In case anyone had forgotten, Silicon Valley is still the hot place to be if you're a technology startup, as the WSJ opines today. It just doesn't seem to matter how expensive the place is because of the deep talent pool:
Moving to Silicon Valley has its complications. The cost of doing business in the area remains steep, particularly due to high labor costs. According to a recent report from the American Electronics Association, a trade group in Washington, D.C., and Silicon Valley, high-tech workers in San Jose, Calif., made an average annual wage of $126,700 in 2004, the last year for which data are available. That compares with the national average for high-tech workers of $72,400.Kevin's comment is very telling. I think it's fair to say that Silicon Valley is the center of the universe for a certain type of talent, the kind that doesn't require interaction with normal human beings: semiconductors and the Internet. (I'll be chided for that last one, but have you seen the goofy Web 2.0 rubbish that has been funded recently? No one outside the Valley would think of using it. More on that below.)Even with these higher costs, start-ups say they have little choice but to go where the most tech talent is concentrated. San Jose, the self-styled Capital of Silicon Valley, boasts 284 tech workers per 1,000 people, compared with the national average of 51 tech workers per 1,000 people, according to the electronics association report.
Mr. Efrusy says the region, home to big Internet firms such as Yahoo Inc. and eBay Inc., is also one of the few places where it's possible to recruit seasoned Internet executives.
But the Valley, so the folklore goes, is different. Which may be why Aaron Levie (age 21), CEO of Box.net, may be dead-on:
"We tried to do some fund raising when we were based in Seattle, but Silicon Valley [venture] firms are just more receptive to younger entrepreneurs."Heaven forbid that VCs should require a little experience, much less a modicum of common sense. Box.net? It does online file storage, like many a failed startup before it. Would I have funded it? Not a chance. I'm glad, however, that Silicon Valley VCs were able to see past Levie's youth and the company's poor idea. It's comforting, really.
I've argued before that open source companies need not bow down before The Valley. Most of the successful ones don't. As I've written before, a large majority of successful open source companies come from outside the Valley, and most of them from Europe. Something about socialism.... :-)
Anyway, this isn't meant to be too hard on Silicon Valley. I lived there for many happy years, and remember being surprised when I left that there were people on the earth who didn't think of technology all day.
Now I live amongst those people. I did some tech support for a neighbor the other night. He wanted help figuring out his networking settings in Virtual PC (He, wise beyond his 40+ years, uses a Mac). While I was there, I showed him some of the cool features in Safari (tabbed browsing) and OS X (Expose). He was impressed for a moment, then just went back to browsing of Web 0.2 sites with only one tab per window open.
He, like 99% of the world's population, doesn't really care about technology for technology's sake. He's a doctor. The computer is an occasional resource, not his lifeblood. Oddly enough, most people are like him. These "most people" just don't happen to live in the Valley. I'd encourage you to meet them sometime. Hopefully, it will affect the kinds of businesses you build. Now that would be innovative.
(All that said, it is true that it's easier to get press and funding in the Valley. Unfortunately, neither venture money nor media is a good substitute for a sound business plan and even sounder execution. For these, I'm not sure Silicon Valley is the answer. Spending time with paying customers is. Hint: Unless you're selling semiconductors or living in an Internet bubble, real customers live outside the Valley. Nearly all of them, in fact.)
Posted by Matt Asay on October 5, 2006 08:48 PM
