
Marc Andreessen: The World Would Be Better If We Had 50 Silicon Valleys - swohns
http://techcrunch.com/2013/04/20/marc-andreessen-the-world-would-be-much-better-if-we-had-50-more-silicon-valleys/
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rexreed
It would be helpful if some of the Silicon Valley venture capital / startup
capital was as enthusiastic in investing in non-Silicon Valley companies. I've
heard on more than one occasion that the company was great, but the only
reason they are not investing is because it is not located in Silicon Valley.

The truth is that the World Would be Better if a) VC in the Other 50 Silicon
Valleys had the Same Appetite for Risk Taking as is present in Silicon Valley
_or_ b) If Silicon Valley VCs were much more open to investing in the Other 50
Silicon Valleys.

Yes, it is true that at the Angel level, there's a much broader access to
capital now more than ever in a broader range of geographies, but once you
start to get into Series A rounds and higher, the bottleneck ("squeeze")
becomes evident, and this is where Silicon Valley has a sizable advantage over
other regions.

There's no lack of entrepreneurial talent, willpower, or ideas in the Other 50
Silicon Valleys. Rather, the lack of investors willing to invest in these
risky endeavors to the point where they can reach the liquidity necessary to
self-perpetuate their local entrepreneurial ecosystem. Small exits are
necessary, but not sufficient to keep a startup ecosystem going on its own.
You need large, $1B+ exits and IPOs on a fairly regular basis to do so... and
that requires the financial power equivalent to what's now mainly in Silicon
Valley, and perhaps one or two other locations, tops. But not in the other
47+.

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auctiontheory
(1) If we had 50 Silicon Valleys rent around here would be a lot lower. Thumbs
up to that.

(2) San Francisco may be diverse by some analyst's spreadsheet, but in
meatspace it is incredibly ghettoized. How many black people (to take an
extreme example) do you see in Pac Heights or the Marina or even the Sunset?
How many white people live in Bayview? It is the opposite of diverse.

The closest to "diverse" I've experienced is Toronto. If Canada had better
weather, I think many more would move there. Pray for global warming, eh?

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richardjordan
The problem is that most parts of the world, while they want to reap the
benefit of a Silicon Valley they don't want to put in place the ecosystem
necessary for it.

It's not a coincidence that Silicon Valley exists on the doorstep of the most
diverse community in the US - not just ethnically but in all areas of
lifestyle diversity. Many places are not prepared to embrace that.

Embrace of failure is incompatible with deep seted cultural values in many
parts of the world.

Tax regimes... Legal structures favoring equity sharing... At will
employment...

Most of the places that want to recreate Silicon Valley always seen to add a
"But Our Way". Problem is "our way" means keeping in place many of the sources
of the failure which those places have had to date in having already created
their own Silicon Valley. (Typo apologies via iPhone)

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rayiner
Are you joking? Silicon Valley is overwhelmingly suburban middle class white,
with a substantial minority of suburban white-washed asians and indians. It's
incredibly homogenous culturally.

New York is far and away the most diverse place in the country, and only a few
places in the world can compare (e.g. London).

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richardjordan
> "white-washed asians and indians"

I am pretty sure a lot of Asian and Indian people will find that racist and
offensive. I certainly do, and I'm neither.

As to New York, per my comment NY might be but Wall Street sucks the oxygen
out of the talent room, similarly London where the City takes all the tech
talent and starves startups of top-tier talent.

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carterschonwald
Bullshit.

Most startups are boring ass websites with none viable business ideas. They do
not need baller engineers. If they have a working business eventually, they're
competing to hire the smart folks based upon the mix of compensation, work and
colleagues. If you can't build a biz that can sustain a compelling mix of
those three hiring ingredients, you aren't allowed to successfully hire good
engineers.

People: you aren't allowed to blame your crap hiring strategy on NYC finance
firms scooping up all the smart engineers that wanted to work in finance.
There are so many smart engineers who do / want live in NYC and Not work in
finance. If you're failing to hire people it's because you have at least one
of the following: a work environment that isn't a sane/pleasant place to spend
40 hours a week, crap compensation, or your biz is a CRUD website with the
personality of a heavily used smelly sponge.

No particular category of business "deserves" smart people, they work hard to
get those folks. And frankly, most startups are just crud websites.
Additionally, the vast majority of interesting engineering challenges only
happen at larger organizations. (That said, there are many small tech
businesses that have really cool tech challenges, but that's the exception
rather than the rule).

Let me restate that: most startups have boring work, terrible hours and crap
pay.

Tl;dr to quote a favorite phrase of an awesome friend / software engineer:
"fuck you, pay me money [if you want me to work with you]"

New York is a lovely place to live, one of the most truely urban and actually
diverse locales one the planet. Certainly the only city in the US with subways
that work 24/7 and good food at all hours. Not having to drive is a beautiful
healthy thing.

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richardjordan
Have you ever hired any technology talent in London? I have. It's exactly as I
describe it. The city can afford to suck a huge amount of talent into is orbit
by outbidding any startups - or most other businesses. It's not a factor if
whether you have a great hiring strategy or not. It's the fact that you're
competing against hiring managers with a good as unlimited budgets. This makes
it hard to build a solid technology team without equally large budgets -
whether you're a startup or a huge multinational corporation which just
doesn't have the pockets of the City. This in turn makes startups in those
places less competitive. Your rant notwithstanding this is something which
makes it harder for those locations to create their own versions of Silicon
Valley.

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hga
Is there anywhere in the world where there might be a "Silicon Valley" besides
California where non-competes are unenforceable as a matter of long standing
public policy?

richardjordan's "But Our Way" exception for this applies to every place in the
US---in fact, I'd say there's a general obsessive focus on what's perceived to
be good for individual companies to the exclusion of what's good for the
ecosystem, like a liquid labor market. That would include the critical
"embrace of failure", the areas I've worked in (Boston in the '80s, D.C. in
the '90s) aren't good with that.

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ArkyBeagle
There was one of a sort around Dallas, but it's dead.

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Zigurd
VC investors have prefer to have their investments close by, yet they tend to
rely on the managers they backed and/or picked to lead these ventures, rarely
intervening. If the non-interventionist approach is good, and it probably is,
then finding and locating ventures all over the planet should result in
discovering more talent, and holding down costs.

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loceng
That means 50 cities that have a startup that has a billion+ $ exit, so then
the trickle effects can do their thing..

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w1ntermute
That's quite rich, considering that a pretty high up guy at a16z told me that
they were parochial when it came to investing, preferring to focus on SV
companies. Maybe they should put their money where their mouth is.

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pbiggar
I read this as "I would prefer if there were 50 SVs we could invest in, but
there aren't".

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graycat
One reason for not having 50 Silicon Valleys is in a recent post of Fred
Wilson at his AVC.com: On average in the US over the past 10 years, venture
capital has had returns lower than the S&P or index funds. So, basically the
ROI of venture capital sucks. Silicon Valley has such a large fraction of US
venture capital that basically the ROI of Silicon Valley has to suck. But the
top tier venture firms are doing well, right? Well, recently KPCB got a
'reality check' about ROI from their limited partners and made some changes.
So, well, maybe Sequoia or AH is doing well. Maybe. Has any venture firm made
much money since Facebook or Google?

So, why should the world have 50 places that have ROI that sucks?

Actually, there's good reason to suspect that not all the blame for the
financial suckage belongs on Silicon Valley or venture capital. Instead likely
we have to look to constraints put on that 'asset class' by the limited
partners. But to the limited partners, the venture capital asset class is
usually at most small potatoes. So, the limited partners are reluctant to bend
over backwards to give the venture partners, in a small asset class, relaxed
constraints.

The good news is the ratio of price and performance for the 'raw material' for
an information technology startup -- an 8 core, 64 bit, 4.0 GHz processor for
about $180, ECC main memory at less than $9 per gigabyte, hard disks with 3 TB
for about $135, Internet bandwidth enough for well over $500,000 a month in
revenue for less than $100 a month, fantastic infrastructure software for free
or nearly so -- Linux, open source, the Microsoft BizSpark program, etc. Can
still be wet behind the ears and remember when such computing performance cost
factors of 10 more.

So, the challenge is to find something valuable to do with such information
technology raw materials. Maybe it is a challenge, but I have to believe that
it is also one of the best business opportunities in the history of the
planet.

Heck for what it costs to open a pizza shop, buy a truck for an electrician,
get a mower, trailer, and truck for mowing grass, or equip an auto repair or
auto body shop, can set up one heck of a server farm. Or just use the cloud.

But my take is also that more is needed than just a bright business 'idea' and
programming language experience.

It does appear that the day of the 'organically' grown startup without equity
funding is about to become more common or even dominant. E.g., there is the
Romantic Matchmaking site Plenty of Fish in Canada, long just one guy, two old
Dell servers, ads just from Google, and $10 million a year in revenue.

With enough programming experience, can bring up such a site and get nicely
profitable in less time than it commonly takes for a venture capital firm even
to respond with a no.

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lambdasquirrel
I think it is more important to note that the white, upper-middle-class
denizens of the valley actually like (or ar least don't mind) being near
people who are not like them, relative to the other upper-middle-class people
elsewhere.

New York has some of that going too, but it's worth pointing out that the
culture in New York subsumes you. New York could still become a tech spot, if
it could overcome other difficulties, like the whole employer-owns-all-your-
work default.

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Snoptic
With all the Superfund sites in SA, I don't know...

