If the startup is successful, it probably won't have made a difference which of the two cities it started in, because the product/service offered and the people behind it are going to be the deciding factors. Unless you're doing something like self-driving cars or helping the homeless, which city picked won't make much difference to the product/service. The city will make a difference on what employee candidates will be available, though a good startup in either city can attract talent from both locations. Housing is less of an issue the further you get from San Francisco. The contiguous communities stretching from San Francisco to San Jose (San Mateo, Redwood City, Mountain View, Cupertino, etc.) are essentially one giant tech valley. Also, counting on a source of students is a weak argument; I went to Stanford and believe me, when you come out of college you know WAY LESS than you think. You need a much longer checklist of all the important pros and cons before you decide between the two cities, but don't worry, even if you make the wrong initial choice it isn't too hard to relocate if you always keep in mind that you may have to move (and a good startup that grows fast WILL have to move).