I think the germ of truth was in the article - you need to be close to your customers. If your customers are tech firms, or the kind of people who work at tech firms, Silicon Valley is a good place to be. If your customers are biotech or banks or any of 100 other disciplines, you're better off being elsewhere.
Don't think that the article was the best written, but here are my 2 cents on the subject as a recent transplant..
I moved to the bay area recently. I couldn't agree more - as a tech entrepreneur I absolutely love being in the valley.
If you already know everyone you will need to know, you don't have to be in the valley.. but if you do need to network, you can network about 10x as efficiently in the bay area.
If you are building a business or technology where there is a lot of precedent, you don't need to be in the Valley. But if you are doing something innovative, you need constant feedback from the cutting edge to define and position your company effectively.
Customers? Funding? both could come from anywhere in the country, but if you need to attract either a customer or an investor with a heavy tolerance for risk, the valley is the best bet. Its in the culture.
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.
Who cares outside of the valley? The average tech worker can find a good job in just about any city in the world nowadays. Startups are some of the worst places to work but tech penetration is so deep, established companies that need tech work and have decent working conditions are everywhere. Why pay the insane costs in the valley when so many other options are available? As far as innovation, that's just a small percentage of companies and often it happens at established companies. Given the cost of living (sky high) and quality of life (mediocre at best) in the valley, I'd say it's one of the worst places to be a tech worker. It is a good place to start one's career for a few years as it really makes one appreciate working at a decent company rather than the startup insanity culture in the valley. There are decent companies in the area, but they are hard to find due to the sheer number of mismanaged startups and scams. The valley falling out of prominence is great news for the rest of the country and the rest of the world, if it's true.
Not true. The valley has a lot to offer but there are plenty of counter examples of successful tech companies outside of the valley too. I would say the valley is great and there are many benefits to being here but does it prevent you from building great stuff? No.
Disclaimer: I lived in SF, in Silicon Valley, and prior lived in a different state that was less tech centric. So I have experience from all angles albeit from a single point of view
You're absolutely right, being in silicon valley does not, by itself, equal success. There are other factors that are far more important and there is no silver bullet. That's why there are tons of examples of great startups all over the world, including ones based right in my hometown.
So, if you personally have no desire to move here and are happy with your startup right where it is, then you should stay where you are.
All that being said, if deep down you've got the feeling that the valley might be the place for you, you see that you're not moving forward on your startup as fast as you'd like, or you haven't yet found the right people to work with, then it's a move I highly recommend.
I think it's wise to ask the question: Where do I/we need to be to build the best team, or the best company?
Are you in a domain where you need to hire people that are difficult to find outside of Silicon Valley? If that's the case, it makes perfect sense to found in the valley.
Is your business capital-intensive, and funding will be a long-term concern? Maybe SV or NYC makes more sense.
Are you entering a domain where most of your key customers will be located in specific metro area, and being located there lends you credibility? Found there.
It may also be smart to found where you have lots of local connections, letting you staff up with vetted local talent and leveraging local connections to get introductions to potential customers.
And finally, founding close to family/friends can help keep your mental health in check and help you stay focused.
I'm going to get hate for this, but here it goes anyway: no, you're not.
There are a lot of compelling reasons to be in Silicon Valley, but there are (IMO) many more for staying away. You've hit on most of them: the laid back lifestyle and the cost of living being the big ones.
There are a lot of companies that want you to be in Silicon Valley to work for them, but there are quite a few who embrace remote employees (Etsy and 37Signals come to mind). Does it limit your job options? Probably somewhat. Can you still do really interesting work but live in a place that isn't insanely expensive? Absolutely.
If you're happy where you are, stay there and find companies that embrace that. They're likely to be better companies to work for anyway.
Feels like the other thing people do is conflate Silicon Valley the place (in my mind, the Valley of the Heart's Delight) with Silicon Valley the idea, the tech center
There are many tech-y people who move there because it's more open, and it almost feels self-perpetuating. But the rest of the people aren't always that way. My dad grew up around there, he remembers highway 85 as the orchards behind his backyard. I remember the Netflix HQ as a gardening nursery. There are still little farms dotted around, hidden in places people don't normally notice as they zoom by.
It feels like tech transplants sometimes forget that or aren't even aware of it. Tech permeates the whole area, you can't escape it. But there's a lot more to be experienced around if you're willing to search it out. It might be helpful to tone the shop talk down a bit too
For people outside of SV/SF, this is definitely the prevailing mindset. I've been all over the country the past 6 months meeting startups and developers and unless you've been there or lived there, Silicon Valley == Bay Area.
First? I've got a Midwesterner working for me. At least for him? it doesn't seem to be hurting his work.
My opinion is that while it's super nice, socially, to be around people who are into what you are into in person, it doesn't make that much difference when it comes to getting actual work done. Now, sales? raising money? all that bullshit where you have to interact with business people? face-time matters a lot. But for purely technical work, hell, I'll be working in the same house as someone and I'll communicate via IM, because it's less disruptive.
On the other hand, he's working for me - If you want to make money? you have to find a competent business person, or at least a business person with money, and most of those guys want to look you in the eye. Not all, but most.
That's the thing; I get a lot of offers to merge, to invest, and to do other business-type things because I'm here and active in the community. I'm not even that active. But you know what? I haven't made a dime off of any of those. (and some of those have cost me enough to buy a central-valley condo) - As for the parts of my business that actually make me money? I could do those from just about anywhere. Of course, that probably says more about my skillset than anything else; I've had serious offers from people with serious money (well, serious money by my standards)
My own experience? moving to silicon valley was more than worth it. But, I've lived in silicon valley, I've lived very near berkeley and I've lived in the central valley. I haven't spent serious time other places. Avoid the central valley. It's not cheap enough to put up with the culture and weather, in my opinion.
Yeah, housing is expensive. but the thing about housing? well, the increase is a percentage of the cost of housing, so if you are okay with modest digs? 2x what you would pay for modest digs in the central valley (probably 4x what you'd pay in the midwest) still not very much money compared to what you are getting paid, and I'm okay with modest digs. (Of course, if you like really nice digs... that percentage increase really hits you.)
One big downside to the south bay is that our public transit is absolute shit. You might consider the Berkeley area for that. VTA doesn't look that bad on paper? But it is nearly completely useless. BART, on the other hand, is pretty good by west-coast standards.
Silicon Valley works great if you can tap into it to raise seed/VC funding.
If not you're pretty much screwed. You're in California, which is a bad place to do business in general - think insane regulations and a 10% state income tax. And in the Valley in particular, tech workers will cost you significantly more than in other parts of the country, let alone the world.
Once you have VC's, are really raising money, have advisors, this is definitely the place to be. That doesn't mean you can't ever leave, or work in other places from time to time. If you absolutely hate it in the area, your product will suffer. If you also like to bounce around sometimes, and are very productive, you should do it. Bring your co-founders with you. Make sure they have the same mindset of working in different areas.
That being said, have a headquarter. Probably in Silicon Valley. Be a resident in the bay area. But by all means, don't subject yourself to never working elsewhere.
"SV money buys you some access to the market, in publicity and networking effects."
It buys you into the echo chamber. Unless your customers are in the startup world, this probably doesn't matter for your business.
Pick a business category that isn't technology or software. Very likely, all of the most recent successes in that category were founded outside of silicon valley.
"At least in SF you have a pool of clever engineers or cofounders. Its not like that in all places."
It's not like that in all places, but it's way better than people pretend. The unemployment rate for a good engineer in the valley is negative -- everyone is being poached by identical-sounding startups, all the time. So you're really just paying substantially more for access to a group of people who have worked at other tech companies.
...meanwhile, many of the best engineers I know continue to live outside of the valley, and work for a fraction of the going rate.
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.
I think a fundamental problem is that people believe Silicon Valley is some sort of panacea in the first place. It only takes a little bit of common sense to deduce that Silicon Valley simply has a higher population of entrepreneurs or VCs. Does it up your chances of networking with the right people? Yes. Does it make living somewhere else worse? No. It's quite absurd to believe that you simply need to be somewhere else in order to prevent failure.
As someone who started a company outside SV, then moved there for 3 years to grow the company, and has now moved away again - I would say it's well worth it to spend at least some time in the Valley to build a network and understand how deals get done in person.
The density of investors and other founders/early employees in Silicon Valley can't be beat, and I often found myself learning inadvertently - dinner table conversations would be about how people raised their round, the friend of a friend you meet while camping turns out to be a partner at a fund you're trying to pitch. In more cases than are logical or fair, people simply invest in their friends - which means if you make friends there you're increasing the chance you'll be able to raise money easily.
That being said, the cost of living is absurd and I would never hire an engineer in Silicon Valley unless I was building something at the outer limits of frontier tech (and even then I'd scour the globe for qualified engineers elsewhere). And I don't think you need to be there forever. If you build up a solid network you can move away and still reap a lot of the benefits from afar / through occasional visits.
That is not my experience with Silicon Valley. My experience is an area of mostly suburbs with small strip malls and 10 block downtowns. Cars are a must and public transit is terrible.
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