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Starting a Company Outside Silicon Valley Just Saved Me $1.1M

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Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#11

Post by spamizbad »

filoleg wrote: post #2

What about the opportunity cost that he potentially lost by starting his company outside of Silicon Valley? I am not saying that he definitely did, but the fact that OP doesn't mention it at all makes his whole post feel a bit disingenuous. In fact, it reminds me a lot of people who talk about how much money they saved by not going to college and how it is the way to go for everyone, despite studies [of US colleges]…

I think it's wise to ask the question: Where do I/we need to be to build the best team, or the best company?

Are you in a domain where you need to hire people that are difficult to find outside of Silicon Valley? If that's the case, it makes perfect sense to found in the valley.

Is your business capital-intensive, and funding will be a long-term concern? Maybe SV or NYC makes more sense.

Are you entering a domain where most of your key customers will be located in specific metro area, and being located there lends you credibility? Found there.

It may also be smart to found where you have lots of local connections, letting you staff up with vetted local talent and leveraging local connections to get introductions to potential customers.

And finally, founding close to family/friends can help keep your mental health in check and help you stay focused.

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#13

Post by jawnv6 »

50% of VC funding lands in CA. 50% of that is on Sand Hill. So ~25% of all VC funding happens in offices in Palo Alto, the sheer efficiency of chasing a funding round can't be beat.

For an established serial entrepreneur with a proven track record, it can absolutely make sense to stay in an area you know. But I think that math really changes if you're going to be cold calling VC's, trying to wrangle meetings from 3 time zones away, get meetings bunched up to consolidate travel, etc. The overhead of redeye travel is relegated to a joke at the end, where's the "measurement" on that?

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#14

Post by filoleg »

sontek wrote: post #10
filoleg wrote: post #2

What about the opportunity cost that he potentially lost by starting his company outside of Silicon Valley? I am not saying that he definitely did, but the fact that OP doesn't mention it at all makes his whole post feel a bit disingenuous. In fact, it reminds me a lot of people who talk about how much money they saved by not going to college and how it is the way to go for everyone, despite studies [of US colleges]…

What would the opportunity cost? What does silicon valley have that philly doesn't?

Talent, VCs, good weather. OP has managed to save $1mil by basing his company in Philly, but could have potentially missed out on multiples of that amount from VCs.

Mind you, I don't even live there, because the downsides of living there in my current situation outweigh the upsides. However,I have been there many times, and if I had to start a company right now, that's where I would do it.

P.S. Try hiring engineers for a company in Philly and a company in SV. Then try to compare the quality and number of candidates knocking on your door in each scenario.

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#15

Post by maxk42 »

JohnFen wrote: post #8

Personally, I wouldn't start a company in silicon valley. On the whole, it looks to me like the downside of doing that far outweighs the upside.

Elitists from silicon valley will downvote this simply because they don't like having their life choices called into question but you're right: The costs (cost to lease space, cost of labor, business costs, commute, quality of life you can afford for your dollar, crime rate, etc.) far outweigh the benefits (access to talent and VC).

If you can bootstrap it yourself or find VC outside of SV, it's typically better to do so.

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#16

Post by bitL »

sontek wrote: post #9
unignorant wrote: post #3

Similar things can be said about starting a company with a fully remote team. I’d estimate we saved much more than $1M for our thirty-person company. An additional benefit is that you can recruit the best talent from anywhere, so long as they have experience working remotely (it’s a bit of a risk to experiement with someone who hasn’t done remote work before). With this setup, I’ve been blown away how easy it is for…

I started my company fully remote but doing payroll in multiple countries is a pain. Have you solved this? I'm limiting my employees to the areas I've already registered with the proper authorities and not hiring in any other locations.

Hire them as contractors with equity. Pay them their accounting costs + health insurance amount + voluntary pension plan if you want to emulate their countries' typical deductions.

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#17

Post by nostrademons »

sontek wrote: post #9
unignorant wrote: post #3

Similar things can be said about starting a company with a fully remote team. I’d estimate we saved much more than $1M for our thirty-person company. An additional benefit is that you can recruit the best talent from anywhere, so long as they have experience working remotely (it’s a bit of a risk to experiement with someone who hasn’t done remote work before). With this setup, I’ve been blown away how easy it is for…

I started my company fully remote but doing payroll in multiple countries is a pain. Have you solved this? I'm limiting my employees to the areas I've already registered with the proper authorities and not hiring in any other locations.

Most of the entrepreneurs I know avoid this problem by not hiring employees - they use contract labor sourced from Upwork, which handles the paperwork of dealing with different countries & currencies. There are some challenges around communication, management, finding good people, etc, but once you find someone you can get a very loyal worker for a low price. A Cambodian programmer making $15/hour can live like a king - that's 12x the median income for their country, or the equivalent of an American making about $720K/year, so they have a strong incentive to work hard and not fuck it up.

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#18

Post by Aloha »

unignorant wrote: post #3

Similar things can be said about starting a company with a fully remote team. I’d estimate we saved much more than $1M for our thirty-person company. An additional benefit is that you can recruit the best talent from anywhere, so long as they have experience working remotely (it’s a bit of a risk to experiement with someone who hasn’t done remote work before). With this setup, I’ve been blown away how easy it is for…

There are some intangibles gained by an office, but I'm less and less convinced that those couldn't be gained as well, by renting a workspace, or hotel function space, loading it up with furniture, and having everyone come in 2-4 times a years for a week or two of inservice, it would still save gobs of money.

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#19

Post by stcredzero »

duxup wrote: post #4

I always assumed the valley focus was because, yeah VC money there, and VCs wanted people close by to help (well if they help), and just generally there are a lot of good people there. By no means are those bad reasons, but not everyone will have those reasons. A calculator seems a bit simplistic but I would generally agree that if there isn't something outright drawing you to that area, you don't have to be there an…

convinced themselves that stuff only happens in the valley and if they hadn't seen it they wouldn't have believed it was possible outside (and some did not, oh the excuses)....

Isn't this bigotry?

I remember watching all of these shows on PBS as a kid, where one of the major themes was how people would judge other people by class or other surface signals, and how this could obscure the truth or leave good people unappreciated on their merits. Did people learn the lesson? I guess some people did, and some people didn't.

Here's my experience coming to the Bay Area, looking up from the bottom: There's more bigotry here. People judge you more quickly and more absolutely on a more shallow basis here than anywhere else I've lived. (With the exception of the Norwood neighborhood in Cincinnati.)

Re: Starting a Company Outside Silicon Valley Just Saved Me $1.1M

#20

Post by eanzenberg »

sontek wrote: post #10
filoleg wrote: post #2

What about the opportunity cost that he potentially lost by starting his company outside of Silicon Valley? I am not saying that he definitely did, but the fact that OP doesn't mention it at all makes his whole post feel a bit disingenuous. In fact, it reminds me a lot of people who talk about how much money they saved by not going to college and how it is the way to go for everyone, despite studies [of US colleges]…

What would the opportunity cost? What does silicon valley have that philly doesn't?

He may lose out tons if/when he gets acquired / acquihired.
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