

Location matters for your startup (with city comparisons) - scottallison
http://scott-allison.net/2011/10/21/location-matters-for-your-startup/

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ashishgandhi
Why density? Does density _really_ matter? Isn't the absolute number more
interesting because whatever be the chance of meeting an important (to your
success) person, you have a bigger pool to pick from.

Case of city A: Say, there are 50,000 residents of which 500 are of interest.
There's an event hosted and 25% of those "interesting" people show up. You,
who's attending this event, have a pool of 125 people out of which, say 5% can
help you AND you'll bump into. So chances are you'll meet _6 people_. Density:
0.01.

Case of city B: 5,000 residents, 100 interesting, 25 show up, chances are
you'll meet only _1 person_. Density: 0.02 (double).

~~~
scottallison
I think the truth is that the absolute number, along with density are both
important. That's why Boulder - apparently 70% more entrepreneurial than
Silicon Valley - cannot really claim to be better than SV, which has an
entrepreneurial population 15 times larger.

~~~
alecbenzer
I was really surprised to see Boulder on that list... had no idea that there
were apparently many start ups there, even if it is just by percent.

~~~
simmons
Boulder's startup scene has skyrocketed in the past several years. At monthly
startup meetups, hundreds of people usually show up to check out what everyone
else is working on.

It's not quite a Silicon Valley, and its score is probably exaggerated by the
difficulty in defining a population area that's relevant to the startup scene.
However, most startups in the scene are in Boulder proper, and most founders
seem to live in the city as well. So the density is there, and it's quite easy
to run into other startup people on the sidewalk or in coffee shops.

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brown9-2
I don't think takes away from the main point of the article, but there is a
bit of a logical fallacy in the opening:

 _18 months ago I relocated from my home town of Glasgow, to London, just 400
miles away. An important reason for the move was because I had just started
working on my new startup, Teamly, and I know that location matters, even when
running an internet business. Don’t kid yourself otherwise, your chance of
success is seriously improved when you’re in a startup hub.

18 months later and moving to London has proved to be a smart move, for all
the expected reasons, as well as the unexpected recognition by the UK
Government of London’s startups with the launch a year ago of “TechCity“._

I don't think you can really say that moving to London to operate your
business there versus operating in Glasgow was a "smart move", as you have no
way of knowing what level of success your startup would have had in Glasgow
(since you never experienced this alternate reality).

Sure you made a lot of great connections as a result of your move, but it is
impossible to know what connections you never made because you weren't in
Glasgow during those 18 months. There is no way of knowing whether you missed
out on something (a chance meeting/encounter/coffee, etc) which, while it may
have been less probable, would have been of more value to the success of your
startup.

~~~
scottallison
Thanks for pointing that out, but putting it another way, the things I
expected I would benefit from by being in London did occur, along with the
pleasant and unexpected bonus of the government's tech city initiative.

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iamelgringo
Location matters. Even if you're boot strapping. I'm boot strapping Hackers &
Founders.

In the past three months, I've met a CEO of a 300 person gaming company, M&A
execs from Fortune 500's, Engineer[0] from Google Finance, the head of the
Singularity Institute, artists that make 2 story flaming sculptures, an
architect that works on computational architecture, a man who built a battery
that charges in 10 minutes that is currently in use by Special Forces in
Afghanistan, a former Yahoo VP, a VP from AT&T, the CTO of America and the man
who wrote the Jobs bill... a person on the US Council of Foreign Relations, a
man who helped the Arab spring flower in Egypt...

That's not to brag. I've simply been extremely deliberate about networking
over the past 5 years.

In Silicon Valley, even after being here for 6 months. You probably don't
realize it, but you're only 2 or 3 degrees of separation from everyone else
who's really, really impressive in town.

To that density, add a culture that places an extremely high value on helping
others out, and you have something amazing.

~~~
a5seo
Are there any practical (mathematical?) techniques to measure "openness" of a
startup community's network?

You may be 2-3 degrees from John Doerr, but the question is, could you
actually get a meeting with him?

Just my intuition, having lived in the Valley (8 years) and Austin (10 years)
is that the Bay Area gets a B- for openness, compared to Austin which gets an
A-.

~~~
iamelgringo
_You may be 2-3 degrees from John Doerr, but the question is, could you
actually get a meeting with him?_

That depends.

Adam Rifkin, the founder of the 106 Miles meetup and pretty kick ass nice guy
and serial entrepreneur, was funded 12 years ago by Kliener Perkins. So, if
you got to Adam's meetup, and bump into him, you're now 1 degree of separation
away from John Doerr.

So, if you take Adam out to coffee, and talk to him about getting an
introduction to John, Adam can certainly provide an into to John, but he's far
more likely to talk to you, get a feel for what you're doing, and then provide
introductions to 10 other investors and amazing people that could probably
provide as much or more value than John Doer.

Good question.

There's also a very strong culture in Silicon Valley of "quality
introductions".

The perceived value of a person's personal network in Silicon Valley is
directly proportional to the quality of introductions that person can make to
others. (Read: matching person to investor)

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famousactress
I'm sure that this is true, but it's awful and broken and we ought to find
ways to fix it. There's way too much talent and energy spread all over the
world, and frankly the group-think that melts young, brilliant brains into
caring way too much about mobile apps for taking pictures of your food is sad,
and boring.

~~~
All-ln
Quite true,but one would argue how many of those minds are actually
brilliant.I guess that's what happens,when far too many people are "doing
they're own thing" and "solving needs/wants"

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accountoftheday
A more important factor compared with density is, in my view, whether startups
are the main game in town. This determines what kind of talent you can
attract.

In London you are competing with cash flow oriented industries that will set
expectations for the compensation mix, so you are in practice left with
somewhat marginal people and not the best. This crowding out effect,
compounded by the relatively small exits produced in the UK and an inferior
work ethic compared to the US, explains why both founders and employees are
less good on average than in some other startup hubs.

For the UK startup scene to really succeed we basically need to destroy the
banks and agencies.

~~~
nickthedart
For the UK startup scene to really succeed ..... how about if people located
their startups in places where people can actually afford housing costs ? such
as - Sheffield, Leeds, Birmingham, Nottingham, Newcastle etc .

~~~
scottallison
I completely disagree with this, simply because there is already a fantastic
and large hub in London. There's hundreds of startups here already and
proximity to VCs, in one of the world's best cities. It makes a lot more sense
to build on something that's already strong, and make it stronger.

I think one of the smartest things this Government has done is to recognise
that and ignore calls from people outside London to create something
elsewhere. But yes, London is frigging expensive. That said, you can live
close to, but outside London and it's no more expensive than the other places
you mention.

~~~
nickthedart
I acknowledge London is in many ways a fantastic place to live and grow a
business. Its great for the UK if we can have a growing startup hub based in
London. However, while many startups will flourish in London, so many others
would be completely dead in the water if they tried to grow while facing
London costs. Living just outside London is surely more costly than living in
a comparable area of a city further north, when you take into account a rail
season ticket? Also, commuting times get silly. There's loads of talent
scattered across the UK. Whats the point of trying to get that talent to move
somewhere where everyone else already wants to live, and quality of life in
many ways is poor as result? Silicon Valley is different because they actually
pay enough for people to live there. Maybe that's the answer - startups need
to start paying £70k to developers in Shoreditch when the same person would
have been happier being paid £20k to live in Derby? Thanks for the response
though- its interesting to debate these things. :)

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goodside
If you calculate backwards from these figures to the absolute size of the
community, you find that NYC's startup scene is actually _twice_ as large as
San Francisco's. As someone from the NYC area, that doesn't seem plausible.

~~~
scottallison
You're right, it's the other way around.

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grigy
Unfortunately it's almost impossible to move to these hot cities from many
countries. Visa is really a problem. So we need to work hard to get our own
local startup hub. I'm from Armenia.

~~~
robjohnson
Agreed. Not just in other countries, but many rural areas of the US. There are
some incredibly talented people out there that may not be able to move for one
reason or another. How do we bring these startup hub advantages to everyone?

~~~
nprincigalli
This is how:

[http://steveblank.com/2011/06/01/why-board-meetings-
suck-%E2...](http://steveblank.com/2011/06/01/why-board-meetings-
suck-%E2%80%93-part-1-of-2/)

[http://steveblank.com/2011/06/02/reinventing-the-board-
meeti...](http://steveblank.com/2011/06/02/reinventing-the-board-
meeting-%E2%80%93-part-2-of-2-virtual-valley-ventures/)

<http://www.leanlaunchlab.com/>

~~~
grigy
Last one looks similar to Lean Startup Canvas - <http://leancanvas.com>.
Though not sure how is it helpful in this case.

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a5seo
Seems like a better approach would be to identify cities with the most startup
"clusters"? Identify a cluster, then look at the population(s) of that census
tract or zip or whatever.

Using city-level population just makes small cities look great (Boulder) and
big cities look terrible (NYC), when I'm pretty sure there are neighborhoods
in NYC that blow away Boulder.

~~~
scottallison
Agreed, a hybrid of absolute numbers of startup people and density is probably
the most appropriate.

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WA
Don't relocate, bootstrap :)

~~~
bodegajed
I completely agree. Your customers will be your best source of funding.

~~~
scottallison
It's not all about funding... it's about the less tangible benefits of being
around other entrepreneurs.

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aninteger
In Los Angeles this really means Santa Monica and maybe El Segundo. Basically
closer to the ocean.

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mstafford
Good points, well made - I'll be over to SF in Jan!

~~~
scottallison
Look forward to seeing you there!

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mleonhard
I'm relocating to the Bay area in December.

~~~
scottallison
As you're in Seattle, it would be interesting to know why you're making the
move.

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pitdesi
The density/city comparison thing is really hard to measure, but I'd argue it
doesn't make a whole lot of sense:

Since people are showing off re SV, I'll do the same for Chicago- where I've
in the past couple of weeks met: CTO for Barack Obama (ran into at falafel
place), Founder of Groupon (stood next to at Weezer concert sponsored by NEA,
talked to him for a bit), Dave McClure (He's an investor in us, we had dinner.
He comes to Chicago often and spends a lot of time with us because we were his
only investment here until last month), VP from Motorola Mobility
(architecture tour), State Senator from Ohio (bar), A Macarthur Fellow
Architect (female, met at bar), Vice Chairman for Goldman Sachs Investment
Banking (happy hour), etc etc etc.

Furthermore, just by chance (ie we didn't know this going in and it is NOT the
startup hub area within Chicago), within 3 blocks of FeeFighters office are:
37signals, SproutSocial, Threadless, Crowdspring, and several other startups.
I don't see how it helps us significantly to bump into them (though we have
helped our neighbors when they've had merchant account issues). Many people
think it is a wasteland anywhere not the valley but I have seen that not to be
the case here, in New York, and even in Pittsburgh.

So what is the difference between here and there? The largest differentiator
I've noticed between the valley and elsewhere is funding. We raised most of
our money in Chicago from VC's we really like, but could have raised easier on
the west coast. A lot of top VC's prefer to have you close and told us flat
out they would fund us if we moved there. We had term sheets dependent on us
being in Austin, SF, and LA. I don't think it has had an effect one way or
another on our business thus far.

Startups need money, and often flock to where it is. Things are changing all
over the place though (Rich people in Chicago all of a sudden want to fund
startups, will be interesting to see if that continues post-Groupon IPO) It
also depends on your type of business. If you sell mainly to startups, you
should probably be in the valley.

BTW in case you missed the discussion re: PG's original article, it is here:
<http://news.ycombinator.com/item?id=3077165>

~~~
TDL
A local (Chicago) angel/entrepreneur & friend of mine told me that it is a lot
harder to get follow through from VCs & angels in Chicago. I wonder if your
experience comports with that view.

I personally have pessimistic view on the Chicago area in the intermediate
term (5-10.)

Regards, TDL

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maximusprime
Just remember quality of life with these things.

I know this will be an unpopular opinion round these parts, but SF is not
somewhere I'd ever chose to live. The bad points vastly outweigh the good
points for me.

~~~
scottallison
I guess everyone is different, I love silicon valley for many things, the
quality of life being one of them (and the weather). Maybe it's just me but
I'm from a cold, wet and windy country called Scotland :)

~~~
maximusprime
Actually weather is one reason I wouldn't live in silicon valley - it doesn't
really have any. It's either flatline boiling hot, or if you go north it's
windy and foggy all the time. It's like being stuck in a never ending summer.

I live in England, where we get glorious boiling summers, wet and windy
autumns, snowy winters. I know that's not for everyone, but the sheer variety
is something I love.

To see the scenery and wildlife change by season is something that really
makes life interesting.

