The Majority of Startup Tech Companies Should Not Be in the Bay Area
Despite the elements to beware of, undeniably, the Bay Area has a ton of strength and draw when it comes to tech startups. There are many blaring and obvious reasons why people consider and do make the move
Talent: The Bay Area has an unparalleled depth of engineering talent that makes scaling efficient and more feasible. It is much more difficult to retain adequate talent in other markets where the talent is scarcer and the competition for that talent is fierce. Companies like Twitter and Facebook capture engineers in New York with salaries that are completely out of reason for startups. With this being said, if you are a talented engineer, you may get the most value out of your career by moving to the East Coast.
Related:No One Can Match Silicon Valley, But Other Cities Benefit From Fostering Startups
Competitive culture: Another big reason to move is the overall culture of tech startups in the Bay Area. There is a built-in community of early adopters who will use your product, beat it up and tell the honest truth about it, which can push you higher. This community creates pressure on the founder to make the product better. The downside is that the pressure can also cause collapse, as teams may run to the next startup at the first sign of decline.
Capital: The dollars are another big reason to move. VCs will back significantly worse teams, concepts and track records, as long as they are local. The bar is lower. The investors reasoning for this is that they can be responsible for making sure the outcome is good, because they have such a great local network. It is the same omnipotent vibe emerging in dangerous ways in other parts of their lives. In reality, their value-add hasn’t statistically changed the failure rate but their money has.
The bottom line: there is a higher probability of funding — and at more attractive valuations — if you live locally in the Bay Area, particularly in the early stages. There are significantly fewer VCs on the East Coast or locally in other markets like Austin and Atlanta, and many of them end up focusing on regional themes like blockchain or fintech.</p>
All of this being said, the reality is that the majority of startup tech companies should not be in the Bay Area. It's expensive, it is insular, and the culture is getting worse, and it just may not make sense depending on focus and customer base. For a consumer platform, the Bay Area could be logical since it's got such a great early adopter community. But, for many industry verticals — pharma, industrial manufacturing, finance, travel, hospitality and the list goes on — all the action is happening outside of the Bay Area. This is a case where being close to customers, industry events and relevant talent should be your primary focus. If enough founders follow this ideology, the capital — and talent — will follow.</p>
Related Video: You Don’t Need to Be in Silicon Valley to Grow Your Business
Published at Fri, 15 Sep 2017 13:30:00 +0000
