

Silicon Valley is Broken. Should We Even Bother to Fix It? - ericabiz
http://www.erica.biz/2011/silicon-valley-broken/

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wccrawford
People here aren't going to want to hear it, but that's the kind of person
this site promotes. I constantly see stories about 'You don't need a good idea
to start a company' (yeah, that one just got posted!) and how you should just
start a company and go for it. About how good ideas are worthless and only
doing something matters.

It's bull. Starting a company is HARD WORK and not something you should jump
into without adequate preparation. I'm sure YC details the work you'll need to
do to get going, but most people don't get accepted to YC.

The problem isn't Silicon Valley. It's the idea that just being in Silicon
Valley somehow solves your problems for you. It doesn't. For every problem it
solves, it creates at least 1 more. Creating a viable internet-based business
has NOTHING to do with location. Or for that matter, any international
business.

~~~
paulbaumgart
The set of people with whom you can have in-depth conversations _is_ highly
location-dependent, and you will be sub-optimally innovative without having
such conversations with the right people.

~~~
gloob
Do you have a rigorous definition of innovation? Or, at least, rigorous enough
that you can measure it and stick a number on it?

Because, without the ability to stick a number on it, how do you propose to
know which sorts of actions are optimal and which aren't?

Engineering without numbers isn't engineering - it's guesswork.

~~~
paulbaumgart
I admit I haven't thought about this particularly deeply, but I suppose the
best way to measure innovation is to compare the state of the world before and
after the innovation takes place.

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il
Thank you for this post..it really is a breath of fresh air after all the
buzzword-laden but completely substance-free pitches you tend to hear after
spending time in the Bay Area.

When startups respond to the question of "How will you make money" with "We'll
get VC funding", you know there is a problem.

Here's a bigger problem: It seems that the set of people building the next big
thing social whatever and looking for VC funding and the set of people who
know about business stuff and lead generation rarely intersect.

This is the great paradox of the valley: It seems that most of the people who
know about sales, driving traffic, etc and are thus most likely to succeed are
building unsexy businesses in web hosting, B2B services, etc. In other words,
the kinds of businesses Valley investors are not interested in it all.

The people who are clueless about marketing or generating revenue get the
lion's share of the funding...because they're making a social iPad app(or
whatever is hot at the moment).

~~~
michaelchisari
In a way, Silicon Valley has become the tech world's Hollywood. Wide-eyed,
talented people are encouraged to move across country and make their fortune
in a big way. And like Hollywood, they're not encouraged to slowly build their
craft and name, through theater and small roles, they're encouraged to go and
pitch their Superman reboot and try and get discovered by David Fincher.

It's why I've always been skeptical of Silicon Valley. I don't like get-rich-
quick schemes, even if they sometimes (although rarely) work. The social
damage done to those who fail, especially when they make up the vast majority
of those who try, can create a terrible reputation for an industry.

Of course, Hollywood has been chewing people up and spitting them out for
decades, so maybe this is a sustainable cultural model, if you don't mind the
repercussions.

~~~
jacoblyles
Fortunately the world needs more programmers than it does actors so there is
some underlying demand to soak up the programmers who don't make it big. A
backup plan of $60-100K a year is hardly the same as being a barista at
starbucks for the next 30 years.

~~~
michaelchisari
Well, a Starbucks manager in Los Angeles doesn't make that much far off from
$60k, but regardless, you're right that that's the case for now, but I would
point out that Silicon Valley is extremely young in comparison to Hollywood.

But most importantly, the point I'd make is this: If Silicon Valley is our
Hollywood, where is our Broadway?

~~~
jedberg
Sand Hill Road.

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chrisyeh
The problem is that the true Silicon Valley way (build great stuff and change
the world) has been overtaken by the poser Silicon Valley way (go to parties
and focus on raising money). This happens during every boom. Fortunately, the
next crash will get rid of the posers again.

~~~
ericabiz
Chris, I could not agree more. This seems to happen in the Valley every four
or five years. I lived through two of those crazy cycles before finally
leaving in 2009 along with a bunch of other people. By 2013, another wave will
leave.

I also find it interesting that a lot of people live in the Valley in their
20's, but when they hit late 20's/early 30's, they're gone. I'm not sure how
it ties in to the above statement (or if it does at all.) The most common
reason I've heard is that the Valley is a terrible place to start a family.

~~~
imack
I find that mentality interesting. Personally, I spent a short time in the
valley in my very early 20's (internship) and found it so boring outside of
work that I knew I didn't want to spend the rest of my 20's there. I did see
how if one already had a family it would be more bearable.

~~~
paulbaumgart
Clearly you didn't spend enough time in San Francisco. :)

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imack
True, but I draw a large distinction between 'the valley' and SF. SF was an
hour and a half away in traffic from my employer, and I don't want to spend 3
hours a day of my life commuting.

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alain94040
Very refreshing read. If you want to hear a different sound than the usual
echo chamber from the valley, read this.

We can argue about some details of the article, but overall it's plain
refreshing.

Erica, you just won a free ticket to the Founder Conference (apologies it's in
Silicon Valley, will you come :-)

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nollidge
Am I the only person who cannot focus on an article without ad-blocking all
the animated stuff around it first? I may very well have A.D.D., so that could
be it, but it's a huge distraction for me.

EDIT: I didn't intend to imply that this spammy behavior at all, as noahc's
reply seems to indicate. There's tons of otherwise fantastic blogs that do the
same thing.

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noahc
I go back and forth on the Erica.biz website. She's obviously smart and
motivated and knows what she's talking about. But everything comes across as
spammy. I don't doubt her methods work well, but there's something about her
and her blog that rub me the wrong way.

EDIT: After looking at the parent, her website isn't spam. It has good
content, but it LOOKS like spam. Maybe I've just spent too much time on the
Internet and these things pop out at me.

~~~
pmichaud
Maybe you're afraid of success and positivity?

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noahc
That's possible, but I don't think so.

Someone e-mailed her this: “Erica, I need to know how to make money on the
Internet. But I need make at least $100,000 in my first year or it won’t be
worth it for me. Can you suggest something that would help me do that?"

Maybe he is a nutjob, but he felt like she could help him. I think she works
super hard and is super smart. She's always been positive as well. I
appreciate those things, but her website and the 'feel' of it all seem like
spam and get rich quick scheme.

The content is great, if I read it in an RSS reader, maybe things would be
different.

Obviously, I'm very happy for her success and ability to keep positive. Her
site just isn't for me.

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MrMan
The Valley, HN -- places where people herd -- are good for leaders, not great
for followers. The group mind that tells us what is good and bad is the
average of all the guesses about how to do modern-day startups. Those who are
above average, or lucky, can be successful without being followers in herd
games.

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HeyLaughingBoy
Nice to see Erica's back. I got my first web host account from her company,
Simpli back when she was a frequent slashposter. Why? Because I liked her
approach to business -- work hard, take care of customers, provide a service
worth paying for -- and I wanted to support that. Not that my $10/month
account made any difference in Simpli's grand plan :-)

I agree with what she says here. I really don't get the misalignment I see
here (HN's my only conduit to Valley thinking) between SV-type startups and
what I think of as "good business."

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jayliew
Startup news are biased towards success stories, many of which raised funding,
so it's natural for outsiders to think "to succeed, raise funding". There's
not enough news detailing the failures, or the success stories but the darkest
hours endured. We need more of that.

After reading this post, if I ever come home to find a 7-day "pay or get out"
notice on my door, I'll at least remember "hey, another entrepreneur has been
through this too! I know what to do: persevere and work hard" :)

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acconrad
I think a fundamental problem is that people believe Silicon Valley is some
sort of panacea in the first place. It only takes a little bit of common sense
to deduce that Silicon Valley simply has a higher population of entrepreneurs
or VCs. Does it up your chances of networking with the right people? Yes. Does
it make living somewhere else worse? No. It's quite absurd to believe that you
simply need to be somewhere else in order to prevent failure.

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malvosenior
Is there an example of an internet company that started in the way she
suggests (no funding, biz model first, start small..) that went on to be a
major online property? Off the top of my head I can't think of one and all of
the biggest successes (Google, Facebook, Twitter) definitely didn't go that
route.

I like her article and tone, but I suspect she's talking about a different
class of business that doesn't fit with the typical valley startup

~~~
ericabiz
Hi, I'm Erica (the author of the article.)

I'd say 37signals is probably one of the most common examples on sites like
HN. They're the poster child for no funding.

Having been in the web hosting industry for 6 years, I can safely say that my
$1.1M exit was a small one for a dedicated server company. Most of the other
dedicated server/colo/datacenter company owners I know are millionaires many
times over. Robert Marsh of Rackshack nee ev1servers is a popular example of
someone who started from scratch and sold out for mega millions. And the guys
who started The Planet have flipped several web hosting companies to the tune
of 8 figures+.

It's a common thing in web hosting to sell a company, then use that money to
start another one, then regain customers and sell for more, and do it all over
again. Not sure how doable it would be today, but that was a common thread
throughout the past 10 years.

~~~
malvosenior
Hi Erica, thanks for the article!

I think it's worth denoting a difference between B2B companies (like
37signals) and B2C companies. I'm mainly talking about the really large B2C
companies.

Web hosting sounds a lot like a consulting business. A great way to start a
business, make a lot of money and have an exit but not the same as the fame
and potential money to be had in the B2C game.

Not saying one is better than the other, but there are a lot of people out
there (myself included) that could never find satisfaction in a B2B and will
always chase the next Google. For those people, the Valley is ideal.

~~~
ericabiz
Perhaps part of the problem is both the Valley's and tech news sites' almost-
obsessive focus on B2C (vs. B2B) companies. ;)

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ax0n
That sounds an awful lot like lazy and/or out-of-touch entrepreneurs being
broken to me. Still, while the venture and angel money in the area isn't
explicitly "must be present to win," you have to admit it helps. But being
present doesn't guarantee winning.

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pitdesi
I really like your article and totally agree in principle, I've found that
attitude pervasive in the bay... but are there any numbers around it? Like do
we know the percentage of startups that succeed? Obviously a significant
percentage of them in the valley make it work, right? Is there an amazing
arbitrage opportunity to be had investing in non-valley based companies?

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JoeAltmaier
Today she would be applying to YC. Sounds like the right kind of founder.

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trotsky
Pretty classy, HN flagging brigade:

<http://img228.imageshack.us/img228/8500/flagged.png>

