Not being around the valley and not having random run ins with people who can help you. I got one of my best employees by running into her roommate at a birthday party and finding out she's looking for work. I've had other cases of running into people at events that later helped me out. Events I wouldn't have gone to if I didn't live in SV.

Also I've found that a lot of VCs don't want to talk to you if you aren't local, because they don't seem to believe in video conferencing and like to be able to have last minutes meetings. This seems to be changing though.

The key here is that my company is fully remote and my employees don't live here, so they get to take advantage of this purchasing power, while I get the advantages of being SV.

I don't think the whole company needs to be in SV, but it certainly helps if the founder is.

A community of experienced technologists. Veterans of successful ventures can skip many mistakes due to experience.

Yeah, network, for example a lot of the companies on http://applytroop.com could probably pick his team up later on if they were in the Bay. But the risk becomes having to move again for opportunities.

He may lose out tons if/when he gets acquired / acquihired.

Talent, VCs, good weather. OP has managed to save $1mil by basing his company in Philly, but could have potentially missed out on multiples of that amount from VCs.

Mind you, I don't even live there, because the downsides of living there in my current situation outweigh the upsides. However,I have been there many times, and if I had to start a company right now, that's where I would do it.

P.S. Try hiring engineers for a company in Philly and a company in SV. Then try to compare the quality and number of candidates knocking on your door in each scenario.