It would be helpful if some of the Silicon Valley venture capital / startup capital was as enthusiastic in investing in non-Silicon Valley companies. I've heard on more than one occasion that the company was great, but the only reason they are not investing is because it is not located in Silicon Valley.
The truth is that the World Would be Better if a) VC in the Other 50 Silicon Valleys had the Same Appetite for Risk Taking as is present in Silicon Valley or b) If Silicon Valley VCs were much more open to investing in the Other 50 Silicon Valleys.
Yes, it is true that at the Angel level, there's a much broader access to capital now more than ever in a broader range of geographies, but once you start to get into Series A rounds and higher, the bottleneck ("squeeze") becomes evident, and this is where Silicon Valley has a sizable advantage over other regions.
There's no lack of entrepreneurial talent, willpower, or ideas in the Other 50 Silicon Valleys. Rather, the lack of investors willing to invest in these risky endeavors to the point where they can reach the liquidity necessary to self-perpetuate their local entrepreneurial ecosystem. Small exits are necessary, but not sufficient to keep a startup ecosystem going on its own. You need large, $1B+ exits and IPOs on a fairly regular basis to do so... and that requires the financial power equivalent to what's now mainly in Silicon Valley, and perhaps one or two other locations, tops. But not in the other 47+.
(1) If we had 50 Silicon Valleys rent around here would be a lot lower. Thumbs up to that.
(2) San Francisco may be diverse by some analyst's spreadsheet, but in meatspace it is incredibly ghettoized. How many black people (to take an extreme example) do you see in Pac Heights or the Marina or even the Sunset? How many white people live in Bayview? It is the opposite of diverse.
The closest to "diverse" I've experienced is Toronto. If Canada had better weather, I think many more would move there. Pray for global warming, eh?
The problem is that most parts of the world, while they want to reap the benefit of a Silicon Valley they don't want to put in place the ecosystem necessary for it.
It's not a coincidence that Silicon Valley exists on the doorstep of the most diverse community in the US - not just ethnically but in all areas of lifestyle diversity. Many places are not prepared to embrace that.
Embrace of failure is incompatible with deep seted cultural values in many parts of the world.
Tax regimes... Legal structures favoring equity sharing... At will employment...
Most of the places that want to recreate Silicon Valley always seen to add a "But Our Way". Problem is "our way" means keeping in place many of the sources of the failure which those places have had to date in having already created their own Silicon Valley. (Typo apologies via iPhone)
Are you joking? Silicon Valley is overwhelmingly suburban middle class white, with a substantial minority of suburban white-washed asians and indians. It's incredibly homogenous culturally.
New York is far and away the most diverse place in the country, and only a few places in the world can compare (e.g. London).
I am pretty sure a lot of Asian and Indian people will find that racist and offensive. I certainly do, and I'm neither.
As to New York, per my comment NY might be but Wall Street sucks the oxygen out of the talent room, similarly London where the City takes all the tech talent and starves startups of top-tier talent.
Most startups are boring ass websites with none viable business ideas. They do not need baller engineers. If they have a working business eventually, they're competing to hire the smart folks based upon the mix of compensation, work and colleagues. If you can't build a biz that can sustain a compelling mix of those three hiring ingredients, you aren't allowed to successfully hire good engineers.
People: you aren't allowed to blame your crap hiring strategy on NYC finance firms scooping up all the smart engineers that wanted to work in finance. There are so many smart engineers who do / want live in NYC and Not work in finance. If you're failing to hire people it's because you have at least one of the following: a work environment that isn't a sane/pleasant place to spend 40 hours a week, crap compensation, or your biz is a CRUD website with the personality of a heavily used smelly sponge.
No particular category of business "deserves" smart people, they work hard to get those folks. And frankly, most startups are just crud websites. Additionally, the vast majority of interesting engineering challenges only happen at larger organizations. (That said, there are many small tech businesses that have really cool tech challenges, but that's the exception rather than the rule).
Let me restate that: most startups have boring work, terrible hours and crap pay.
Tl;dr to quote a favorite phrase of an awesome friend / software engineer: "fuck you, pay me money [if you want me to work with you]"
New York is a lovely place to live, one of the most truely urban and actually diverse locales one the planet. Certainly the only city in the US with subways that work 24/7 and good food at all hours. Not having to drive is a beautiful healthy thing.
Have you ever hired any technology talent in London? I have. It's exactly as I describe it. The city can afford to suck a huge amount of talent into is orbit by outbidding any startups - or most other businesses. It's not a factor if whether you have a great hiring strategy or not. It's the fact that you're competing against hiring managers with a good as unlimited budgets. This makes it hard to build a solid technology team without equally large budgets - whether you're a startup or a huge multinational corporation which just doesn't have the pockets of the City. This in turn makes startups in those places less competitive. Your rant notwithstanding this is something which makes it harder for those locations to create their own versions of Silicon Valley.
In my experience SV is more dominated by tech than NYC is by finance. Fashion, marketing, publishing, etc, are also huge here which means the yuppie hangouts aren't just filled with people in one industry. Not to mention you can walk down a street and hear three different languages in the same hour.
> New York is far and away the most diverse place in the country, and only a few places in the world can compare (e.g. London).
"The Houston region is now the most racially and ethnically diverse large metropolitan area in the United States, surpassing the New York metro area, acccording to a new analysis of Census data." [1]
(Granted, the study was done by folks at Rice University here in Houston ....)
That seems to be based just on looking at the percentages of the four major ethnic groups (white, hispanic, black, asian). The study doesn't look at other axes of diversity, like nationality, language, etc.
I lived in Atlanta for a long time, which is very "diverse" in the sense that there are large numbers of each of whites, blacks, and hispanics. But it was nothing like New York where you had viable communities of say Trinidadians versus Jamaicans, etc.
Anecdote: On our wedding anniversary a few years ago, my wife and I had dinner at a new French restaurant not far from our house. The server looked vaguely Asian, but she spoke English with what sounded a bit like a French accent. I asked if she was Vietnamese. She said she was from Kazakhstan. Surprised, I said I didn't realize we had Kazakhs in Houston. To my shock, she said, "there are about 5,000 of us here."
While I think your point about cultural issues causing problems in other areas has truth to it, I think it's funny to call silicon valley the most diverse community in the US.
The valley exists on the doorstep of stanford - an incredibly highly selected (this year the most highly selective) university. In addition to that a large portion of the people I've met here come from fabulously wealthy backgrounds (dynasty money) where failure is largely irrelevant because there is always a near infinite supply of backup money.
I think part of the reason the valley does well is because the population is some of the most homogenous and highly selected in the world all living in the same place and there is enough wealth to try things.
I think it's hard to argue that San Francisco is not the major city most open to cultural diversity in the country. The Bay Area is very diverse ethnically. New York perhaps but its economy is dominated by finance which sucks the air out. The Bay Area's openness is key to the success of Silicon Valley. Stanford certainly has a lot of positive influence, sure, but there's more to the Bay Area than Palo Alto.
EDIT: To clarify not just ethnic diversity, but diversity of opinion and openness to all kinds of cultural diversity. For example I see a non-trivial number of non-straight people in startups, and it's pretty easy to argue many parts of the world claiming they want to create a new Silicon Valley are not as embracing as the Bay Area when it comes to sexual identity.
Yep, and the Houston area is now even more diverse than LA and NYC. Here's hoping a couple decades from now the kids of the current residents will be thought leaders in a local version of Silicon Valley.
So I'll have to respectfully take a different view on Houston having lived there for three years (admittedly returning to the Bay Area in 2007). There's certainly diversity in ethnicity in that there are large population of whites, african-americans and hispanics. Outside of those groups there's a large fall-off. But more importantly a key weakness of Houston is its lack of cultural diversity. I found to be the most parochial city of 4million people I'd ever experienced (and I've lived in a lot of places). It is not really remotely comparable to something like Silicon Valley in that regard, sadly.
However, I share your hope that the increased ethnic diversity, and the general nationwide cultural trends of young people being more open to new things and will become thought leaders. Of course my reluctant skepticism comes from what I experienced (great anecdote for another venue) of the control of thought leadership by a very narrow good-ole-boy network which appears pretty well entrenched and able to ride out the best intentions of upcoming potential leaders. I was shocked by the examples of outright corruption while living there.
Not to dampen your optimism - I am absolutely cheering you on to be right, as I'd love to see it, but I'm sadly pessimistic.
I'll admit you may not have seen the cultural diversity in the area since the city is spread out, but Houston has as many OR MORE ethnicities than LA or NYC since the last decade has seen a huge increase in the number of refugees and students and workers from every little corner of the globe you could imagine. In addition to the Vietnamese and Chinese who have been here for a while, there are now large numbers of Indians and folks from Central Asia and the Middle East who may not yet be counted. Having lived in Nigeria as a kid, I'm excited that as of the last couple of years, there are possibly more Nigerians here in Houston than anywhere else in the world outside of Nigeria--more than NYC, LA or Chicago. I miss the walkability of Boston and how easy it was to run into so many people compared to the seclusion you feel in a driving city. Even though Houston is pouring hundreds of millions into bicycle trails at this moment, I know it will take a long time for this spread-out city to afford as many opportunities to bump into all sorts of people every day outside of a few key areas, and for that reason it's possible to live here and encounter little diversity.
yes, great point - which is the broad point I was trying to make - Silicon Valley benefits from being in the whole Bay Area which is incredibly diverse and that's a key strength of Silicon Valley's geography which other places won't choose to emulate.
Still. Not quite sure why my original point that started this thread keeps getting downvoted though - that's several so far, as far as I can tell.
Ethnic diversity is less interesting (and less relevant) - I'd also call it a stretch to consider San Jose as the main city of silicon valley. The people actually working in tech are fairly homogenous culturally (which is what the OP was talking about).
I'm not saying this is bad, but that diversity may not be that important for a silicon valley like atmosphere and that the people who work in tech aren't very diverse. Palo Alto also isn't a very varied place and is the center of the current silicon valley.
I think a meritocracy and a willingness to try/accept new ideas rather than hold on to tradition is the important thing. I think that tends to go along with education, the more highly selected the better.
But I've no doubt Silicon Valley is fairly diverse, although there were a bunch of articles in the last couple of years pointing out how little diversity there is in the management layers of Silicon Valley companies.
I'll allow a truce. :) I was hanging out with Rice sociologist Dr. Michael Emerson this morning so the topic is near and dear to my heart! FWIW they're all very close right now, and the biggest surprise is that Houston is so diverse--it has undergone the most rapid transformation of any large city in America in the last 3 decades, which means it's on track for rapidly outpacing the others in ethnic diversity (there were few Hispanics and Asians here when I was born, and now there are huge numbers).
Houston has the advantages of affordable property, more jobs for a wider range of backgrounds and few limits to development. It seems natural that new immigrants not specifically involved in the software industry would choose Houston over Silicon Valley. Especially if they already know they can take the humidity.
The cost of housing alone. An equivalent to my large house in a leafy suburb of Houston is absolutely unaffordable to me now I live in the Bay Area. Personally I prefer my overall lifestyle and standard of living here, but it's bloody pricey!
Prices (in SF, anyway) have also increased dramatically since I left the area in 2009. I got paid more and paid less for rent when I moved to NYC, which didn't make sense to me, either.
because having lived in New York, and currently between DC and Houston, whenever I'm in Silicon Valley I'm always sort of, taken aback, by the paucity of blacks there. Reading through that article, I see now that it wasn't just my imagination.
I think the key is though - and certainly the point I was trying to make at the start of the thread - it's not just ethnic diversity, though that's important. It's diversity of opinion and other cultural factors. There's an open-mindedness to Silicon Valley that is definitely not there in Houston - my in-laws are from Houston and I lived there for three years, and I don't think anyone would make the case that it's comparable to the Bay Area for that.
Yet that cultural tolerance has been shown time and again to be critical in attracting the creative class professionals which make Silicon Valley tick.
I'd agree that it's cultural tolerance that is the important factor, but I don't know if that results from diversity - I think it results from education.
Is there anywhere in the world where there might be a "Silicon Valley" besides California where non-competes are unenforceable as a matter of long standing public policy?
richardjordan's "But Our Way" exception for this applies to every place in the US---in fact, I'd say there's a general obsessive focus on what's perceived to be good for individual companies to the exclusion of what's good for the ecosystem, like a liquid labor market. That would include the critical "embrace of failure", the areas I've worked in (Boston in the '80s, D.C. in the '90s) aren't good with that.
VC investors have prefer to have their investments close by, yet they tend to rely on the managers they backed and/or picked to lead these ventures, rarely intervening. If the non-interventionist approach is good, and it probably is, then finding and locating ventures all over the planet should result in discovering more talent, and holding down costs.
That's quite rich, considering that a pretty high up guy at a16z told me that they were parochial when it came to investing, preferring to focus on SV companies. Maybe they should put their money where their mouth is.
One reason for not having 50 Silicon Valleys is in a recent post of Fred Wilson at his AVC.com: On average in the US over the past 10 years, venture capital has had returns lower than the S&P or index funds. So, basically the ROI of venture capital sucks. Silicon Valley has such a large fraction of US venture capital that basically the ROI of Silicon Valley has to suck. But the top tier venture firms are doing well, right? Well, recently KPCB got a 'reality check' about ROI from their limited partners and made some changes. So, well, maybe Sequoia or AH is doing well. Maybe. Has any venture firm made much money since Facebook or Google?
So, why should the world have 50 places that have ROI that sucks?
Actually, there's good reason to suspect that not all the blame for the financial suckage belongs on Silicon Valley or venture capital. Instead likely we have to look to constraints put on that 'asset class' by the limited partners. But to the limited partners, the venture capital asset class is usually at most small potatoes. So, the limited partners are reluctant to bend over backwards to give the venture partners, in a small asset class, relaxed constraints.
The good news is the ratio of price and performance for the 'raw material' for an information technology startup -- an 8 core, 64 bit, 4.0 GHz processor for about $180, ECC main memory at less than $9 per gigabyte, hard disks with 3 TB for about $135, Internet bandwidth enough for well over $500,000 a month in revenue for less than $100 a month, fantastic infrastructure software for free or nearly so -- Linux, open source, the Microsoft BizSpark program, etc. Can still be wet behind the ears and remember when such computing performance cost factors of 10 more.
So, the challenge is to find something valuable to do with such information technology raw materials. Maybe it is a challenge, but I have to believe that it is also one of the best business opportunities in the history of the planet.
Heck for what it costs to open a pizza shop, buy a truck for an electrician, get a mower, trailer, and truck for mowing grass, or equip an auto repair or auto body shop, can set up one heck of a server farm. Or just use the cloud.
But my take is also that more is needed than just a bright business 'idea' and programming language experience.
It does appear that the day of the 'organically' grown startup without equity funding is about to become more common or even dominant. E.g., there is the Romantic Matchmaking site Plenty of Fish in Canada, long just one guy, two old Dell servers, ads just from Google, and $10 million a year in revenue.
With enough programming experience, can bring up such a site and get nicely profitable in less time than it commonly takes for a venture capital firm even to respond with a no.
I think it is more important to note that the white, upper-middle-class denizens of the valley actually like (or ar least don't mind) being near people who are not like them, relative to the other upper-middle-class people elsewhere.
New York has some of that going too, but it's worth pointing out that the culture in New York subsumes you. New York could still become a tech spot, if it could overcome other difficulties, like the whole employer-owns-all-your-work default.
The truth is that the World Would be Better if a) VC in the Other 50 Silicon Valleys had the Same Appetite for Risk Taking as is present in Silicon Valley or b) If Silicon Valley VCs were much more open to investing in the Other 50 Silicon Valleys.
Yes, it is true that at the Angel level, there's a much broader access to capital now more than ever in a broader range of geographies, but once you start to get into Series A rounds and higher, the bottleneck ("squeeze") becomes evident, and this is where Silicon Valley has a sizable advantage over other regions.
There's no lack of entrepreneurial talent, willpower, or ideas in the Other 50 Silicon Valleys. Rather, the lack of investors willing to invest in these risky endeavors to the point where they can reach the liquidity necessary to self-perpetuate their local entrepreneurial ecosystem. Small exits are necessary, but not sufficient to keep a startup ecosystem going on its own. You need large, $1B+ exits and IPOs on a fairly regular basis to do so... and that requires the financial power equivalent to what's now mainly in Silicon Valley, and perhaps one or two other locations, tops. But not in the other 47+.