SV isn't the best fit for a lot of startups. It really shouldn't be the default location for all startups especially since there are different options that offer different things (NYC, Denver/Boulder, Austin etc).
The Bay Area has 3 things that set it apart from anywhere else and startups that really need this have no other real choice:
Investors who are willing to invest super early
Lots of top tier engineers
An extremely optimistic culture
Investors- Our startup did fundraising on both east/west coast. Valuations, investor quality and potential help was relatively the same, but those in the the Bay Area were completely fine in investing in a pre-rev idea. That was, and still is inconceivable outside. A NYC fund flatly told us they will do no investments until we reach 50k MRR. That wasn't a requirement at SV and we got the initial seed funding as a result.
We do something very tech heavy and quite at the forefront in our field. We need really good engineers and most these types of specialists currently are employed at a Google or Facebook etc. In theory they should be super expensive and impossible to dislodge from these tech giants but what I find is that these super smart people get bored after a few years. They know their worth and that there will always be high paying jobs for them, but they can be persuaded to join a startup on a lot lower salary because they get a lot of freedom and ability to make a difference. A lot of the people that complain about expensive demanding engineers in SV are basically a bunch of PMs or salespeople who want a CTO to build a front end app. If you actually have interesting tech, finding engineers at a discount is quite feasible.
The last thing is about culture. It's like the YC interview day. We spent the entire day before and after the interview (and snuck in again the next) because the other teams you meet- the optimism and energy is infectious. It's the same feeling the morning of a marathon where you're worried it's too cold and wet, but the instant you see the crowd, everything feels right.
If you're doing something that counter-intuitive, and changes existing thinking, then culture is essential. Most startups, even in the accelerators, are ops businesses. They utilize tech, but business not tech is their key driver. There's nothing wrong with being that kind of startup, but if that is the case, then the Bay Area isn't a good a fit which is what this article says. Your customers aren't there, it's expensive, and there are other options. But if you do have a early crazy idea that is based around a key piece of tech, the Bay Area is still the best choice by far.
An optimist: I could make a start-up and become a billionaire, or at least get $million/year at a FAANG.
A pessimist: I'd probably be sharing a studio apartment and eating dry dog food, or maybe even homeless like so many of the people there.
You see it outside of tech too, for example in acting. The optimist sees movie stars getting over $100,000,000 per movie, so they throw all their belongings in a duffel bag and take the next greyhound to Hollywood. The pessimist knows that most actors fail, with many working minimum wage or risking their health to make NSFW movies. Another place is sports, with the optimist focused on top players and the pessimist well-aware that most are lucky to end up as gym teachers.
So the optimist goes to the Bay Area, gambling his life, and the pessimist chooses a more reliable path in life.
it's not just the top tier engineers. It's engineers who are confident enough to take flyers on startups. It also helps they're very confident that if the startup explodes they'll be able to get another job; that requires a density of opportunities and employers who don't mind a previous job that blew up or a short stint or two.
It's not a seed round if you're making $600,000 a year.
You could stop all development, fire every expensive person apart from some basic cheap support staff, and be wildly rich in a couple of years just from that.
In a couple of years you'd be a millionaire and richer than virtually anyone in the world. And in a few more you'd be a multi-millionaire and richer than virtually any American.
If you want to carry on working for 10 years to try and become a billionaire, which will almost certainly not happen, go for it.
No reason to assume I don't get something here. Learn to leave room for your own ignorance and blind spots.
600k/y doesn't make you a millionaire in a year or two, especially in SV, no matter how hard you try. And it certainly doesn't qualify you as "wildly rich".
The Bay Area has 3 things that set it apart from anywhere else and startups that really need this have no other real choice:
Investors who are willing to invest super early
Lots of top tier engineers
An extremely optimistic culture
Investors- Our startup did fundraising on both east/west coast. Valuations, investor quality and potential help was relatively the same, but those in the the Bay Area were completely fine in investing in a pre-rev idea. That was, and still is inconceivable outside. A NYC fund flatly told us they will do no investments until we reach 50k MRR. That wasn't a requirement at SV and we got the initial seed funding as a result.
We do something very tech heavy and quite at the forefront in our field. We need really good engineers and most these types of specialists currently are employed at a Google or Facebook etc. In theory they should be super expensive and impossible to dislodge from these tech giants but what I find is that these super smart people get bored after a few years. They know their worth and that there will always be high paying jobs for them, but they can be persuaded to join a startup on a lot lower salary because they get a lot of freedom and ability to make a difference. A lot of the people that complain about expensive demanding engineers in SV are basically a bunch of PMs or salespeople who want a CTO to build a front end app. If you actually have interesting tech, finding engineers at a discount is quite feasible.
The last thing is about culture. It's like the YC interview day. We spent the entire day before and after the interview (and snuck in again the next) because the other teams you meet- the optimism and energy is infectious. It's the same feeling the morning of a marathon where you're worried it's too cold and wet, but the instant you see the crowd, everything feels right.
If you're doing something that counter-intuitive, and changes existing thinking, then culture is essential. Most startups, even in the accelerators, are ops businesses. They utilize tech, but business not tech is their key driver. There's nothing wrong with being that kind of startup, but if that is the case, then the Bay Area isn't a good a fit which is what this article says. Your customers aren't there, it's expensive, and there are other options. But if you do have a early crazy idea that is based around a key piece of tech, the Bay Area is still the best choice by far.