Is New York a bad place to set up shop? | Hacker News Reader

Is New York a bad place to set up shop?

paulgraham.com

2 pointskarzeem8 comments

Obviously, Silicon Valley is the capital of the startup world. But would a startup that's successful there fail in New York?

My wariness about the Bay Area is mainly related to groupthink. Being surrounded by people who are all in the same industry, thinking about the same issues, talking about the same things, has obvious benefits. At the same time, it seems that the only companies that succeed, whether they're based in the Bay Area or not, are the ones that ignore an important piece of conventional wisdom. And that seems like it would be harder to do when you're immersed in it. If you don't want to drink the Kool-Aid, you should have some hesitation about moving to the factory.

The upside of New York specifically, and Boston too (besides the fact that they're beautiful, vibrant cities), is the cross-pollination you get by being in touch with different cultures and industries. In the right circumstances, that benefit could greatly outweigh the value of being in a place that has bigger-name VCs and contacts.

And lastly, Google's second-biggest office is in New York, so that may be the beginning of something very important there.

Empirically the advantages of concentration are bigger than the disadvantages, and this applies as much when comparing NYC and the Bay Area as Detroit and NYC.

Google's NY office doesn't signify anything in particular. They knew a lot of smart people were trapped on the east coast, e.g. by family stuff, so they established an office here. They put it in NYC because they already had an ad sales office there. I think that was a mistake, actually; Boston is a much more Googly place than NYC.

The Google in Cambridge is a pretty substantial operation and I believe it's growing quite fast.

It comes down to raising money... New York's great, but it's exponentially easier for a social networking site to raise money in the Bay Area.

There are so many variables to tease apart, though. Are more companies raising money out west just because there are more good companies out there? And the fact that companies are more likely to get funded in the Bay Area doesn't necessarily mean they are better companies. It might just be that angels and VCs are looser with money out there.

One really useful metric in all of this would be comparing the Bay Area's percentage of VC-backed startups that actually succeed to that of Boston and New York. That would help cut right to the long-term relevance to success that funding has in the first place. (The idea being that bad companies are unlikely to succeed even if they do get funding and that good companies are likely to get funding even if they're outside the Bay Area).

Some companies know in advance that their business model requires raising money. It doesn't make sense for those companies to not locate themselves in the Bay Area.

Everyone else is much more flexible.

My vote is for San Francisco to become the new startup capital. Why not? :)

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