
DHH: Are you sure you want to be in San Francisco? - johns
http://www.37signals.com/svn/posts/987-are-you-sure-you-want-to-be-in-san-francisco
======
rob
I think people are too focused on the logistics of "startups" and getting
investors instead of actually creating websites that make money.

The fact of the matter is, there are tons of individuals across the country
that make thousands of dollars a month creating websites _themselves_. They
don't seek funding, they either hire a designer/programmer or do it
themselves. They don't have a beta, they launch whatever they they are making.
They don't have one obscure idea that they think they need to go out and pay
$5,000 to form an official company for, but instead have a couple of useful
websites that generate money. If they start to make a lot of money, then
they'll open a LLC for tax benefits.

On top of that, I'd bet a majority of them have no computer science degree or
the knowledge that the hackers here do, which means anyone here can make as
much as them since they won't need to pay for programmers.

------
geebee
San Francisco is an interesting place. I live in SF, and I know a lot of
programmers (and other tech workers) who live in SF, but I doubt that more
than a third of them actually work in SF proper. Most of us engage in long and
soul destroying drives to sterile office buildings in the midst of pedestrian-
unfriendly parking lots on the peninsula and in the south bay. And we pay _a
lot_ for the privilege.

I think that other cities, like Portland, Seattle, Austin in the US (and maybe
Barcelona, Copenhagen internationally) might actually be better places to
work.

I wouldn't leave SF, but I grew up here and have family around. If I were
starting out, I'd definitely consider other cities.

~~~
tx
I can't believe you put Portland and Austin in the same sentence. Nothing
wrong with Portland, but Austin is simply in another league: I don't believe
there is another place in US with such combination of technology, nightlife
and dating scenes. I do feel sorry for all guys in their 20s living in Bay
Area.

~~~
geebee
That's funny - I actually feel sorry for all the guys in their 30s living in
SF (and that includes me)! Technology, nightlife, and dating seems pretty
great in SF. And when you have no obligations, you can take advantage of all
of that.

Most of the programmers I know are now in their 30s with small children. We're
trying to figure out how to pay a mortgate and preschool costs that easily
exceed $1000/month.

Salaries are high here, and two income families can swing it. But I have
realized that high costs are toxic to freedom. Yeah, if you score huge with a
startup you'll have enough money be free of the daily grind, but that isn't
really in the cards for most of us, even if we take a real crack at it.

I know people who have cashed out of the real estate market in SF and moved to
Austin, and they absolutely love it. I think I'd enjoy it there, too. I think
that it's probably easier to gain financial independence and start living on
your own terms in other cities. And these don't have to be crappy lame places
- these are really entertaining places to live. In some ways, I think the cost
structure of SF makes it a less entertaining place to be, because people have
to make more decisions based on paying the mortgage than doing something
creative.

But my wife and I have a huge extended family in SF (parents, grandparents,
cousins, nieces, nephews, etc...). I've actually tried to leave, but just I
can't do it. And to me, cost is the only problem - if you have the dough, then
for a certain type of person, SF may be the most pleasant place to live in the
US.

------
quellhorst
Are you sure you want to listen to someone who has never lived in San
Francisco?

How can you measure the benefits of being around people and businesses that
are similar? Its possible to trade stocks anywhere, but why do companies setup
in New York or London?

If you don't want to take someone else's money to build your business, then
don't. If you lived in Las Vegas would you automatically become a gambler?

~~~
tptacek
I don't know. Why don't you ask FeedBurner?

~~~
sabat
I think that -- by pointing out that there has been only one successful
startup in Chicago (37Signals does not count; it's not really a startup, just
a small business) -- that you just underscored the argument for the Bay Area.

~~~
tptacek
Way to take my argument out of context.

First, I'm citing Feedburner to demonstrate that large Google acquisitions
don't have to come from the Bay Area. Are you refuting that?

Second, if you ask me to name more Chicago startups, I'll add 37Signals,
EveryBlock, Threadless, Inkling Markets, and of course Orbitz.

Third, nobody is arguing that any other city in the US, including Boston, can
go toe to toe with San Francisco simply on body count. I am, however,
objecting to the argument that in 2008, the only way to be successful in a web
company is to be based in the same city as your potential acquirer. I'll
guarantee you this: your customers will not give a shit where you're located.

~~~
menloparkbum
just to nitpick, Orbitz totally wasn't a "startup" in the conventional sense,
and certainly not the DHH sense. It was a project conceived and funded by a
cartel of major airlines. The initial funding was 150 million dollars!

~~~
tptacek
You're right; I'm just thinking about tech companies, but the same logic would
lead someone to count MOT.

------
gibsonf1
DHH talked about lifestyle at Startup camp, and lifestyle is the key reason to
want to be in San Francisco. It is simply a great City to live in with the
added benefit that almost any escape to the natural world, like skiiing,
sailing, etc etc, is immediately available. The downside is some added cost,
but the costs here are comparable to Southbay locations and other major
Cities. So if you want to build a sustainable business with a lifestyle that
you want to enjoy for the long-term, San Francisco is an ideal location.

~~~
tptacek
Give me a break. I lived in San Francisco for a bunch of years, starting after
my first company got bought out --- I've experienced the city both totally
flush with cash and living paycheck to paycheck. Allow me to retort:

* Public transportation in the Bay Area is a shambles, and, in particular, getting between any two points in the (tiny) city of San Francisco involves interaction with the worst bus system in the country.

* Housing is _spectacularly_ expensive, which, in hacker teams, simply means you're going to be living in half the space you have now, with no amenities.

* Office space in San Franscisco? I already spent the modifier "spectacular", so let's go with "catastrophically" expensive, meaning: your office won't be in the city, it will be in San Mateo, which despite its relative proximity to the city, will still be an hour and a half commute. Unlucky enough to wind up in Santa Clara? I was. My commute from SOMA often exceeded two hours _each way_.

* Half to 3/4s of your friends are going to live in the South Bay. No matter where you choose to live --- San Francisco or the suburban Mallhalla of the South Bay --- you are going to be 45 minutes to an hour away from anyone you want to visit.

* An ongoing dispute between the dispatchers, the city, and medallion owners keeps taxicabs artificially scarce, so that you are going to wait 20 minutes to catch one on Folsom or downtown.

* There isn't one good place in the city to see a show, but that doesn't matter, because your favorite band skips San Francisco.

* Last call in San Francisco? Earlier than other cities.

* Weather? Choose between "brown" or "wet".

* Streets? Laden with human feces and garbage. Am I being hyperbolic? No.

Almost any other city in the country, save Los Angeles, can lay a better claim
to being a destination for long-term lifestyle companies than San Francisco.

~~~
menloparkbum
* Public transportation in the Bay Area is a shambles, and, in particular, getting between any two points in the (tiny) city of San Francisco involves interaction with the worst bus system in the country.

\- Public transportation is bad, unless you've ever been to houston, phoenix,
dallas, detroit, los angeles, or anywhere else in the US outside of NYC,
Boston, Portland, Chicago, or D.C. As bad as it is, SF's public transport is
probably the 5th BEST in the country.

* Housing is spectacularly expensive, which, in hacker teams, simply means you're going to be living in half the space you have now, with no amenities.

\- Yes.

* Office space in San Franscisco? I already spent the modifier "spectacular", so let's go with "catastrophically" expensive, meaning: your office won't be in the city, it will be in San Mateo, which despite its relative proximity to the city, will still be an hour and a half commute. Unlucky enough to wind up in Santa Clara? I was. My commute from SOMA often exceeded two hours each way.

\- My office space on Howard street is cheaper than what I would pay on the
peninsula or in Chicago. I think I lucked out, though.

* Half to 3/4s of your friends are going to live in the South Bay. No matter where you choose to live --- San Francisco or the suburban Mallhalla of the South Bay --- you are going to be 45 minutes to an hour away from anyone you want to visit.

\- uhh... i guess if your friends all work at Yahoo!? I don't really see this
unless your friends are all married or dorks.

* An ongoing dispute between the dispatchers, the city, and medallion owners keeps taxicabs artificially scarce, so that you are going to wait 20 minutes to catch one on Folsom or downtown.

\- this is pretty much true.

* There isn't one good place in the city to see a show, but that doesn't matter, because your favorite band skips San Francisco.

\- this is true if your favorite musicians are Jack Johnson or Britney Spears.
If you are cool and listen to interesting music there are at least 6 decent
mid to large clubs and dozens of smaller spaces. The music scene is better in
Manhattan, Brooklyn and Chicago but SF is on par with everywhere else.

* Last call in San Francisco? Earlier than other cities.

\- except it is the same as Los Angeles, Portland and Minneapolis, an hour
later than Seattle and Boston, and about the same time as when most bars in
Chicago now close. If you want to stay out really late your only choice in the
US is Manhattan.

* Weather? Choose between "brown" or "wet".

\- more like "cold and windy" or "not quite as cold and windy"

* Streets? Laden with human feces and garbage. Am I being hyperbolic? No.

\- it sounds like someone's office was close to 6th and Market. SOMA is slimy
in parts but gentrification happens and the poo is mostly confined to a few
select corridors these days.

Poopy streets to avoid: 6th between Market and Folsom and associated side
alleys. Capp between 15th and 17th. The tenderloin bounded by turk, mason,
leavenworth and o'farrell.

~~~
tptacek
I modded you up, but:

* Compared to Chicago, Seattle, Portland, Atlanta, or Boston, San Francisco is filthy, both in a "civic pride and basic hygiene" sense, and in a "methadone clinics spewing out mentally ill homeless people contributing to a desperate humanitarian crisis" sense.

* What areas are walkably friendly got that way by gentrifying and bleaching out the culture and neighborhoods from the city. Live in San Francisco? When was your last block party? Can you name your neighbors?

* Strong indie music scene? I guess it depends on what you like --- you could caricature me as a Pitchfork fan. Admittedly, comparing to Chicago, most other cities save New York and Seattle are going to suffer. But go read JWZ's blog about the DNA Lounge and form your own conclusions about how vital and diverse San Francisco's indie venues are.

* If your friends all work at startups, a big chunk of them live in the South Bay, which means you will rarely see them, because facing a 45 minute commute (that's _without_ 101 traffic) at 12:30AM is a strong deterrant to an impromptu night at a bar.

* Your office on Howard Street --- presuming it's a real office --- is not cheaper than what you'd pay in Chicago. Let's compare notes. You first.

I'm skipping the good stuff about San Francisco. Leaving aside the benefits of
being surrounded by product managers and QA team leaders, which is a dubious
benefit, let me get in:

* You have 7-day-a-week access to solid Dim Sum.

* You live in the US capital of fresh water aquarium suppliers.

* On any Friday or Saturday you are 30 minutes, a cooler, and a couple of logs away from a bonfire on the beaches south of San Francisco.

* If your car can handle, the drive to Half Moon Bay is pretty awesome.

I'm assuming most of the readers here don't have kids. I have two. We won't
get in to how much worse the city is going to be for you if you're trying to
raise a family.

~~~
menloparkbum
* Compared to Chicago, Seattle, Portland, Atlanta, or Boston, San Francisco is filthy, both in a "civic pride and basic hygiene" sense, and in a "methadone clinics spewing out mentally ill homeless people contributing to a desperate humanitarian crisis" sense.

\- I agree with that, I guess. SF is pretty psychotic.

* What areas are walkably friendly got that way by gentrifying and bleaching out the culture and neighborhoods from the city. Live in San Francisco? When was your last block party? Can you name your neighbors?

In my neighborhood the block party is in September but the SOMA block party is
in a couple of weeks. I know all the people who live in my building (there are
only 5) and three of my good friends live on the same block.

* Strong indie music scene? I guess it depends on what you like --- you could caricature me as a Pitchfork fan. Admittedly, comparing to Chicago, most other cities save New York and Seattle are going to suffer. But go read JWZ's blog about the DNA Lounge and form your own conclusions about how vital and diverse San Francisco's indie venues are.

\- JWZ is grouchy because he was hoping to open up an industrial club but
instead has to cater to asian gangsters coming up from Daly City. The scene he
is into (industrial dance music) was never big enough to support a club the
size of DNA and pretty much died out entirely 10 years ago. Everyone who was
into it is now 40+ and doesn't go out anymore. I will admit that I don't go to
many shows but the bands that I like (Autechre, TV on the Radio, Cornelius,
are a few shows I've seen) seem to play here as often as anywhere else. The
LOCAL music scene isn't that awesome, IMO. Most people are trying to be DJs
rather than be in bands.

* If your friends all work at startups, a big chunk of them live in the South Bay, which means you will rarely see them, because facing a 45 minute commute (that's without 101 traffic) at 12:30AM is a strong deterrant to an impromptu night at a bar.

I guess that would be true. However most of the friends I have at startups
work at startups in the city.

* Your office on Howard Street --- presuming it's a real office --- is not cheaper than what you'd pay in Chicago. Let's compare notes. You first.

We pay $8850 for 9000 square feet. Pre-wired, server room, and physical
workspace in the basement (part of our product involves creating physical
prototypes)

~~~
tptacek
* I lived in Noe Valley for a couple years and never once even heard of a block party. "The SOMA block party"? Does that go by another name I'd know it by better, like, say, the Folsom Street Fair? That's hardly a "neighborhood" event, but then, SOMA isn't a neighborhood, and hasn't been since it was debrided by "live-work art spaces" (a.k.a. luxury condos).

* JWZ is certainly not a good trendspotter, but you're providing a parody of his experience. He's not complaining that nobody cares about VNV Nation; he's complaining that he can't get permits to host 18+ shows (why do you care? Because lots of touring acts won't book 21+ shows), and chronicling the demise of one music venue after another.

* You are getting a _fantastic_ deal on office space; you're paying approximately what we're paying for finished office space in the Loop (we have a smaller space; our company is split evenly between Chicago and Manhattan).

~~~
menloparkbum
It is actually a different block party centered around the park between 7th
and 8th on Folsom. It caters mainly to the mexican people who live in the
area. I've never heard of a block party in Noe, either. My apologies for
bringing up race, but I used to rent an art studio in the Bayview and that was
the only place in SF that I've seen block parties. I've lived mainly in white
yuppie neighborhoods in various parts of the country and never encountered a
block party in any of them. There have only been annual "street fairs." The
only other place I've seen a proper block party was when I lived on the edge
of a puerto rican neighborhood in Brooklyn.

------
andreyf
This seems a direct contradiction to everything PG advocates ... no funding
(not even seed funding). No VC's. No IPO. No buyout. Just doing what you love,
without a boss, and getting paid well for it. Claiming a higher probability of
happiness than the "funding" route.

And yet, PG is eerily silent... does YC cater to people following the 37sig
model? If one decides to stay a private company, how do investors ever make
back money?

~~~
pg
I've just been busy with other stuff today and I haven't read it. But the
answer to your question is yes: Wufoo, for example, is very much following the
37 Signals model.

~~~
andreyf
If Wufoo stays private indefinitely, doesn't this clash with YC's business
model?

This probably stems from my naivete, but how do investors make money if a
company has no intention of going public or being acquired?

~~~
dhh
Investors can make money the same way founders can: Dividends. But yeah,
that's a slow, boring way of earning a return in the eyes of some. It's not
nearly as spectacular as a 10-100x return from a sale.

~~~
pg
The reason venture investors want a return of capital rather than dividends is
not so much that it's faster, but that it's harder to spoof. Investors will
accept dividends from a large, public company, because they're so highly
regulated. But in a small private company it would be too easy for the guys
running it to divert (what would have been) profits to their own uses.

This is why medieval venture investors were willing to back sea voyages but
not factories. In a sea voyage everyone got liquid at the end of each trip,
and it was very clear what was on each ship.

I'm not suggesting of course that 37 Signals would take advantage of
investors. I'm just explaining why, structurally, venture investors are not
interested in dividends.

~~~
dhh
Which is a great argument for why we turned down the 30+ venture capitalists
who came knocking on our door. We weren't interested in those kind of setups.
And I wish more people who think through exactly those implications: Getting a
traditional VC involved means aiming for an exit. Whether that be M&A (more
likely) or IPO (less likely).

For people who are just interested in building a business, not searching for
an exit, the traditional VC is just not a relevant option. 37signals is
amongst those people.

------
kyro
His first argument seems to do more with the teams themselves than the
surrounding area. Temptation is found anywhere, whether it's a big office in
the bay area, a huge flat in Chicago, or me supersizing my McDonald's combo
#2. If you're not disciplined with your money, you're bound to fail regardless
of location. Sounds like he's making a generalization about programmers, too.

~~~
comatose_kid
As a Silicon Valley resident who has lived in an inexpensive place, I think
you have to be _more_ disciplined with your money and time if you live in the
Bay Area.

------
pibefision
I'm in Buenos Aires. The cost of living here it's 1/6 compared to San
Francisco. And we have a lot of talent, cheap bandwidth and resources (apple
Computers, big linux community, etc). Also, real state its growing fast. If
you are planing to visit BA, msg me! :)

~~~
ichverstehe
I've been to Argentina and I'm deeply in love with Buenos Aires – but heard
that it's getting rather expensive living there fulltime. How is the job
situation and such, for foreigners?

~~~
pibefision
You can rent an appartment for U$S 300/month in a very accesible and centric
place. You don't need a car here. There is plenty of work on IT, but we are
talking about startupping here, so yo have everything. This country does not
request visa for work or tourist, so you will not have any problem. Mail me
pablocorral at gmail.

------
alaskamiller
You know none of this really matters. Be a rebel. Live everywhere as often as
you can.

I've lived in Taipei, Los Angeles, LA suburb, east San Jose, Cupertino, San
Diego, Pendleton, Lejeune, and now back in Cupertino with constant visits to
San Francisco and I can honestly say... it doesn't really matter where you
live.

Learn as much as you can. Make as many friends as you can. And make sure you
always have a WiFi connection.

------
thaumaturgy
I agree. I live in Grass Valley, in the Sierra foothills. Turns out, we've got
a solid little tech base here, in a rural area. I never wanted to go the VC
route, so the conditions here have made it much easier for me to bootstrap as
a consultant, and make lots of professional connections.

In my case, I'll ultimately be more successful starting out here, than I think
I would have in the Bay Area.

------
johnrob
There are a lot more chicks in other cities. This might assist founders during
the low points of a startup.

~~~
tptacek
Please check your gender bias at the login page.

------
webwright
If crazy growth, outside investment, and M&A are your goals, being in the
Valley is the place to be. Especially if you are aiming for a consumer app. No
question.

If you're going the "DHH path" (profitable lifestyle business, limited outside
investment), it probably doesn't matter much.

~~~
tptacek
Because why? You didn't make an argument, you just recited the premise of
DHH's argument.

~~~
webwright
I wasn't trying to make an argument.

However, if I was, I'd say:

Draw a 50 mile radius circle around Stanford. Get a list of all consumer
startup acquisitions in the last 2 years. Put a pin in the map for each
acquisition. (This is straight from the mouth of Ron Conway, so apologies to
him).

Rinse/repeat for VC investment (which is nearly required for any consumer
startup)-- it turns out that VCs tend to invest in Valley companies (because
that's generally who they can meet face to face).

~~~
tptacek
Wow. For that argument to make sense, all you have to do is get bought by
Google.

~~~
webwright
If your target path is VC and then acquisition, I'd say proximity to Google is
a pretty good idea, wouldn't you? Throw in Yahoo, Ebay, and the many other big
players who like to buy companies as a bonus.

The point is-- It's way easier to get funded in the Valley (I'm raising money
in the Valley and Seattle right now, so I'm speaking from a bit of
experience).

And the data seems to show that it's easier to sell your company if you're in
the Valley (which is the only realistic path to liquidity for
founders/investors). Even if the data didn't confirm it, it makes SENSE,
doesn't it?

~~~
tptacek
I don't know. The last big VC-funded company I was with was in Ann Arbor, MI.
When the valley influenced the rest of the VC-backed or acquired companies I
worked with, it did so by moving the established company out to California.
I've never worked for a company whose opportunities came simply from being
located in California.

Meanwhile, the elephant in the room here is that you aren't _going_ to be
acquired by Google, in the same sense as you are not going to win the lottery.
There's a get-rich-quick mentality behind web startups that is totally not
borne out by the numbers, and it cuts both ways: unrealistic hubris that
infects judgement (for instance, by moving teams out of comfortable
environments to San Francisco), and devastating emo temper tantrums at minor
setbacks, like not being accepted into YC.

------
brianmckenzie
I loved DHH's speech at startup school, but having lived in Chicago and now
living in SF, I have to disagree with him on this one.

His point seems twofold: 1) The availability of funding in the Bay Area tempts
people to take it whether they need it or not, and 2) The competition for top
talent is stronger here than anywhere else.

The first point, on funding, is news to me. Yes, the availability of VC here
is correlated with more Bay Area startups being funded. It doesn't mean that
your startup will automatically be funded just because you're located here -
the competition for funding is as strong as the competition for talent.

I meet people doing self-funded startups all the time. The differentiator is
whether you want to be the next Facebook vs. traditional profit model. Yes,
the funded web-2.0-ish startups get most of the press here, it doesn't mean
that no one is doing it another way.

Yes, the competition for talent here is fierce. Right now I'm looking for a
CSS expert, no programming required, and even that is nearly impossible to
find. However, I know I will find someone sooner or later _because I'm located
in SF_. I shudder to think how hard this would be if I were in St. Louis or
something, or even a less tech-centric city like Chicago. A few weeks ago I
needed an expert Flex hacker to help with something I'm building, so I just
called up my friends until I found one. Try doing that in the midwest. Also,
I'm at the kind of small, traditional-profit-type company that DHH so admires.

Hackers move here because SF is the best place on earth to be a hacker, and
that fact mitigates in your favor when looking for talent.

------
ivankirigin
This issue is so much less important than other matters - and heavily context
dependent. But I find the ability for two reasonable and diametrically
opposing opinions interesting.

I just moved to SF from Boston. I think more people understand startups in the
Valley, making hiring with equity displacing cash more of an option.

I also think my startup's success will heavily depend on distribution and
business development deals. That makes moving to a concentrated area more
important.

------
kennyroo
I wonder if DHH means SF proper, or if he's actually talking about the entire
Bay Area.

The Peninsula (Palo Alto, San Mateo) and the South Bay (Mountain View, San
Jose, Santa Clara, Sunnyvale) are home to the popular web sites used around
the world.

The issues you would deal with living in SF differ pretty dramatically from
the ones you'd deal with living anywhere else in the Bay Area. (Except the
expense, which is bad everywhere.)

------
cbryan
I'm surprised that noone's really talking about money here. The Bay Area has
one of the highest costs of living of any city in the country. That means its
going to take that much more of your time to work, to make money, and to live.
If you're spending your time working to live, that means you're not using that
time to work on your projects.

Right now I'm taking a culture hit. Living in Worcester, MA certainly doesn't
put me at the center of startup culture, but Boston and Providence are close
enough. I can take the bus/train and find myself surrounded by technically
oriented people. A low cost of living in this town is what allows me to work
less and affords me the free time to work on my projects. To me, this time to
work is alot more valuable.

(Oh, there is culture in Worcester. You just have to dig. :)

~~~
kingkongrevenge
Not to mention that California is probably the most fiscally screwed up and
one of the most tax heavy states in the country.

~~~
ardit33
You forget to mention that I make about twice as much here in SF as I did in
Boston. And my lifestyle and quality of life improved dramatically...

I have an uncle in Worcester, and I visit it once and a while, and I think it
is really boring.

------
menloparkbum
The smart businesses know you don't want to be in San Francisco - there are
too many distractions. You want to be somewhere lame, like San Carlos, so that
people don't have anything to do besides work.

edit: I guess I should have added the ";)" JUST KIDDING!

~~~
thaumaturgy
Bluh. Dunno about you, but I get badly demotivated if all I'm doing is
working.

------
acgourley
Just because there are some crap companies being started, and some crap
investments being made, doesn't mean everything coming out of the bay area is
as DHH describes. I'm working at a company thats doing quite well, and will
continue to do quite well. Being close to the bay area was essential, so
essential that the founders both relocate from their homes for most of the
year to be here.

------
obelix
After reading this rant and listening to his talk in startup school, is DHH
drinking too much of his own kool-aid?

[I live in SF bay area and work in VC funded startups]

I mean life is not just 37 signals? At some point in time, he has to come out
and do another startup. Is he setting himself a trap of doing a very narrow
set of startups?

~~~
dhh
Why do I have to go out and do another startup? I don't work at a startup, I
work at a company.

I think this mentality is a big part of what's wrong with the startup culture
in the Bay area. This notion that it's inevitable that you have to work for a
long string of companies, better not get too attached to any one of them.

Jason and I intend to make 37signals a company that'll last for 20 years.
Maybe we won't succeed, lots of businesses fail, but that's at least our goal.

It's a sad state of affair where such a simple goal is looked upon with
suspicion and disbelief.

------
gojomo
Much of the "go big with other people's money" culture is by design.

People are naturally risk-averse -- moreso than pools of capital would prefer.
Capital wants to maximize expected return, and will smooth out the variance by
diversification, rather than trading away raw expected return for stability.

------
dnaquin
No one's mentioned competition?

Along the lines of start small, regional and expand. It's easy to
differentiate yourself as a regional online application. Anywhere else.

------
dbreunig
There should be another point under TALENT.

Set up shop near a college with a strong tech program.

~~~
tptacek
And there should be a sub-bullet for "HARD TO COME BY IN THE BAY AREA". Yes,
there's clearly more of it in the Bay in gross terms. That doesn't mean you're
getting access to any of it: new startups in San Francisco are totally,
completely outgunned.

------
sutro
I'm glad you enjoy those wonderful Chicago winters, DHH.

~~~
jrockway
Winter in Chicago isn't that bad. Do you think "wow, this is great weather"
every day during the winter? No. But the spring, summer, and fall is very
enjoyable.

The problem with Chicago is that there are no other hackers around (all the
tech people work for banks, and end up being as interesting as you'd imagine),
and there are no 24-hour coffee shops, at least not near me.

Chicago is a good place to be if you want to be alone. I guess it's "a big
city" but it sure doesn't feel like it at times.

~~~
sabat
"Winter in Chicago isn't that bad."

In the words of 37signals -- and Dr. Phil -- get real. Winter is hell in
Chicago, summer is a pressure cooker, and fall and spring are tolerable for a
few days.

"Isn't that bad" is relative. Weather in the Bay Area is amazingly good. One
of three mediterranean climates in the world. There is no comparison.

~~~
jrockway
> In the words of 37signals -- and Dr. Phil -- get real. Winter is hell in
> Chicago, summer is a pressure cooker, and fall and spring are tolerable for
> a few days.

You are entitled to your opinion, but I disagree. It's just the weather; if
that's the defining feature of your life, try to do something more interesting
:)

------
sabat
Flamebait. From a guy who's barely ever been here. From a guy who grew up in
an ugly place with lousy weather (Denmark) and moved to a place that's
remarkably similar to that.

DHH generalizes wildly in this rant -- usually an indication of anger and
jealousy rather than reason.

~~~
rob
What is he angry and jealous of? I'm pretty sure he can afford to move there
if he wants to.

~~~
sabat
I'm just guessing, but I'd say he's intimidated. Usually people who are
frequently accused of arrogance are overcompensating. He doesn't like the Bay
Area because so much happens here, and he's not a part of it.

Afford? DHH is not rich.

~~~
dhh
I actually really like the Bay area as pleasant place to be. My argument is
that you shouldn't move there to start a company of the product/price/profit
variety.

And this doesn't really have anything to do with cost. 37signals is a multi-
million dollar company and we (including the founders) could certainly afford
to move to San Francisco.

