
Why Being Outside Silicon Valley is Good for Startups - terpua
http://venturelaw.blogspot.com/2007/11/why-being-outside-silicon-valley-is.html
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suziedw
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.

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joshwa
Boy, that sure sounds nice! Wish I could have applied some of those laws to my
last employer...

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davidw
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.

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BitGeek
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.

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pg
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.

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pg
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.

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dean
"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.

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amichail
"employee stickiness" is a bad sign for employees. It means that finding and
keeping a rewarding job is hard.

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hello_moto
Not quite a bad sign. Maybe they're just happy at the place they're working
and the employees are loyal people.

~~~
amichail
Why would you want to be a loyal employee?

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hello_moto
The employer treated me alright, good benefits, nice working environments. I
value trust and connection.

~~~
chaostheory
There are very few companies like that - the names i can come up with are less
than the number of fingers that i have...

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nickb
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.

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neilc
> 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.

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johnrob
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 :)

