He is mischaracterizing Paul Graham's argument. The argument pg makes is that if all other things are held equal, your chances of success are higher in Silicon Valley than they are in other cities, which is not the same thing as saying that Silicon Valley is the only place you can do a startup.
It's fairly common to do this. When someone says 'X is harder unless Y' and people accept it, then soon everyone doing X must do Y as well. When the pendulum swings far enough towards Y, people start doing Not-Y and succeed, pulling the pendulum back.
Basically, Paul Graham's argument about being in a startup hub was so clear cut a few years ago that everyone doing a startup moved to SV. Now with SV overcrowded with startups all trying to get the same investments and publicity, it might actually be easier to start a startup outside of the hub where there is far less competition for finance and talent.
I'm very convinced of Paul Graham's take on this, in that there are positive network effects to locating near people and organizations like yours.
That being said, I agree with the author...but only because I'm starting to think that the toxicity level of SV culture is starting to outweigh its positive network benefits of talent. SV startups are completely overrun by a TechCrunch mentality of hype-machine backed, poorly conceived products...and if you aren't funded you are dead. Some startups may thrive in that culture, but far from all will.
I would argue that you should locate where you get the benefit of colocation of focused talent, rather than colocation of focused intent. In other words, if you are a cruise vacation startup, you need to be in Miami, not Cupertino. And if you are a media startup, you need to be in Los Angeles or New York, not Mountain View.
Actually.... I would argue that the "TechCrunch / HackerNews" mentality (as you describe it) is more common OUTSIDE of the Bay Area than it is within it.
In the Bay Area you are surrounded by real world examples of success and failure, and enough of each so that you can actually derive repeatable lessons. Outside the Bay Area there is the tendency to believe that if it's written about on one of these sites it's gospel.
> SV startups are completely overrun by a TechCrunch mentality of hype-machine backed, poorly conceived products...and if you aren't funded you are dead.
I don't think this is really true. Sure, those startups are on TC, but if you visit SV IRL you'll find that you are by no means forced to be a part of that circle. And the backlash against hype-backed companies has been strong.
So he has one data point, therefore generalizes for everyone. That takes away credibility from the article. Sure, you don't need to be in Silicon Valley. All you need is luck :)
I've seen many startups benefit greatly from moving to Silicon Valley (including my own). Sure, you don't need to be in Silicon Valley. However, it does help tremendously for many types of companies.
So he has one data point, therefore generalizes for everyone. That takes away credibility from the article. Sure, you don't need to be in Silicon Valley. All you need is luck
Are you saying you don't need luck if you locate to Silicon Valley???
Anyway, as for the "generalizing to everyone" bit... IF the opposing argument was actually that you must be in Silicon Valley to be successful, then even one opposing datapoint invalidates that argument. I'm not sure that actually is pg's argument though, but nonetheless, every successful startup that exists outside of SV serves to demonstrate that you certainly can be successful starting in other places.
Sure, you don't need to be in Silicon Valley. However, it does help tremendously for many types of companies.
I'm guessing it can also hurt for some types as well. If you're doing something fashion related, for example, you might be better served to be in NYC, London or even LA.
Beyond that, the higher cost of living, increased competition for technical talent, etc., could be reasons a given startup would be better off not being in the valley.
Come on, you're getting pedantic. Hacker News and its participants should be better than that.
> Are you saying you don't need luck if you locate to Silicon Valley???
He's saying you're less dependent on luck for success if you're in SV. The mean of the "success" probability distribution is shifted towards the right.
> IF the opposing argument was actually that you must be in Silicon Valley to be successful, then even one opposing datapoint invalidates that argument.
Nobody reasonable is saying you MUST be in the Valley. They're saying it makes it considerably easier than being anywhere else on the planet.
> If you're doing something fashion related, for example, you might be better served to be in NYC, London or even LA.
Again, we're speaking about all tech startups in general. Nobody is saying there aren't occasional exceptions.
> Beyond that, the higher cost of living, increased competition for technical talent, etc., could be reasons a given startup would be better off not being in the valley.
The higher cost of living is not a reason to definitely not be in the Valley (though it can be a factor). You can learn to live frugally if being an entrepreneur is that important to you. And the Valley is the best place for technical talent (among other things important to startups).
The higher cost of living is not a reason to definitely not be in the Valley (though it can be a factor). You can learn to live frugally if being an entrepreneur is that important to you. And the Valley is the best place for technical talent (among other things important to startups).
Sure, although there is a (very big) open question about "how much" being in the valley shifts the probability distribution towards "success". It would also be interesting to understand more about exactly which types of startups benefit most from being in the valley, versus being somewhere else.
Actually, the bigger issue might not be any of this... it might be "assuming I don't want to live in CA, what are my chances of success in $WHEREVER and how do I optimize them?"
In some ways I personally think the Valley is a harder place to start a company these days. The competition for talent and sky high real estate prices translate to expensive salaries which entrepreneurs have to pay somehow, and employee loyalty is probably harder to achieve in a place where employees have so many job opportunities vying for their attention. Those factors make it harder to get a company off the ground, and harder to keep it going for the long term, somewhat offsetting the benefit of easier access to capital.
Agreed, a company's limited startup capital goes a lot further in other places. Office rent, housing, hell even Internet access and electricity are cheaper outside of the usual places startups locate. But then you have a reverse problem of not necessarily having enough talent in the area. However, if you're open to remote workers (which everyone should be) then that is much less of an issue.
But then you have a reverse problem of not necessarily having enough talent in the area.
There's no doubt that some areas have a great concentration of talent than others. But there are definitely plenty of places besides SV where there is talent aplenty. Look at the Research Triangle Park area of NC... within something like a 25 mile radius you have 3 major research universities (UNC Chapel Hill, NC State and Duke), several smaller colleges, including the all-girl schools and the historically black colleges, Peace, North Carolina Central, Meredeith, Shaw, St. Augustines, etc., as well as two pretty good community colleges - Wake Tech and Durham Tech.
One of the suburbs here (Cary) has - if I recall correctly - the highest (or one of the highest) per capita concentrations of Phd holders of any city in the US. Yes, in North Carolina... fancy that, huh?
The challenge for startups here, in terms of talent, is to convince local graduates, and/or people who move here to work for IBM, Glaxo, Cisco, EMC, etc., to stay here and work for a startup. But the talent is here, and as the startup culture grows (and it has been growing, markedly so in the past 4-5 years I'd say), that becomes more and more viable.
In a big city like Houston, many developers seem content with their corporate jobs. However, because there aren't many startups like ours, we don't have to battle other companies for talent among the the subset of developers here who crave something more interesting.
Ryan is already "known" and had a business that was profitable. I'm sure Biz Stone could raise money in Maine. Try being unknown in Orlando and raising money for a pre-revenue startup. YRMV
Also $7 million was raised with an office in Portland, which I'd consider a startup hub.
It's a contradiction to establish a company that leverages users all around the world and then cram the team into a small geographical area together with similar companies.
"Oh but we want to raise money, financing is there", financing is everywhere.
And you will probably find that you don't need to raise that much money if you relocate somewhere else, since your employees can get a smaller compensation, since they don't have to fight for a place to rent.
Your office costs can be smaller as well
And no, you don't have to get your team together all the time, be creative, it is possible to come up with a product with a remote team. If they can meet a couple of days per week, even better.
Have you tried explaining to a developer (or anyone, for that matter) that they are objectively worth less in Missouri than they are in San Francisco?
Everyone loves it when they move from the midwest or southeast to the Valley because they can add a zero to their salary. Nobody moves out of the Valley precisely because you're subtracting a zero from their salary. It seems folks are all about factoring in cost of living when it gets them an extra $40k/year. When it means they should earn less, they just ignore it and refuse to take a pay cut on principle. That's been my experience, at least.
Most businesses will succeed based on a variety of metrics, there are environmental factors that help some of those metrics.
Startups are hard - setting up shop in a startup hub helps you succeed at being a startup. There's support and best practices in the air for you at being a startup, which is super super helpful. SF being the largest and most robust of these hubs provides probably the greatest support on this front.
Nevertheless, it is sometimes forgotten that startups often don't exist in a startup vacuum - they interact on a variety of levels with the world and different locations will help them succeed in these other aspects. If your startup deals with publishers, being in the location where all those publishers are helps you immensely. If you deal with fashion being in a fashion hub helps you. If you're schtick is some fancy machine learning thing, maybe you want to set up shop by MIT. Etc.
So while generically being in a startup hub will help most startups more than other locations. Specifically your startup might see greater benefit elsewhere, or not in SF or whatever. And maybe, just maybe, you don't need these environmental boosts so just go wherever the hell you want to live. It's startups, break the rules when you want to - just know what you're giving up and what you're getting in return.
I imagine as time goes on, and remote working becomes increasingly more and more common, that the notion of packing up and moving to a start up hub will become more and more rare. There's always going to be cases where it makes sense to have employees in the office, or a reasonably central hub, but given the majority of work can be handled from a tropical beach or a snow capped mountain it's less relevant.
Agreed about Silicon Valley colocation being unnecessary. I'd go further and argue that imposed colocation anywhere is unnecessary. For over a decade I've worked exclusively on distributed teams which came together only during those times when it was naturally productive to do so. For the majority of the time, team members worked in distributed locations independently.
Consider Joy's Law [1]:
"No matter who you are, most of the smartest people work for someone else"
Generalizing, I believe:
"No matter where you are, most of the smartest people are somewhere else."
Face-to-face productivity gains are easily overwhelmed by losses due to having restricted the search for team members unnecessarily. Distributed organizations will win in the future.
Ryan, treehouse is an awesome way to learn technical subjects. It looks like you guys put a tremendous amount of effort into making the quality just superb. I'm curious if your pricing going forward will change with your focus on younger students. I have a little one at home who is really jazzed about the iOS classes, and the price is totally doable but causes a bit of a wince.
Secondly, I have really been wanting to setup a "Computer Club" for young kids in my town, but I don't have an educators training. Just wanted to say that this seems like a perfect fit for filling in the gaps of my knowledge by using your content and get this group up and running.
I've worked at a startup in Santa Barbara CA, and one in the Bay Area. The reason I push to the Bay is for energy purposes. The inspiration of the startup community really boosted everyones energy up and pumped us up to work harder! It easier to work out with others that are working out rather than doing it alone in your living room.
Depends on what you're doing. If I were starting up something around the oil industry, pretty sure I'd want to be in Houston. (Easy access to Austin talent being a bonus, but that's a tangent)
Just because you don't NEED to be in Silicon Valley to build a successful venture backed start-up doesn't mean your odds of success are not IMPROVED by locating there.
His argument isn't "stay 1000 miles away from SV at all times". It's common for founders of more established startups to frequent SV (and other hotspots depending on industry and event locations), so I don't think it invalidates the argument if, for example, 5% of the company's total worker-days are spent in SV.
