Fred, your last line is priceless. "pick a place you want to live and work and then get busy". I've been telling folks that ever since I left Boston for Boise ten years ago and started Highway 12 Ventures. Everyone, and I mean everyone thought I was nuts to start a VC firm in Boise, ID. Here we are, 10 years later and thriving. As a matter of fact, we just sold a Boise based company (Telemetric) to a billion dollar company for a nice profit. Keep on spreading the word pal, you can start and grow an important company anywhere today...
fredwilson
· 5 months ago
oh man. you are a pioneer and a brave one. you should be proud of what youv'e done.
benkuo
· 5 months ago
Hear hear! Plus, if you dig into many of the very successful companies nowadays, they're spread globally/virtually -- in today's world of the Internet, as long as you're connected to your customers and partners electronically, it's not a whole lot of difference if they're across the street or across the country.
Ben Atlas
· 5 months ago
About anywhere is better than Boston.
DonRyan
· 5 months ago
The last paragraph was the real take home for me. With the tremendous amount of resources available and the incredibly cheap cost of bandwidth, anywhere can be the base for your startup. With that in mind, the human factors become immensely important. If you find a place where you want to be, pulling the rest of the stuff together is easy. We're beginning to see that here in Columbus which is a very livable city (especially compared with the rest of Ohio) but is now also starting to see a vibrant tech entrepreneur ecosystem. Great post.
fredwilson
· 5 months ago
And you've got big time college sports too, just like austin
DonRyan
· 5 months ago
It's not a sport, it's religion. (OSU '93)
fredwilson
· 5 months ago
I know. I've got a friend in NYC who grew up in columbus. He's still crazy for the buckeyes
dugsong
· 5 months ago
Ann Arbor also has a growing startup ecosystem (with strong ties to SV & Route 128, and a few friends in Boulder :-) and a strong hacker/geek community:
We're still working on the college sports thing. ;-) Go Blue!
Jonathan Deamer
· 5 months ago
RE: the much re-tweeted misquote - after the recent correcting of TechCrunch's piece alledging FW said "Twitter will be bigger than search" and putting the FT straight on who coined the word "freemium", look like Fred might need a whole "Setting things straight" blog :-)
fredwilson
· 5 months ago
That would be this blog
gzicherm
· 5 months ago
Fred:
As one of the few* entrepreneurs who've started and sold successful companies in the Bay Area and *then* moved to NYC to start another, I have a unique perspective on the issue, IMHO. (My previous company was Trymedia, my current one is http://rmbrME.com - the mobile business networking platform).
I love NYC and moved here for personal, rather than business reasons. My rationale: as a successful entrepreneur I could start a tech company anywhere, and New York certainly isn't just *anywhere*. :)
For all the plusses and minuses of the NY tech scene, defensiveness is its greatest weakness, and while I hope this doesn't offend you - this post doesn't honestly move the dialogue forward.
If you want to make the ecosystem work better, the first step is to talk about what is and what isn't working, and to make a concerted effort to seriously and strenuously address the community's blocks and limitations. Instead, NYC tends to do things like put up banners that say "Technology Capital of the World" (yes, the city really said that) or run events like Internet Week (well intentioned, but lacking in concrete purpose or measurable outcomes *and* competitive with for-profit events).
New Yorkers are unbelievably defensive about their city and - in general - tend to doggedly defend everything about it ("NYC has the best subway", "NYC has the best pizza", "NYC has the best startup community"), even when *empirical* data proves otherwise.
Perhaps our bluster, persistence and PR "flash" are the core values that make New York great - and we don't really need to change or adjust them to fit some mold. Perhaps the us vs. them mentality often espoused by the industry's leading lights isn't a problem in any way. And maybe the fundraising, talent acquisition, support networks, transportation and university system are fine for aggressive startups with a bootstrapped, customer-centric mentality.
Perhaps.
The crux of the debate for me is less about whether NYC is good (or good enough), but whether our collective defensiveness undermines our ability to seek positive change.
The empirical evidence - across many fields of inquiry - suggests that it does. Until we take a step back and analyze our strengths and weaknesses as a community *without* resorting to us vs. them, defensive, populist or purely rhetorical arguments, I'm afraid we're doomed to keep having this discussion.
Gabe Zichermann CEO, rmbrME
*I know there are a number of SF-->NYC entrepreneurs, and many of them are my friends. However, in absolute numbers, there are far greater numbers of expat New Yorkers in startups on the west coast compared to the number of expat Californians running startups in NYC, even when adjusted for population and university size.
fredwilson
· 5 months ago
what are the weaknesses (other than defensiveness) that you'd like to see addressed?
gzicherm
· 5 months ago
Fred:
Defensiveness is only a weakness *if* you agree that some change is needed. If no change is required, then defensiveness is - merely - defense. :)
Tactically, here are just some of the issues that have been raised by myself, friends and colleagues in forums like the Founders Roundtable (http://foundersround.org), Bootstrapper (http://bootstrappersummit.com) - both of which are great, grass-roots organizations for NYC startuppers- or over drinks. I'll phrase them as convivially as possible:
"The City cares more about saving the dying finance business or bringing in short-term film & television jobs than it does about the tech industry" "New York's tech industry is very 'clique-ish' - if you're friends with the right crowd, there's money, fame, exposure" "Insiders here care more about getting into the NYTimes and Esquire than building companies or industries. It's like LA meets Silicon Valley." "NYCs investment community is too insular, preventing new sources and seekers of capital from entering the market" "NY-region's tech industry stats are wrong and inflated and lead to bad policy decisions. A ton of investment goes into finance tech and high-capex healthcare, not into small, nimble, consumer-facing startups. It's not apples to apples" "It's too 'lawyery' here - everything takes a ton of paper, lawyers are expensive, deals are cumbersome to do" "NYC is too expensive to bootstrap"
...and those are just some of the issues. But it's less about the tactical concerns for me than it is about the strategic *frameworks* we're using to make things better.
-Gabe
fredwilson
· 5 months ago
i agree with all of these critiques, some more than others, but they are valid. what can i do to help?
gzicherm
· 5 months ago
Fred: Thanks for being a tireless (though judging by your flight schedule from yesterday, tired) advocate for change.
I'll rope you in to some of the good work that Amol, Richie and others are doing and let's see if we can figure out a platform for making things work better.
-Gabe
charliepinto
· 5 months ago
Fred and Gabe, please keep us all posted! This has been a great post and I would love to see some more commentary!
Fred, do you see a correlation here between your previous posts on "some VCs are broken" and Gabe's above comments?
Gabe, I think you hit the nail directly on the head. I have been tossing around working in NYC vs. Silicon Valley for the past year. My only concern about NYC was the perceived lack of opportunities and resources for startups... (of course, compared to the West Coast)
fredwilson
· 5 months ago
Fortunately startups need less capital so SV's dominance as a startup capital hub is not as big of a deal as it was 10-15 years ago
When we started comScore in 1999 we purposely didn't locate it in Silicon Valley because the competition for people talent was astronomical there as was the cost of office space. Instead we based the company in Virginia where we were able to hire very talented people at a reasonable cost. It was one of the smartest things we did. But, I recall one prominent valley VC tell us that we could't expect that he would get on a plane and fly to attend board meetings if we didn't HQ the company in the valley! I agree with Tim and Fred "TMTOWTDI"
One thing that twitter now allows you to do is actually form relationships with folks you ordinarily would have to meet "live" to begin to get to know (Tim O'Reilly has posted on this before). So first the blogs helped you get "informed" now twitter enables live networking --
do it where you want to do it.
David J Bland
· 5 months ago
comScore is my 3rd "start up" in Northern Virginia since 1999. The start up scene here is quite resilient.
Louis Marascio
· 5 months ago
Fred, thanks for including Austin! I'd prefer to build a company in a town like Austin over Silicon Valley, partly because I like being outside the noise. I think part of the perception related to SV being "the place to start a company" comes from the fact that there are simply more people to listen to what you have to say. More deals might get funded there, but are those deals proportionately better than the deals that are funded in a town like Austin or NYC? We often forget all of the bad deals that come out of SV, which I'd be willing to bet is numerically larger than the bad deals coming out of Austin.
SV doesn't have a monopoly on good entrepreneurs or good deals. There might be more of them there, but I'd reckon that the ratio of available capital to good deal flow is fairly consistent across the board.
Rob K
· 5 months ago
This is a really interesting post and commentary for me as I am looking for a new opportunity and strongly considering moving (back) to the Valley. While is it absolutely true that you can build a great start-up in many places, the bottom line is that the Valley produces at least 10x more interesting high-growth companies (particularly Internet companies) than anywhere else.
Seattle is a solid #2. There are pockets of strength in Boston (software, storage), and Austin and NYC.
I think part of this is related to the fact that the first 10-50 employees after the founders tend to come from mid-sized and larger companies and SV just has waaaay more of those. I also think part of it is a financing issue. Smart connected angel and early stage money is much easier to find in SV.
I too am struck by the irony that the Internet allows us to start and build great companies anywhere, hire remote employees, find and connect with partners, etc. But even with that, SV's proclivity to produce the next great thing is unmatched. Just look at Facebook- founded at Harvard, it could have been the next great Boston based company. But Mark moved it to Palo Alto.
For the record, I have lived in the Bay Area, Chicago, Austin, DC, and Boston.
fredwilson
· 5 months ago
well there's one great startup hotbed in the US you haven't lived in. guess what it is?
Rob K
· 5 months ago
I'm wondering if you're thinking Seattle or NYC?
fredwilson
· 5 months ago
oops. there are two, and they are both really good ones. i was thinking of NYC.
Mark Essel
· 5 months ago
The Perks: Networks gain strength as the square of their node number. SV has many nodes. There's a tangible benefit to being surrounded by folks that have startup in their blood. The Reality: Look at what Matt Mullenweg has pulled off with Wordpress. You get passionate folks to join up all over the globe and somehow put together the framework to coordinate everyone's activities (or just keep each other up to speed and help problem solve). When I start something up, I won't care much for physical colocation (face to face is great but not necessary every day).
Personal choice trumps geolocation advantage: I'm partial to an entire city with a higher ratio of folks with rose colored glasses on, but my fiance and I were considering moving out west independent of startups. Long Island has gone down hill since I grew up here, and although I love visiting Manhattan, I need an unobstructed path to walking on grass (suppose I could live in central park).
Mark Essel
· 5 months ago
Felt compelled to add, the comment stream on this post is "full of win" so far. You've got the Midas touch for getting valuable first hand independent perspectives on the question Fred. Priceless collaborative smarts in one place.
Kevin Chan
· 5 months ago
I think this is a really good post, as many startups are not just limited to the Silicon Valley or even America itself. A lot of upcoming startups and their application would have to pretend that they are made in America or at least located in America for fear as being thought of as a sub-standard product.
I used to work at a CRM company called Entellium that went bust a few months ago. Did anyone know that the application was entirely developed and supported from Malaysia? Even the support team for the application had to adopt Americanized names to avoid confusing and frightening the customers away.
However now with the cloud computing model, where applications and systems can be deployed and used directly from the Internet it does close this particular gap, where before this you need to see or hear a familiar face or voice where it could sway your opinion before purchase.
I personally do not believe in locations or addresses to add credibility for a company, as long as the application delivers what I require it to perform. I believe your statement on a crock of shit would go a long way for other startups to ignore their geographical location and focus on making their product better.
Ben Atlas
· 5 months ago
I find the following paradox puzzling:
1) The Net was supposed to be post-geographical, instead there is this perception of the cultural command and control center. 2) The Net was supposed to allow bottom up wealth, instead the wealth is highly concentrated with tiny group of people at the top of the scalable pyramid, reaping all the financial benefits. 3) The Net was supposed to be a cross denominational, universal in language, etc. Instead the Net fragmented into tiny niches that don't talk to each other.
PS I am sure you are ware of the definitive essay on this subject by Paul Graham. Speaking of Boston, remember CMGI? I heard someone talking about Naviste recently on CNBC and I just chuckled. I still remember Naviste IPO and now they say the company that currently is trading in pennies "got the potential". But I digress.
fredwilson
· 5 months ago
I don't agree with Paul on this topic. We've agreed to disagree. I respect Paul greatly. He's done so much to reshape the idea of early stage VC. But he's a silicon valley bigot, just like marc andreessen, another friend who I respect deeply
Satish
· 5 months ago
I have been re-listening to Warren Buffet's biography on my drive this week. He built the greatest investment company in Omaha when the common wisdom said you were toast if you weren't in NYC.
Anyways, I have two contradictory thoughts on this topic: 1) I think the two greatest factors for a startup's success are the vision of the founders and their ability to sell that to people they want to recruit, and their detrrmination to fight through the failures till they work out the path to success. And these people will make it happen irrespective of the location (well assuming they are in the 12/20 cities)
2) The companies that Fred mentions are the Black Swans and they are random and can happen anywhere. But what about the small to medium start up successes ($50mil to $150mil exits). Are they easier in Silicon Valley because you are surrounded by a bunch of people who are so tied into the ecosystem that you come up with an idea that fits into something else and can execute quickly?
I don't have an answer overall and it is an internal debate for me. I might make a decision about where i will live for the next 6-7 years of my life and i think about this issue a lot. And it scares me a little. Some days i feel location won't matter and sometimes i feel why should i take up the battle of location when there will be bigger challenges in figuring out the market & product. If and when i do something and the results come out, i'll have an better grasp of this issue. :)
rafer
· 5 months ago
There's also what the EU VCs call the "Israeli model." Start something anywhere you can find good tech talent, then transition commercial management to SV/NYC/LON when the larger deals need to start getting done. At this point, he Valley is a tech center because of its specialized financial services rather than the other way around.
fredwilson
· 5 months ago
there are a whole bunch of really successful $50mm to $150mm value tech startups in NYC. same with Boston, Boulder, Austin, Seattle, SoCal, europe, israel, india, china, australia, etc, etc
i agree about the black swans. but tmtowtdi is true all up and down the scale of companies
Satish
· 5 months ago
I agree with TMTOWTDI. And the second part that you need to pick a place where you can live happily and then work your butt off.
kimheras
· 4 months ago
Hey Fred
Would be keen to hear which Australian startups you're speaking about.
We probably cover more Aussie tech startups, at TechNation Australia, than any other blog and to be honest I'd struggle to come up with a "whole bunch" of really successful Aussie tech startups b/w $50mm to $150mm in value.
I'd like to be wrong though, so feel free to set me straight :)
Mike Trotzke
· 5 months ago
I'm surprised to hear that Marc Andreessen would be a Silicon Valley Bigot. I first ran into to him at NCSA in the middle of the Midwest back in '93. He was making Mosaic. So clearly he knows that innovation can happen outside the valley. I guess someone convinced him that Netscape had to be in the valley and he stuck with it.
Ben Atlas
· 5 months ago
Speaking about California - Rushkoff: http://tinyurl.com/ntf9ra How the Tech Boom Terminated California's Economy.
fredwilson
· 5 months ago
I'm gonna read that today
David Parmet
· 5 months ago
The paradox you describe is something I've always found puzzling. We have the bandwidth and the tools to be able to work with anyone in the world from any location - be it our kitchen table in Poughkeepsie or a tech incubator in SV. Yet SV still holds this place in everyone's imagination.
The start ups I'm watching are popping up in places like Providence RI. Out of the way but still connected to the rest of the World. No fancy parties to attend and no high profile bloggers to worry about.
Ben Atlas
· 5 months ago
I actually think the parties are are very important and I certainly would not compare NY to Boston, let alone Providence.
markslater
· 5 months ago
go easy - i used to work there!
i'll never forget the monthly financial update where we burned $4 mill in one start up and were told 'you are not spending enough'.
get big quick - remember that?
Ben Atlas
· 5 months ago
I would rather forget, alas I remember that time all too vividly. Speaking of DEC they had two remaining proprieties that had any value - Alpha chips bought by Intel and Alta Visa acquired by CMGI. I remember I would write to David Weatherell: "Google is eating your lunch". He could not see it and he was determined to make Alta Vista into a portal, away from search and towards the wonderful Yahoo model. Don't get me started!
farhanlalji
· 5 months ago
I think there's more then two dozen as well. With Zappos in Vegas, Spotify started in Sweden, you can do a tech start up well almost anywhere. Think you need a minimum of technical expertise, a minimum of biz savvy, and you're off to the races. But if you don't have the minimum expertise or savvy then you need to be in one of the hotbeds as this will bring you closer to filling those gaps.
Fred, have you read any of Richard Florida's work on hubs/hotspots? Thoughts?
fredwilson
· 5 months ago
No I have not. Can you point me in the right direction?
He's also on Twitter - @richard_florida but just linking to blog posts and interesting articles.
Enjoy.
Imran Ali
· 5 months ago
I recently read an interesting article debunking many of Florida's assertions at http://www.thestar.com/article/656837 - a useful counterpoint to assess Florida's body of work.
farhanlalji
· 5 months ago
Not sure if the Tor Star article debunks his assertions, seems like it rather points out that there are other people who matter in a society. Think Florida's research still is pretty impactful on the culture and places for entrepreneurial success, regardless of how he "sells" his research.
Yule Heibel
· 5 months ago
From the TorStar article: "Part of it may come from the the uniquely Canadian impulse to resent success." As a Canadian (and dual US-Cdn citizen, and former child-immigrant to Canada from Germany), all I can say is, no kidding.
At a core level, Florida preaches competition: he asserts that cities can band together in regions, and that cities compete against one another, which also means nation-states matter less than they did in the past. Paris competes against London competes against Tokyo competes against New York competes against... etc.
Canadians *do* play hardball in some sectors (for example, the corporatists who've run the usual resource-extraction racket, er, I mean, economy - hewers of wood, drawers of water and all that...), but officially, we're NICE.
It's interesting that Florida remarks (in this article) that he gets criticism from the rightwingers in the US (for advocating tolerance of gays and diversity), but that he just knew he'd get criticism from the leftwingers in Canada.
I don't swallow everything Richard Florida says whole, but I think he's basically on the right track. (That said, the devil along with every other deity is in the DETAILS, right?) That said, I'm not surprised to see my fellow Canadian activists attack success...
John Isaac
· 5 months ago
I think running a startup outside the Valley makes you sharper and more innovative, because it is sink or swim. The Valley is the bird nest of startups the rest of us learn to fly early.
Great Post!
Nigel Eccles
· 5 months ago
Great post. I'm glad you wrote it so I can link to it every time this debate comes up (which is just about every other tech events in the UK).
My personal opinion is that there are distinct advantages for a start-up to be located in SV (access to talent, partners, money, advice etc) however location is far from being the most important factor. Location is the most important factor for real estate but for start-ups it is who the founders are (Paul Graham: http://www.paulgraham.com/13sentences.html)
rajjr_tx
· 5 months ago
I HAVE to agree with you because, I'm not in SV. In other words, I believe the solid, creative, productive, profitable, useful startups are not a product exclusive to SV.
However, because of the huberous of SV, where the greatest consentration of VCs reside, it IS very difficult to get any traction if you start with 2 strikes against you because your not geographically preferable.
DBM
· 5 months ago
Absolutely agree that a successful startup can be anywhere. But I do believe it is harder in many places. Peers, family, work associates - they may all view you as crazy to take the chance. There aren't many friends going through a similar situation and your support network is limited. There are cities and towns where getting a job (or not getting a job and just playing golf - why risk losing what you have?) is the norm. You can still be successful of course, but going against the grain is not always easy.
fredwilson
· 5 months ago
totally agree about cultural issues. but the dozen to two dozen startup hotbeds around the world don't suffer from that. when we started flatiron in NYC in 1996, people thought we were crazy. hedge funds were the way to make money. now a lot of people look at the venture/startup ecosystem in NYC with jealousy.
rafer
· 5 months ago
I bet you'd get a lively discussion going if you named the two dozen you are referring to. I'd suggest alphabetical order so the discussion remains polite.
fredwilson
· 5 months ago
i only got 2.5 hours sleep last night scott. i don't have it in me to do that today. but i will. it could be a few more or less than two dozen.
rafer
· 5 months ago
Careful for those Seattle types. They sneak up on you.
We all figured two dozen was approximate.
Elie Seidman
· 5 months ago
If you live and work in Silicon Valley, there is a very real danger that you start to believe that the world - or even Chicago - is like Silicon Valley. But they are nothing like it so you nearly have to leave town to do your market research. Oh, and when you leave work at 10PM in Manhattan, TGIF is not your only option for dinner...
fredwilson
· 5 months ago
i was going to throw a bunch of suburbia hate into the post, but i felt it was just my personal baggage and so i left it out
Facebook User
· 5 months ago
Suburban/rural NJ had a great many challenges for a startup.
charliepinto
· 5 months ago
Please tell me Sussex County...
Yule Heibel
· 5 months ago
Haha, I'll carry those bags a few more miles! (re. suburbia hate)
Also, I strongly suggest Richard Florida's work and books on the Creative Class.
James Eliason
· 5 months ago
I agree 100% with you Fred. Cool and innovative stuff is happening all over the world, and with platforms like Facebook and Twitter things and ideas are being accelerated faster than before. Which makes my dream of building and running a company from a beach with a blackberry a possibility some day :) Great post. Thanks.
Jof Arnold
· 5 months ago
Depends on how well-connected you already are. If you know loads of influencers and talent, then by all means start in Alaska or (in england) Norfolk (heavens forbid!). But if you don't, then I'd advise spending at least the first 6 months to a year doing startup stuff in a big city; you will gain knowledge and connections 10x faster that way.
barryengel
· 5 months ago
Quality of life is key and it's not just restaurants open late. After 15 years in SV with 3 start-ups under my belt I want to give my kids a fighting chance. With CA schools ranked 48th in the nation (and not wanting to go the private school route) we left to return to the NY area. Great schools, grass under the feet and tech!. I can only hope my friend and mentor Steve Poizner can bring sanity to the state's ed. system
Uday Subbarayan
· 5 months ago
Fred, Your title says it all....if i double click on the title, SV is the center of innovation industry till now and peripheral innovation/startups can be anywhere. The question is, Can SV continue to be the center for next 10/20 years? I don't know.
Chris
· 5 months ago
Don't forget Novell, Word Perfect and Omniture coming out of Utah.
fredwilson
· 5 months ago
for sure.
pfreet
· 5 months ago
Yes, you can create a startup anywhere. As long as you don't need smart money, or strategic advisors with domain knowledge, or employees with specific industry experience, or service providers who understand the startup experience. What else am I missing?
Not everything is a consumer internet play.
Chris
· 5 months ago
Don't forget Novell, Word Perfect and Omniture coming out of Utah.
Tim Panton
· 5 months ago
The problem isn't with the startups, it's with the VCs. VCs would rather not travel to go to a board meeting.
If you choose to do your startup outside a hotbed, then you are drastically reducing your pool of possible finance.
fredwilson
· 5 months ago
True. But I wrote this post on a blackberry on a redeye coming back from talking at an entrepreneur meetup in seattle. VCs will travel if there's a good deal to be had
Jason Tan
· 5 months ago
Great stuff. I think most of the audience understood what you meant, but "crock of shit" is too juicy of a soundbite for 140 characters. Thanks for being part of it. You didn't speak readily, but when you did, it was thoughtful and interesting. Come by Seattle more often.
suthakamal
· 5 months ago
Since you wrote this on a blackberry, it's worth mentioning that RIM is from Waterloo, Ontario.
fredwilson
· 5 months ago
are there any other good startups in waterloo? can RIM spawn a whole startup culture?
Yule Heibel
· 5 months ago
RIM gets some credit for investing in R&D, but it's not representative of Canadian business/ innovation culture overall:
QUOTE Canada's new R&D players - BlackBerry inventor Research In Motion Ltd. being the most notable - remain too few to alter a troubling reality. RIM spent 6.2 per cent of sales on R&D in the fiscal year that ended Feb. 28, less than half of Nortel's level of investment last year.
Still, RIM's R&D budget as a percentage of its sales is several times that of Canada's biggest oil and gas companies, which have been stock market stars throughout this decade and which remain the foundation on which the country has pinned its hopes for a rapid recovery. Despite overflowing profits in recent years, EnCana, Petro-Canada and Suncor have spent less than 0.5 per cent of annual revenues on R&D. UNQUOTE Source: Canada's Innovation Gap
suthakamal
· 5 months ago
Probably not. RIM's own internal culture now is getting old and stodgy. There's not a lot of interesting innovation going on in Waterloo outside of RIM, and so there isn't nearly as much excitement in or around RIM as there is in the valley, for instance. There're a few ex-RIM startups in the neighborhood doing interesting things, but there aren't the same waves of RIM alums starting companies, compared with what you'd see from eBay, Google, Yahoo... hell, even Fairchild.
There're lots of smart people there, but the culture and drive seems to be missing.
Hemang Gadhia
· 5 months ago
Just to play devil's advocate, having observed the start-up scene in NYC, DC/NoVa and Boston, I can tell you that talent can be very hard to come by in those places. Just the sheer volume of talent available in SV makes it very attractive for entrepreneurs. In DC for example, there is solid base of technical talent, but I've always found creative talent to be somewhat lacking. And even the technical talent isn't necessarily on the bleeding edge, which I would argue is very helpful for start-ups. While I think it can it's certainly possible to build great start-ups just about anywhere, if I were starting up a new company today and could pick anywhere on the planet to base it, I'd probably go with SV.
Healy_Jones
· 5 months ago
I recently blogged on an academic study that just came out claiming only 3 regions in the US matter for venture funding. I thought that the study was interesting, but didn’t completely agree with all the conclusions. However, I did take away that a non-SF/Boston/NYC entrepreneur going down the Series A VC route should talk to some VCs in the major markets since these investors likely have much greater deal/idea flow and may provide better market intelligence vs. smaller market VCs. I would love people’s comments. http://www.startable.com/2009/07/07/real-estate...
fredwilson
· 5 months ago
healy, i left you a comment in your blog. great post. there's a lot of truth to what you postulate.
jeffreymcmanus
· 5 months ago
sorry, seattle doesn't get credit for microsoft, they started up in arizona and moved to seattle only after they were no longer a startup.
JeremiahKane
· 5 months ago
New Mexico, but its a rounding error... there is a great column every month in New Mexico magazine "One of the fifty is missing" that highlights NM getting mixed-up with Arizona and Mexico. http://www.nmmagazine.com/50missing_july09.php
Jeffrey McManus
· 5 months ago
That is hilarious! Thanks for the correction Jeremiah.
joeagliozzo
· 5 months ago
You can build it anywhere you want, but what are the odds? Do the math - you have a better chance of being struck by lightning than "doing it" successfully (in the VC way) outside the valley.
I have tried both - Valley and LA - and there's just no comparison. Easier to hire people who get it, easier to raise money. If you want to be a VC funded tech company, go to the valley or do not pass go and don't collect $200.
fredwilson
· 5 months ago
well LA has issues, particularly with the funding environment, but that's changing for the better. but if you started in Boston, Seattle, NYC, or a few other places, you might have found it easier going.
joeagliozzo
· 5 months ago
People more than funding. I have staffed up in both areas, and much easier to find "real" hackers in valley who like to keep a futon in their cube. Same with other vendors, etc.. BTW, in Paris right now and my compliments to you and the Gotham Gal for many of your recommendations from your trip to Paris last year - they are "fantastique"! There's a business in there somewhere..
benkuo
· 5 months ago
I think it depends on the industry you're in, and the type of talent you're looking for on how much of a difference LA. vs the valley is for a startup. I hear from companies in Southern California complaining about not being able to find the right software folks, but then I hear the equally loud complaints of startups in Silicon Valley who keep losing their good software folks--every 3 months-- to the "next hot startup" dangling a higher salary/more options/etc., or to Google, or whoever.
The great part about the SV is that there's nothing else there, so of course you have to focus on business because it's what everyone else is doing.
Living a well-rounded life in what is really just a suburb of Oakland -- the original place where "there is no there there" -- is not possible. So you work all the time. If that's what you want to do, that's great. If not, there are lots of other great places.
Yule Heibel
· 5 months ago
Haha, I always thought Gertrude Stein was a tad hard on Oakland (but then, she had Paris to judge it by ...'nuff said, eh?). What you say though is spot-on: If there are enough natural distractions, you can avoid the nastiness of rubbing along with people (all the social crap) and just go ...oh, I don't know, camping?? Recharge your batteries, maybe ...But it works negatively, too. Rubbing along with people is where plenty of ideas originate, not to mention useful labor.
fredwilson
· 5 months ago
great post, i didn't see a place to leave a comment (could be that i just missed it)
i hate the name silicon alley so much. it reeks of "we want to be silicon valley" jealousy
in my web 2 NYC keynote last year i begged everyone to drop it
we are NYC, for god's sake, the greatest city in the US, and one of the great cities of the world.
why on earth do we need a new name?
Scott Yates
· 5 months ago
You are exactly right.
The good news is that the names only take when there is no other name for a place that needs a name. If "Denver" doesn't need a new name, than certainly New York City doesn't.
"The collection of suburban areas south of Oakland best known for a concentration of high-tech companies" needed a new name, so it got one.
kennethli
· 5 months ago
Hi Fred, being an angel investor/incubator in Singapore (www.frontedgecapital.com) where the startup scene is still largely nascent, I must confess that there are definitely disadvantages to not being in the valley, or even places like Seattle, New York and Boston. All the startup benefits generally found in these hotbeds are much lower here (e.g. capital, smart capital, talent, partnership opportunities, strong community, etc). I see this all this impacting the way startups think (less influence/pushing their ideas and thinking from fellow entrepreneurs or smart investors) as well as operate (less funding, less runway to try different things).
That being said, I think it is still very feasible to create a great startup here, or anywhere else for that matter. As pointed out in one of the previous comments, the founders are the primary assets of a startup. They can easily "educate" themselves and improve their ideas/create new ones with the rich amount of resources available on the web (such as your blog among others) - it is really for the entrepreneurs to know to look for these resources in the first place. And of course the costs doing a startup are quite low now, both in terms of the technology and marketing, so capital is becoming less important. Though entrepreneurs not in startup hotbeds do suffer from a bit of a disadvantage, it is not insurmountable to prevent them from creating something great.
Just a note on some of the examples that you gave, those companies actually leveraged on some of the assets they had locally (which actually may not be found in the valley). Bloomberg serves the finance industry - where else could it be created and succeed but in NY? Microsoft started next to a university with one of the earlier sets of computer terminals. Many telephony based companies come out of the northern europe due to strengths in that area. Sometimes, being in an area other than the valley can have its advantages as well.
benkuo
· 5 months ago
Well said! In my experience, great companies can be created anywhere. Yes, Silicon Valley has some advantages in terms of a "startup culture"--but that also exists across the U.S. (and, I might add, in Israel, China, India, and beyond). Most of the folks I talk with in technology centers outside of Silicon Valley tell me there is a sense of provincialism among those in Silicon Valley when it comes to the validity of startups elsewhere, but I'd just attribute this to the human tendency to feel like their local team has an advantage over "those other guys" (Yankees vs. Red Sox anyone?). The truth is, if you've got the right ingredients (entrepreneurs + capital + customers, etc.) you can make a hugely successful startup anywhere.
There's plenty of examples of very successful companies outside of the typical Silicon Valley sphere, however, given the huge focus and concentration of the technology press and bloggers in Silicon Valley, you get overcoverage of darlings like Twitter, Facebook, etc. which distorts the view of folks of how important it is to be in Silicon Valley.
tomhigley
· 5 months ago
Fred, I completely agree with two things you've said: (1) there's more than one way to do it; and (2) (paraphrasing) there's more than one place to do it. I'm an entrepreneur in Boulder. It's a hotbed of entrepreneurial activity. TechStars is here (and now in Boston); Boulder Denver New Tech Meetup is here; Brad Feld is here; Foundry Group is here; Silicon Flatirons is here; and much more. Denver/Boulder is a great place to live and work; there is no shortage of talent, motivation or drive; and most of the basic infrastructure needed by entrepreneurs and startups is here.
Capital is a bigger issue. Many of the local VCs are off cycle. Foundry, the largest of the Colorado VCs, is investing nationally, not regionally. VCs in the Bay area continue to have enough deal flow with local roots that investments in startups farther than 60 minutes away seem unnecessary and unwise. When a region has some requisite minimum of its own investment capital, it can often attract participating or follow on investment from Silicon Valley. Without that concentration of capital, however, the entrepreneurial base begins to see financing risks as a much larger concern; they think about relocation, or they gravitate to opportunities that are less likely to require significant early stage capital.
I love Colorado, and I love Boulder. I think this is a great place to live and work. I am willing to make a number of sacrifices to build successful companies here. But I do understand the sentiment and concern that you heard last night from entrepreneurs in Seattle. Of course you can build a great company in Seattle, Austin, Boston or Boulder; not just in Mountain View or Palo Alto or San Francisco. We all need to be realistic, though, about the challenges and the advantages and disadvantages that each startup "hotbed" provides.
fredwilson
· 5 months ago
This all work's to the advantage of firms like foundry. We have a similar benefit in NYC
tomhigley
· 5 months ago
Of course it does. Brad Feld is a dear friend, an investor in my current startup and an investor in the two previous startups I founded and ran and an advisor to a startup I founded before that. Because he is a friend, I am very glad that Brad enjoys an advantage. As an entrepreneur, however, I have to do everything I can to maximize the size of the opportunity and mitigate risk (for me, for my team and for my investors), and one of the risks I face that is not subject to ready mitigation is the risk that capital will (a) be unavailable when I need it or (b) will be available only on such terms as to make my position (and the positions of my team and employees) considerably less attractive than our respective counterparts in the Bay area.
fredwilson
· 5 months ago
Its true. In NYC, I have been very supportive of the development of new VC funds and other sources of capital for entrepreneurs. A few weeks ago, an LP called for a reference for a VC competitor in NYC. I was highly complimentary. I told that LP that NYC needed more quality VC firms. That doesn't help me competitively, but it does help NYC and that's what matters at the end the day
James
· 5 months ago
The strength of Silicon Valley for technology ventures varies quite a bit over time, as do the categories of factors that influence this, and I would argue that it is currently in a waning phase though that could reverse itself in the future. From my own perspective as a long-time denizen of Silicon Valley but having lived and spent considerable time in other major locales, there are a couple often overlooked factors that have traditionally made it attractive:
A culture of very low risk-aversion. Every region has its own cultural notion of socially acceptable levels of risk in business and employment, and it varies widely. The social pressure to conform to a certain level of risk aversion is subtle but pervasive, and has a real impact on the opportunities available for intrinsically high-risk enterprise, both in terms of raising money locally and finding top-notch employees. In my experience, Silicon Valley is one of the very least risk-averse cultures in the US and attracts many people with low risk-aversion, where high-risk career paths are almost a default assumption. This also goes hand in hand with an environment where failure at business is not the black mark on one's reputation that it is in many other cultures. That said, I think all you really need is sufficiently low risk-aversion which can be found in many other locales, not the anomalously low risk-aversion that pervades Silicon Valley. Also, I think Silicon Valley has become more risk-averse over the last several years such that it stands out less on this account.
The social primacy of technology/engineering. Back in the 1990s, this was probably the most distinctive feature of Silicon Valley that I think made it great. In almost all places, the default assumption, both explicit and implicit, is that engineers and technology are unambiguously subordinate to the business school graduates, and consequently many engineering/technology decisions are strongly influenced by people that do not fully understand the consequences. An innovation in Silicon Valley was the idea that business and engineering occupy explicitly parallel hierarchies, neither subordinate to the other and with both hierarchies having some measure of veto power over the other. Silicon Valley venture capital embraced this idea to a significant extent (the entry of many former engineers into the ranks of VCs probably helped here) and I think it enabled a great many companies to produce innovative technologies that never would have made it in a more traditional hierarchical business structure. I see less of this today in Silicon Valley than there used to be, and I believe this more than any other factor will unseat Silicon Valley as the center of the universe for technology companies. In my estimation, the Pacific Northwest region is more strongly embracing this idea now than is Silicon Valley.
Silicon Valley will continue to change, but it is not nearly as compelling today as it has been in times past. The distribution of technology startups in the US and globally is more diffuse than it used to be. Among the people I know, there has been a slow but noticeable exodus of really smart engineers from Silicon Valley to the Pacific Northwest, and I have noticed the emergence of cultural characteristics in the tech startup environment in places like Seattle that remind me of the periods when Silicon Valley was really on top of its game albeit on a smaller scale. That would be my bet for the part of the US most likely to unseat Silicon Valley as the center of gravity for tech startups if/when another center of gravity emerges.
Because a lot of the critical mass is cultural, I would expect that it can rapidly shift geographically given a mobile society, moderated by network effects.
dutchkabuki
· 5 months ago
As a founder, you absolutely should be in SV.
"You can build a great startup in any of the hotbeds..."
True. But, your current startup is probably going to fail. The real question is can you fail in any of the "hotbeds?" In SV, you'll work on your current startup w/ the best best people in the industry, and you'll probably meet your co-founder for the next one, the one that will work! or you'll get hired early at another startup that's got a great shot ... etc.
In NYC, i am sure after you fail, you probably go on terribly condescending interviews at insurance companies and investment banks. Or maybe go out to NJ and talk about how much you love pharmaceutical manufacturing?
And does Fred care that your career is shot? no, 9-out-of-10 failures are already built into his model, so as a founder you need to build that into your model too, you need to reduce the cost of failure. Only one way to do that is to move to SV!
fredwilson
· 5 months ago
Not true about NYC and failure. Dave Morgan failed with real media and came roaring back with TACODA which is our biggest exit so far
NY loves risk takers and accepts failure better than anywhere I know
pfreet
· 5 months ago
Anecdotes are not arguments. Nobody said it CAN'T be done, the question is if it is a good idea or not.
The median startup is a failure. You've got one career. Either pick a market your city excels in or start your technology in a startup friendly culture. Either way you've improved your odds significantly of recovering and going on the numbers two and three.
BTW, re risk taking in New York, if your first hedge fund (or PE/VC fund) fails, can raise another one?
fredwilson
· 5 months ago
Yes, particulalry with hedge funds.
Michael F. Martin
· 5 months ago
If Union Square hasn't proved that startups can be successful outside Silicon Valley, then nothing does.
...but Union Square is smack dab in the middle of the biggest network of them all in the United States -- NYC.
My $0.02: People tend to systematically understimate the importance of social networks. And I'm not talking about their digital imitations like Twitter and Facebook. I mean the real, flesh-and-blood kind.
As Fred himself has pointed out on this very blog, there's a lot information that just doesn't come across except in face-to-face interactions.
My view is that you're simply going to spend more time and money by not moving to Silicon Valley. For some people, that's a fine tradeoff. For others, it makes more sense to come here, give it a shot, and then move on.
(Or get addicted to the culture and become an indentured servant to the culture through a Silicon Valley mortgage like me!)
ShanaC
· 5 months ago
There may be no one right way of doing "it", whatever it may be to you. It can be a large number of things you may want to do in life- whether diet, or start a company.
However there will be right people to do "it" with. People power is the largest power there is. And while you can find the right people anywhere (and you can) you have to make it your mission to be with those people who will enable you to do "it." If you think you have found a location that has a large amount of those people, and that location makes you happy, then move there. Otherwise, move on.
Weight Watchers makes money off this scheme you know. They assemble groups of people to party on the idea of losing weight. But if you hate your group- you are not going to be losing weight. You'll probably drop the program. Same thing with having family that doesn't like the idea of watching tv- if none of your family watches tv, it is unlikely you will either.
It's all about your peer group.
FunDump
· 5 months ago
You can go on a honeymoon in Paris or in Peoria since sex is sex, yet Peoria isn't romantic. You can start-up in SV or in Peoria since business is business, yet Peoria isn't synergistic.
kevin
· 5 months ago
I heard a great interview with Kleiner (I don't know his first name) of Kleiner Perkins, and he had a good answer for this. He said that in Silicon Valley there is this culture where people look at someone doing a startup and say to themselves "well, i'm as smart as he is so why don't I do a startup?" There's definitely something cultural about hot spots. But I truly believe that with hard work, good idea and good disciplined management, anyone can do a startup. It's just that in the valley, you're far more likely to get funded if you only have 2 out of 3 of those. So you definitely have to try harder if you're doing a tech startup in Detroit, for example, but there's nothing magical about any startup hotspot, I think hot spots are self-feeding because people go there with the mistaken belief that they have to in order to succeed.
Dan Cornish
· 5 months ago
We moved from NY to Austin, TX simply because it is a better place to start and run a business. The cost of overhead, salaries, insurance, taxes, electricity, gas, etc.. are all less. I am also finding we do not have to compete with Wall Street Banks for development talent. The Wall Street mentality artificially inflates salary and benefit expectations.
kidmercury
· 5 months ago
location will matter less and less, whether you are on the no fly list will matter more and more.
Michael F. Martin
· 5 months ago
I disagree. Until our brains are hardwired to it, not all information will be available through the internet. In fact, the most important and sensitive info will tend to stay offline.
kidmercury
· 5 months ago
i agree with what you're saying, although i expect transportation costs to continue to fall over the long run due to innovations, and thus it will be increasingly feasible to have meetings all over the world. so long as your ability to move around is not hindered, i think location will become increasingly irrelevant over the long run.
Michael F. Martin
· 5 months ago
Okay I hope you are right. Traveling sure is a pain in the @$$ right now.
Actually, part of the problem is that nobody wants to put money into the airline industry because investors keep losing their shirt on it.
fredwilson
· 5 months ago
Teleportation. I'm waiting for that business plan to hit my inbox
paramendra
· 5 months ago
"Pick a place you want to live and work and possibly raise a family. And then get busy." I could not agree more. I picked NYC in 2005 because it is the first hometown I ever had, and I have been to all 48 states. It was hometown. My tech startup is in round 1. Some of the key people on my team are in the Bay Area, Macedonia, Mumbai, Kathmandu, Kentucky. http://technbiz.blogspot.com/2009/07/telecommut... But then I also envision the center of gravity in the tech industry shifting to NYC in less than a decade. http://technbiz.blogspot.com/2007/09/silicon-ci... That claim is based on my Web 5.0 talk, my particular classification system. http://technbiz.blogspot.com/2009/02/conceptual...
webwright
· 5 months ago
Hey Fred- Thanks for coming out the Seattle-- I thought the panel was a lot of fun to watch!
I wish I'd gotten in on the conversation earlier. A reader of my blog (I love the web!) was inspired to do some analysis on Crunchbase and found that the *PERCENTAGE* of startups in that database that had a liquidity event varied a bit by location. The major hubs (SV, SEA, NYC) had a noticable edge, and Seattle actually had a higher rate than the Valley. Of course, Crunchbase is an imperfect dataset (10,000 companies) and liquidity events are an imperfect measure of success, but I still thought the data was interesting.
Link to the post: http://bit.ly/Mapl1 (the comments have some interesting bits from folks with other data sources)
fredwilson
· 5 months ago
That is very interesting. I'll go check it out
Marc Vermut
· 5 months ago
Fred, great, timely piece. Was just discussing this the other day regarding the location of a startup. I do think though that different cities provide support and greater likelihood of success for different types of startups (social software versus media versus hardware versus telecom, etc), simply by dint of existing robust ecosystems already in place. That is, different cities are likely predisposed for greater success for specific types of businesses.
fredwilson
· 5 months ago
True. Starting a comm equipment company in NYC is not a great idea
bmartyna
· 5 months ago
A lot depends on the type of business and the trajectory.
Very high tech businesses that need to succeed fast or miss the window of opportunity have a far better chance of success in hotbeds. Access to capital, media buzz, talent that lives for the big win, etc. is plentiful. If you're building a rocket, in order to reach escape velocity, you need expensive jet fuel at all stages. Then you either make it fast -- or burn up on the way down just as quickly.
The longer, slower builds that don't necessarily need venture capital can thrive anywhere.
I founded my current company along with an savant java programmer and a spectacular industry visionary in the middle of pretty much nowhere. We're pushing 8 figures this year, but it's taken three years.
We perhaps would have grown too quickly and might have been scrounging for a 2nd round if we got VC funded at the outset. Instead, we're growing, quietly, profitably and with positive cash flow. With luck, we'll continue to ride out the storm.
fredwilson
· 5 months ago
Congratulations on your progress and success. I love hearing stories like this
GrishaRemake
· 5 months ago
I think it all depends on people's personality type.
Extrovert will be more successful when he lives in a startup hotbed.
Introvert doesn't need anybody, he can live anywhere he likes.
ikongsgf
· 5 months ago
I agree with some who posted about culture and cited Richard Florida, etc.. It's not necessarily about capital or costs. Culture is more important, particularly for seemingly goofy consumer Internet startups like Twitter, and earlier, flickr, Facebook, etc. I think people are earlier adopters of not just technology but various cultural trends, e.g., fashion, food, etc., on the West Coast. Technology isn't just about better, faster, cheaper, but enabling changes in human behavior, e.g., the iPhone is affecting photography, newspapers, magazines, and non-mobile Web. So culture (really human behavior) is critical.
People are also more open to trends in, say, Austin, e.g., note Twitter's first big wave of popularity happening at SXSW. However, here on the East Coast and especially in the South, people just don't "get it" quickly and aren't actively seeking to get it. Thinking about The Next Big Thing isn't exactly on a lot of minds. That lack of thinking affects the conversations in entrepreneurial circles (*shockingly* ignorant of Internet trends at worst, and a couple of years behind at best) as well as the tenor of general conversations at kids' birthday parties, networking events, etc. This ignorance does not encourage the psychic energy that drives human creativity.
Is the Valley the only place with the right culture? No, there are a few other places already mentioned (Austin, Seattle, Boston, Israel, etc.). Innovation can happen anywhere but the right mix of culture, financial and human capital just isn't present everywhere. This shouldn't be cause for any inferiority complex, but it is what it is.
fredwilson
· 5 months ago
That's why NYC is thriving as a startup hotbed. Its the most creative city in the US and possibly the world
tom summit
· 5 months ago
What would be good is to break the TechCrunch hold on the minds of the start up interested public. Silicon Valley Bigots promote their companies and don't acknowledge the contributions of other markets.
You could help by backing a media site that highlights the contributions and innovations from other geographies. Here in Boston Xconomycom is doing a good job, and is run by quality writers with a journalistic bent.
fredwilson
· 5 months ago
Backing in what way? We don't like to invest in blog networks at USV.
Yule Heibel
· 5 months ago
A post close to my heart, and lots of good comments. I hope kidmercury is right that transportation costs will fall, because I live on a freaking island (in Victoria on Vancouver Island - Victoria is the capital of the province of British Columbia), and it's costing us more and more to get off "The Rock" (i.e., the island). I would have driven to Seattle in a heartbeat for Naked Truth, but with travel logistics as complex as they are here, well...
Victoria is one of those places you live in for the lifestyle, and then just hope that there's enough synergy (rubbing along with people - see my remarks in response to other comments on this thread) to make it work. In Victoria - and Cascadia in general - however, nature is so gloriously overpoweringly beautiful that it's easier just to fark off and go camping instead. That hurts the hunger in startup culture.... SV destroyed swathes of orchards and farmland (nature) to create that culture...
By the way (on the topic of Canada): RIM was mentioned, but no one recognized that Flickr was started in Vancouver (the company that Butterfield and Fake initially had was called Ludicorp, and they were working on The Game Neverending). They built Flickr in Vancouver - Yahoo (a SV company) bought that Canadian startup. While Fake has now started Hunch.com in NYC, Butterfield just announced that he's starting a new company, Tiny Speck in Vancouver.
fredwilson
· 5 months ago
My friend boris wertz is doing several startups in vancouver. Its a startup hotbed in my mind, maybe in the second dozen (there may be a third). But its happening
Yule Heibel
· 5 months ago
Yes, Boris W. initially came to Victoria after Abebooks (a Victoria company) bought Wertz's company in Germany (I think that was the chain of events). He left for Vancouver after several years to do his own thing. Abebooks, by the way, early on bought an interest in Vermont-based (?) Tim Spalding's LibraryThing (that's a link to my profile, ...which needs updating). And then, about a year or so ago, Amazon (across the Strait in Seattle) bought Abebooks. (But Abebooks is supposed to be staying here, in Victoria.)
One of the more annoying things (from a Victoria-based person's perspective) is meeting people who don't know that Abebooks is a Victoria company, or seeing Victoria companies send out press releases that start with "Vancouver, BC..." I've seen Genologics do this, and also Triton (which developed The Sawfish, a cool machine for harvesting underwater logs). High tech has actually overtaken tourism as the number one industry in Victoria, but it's all quite small companies. And we don't have a single "head office" type company that can throw off high-level engineers or managers who want to start their own thing (somewhere in the comments, someone pointed to Microsoft's and Amazon's roles in seeding the entrepreneurial ecosystem) - that's a condition that holds for Vancouver, too.
Flock (the social browser) has a development team in Victoria (in addition to its headquarters in San Francisco), but it's small compared to ...well, big. If anything, companies start here and then get bought by big companies once they're successful. PureEdge was bought by IBM; Power Measurement by Schneider Electric, and so on.
Geographically, Victoria is actually closer to Seattle than to Vancouver, but nationally it's a different country of course (even though we are below the 49th). Those national borders complicate things, as does the fact that we're on an island. To my mind, we should be one regional power-house - some people choose Victoria over Seattle and Vancouver because of lifestyle - but the regional thing is just not quite happening yet. There's still a lot of friction (geography & national politics) in getting people together, and Victoria has quite the inferiority hang-over vis-a-vis Vancouver (there's a huge political discussion in this, too), while Canadians have an inferiority/rivalry thing vis-a-vis the US (Seattle, eg.).
Sorry to keep harping on Victoria here, but it's where I live (and I'm recently questioning why I don't live in Vancouver or Seattle (as a dual citizen, I could, friction-free).)
By the way, if you're ever up in Vancouver, there's another Boris you have to meet, if you don't know him yet: Boris Mann of Bootup Labs, which hosted Brad Feld last April. I know they'd love to host you for an event, too!
fredwilson
· 5 months ago
Wow. What a great info filled comment Yule. I didn't know very much of this. You are right. Seattle to Vancouver (incl Victoria) will be one single startup hotbed (like denver/boulder) is. It will happen
Yule Heibel
· 5 months ago
I so hope you're right ("It will happen"). From your lips to the right ear,as they say... ;-)
Aruni
· 5 months ago
Totally agree! We have lots of great things going on here in Austin. We are sometimes concerned that we don't have as good access to capital as the Bay Area but we help our companies at the Austin Technology Incubator find creative ways to get capital. Where there is a will, there's a way!
Jeff Bennett
· 5 months ago
Bravo Fred. There are many places where we can build great companies. No need for any Silicon Valley envy. Its about the idea, the entrepreneur and team.
jennifermeacher
· 5 months ago
"I'm doing this at 5am on my BLACKBERRY on the redeye because I can't sleep so my examples are what I can muster at this moment."
.....Oh yeah, Waterloo ON, produced RIM
cheap nhl jerseys
· 5 months ago
One thing that twitter now allows you to do is actually form relationships with folks you ordinarily would have to meet "live" to begin to get to know (Tim O'Reilly has posted on this before)
Glenn Engstrand
· 5 months ago
Thanks for taking this important and supportive stand! I used to live in the Bay Area. Now, I live far away an am an entrepreneur with about a year old start up technology company. Our value add is accelerating innovation iteration in a "fail fast" way by developing and delivering technology more rapidly and cheaply. We do this by working smarter. Anyway, that's beside the point. When I was in the Bay Area, I got socially buoyed up because everyone else on the BART train or on the bus was also talking about their start up or their web app, etc. When you are in a place where entrepreneurs are few and far between, then you start to experience this "ugly duckling" syndrome.
Carl Morris
· 5 months ago
I think the "creative cost" of living in the Valley could be an opportunity cost.
Technology always relates to some form of human endeavour. I would think any area can create a mindset with its own insights and blindspots.
As for the Valley, when you live in an area that is sometimes happy to celebrate technology as an end in itself, you will develop your ideas along certain lines.
I don't see Europe as a homogenous area, it's more complex than that!
That said, a good example of regional variation could be start-ups with a presence in London that focus on music - Last.FM of course and now Spotify and Soundcloud. It's clear that they benefit from being so close to established music companies and the live music scene.
Shawn L
· 5 months ago
Interesting notion. Boston's long had an inferiority complex to the Valley, and has recently started hosting innovation nights (see http://massinnovationnights.com) in an attempt to show that things are happening. Thing here is, everyone tends to run in the same circle, so an innovation night just shines a spotlight on the inferiority. I'm all for getting like-minded people together to network (http://techcocktail.com), but let's keep it honest.
The start-up I work for, http://www.on-state.com, started as a completely virtual company, and just recently set up Boston headquarters. While the new HQ facilitates easier collaboration and communication, there is something to be said for virtualization. So maybe the inferiority complex will dissolve as companies migrate in that direction.
Ryan Graves
· 3 months ago
Re reading this post months after it went up, and after a recent move back to Chicago (where I do think their is startup potential i.e. feedburner). I'm trying to identify why certain places are popular and other aren't.
What I'd like to see more of in Chicago is...
1) VC's and Angels who blog - so that they communicate what is interesting to them and so that they are more accesible or even appear more accessible to the areas entrepreneurs.
2) An increase in the understanding that failure won't kill you. In the valley, as well as in NYC, people understand that successful business comes from trial and error much of the time. Here in Chicago with the good trading culture failure is BAD. We need to get over that.
I'm speaking next week in Milwaukee about a startup that I started and how/why it failed. That's my first step.
All Comments
http://annarborstartups.com
http://a2newtech.org
http://a2geeks.org
We're still working on the college sports thing. ;-) Go Blue!
As one of the few* entrepreneurs who've started and sold successful companies in the Bay Area and *then* moved to NYC to start another, I have a unique perspective on the issue, IMHO. (My previous company was Trymedia, my current one is http://rmbrME.com - the mobile business networking platform).
I love NYC and moved here for personal, rather than business reasons. My rationale: as a successful entrepreneur I could start a tech company anywhere, and New York certainly isn't just *anywhere*. :)
For all the plusses and minuses of the NY tech scene, defensiveness is its greatest weakness, and while I hope this doesn't offend you - this post doesn't honestly move the dialogue forward.
If you want to make the ecosystem work better, the first step is to talk about what is and what isn't working, and to make a concerted effort to seriously and strenuously address the community's blocks and limitations. Instead, NYC tends to do things like put up banners that say "Technology Capital of the World" (yes, the city really said that) or run events like Internet Week (well intentioned, but lacking in concrete purpose or measurable outcomes *and* competitive with for-profit events).
New Yorkers are unbelievably defensive about their city and - in general - tend to doggedly defend everything about it ("NYC has the best subway", "NYC has the best pizza", "NYC has the best startup community"), even when *empirical* data proves otherwise.
Perhaps our bluster, persistence and PR "flash" are the core values that make New York great - and we don't really need to change or adjust them to fit some mold. Perhaps the us vs. them mentality often espoused by the industry's leading lights isn't a problem in any way. And maybe the fundraising, talent acquisition, support networks, transportation and university system are fine for aggressive startups with a bootstrapped, customer-centric mentality.
Perhaps.
The crux of the debate for me is less about whether NYC is good (or good enough), but whether our collective defensiveness undermines our ability to seek positive change.
The empirical evidence - across many fields of inquiry - suggests that it does. Until we take a step back and analyze our strengths and weaknesses as a community *without* resorting to us vs. them, defensive, populist or purely rhetorical arguments, I'm afraid we're doomed to keep having this discussion.
Gabe Zichermann
CEO, rmbrME
*I know there are a number of SF-->NYC entrepreneurs, and many of them are my friends. However, in absolute numbers, there are far greater numbers of expat New Yorkers in startups on the west coast compared to the number of expat Californians running startups in NYC, even when adjusted for population and university size.
Defensiveness is only a weakness *if* you agree that some change is needed. If no change is required, then defensiveness is - merely - defense. :)
Tactically, here are just some of the issues that have been raised by myself, friends and colleagues in forums like the Founders Roundtable (http://foundersround.org), Bootstrapper (http://bootstrappersummit.com) - both of which are great, grass-roots organizations for NYC startuppers- or over drinks. I'll phrase them as convivially as possible:
"The City cares more about saving the dying finance business or bringing in short-term film & television jobs than it does about the tech industry"
"New York's tech industry is very 'clique-ish' - if you're friends with the right crowd, there's money, fame, exposure"
"Insiders here care more about getting into the NYTimes and Esquire than building companies or industries. It's like LA meets Silicon Valley."
"NYCs investment community is too insular, preventing new sources and seekers of capital from entering the market"
"NY-region's tech industry stats are wrong and inflated and lead to bad policy decisions. A ton of investment goes into finance tech and high-capex healthcare, not into small, nimble, consumer-facing startups. It's not apples to apples"
"It's too 'lawyery' here - everything takes a ton of paper, lawyers are expensive, deals are cumbersome to do"
"NYC is too expensive to bootstrap"
...and those are just some of the issues. But it's less about the tactical concerns for me than it is about the strategic *frameworks* we're using to make things better.
-Gabe
I'll rope you in to some of the good work that Amol, Richie and others are doing and let's see if we can figure out a platform for making things work better.
-Gabe
Fred, do you see a correlation here between your previous posts on "some VCs are broken" and Gabe's above comments?
Gabe, I think you hit the nail directly on the head. I have been tossing around working in NYC vs. Silicon Valley for the past year. My only concern about NYC was the perceived lack of opportunities and resources for startups... (of course, compared to the West Coast)
I agree with Tim and Fred "TMTOWTDI"
and its never been easier
One thing that twitter now allows you to do is actually form relationships with folks you ordinarily would have to meet "live" to begin to get to know (Tim O'Reilly has posted on this before). So first the blogs helped you get "informed" now twitter enables live networking --
do it where you want to do it.
SV doesn't have a monopoly on good entrepreneurs or good deals. There might be more of them there, but I'd reckon that the ratio of available capital to good deal flow is fairly consistent across the board.
Seattle is a solid #2. There are pockets of strength in Boston (software, storage), and Austin and NYC.
I think part of this is related to the fact that the first 10-50 employees after the founders tend to come from mid-sized and larger companies and SV just has waaaay more of those. I also think part of it is a financing issue. Smart connected angel and early stage money is much easier to find in SV.
I too am struck by the irony that the Internet allows us to start and build great companies anywhere, hire remote employees, find and connect with partners, etc. But even with that, SV's proclivity to produce the next great thing is unmatched. Just look at Facebook- founded at Harvard, it could have been the next great Boston based company. But Mark moved it to Palo Alto.
For the record, I have lived in the Bay Area, Chicago, Austin, DC, and Boston.
Networks gain strength as the square of their node number. SV has many nodes. There's a tangible benefit to being surrounded by folks that have startup in their blood.
The Reality:
Look at what Matt Mullenweg has pulled off with Wordpress. You get passionate folks to join up all over the globe and somehow put together the framework to coordinate everyone's activities (or just keep each other up to speed and help problem solve). When I start something up, I won't care much for physical colocation (face to face is great but not necessary every day).
Personal choice trumps geolocation advantage:
I'm partial to an entire city with a higher ratio of folks with rose colored glasses on, but my fiance and I were considering moving out west independent of startups. Long Island has gone down hill since I grew up here, and although I love visiting Manhattan, I need an unobstructed path to walking on grass (suppose I could live in central park).
I used to work at a CRM company called Entellium that went bust a few months ago. Did anyone know that the application was entirely developed and supported from Malaysia? Even the support team for the application had to adopt Americanized names to avoid confusing and frightening the customers away.
However now with the cloud computing model, where applications and systems can be deployed and used directly from the Internet it does close this particular gap, where before this you need to see or hear a familiar face or voice where it could sway your opinion before purchase.
I personally do not believe in locations or addresses to add credibility for a company, as long as the application delivers what I require it to perform. I believe your statement on a crock of shit would go a long way for other startups to ignore their geographical location and focus on making their product better.
1) The Net was supposed to be post-geographical, instead there is this perception of the cultural command and control center.
2) The Net was supposed to allow bottom up wealth, instead the wealth is highly concentrated with tiny group of people at the top of the scalable pyramid, reaping all the financial benefits.
3) The Net was supposed to be a cross denominational, universal in language, etc. Instead the Net fragmented into tiny niches that don't talk to each other.
PS I am sure you are ware of the definitive essay on this subject by Paul Graham. Speaking of Boston, remember CMGI? I heard someone talking about Naviste recently on CNBC and I just chuckled. I still remember Naviste IPO and now they say the company that currently is trading in pennies "got the potential". But I digress.
Anyways, I have two contradictory thoughts on this topic:
1) I think the two greatest factors for a startup's success are the vision of the founders and their ability to sell that to people they want to recruit, and their detrrmination to fight through the failures till they work out the path to success. And these people will make it happen irrespective of the location (well assuming they are in the 12/20 cities)
2) The companies that Fred mentions are the Black Swans and they are random and can happen anywhere. But what about the small to medium start up successes ($50mil to $150mil exits). Are they easier in Silicon Valley because you are surrounded by a bunch of people who are so tied into the ecosystem that you come up with an idea that fits into something else and can execute quickly?
I don't have an answer overall and it is an internal debate for me. I might make a decision about where i will live for the next 6-7 years of my life and i think about this issue a lot. And it scares me a little. Some days i feel location won't matter and sometimes i feel why should i take up the battle of location when there will be bigger challenges in figuring out the market & product. If and when i do something and the results come out, i'll have an better grasp of this issue. :)
i agree about the black swans. but tmtowtdi is true all up and down the scale of companies
Would be keen to hear which Australian startups you're speaking about.
We probably cover more Aussie tech startups, at TechNation Australia, than any other blog and to be honest I'd struggle to come up with a "whole bunch" of really successful Aussie tech startups b/w $50mm to $150mm in value.
I'd like to be wrong though, so feel free to set me straight :)
The start ups I'm watching are popping up in places like Providence RI. Out of the way but still connected to the rest of the World. No fancy parties to attend and no high profile bloggers to worry about.
i'll never forget the monthly financial update where we burned $4 mill in one start up and were told 'you are not spending enough'.
get big quick - remember that?
Fred, have you read any of Richard Florida's work on hubs/hotspots? Thoughts?
Here he is at Google, for their author's series - http://www.youtube.com/watch?v=khQ9BaXZAjM
His creative Class website - http://creativeclass.com/
His latest book, who's your city - http://creativeclass.com/whos_your_city/whos_YO...
on Amazon - http://www.amazon.com/Whos-Your-City-Creative-I...
He's also on Twitter - @richard_florida but just linking to blog posts and interesting articles.
Enjoy.
At a core level, Florida preaches competition: he asserts that cities can band together in regions, and that cities compete against one another, which also means nation-states matter less than they did in the past. Paris competes against London competes against Tokyo competes against New York competes against... etc.
Canadians *do* play hardball in some sectors (for example, the corporatists who've run the usual resource-extraction racket, er, I mean, economy - hewers of wood, drawers of water and all that...), but officially, we're NICE.
It's interesting that Florida remarks (in this article) that he gets criticism from the rightwingers in the US (for advocating tolerance of gays and diversity), but that he just knew he'd get criticism from the leftwingers in Canada.
I don't swallow everything Richard Florida says whole, but I think he's basically on the right track. (That said, the devil along with every other deity is in the DETAILS, right?) That said, I'm not surprised to see my fellow Canadian activists attack success...
Great Post!
My personal opinion is that there are distinct advantages for a start-up to be located in SV (access to talent, partners, money, advice etc) however location is far from being the most important factor. Location is the most important factor for real estate but for start-ups it is who the founders are (Paul Graham: http://www.paulgraham.com/13sentences.html)
However, because of the huberous of SV, where the greatest consentration of VCs reside, it IS very difficult to get any traction if you start with 2 strikes against you because your not geographically preferable.
We all figured two dozen was approximate.
Penelope Trunk has blogged a few times on where to live, especially if you want to start a company
http://blog.penelopetrunk.com/2009/05/21/how-to...
Also, I strongly suggest Richard Florida's work and books on the Creative Class.
Your title says it all....if i double click on the title, SV is the center of innovation industry till now and peripheral innovation/startups can be anywhere. The question is, Can SV continue to be the center for next 10/20 years? I don't know.
Not everything is a consumer internet play.
VCs would rather not travel to go to a board meeting.
If you choose to do your startup outside a hotbed, then you are
drastically reducing your pool of possible finance.
QUOTE
Canada's new R&D players - BlackBerry inventor Research In Motion Ltd. being the most notable - remain too few to alter a troubling reality. RIM spent 6.2 per cent of sales on R&D in the fiscal year that ended Feb. 28, less than half of Nortel's level of investment last year.
Still, RIM's R&D budget as a percentage of its sales is several times that of Canada's biggest oil and gas companies, which have been stock market stars throughout this decade and which remain the foundation on which the country has pinned its hopes for a rapid recovery. Despite overflowing profits in recent years, EnCana, Petro-Canada and Suncor have spent less than 0.5 per cent of annual revenues on R&D.
UNQUOTE
Source: Canada's Innovation Gap
There're lots of smart people there, but the culture and drive seems to be missing.
I have tried both - Valley and LA - and there's just no comparison. Easier to hire people who get it, easier to raise money. If you want to be a VC funded tech company, go to the valley or do not pass go and don't collect $200.
http://www.sco.tt/scott_yates/2009/07/dont-name...
The great part about the SV is that there's nothing else there, so of course you have to focus on business because it's what everyone else is doing.
Living a well-rounded life in what is really just a suburb of Oakland -- the original place where "there is no there there" -- is not possible. So you work all the time. If that's what you want to do, that's great. If not, there are lots of other great places.
i hate the name silicon alley so much. it reeks of "we want to be silicon valley" jealousy
in my web 2 NYC keynote last year i begged everyone to drop it
we are NYC, for god's sake, the greatest city in the US, and one of the great cities of the world.
why on earth do we need a new name?
The good news is that the names only take when there is no other name for a place that needs a name. If "Denver" doesn't need a new name, than certainly New York City doesn't.
"The collection of suburban areas south of Oakland best known for a concentration of high-tech companies" needed a new name, so it got one.
That being said, I think it is still very feasible to create a great startup here, or anywhere else for that matter. As pointed out in one of the previous comments, the founders are the primary assets of a startup. They can easily "educate" themselves and improve their ideas/create new ones with the rich amount of resources available on the web (such as your blog among others) - it is really for the entrepreneurs to know to look for these resources in the first place. And of course the costs doing a startup are quite low now, both in terms of the technology and marketing, so capital is becoming less important. Though entrepreneurs not in startup hotbeds do suffer from a bit of a disadvantage, it is not insurmountable to prevent them from creating something great.
Just a note on some of the examples that you gave, those companies actually leveraged on some of the assets they had locally (which actually may not be found in the valley). Bloomberg serves the finance industry - where else could it be created and succeed but in NY? Microsoft started next to a university with one of the earlier sets of computer terminals. Many telephony based companies come out of the northern europe due to strengths in that area. Sometimes, being in an area other than the valley can have its advantages as well.
There's plenty of examples of very successful companies outside of the typical Silicon Valley sphere, however, given the huge focus and concentration of the technology press and bloggers in Silicon Valley, you get overcoverage of darlings like Twitter, Facebook, etc. which distorts the view of folks of how important it is to be in Silicon Valley.
Capital is a bigger issue. Many of the local VCs are off cycle. Foundry, the largest of the Colorado VCs, is investing nationally, not regionally. VCs in the Bay area continue to have enough deal flow with local roots that investments in startups farther than 60 minutes away seem unnecessary and unwise. When a region has some requisite minimum of its own investment capital, it can often attract participating or follow on investment from Silicon Valley. Without that concentration of capital, however, the entrepreneurial base begins to see financing risks as a much larger concern; they think about relocation, or they gravitate to opportunities that are less likely to require significant early stage capital.
I love Colorado, and I love Boulder. I think this is a great place to live and work. I am willing to make a number of sacrifices to build successful companies here. But I do understand the sentiment and concern that you heard last night from entrepreneurs in Seattle. Of course you can build a great company in Seattle, Austin, Boston or Boulder; not just in Mountain View or Palo Alto or San Francisco. We all need to be realistic, though, about the challenges and the advantages and disadvantages that each startup "hotbed" provides.
A culture of very low risk-aversion. Every region has its own cultural notion of socially acceptable levels of risk in business and employment, and it varies widely. The social pressure to conform to a certain level of risk aversion is subtle but pervasive, and has a real impact on the opportunities available for intrinsically high-risk enterprise, both in terms of raising money locally and finding top-notch employees. In my experience, Silicon Valley is one of the very least risk-averse cultures in the US and attracts many people with low risk-aversion, where high-risk career paths are almost a default assumption. This also goes hand in hand with an environment where failure at business is not the black mark on one's reputation that it is in many other cultures. That said, I think all you really need is sufficiently low risk-aversion which can be found in many other locales, not the anomalously low risk-aversion that pervades Silicon Valley. Also, I think Silicon Valley has become more risk-averse over the last several years such that it stands out less on this account.
The social primacy of technology/engineering. Back in the 1990s, this was probably the most distinctive feature of Silicon Valley that I think made it great. In almost all places, the default assumption, both explicit and implicit, is that engineers and technology are unambiguously subordinate to the business school graduates, and consequently many engineering/technology decisions are strongly influenced by people that do not fully understand the consequences. An innovation in Silicon Valley was the idea that business and engineering occupy explicitly parallel hierarchies, neither subordinate to the other and with both hierarchies having some measure of veto power over the other. Silicon Valley venture capital embraced this idea to a significant extent (the entry of many former engineers into the ranks of VCs probably helped here) and I think it enabled a great many companies to produce innovative technologies that never would have made it in a more traditional hierarchical business structure. I see less of this today in Silicon Valley than there used to be, and I believe this more than any other factor will unseat Silicon Valley as the center of the universe for technology companies. In my estimation, the Pacific Northwest region is more strongly embracing this idea now than is Silicon Valley.
Silicon Valley will continue to change, but it is not nearly as compelling today as it has been in times past. The distribution of technology startups in the US and globally is more diffuse than it used to be. Among the people I know, there has been a slow but noticeable exodus of really smart engineers from Silicon Valley to the Pacific Northwest, and I have noticed the emergence of cultural characteristics in the tech startup environment in places like Seattle that remind me of the periods when Silicon Valley was really on top of its game albeit on a smaller scale. That would be my bet for the part of the US most likely to unseat Silicon Valley as the center of gravity for tech startups if/when another center of gravity emerges.
Because a lot of the critical mass is cultural, I would expect that it can rapidly shift geographically given a mobile society, moderated by network effects.
"You can build a great startup in any of the hotbeds..."
True. But, your current startup is probably going to fail. The real question is can you fail in any of the "hotbeds?" In SV, you'll work on your current startup w/ the best best people in the industry, and you'll probably meet your co-founder for the next one, the one that will work! or you'll get hired early at another startup that's got a great shot ... etc.
In NYC, i am sure after you fail, you probably go on terribly condescending interviews at insurance companies and investment banks. Or maybe go out to NJ and talk about how much you love pharmaceutical manufacturing?
And does Fred care that your career is shot? no, 9-out-of-10 failures are already built into his model, so as a founder you need to build that into your model too, you need to reduce the cost of failure. Only one way to do that is to move to SV!
NY loves risk takers and accepts failure better than anywhere I know
The median startup is a failure. You've got one career. Either pick a market your city excels in or start your technology in a startup friendly culture. Either way you've improved your odds significantly of recovering and going on the numbers two and three.
BTW, re risk taking in New York, if your first hedge fund (or PE/VC fund) fails, can raise another one?
...but Union Square is smack dab in the middle of the biggest network of them all in the United States -- NYC.
My $0.02: People tend to systematically understimate the importance of social networks. And I'm not talking about their digital imitations like Twitter and Facebook. I mean the real, flesh-and-blood kind.
As Fred himself has pointed out on this very blog, there's a lot information that just doesn't come across except in face-to-face interactions.
My view is that you're simply going to spend more time and money by not moving to Silicon Valley. For some people, that's a fine tradeoff. For others, it makes more sense to come here, give it a shot, and then move on.
(Or get addicted to the culture and become an indentured servant to the culture through a Silicon Valley mortgage like me!)
However there will be right people to do "it" with. People power is the largest power there is. And while you can find the right people anywhere (and you can) you have to make it your mission to be with those people who will enable you to do "it." If you think you have found a location that has a large amount of those people, and that location makes you happy, then move there. Otherwise, move on.
Weight Watchers makes money off this scheme you know. They assemble groups of people to party on the idea of losing weight. But if you hate your group- you are not going to be losing weight. You'll probably drop the program. Same thing with having family that doesn't like the idea of watching tv- if none of your family watches tv, it is unlikely you will either.
It's all about your peer group.
Actually, part of the problem is that nobody wants to put money into the airline industry because investors keep losing their shirt on it.
I wish I'd gotten in on the conversation earlier. A reader of my blog (I love the web!) was inspired to do some analysis on Crunchbase and found that the *PERCENTAGE* of startups in that database that had a liquidity event varied a bit by location. The major hubs (SV, SEA, NYC) had a noticable edge, and Seattle actually had a higher rate than the Valley. Of course, Crunchbase is an imperfect dataset (10,000 companies) and liquidity events are an imperfect measure of success, but I still thought the data was interesting.
Link to the post: http://bit.ly/Mapl1 (the comments have some interesting bits from folks with other data sources)
Very high tech businesses that need to succeed fast or miss the window of opportunity have a far better chance of success in hotbeds. Access to capital, media buzz, talent that lives for the big win, etc. is plentiful. If you're building a rocket, in order to reach escape velocity, you need expensive jet fuel at all stages. Then you either make it fast -- or burn up on the way down just as quickly.
The longer, slower builds that don't necessarily need venture capital can thrive anywhere.
I founded my current company along with an savant java programmer and a spectacular industry visionary in the middle of pretty much nowhere. We're pushing 8 figures this year, but it's taken three years.
We perhaps would have grown too quickly and might have been scrounging for a 2nd round if we got VC funded at the outset. Instead, we're growing, quietly, profitably and with positive cash flow. With luck, we'll continue to ride out the storm.
Extrovert will be more successful when he lives in a startup hotbed.
Introvert doesn't need anybody, he can live anywhere he likes.
People are also more open to trends in, say, Austin, e.g., note Twitter's first big wave of popularity happening at SXSW. However, here on the East Coast and especially in the South, people just don't "get it" quickly and aren't actively seeking to get it. Thinking about The Next Big Thing isn't exactly on a lot of minds. That lack of thinking affects the conversations in entrepreneurial circles (*shockingly* ignorant of Internet trends at worst, and a couple of years behind at best) as well as the tenor of general conversations at kids' birthday parties, networking events, etc. This ignorance does not encourage the psychic energy that drives human creativity.
Is the Valley the only place with the right culture? No, there are a few other places already mentioned (Austin, Seattle, Boston, Israel, etc.). Innovation can happen anywhere but the right mix of culture, financial and human capital just isn't present everywhere. This shouldn't be cause for any inferiority complex, but it is what it is.
You could help by backing a media site that highlights the contributions and innovations from other geographies. Here in Boston Xconomycom is doing a good job, and is run by quality writers with a journalistic bent.
Victoria is one of those places you live in for the lifestyle, and then just hope that there's enough synergy (rubbing along with people - see my remarks in response to other comments on this thread) to make it work. In Victoria - and Cascadia in general - however, nature is so gloriously overpoweringly beautiful that it's easier just to fark off and go camping instead. That hurts the hunger in startup culture.... SV destroyed swathes of orchards and farmland (nature) to create that culture...
By the way (on the topic of Canada): RIM was mentioned, but no one recognized that Flickr was started in Vancouver (the company that Butterfield and Fake initially had was called Ludicorp, and they were working on The Game Neverending). They built Flickr in Vancouver - Yahoo (a SV company) bought that Canadian startup. While Fake has now started Hunch.com in NYC, Butterfield just announced that he's starting a new company, Tiny Speck in Vancouver.
One of the more annoying things (from a Victoria-based person's perspective) is meeting people who don't know that Abebooks is a Victoria company, or seeing Victoria companies send out press releases that start with "Vancouver, BC..." I've seen Genologics do this, and also Triton (which developed The Sawfish, a cool machine for harvesting underwater logs). High tech has actually overtaken tourism as the number one industry in Victoria, but it's all quite small companies. And we don't have a single "head office" type company that can throw off high-level engineers or managers who want to start their own thing (somewhere in the comments, someone pointed to Microsoft's and Amazon's roles in seeding the entrepreneurial ecosystem) - that's a condition that holds for Vancouver, too.
Flock (the social browser) has a development team in Victoria (in addition to its headquarters in San Francisco), but it's small compared to ...well, big. If anything, companies start here and then get bought by big companies once they're successful. PureEdge was bought by IBM; Power Measurement by Schneider Electric, and so on.
Geographically, Victoria is actually closer to Seattle than to Vancouver, but nationally it's a different country of course (even though we are below the 49th). Those national borders complicate things, as does the fact that we're on an island. To my mind, we should be one regional power-house - some people choose Victoria over Seattle and Vancouver because of lifestyle - but the regional thing is just not quite happening yet. There's still a lot of friction (geography & national politics) in getting people together, and Victoria has quite the inferiority hang-over vis-a-vis Vancouver (there's a huge political discussion in this, too), while Canadians have an inferiority/rivalry thing vis-a-vis the US (Seattle, eg.).
Sorry to keep harping on Victoria here, but it's where I live (and I'm recently questioning why I don't live in Vancouver or Seattle (as a dual citizen, I could, friction-free).)
By the way, if you're ever up in Vancouver, there's another Boris you have to meet, if you don't know him yet: Boris Mann of Bootup Labs, which hosted Brad Feld last April. I know they'd love to host you for an event, too!
.....Oh yeah, Waterloo ON, produced RIM
Technology always relates to some form of human endeavour. I would think any area can create a mindset with its own insights and blindspots.
As for the Valley, when you live in an area that is sometimes happy to celebrate technology as an end in itself, you will develop your ideas along certain lines.
I don't see Europe as a homogenous area, it's more complex than that!
That said, a good example of regional variation could be start-ups with a presence in London that focus on music - Last.FM of course and now Spotify and Soundcloud. It's clear that they benefit from being so close to established music companies and the live music scene.
The start-up I work for, http://www.on-state.com, started as a completely virtual company, and just recently set up Boston headquarters. While the new HQ facilitates easier collaboration and communication, there is something to be said for virtualization. So maybe the inferiority complex will dissolve as companies migrate in that direction.
What I'd like to see more of in Chicago is...
1) VC's and Angels who blog - so that they communicate what is interesting to them and so that they are more accesible or even appear more accessible to the areas entrepreneurs.
2) An increase in the understanding that failure won't kill you. In the valley, as well as in NYC, people understand that successful business comes from trial and error much of the time. Here in Chicago with the good trading culture failure is BAD. We need to get over that.
I'm speaking next week in Milwaukee about a startup that I started and how/why it failed. That's my first step.
Thanks for the thoughts again Fred.