Why Startup Hubs Work

You're not following. Broadly speaking, better talent costs more money. The more money you have to spend on talent, the better the talent you retain will be. It's not about looking for "cheap labor"; it's about being able to find, recruit, and retain better people.

Think of it as a market inefficiency (albeit one that is difficult to "fix"): the stickiness of people's locales prevents them from maximizing their opportunities and decreases demand for their services in SFBA and increases their supply in (say) MSP.

I think that the hacker news structure has its own merits in terms of randomness which makes it as close to an online hub that currently does exist. By posting something on HN you open the idea to the community, with no idea where discussion can go. As someone who isn't from a Startup hub (Ohio), this type of directed random interaction and analysis has been crucial for me in helping me to understand the startup mentality, as well as providing me with the opportunity to rapidly immerse myself with information and anlaysis of the startup movement coming directly from the horses mouth (those within the movement). The members of the physical start up hubs of the world, contribute to the online hubs, allowing those outside of these physical hubs to be a part of our first start up hub.

Is Silicon Valley really a hot bed of startups? Let's see:

People do 'startups' border to border in the US, in communities tiny to huge. Those startups might be a pizza carryout, electrical engineering company, franchised fast food restaurant, white tablecloth restaurant, law firm, CPA tax firm, auto body shop, photo studio, boutique dress shop, Web site design and programming firm, big truck/little truck product supplier, etc. Yes, Silicon Valley has a high concentration per capita of venture funded information technology startups, but there are startups all over the US.

Do the venture funded information technology startups really need a very special environment to keep going?

Let's see: An auto body shop, white table cloth restaurant, or even a lawn mowing service need more expensive capital equipment than an information technology startup. E.g., just a lawn mower can cost $13,000, enough to buy parts enough to plug together 10 good servers. A Web design firm anywhere in the US, or the world, has nearly all the same software challenges as a venture funded social Web site in Silicon Valley.

Does Silicon Valley really have a big advantage on the best creative work?

Let's see: Let's look at some of the best creative work in, say, music: How did Stradivari and Guarnieri build their violins, Vivaldi, Bach, Mozart, Beethoven, Mendelssohn, and Paganini write for violin, Heifetz get started in violin all in really small communities where what they were doing was astoundingly rare and world class on an historic level? I mean, who the heck was Mozart going to go to for help on how to write interesting, novel harmony? Where was Bach going to learn about key modulations? Who gave Mozart the crucial help he needed to write his operas or Bach to write his organ pieces or his violin 'Chaconne'? No one.

Who helped Newton with optics, calculus, the law of gravity, and the second law of motion?

Who helped Watt with the steam engine?

The history of the best works in art, science, engineering, and technology is awash in people doing historic world class work in what in Silicon Valley would look like near total isolation.

So, (1) startups happen all over the US and (2) much of the best work in all of history happened in near isolation. So, Silicon Valley is not needed for either startups or good work.

There's another candidate reason for the high per capita concentration of venture funded information technology startups in Silicon Valley: On average and in nearly all cases, the venture partners have at best meager qualifications in anything technical yet have to justify their risky investments to their general partners and limited partners.

Their best justification is, may I have the envelope please? Thank you. Here is it: "Join the herd!" So, get a place on Sand Hill Road or nearby and do much like everyone else does. So, 'fit in'. Talk to each other a lot like gossip among middle school girls.

So, net, what Silicon Valley has a high concentration of is not really startups but just venture funded information technology startups, and the reason is not that Silicon Valley is an especially good place for the entrepreneurs to get the work done but just that the venture funding is concentrated there because the venture partners do not have the qualifications to evaluate projects on their own and, instead, get along by fitting in and joining the herd. Net, the concentration is due to the propensity of venture partners to form herds.

Once again I'm glad for US national security that the Silicon Valley venture partners are not DARPA, NSF, or NIH problem sponsors.

I read something more along those lines in an article about Sean Parker talking about how he was more involved with things than the movie presented. I can't find that article anymore. Here is an article that actually has a quote from Zuckerberg, stating he let Sean Parker crash at his place (although Zuckerberg himself does not say he bumped in to Parker): http://www.fastcompany.com/magazine/115/open_features-hacker...

"This sounds a little bit to me about what it must sound like to hear Brad Pitt talk about getting lunch in LA."

But the difference is if I flew out to the Valley and knew who to look for there is no doubt in my mind that I could go right up to anyone of the people that Paul mentioned and say something to them and they would listen certainly for a minute or longer. That wouldn't happen in LA. And I'm not Paul Graham.

Way back in 1998 or 99 I sent an email to Tim Draper and had no problem setting up a meeting. That wouldn't have happened in Hollywood. The valley is different. As Paul mentions, the density is important. If you are in fashion, it's NYC. If you are in entertainment - LA. Jewelry? The diamond district in NY. You go where the most people are doing what you want to do. In the case of tech that's the valley.