>I'm not trying to be all sour grapes, it just doesn't make sense to me.
Please allow me to offer a different perspective.
Doing a startup, at least a serious startup (instead of a side project), is an extremely costly endeavor, doesn't matter who you are. By costly I don't mean the office rent or employee payroll, I mean the toll it takes on your time, your personal life, and most importantly the opportunity cost you pay by giving up a potentially lucrative career elsewhere.
In addition to being costly, doing a startup has a very high risk of failure. So combining both of those factors, if you decide to take the leap of faith to do a startup, wouldn't you try to do it in a way that absolutely maximizes chance of success? Considering all that risk and opportunity cost, higher rent and more expensive cost of living is such a marginal cost. With all due respect, I know what kind of house you can buy for about $300k in Houston, and if keeping that standard of living is more important to you than maximizing the chance of success for your high risk startup, then I sincerely wonder if doing a startup is the right thing for you considering how low your risk tolerance is.
Now why do I think Silicon Valley offers a higher chance of success? Books can be written about this topic so I won't get into too much details. The talent pool is one issue (and no, even though I don't doubt there will be a lot of .NET devs in Houston, I think you will realize it's one thing to find good .NET devs, but another to convince them to work for you), the other one is the entire supporting ecosystem. I'm talking about cofounders, investors, people to bounce ideas off, people who show you where the doors are, and most importantly there is a culture of not punish failure that does wonders for encouraging taking risks and innovate.
Is SV a circle jerk? Oh absolutely. But it doesn't mean you can't get tremendous value out of it.
A counter example is when I tried to do a software startup in Austin. To be honest, the level of ecosystem in Austin is completely bush league when compared to SV. I think one of the biggest VC firms in town back then had an unofficial policy of "not invest in first time founders", and most of their investments are series B/C rounds following bigger SV VC firms. That is how risk-averse the scene is. I moved to Silicon Valley soon after that and I never looked back.
Don't get me wrong, there are plenty, plenty of reasons to do a startup else where. For example, if you are doing a startup that writes software for the oil/energy companies, then Houston would be a fantastic place! If you are doing a startup that promotes live music, then Austin would make sense too. I just don't think personal cost of living is worth much consideration in most cases.