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Comment by driverdan | Hacker News Reader

Serious question for other startup founders: why would you put your company in the bay area or even the state of CA?

It has never been easier to build a tech company, especially a SaaS-type business with no physical inventory. You could home your company in a cheaper, more business friendly city like Austin (disclaimer: I live in Austin). The tax savings alone would cover the costs of going to SF once a week. Quality of life is just as high (or higher, depending on your interests) in many other cities.

Edit: Seems people are missing the fact that you could literally fly to SF once a week for networking / meetings / events and it would still be cheaper to live somewhere else. You don't have to miss out on being a part of the network.

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Disclaimer: I live in Chicago, but started my company in San Francisco. I've been in gravitational orbit around the SF Bay Area my entire working life. (For a majority of the past 6 years, I've spent 1 to 2 weeks a month in SF.)

The standard arguments for starting a company in California is: 1) You'll be closer to venture capital. 2) You'll be closer to talent. 3) You'll be closer to customers.

1) If you want or need venture capital, then it helps to play by their rules. One rule is: "Locate your company's headquarters within an hour's drive of my office." In my opinion, this is stupid and short-sighted, but from their perspective, it kinda makes sense. Giving you capital means (most likely) also sitting on your board of directors. And if those board meetings only require a short drive (instead of flying), then their life is easier. Also, if they're giving you a ton of money (many millions, perhaps), they'll sleep better at night knowing you're close by and can meet in person at any time.

2) Access to talent is closely related to access to capital. VCs will want to give you money only if you want to get big and make billions of dollars. (AKA: Are you the next Google, Facebook, or Apple?) The implication is that if you're going to scale big, you're going to need a ton of employees. If you're based in the middle of nowhere, your growth potential is limited to the size of your local talent pool. Again, I think this argument is silly and short-sited. But I've heard VCs make this argument directly to me in the past.

3) It generally makes sense to be close to your customers, especially early on when you don't have any. If you're a software company selling to other software companies, it might make sense to be based in San Francisco, regardless of how expensive it is to operate there. (You're going to make billions, anyway, right?) If your early customer is the U.S. Government, it might make sense to be primarily based near D.C. If your customer is the media, it might make sense to be based in New York or Los Angeles. If you can argue that there isn't a central cluster city of potential customers for your business (or you can argue that it doesn't matter), then it's less likely you'll need to move to be closer to them.

This is how I plan to do my next startup given the above three arguments: 1) Don't plan on needing VC. Bootstrap and get to profitability as quickly as possible. Then I won't have to play by VC rules and move closer to them. 2) Don't plan on needing to grow big. Plan on hiring people wherever they are, and create a remote-friendly working environment. 3) Live near an airport. As long as I'm close to an airport with lots of direct flights, I can visit potential customers whenever/wherever I want. (This is why I'd rather be in Chicago near O'Hare Airport, than live in the middle of Kansas, for example.)

However, I still might move back to the Bay Area someday. But I'd only do so for personal reasons - e.g. being closer to family and access to awesome hiking trails.

[edit: spelling and grammar]

Sounds great, and I hope you succeed with your new venture. I'm with you on not wanting VC money. Nothing says "I don't have control" like a company in debt or beholden to those who control the purse strings.

Until you never have to work again in your life, you'll always be beholden to someone. But I'd rather be beholden to my family, my employees, and my customers.

Would investors be placated by a start-up from Chicago or Chattanooga committing to operating board meetings out of San Francisco indefinitely?

I don't know, it depends on the investor. But I'd rather be in a position where I don't care what their preference is.

The real networking doesn't happen at networking events. It happens when you happen to be up in the city and text your friend that you worked with a couple years ago to hang out and catch up, and then he invites you to his startup's holiday party, and there you meet one of his investors or just a top engineer that thinks what you're doing is really cool, and suddenly your side project is now a hot startup. That doesn't happen when you need to get on a plane for events.

Texas is... OK, but has no real culture to speak of. The tax relief in Texas is not as great as you might be led to believe. Great for businesses (sometimes), not for people. Texas has some of the highest property taxes in the country despite cheaper housing. Texas is hot 9 months of the year, has no real seasons, has hideous politics (even in "Let's keep it weird" Austin"), low-grade food choices, laughable night life (6th Street. Really?), immigration nightmares, cannot walk anywhere, must have a car, a largely uneducated populace, rednecks galore, the notion of brisket as real food and not dog fodder, did I mention the heat?

There are far better options for just as little money that offer culture, more fun, safer living, you name it.

Austin was merely an example. You can build a tech company almost anywhere.

Two books that discuss this are "Founders at Work" and "Gamers at Work", but in a nutshell - in this industry it's easy to grow from 1 to 50 people anywhere, but it's very hard to grow from 50 to 500, and almost impossible to grow from 500 to 5,000 employees anywhere outside the Valley. It's just the proper concentration of talent and other companies you can poach from.

The chance of great collisions and fortuitous opportunities are hogher in the area. The people who know how to build great companies are in that area. Top rngineering talent, top venture capital, and great people with ops backgrounds live in that area. Like ben horowitz says, if you conpete with a bay area company in the same space, they have a large advantage

Because success in the US is 90% networking and who you know.

Sad, but true.

The trick, then, is to do what I did: Move to SF for a year or two, make a bunch of connections, then move (back) to wherever you want.

And that bunch of connections will still care about you (if they ever did) when you lived far away for years?

If they don't care about you anymore, it wasn't much of a connection was it?

True. I have found the farther away you go and the longer away you are, connections fade. No matter how 'connected' you felt they were. I guess it's just human nature. Friends are different.

You're right, if you want to build a lifestyle SaaS type business, you probably don't need to be here.

Folks here have bigger ambitions and want to change the world. Some do, most don't. Lot's are just delusionary.

Changing the world is nearly impossible, but that possibility is sharply increased when living in close proximity to money and talent. You only live once, why not try?

Who said anything about building a lifestyle business?

> Changing the world is nearly impossible, but that possibility is sharply increased when living in close proximity to money and talent. You only live once, why not try?

Talent is available everywhere and for far less than the bay area. Why not live somewhere else and raise funding from CA?

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