Tony Wright's Startup Front-End

Compete should be listed as Boston, MA not London, UK. TNS is based in London, Compete was and is based in Boston, MA.

David Cancel
Compete Founder.

Hear Hear. All this “You HAVE to be in the valley” talk only applies to people who need the nursing of VC money. If you have a solid idea with a solid team you can build a startup anywhere in the world with an internet connection.

Paul Graham preaches “the valley or nothing” because that philosophy helps Paul Graham … not necessarily because its the unequivocal truth.

I agree– thought I don't think VC money is always necessarily nursing.

Dropbox is a great example– building a seamless cross-platform file
storage/backup tool as good as that isn't something you do in your off hours
and it isn't something easily bootstrapped. They took something like 18
months and they NAILED it. Doubt they could've done it without VC.

There are plenty of businesses that NEED VC just to get started (Tesla?).
And there are plenty of others who have a promising prototype who need VC to
make distribution happen or to scale successfully (Twitter). If you don't
have SEO or viral magic, most products don't sell themselves.

Tony,

I think a factor that will spread entrepreneurship even more out of California is the fact that Google (and others) are now recruiting so hard outside of California. Why? Because they get a fixed rate of fresh talent from California. They can't grow that any more (without starting their own university).

So now, in Boston among other places, you can graduate from college. . . . work at Google in Boston or another big but interesting tech company — and then leave and stay in the area and build your own company.

John

I think having companies like Avaya and 3Com on the list muddies up the waters a little bit.
In addition, Avaya is in New Jersey, not London

If we were doing it based on dollars changing hands, I'd agree… But
yeah– it's not startup acquisitions, per se, it's technology acquisitions.

I thought your data was interesting, and I used it as an excuse to play around with some data analysis / visualization tools that I've been exploring lately, Many Eyes and DabbleDB.

Here is a blog entry I made discussing how I used them to perform some further analysis on the data: http://daniel.yipyip.com/77049.html

Where exactly is this mystical magical place known as Silicon Valley? If it exists at all, it kind of sort of stretches from Petaluma south down to Los Gatos, and east to kind of, right? and from Daly City east to Livermore, more or less, no? that's 'bout 90 miles north-south and 50 miles east-west. population, roughly 10-12 million or so?

is that a place? if so, its practically a country. awesome place — how can you not love northern CA? — but hardly an intimate clubby setting, as boosters make it out?

btw, here in New England, if you drive that far north-south you could cross four states (from Portland, ME, cross NH, cross MA, to Providence, RI) and east-west you'd go from boston out to sturbridge village. population roughly 5-6 million

Great post; and good you allied it with some tangible data – even if dug up by a nameless bod in a basement

lols. “2 – 3 hackers” ha! of the 100's of people that create a successful new company of size, you think there all “hackers” that could be working at home?

yeah steve, as a guy in silicon valley that needs to hire 10 people in the next 6 months, all in all different functional areas (dev, sales, marketing) when I post on craigslist, I get numerous resumes, from people that have worked at top tech companies, and have made a career in the tech industry. sorry bro, this is a “company town” (just like NY is finance, LA is entertainment, DC is federal government…. and Boston is Police

I know everyone likes to feel that way but it simply ain't so.

Take L.A. (I lived there many years.) Certainly many think of it as a
“company town.” But that's mostly the people who work for the “company” and
like to preen.

Hollywood (very broadly-defined) employs maybe 250,000 people in Los Angeles
County — out of a total population of 10 million, out of which maybe 75%,
or 7.5 million are not children. (These numbers are from census.gov and
bis.gov.)

Your post itself pokes a hole in the myth that Silicon Valley is such a
concentration of the digital workforce. But here's some interesting figures
on whether or not “Silicon Valley” really exists as popularly described
(e.g. a “company town”,) and who works there:

http://www.viewfromsiliconvalley.com/id296.html

Would be interested in a follow up post from you on where you think Seattle is with hitting the rhythm of the valley — what are we missing? how can we grease to wheels toward a better startup environment?

This is madness! gov statistics might fly in boston (where everybody has their census-designated career code on their union card but lets talk about where the rubber meets the road. all this tomfoolery made me collect some real stats. Lets look at tech job postings on cl in the last week (five working days).
http://imgur.com/O27SA.jpg

SF destroys everywhere else on shear quantitative volume, but what was more striking to me was the qualitative aspects. esp. sf internet engineers, take a look at the _types_ of jobs there you'll see CTO's position for angle backed cos, vp of engineering, next-gen technologies mentioned… look over at boston and its all exchange admins positions at car dealerships and a variety of old school technology (ASP seems to be popular on the east coast).

you let top tech talent browse sf , bos, and sea and let him pick which list he wants to choose from and he'll pick sf everytime. so top talent will come here. and as a guy that's doing the hiring i'll be able to recruit that talent and I'll know that they wernt doing ASP at a Hospital Management Co. so they'll “get it” (get all the next gen tech ruby et all)

Maybe the counter is ,, “the elementary schools are better out here” “Think about the lifestyle!” ,, well I personally don't have hobbies, outside interests so I sure as hell dont want my developers to have any! I want 1-dimensional startup guys like me!!

I'm not arguing in favor of boston

I'm just saying, “silicon valley” is a marketing term, not a reality

Great people and great technology and great startups happen all over

Over on tech crunch Sarah lacy also punctures the silicon valley myth
machine a bit also

http://bit.ly/LNHvr

So, I've worked in both the Valley and the Mid Atlantic as a venture lawyer and now as a venture investor. There is a greater concentration of activity in SV, but I have always found that technology entrepreneurship can occur anywhere there is a technology cluster — the combination of people, capital, infrastructure and unversities in a concentrated location. SV is the oldest example, but not the only one. Once a company gets going, its market opportunity is national and then international. And, from an exit standpoint, so long as you are willing to relocate, if necessary, your acquior can come from any where.

Your data also suggests that the “hit” rate for SV investing might actually be less than for other regions. There is so much more capital being deployed in SV, you could argue that the percentage of the US should be much higher than it is.

The bottom line is that now that certain technologies, particularly software are becoming more of a commodity, they do not have to be in a partiuclar location to succeed. They just have to be in a good technology cluster, which can by SV, Boston 128, Washington, DC, Raleigh Durham, Tel Aviv, etc.

A more interesting question, I think, is where the next wave of innovative technogy is going to be developed. Will it be nano materials? New types of energy production? Space elevator and related technologies? More likely those efforts, were they to occur, would initially be centered around the drivers of that new industry. It could be in an existing technology cluster, or one that isn't recognized as a commercial center yet.

The mistake that is often made is to look backwards to see the future. SV was important. But it's future importance is not certain, nor apparently is its current dominance.

Jonathan Aberman, Managing Director, Amplifier Ventures

Tony,

Great post. I love that you looked at this question with data in hand. I agree that without “the denominator” as you mentioned you can't really calibrate if there's an “edge” to being in the Valley.

You mentioned this, but I think it's worth reiterating, that in the (old) VC startup game, having access to large amounts of capital was critical, and the Valley clearly has an edge with that metric. However, I think this is changing. Startups will always need access to the “right amount” of capital to grow their business, but it could be that trends toward more capitally efficient companies and business models/strategies will further skew results away from the valley.

Speaking of capitally efficient… I see you have BuddyTV listed as an exit for Seattle, WA, I'm pretty sure Andy and David would disagree… they're still independent and working on making it big.

Heh– I didn't notice BuddyTV on the list (I actually bump into Andy a lot
at events here in Seattle). If I had, I probably would've pulled it. The
list is definitely not perfectly accurate. I'd LOVE to see someone dig in
using the CrunchBase API. I just pulled it from the blog I linked to, who
in turn pulled it from TechCrunch and a few other sources.

I think you're dead on about capital efficiency. The “right amount” of
capital for a lot of companies is certainly heading south.

I kinda feel like there is a early phase of a company that ends with the
founders hopefully saying, “Holy crap! We're really onto something!” I
think reaching that point used to be a lot more expensive. That being said,
once you reach that point, it's not always cheap to go from “onto something”
to “changing the world”.

Great work- kudos.

We put together some stats using the Crunchbase data. The numbers are fairly similar to what you've reported. Some exceptions: the acquisition rate in Silicon Valley doesn't appear to have declined in the last few years although it may have flattened, and the State of Washington appears to have the highest acquisition rate of all, just ahead of the Silicon Valley.

The stats can be viewed here
http://igeejo.com/crunchbase_stats.txt

Cheers
Jim Karsten

We put together some stats using the Crunchbase data. The numbers are fairly similar to what you've reported. Some exceptions: the acquisition rate in Silicon Valley doesn't appear to have declined in the last few years although it may have flattened, and the State of Washington appears to have the highest acquisition rate of all, just ahead of the Silicon Valley.

The stats can be viewed here
http://igeejo.com/crunchbase_stats.txt

Cheers
Jim Karsten