People here aren't going to want to hear it, but that's the kind of person this site promotes. I constantly see stories about 'You don't need a good idea to start a company' (yeah, that one just got posted!) and how you should just start a company and go for it. About how good ideas are worthless and only doing something matters.
It's bull. Starting a company is HARD WORK and not something you should jump into without adequate preparation. I'm sure YC details the work you'll need to do to get going, but most people don't get accepted to YC.
The problem isn't Silicon Valley. It's the idea that just being in Silicon Valley somehow solves your problems for you. It doesn't. For every problem it solves, it creates at least 1 more. Creating a viable internet-based business has NOTHING to do with location. Or for that matter, any international business.
The set of people with whom you can have in-depth conversations is highly location-dependent, and you will be sub-optimally innovative without having such conversations with the right people.
I admit I haven't thought about this particularly deeply, but I suppose the best way to measure innovation is to compare the state of the world before and after the innovation takes place.
Thank you for this post..it really is a breath of fresh air after all the buzzword-laden but completely substance-free pitches you tend to hear after spending time in the Bay Area.
When startups respond to the question of "How will you make money" with "We'll get VC funding", you know there is a problem.
Here's a bigger problem: It seems that the set of people building the next big thing social whatever and looking for VC funding and the set of people who know about business stuff and lead generation rarely intersect.
This is the great paradox of the valley: It seems that most of the people who know about sales, driving traffic, etc and are thus most likely to succeed are building unsexy businesses in web hosting, B2B services, etc. In other words, the kinds of businesses Valley investors are not interested in it all.
The people who are clueless about marketing or generating revenue get the lion's share of the funding...because they're making a social iPad app(or whatever is hot at the moment).
In a way, Silicon Valley has become the tech world's Hollywood. Wide-eyed, talented people are encouraged to move across country and make their fortune in a big way. And like Hollywood, they're not encouraged to slowly build their craft and name, through theater and small roles, they're encouraged to go and pitch their Superman reboot and try and get discovered by David Fincher.
It's why I've always been skeptical of Silicon Valley. I don't like get-rich-quick schemes, even if they sometimes (although rarely) work. The social damage done to those who fail, especially when they make up the vast majority of those who try, can create a terrible reputation for an industry.
Of course, Hollywood has been chewing people up and spitting them out for decades, so maybe this is a sustainable cultural model, if you don't mind the repercussions.
Fortunately the world needs more programmers than it does actors so there is some underlying demand to soak up the programmers who don't make it big. A backup plan of $60-100K a year is hardly the same as being a barista at starbucks for the next 30 years.
Well, a Starbucks manager in Los Angeles doesn't make that much far off from $60k, but regardless, you're right that that's the case for now, but I would point out that Silicon Valley is extremely young in comparison to Hollywood.
But most importantly, the point I'd make is this: If Silicon Valley is our Hollywood, where is our Broadway?
I'll temper the cynicism by saying that, despite everything, if you want to have any chance at being successful in the movie industry, you come to Hollywood.
Same thing with Silicon Valley, despite its flaws.
The problem is that the true Silicon Valley way (build great stuff and change the world) has been overtaken by the poser Silicon Valley way (go to parties and focus on raising money). This happens during every boom. Fortunately, the next crash will get rid of the posers again.
Chris, I could not agree more. This seems to happen in the Valley every four or five years. I lived through two of those crazy cycles before finally leaving in 2009 along with a bunch of other people. By 2013, another wave will leave.
I also find it interesting that a lot of people live in the Valley in their 20's, but when they hit late 20's/early 30's, they're gone. I'm not sure how it ties in to the above statement (or if it does at all.) The most common reason I've heard is that the Valley is a terrible place to start a family.
I find that mentality interesting. Personally, I spent a short time in the valley in my very early 20's (internship) and found it so boring outside of work that I knew I didn't want to spend the rest of my 20's there. I did see how if one already had a family it would be more bearable.
True, but I draw a large distinction between 'the valley' and SF. SF was an hour and a half away in traffic from my employer, and I don't want to spend 3 hours a day of my life commuting.
The most common reason I've heard is that the Valley is a terrible place to start a family.
I would imagine that the cost of housing plays a large part in that. Housing in the Silicon Valley/Bay Area is insanely expensive. Maybe not as bad as downtown Manhattan, but still insane by the standards of pretty much every other metropolitan area in the US.
If you're by yourself, you can get away with squeezing into a tiny apartment and making do (or getting roommates). If you're starting a family, this isn't an option.
I've started a family in Silicon Valley, and it is tough financially. We were lucky to find housing a below-market rent, and it's come with some hassles but overall it has been a godsend. Other expenses like health insurance really add up -- you should see the cost of preschools on the Peninsula. I like living here but it is expensive.
The most common reason I've heard is that the Valley is a terrible place to start a family
Apart from the cost of housing, let's see: sunshine 9 months a year, driving distance of Tahoe to go ski, the ocean is 40 minutes away, we can go every weekend, plenty of campgrounds and parks within an hour drive.
No, I think it's a great place to raise a family. But of course everyone is different.
Am I the only person who cannot focus on an article without ad-blocking all the animated stuff around it first? I may very well have A.D.D., so that could be it, but it's a huge distraction for me.
EDIT: I didn't intend to imply that this spammy behavior at all, as noahc's reply seems to indicate. There's tons of otherwise fantastic blogs that do the same thing.
I go back and forth on the Erica.biz website. She's obviously smart and motivated and knows what she's talking about. But everything comes across as spammy. I don't doubt her methods work well, but there's something about her and her blog that rub me the wrong way.
EDIT: After looking at the parent, her website isn't spam. It has good content, but it LOOKS like spam. Maybe I've just spent too much time on the Internet and these things pop out at me.
Someone e-mailed her this: “Erica, I need to know how to make money on the Internet. But I need make at least $100,000 in my first year or it won’t be worth it for me. Can you suggest something that would help me do that?"
Maybe he is a nutjob, but he felt like she could help him. I think she works super hard and is super smart. She's always been positive as well. I appreciate those things, but her website and the 'feel' of it all seem like spam and get rich quick scheme.
The content is great, if I read it in an RSS reader, maybe things would be different.
Obviously, I'm very happy for her success and ability to keep positive. Her site just isn't for me.
FWIW (in FF at least), hitting the stop button (after the site has loaded) stops all the gif animations. Flashblock can ensure that Flash ads don't start up either.
No, I feel the same way. I read at a large font size (weak eyes), so a lot of the gunk was shoved off the screen; but I finally had to pull up adblock.
The Valley, HN -- places where people herd -- are good for leaders, not great for followers. The group mind that tells us what is good and bad is the average of all the guesses about how to do modern-day startups. Those who are above average, or lucky, can be successful without being followers in herd games.
Nice to see Erica's back. I got my first web host account from her company, Simpli back when she was a frequent slashposter. Why? Because I liked her approach to business -- work hard, take care of customers, provide a service worth paying for -- and I wanted to support that. Not that my $10/month account made any difference in Simpli's grand plan :-)
I agree with what she says here. I really don't get the misalignment I see here (HN's my only conduit to Valley thinking) between SV-type startups and what I think of as "good business."
Startup news are biased towards success stories, many of which raised funding, so it's natural for outsiders to think "to succeed, raise funding". There's not enough news detailing the failures, or the success stories but the darkest hours endured. We need more of that.
After reading this post, if I ever come home to find a 7-day "pay or get out" notice on my door, I'll at least remember "hey, another entrepreneur has been through this too! I know what to do: persevere and work hard" :)
I think a fundamental problem is that people believe Silicon Valley is some sort of panacea in the first place. It only takes a little bit of common sense to deduce that Silicon Valley simply has a higher population of entrepreneurs or VCs. Does it up your chances of networking with the right people? Yes. Does it make living somewhere else worse? No. It's quite absurd to believe that you simply need to be somewhere else in order to prevent failure.
Is there an example of an internet company that started in the way she suggests (no funding, biz model first, start small..) that went on to be a major online property? Off the top of my head I can't think of one and all of the biggest successes (Google, Facebook, Twitter) definitely didn't go that route.
I like her article and tone, but I suspect she's talking about a different class of business that doesn't fit with the typical valley startup
I'd say 37signals is probably one of the most common examples on sites like HN. They're the poster child for no funding.
Having been in the web hosting industry for 6 years, I can safely say that my $1.1M exit was a small one for a dedicated server company. Most of the other dedicated server/colo/datacenter company owners I know are millionaires many times over. Robert Marsh of Rackshack nee ev1servers is a popular example of someone who started from scratch and sold out for mega millions. And the guys who started The Planet have flipped several web hosting companies to the tune of 8 figures+.
It's a common thing in web hosting to sell a company, then use that money to start another one, then regain customers and sell for more, and do it all over again. Not sure how doable it would be today, but that was a common thread throughout the past 10 years.
I think it's worth denoting a difference between B2B companies (like 37signals) and B2C companies. I'm mainly talking about the really large B2C companies.
Web hosting sounds a lot like a consulting business. A great way to start a business, make a lot of money and have an exit but not the same as the fame and potential money to be had in the B2C game.
Not saying one is better than the other, but there are a lot of people out there (myself included) that could never find satisfaction in a B2B and will always chase the next Google. For those people, the Valley is ideal.
Google,Facebook,Twitter are extremely atypical outliers.
Statistically speaking, the typical valley startup builds something quickly, fails to acquire users, burns through angel funding, and dies quietly.
The typical _succesful_ Valley startup is not that different from the business described in the post. Remember, the most succesful YC exit ever, Heroku, is a hosting company.
The typical small business fails as well. My list was short but again, any successful internet property I can think of did not start in the manner suggested in the article. I also think about the motivations behind the best entrepreneurs I know (some with 100M+ exits) and never did they want to build a small business. They always wanted to touch as many people as possible, build something cool and later, reluctantly, strap a business model on.
Not a popular opinion here I know, but true nonetheless.
That sounds an awful lot like lazy and/or out-of-touch entrepreneurs being broken to me. Still, while the venture and angel money in the area isn't explicitly "must be present to win," you have to admit it helps. But being present doesn't guarantee winning.
I really like your article and totally agree in principle, I've found that attitude pervasive in the bay... but are there any numbers around it? Like do we know the percentage of startups that succeed? Obviously a significant percentage of them in the valley make it work, right? Is there an amazing arbitrage opportunity to be had investing in non-valley based companies?
It's bull. Starting a company is HARD WORK and not something you should jump into without adequate preparation. I'm sure YC details the work you'll need to do to get going, but most people don't get accepted to YC.
The problem isn't Silicon Valley. It's the idea that just being in Silicon Valley somehow solves your problems for you. It doesn't. For every problem it solves, it creates at least 1 more. Creating a viable internet-based business has NOTHING to do with location. Or for that matter, any international business.