Tell that to foursquare, tumblr, bit.ly, etsy, gilt, drop.io, aviary, boxee, meetup, gdgt, hunch, betaworks, hot potato, kickstarter, challengepost, etc, etc, etc. All New York startups.
Agreed. I'm very bullish on NYC. To go back to my Harvard analogy, it's not like there aren't places of the same caliber as Harvard in terms of opportunity, just very few.
But, if you summed the market caps of all these companies, what would you get?
My guess is $2-5 billion.
Now Google alone is worth ~$200B.
I agree that you can start a really successful Internet company in NYC. I'd say any city in the U.S. would do. However, if you have some pathological urge to build a gigantic Internet company, you absolutely need to be in Silicon Valley.
Being in the valley is definitely a boon, but calling it a must is silly. Those guys combined have a market cap of $343 billion. The other end of the bullshit-spectrum is people pretending that it doesn't make a difference because they don't want to move.
Part of the guy's argument (and one I've heard from a few YC founders) is that with all the other odds that are stacked against you in a startup, do you really want to take a chance on ___location too? If it gives you a few percentage points better chance of success, why not take it? If your startup failed, how would you feel if it was only because you didn't move to Silicon Valley? Tech markets are often winner-take-all - if you're a couple percentage points better than the other guy, you win.
That uhm, wasn't part of his argument, that was his argument. And it's a fair one.
That said, all startup successes are statistical anomalies. The implicit irrational assumption is that you can beat the odds. Some companies beat harder odds than others, and being outside the valley does set them up for that.
There are lots of reasons one might not want or be able to move -- visas, family, other attachment to a particular place -- and that just has to become part of the calculation, "This makes it x% more likely that I'm just wasting my time, but I'm still [irrationally] convinced I can beat those odds."
We know that this works because there are examples of it. We also know that it's harder because of how relatively few there are.
At the end of the day you succeed (in the larger world, not the Silicon Valley echo chamber) by having a great (or even good enough) product that hits the market at the right time, and can pretty much grow because you have customers willing to pay for it, directly or indirectly.
If all you have is a "me-too"|yet-another-Twitter-client that appeals only to the geek crowd, and has no viable business model, Silicon Valley is the place to be. Especially if you want to burn through early capital living in one of the most expensive locations in North America.
Using Google as an example of why being located in the SV is a necessity is rather silly. Let's face it: Google is a fortunate anomaly.
If you want to make a point, you should think of the average company that succeeded, and then see where that company did succeed. For every Google, Intel and Microsoft, there are thousands of startups that did attain success, but did not become giants (not because they failed to become giants, but because few companies are destined to become giants).
You can succeed ANYWHERE, just like you can succeed regardless of what college you go to. Silicon Valley is a lot like Harvard in the sense that you afford yourself with the best possible resources (education, peers, network, opportunities,etc.), except it's open to everyone. Why not give yourself the best possible opportunity if you can have it?
Silicon Valley is a lot like Harvard... Why not give yourself the best possible opportunity if you can have it?
Crikey, you are nearly giving me flashbacks to high school. I was speaking to an admissions officer from Harvard and, after answering his questions about myself, he asked me whether I had a question for him. I asked "Well, you know, I probably have a bit of ability to pick where I go to school. Why should I go to Harvard?" I remember his response exactly: "If you can get into Harvard, why would you go anywhere else?"
That line convinced me not to apply, on the theory I'd have to spend four years of my life with people who thought like that. (Which, come to think of it, is one reason I would not love to live in Silicon Valley.)
I see your point, but I don't entirely agree with the analogy; the types of people who think like the admissions officer you quote are influenced a lot by the prestige that comes from saying "I went to Harvard." Saying "I live in Silicon Valley" isn't nearly as impressive to most folks. :-)
Startups thrive and wither in the Valley, just as they do anywhere else. Silicon Valley can be a useful card in your hand, but the flop is more important.
Pretty much what I was saying above. As a startup, you need to give yourself as many possible advantages as you can. Silicon Valley lets you do that over any other geo, hence why it makes the most sense.
What most distinguishes Silicon Valley from elsewhere is how much easier it is to find investors - not just VC, but angels who are comfortable putting their money into tech startups.
Startups in the Valley are never more than a couple degrees of separation from someone who's made money in tech, or has friends who did. There's a level of comfort with tech startups that doesn't exist elsewhere. Though there may be plenty of rich people in other areas, they don't have the familiarity with tech to risk their money on a startup when they could buy real estate or whatever.
I've given this a lot of thought recently, and I don't think you need to be in Silicon Valley. Rather, I think you need to be surrounded by a lively startup community, so that you have opportunities to interact with other startup founders and to learn from each other. The chances of that are much greater in Silicon Valley, but now that there's little pockets of startup activity springing up all around the US (and the world, it seems), it's not a necessity.
It's advantageous to be in Silicon Valley if you're going the VC route. If you're going to bootstrap for awhile, SV is quite expensive to live and work in and other cities may actually be a better fit. Agreed though that most other cities outside NY and Boston, and maybe Austin you're going to feel much more isolated.
she also touches on some cultural differences between NYC and CA:
But what NYC is actually missing is not engineers. In NYC you can find lots of great engineers, visual designers, and great publishers and contributors to social media. But in CA I seem to find far more people with multiple skills - engineers who blog and dabble in design, designers who can do great UI but also great UX, etc. These multidisciplinary people are the ones who hack together brilliant new stuff, can innovate across the board, see various avenues of attack, and are indispensable at startups. It is these hybrid people that we are always looking for at Hunch and for whatever reason find them much more often in CA than NYC.
Her article is wrong. NYC actually is missing engineers, or more accurately, missing internet-software-company-potential-employees. There are quantifiably more of these people in the Bay Area than there are in NYC. I don't have any numbers to back this up, but I actually think there are a higher percentage of "jack of all trades" programmers in NYC. In the Bay Area there are enough software engineers so that people can get much more specific about their areas of expertise. In NYC, there are fewer engineers, so people are forced to do a bit of everything.
Caterina Fake's real complaint is that she can't find one person to do three jobs at once for her at Hunch, which isn't surprising.
I don't get what makes "startups" different from other businesses. Why is a "cloud social network" business different from a new innovative retailer. Why is Wal-mart (started in Alabama), less financially successful than Google (started in CA).
i see 3 underlying assumptions here (both in your reply and in the original post)
1) You need investors to scale
2) It is easier to find VC money in the Valley
3) Being an early adopter is a critical factor in startup success.
I would disagree with all of these, i think you need a good product and loyal customers, everything else including the "networking edge" of being in the center of the startup universe is secondary in my opinion. Paying customers will let you scale. It is bad to be an "adopter", make your own thing. And its easy to find an investor if you have a good product, no matter where you are.
I'd move from Boston to CA just for the sake of windsurfing.
Interestingly, my startup did something very similar early on, and is now in the process of moving away from the Valley.
The cachet of a Valley presence, while helpful to us for fundraising, hurt us when dealing with our target customer (the government). So now we're in the slow process of moving back East.
