Five Days in the Valley: An East Coaster's Take on Silicon Valley vs. NYC
ventureminded.me
ventureminded.me
There's an optimism that permeates and reinforces the entrepreneurial spirit in the bay area that the East doesn't have anymore. It's a kind of frontier, the world is my oyster, I can do anything kind of thinking, that's needed in this kind of highly speculative industry.
On the downside, coming from the East Coast, it feels weird at times, interacting with SV folks. Bringing up obvious concerns or problems is met more with a "why are you poo pooing my optimism buzz?" more often than valid concerns taken as a serious consideration. The hyper-optimism is socially reinforced, I have my head in the clouds, you have yours, it's rude to bring anyone down.
As an outsider, it seems to explain certain bizarre behaviors I'd encountered when dealing with West Coast firms, usually centered on outrageous and unjustifiable expenditures of their VC money before the company has made any sort of sniffs at being profitable.
Haha, I had to learn this bigtime coming from NYC. East Coast culture is kind of 'half-empty-cup-first' thinking, then the other party is expected to prove their point. Out here it's more like 'my cup runneth over!' then you say 'yeah dude, that is totally awesome'. (pause) 'BTW, have you thought about this little issue? I'm sure it's nothing, but you should have a good response in case some wanker VC brings it up..' then you gently drop da bomb that their idea is wildly unworkable.
Very different cultures -- not just in hi-tech, this is a deep east coast/northern CA differential.
Is one approach or mindset better than the other? It's tempting to say that the financial success of SV validates that approach, but I don't think that success occurs in a vacuum. Could those SV companies get where they are without past contributions from MIT or Bell Labs, current ones from Austin or Seattle? I don't think so. An army needs more than one kind of soldier, an industry needs more than one kind of company, and just because SV seems to hog all the glamour doesn't mean other places are somehow lacking.
And many of them would be the first to also trot out the old cannards of "90% of all startups fail" and so on, they just don't really believe it, or don't believe their project will fail, regardless of the evidence.
I guess the difference is, finding out the hard way that you burnt through all your funding and have to look for another job is hardly comparable to getting shot. And some of them (at least, enough to make the VC firms stick around) do succeed.
(If not, it seems like you need to argue for an extremely skewed distribution of the value that individual engineers are adding based on quality or area of expertise.)
If one of these $1m revenue/year ("1MRPY") engineers starts a company with n 1MRPY engineer friends, is it so crazy to suggest that they might produce $x * n million worth of value over x years? (Even if they just build infrastructure and never turn a profit?) Or that they might be worth $4 * n million in revenue over a four year earn-out to an acquiring company?
No. Just because total revenue divided by total headcount comes out to a million doesn't mean every engineer is contributing a million. For one thing, a lot of that revenue is return on investment - in the code, in customer relationships, in the "brand" generally - in previous years, nothing to do with current headcount. For another, the distribution is exponential. A few people contribute many times that million, while the majority contribute less, and many of those at the high end aren't engineers. So yes, engineers who contribute a million dollars to the bottom line do exist, but they're a very small minority. I've even been one myself, but not every year. Everyone in SV seems to think they're firmly established in that elite category. 99% of them are wrong.
"If one of these $1m revenue/year ("1MRPY") engineers starts a company with n 1MRPY engineer friends, is it so crazy to suggest that they might produce $x * n million worth of value over x years?"
It's not totally crazy, but it's very unlikely. Such engineers are rare enough, and in such high demand, and self-directed enough, that you're unlikely to get more than a couple of them to follow one vision even if you're friends. Then you have to find people with non-engineering skill sets who are as good in their respective fields, and convince them to join you. Then you'll probably still fail due to factors other than the quality of your personnel.
What we're facing here is the compounding of two errors. Everyone thinks they're in the top 1%, and that being in the top 1% for one skill set is enough to ensure success. In reality, most startups have average teams and many non-technical obstacles to overcome. I've been in nine startups myself. I'd hardly discourage anyone from trying, but overconfidence can prevent people from doing what they really need to, and overconfidence seems to be California's most abundant crop.
Needless to say, deep inside I'm just jealous.
VC is in large part a sales job (selling potentail limited partners on your future returns) and anyone who can survive two years as an analyst is both intelligent, conscientious, has a prodigous capacity for work and is likely personable. All of these are helpful for being an entry level VC, who acts as coffe boy, secretary, research assistant etc.
But that's not the prize, the prize is impressing somene enough to actually make partner, for which the roadmap goes Here Be Dragons.
And remember, over 90% of VC funds lose money. I would be mildly surprised if the prestige (and return) funds didn't have more diverse backgrounds than the money bonfires.
That should tell you everything you need to know about becoming a VC.
The author is a bit over confident in his opinions for me, but a summer schmoozing in SV sure sounds nice.
It's typical in SF to pay $2K+ for a 1BR overlooking a back alley where homeless and drunks fight every night, where your neighborhood is contested by gang wars, your building is a creaky little Victorian built at the turn of the century, where a favorite topic of conversation are routes you can take to get from point A to point B in the city that maximizes personal safety, and only-half-joking comments about getting mugged on the bus.
It's not the worst city in the USA to live in, but having lived here for six months now, and many major cities in two continents before that, I honestly think SF is completely overblown. It strikes me as a city where a bunch of suburban folk come after college and are blown away by all the Big City(tm) things, and every negative point simply becomes "how cities are", despite many other cities not suffering the same crime, housing, or other social ills.
If it weren't for the booming and incredibly professionally satisfying tech scene, I'd have high-tailed it to a city where rents are halved, crime is quartered, and transportation not so sucktastic.
http://www.salon.com/1999/11/03/sf/
It's an incredibly satisfying place to be a tech company employee, by the way. It's less satisfying to be a founder there, unless you're in it as much for the social scene as to run a business. The noise level is crazy, the distractions are extreme, the battle for talent is fevered, the costs are stratospheric.
Not in Palo Alto or any of the desirable bay suburbs. You get what would in any other part of the country be a starter 3-bed with 1/10 acre plot for upwards of $2M. It's insane and unsustainable.
SV or, more correctly the greater Bay Area, is to tech entrepreneurship as LA is to movies. Sure, you can become a star in NYC or somewhere else but everybody just knows that if you want to increase your chances, you've gotta go to LA. As Shawn Mullins says in Lullaby for LA:
it's hard to play a gig in this town
and keep a straight face
seems like everyone here's got a plan
it's kind of like Nashville with a tan
Interestingly, the movie industry started in NYC, then moved to LA in the 1910s and 20s (http://en.wikipedia.org/wiki/Cinema_of_the_United_States#Ori...). Read that part of the Wikipedia article carefully, as many of the reasons for SV's dominance are pretty much the same.
If only New York City could be as far from New Jersey as California is--
This mattered in the early days of movies, when Edison's patent enforcers would show up to demand payment for people using cameras. The early filmmakers didn't want to pay and skipping to Mexico while the goons were in town was a good way to avoid those "expenditures".
I'd imagine that startups in a few industries (fashion and media are two that come to mind) would benefit greatly from a New York location.
You see ads for location-based services and you always see a map centered on SF. Well, I can say I never felt dumber than the day a friend and I were using a "smartphone" to look for lunch in SF and it kept sending us to places that were closed and we kept walking past places that were open.
But if you want to get funding you're better off in the fish tank.
If you require legal handcuffs to keep them, something's very wrong, something that stands a good chance of killing your company anyway.
For America as a whole, the industry, pushing forward the state of the art, etc. etc. this liquid talent market is very good. Overall talent moves from companies with poor to good (or at least better) prospects; overall especially in the long term this is how the capital markets work. Bad if your name is Kodak, good otherwise.
http://www.betabeat.com/2012/01/30/the-best-tech-events-this...
http://generalassemb.ly/events-page
http://www.betabeat.com/2012/01/29/art-hack-day-brooklyn-319...
http://www.wixlounge.com/#!calender
There are plenty of smart people who spend think about tech night and day, and disagree that the best and brightest are primarily in fiance. To many people fiance are causing more harm to the country then good.
This is happening everywhere. My 64 year old mother in law from Florida loads apps on her iPhone.
It would be interesting to know more specifics.
I am going to assume you are not American and that this is an honest question.
There is real culture difference between the large areas of America, north vs south, east vs west, etc. Now speaking as someone form the old world, America's cultural differences are still very small compared to differences between old world neighbors. Never the less, cultural differences in America do exist.
I'd say north/south is a bigger deal than east/west. And when ever I hear east coast Americans talk about California, it sounds a lot like how Europeans talk about Americans in general - optimistic, the world is my oyster, etc.
There's a webcomic I read, and the author based in the deep south, described going to a comic convention in Portland Oregon as traveling to the future.
Yup, you guessed right.
The Americans I've met here in Sweden have been pretty homogenous as a whole, didn't matter if they were from SF or Kansas or Boston. They all seemed like liberal-minded europhile people. Then again, heavy selection bias.
"Despite the climbing number of American passports in circulation, 30% is still low compared to Canada's 60% and the United Kingdom's 75%."
[1] : http://articles.cnn.com/2011-02-04/travel/americans.travel.d...
This is plainly false. Just two quick examples: No difference within the states is as big as the difference between French and English speaking parts of Canada. And a tiny country like Switzerland encompasses French, German and Italian speaking populations.
A Londoner would cross six or seven national boundaries by covering less distance than it takes me to actually leave this country.
This contradicts your first sentence. Also a Londoner will meet several nationalities, I don't know what you mean by "boundaries." Also a New Yorker should be right up there with Londoners.
I'd argue that English and French Canada are about as different as any of these pairs.
Really? You speak English, you can go to any shop in Hawaii, NYC, Alabama or Texas and buy what ever you want.
I am sure you can do the same in Toronto. Could you do the same in Montreal if you don't speak French and the clerk doesn't speak English?
If you don't speak French, are red-green color blind and have never noticed the hexagonal shape of a certain street sign, do you know what you should do in your car when you see "Arrest" on a street sign?
I guess what I'm trying to say is that the difference between Montreal and Toronto is plainly, objectively and obviously greater than that between any two places in the US.
Even in the French heavy parts of Maine and Louisiana at least the street signs are still in English.
Or put another way, I had about as much trouble as I did in France and about as much as some really Cajun parts of Louisiana -- and I don't speak French.
http://www.youtube.com/watch?feature=player_detailpage&v...
I'm from the mid-Atlantic, but have had significant issues in parts of Alabama/Arkansas both with being understood and understanding them, parts of Miami, and even parts of Washington D.C.!
In Alabama and Arkansas I also found that I ate very different foods, parts of animals and plants prepared in ways I wouldn't normally eat - lizards, organs and frogs oh my! On the contrary the food in Quebec seemed pretty familiar except for the Poutine.
In Hawaii there are more East Asians and Pacific Islanders than Caucasians. There are parts of the Islands where you might not be intelligible unless you speak Tagalog or Japanese, it has an economy built around tourism and they eat more spam than the rest of the U.S. it has royal palaces. It's about as comparable to New York City as Zurich is.
In fact I've felt more at home in Florence than I did in Greenville, Alabama. In Texas, my friends thought nothing of pulling off to the side of the road at a BBQ pit and eating beef off of Styrofoam plates in a rickety shack where we brought our own beer. I couldn't imagine doing that anywhere north of D.C.
Yes my friend, America really has very different cultures.
That sounds awesome. What's that kind of eatery called? :)
I still haven't quite figured out what a Honkey Tonk is. The locals seemed to know what I meant when I called it a Bar-B-Que pit.
Oh, and it was all smoked brisket. Which we don't really have as such here on the East Coast, we tend to do pork or chicken, in a sweeter sauce.
Some of the places have grown up a bit over the decades and have other meats and pies and biscuits and things now.
http://www.saltlickbbq.com/ is one that started as a pit and apparantely hung on to become slightly more established.
"But in 1967, Thurman, who was known for his delicious barbeque at family reunions, decided he would cook meat for paying customers. Thurman and his two sons built a huge barbeque pit. Thurman would go to the pit on Thursday night and start cooking. He stayed for the weekend, sleeping on a cot, until all the meat sold. He kept coming home earlier and earlier. After a few months, the boys and Thurman built a little screen porch around the pit. The Salt Lick has grown from there. The Roberts family now serves mouthwatering barbeque to thousands of folks each week."
It would be interesting to see travel figures for similarly sized countries such as Russia and China.
Conservatives go to South America/Africa. Liberals go to Europe and Australia.
Everybody goes to Islands and Asia.
America is pretty divided on Liberal/conservative. Bush won by 1% (!50 Million disagreed) and Obama by 2% (147 Million disagreed). It more half and half than either side likes to believe. My point: there is quite a bit of diversity.
But wouldn't you say that the cultural difference between Oregon and Mississippi, or between New Mexico and New York, are bigger than the difference between Sweden and Finland?
A simple proof. Swedish is a Germanic language, the people are a Germanic people. Finish is a Finno-Ugric language. That's not even one of the Indo-European languages! Magyar is in the same language group.
In other words, despite their physical proximity over thousand of years, Finns and Swedes have maintained a huge cultural difference.
And the same goes for almost any two old world neighbors. Even the ones you may think of as super similar. As big as the differences between Oregon and Mississippi are, they really ain't much compared to the differences between France and Holland, which geographically are much closer together.
The per capita GDP in Finland and Sweden is US$44,5000 and $47,900, respectively. For Maryland and Mississippi, it's $69,300 and $36,600. The percentage of population that has bachelor degrees or higher in Finland and Sweden is 23% and 21%. For Maryland and Mississippi it's 35% and 19%.
If we are going to cherry pick how we compare places, I say let's start with climate. When talking about climate clearly Mississippi and Washington state are far more different than Sweden and Finland.
Only an American could completely discount language and want to talk about GDP or GNP and industry composition. Very CIA fact book page. I freely admit by GDP and standard of living all of Western Europe is less different than Mississippi and any of the "blue" states.
Hell if we're going to use CIA country fact book style information to measure differences then all of the OECD countries (this includes Japan, Europe, Canada and the US) are on average less different than just the US states.
Now think about that. Does it make sense to say that just the US states are more diverse then a group with includes both Japan and most of Europe?
I guess if you're an American and think language is "culture" and boring then yeah that can sound right to you.
> Very CIA fact book page
My "CIA fact book" numbers were chosen because they're numbers, so they are objective and easy to obtain. I put "philosophy" first for a reason; that's what's important in the context of the OP articles. It's just that it's not easy to look up "average philosophical view for a country".
Also, don't you agree that amount of education is extremely important to culture?
>And art somehow snuck in there too, but I guess the totally of language based art, poetry, books, etc, somehow is boring?
Art, poetry, books are not boring and are definitely interesting aspects of culture. (Although again, in the context of this article, serious academic art is less germane than standard of living.) But the mere fact that people use a different language is not. Yes, of course language can influence many arts, but it's ridiculous to think that language difference is a good metric for difference in art.
>Europe is more diverse - but trivially?
Europe is more diverse trivially when you use language differences as a metric for cultural differences. (I thought that conditional was clear from the placement of the parenthetical, but I guess not.) And it's trivial. Most countries in Europe have their own language, so obviously they are more diverse in this manner. Why would there even be a discussion?
> If we are going to cherry pick how we compare places,
You said "America's cultural differences are still very small compared to differences between old world neighbors" (emphasis mine) in the context of a comparison between California and New York. I interpret that to mean roughly that the smallest intra-country differences in Europe are bigger than the largest intra-state differences in the US. If I misinterpreted, let me know.
> I say let's start with climate.
Climate is interesting insofar as it influences culture. And yes, this is definitely part of the cause of cultural diversity in the US states, but it's probably not a great metric. I think wealth, especially in the modern era, is going to be more closely tied to culture than climate.
Still, in comparing the cultures of Finland and Greece, wouldn't you agree that climate is, in fact, a better metric than language?
>Hell if we're going to use CIA country fact book style information to measure differences then all of the OECD countries (this includes Japan, Europe, Canada and the US) are on average less different than just the US states. Now think about that. Does it make sense to say that just the US states are more diverse then a group with includes both Japan and most of Europe?
The lack of diversity you're talking about comes from averaging, which comes from considering large population sizes of Japan/US/EU and comparing them to US states. In contrast, Maryland and Mississippi are within a factor of 2 in population to Sweden and Finland.
Simply put you and I have different definitions of culture.
To me GDP, GNP, level of education, standard of living, etc, are all economic measures, which are indeed numerical and thus trivially easy to compare.
But my definition of culture includes, language, national identity, customs (this is very different from laws), holidays, music, rituals, food, etc.
And I would argue that those things don't change even as GDP and standard of living go through revolutionary levels of change.
Prime example: Ireland.
For a very long time Ireland was one of the poor, agricultural nations of Europe. Then legal and tax changes were introduced and a few years later people were talking about the Celtic tiger, and English laborers were going to work in Ireland for the first time ever. And even now after the real estate bubble has burst, modern Ireland is astronomically far away from potato famine Ireland in terms of GDP and standard of living.
But culturally it is mostly still the same.
China before communism, China after the economic reforms in the 1970s, China today, all economically VERY differently. Culturally there's been big changes too, but not nearly as huge as the economic ones.
Right before Thatcher, Britain's economy was so bad, predictions had it reaching Albanian levels of prosperity in a decade or two. How culturally different is Britannia of that time compared to Tony Blair's cool Britannia of the booming 90s?
So Massachusetts and Mississippi are very different in terms of GDP, education and median income. But to me they are both obviously American. That's very different from Holland and France, or the UK and Holland, or France and Spain. While the GDP there is much closer, they are very, very different cultures.
Let's do a thought experiment:
You go to Holland and try to grok how to live there. You have an iPhone translation app that can translate text you take pictures of and voices it hears. You use that to make your way, pick up some Dutch and figure out things like how to buy food, how to get a job, etc.
Once you feel you get it, move to France and repeat. Then move to Spain or Germany, or Italy and repeat.
At the same time lets find someone form Holland who does not speak English.... crap that's not really possible. Germany maybe, if we look hard enough and go for the older population I bet we can find a German who does not speak English.
And we give them the same iPhone app and send them to a state in the US, and when they feel they grok it, we move them to another state.
Assuming you both happen to be equally bright and grok your first state in the same amount of time, who do you think will to through 5 states first? You in Europe, or the German in the states?
I'd argue that if you grok one US state, that's it, game over, you grok ALL of the US. English is spoken. Turkey day is Turkey day, as is July 4th. Food differences are slight, but the stores all sell overwhelmingly the same things. Except for a bit of local programming, same TV and music on the air, etc.
This is a complete non-sequitur, because you either forgot what you originally said ("Hell if we're going to use CIA country fact ... includes both Japan and most of Europe?") or you didn't read what I wrote carefully, or both. Luckily, in the midst of your confusion, you did make a point to disparage Mississippi, which was very classy.
> Simply put you and I have different definitions of culture.
So do you agree that the definition that I used, the one relevant to the OP, has a larger variance between Mississippi and Maryland than Sweden and Finland? Because I'm not interested in hearing how confident you are that the difference in "national identity" is larger for the latter pair (which it is by definition).
> Let's do a thought experiment:...
I did the thought experiment with Mississippi and Maryland, vs. Finland and Sweden. And if you assume the person can speak the relevant languages, then I think they grok Sweden following Finland (which I base on the advice of the Finnish grad student down the hall) or Switzerland following France (which I have done) significantly easier than they grok Mississippi following Maryland.
Have you spent any time in a poor, southern US state?
Anyway, as someone who has spent ten years on each coast, it's impossible to disagree with his overall sentiment. There's an energy and vitality in the bay area that is completely lacking in other places.
People love to talk about their local tech community, and I've found myself talking up Raleigh and Durham and the American Tobacco Campus and whatnot, but I know it's just a pale imitation.
Take some meetings with VCs in each location; the difference is eye-opening.
I've heard the media reports saying how the Raleigh Triangle area is a growing tech hub but I honestly don't see it. It pales so much in comparison to the Bay Area. There are some people interested in entrepreneurship and technology but it's still really hard to find them. It's hard not to run into these kinds of people in the Bay Area. One point of evidence is in looking at how many meetup groups and members are focused on technology and entrepreneurship in each area, and there is a stark difference.
Also, the Dean Dome is amazing. I'd rate it better than Oracle Arena.
That's helpful...thanks for the comparison!
I thought it was one of the most beautiful commutes in the world personally.
A plea: next time you hear someone comparing their city to SV, take them aside privately and tell them to book a ticket on the next plane going to the Valley.
> I'm a first-year student at Harvard Business School