Well, since I started, might as well get all the controversial opinions out now. :-) Remember, advice is limited experience + overgeneralization.
--
Building a startup is about leverage. Leverage is the ability to magnify your efforts. The bay area reduces your leverage. Especially compared to somewhere like Seattle, or Portland, or Boulder, or Salt Lake City, etc.
11. Everyone is rude. It's like living in New York or LA. The laid back california of the 70s is no more. Maybe Eureka or Weed or Barstow are good places, but the bay area is harsh. Some relish the challenge, others just want to be left alone so they can be productive. Being productive on your product increases leverage...
10. California looks so run down. This is because it is. The quality of life is declining rapidly. There's nowhere to go to escape urban sprawl-- not close anyway and getting there is hours in gridlock. Being unhappy decreases focus which decreases leverage.
9. The population density is so high, everyone is on prozac. (I'm not kidding.) Being depressed reduces leverage.
8. After spending 2 months there, I knew the business plans of 70+ companies in stealth mode. Everyone knows what everyone else is doing. Thus getting an edge on your competition is difficult, they may get your employees, and they do know your ideas. You have less leverage.
7. Every resource is in high demand, thus time spent finding real estate, finding equipment, is higher. The local and state government levels of regulation are very high, and thus time spent dealing with the burocrats is much higher. All these are distractions you don't need.
6. The availability of good startup quality employees is lower in the Bay Area. Because startups per capita is much higher there, there are more startups competing for the same employees.
5. Office rent is expensive, Gas is expensive, Taxes are high, everything you could want to buy costs more. Your burn rate is going to be much higher.
4. You can't find a place to live. Your employees can't either. Both you and your employees need more money to cover basic cost of living... your burn rate is much higher.
3. Being in the bay area means being on the VC treadmill. This is the opposite of working for yourself, you are working for the VCs, and unless you triple their money in three years, you get nothing. This forces bad decisions and much less leverage.
2. Long frustrating commutes reduce employee productivity and morale. They also reduce the length of the workday.
1. The state taxes capital gains like income! So, even if you win, you lose.
The upside... what rocks about the bay area:
10. Better S&M clubs. Much. Better.
9. You can fantasize about one day getting a boat and sailing out under the golden gate bridge.
8. Skinnier (but more expensive) women who want to date geeks.
7. More plastic surgery.
6. More networking events.
5. Better parties.
4. More founders to commisserate with when you're forced out of your company.
3. You can TP Arringtons house if he gives you a bad review, or doesn't invite you to a party, or says something particularly slimy about someone. Hell, just do it anyway.
2. A lot of the good conferences are there, and if they aren't, Las Vegas is closer than to other cities.
As a bay-area resident who moved here from Canada a few years back, I'd like to give my own view - my numbers correspond to your numbered points..
11. As you get closer to larger companies, people on the road tend to be more rude. I'm thinking of the San Jose/Milpitas area. I think most of those workers are unhappy to be treading off to their anonymous jobs :)
10. Disagree. If you live on the 101, I could see how you would feel that way, but try to drive around los gatos or saratoga and say that. No urban sprawl. Plus, 'quality of life' is such a nebulous term....for me, quality of life is improved just by the energy of this place and the diverse types of people it attracts.
9. I don't know anyone on prozac, and I'm not sure what that has to do with population density...
Speaking of population density/sprawl, I met this nice lady very recently who had just relocated from Paris. Having been lucky enough to visit there myself, I had to tell her how beautiful I thought her city was. She said that she was happy to leave, as the bay area was a "lot greener" (her words) and better for children.
8. You point should show anyone why the bay area is a great place. Where else would you know 70 founders?? And getting an edge on your competition doesn't necessarily involve secrecy....
7. Totally agree about having to find a home, etc. But the regulations are pretty minor from a biz standpoint relative to the benefits of doing business here.
6. Would you rather be a big fish in a small pond? If your startup has potential, you should not only be able to compete with other startups to hire, you will be able to pick from among the best people in the world.
5. Second order problems. Instead of looking at expenses, you should be looking at the place that allows your startup to have the most room to grow. If your primary concern is the cost of living, move to Thailand. Gorgeous beaches, your dollar goes incredibly far, and oh, the closest thing to a technology company there is the guy selling electronic keychains on the street...
4. I've been in the valley since 2000 - it's much easier to find a place here now than it was back then. And salaries aren't that much higher here than they are in other tech centers in the USA or even Canada.
3. Disagree. Since when is having more options a negative thing? If you don't need VC money, don't spend your time chasing it. But if you do, you'll have a much better chance getting it here.
Face it - if you need VC money, the treadmill exists regardless of which city your business is situated in - you'll just have an easier time getting on the treadmill if you're in the bay area.
2. Can't disagree with that...commutes certainly suck, and they're longer here than most places.
1. Agreed...which is why holding onto a stock for 1yr is good, but that's a different conversation...
Very nice post. After attending startup school I found myself wanting to move for the first time since living in Austin. Then I thought about how much cheaper I could live in Austin while working on the startup. Of your reasons _to_ move to the Bay Area, I am most attracted to 2 and 6. I think there is probably a right time to make the move though.
Well, you can always fly to conferences and network there.
As for 6 - Thinking back to something Paul Graham said about how the number 6 startup hub should really not even be considered to be in the same league as the number 1 or 2, I wonder if there might be a non-geographic effect to be gained by all the startups who are NOT in the Valley joining virtual forces to be a counterweight to the SF-club.
I think there are likely alot of us, and the bar for our success is certainly lower than it is if you live in the SF-area.
Weird that there aren't any pure Startup conferences, at least that I know of. They all seem to be organized by the funders or by people who are out to make a buck on the conference itself. A conference organized by startups with their interests in mind i.e. no $1500 presentation fees, would potentially still attract investors/press/etc. without having to have the impreteur of some internet celebrity organizing it. Its almost like the word 'startup' itself has enough celebrity around it now to pull its own weight.
We should have it in some decidely non-startup hub, like Hartford CT or something...
I think Austin is an excellent location for a startup. You have good high tech infrastructure, a good college that (at least in the 1990s) put out CS students who actually had a clue, a very supportive community, low cost of living (again at least it was), etc. And a large number of very intelligent engineers.
Also, I wonder if something like the effect that we see in the Windows shareware market vs. the Mac shareware market isn't also happening with investors. Mac shareware authors make more money because the mac market is smaller. While the windows market is larger, the proportion of shareware authors is even larger, crowding out your product. So, its more profitable to target the smaller market.
VCs in Texas are more likely to fund a company in Texas... there may be more VCs in California than there are in Texas but there are a lot more startups in california competing for the funding.
I started my second company in Austin...and moved it to the Bay Area for WFP2007. The Bay Area is better. And not just by a little bit. My first company was started in Houston and moved to Austin for the better tech environment, but it turns out there's just not much really going on in Austin when you compare it to Silicon Valley. A few users groups and small conferences (plus SXSW, which is worth noting) does not a tech industry make.
I miss Austin for the things that make Austin wonderful, but I don't think I'll ever go there to start a technology startup (unless things change remarkably in the future). And Mountain View and San Francisco are both great places to live, even if they aren't as cool as Austin.
I'm from Austin as well. Plenty of entrepreneurs, plenty of engineers, and enough funding sources. All the pieces are there - I think what we're missing is a real tech startup community.
Moving from London to the Bay Area actually halves costs. A fantastic reason in addition to the obvious network effects which makes it worth moving there,
That's not a reason, that's an assertion of your opinion. You're not alone in that opinion.
The real question is why? This has never been answered, other than "closeness to VCs".
There's no fundamental advantage to the Bay Area over, say Seattle, or other places that has been mentioned here.
All of the resources you could want are either a lot cheaper elsewhere, or the same price (because they are delivered over the net.)
With the exception of venture capital...
So, fundamental ot this idea of relocating to the bay area is the assumption that you must take venture capital. (And I think this assumption no longer holds.)
Two factors:
1. Its not as disproprotionate is it seems due to the amplifiction effects of mainstream media.
2. In the 70s, most of the problems I have identified didn't exist, and so it was a good place to form high tech companies. Now, four booms later, not so much.
[+] [-] BitGeek|19 years ago|reply
--
Building a startup is about leverage. Leverage is the ability to magnify your efforts. The bay area reduces your leverage. Especially compared to somewhere like Seattle, or Portland, or Boulder, or Salt Lake City, etc.
11. Everyone is rude. It's like living in New York or LA. The laid back california of the 70s is no more. Maybe Eureka or Weed or Barstow are good places, but the bay area is harsh. Some relish the challenge, others just want to be left alone so they can be productive. Being productive on your product increases leverage...
10. California looks so run down. This is because it is. The quality of life is declining rapidly. There's nowhere to go to escape urban sprawl-- not close anyway and getting there is hours in gridlock. Being unhappy decreases focus which decreases leverage.
9. The population density is so high, everyone is on prozac. (I'm not kidding.) Being depressed reduces leverage.
8. After spending 2 months there, I knew the business plans of 70+ companies in stealth mode. Everyone knows what everyone else is doing. Thus getting an edge on your competition is difficult, they may get your employees, and they do know your ideas. You have less leverage.
7. Every resource is in high demand, thus time spent finding real estate, finding equipment, is higher. The local and state government levels of regulation are very high, and thus time spent dealing with the burocrats is much higher. All these are distractions you don't need.
6. The availability of good startup quality employees is lower in the Bay Area. Because startups per capita is much higher there, there are more startups competing for the same employees.
5. Office rent is expensive, Gas is expensive, Taxes are high, everything you could want to buy costs more. Your burn rate is going to be much higher.
4. You can't find a place to live. Your employees can't either. Both you and your employees need more money to cover basic cost of living... your burn rate is much higher.
3. Being in the bay area means being on the VC treadmill. This is the opposite of working for yourself, you are working for the VCs, and unless you triple their money in three years, you get nothing. This forces bad decisions and much less leverage.
2. Long frustrating commutes reduce employee productivity and morale. They also reduce the length of the workday.
1. The state taxes capital gains like income! So, even if you win, you lose.
The upside... what rocks about the bay area:
10. Better S&M clubs. Much. Better.
9. You can fantasize about one day getting a boat and sailing out under the golden gate bridge.
8. Skinnier (but more expensive) women who want to date geeks.
7. More plastic surgery.
6. More networking events.
5. Better parties.
4. More founders to commisserate with when you're forced out of your company.
3. You can TP Arringtons house if he gives you a bad review, or doesn't invite you to a party, or says something particularly slimy about someone. Hell, just do it anyway.
2. A lot of the good conferences are there, and if they aren't, Las Vegas is closer than to other cities.
And the number one good thing about the bay area:
1. Well, at least its not Los Angeles!
[+] [-] comatose_kid|19 years ago|reply
11. As you get closer to larger companies, people on the road tend to be more rude. I'm thinking of the San Jose/Milpitas area. I think most of those workers are unhappy to be treading off to their anonymous jobs :)
10. Disagree. If you live on the 101, I could see how you would feel that way, but try to drive around los gatos or saratoga and say that. No urban sprawl. Plus, 'quality of life' is such a nebulous term....for me, quality of life is improved just by the energy of this place and the diverse types of people it attracts.
9. I don't know anyone on prozac, and I'm not sure what that has to do with population density...
Speaking of population density/sprawl, I met this nice lady very recently who had just relocated from Paris. Having been lucky enough to visit there myself, I had to tell her how beautiful I thought her city was. She said that she was happy to leave, as the bay area was a "lot greener" (her words) and better for children.
8. You point should show anyone why the bay area is a great place. Where else would you know 70 founders?? And getting an edge on your competition doesn't necessarily involve secrecy....
7. Totally agree about having to find a home, etc. But the regulations are pretty minor from a biz standpoint relative to the benefits of doing business here.
6. Would you rather be a big fish in a small pond? If your startup has potential, you should not only be able to compete with other startups to hire, you will be able to pick from among the best people in the world.
5. Second order problems. Instead of looking at expenses, you should be looking at the place that allows your startup to have the most room to grow. If your primary concern is the cost of living, move to Thailand. Gorgeous beaches, your dollar goes incredibly far, and oh, the closest thing to a technology company there is the guy selling electronic keychains on the street...
4. I've been in the valley since 2000 - it's much easier to find a place here now than it was back then. And salaries aren't that much higher here than they are in other tech centers in the USA or even Canada.
3. Disagree. Since when is having more options a negative thing? If you don't need VC money, don't spend your time chasing it. But if you do, you'll have a much better chance getting it here.
Face it - if you need VC money, the treadmill exists regardless of which city your business is situated in - you'll just have an easier time getting on the treadmill if you're in the bay area.
2. Can't disagree with that...commutes certainly suck, and they're longer here than most places.
1. Agreed...which is why holding onto a stock for 1yr is good, but that's a different conversation...
[+] [-] iamelgringo|19 years ago|reply
My favorite beach was packed with 10 other people there last weekend. It was awful. ;)
[+] [-] larrykubin|19 years ago|reply
[+] [-] goodgoblin|19 years ago|reply
As for 6 - Thinking back to something Paul Graham said about how the number 6 startup hub should really not even be considered to be in the same league as the number 1 or 2, I wonder if there might be a non-geographic effect to be gained by all the startups who are NOT in the Valley joining virtual forces to be a counterweight to the SF-club.
I think there are likely alot of us, and the bar for our success is certainly lower than it is if you live in the SF-area.
Weird that there aren't any pure Startup conferences, at least that I know of. They all seem to be organized by the funders or by people who are out to make a buck on the conference itself. A conference organized by startups with their interests in mind i.e. no $1500 presentation fees, would potentially still attract investors/press/etc. without having to have the impreteur of some internet celebrity organizing it. Its almost like the word 'startup' itself has enough celebrity around it now to pull its own weight.
We should have it in some decidely non-startup hub, like Hartford CT or something...
[+] [-] BitGeek|19 years ago|reply
Also, I wonder if something like the effect that we see in the Windows shareware market vs. the Mac shareware market isn't also happening with investors. Mac shareware authors make more money because the mac market is smaller. While the windows market is larger, the proportion of shareware authors is even larger, crowding out your product. So, its more profitable to target the smaller market.
VCs in Texas are more likely to fund a company in Texas... there may be more VCs in California than there are in Texas but there are a lot more startups in california competing for the funding.
[+] [-] SwellJoe|19 years ago|reply
I miss Austin for the things that make Austin wonderful, but I don't think I'll ever go there to start a technology startup (unless things change remarkably in the future). And Mountain View and San Francisco are both great places to live, even if they aren't as cool as Austin.
[+] [-] jonmc12|19 years ago|reply
[+] [-] sharpshoot|19 years ago|reply
[+] [-] Harj|19 years ago|reply
This is where the best startups have been formed and will be formed.
[+] [-] BitGeek|19 years ago|reply
The real question is why? This has never been answered, other than "closeness to VCs".
There's no fundamental advantage to the Bay Area over, say Seattle, or other places that has been mentioned here.
All of the resources you could want are either a lot cheaper elsewhere, or the same price (because they are delivered over the net.)
With the exception of venture capital...
So, fundamental ot this idea of relocating to the bay area is the assumption that you must take venture capital. (And I think this assumption no longer holds.)
[+] [-] jamongkad|19 years ago|reply
[+] [-] boomstrap|19 years ago|reply
[+] [-] BitGeek|19 years ago|reply
[+] [-] richcollins|19 years ago|reply