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Our Startup Would Probably Die If We Were In San Francisco

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Re: Our Startup Would Probably Die If We Were In San Francisco

#41

Post by glynjackson »

faizanbhat wrote: post #2

Staying somewhere cheap gives you a tangible advantage but also puts you at several intangible disadvantages. At my first startup in the UK, we decided to base out of Birmingham instead of London, which reduced our living expenses by 70% and allowed us to really stretch our seed funding. But we ended up having to commute to London frequently for important meetings. Also, one could argue that we might have accomplishe…

It all depends on the type of business you are in and at what stage your company is at. I'm a freelancer but I have staff. My office is based outside the city, but all my work comes from clients in Manchester and London, UK. The major cities are where the opportunities, networking and money comes from. My sacrifice for cheaper living means higher travel costs, longer work hours and in some cases less credibility. For myself, the offset of living in a low crime area with better schools works for me. But, I can understand why startups decide to work in expensive areas. Wealth breeds wealth.

Re: Our Startup Would Probably Die If We Were In San Francisco

#42

Post by seanflyon »

dyeje wrote: post #20
freeqaz wrote: post #3

I've thought a lot about this and I feel like it makes sense pre-seed to do this. Save the cash, invest it in the business, and then when you raise money move to San Francisco/Bay Area. It's really tough to grow outside of SF, I feel like. But if you're bootstrapping yourself... Then I can't see many reasons to come to SF.

Why is it tough to grow outside of SF? There are plenty of successful internet businesses that are not based in San Francisco.

SF is the most extreme example, but I think it is hard to grow a tech company outside of a tech hub (such as Silicon Valley or Seattle). Other tech hubs have the same cost of living problems (to a lesser extent), but they also have potential investors, mentors, and employees.

Re: Our Startup Would Probably Die If We Were In San Francisco

#43

Post by brianwawok »

bunderbunder wrote: post #31
frankus wrote: post #26

It's probably obvious to most, but I recently came to the realization that if you're paying off debt, a high COL works in your favor, whereas if you're living off cash, it works against you. That means that if you're fresh out of college with lots of student loans, you're doing yourself a disservice if you don't move to a big city and get a high paying job. You can effectively inflate your way out of your debt by mak…

That only works out if the salary you can make increases in proportion with the cost of living. I haven't lived in a lot of places, but at least based on the few cities I have lived in, I don't believe the two are anywhere near that tightly correlated. For example, consider Milwaukee vs. Chicago. Chicago's a major finance and banking center, and a huge percentage of the people living there are in some kind of profess…

Cost of living in Chicago is NOT 2x Milwaukee. Nor is salary, so you need to go more in depth.

I think 30-40% more salary is easy in Chicago. I think you can easily live at only 30-40% more expenses in Chicago (think of all the stuff a big city saves you.. can get rid of all your cars, get more free entertainment options, etc).

Thus, I think Chicago is awesome for post college people to inflate their way out of college debt. I do not know enough about SF to say if that is a good idea, but the COL to Salary ratio could be off.

Re: Our Startup Would Probably Die If We Were In San Francisco

#44

Post by brianwawok »

marshallhaas wrote: post #6
freeqaz wrote: post #3

I've thought a lot about this and I feel like it makes sense pre-seed to do this. Save the cash, invest it in the business, and then when you raise money move to San Francisco/Bay Area. It's really tough to grow outside of SF, I feel like. But if you're bootstrapping yourself... Then I can't see many reasons to come to SF.

Agreed, San Francisco is probably the worst place to be if you want to bootstrap.

I would take SF over Antarctica.

Re: Our Startup Would Probably Die If We Were In San Francisco

#45

Post by seanflyon »

bane wrote: post #7

I've known a few businesses who "HQ" out of a big city, but usually just with a small sales office. Then they hire almost all of the rest of their staff in very cheap, but talent filled areas. One mistake I've seen over and over again, don't hire your customer facing staff in those cheaper areas. You really want sales staff/etc. To be in the same area as your customer base

What areas do you consider to be very cheap and talent filled? I always assumed that the expensive areas are expensive because well paid talent is driving up the cost of living (though city attitude towards construction plays a large role as well).

Re: Our Startup Would Probably Die If We Were In San Francisco

#46

Post by superuser2 »

bunderbunder wrote: post #31
frankus wrote: post #26

It's probably obvious to most, but I recently came to the realization that if you're paying off debt, a high COL works in your favor, whereas if you're living off cash, it works against you. That means that if you're fresh out of college with lots of student loans, you're doing yourself a disservice if you don't move to a big city and get a high paying job. You can effectively inflate your way out of your debt by mak…

That only works out if the salary you can make increases in proportion with the cost of living. I haven't lived in a lot of places, but at least based on the few cities I have lived in, I don't believe the two are anywhere near that tightly correlated. For example, consider Milwaukee vs. Chicago. Chicago's a major finance and banking center, and a huge percentage of the people living there are in some kind of profess…

>This is because the two cities are so close to each other that at least in tech they're essentially the same job market.

I live in Milwaukee and disagree. There is no tech scene here. Programmers work for banks, insurance companies, Time Warner Cable, manufacturing, etc. if they work at all. In Chicago, there are actual software companies and consultancies. You would never see something like ThoughtWorks or Matasano (and their correspondingly competitive salaries) in Milwaukee.

Re: Our Startup Would Probably Die If We Were In San Francisco

#47

Post by seanflyon »

rjurney wrote: post #38
acheron wrote: post #9

There's also the fact that California is regularly at the bottom of rankings of "business friendly" states. I'd rather locate my business in a state that wants me there.

How ironic, when California has the most pro-entrepreneur labor laws. Non-competes aren't enforceable and California 2870 has the entrepreneur's back. http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr... Every company has to give you a piece of paper that says, "If you develop something unrelated without using company resources, you own it." California is an entrepreneur's wet dream. The tax liability is c…

My first contract out of college specifically stated that they owned everything I make on my own time unless I live/work in CA.

Re: Our Startup Would Probably Die If We Were In San Francisco

#48

Post by sayemm »

I think this all depends if you're really a "startup" or not. As per Paul Graham's definition: http://paulgraham.com/growth.html. Just because you're starting something up doesn't mean you're really swinging for the fences for a big home run. But if you are, your survival depends on deal-making and hardcore talent, so you're at a huge disadvantage by not being in a major tech hub.

But if you're focused on building a 7 or low 8-figure business, bootstrapped, and self-funded, and your goal is financial independence/freedom instead of "changing the world", totally agree, starting up outside of SF is a great way to build up and earn those first stripes.

I live in San Diego and there are lots of internet millionaires here: http://helenchangwriter.com/2009/11/20/millionaire-internet-...

Re: Our Startup Would Probably Die If We Were In San Francisco

#49

Post by vonmoltke »

rjurney wrote: post #36
marshallhaas wrote: post #6

Earlier quoted context omitted.

Agreed, San Francisco is probably the worst place to be if you want to bootstrap.

I don't think so. There are so many early adopter, visionary customers here you can sign up on spec to pay you to develop your product.

Assuming your product appeals to the type of consumers or businesses that inhabit San Francisco.

Re: Our Startup Would Probably Die If We Were In San Francisco

#50

Post by curun1r »

freeqaz wrote: post #3

I've thought a lot about this and I feel like it makes sense pre-seed to do this. Save the cash, invest it in the business, and then when you raise money move to San Francisco/Bay Area. It's really tough to grow outside of SF, I feel like. But if you're bootstrapping yourself... Then I can't see many reasons to come to SF.

Early in the bootstrapping process, I think it makes sense to go the Github route...make telecommuting and virtual presence a part of your company DNA and then get the best talent::cost ratio by not limiting yourself to employees in any city or state.

Offices in St Louis might be cheaper than San Francisco, but they're nowhere near as cheap as not having an office at all and possibly flying everyone to a common location on a quarterly basis for company all-hands.

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