11 October 2007

Startups belong in Silicon Valley, Movies in LA

Paul Graham of Y Combinator gave a talk in the UK that apparently rankled. All he'd done was state an obvious truth: "startups would do better if they moved to Silicon Valley." In this essay, Graham lays out some of the reasoning for moving to the startup hub, but mostly sticks with the investment aspect. It's easier to get money in the Valley than anywhere else, even the number two spot for startups in the world:

Boston investors will admit they're more conservative. Some want to believe this comes from the city's prudent Yankee character. But Occam's razor suggests the truth is less flattering. Boston investors are probably more conservative than Silicon Valley investors for the same reason Chicago investors are more conservative than Boston ones. They don't understand startups as well.
What Graham doesn't cover in great detail is the rest of the infrastructure that's missing in other locations. Anyone who's ever tried to hire a top-tier, cutting edge software engineer out in the hinterlands (and yes, I count the PHX metro area and its 4.5 million inhabitants as "hinterlands") knows that the pool is ridiculously shallow.

That's not the case in the SV/SF area. There, the pool is deep and the networks as dense as dendritic fibers in the corpus callosum. Add to that the networking guys, hardware guys, marketing experts, tech sales pros, lawyers, etc. who actually understand how startups and tech companies work, and you can easily see how building a startup in SV is the right thing to do.

When I read this, I was oddly reminded of a post from Jim Henshaw about Canadian TV. Apparently spurning the lessons of Hollywood, SV, and Detroit Nagoya, Canada is trying to spread out film production.
The concept of Regionalizing production may satisfy politicians who want to see their constituents tax dollars spent locally. But you can't build a viable film industry that way. In fact, it's a sure-fire recipe for making sure it never happens.

Imagine asking most of the production companies in Hollywood to relocate to Pismo Beach if they want their project green-lit. Consider what Woody Allen or Spike Lee's films would look like if they had to be shot in Newark. Take your life in your hands and tell Robert Rodriguez he's giving up Austin for Padre Island.

And maybe give some thought to the "suppliers" of the industry. The people who have no say in what gets conceived or made. They rent cameras, build props and costumes, or sustain state of the art post houses. Now imagine how their profit margins (which have always been thin) are impacted by having to serve customers who have no choice but to work in areas where such operations are not resident because they couldn't survive and everything has to be shipped in.
There's no mystery that I'm not a country mouse. I like cities. I wish I lived in one. These are some of the reasons why.
Paul Graham essay via Sam Pullara