Yes, PHL/BOS/CHI/SEA/NYC/BLT/XYZ does Web startups
gabrielweinberg.com
gabrielweinberg.com
More diverse economy: If you're doing anything that involves selling to companies instead of individuals (and a substantial portion of YC companies, for instance, do), cities like Philly or Boston already host broad groups of big companies, and whole constellations of smaller companies that work with them, all of whom have IT shops of varying degrees of sophistication, which creates a myriad of opportunities for selling into real companies.
I know it's fashionable to bash health insurers, but I think it's not quite accurate. Aetna's profit margins are lower than 4% [1] and they generally do well for people.
Insurance is the kind of business that is almost always disliked, because people attribute the positive success stories and gratitude towards the people doing the direct work (the doctors), but everything that goes wrong to the insurer. It's just the nature of things. I'll share a counter-story though: When I was 13 years old, I had a kind of benign skin cancer growth on my head and we had Aetna at the time. If memory serves, the policy for our entire family was only $500 per month, and pretty much every dime that we'd ever paid was more than wiped out by me getting surgery. The insurance process was fairly smooth and there were no problems. For $6000 per year to insure a whole family against disaster, I think that's a pretty awesome service.
Their margins are low. Currently I've got Patriot International insurance while traveling, $150 for six months for coverage up to $2,000,000 with a $10,000 deductible. Honestly, though it's unfashionable to say, I think the health insurance companies are generally a massive net win for society.
[1] http://money.usnews.com/money/blogs/flowchart/2009/08/25/why...
Companies that transitioned through, like Stream, did a really good job of bootstrapping many an IT career in Memphis. That FedEx, Hilton, International Paper and AutoZone all have major IT centers there helps as well, though it does lead to there being lot of very UN-talented IT people on the whole.
The trick, as always, is sorting out the good from the bad. Where I think you'll have problems is in raising Venture Capital (if you need it), finding dotcom-centric marketing agencies, SEO development, and that sort of thing. Of course, that only matters if you're looking local anyway.
Once you're out of the valley the startup scene definitely changes, with a tad more focus on actual monetization :)
What's sad is that a majority of the local economy is outside of Center City Philadelphia, and Philadelphia proper mostly due to the city wage tax which takes out almost 4% on top all other deductions in your paycheck. And young people want to live in the city, so it's a tough sell.
It reminds of pg's essay on Cities and Ambition. This kind of thing will give people more options on where to set-up shop, in an area they're comfortable with. It will also help prevent groupthink, and promote a diverse startup ecosystem.
I moved to the Bay area to feel the pulse, and get a feel for the startup scene. Hopefully, I'll have the chance to attend startup school next month.
Failing that, would anybody recommend any venture capital firms that focus on web startups?
The difference between a silicon valley web startup and most of the country is that in most of the country founders are getting rich off of high margin niche business software. They are selling licenses to specific industries with specific problems for thousands or tens of thousands of dollars, or doing lucrative consulting.
These people simply do not write blogs or do web published interviews. They have no incentive for mass market publicity.
There are only so many ways to make email and ebay/CL more efficient, which I think broadly sums up most mass market web ventures you read about. I'm firmly convinced the way to go is with a list of 20 specific corporate customers in mind. Make something you know they need. Ideally, they're already paying $80,000 a year for an inferior piece of shit.