Location matters for your startup (with city comparisons) | Hacker News Reader

Location matters for your startup (with city comparisons)

scott-allison.net

55 pointsscottallison49 comments

Why density? Does density really matter? Isn't the absolute number more interesting because whatever be the chance of meeting an important (to your success) person, you have a bigger pool to pick from.

Case of city A: Say, there are 50,000 residents of which 500 are of interest. There's an event hosted and 25% of those "interesting" people show up. You, who's attending this event, have a pool of 125 people out of which, say 5% can help you AND you'll bump into. So chances are you'll meet 6 people. Density: 0.01.

Case of city B: 5,000 residents, 100 interesting, 25 show up, chances are you'll meet only 1 person. Density: 0.02 (double).

I think the truth is that the absolute number, along with density are both important. That's why Boulder - apparently 70% more entrepreneurial than Silicon Valley - cannot really claim to be better than SV, which has an entrepreneurial population 15 times larger.

Also New York. I think I've read people talking about New York having over taken Boston and it being a potential threat to the Valley. But density-wise, I don't think it is fairing (I hope I've used the correct spelling of the word) that well.

I was really surprised to see Boulder on that list... had no idea that there were apparently many start ups there, even if it is just by percent.

Boulder's startup scene has skyrocketed in the past several years. At monthly startup meetups, hundreds of people usually show up to check out what everyone else is working on.

It's not quite a Silicon Valley, and its score is probably exaggerated by the difficulty in defining a population area that's relevant to the startup scene. However, most startups in the scene are in Boulder proper, and most founders seem to live in the city as well. So the density is there, and it's quite easy to run into other startup people on the sidewalk or in coffee shops.

That's exactly what I was going to say. This is a good first stab at measuring something important.

One thing I was wondering was what "population" was used. I assume it's the city population. Using MSA or CSA populations could lead to very different results, most likely favoring smaller locales.

I don't think takes away from the main point of the article, but there is a bit of a logical fallacy in the opening:

18 months ago I relocated from my home town of Glasgow, to London, just 400 miles away. An important reason for the move was because I had just started working on my new startup, Teamly, and I know that location matters, even when running an internet business. Don’t kid yourself otherwise, your chance of success is seriously improved when you’re in a startup hub.

18 months later and moving to London has proved to be a smart move, for all the expected reasons, as well as the unexpected recognition by the UK Government of London’s startups with the launch a year ago of “TechCity“.

I don't think you can really say that moving to London to operate your business there versus operating in Glasgow was a "smart move", as you have no way of knowing what level of success your startup would have had in Glasgow (since you never experienced this alternate reality).

Sure you made a lot of great connections as a result of your move, but it is impossible to know what connections you never made because you weren't in Glasgow during those 18 months. There is no way of knowing whether you missed out on something (a chance meeting/encounter/coffee, etc) which, while it may have been less probable, would have been of more value to the success of your startup.

Thanks for pointing that out, but putting it another way, the things I expected I would benefit from by being in London did occur, along with the pleasant and unexpected bonus of the government's tech city initiative.

Location matters. Even if you're boot strapping. I'm boot strapping Hackers & Founders.

In the past three months, I've met a CEO of a 300 person gaming company, M&A execs from Fortune 500's, Engineer[0] from Google Finance, the head of the Singularity Institute, artists that make 2 story flaming sculptures, an architect that works on computational architecture, a man who built a battery that charges in 10 minutes that is currently in use by Special Forces in Afghanistan, a former Yahoo VP, a VP from AT&T, the CTO of America and the man who wrote the Jobs bill... a person on the US Council of Foreign Relations, a man who helped the Arab spring flower in Egypt...

That's not to brag. I've simply been extremely deliberate about networking over the past 5 years.

In Silicon Valley, even after being here for 6 months. You probably don't realize it, but you're only 2 or 3 degrees of separation from everyone else who's really, really impressive in town.

To that density, add a culture that places an extremely high value on helping others out, and you have something amazing.

Are there any practical (mathematical?) techniques to measure "openness" of a startup community's network?

You may be 2-3 degrees from John Doerr, but the question is, could you actually get a meeting with him?

Just my intuition, having lived in the Valley (8 years) and Austin (10 years) is that the Bay Area gets a B- for openness, compared to Austin which gets an A-.

You may be 2-3 degrees from John Doerr, but the question is, could you actually get a meeting with him?

That depends.

Adam Rifkin, the founder of the 106 Miles meetup and pretty kick ass nice guy and serial entrepreneur, was funded 12 years ago by Kliener Perkins. So, if you got to Adam's meetup, and bump into him, you're now 1 degree of separation away from John Doerr.

So, if you take Adam out to coffee, and talk to him about getting an introduction to John, Adam can certainly provide an into to John, but he's far more likely to talk to you, get a feel for what you're doing, and then provide introductions to 10 other investors and amazing people that could probably provide as much or more value than John Doer.

Good question.

There's also a very strong culture in Silicon Valley of "quality introductions".

The perceived value of a person's personal network in Silicon Valley is directly proportional to the quality of introductions that person can make to others. (Read: matching person to investor)

Also, I've also thought of Silicon Valley investor, operator and notables networks as a type of graph problem. And, I've often thought of working towards a specific introduction as a type of graph traversal problem.

What node foo in this graph do I need to connect to? What nodes bar[] surround foo? What is the strength of each edge connecting bar[node] to foo?

Getting from node baz to node foo is recursive:

Get_to_Node_Foo( node baz ): Look at all the edges and nodes surrounding baz. Are you next to foo? Ask for intro. Else, move to the node that seems closest to foo. get_to_node_Foo( that_new_node ).

I'm sure that this is true, but it's awful and broken and we ought to find ways to fix it. There's way too much talent and energy spread all over the world, and frankly the group-think that melts young, brilliant brains into caring way too much about mobile apps for taking pictures of your food is sad, and boring.

Quite true,but one would argue how many of those minds are actually brilliant.I guess that's what happens,when far too many people are "doing they're own thing" and "solving needs/wants"

A more important factor compared with density is, in my view, whether startups are the main game in town. This determines what kind of talent you can attract.

In London you are competing with cash flow oriented industries that will set expectations for the compensation mix, so you are in practice left with somewhat marginal people and not the best. This crowding out effect, compounded by the relatively small exits produced in the UK and an inferior work ethic compared to the US, explains why both founders and employees are less good on average than in some other startup hubs.

For the UK startup scene to really succeed we basically need to destroy the banks and agencies.

Startups the main game in town; yup, it's a good point, and in Paul's essay he says that Silicon Valley is probably the only place where doing a startup is considered normal. In London it's absolutely not! London has a low density, but still in absolute terms the 3rd largest (by SD subscriber metrics) startup cluster in the world. The fact that startups are not the only game in town is both a positive and a negative. In Silicon Valley there is somewhat of an echo-chamber, and there really isn't anything but tech. London on the other hand is a huge city, the most multicultural on the planet, and can lay claim to being the centre of a number of important industries, including finance, media, music, fashion, etc. If you are doing a startup in any of those sectors Silicon Valley is probably not the most appropriate place to be.

I think salaries for non-contract software engineers outside of finance in London aren't terribly impressive; and not everybody wants to work in finance (or in particular, work with the kind of people who work in finance). Salaries are even worse in the Reading / Thames valley region.

For the UK startup scene to really succeed ..... how about if people located their startups in places where people can actually afford housing costs ? such as - Sheffield, Leeds, Birmingham, Nottingham, Newcastle etc .

One can't create beautiful things in ugly places.

I completely disagree with this, simply because there is already a fantastic and large hub in London. There's hundreds of startups here already and proximity to VCs, in one of the world's best cities. It makes a lot more sense to build on something that's already strong, and make it stronger.

I think one of the smartest things this Government has done is to recognise that and ignore calls from people outside London to create something elsewhere. But yes, London is frigging expensive. That said, you can live close to, but outside London and it's no more expensive than the other places you mention.

I acknowledge London is in many ways a fantastic place to live and grow a business. Its great for the UK if we can have a growing startup hub based in London. However, while many startups will flourish in London, so many others would be completely dead in the water if they tried to grow while facing London costs. Living just outside London is surely more costly than living in a comparable area of a city further north, when you take into account a rail season ticket? Also, commuting times get silly. There's loads of talent scattered across the UK. Whats the point of trying to get that talent to move somewhere where everyone else already wants to live, and quality of life in many ways is poor as result? Silicon Valley is different because they actually pay enough for people to live there. Maybe that's the answer - startups need to start paying £70k to developers in Shoreditch when the same person would have been happier being paid £20k to live in Derby? Thanks for the response though- its interesting to debate these things. :)

Re: your comment around destroying agencies, I disagree inasmuch as believing the forward thinking agencies are/will actually spawn their own IP divisions, and thus feed into the startup scene in the future.

If you calculate backwards from these figures to the absolute size of the community, you find that NYC's startup scene is actually twice as large as San Francisco's. As someone from the NYC area, that doesn't seem plausible.

You're right, it's the other way around.

Unfortunately it's almost impossible to move to these hot cities from many countries. Visa is really a problem. So we need to work hard to get our own local startup hub. I'm from Armenia.

FYI, UK introduced a "startup visa" this April.

Really? Smart move on their part. There's so many talented engineers in the developing world that are 'hungry for it' - Just what startup founders are looking for in a partner.

More on UK visa: http://eu.techcrunch.com/2011/03/17/uk-beats-the-us-to-a-tec...

Agreed. Not just in other countries, but many rural areas of the US. There are some incredibly talented people out there that may not be able to move for one reason or another. How do we bring these startup hub advantages to everyone?

This is how:

http://steveblank.com/2011/06/01/why-board-meetings-suck-%E2...

http://steveblank.com/2011/06/02/reinventing-the-board-meeti...

http://www.leanlaunchlab.com/

Last one looks similar to Lean Startup Canvas - http://leancanvas.com. Though not sure how is it helpful in this case.

Seems like a better approach would be to identify cities with the most startup "clusters"? Identify a cluster, then look at the population(s) of that census tract or zip or whatever.

Using city-level population just makes small cities look great (Boulder) and big cities look terrible (NYC), when I'm pretty sure there are neighborhoods in NYC that blow away Boulder.

Agreed, a hybrid of absolute numbers of startup people and density is probably the most appropriate.

Don't relocate, bootstrap :)

I completely agree. Your customers will be your best source of funding.

It's not all about funding... it's about the less tangible benefits of being around other entrepreneurs.

It's not just about funding. I find being in Boston makes finding advisors, mentors, ents and domain experts really easy. You don't necessarily even need to be actively networking, you can learn tons 'passively' simply by attending meetups, events etc... While location shouldn't matter when it comes to the company itself, it makes significant difference in terms of getting access to a really powerful support network.

In Los Angeles this really means Santa Monica and maybe El Segundo. Basically closer to the ocean.

Good points, well made - I'll be over to SF in Jan!

Look forward to seeing you there!

I'm relocating to the Bay area in December.

As you're in Seattle, it would be interesting to know why you're making the move.

The density/city comparison thing is really hard to measure, but I'd argue it doesn't make a whole lot of sense:

Since people are showing off re SV, I'll do the same for Chicago- where I've in the past couple of weeks met: CTO for Barack Obama (ran into at falafel place), Founder of Groupon (stood next to at Weezer concert sponsored by NEA, talked to him for a bit), Dave McClure (He's an investor in us, we had dinner. He comes to Chicago often and spends a lot of time with us because we were his only investment here until last month), VP from Motorola Mobility (architecture tour), State Senator from Ohio (bar), A Macarthur Fellow Architect (female, met at bar), Vice Chairman for Goldman Sachs Investment Banking (happy hour), etc etc etc.

Furthermore, just by chance (ie we didn't know this going in and it is NOT the startup hub area within Chicago), within 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 (though we have helped our neighbors when they've had merchant account issues). Many people think it is a wasteland anywhere not the valley but I have seen that not to be the case here, in New York, and even in Pittsburgh.

So what is the difference between here and there? The largest differentiator I've noticed between the valley and elsewhere is funding. We raised most of our money in Chicago from VC's we really like, but could have raised easier on the west coast. A lot of top VC's prefer to have you close and told us flat out they would fund us if we moved there. We had term sheets dependent on us being in Austin, SF, and LA. I don't think it has had an effect one way or another on our business thus far.

Startups need money, and often flock to where it is. Things are changing all over the place though (Rich people in Chicago all of a sudden want to fund startups, will be interesting to see if that continues post-Groupon IPO) It also depends on your type of business. If you sell mainly to startups, you should probably be in the valley.

BTW in case you missed the discussion re: PG's original article, it is here: http://news.ycombinator.com/item?id=3077165

Sounds like Chicago has a great community!

But you can't cite bumping into Dave McClure as evidence of anything other than Dave McClure travels, A LOT. ;)

A local (Chicago) angel/entrepreneur & friend of mine told me that it is a lot harder to get follow through from VCs & angels in Chicago. I wonder if your experience comports with that view.

I personally have pessimistic view on the Chicago area in the intermediate term (5-10.)

Regards, TDL

Just remember quality of life with these things.

I know this will be an unpopular opinion round these parts, but SF is not somewhere I'd ever chose to live. The bad points vastly outweigh the good points for me.

I guess everyone is different, I love silicon valley for many things, the quality of life being one of them (and the weather). Maybe it's just me but I'm from a cold, wet and windy country called Scotland :)

Actually weather is one reason I wouldn't live in silicon valley - it doesn't really have any. It's either flatline boiling hot, or if you go north it's windy and foggy all the time. It's like being stuck in a never ending summer.

I live in England, where we get glorious boiling summers, wet and windy autumns, snowy winters. I know that's not for everyone, but the sheer variety is something I love.

To see the scenery and wildlife change by season is something that really makes life interesting.

Fair enough.

But would you rather (a) live in your choice of San Francisco, New York, Austin, Boston, or Boulder; or (b) pick five cities at random from an alphabetical list and then choose one of them to live in?

I expect the vast majority of HN readers would choose (a). SF has some disadvantages (cold weather in summer, astronomical cost of living), but pretty much all startup hubs have a high concentration of energy and generally ambitious people.

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