Location matters for your startup (with city comparisons)

Why density? Does density <i>really</i> 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.<p>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 <i>6 people</i>. Density: 0.01.<p>Case of city B: 5,000 residents, 100 interesting, 25 show up, chances are you'll meet only <i>1 person</i>. Density: 0.02 (double).

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:<p><i>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.<p>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><p>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).<p>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.

Location matters. Even if you're boot strapping. I'm boot strapping Hackers &#38; Founders.<p>In the past three months, I've met a CEO of a 300 person gaming company, M&#38;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&#38;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...<p>That's not to brag. I've simply been extremely deliberate about networking over the past 5 years.<p>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.<p>To that density, add a culture that places an extremely high value on helping others out, and you have something amazing.

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.

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

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

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.

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.<p>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.

Don't relocate, bootstrap :)

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!

I'm relocating to the Bay area in December.

The density/city comparison thing is really hard to measure, but I'd argue it doesn't make a whole lot of sense:<p>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.<p>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.<p>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.<p>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.<p>BTW in case you missed the discussion re: PG's original article, it is here: <a href="http://news.ycombinator.com/item?id=3077165" rel="nofollow">http://news.ycombinator.com/item?id=3077165</a>

Just remember quality of life with these things.<p>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.