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Comment by SQL2219 | Hacker News Reader

good quote:

...it costs at least four times as much to base a startup in the Bay Area as it would in most other cities in America.

I expect it is also at least four times easier to raise capital in the Bay Area as it would in most other cities in America. These things have a way of evening out.

I would honestly expect it to be more than 10x easier. In Canada, the idea of raising a 2-3 million round is completely foreign, and in my city (Edmonton) the idea is absurd. I strongly suspect you could raise 10x more much easier in the Bay compared to Edmonton, making it worth it to have an office down there, even though the cost of SWEs is ~4x cheaper here.

Honest question from a place of ignorance: why do you need an office there, rather than just extended stays in hotels and some rented conference space?

A lot of investors won't invest in companies that don't have large offices in the Bay. Investors also generally advise against having remote offices when you have less than 100 people. As a result, there's not really any reason that startups need offices there other than that it can be difficult to get investment if you're based elsewhere.

EDIT: I shouldn't say "the Bay", but rather, "the Bay/LA/NYC/Seattle". I more mean "top tier startups cities" rather than strictly just the Bay, per se.

Excessive capital raised to go with excessive expenses per widget and a higher density of other startups.. The Bay Area and anyone who bought this recent 4 times overpriced equity in it won't be pleased if these things have a way of evening out.

Most of the interesting startups I've seen recently have a small office in the Bay Area to go with a preference for real operations in other cities. Probably an efficient way to raise money from VCs who apparently think Google maps is the tool for investments and yet not have to excrete rainbows to reach profitability.

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