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Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

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Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#21

Post by jnorthrop »

mgkimsal wrote: post #9

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.” And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area tha…

> Are investors so emotionally tied to one geographic area that long-term investing in other areas of the US is strictly verboten?

I don't think it is quite as conspiratorial as you make it out to be. I was speaking to an active angel investor last night. He said he won't do a deal that is much more than an hours drive away. He feels like he can't really participate (as an advisor) to a company that he can't easily reach.

It is not unlikely that many (most?) of the Silicon Valley investors feel the same way.

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#22

Post by sabat »

nirvana wrote: post #19
mgkimsal wrote: post #9

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.” And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area tha…

I really don't understand the over fixation on Silicon Valley. I lived there for awhile. Its got high population density is full of a lot of fake people (people who are happy to "help" your startup for just a taste of the equity), fake investors, and an extraordinary amount of noise. I'm sure there are many people who love it for the same reasons that high pressure finance types love new york city. But this seems ana…

I really don't understand the over fixation on Silicon Valley.

I think the rest of your comment is elaboration on this theme. You don't understand, mainly because your views are distorted. A couple of examples to give you the idea:

it attracts engineers who are more likely to jump to the next hot startup

Untrue. Certainly you can find those types, but the Bay Area is full of people who are willing to stick with a company they believe in. It's just that you're focussing on smaller, more questionable startups. They're not the majority.

This makes bumfuck Ohio[1] a better place if retaining talent is important.

But you are much less likely to find talented engineers who just happen to live in Bumfuck, Ohio. Nerds tend to flock, because flocking is important. Startups need an ecosystem.

Nor does it have the jealousy driven culture where every 4th person has an overpriced show off car, etc.

I've been a Bay Area professional for 20 years, have worked at multiple startups, and have yet to see "every 4th person" with a show-off car. I think I know two or three people with super-expensive cars. Most people in the Bay Area who are involved in startups are serious about business and technology. That's why we have so many major success stories, and smaller ones you probably haven't heard of — for example, have you heard of Workday? It's a SaaS company started by Dave Duffield, who founded and ran PeopleSoft previously. Workday is growing like a weed, not because of wild infusions of crazy venture cash, but because it's a good service and the customer base is expanding.

The reason everyone focuses on the Valley? People are focused on venture capital, not building profitable businesses.

Wholly untrue. The entire focus is on building successful, profitable businesses, not on raking in VC money. That's why Heroku, Salesforce (which bought Heroku), Evernote, Dropbox, and — since history matters — Apple, Oracle, and even HP are here. I could make a much bigger list of successful and up-and-coming startups, but you can do the research if you actually are interested.

You're focused on trivial companies and outlying flakey people. They're not the majority.

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#23

Post by podperson »

nirvana wrote: post #19
mgkimsal wrote: post #9

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.” And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area tha…

I really don't understand the over fixation on Silicon Valley. I lived there for awhile. Its got high population density is full of a lot of fake people (people who are happy to "help" your startup for just a taste of the equity), fake investors, and an extraordinary amount of noise. I'm sure there are many people who love it for the same reasons that high pressure finance types love new york city. But this seems ana…

I think Paul Graham has discussed this fairly well:

http://www.paulgraham.com/siliconvalley.html

I live in Alabama. I joke that "high tech" here means "installing Windows and supporting Sharepoint" and it's not far from the truth. If I weren't the "trailing spouse" of an academic there's no way I'd live here given my skill set. It follows that people with similar or complementary skill sets to mine are hard to find here.

I have friends on the west coast who can pull together a project using friends and colleagues working in their spare time (gee, I wonder how Apple got started...). Similarly, when I was working in California I would frequently get requests from colleagues to contribute to their projects and often give them finished pieces they could plug into their projects the next morning. This kind of talent density is a huge "force multiplier". In the time it would take me to, say, find a designer or scalability guy I can work with who is willing to put sweat equity into a project, or do something for me for a few bucks, blah blah blah -- in Silicon Valley it would already be a working demo with seed money.

In fact, it's worse than that. I've been trying to find locals to work with me on stuff for years. I've built projects start-to-finish (but with missing pieces) several times over in that time.

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#24

Post by mindcrime »

jonny_eh wrote: post #12
mindcrime wrote: post #11

Earlier quoted context omitted.

Exactly. Every time I hear somebody talk about the "overabundance of capital" in the startup world, I want to grab them by the shoulders, stare them in the eyes and scream frantically like a mad-man "Have you been to RTP (NC) ?!?!??" OK, not quite that bad, but still, you get the drift. What's happening in California is not necessarily indicative of what's going on in the rest of the world. Research Triangle Park, fo…

What's RTP?

Strictly speaking, RTP[1] is a small area (mostly) in Durham County, NC, where a research park is located, where a lot of major technology and pharma companies, and tons of small companies, have R&D and/or manufacturing operations.

Colloquially, people use "RTP" as shorthand for "The Triangle"[2] which is generally considered an area roughly defined by a triangle of lines connecting Raleigh, Durham and Chapel Hill. Or, depending on your take, connecting Duke University, the University of North Carolina at Chapel Hill, and NC State University.

RTP (or "The Triangle") is a tech hub in the Southeast region, and is becoming quite a startup hotbed. But one of the limitations of this area is lack of access to early stage capital. Of all the things that hurt entrepreneurs in this area, that's probably the single most encountered problem. :-(

[1]: http://en.wikipedia.org/wiki/Research_Triangle_Park

[2]: http://en.wikipedia.org/wiki/Research_Triangle

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#25

Post by netmau5 »

podperson wrote: post #23
nirvana wrote: post #19

Earlier quoted context omitted.

I really don't understand the over fixation on Silicon Valley. I lived there for awhile. Its got high population density is full of a lot of fake people (people who are happy to "help" your startup for just a taste of the equity), fake investors, and an extraordinary amount of noise. I'm sure there are many people who love it for the same reasons that high pressure finance types love new york city. But this seems ana…

I think Paul Graham has discussed this fairly well: http://www.paulgraham.com/siliconvalley.html I live in Alabama. I joke that "high tech" here means "installing Windows and supporting Sharepoint" and it's not far from the truth. If I weren't the "trailing spouse" of an academic there's no way I'd live here given my skill set. It follows that people with similar or complementary skill sets to mine are hard to find h…

I'm in Bama too. We've got plenty of brilliant people but they can be difficult to find and usually aren't well-connected. Want to get coffee sometime?

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#26

Post by davidw »

jnorthrop wrote: post #21
mgkimsal wrote: post #9

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.” And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area tha…

> Are investors so emotionally tied to one geographic area that long-term investing in other areas of the US is strictly verboten? I don't think it is quite as conspiratorial as you make it out to be. I was speaking to an active angel investor last night. He said he won't do a deal that is much more than an hours drive away. He feels like he can't really participate (as an advisor) to a company that he can't easily r…

Some companies and businesses manage to cobble together globe-spanning supply chains, so the excuse that they can't interact with "far away" people seems a bit dubious. Sooner or later, there will be VC's that figure out how to interact in a way that, while not 'as good' as being there in person, will be 'good enough', and will reap some nice profits from it.

There are a lot of good things about SV, but there are also some good reasons to get out and go to smaller hubs - stuff like Boulder, Portland, and other places like that where life is more enjoyable.

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#27

Post by simplemind »

mindcrime wrote: post #11
mgkimsal wrote: post #9

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.” And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area tha…

Exactly. Every time I hear somebody talk about the "overabundance of capital" in the startup world, I want to grab them by the shoulders, stare them in the eyes and scream frantically like a mad-man "Have you been to RTP (NC) ?!?!??" OK, not quite that bad, but still, you get the drift. What's happening in California is not necessarily indicative of what's going on in the rest of the world. Research Triangle Park, fo…

This isn't a political statement, it's a comment about culture as it relates to recruiting valuable and scarce talent. Startup culture tends to be highly meritocratic. It lends itself to openness toward who you are as an individual as long as you work hard, work smart and achieve.

Given this, I can't imagine trying to recruit the best and the brightest to NC given recent developments when there are more accepting places like NY, Silicon Valley, Seattle, etc. There are a ton of talented people who wouldn't want to live there. I'll concede that there may be others who want to live there more because of what went down, but those same people could be recruited almost anywhere without a meaningful depreciation in quality of life.

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#28

Post by mgkimsal »

jnorthrop wrote: post #21
mgkimsal wrote: post #9

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.” And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area tha…

> Are investors so emotionally tied to one geographic area that long-term investing in other areas of the US is strictly verboten? I don't think it is quite as conspiratorial as you make it out to be. I was speaking to an active angel investor last night. He said he won't do a deal that is much more than an hours drive away. He feels like he can't really participate (as an advisor) to a company that he can't easily r…

I didn't say it was a conspiracy, but emotional ties.

His wanting to stay in a particular geographic area plus his desire to only invest in projects he can drive to is limiting him. That's fine. I'm not even suggesting he's complaining about a talent shortage. But others are.

Might he not have a similar quality of life and have access to some other great companies to invest in within an hour's drive and have less investment competition should he choose to move to, say, Louisiana? Or Mississippi? Or Tennessee? Or Texas?

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#29

Post by Mc_Big_G »

nirvana wrote: post #19
mgkimsal wrote: post #9

“Everyone is competing for the same people, going after the same real estate, the same support services,” Hartz says. “The natural resources of the startup world are getting scarcer and scarcer, and the cost is getting higher and higher. It’s all an outgrowth of an abundance of capital.” And largely still doing this in just a few square miles in California. Are investors so emotionally tied to one geographic area tha…

I really don't understand the over fixation on Silicon Valley. I lived there for awhile. Its got high population density is full of a lot of fake people (people who are happy to "help" your startup for just a taste of the equity), fake investors, and an extraordinary amount of noise. I'm sure there are many people who love it for the same reasons that high pressure finance types love new york city. But this seems ana…

I moved to SF from bumfuck Ohio (Swanton) last year and it was one of the best decisions of my life. Besides the great weather and quality if life here, the thing I enjoy most is being around people who "get it".

Ohio wants microsoft and SAP developers. The small biz dev help and incubators only care about manufacturing, specifically solar. Finding like-minded entrepreneurs is like finding a needle in a haystack. Finding a co-founder with the same level of technical skill is just plain impossible. Thats just a taste of it.

[edit typos on Bart]

Re: Why One of Silicon Valley’s Savviest Investors Has Shut His Wallet

#30

Post by mindcrime »

simplemind wrote: post #27
mindcrime wrote: post #11

Earlier quoted context omitted.

Exactly. Every time I hear somebody talk about the "overabundance of capital" in the startup world, I want to grab them by the shoulders, stare them in the eyes and scream frantically like a mad-man "Have you been to RTP (NC) ?!?!??" OK, not quite that bad, but still, you get the drift. What's happening in California is not necessarily indicative of what's going on in the rest of the world. Research Triangle Park, fo…

This isn't a political statement, it's a comment about culture as it relates to recruiting valuable and scarce talent. Startup culture tends to be highly meritocratic. It lends itself to openness toward who you are as an individual as long as you work hard, work smart and achieve. Given this, I can't imagine trying to recruit the best and the brightest to NC given recent developments when there are more accepting pla…

There's no question that A1 gave NC a black eye, and it does hurt. How much it hurts is a different question. My perception, having lived in NC my entire life, and having worked in the RTP area for 12 years, is that talent isn't the major holdup here. There is a ton of talent here, at least on a transitional basis, by virtue of the fact that people come here to attend NCSU, UNC and Duke (all 3 are very well respected and regarded schools) and because IBM, Cisco, GSK, and a pile of other companies have large presences here. The big challenge, talent wise, is to keep the folks who are graduating from UNC, NCSU, Duke, etc., here, instead of moving off to $WHEREVER. Not easy, but - believe it or not - NC has a lot going for it, A1 aside.
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