are other networks. Networks of people in their 40’s. Networks of people that are from a specific ethnic group. Networks of people that went to the same (non-Harvard/Stanford) business school as you that are willing to help out. Are most of these networks as big and powerful as the circles Sam roles in? Absolutely not. But are they out there? Yes. One of the marvels of Silicon Valley is that because there are so many people out here, there’s a semi-decent chance you might find someone in one of these networks that will meet you for a coffee, offer to help, and try to make something happen for you. Is it likely? No, but possible, yes? And that—the possibility of something working out despite the odds—is what entrepreneurship is about. [0] - What It's Like Raising Money As A Woman In Silicon Valley (http://www.forbes.com/sites/jeffbercovici/2014/08/07/what-its-like-raising-money-as-a-woman-in-tech/ http://www.forbes.com/sites/jeffbercovici/2014/08/07/what-it...)

whiddershins 12y ago

I love the way people in the Startup community talk about how New York is oriented around finance. It is totally true, from the perspective of a certain group of people. New York also has a history and cultural identity that puts monetary success and business above other concerns that can arguably be traced back to its founding by Dutch traders as New Amsterdam. That said, New York is only oriented culturally around finance from the perspective of a tiny subgroup of self-important people. The overwhelming majority of people living, working, and creating in NYC do not feel that "finance" dominates the culture, the connections, or the emphasis. New York is the dominant hub (or close to it) for several genres of music, for television, for fashion, for theater, for many counter-culture political movements, textiles ... the list goes on and on and it will be boring if I continue to explain. Basically, it's the kind of thing you can say if you really know nothing about New York.

cylinder 12y ago
Well put. I live here and can go months before meeting someone who works in finance. There are lots of big corporations here as well as lots of artistic/creative jobs.
jknightco 12y ago
Thank you for this. I absolutely can't stand the comparison between the two environments. According to NYC's labor statistics [1], Finance as a whole (including all of commercial and investment banking, insurance, and real estate) makes up about 12.5% of the city's private sector jobs, and employs about as many people as the NYC local government does. For comparison, the Education and Health Services sector employs almost twice as many people (~24%), and Leisure and Hospitality about the same (11.4%). Its much harder to find good statistics on the Bay Area because its comprised of so many different municipalities, but I would bet the Tech industry employs way more than 12.5% of private sector employees there. There's also no real "runner-up" in the region; Finance is one of the industries here, Tech is the industry in the Bay Area. [1] http://labor.ny.gov/stats/nyc/index.shtm http://labor.ny.gov/stats/nyc/index.shtm

schtinky 12y ago

> Conspicuous consumption isn’t that cool; not too many people drive Ferraris 99.9% sure I saw Sam pulling out of De Anza College at SUS 2014 in a Lotus Elise.

Cacti 12y ago

As a software developer not-in-SV, life is great. I don't make a shit-ton (~90) but my spouse also works (~50), (and we are both young) we have no debt, our insurance is fantastic, our commute is about 15 minutes each, our house is 1/5th the cost of SV, and we are in a very good neighborhood (meaning public school district is better than any private school unless you're going for ivy prep), and shopping for practically anything is about 5 minutes away. Oh and neither of us work more than 40 hours a week. So... yeah. There is actual life outside of SV.

2D 12y ago

It strikes me, as do a few other posts and comments from YC that this is an incredibly American centric view of the world. I've heard PG say "just consider moving here" but without a visa as a startup that's very difficult.

WWKong 12y ago

It does work if you are a VC. Tons of talented folks living in dorm like conditions (some living out their car), working long hours, in the hopes of striking it rich one day. Most fail. Some succeed proped by blogs owned by VCs. It is a nice machinery. The world mostly gets another music discovery app or another ad targeting company.

pikachu_is_cool 12y ago

The Silicon Valley works because of the toxic culture of "work until you die". [1] [1] I grew up there. Never going back.

mempko 12y ago

I would like to ask a.radical question. Is Silicon Valley actually working? Because if you throw a lot of money at something, even if it is bad, will make it better. Given the amount of money banks an investors are throwing at the valkey, is it successful given the output?

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