Businesses are more cautious and there are harder to cross barriers to word of mouth spread for consumer oriented businesses. For example, I worked for a social network started before Facebook that was used by nearly every teenager in a large region, but we could not break out of that region no matter what we tried. The kids in the schools in our region just didn't interact outside the region much, so there were no network effects.
In the valley, though, nearly everyone you meet is excited about tech somehow. Many people are from somewhere else in the world and are still in some way connected to where they're from, both in terms of businesses and people. It's just fertile ground for network effects.
I'm not saying we didn't have other problems that would have led us to fail eventually anyway (especially to facebook), but we observed this as a very real problem.
If you're making an ebay killer, you can live anywhere.
Anything else applies to any other startup, I think.