

Ask YC: How important is location when your startup isn't looking for lots of VC money? - Payton

I have read in many places that if you are considering a startup, Silicon Valley, Boston and Seattle are your choices for places to work and live.  The odds of success in these places are significantly higher than anywhere else in North America.<p>I am asking this because I am currently living in Western Canada in a fairly low tech area and my future plans include web startups.<p>My co-founder and I are trying to weigh the pros and cons of relocating.  Because we are not planning to look for large rounds of funding or to begin a hiring binge in the near future, are there other large benefits to basing our web company out of these "startup friendly" centers?<p>Does Canada have any areas that stand out as being startup friendly?
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SwellJoe
I've asked this before, but it bears repeating:

Have there been many wildly successful tech startups that were based on the
premise "save money", to the point that they located themselves some place
incredibly cheap (but far outside of tech industry circles)?

I'm not saying it isn't a valid business plan, as I don't know, but I can
point to an awful lot of Silicon Valley startups that have been wildly
successful, and no wildly successful tech startups from Idaho. It's really
cheap to live in Idaho, so you've got a REALLY long runway. Why aren't there
success stories? (Expand it to the whole midwest, and the story isn't
remarkably better.)

Then again, Kevin Hale from Wufoo told me a great story about a technique he
uses in one of his presentations (which are awesome)...he passes around
printouts about the top 20 or so fastest growing companies according to Inc.
Magazine, and asks questions about them, asking folks to raise their hand if
the answer is "yes". One of the questions is "Is the company you're looking at
based in California or Boston or New York?" and only one or two hands go up
(Wufoo is based in Florida, and thus they take great satisfaction in talking
about successful companies outside of the tech startup hubs). But, Inc.
Magazine covers stuff that isn't tech.

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pius
I've not got data, but I'd imagine that reporting bias causes a tendency to
conflate the cool web 2.0 and 90's dot-com startups with the tech sector as a
whole. There are plenty of less sexy tech companies that are thriving outside
of hubs. The technology sector is not a unique snowflake -- microeconomics
still applies. Lowering your costs is a good thing.

The world is flat. If you've founded, say, an enterprise software firm with no
interest in outside funding and you have all the employees you need, there's
no reason to be in a "startup hub" unless you want to be.

~~~
SwellJoe
"The world is flat."

I'm not sure I believe this one. I've lived in a lot of different places...and
I _know_ that I build better technology when I'm surrounded by technology
people. Humans are social animals, and if your peer group is building next
generation technology you're more likely to do the same...likewise, if your
peer group is pushing paper, building cars, milking cows, packing chicken,
etc. I suspect you're far less likely to be producing the best technology. You
might be happier. You might be able to run your company for longer without
raising money or running out of what you did raise. But, I doubt you're
building the best technology you're capable of building. Maybe I'm
unique...maybe nobody else is effected this way, but I doubt it.

Of course, if by saying "enterprise software", you mean "a market no one else
is interested in, and thus I can build any old technology I want and people
will have to buy mine", then sure. No matter where you are, you'll do fine.
But what happens when an agile web-based competitor arrives who are using
modern techniques and have hired the best nerds they could find in the
technology center where they're based (which are, let's face it, better than
the nerds you can find in a non-tech-focused city)?

I also have very little data, I just think the reasoning is flawed somewhere,
since whenever I've met someone starting a company in the sticks (often "to
save money"), it is fatally flawed from the get-go--often based on five year
old thinking. I'm just suggesting that maybe there is a continuum of "tech
productivity goodness" and that the Valley is near the top and Idaho is near
the bottom, and placing yourself at the bottom of the continuum might be bad
for your odds. Balancing other elements is certainly fine...but beware of what
you're giving up by "saving money".

In my previous business I did a lot of work in out of the way places ("packing
chicken" was actually true of the city where I once worked on a pretty big
project, and the IT and software managers there were desperate for talent but
simply couldn't hire it at any price)...you keep acting as though "once you
have your employees" it doesn't matter where you are. But, employees leave,
and if you're lucky your company will grow. You have to hire sometime if you
survive.

I'm not saying you're wrong, but I think the evidence is much stronger that
you are than that you're not.

~~~
pius
_Of course, if by saying "enterprise software", you mean "a market no one else
is interested in, and thus I can build any old technology I want and people
will have to buy mine", then sure. No matter where you are, you'll do fine.
But what happens when an agile web-based competitor arrives who are using
modern techniques and have hired the best nerds they could find in the
technology center where they're based (which are, let's face it, better than
the nerds you can find in a non-tech-focused city)?_

Isn't it presumptuous to think that one's city would dictate one's knowledge
of "modern" technology? If you're going to stagnate, you'll do it wherever you
live.

I'll concede the point about local staffing but, again, if you've got your
team together and build your startup so that it's profitable, you'll have no
problem hiring when you need to.

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parker
In Canada right now I'd have to say the hottest area is Montreal, with
Vancouver and Toronto on a second tier. There's more momentum and innovation
going on in Montreal, and some interesting early-stage funds have opened up
there.

Toronto has an internet community, but not really a startup community. And
Vancouver has a bunch of highlights (Flickr comes to mind), but is really
stagnating right now IMO (I live there currently). In Canada, the money and
attention disproportionately follows the local tech celebrities, and it's hard
to get either if you're starting out on your own. And if it's hard to get
investment, it's hard to get your ideas off the ground.

The question of whether to relocate is one that I've thought about quite a bit
recently. I think to get a foot in the door, you have to meet the right people
first. And it's really hard to meet those people when you're not in a tech-
hub. Once you're a success, you can extrapolate that success in your hometown
or where-ever with more certainty.

Canadian VCs fawn over local people who have a well-known name in the Valley.
I know that for a fact - more than a few startups in town are created by
people who are purely riding notoriety from Web 1.0. If you don't have the
notoriety, they'll always be suspicious of you.

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juansequeda
Move to Austin! I consider this THE place to be. It is a tech city, we have
Silicon Hills, its MUCH MORE CHEAPER than SF and you have all the commodities
of the tech cities like SF, Seattle and Boston. Plus, we have UT Austin, a top
10 school in CS, in case you are looking to recruit.

~~~
pius
I've been thinking about it. :)

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mixmax
37signals are in Chicago (and until around 1½ year ago one of them was in
Denmark), and Skype was done in Estonia. There are many other stories of
successful companies that aren't in the major hubs. So I would say that it is
definitely possible. Especially now where almost all business can be taken
care of over the web. A designer I know even moved to Thailand, and did his
work from the beach without skipping a beat - without his customers knowing
about it.

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solost
1\. Resources 2\. Talent 3\. Money 4\. Travel Costs / Accessibility

These ideas all come to mind on why you would want to be in a major hub. That
said I believe a start up can start anywhere but needs to be prepared to
relocate should the needs of the business demand that they do so.

~~~
pius
_That said I believe a start up can start anywhere but needs to be prepared to
relocate should the needs of the business demand that they do so._

Yeah, moving away from major hubs can be a good way to save money.

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shafqat
We're based in Geneva, Switzerland and Sweden. We even have our own developers
(not outsourced) in Bangladesh. Its easy to be distributed, and we've had no
problems being in Europe. Geneva is not huge, but I try and get out and meet
local entrepreneurs, participate in Open Coffees, talk to some local VCs etc.
You can be anywhere if you have a great product and people want it.

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nomad
I started my company in Seattle and just recently moved to SF -- even though
Seattle is extremely tech-friendly, it's still like moving from the
countryside into the Big City. Ideas abound, it's like the whole city is
involved in a big brainstorming session. Even if you don't need more talent or
money (lucky you!), your product benefits.

