Why Startup Hubs Work • Hacker News Board

Re: Why Startup Hubs Work

#71

Post by lukes » Wed, Oct 05, 2011, 11:10 PM UTC

When I meet people from the Valley they tend to talk how my startup might succeed and the interesting directions we could take. Conversely when I meet startup people from London (where I'm based) who haven't been to the Valley they tend to talk about why my startup might fail, usually focusing on competitors. Both are useful to talk about, but I think this reflects the optimism/cynicism divide between the Valley and everywhere else.

We said we'd move to the Valley if we were accepted to YC this winter, but I think the culture over there might be reason enough to do it regardless.

Re: Why Startup Hubs Work

#72

Post by chc » Wed, Oct 05, 2011, 11:11 PM UTC

tptacek wrote: post #55

I don't want to argue too much about this, because I think Graham is probably right, but this footnote struck me: [4] As I was writing this, I had a demonstration of the density of startup people in the Valley. Jessica and I bicycled to University Ave in Palo Alto to have lunch at the fabulous Oren's Hummus. As we walked in, we met Charlie Cheever sitting near the door. Selina Tobaccowala stopped to say hello on her…

He was only illustrating how thick the Valley is with that kind of people, not claiming they'll come up and say "Hi" if they don't know you. I don't see how being Paul Graham makes it any more likely that people associated with startups will be at Oren's Hummus or in front of some random yogurt joint when you arrive (unless we're postulating some PGPS technology that tells entrepreneurs where they can meet Paul at any given time).

Re: Why Startup Hubs Work

#73

Post by protagonist_h » Wed, Oct 05, 2011, 11:25 PM UTC

Good explanation of benefits of being in a startup hub. However, are there advantages to being OUTSIDE a hub? I can think of at least two:

* Living and working outside a startup hub, you are more likely to encounter a problem nobody else has worked on before. In startup hubs, you have large number of startups working on small number of similar problems, while large chunk of profitable opportunities remain untapped. Why? Typical startup people don't encounter these problems. They are not talked about on startup blogs and you won't encounter that problem walking down University Ave in Palo Alto. In many cases, these opportunities are taken by old school, dinosaurs-like software firms who overcharge customers for their crappy software.

* Living outside a startup hub, you are exposed to users who are a good sample of the general population. This is not true for startup hubs, where users a lot more tech-savvy. While it seems at first that being surrounded by tech-savvy users is a good thing, this in fact may be a problem because building your startup based on feedback from these users may steer you in the wrong direction. You end up with couple of thousand "early adopters" who are enthusiastic about your product, but you are not able to expand further because your product just doesn't resonate with a true average user. On the other hand, if you can get a true average user to be your early adopter, the feedback you get from them will help you make a product which is attractive to a large number of users.

Of course, hubs are way overrepresented in the past success stories. However, more startups are started in the hubs, so it's not clear how actual success rates compare. I would love to see some stats for that.

Re: Why Startup Hubs Work

#74

Post by tptacek » Wed, Oct 05, 2011, 11:28 PM UTC

thingsilearned wrote: post #60

tptacek wrote: post #55

I don't want to argue too much about this, because I think Graham is probably right, but this footnote struck me: [4] As I was writing this, I had a demonstration of the density of startup people in the Valley. Jessica and I bicycled to University Ave in Palo Alto to have lunch at the fabulous Oren's Hummus. As we walked in, we met Charlie Cheever sitting near the door. Selina Tobaccowala stopped to say hello on her…

You would be surprised. Probably because of the density of University Ave and the consistently great weather (with today as an exception) it's actually just incredibly common to run into people you know. On top of that people in Palo Alto are on average doing really amazing things.

Sure, I don't doubt it, I'm just saying it helps a lot to be among the more powerful people in the valley; the people you know that you run into are apt to be of a higher caliber.

Can I say again that I think Graham is probably right in this post?

Re: Why Startup Hubs Work

#75

Post by pg » Wed, Oct 05, 2011, 11:31 PM UTC

thingsilearned wrote: post #60

tptacek wrote: post #55

I don't want to argue too much about this, because I think Graham is probably right, but this footnote struck me: [4] As I was writing this, I had a demonstration of the density of startup people in the Valley. Jessica and I bicycled to University Ave in Palo Alto to have lunch at the fabulous Oren's Hummus. As we walked in, we met Charlie Cheever sitting near the door. Selina Tobaccowala stopped to say hello on her…

You would be surprised. Probably because of the density of University Ave and the consistently great weather (with today as an exception) it's actually just incredibly common to run into people you know. On top of that people in Palo Alto are on average doing really amazing things.

(Curiously enough I ran into thingsilearned as I was bicycling home from lunch today. Or would have if he hadn't scurried across the crosswalk just in time.)

Re: Why Startup Hubs Work

#76

Post by tptacek » Wed, Oct 05, 2011, 11:34 PM UTC

protagonist_h wrote: post #73

Good explanation of benefits of being in a startup hub. However, are there advantages to being OUTSIDE a hub? I can think of at least two: * Living and working outside a startup hub, you are more likely to encounter a problem nobody else has worked on before. In startup hubs, you have large number of startups working on small number of similar problems, while large chunk of profitable opportunities remain untapped. W…

A third issue here is that talent is cheaper in (say) MSP than in SJC/SFO. Like, a lot. It's easier to hire and easier to retain. Because locales are sticky, the level of talent available to you is likely to be comparable or better than you'll get in the valley.

Your point about the "general population" is well taken too, especially if you're a company selling to other businesses. Most of the big companies in SFBA, and most of the companies you'll talk to period if you HQ out there, are software companies. Selling software to software companies is hard. Whereas if you HQ in Atlanta, you've Home Depot, UPS, Coca Cola, big banks, and so on.

There is clearly a kind of startup that benefits from being in SFBA so I don't want to sound like I'm saying there's nothing to this "startup hub" thing.

Re: Why Startup Hubs Work

#77

Post by _pius » Wed, Oct 05, 2011, 11:34 PM UTC

pitdesi wrote: post #16

I think the world has changed drastically in the past few years... I can provide perspective from working for a startup in SF in 06-07 and a startup in Chicago now... In Chicago noone thinks you're unemployed if you say you work for a startup. That was the case a couple of years ago, but with Groupon and a TON of other companies that just isn't the case. The difference is just that more people are doing startups in S…

[W]ithin 3 blocks of FeeFighters office are: 37signals, SproutSocial, Threadless, Crowdspring, and several other startups. I don't see how it helps us significantly to bump into them ...

That's because the marginal utility FeeFighters will get on average out of any given serendipitous moment is a lot less than, say, an unfunded startup no one's ever heard of.

If you graphed that marginal utility over time, you'd probably find that it's multi-region: linear in some parts, exponential in others.

Re: Why Startup Hubs Work

#78

Post by tptacek » Wed, Oct 05, 2011, 11:39 PM UTC

michaelochurch wrote: post #50

Next to drugs, the strongest predictor of imminent mental illness in a healthy person is a move caused by adverse economic circumstances (such as having to sell one's house, or move to a new city because there are no jobs). Moving scares people, especially after 25. What the Bay Area and New York have in technology is an environment where (at least for now) people can bounce back from job loss (a likely eventual outc…

It's like that now, but when my SF startup failed in 2001 and I had to look for a job at the end of the bubble, it was extremely stressful --- and I'm guessing I had an easier time looking for jobs than most of my last-bubble cohort.

Continuing the same point: it is in fact not all that stressful finding tech jobs in any major metro area now. I'm in Chicago, we have offices in NYC (our HQ) and Mountain View, and it's hard to hire in all three places.

I'm sure there's a grain of truth in what you're saying, that SF can accumulate talent because talent moves there expecting the red-hot market in the area to mitigate risks. But things can turn quickly.

Re: Why Startup Hubs Work

#79

Post by pwim » Wed, Oct 05, 2011, 11:42 PM UTC

If you look at a list of US cities sorted by population, the number of successful startups per capita varies by orders of magnitude.

Silicon Valley has a larger concentration of startups per capita, as people from around the country go there to try a startup. As such, I'm sure it also has a higher number of failed startups per capita. Instead of looking at absolute numbers, the chance that a given startup will succeed is the key metric.

Re: Why Startup Hubs Work

#80

Post by protagonist_h » Wed, Oct 05, 2011, 11:43 PM UTC

tptacek wrote: post #76

protagonist_h wrote: post #73

Good explanation of benefits of being in a startup hub. However, are there advantages to being OUTSIDE a hub? I can think of at least two: * Living and working outside a startup hub, you are more likely to encounter a problem nobody else has worked on before. In startup hubs, you have large number of startups working on small number of similar problems, while large chunk of profitable opportunities remain untapped. W…

A third issue here is that talent is cheaper in (say) MSP than in SJC/SFO. Like, a lot. It's easier to hire and easier to retain. Because locales are sticky, the level of talent available to you is likely to be comparable or better than you'll get in the valley. Your point about the "general population" is well taken too, especially if you're a company selling to other businesses. Most of the big companies in SFBA, a…

Actually I disagree about your "cheap talent" remark. When you are building a scalable startup, looking for cheap labor is not a good idea since it's a part of "fixed cost" you have. Moreover, you don't need that many developers nowadays to build a startup. You only need a couple really good developers, and you want to either pay them really well or have them as your co-founders. (disclaimer: I'm a programmer myself).