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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

#81

Post by jlarocco »

lotsofpulp wrote: post #77
jlarocco wrote: post #64

Earlier quoted context omitted.

> Personally I think ego is part of the issue - VCs don't want to admit they don't always need "the best of the best talent" for their application. I'm sorry, but isn't that the same bigoted mindset? Unless there's real evidence that the valley actually has "the best of the best talent". Every time I see that claim, though, it boils down to some kind of circular logic. I would definitely agree SV folks think they're…

The multitude of world changing organizations, especially by market cap, that have come out of SV is some evidence. Not that that means “best of the best”, but if I were to bet on where something transformative will come from, SV would still be on my short list. It’s all about playing the odds, not necessarily being absolute about statements like best of the best.

There aren't many "world changing" organizations coming out of SV lately, and I'm not sure that claim holds in any case: http://fortune.com/fortune500/visualizations/

Even narrowing down to "tech" companies, there are enough outliers that I don't buy it.

Change it to "SV has the best developers searching for VC funding," and I believe it, but I'd still question the cause and effect of the situation...

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

#82

Post by sharemywin »

froindt wrote: post #78
true_tuna wrote: post #52

Earlier quoted context omitted.

I saw this happen in reverse. I was buying servers from Rackable in orders of several millions of dollars. They bought SGI. Fired their Bay Area support staff, moved support to Ohio which was a huge short term gain. But support became so bad it was literally worth less than nothing. They would take in a machine with a known fault (raid controller let’s say) fail to replace the card, ship back a machine that didn’t bo…

I guess as with everything - context matters. Their overall goal was to be as effective as they could be. The cost savings went along with operational improvements. It was also a non-profit, which has an entirely different dynamic compared to a for-profit customer relationship. I'm totally on-board with there being region-specific niches where it simply works better to have support in that area. Farmers from the Midw…

I kind of agree with the people above if you take an experienced team then replace it with another team(with cost cutting added in), it could be a block down the road and your going to run into problems.

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

#83

Post by sudosteph »

true_tuna wrote: post #46
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.

Where would you go? Asking as a Silicon Valley person looking for a place that’s a step less Silicon Valley, but not quite middle America.

Well the author of the article seems to think Philly is a good option, and to be fair, I do know some very smart and ambitious engineers working and living in Philly these days.

Some of it probably depends on the company and the founders, but in general, I would look for signals like good universities, positive inflow of people moving there, and decent cost of living. I like Raleigh, Durham and Charlotte for those things, but I'm from that area am a bit biased because I have a network there and know it's a environment and culture I can operate in. Raising capital is a real issue in those places, but I know tons of talented people around there who feel underutilized working at satellite offices for the big corps (IBM, Cisco, NetApp, etc) and do seek out places with a more startupy culture. Raleigh and Durham are more tech centric (companies founded include RedHat, Ansible, SAS ) while Charlotte is more financially-oriented, but both are growing like crazy and still very affordable. I'd say they're at least worth a visit if you're giving other locations serious consideration.

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

#84

Post by jarjoura »

The conversation that you're either starting a company in SV or not seems silly. Of course you can start a company in most civilized places in the world, people do it all the time. Case-in-point the article above.

Plenty of industry defining tech companies started outside of the valley too. Microsoft up in Redmond, Commodore in West Chester Penn, AOL in Reston VA, and so on.

The point I never see talked about with conversations like this is, should you? You can find plenty of data points that say you can and you absolutely can. It's the, does your idea and execution path make sense for the location you're setting up at.

Some of the worlds top talent for tech are located in SV and that's why so many companies are here fighting for them. We're told, we need the best of the best to stay competitive and execute. If your product doesn't need a concentration of world class product managers, designers and engineers, then don't waste your time here competing for that talent. You'll have a much easier time finding talent elsewhere and for less money.

For me, an engineer, I chose SV because I didn't want to be the best person on my team. I wanted to be surrounded by people who are 10x smarter than I am and learn from them.

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

#85

Post by geverett »

true_tuna wrote: post #57
geverett wrote: post #28

As someone who started a company outside SV, then moved there for 3 years to grow the company, and has now moved away again - I would say it's well worth it to spend at least some time in the Valley to build a network and understand how deals get done in person. The density of investors and other founders/early employees in Silicon Valley can't be beat, and I often found myself learning inadvertently - dinner table c…

Where did you move? I’d guess 50% of the people in this thread are open to leaving the Bay Area if we find a location with comparable opportunity.

I'm in the process of trying to figure out where I'm going to be based next, leaning towards Puerto Rico (love the climate, friendly local population, easy/cheap/fast hop to family in New York, incredible tax incentives for people running businesses, sense of excitement/opportunity as the state rebuilds). 'Comparable opportunity' is relative - while an engineer here isn't as likely to earn a Bay Area salary, as a founder I think it's likely I could raise a decent round while based here (likely sourcing a lot of capital from Silicon Valley) while enjoying a comparably low cost of living and doing business. If I were trying to build the next Instagram I wouldn't do it here but there are so many businesses that need to be built here. I'm a firm believer you can find opportunity anywhere if you get creative. It's more fun to be a statistical outlier :)

I'm also in a position at the moment where I have relatively low overhead (no kids, good health) and realize that might not be the case for everyone, though I'd bet it's the case for many people who don't bother to take advantage of it.

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

#87

Post by bhelkey »

ojbyrne wrote: post #59

“It’s VC arbitrage.” The problem with arbitrage is that everyone wants to capture it, since it’s basically free money. Not in SV? You only need 1/4 the funding.

> As you can see, the $3.35M I raised at a San Francisco valuation netted me over $4.5 million of purchasing power in Philadelphia.

3.35 / 4.5 = 74.4%. 3/4 the funding not 1/4.

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

#88

Post by Nasrudith »

jlarocco wrote: post #64
Nasrudith wrote: post #49

Earlier quoted context omitted.

Personally I think ego is part of the issue - VCs don't want to admit they don't always need "the best of the best talent" for their application. Especially if their actual product would still be a turd no matter how polished like Juicero - there is no real sophistication needed there, they just wanted to copy Keurig to get rich.

> Personally I think ego is part of the issue - VCs don't want to admit they don't always need "the best of the best talent" for their application. I'm sorry, but isn't that the same bigoted mindset? Unless there's real evidence that the valley actually has "the best of the best talent". Every time I see that claim, though, it boils down to some kind of circular logic. I would definitely agree SV folks think they're…

I did put it in quotes to point out that it was considered an opinion. The real point was that they were doing routine work and paying like they are doing something new while working on a rehash.

There is some evidence that they are in fact above average given repeated failures to outsource to lower cost locales. From many corporations who tend to be ruthless about cutting costs even at the risk of long term problems that stands out as /something/. There are also incompetents everywhere as demonstrated by some major and avoidable blunders.

They may in fact be overpriced and there are people with said capabilities elsewhere. Mobility isn't perfect, one would expect there to be a talent concentration there based upon wages - even if they don't stick around the feather in their cap helps with future job seeking and wages. I am also aware not all sufficent talent is capable or wishes to of head there.

However prejudicing in talent pools does no favors eithe. To take an absurd example recruiting for people who are Olympic body builder and Java developers when you really just need Java developers would pass up vast pools of talent and raise expenses for essentially no reason. That is an extreme case of pointless overspecification.

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

#89

Post by jawnv6 »

JohnFen wrote: post #34
jawnv6 wrote: post #13

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 t…

But that only matters if you're chasing VC money. That's the norm in silicon valley, but (depending on your goals) it's not necessary in order to start a profitable business. I've started and sold a handful of successful tech companies, but have never taken a dollar of VC money.

Right, the article is chasing VC money. They have a calculator to see how far a VC dollar will take you called "VC Arbitrage". The author takes flights to SF specifically for VC meetings.

You're talking about a situation wholly removed from the article, why?

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

#90

Post by jawnv6 »

bluGill wrote: post #36
jawnv6 wrote: post #13

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 t…

You only need the VC who funds you though. Chasing after one elsewhere might be better odds because everyone else is looking to CA.

"the" VC? lol
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