And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area that long-term investing in other areas of the US is strictly verboten? Techstars and other programs should be demonstrating there's 'natural resources' outside of California, no?
OK, not quite that bad, but still, you get the drift. What's happening in California is not necessarily indicative of what's going on in the rest of the world. Research Triangle Park, for example, is FAR from having enough capital freely available, much less too much. Look at the most recent Triangle Startup Factory class... they took, what, six startups out of - IIRC - a hundred and some applications?
Now to be fair, probably not all 100 of those startups are worthy of funding... But I know there were more than six worthy startups in the Raleigh / Durham / Chapel Hill area as of March, 2012.
Given this, I can't imagine trying to recruit the best and the brightest to NC given recent developments when there are more accepting places like NY, Silicon Valley, Seattle, etc. There are a ton of talented people who wouldn't want to live there. I'll concede that there may be others who want to live there more because of what went down, but those same people could be recruited almost anywhere without a meaningful depreciation in quality of life.
Durham and Orange Counties voted no by over 2-1 margins. And meanwhile, Proposition 8 passed in California a few years back; indeed, such propositions have been passed everywhere in the US where they've been put to the voters as a whole. North Carolina is not distinguished in this respect.
I personally like San Francisco over RTP, despite originally being from Durham, but there is a lot that is very good about the RTP area, and I personally know a lot of very talented people who are extremely happy (if, admittedly, a little bit less so this week...) to call it home.
NC is a wonderful place, I was making the comment that now it's just a little harder to recruit great people there. Perception matters when scaling a company. Starting a 10 person team is probably fine. Scaling to a 100-200 team gets that much harder.
Projecting your political opinions a bit?
The guy was sympathetic, but we both knew that was the end of that conversation.
For some of us this isn't a matter of politics, but an impact on our quality of life. And for others of us, it may just be a matter of politics, but even then, that doesn't mean it's trivial.
That is a bit unfair, but unsurprising. People choose to work where they want to live, and they'll work with the people they're most familiar with and understand, in the environment around them.
Colloquially, people use "RTP" as shorthand for "The Triangle" which is generally considered an area roughly defined by a triangle of lines connecting Raleigh, Durham and Chapel Hill. Or, depending on your take, connecting Duke University, the University of North Carolina at Chapel Hill, and NC State University.
RTP (or "The Triangle") is a tech hub in the Southeast region, and is becoming quite a startup hotbed. But one of the limitations of this area is lack of access to early stage capital. Of all the things that hurt entrepreneurs in this area, that's probably the single most encountered problem. :-(
It's the area where Chapel Hill, Durham, and Raleigh, NC are.
I don't think it is quite as conspiratorial as you make it out to be. I was speaking to an active angel investor last night. He said he won't do a deal that is much more than an hours drive away. He feels like he can't really participate (as an advisor) to a company that he can't easily reach.
It is not unlikely that many (most?) of the Silicon Valley investors feel the same way.
There are a lot of good things about SV, but there are also some good reasons to get out and go to smaller hubs - stuff like Boulder, Portland, and other places like that where life is more enjoyable.
His wanting to stay in a particular geographic area plus his desire to only invest in projects he can drive to is limiting him. That's fine. I'm not even suggesting he's complaining about a talent shortage. But others are.
Might he not have a similar quality of life and have access to some other great companies to invest in within an hour's drive and have less investment competition should he choose to move to, say, Louisiana? Or Mississippi? Or Tennessee? Or Texas?
Why would someone in a position to make angel investments move to a random new city just to have less investor competition?
Edit: it's no coincidence that the startup hub in Texas is in Austin, the only place in Texas I'm aware of that has a non-conformist culture.
"He feels" is where I got emotion from.
If you must, substitute "believes" for "feels" in this scenario and you'll probably understand better.
If an investor was watching one of their companies continually chasing a limited resource and paying an ever-higher price for those resources just to keep their business going, wouldn't they counsel the company to change their business model some? Look outside the box? Look for different suppliers to keep the costs down, create a competitive advantage, etc?
But I'm not in silicon valley.
But this seems anathema to building a good startup- where you need some isolation some time to focus and to keep a broad and rational perspective, not to be high on each others fumes.
Plus, the bay area is very expensive, it attracts engineers who are more likely to jump to the next hot startup, its hard to find good office space, etc.
It isn't like you can't get broadband everywhere.
And I think people really misunderestimate the importance of good engineers who stick around. Turnover means critical knowledge is walking out the door.
This makes bumfuck Ohio a better place if retaining talent is important. The idea that only Stanford educated engineers are good enough to work at startups is silly. (my experience- finding the best engineers is not correlated with ivy league degrees.)
Bumfuck Ohio may not have the cool meet ups that SV has, but it doesn't have the two orders of magnitude more distractions that SV has as well. Nor does it have the jealousy driven culture where every 4th person has an overpriced show off car, etc.
The reason everyone focuses on the Valley? People are focused on venture capital, not building profitable businesses. Venture capital lives in the valley because for a lot of these VC firms a 90 minute flight to Seattle for a board meeting is just too much effort.
 Nothing against Ohio, never been there, just picking it for an example.
I live in Alabama. I joke that "high tech" here means "installing Windows and supporting Sharepoint" and it's not far from the truth. If I weren't the "trailing spouse" of an academic there's no way I'd live here given my skill set. It follows that people with similar or complementary skill sets to mine are hard to find here.
I have friends on the west coast who can pull together a project using friends and colleagues working in their spare time (gee, I wonder how Apple got started...). Similarly, when I was working in California I would frequently get requests from colleagues to contribute to their projects and often give them finished pieces they could plug into their projects the next morning. This kind of talent density is a huge "force multiplier". In the time it would take me to, say, find a designer or scalability guy I can work with who is willing to put sweat equity into a project, or do something for me for a few bucks, blah blah blah -- in Silicon Valley it would already be a working demo with seed money.
In fact, it's worse than that. I've been trying to find locals to work with me on stuff for years. I've built projects start-to-finish (but with missing pieces) several times over in that time.
Ohio wants microsoft and SAP developers. The small biz dev help and incubators only care about manufacturing, specifically solar. Finding like-minded entrepreneurs is like finding a needle in a haystack. Finding a co-founder with the same level of technical skill is just plain impossible. Thats just a taste of it.
[edit typos on Bart]
Every employment contract I have seen outside of California has said something to the effect that anything you develop, no matter whose time and equipment is used, or relevance to your job or employer belongs to them. Even if you worked for a software company, coming up with new cat food would belong to them. Many times there is also a non-compete but at least some states require payment during the non-compete period.
This lack of "friction" in California makes for a more vibrant scene in starting companies and getting people to join.
Of course I'd prefer to keep anything I think of on my own time, but proving that it was on my own time is nearly impossible, and I think this provides them some protection against assholes. And I have no interest in competing against my employer anyhow.
As would any terrorist plans or child porn. This has come up a couple times in contracts with employers in the past, and I tell them they really don't want to own everything I develop, and I've had that clause struck from a contract with a bit of pushing.
I disagree completely. Engineers here are no more likely to jump ship than anywhere else - the difference is that in some geographies you can keep people tied to you via lack of opportunities (i.e., "so... who exactly in town is hiring?"), but with mobility so prevalent these days, even that won't hold a skilled engineer for long.
And from my own experience - I was the first one on the ground setting up a satellite office for a company not based in SF. I found a great office space in 2 days.
> "This makes bumfuck Ohio a better place if retaining talent is important."
As an engineer in SF, I simply have no interest in living in bumfuck Ohio. You'd have to pay me considerably more than even SF levels of salary for me to make that sacrifice.
There are many places that may attract tech talent that isn't SF or the Valley - but they are all major metropolises, because they contain the lifestyle that the typically young-ish technology folk are looking for. In the current climate there is no reason for anyone to hole up in a backwater and not live life while they build their startup.
> "Turnover means critical knowledge is walking out the door."
Fully agreed. So who is more likely to stick around: someone who is getting paid a (very high) SF salary, meaningful equity, all the perks you can throw at them, interesting work, a city full of people who get technology, sunny weather, mild temperatures... or bumfuck Ohio, where salaries are severely depressed, and the community of hackers is small, and the people who surround simply don't get it?
> "Bumfuck Ohio may not have the cool meet ups that SV has"
Read: There are few opportunities to network. Meetups are a core part of what makes SV tick, not just between VCs and those hungry for funding, but between engineers. They are an incredibly powerful recruiting tool and exposure to new tech and new products.
> "People are focused on venture capital, not building profitable businesses."
Have you been to SF or SV? Have you actually met the startup folk around here?
I think the point is there are great programmers already living in Ohio, who have family and ties there.
Obviously there are outliers, which have a rich cross section of talent, Miami, Chicago, Charlotte. But if you want to get a web-based business up and running and need a deep pool of talent there is no better place than Silicon Valley.
There's a lot of history behind it:
1) employment options: I'm most likely not going to work for the same company forever. I love my current company and coworkers, but I'm also realistic. I doubt I'll be at the same company in 10 years.
Many times the only way to get a raise or a promotion is to switch companies, not just because companies don't always hire from within, but because maybe they don't have any current openings to promote. Companies go through bad times and have to lay people off, too. Maybe the new product turned out to be a bust, so they only need about half the current team to start a new project. Maybe they want to re-org. Maybe my boss or a co-worker sucks so much that I don't want to work with them anymore, and there's no openings to switch teams. Maybe my family situation changes so I want to work more/less hours.
For whatever reason, I am almost certainly going to have to switch companies sometime between now and when I semi-retire in about 30 years or so. If I am in the valley, I know that I will be able to get another job relatively quickly, simply because there are a lot of job opportunities (there are tons of startups, quite a few large technology companies, and many smaller niche technology companies that no one outside of the relevant industry has heard of). Depending on the job market not completely tanking, I could have a job in as little time as immediately or as long as 6 months. During this time, I know I can also find contract work with another local company in addition to telecommuting contracting, if my emergency fund depletes early.
If I'm in Nowhere, USA, then it's a pretty good bet that the company I just left is the only game in town. That means I'm going to have to relocate or /(tele)?commute/ to a new job. That's not fun, especially if I have a wife with a job, or kids in school or both. Outside of Boston or NYC, I would be worried about finding a job quickly without having to move a significant distance. Even a place like Seattle, which has Google, Microsoft, Amazon, and a number of startups worries me a bit.
Honestly, I refuse to sign any non-compete unless I am paid my full salary and benefits for the entirety of the non-compete period, regardless of the reason for leaving. I doubt most companies would be willing to sign such an agreement or forgo a non-compete clause for a typical engineer, but even if they are, that is a whole bunch of extra negotiating I have to deal with that I don't have to deal with in CA.
3) what i develop in my free time: In CA, as long as I don't use company equipment, don't develop on company time, and don't develop something relating to the company, whatever I develop is entirely mine. This isn't always the case, and once again, just means a whole lot of extra negotiating if i'm working in a state where this isn't the case.
4) geography: in general, any point in CA is less than 120 miles (~2 hours drive time) from at least two completely different climates. This means that I don't have to travel far to "get away". Weekend trips are just a car ride away, and there are quite a few great state and national parks that are just a day trip away as well.
5) Salary and benefits: Salary isn't everything, but it is still very important to me, since I am not yet independently wealthy. Certain things like housing and food will adjust with my salary in different locations. Other things, like the price of a car or the size of my retirement fund ( I put away a fixed percentage of my income), or the cost of a vacation to someplace tropical won't. Taking a lower salary means a lower standard of living (unless the variable-with-geolocation cost expenses drop low enough relative to the salary drop on an absolute scale to make up the difference).
6) Relocating: I already touched on this, but relocating sucks. I have a fair amount of stuff that I either need to sell and buy again after relocating or bring with me. Hiring movers is expensive, but it saves me time from having to take time off to move myself. Moving myself is cheaper, but it is a timesink and adds stress to an already stressful process. In either case, there is still a rather large cost to relocating.
Regardless of where I am moving, I would at least want a relocation bonus to cover moving costs, and depending on how many tech companies are located where I'm moving I would also want a relocation bonus to move back to the bay area, where I know I can get another job (my new company might offer a relocation bonus as well, but not all companies offer this, and I don't want to limit my search to only companies offering relocation bonuses). Of course, the pragmatist in me tells me that getting a package like this will be practically impossible.
7) Culture: I love the fact that I am judged based on my abilities and not my outward appearance. I love being able to choose what I wear every day. I love that I can set my own hours within reason, so I can schedule doctor appointments, dentist appointment, car work appointments, and other things at reasonable hours. I love that short of a full-on emergency, crunch period or on-call rotation, my lunch hour(s), evening time, weekends, and vacation are my own. I love that my company provides many free drinks and snacks that run the gambit from healthy to junk. I love that my company has a large break room with TVs, game consoles, ping-pong, foosball, pinball, and pool and actually expects us to take breaks during the day to use the break room.
Many of these perks are nonexistent or limited compared to tech companies in other areas or non-tech companies with internal tech divisions. I also love that fact that most, if not all of these perks are pretty standard across tech companies in the bay area.
FWIW, there's a bunch of stuff I hate about the bay area, like high rent and house prices, expensive food, high state taxes, less than great public transportation outside in silicon valley, having to drive everywhere since it's usually too far to bike or walk outside of sf, high gas prices, &c., &c. Despite those things, though, I still find the benefits to working in the bay area compared to other areas far outweigh the disadvantages.
Number 7 is pretty great, too. Some are only going to be around until there is an abundance of well qualified software engineers, like free snacks and drinks and ornate gamerooms. But others, like flexible hours are just the nature of this job, so any place that understands how to maximize productivity will allow for this in various degrees.
And I'm just at a post-ipo company that most people haven't heard of, so it's not like i'm looking down from my ivory tower at facebook, apple, google, microsoft, or <trendy startup>.
I think the rest of your comment is elaboration on this theme. You don't understand, mainly because your views are distorted. A couple of examples to give you the idea:
it attracts engineers who are more likely to jump to the next hot startup
Untrue. Certainly you can find those types, but the Bay Area is full of people who are willing to stick with a company they believe in. It's just that you're focussing on smaller, more questionable startups. They're not the majority.
This makes bumfuck Ohio a better place if retaining talent is important.
But you are much less likely to find talented engineers who just happen to live in Bumfuck, Ohio. Nerds tend to flock, because flocking is important. Startups need an ecosystem.
Nor does it have the jealousy driven culture where every 4th person has an overpriced show off car, etc.
I've been a Bay Area professional for 20 years, have worked at multiple startups, and have yet to see "every 4th person" with a show-off car. I think I know two or three people with super-expensive cars. Most people in the Bay Area who are involved in startups are serious about business and technology. That's why we have so many major success stories, and smaller ones you probably haven't heard of — for example, have you heard of Workday? It's a SaaS company started by Dave Duffield, who founded and ran PeopleSoft previously. Workday is growing like a weed, not because of wild infusions of crazy venture cash, but because it's a good service and the customer base is expanding.
The reason everyone focuses on the Valley? People are focused on venture capital, not building profitable businesses.
Wholly untrue. The entire focus is on building successful, profitable businesses, not on raking in VC money. That's why Heroku, Salesforce (which bought Heroku), Evernote, Dropbox, and — since history matters — Apple, Oracle, and even HP are here. I could make a much bigger list of successful and up-and-coming startups, but you can do the research if you actually are interested.
You're focused on trivial companies and outlying flakey people. They're not the majority.
The investment game has got tough. Not only do you need to gamble on an uncertain business model, now you have to compete with a growing investor population. With all the noise and vying investment dollars it is not so a bad idea to sit out and hang on to your past investments.
Unfortunately not everyone has the same portfolio as Hartz....
investment in internet companies at $1.4 billion was down
slightly in dollar terms in Q1 of 2012 compared to the
end of 2011
Seems to me like investors are pretty smart this time around, and are doing everything to avoid a bubble.
What? people are already mocking the consumer internet space
They weren't (at least not so much) 3-4 years ago, but now? instagram just broke the levees.
When VC descend down to Angel rounds and Angels are substituted by incubators and accelerators I can completely understand that some angels take break.