Silicon Valley versus Seattle (and Everywhere Else)
There has been a lot of chatter lately about alternatives to Silicon Valley. There is no denying that Silicon Valley produces more startup success than any other town. But is it cause or effect? Does SV add some secret sauce to the startup recipe or is it simply a place where a lot of geeks tend to congregate?
For starters, it’s a good idea to read Glenn Kelman’s outstanding post on Seattle as a startup hub, inspired by the New York Times piece on the same topic. TechCrunch fairly quickly blew the post out of the water, causing Glenn to post a solid (and humble) response. And, causing Alan to point out that Arrington is “being a wanker”. Fun stuff! I I’m a big Arrington fan, but I’ll second the sentiment… It’s easy to crap on an upstart. Windows people have been doing it to Mac people for years. “You’re so far behind, why are you even trying? It’s almost pathetic,” they say. Strange that you don’t hear that too much anymore from the Windows camp. Never count out an upstart!
As a founder who is currently hip deep in the YCombinator experience in Silicon Valley, my initial inclination was to return to Seattle in March. I’m currently rethinking that sentiment (but haven’t made any sweeping decisions). The purpose of this post is to publicly run through some thoughts on this and get some feedback.
As mentioned by just about entire world, Silicon Valley births more startups than anyone. By a huge margin. It’s ridiculous how far it is ahead of upstarts like Boston, Seattle, Austin, etc. It’s obvious to me that there are many more startup PEOPLE in SV (which is a big reason for the number), but are there factors there that make startups more successful? I’m going to run through the thing I think are critical for a startup and how I think SV adds to them. Call me out if I’m wrong or if I’m missing anything:
- First and foremost, a startup needs to build something people want. I don’t think SV really helps here. In fact, the “echo chamber” effect might cause founders to thing that people around the world actually think and behave like the geeks in SV. If you buy the argument that SV people are smarter/better than other folks, then maybe SV would get an edge here.
- A startup needs a great team. People who destroy problems. People who prioritize the right problems. SV certainly has the edge here in supply, but it’s difficult to determine how the demand effects that availability of these people. I will say that, while I have been pretty damn impressed with the people in SV, I don’t think they are any better than the best people in Seattle (but there sure are a lot of ‘em). And they tend to be more motivated, more monomaniacal, and more mercenary. Again, it’s hard to gauge supply and demand here– there are plenty of startup nuts in Seattle. I’m tempted to give the edge here to Silicon Valley because that’s what people smarter than me have concluded in the past, but that seems like a lousy reason to do it. It comes down to this– if I spend 6 months trying to build a small kickass engineering team, would I get a better team in SV? Or is the competition too fierce?
- Startups need to work their asses off. This seems to be one of Arrington’s main points: That Seattle-folk frolic on hiking trails and in kayaks instead of working on their startup. I think that’s pretty ridiculous. Passion and dedication aren’t geographically bound. There are plenty of SV people who bounce from party to party and conference to conference when they should be coding or slinging pixels. This is a personal trait, though you could argue that SV attracts more monomaniacal folks. Again, however, there’s no denying SV has the edge in supply– but does the demand outstrip it? Does more = more who are available?
- Startups need money and time. And, oftentimes, money can buy you time. Here, Silicon Valley bitch-slaps any of the upstarts. Anecdotally, it seems that funding in SV happens quicker (allowing founders to get back to building products). It also seems more available for early-stage companies. For companies who can’t bootstrap their way to a 12-18 month runway, this is huge consideration. This is also a big deal for companies without an obvious revenue model (Twitter?).
- Startups need blog and press coverage. SV wins here, too– by a healthy margin. I’m tempted to break out my “marketing is a tax you pay for being unremarkable” quote (I wish I could recall who originally said this). I firmly believe that you’ll get coverage if you’ve made something exceptional that people really want. There’s no arguing, however, that that you’ll probably get more if you go to the right parties and conferences, and manage to chat with bloggers like Scoble or Arrington.
- Distribution and deals. Technologists can often be snarky about the idea of bizdev, but it can be damn powerful. At the end of the day, many of the people you want to be doing deals with are probably in the Valley, and deals happen better if you can meet face to face ( and meet often, if necessary). There’s something inherently more comfortable about doing a deal with a company down the street. SV wins here, hands down.
- Lawyers and accountants. SV has more specialized services folks, but I’ve literally never heard of a startup who died from lack of a great startup lawyer. I think there is a healthy supply of these in any of the upstart hubs. Am I being naive here?
- People who buy startups. Acquisitions are like any other deal. They oftentimes happen because of face-to-face meetings and are probably likelier to happen if you are right down the street from your potential suitor. Seattle has Microsoft and Amazon. SV has just about everyone else who buys startups, notably Google and the ailing Yahoo(soft). Your mileage will vary, depending on your startup. A financial software startup might have a better chance of getting bought in NYC.
It’s probably safe to say that each of the above points carry different weights for different startups. A company like mine might not care much about great startup lawyers, but a company like Avvo might. A company like Twitter clearly cares an awful lot about funding– it’s a big play with a ton of upfront expenses and no immediate way to make a pile of money. But for a company like mine (which, ultimately, is probably going to live or die based on the value we can provide to businesses), will living in Silicon Valley give us enough of an edge to justify the expense and distraction of moving?
