This is a bittersweet post to write. I love Seattle. I love the people. I love the scenery. I love the startup scene and the underdog mentality. I’ve actually written data-driven posts trying to justify this entrepreneur’s choice to live here. I’ve cheered on as Glenn Kelman valiantly defended our soggy brand of entrepreneurship. I actually kinda love the weather. But over and over again, very smart people tell me that the best thing for my company is to move it to the Valley (see this & this). The logic is pretty compelling. Being a founder requires a mix of determination and flexibility. As I wade into my next company and as I hear stories from my friends down south, I think now is a time to be flexible. So we’re going to go try the Valley on for size.
As I’ve started to tell people, I’ve had plenty of Seattle folks tell me that I don’t need to go to the Valley to succeed. Empirically, they are right. There are obviously successes in Seattle both big and small. But here’s how I look at it. Startups are like a big formula. Maybe it’s “(10 * market) + (7 * product) + (5 * team) + (3 * distribution) + (3 * fundraising) + (10 * blind-ass luck)”. I suspect that it’s different for each startup. But I firmly believe that having strong relationships in the Valley adds a meaningful multiplier to important parts of that formula (especially on the fundraising side of things– more on that in a minute).
There are some great investors in Seattle. We’ll be working with a few (hi guys!). But as I look forward in my company’s future, I know we’ll be raising more money. I believe (I hope!) that we’ll be raising based on a “line“. Whatever trajectory we’re on, it’s nigh-impossible to argue with this fact– any fundraising effort is easier, faster, and more likely to close with better terms in the Valley. The key there for me is faster. Fundraising is expensive. It saps attention from your product and it takes time/money. The other key is “more likely”. I’m pretty confident that I can raise money anywhere in today’s market. But I don’t know where the market is going to be in 12-24 months. I *DO* know, that if the market goes south, my odds will be strongest in the Valley. And, while I don’t want to be a “douchey deal optimizer”, the best Seattle terms I’ve heard of are merely adequate in the Valley… And terms that are good in the Valley are virtually unheard of in Seattle.
Of course, you can raise remotely. A flight south is a few hundred bucks and kills the better part of a day. But it’s hard to build relationships when you only fly down once every month or two.
Blind-ass luck is worth talking about, too. While you can’t force luck, you can increase your “luck surface area”– do low-cost things that increase your shot at something fortuitous happening. The obvious example here is: be nice. Help other people and you increase the chance that they run across an opportunity that they drop in your lap.
While it’s not entirely low-cost to move to the Valley, I think it dramatically increases our luck surface-area. Reporters and bloggers are constantly sniffing around in the Valley. Well-armed/high-imagination bizdev folks wander around looking for creative deals to strike. There are investors and portfolio companies wandering around at every event/party. There are world-class startup geeks in the Valley on every corner (of course, there are a thousand startups all vying for the same talent, too).
A final consideration is optimism. I’ve often said that startups only die from 1 thing. They run out of optimism. They no longer believe in the opportunity (or they believe in a different one). You can run out of money, but if you believe, you’ll find a way to soldier on. You’ll raise money, max your credit cards, eat ramen, or otherwise do whatever it takes. Strangely, I think it’s easier to keep your optimism tank full in the Valley… In the church of startups (with miracles on display for every sermon), you can’t help but believe.
It’s going to be an interesting ride. Some of my favorite entrepreneurs from Seattle have blazed a trail southward and, despite their apparent love for Seattle, they haven’t felt compelled to return. I’m going to head south with an open mind and see how it goes.