Why Silicon Valley Works

http://blog.samaltman.com/why-silicon-valley-works

by philip1209 • 12 years ago

294 235 12 years ago

blog.samaltman.com

anateus2• 12 years ago

Two sentences early on are problematic:

"One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. "

If Sam had said "you need them in Silicon Valley much less than anywhere else" it would be a true statement. But in an article I strongly agree with, this sort of thing... I'm not even sure what to call it, misinformation? Makes the rest ring hollow.

The networks here have vastly lower costs of entry and way fewer secret handshakes. But they still have them, and for many groups of people those costs are much higher than the median. It would have been easy to acknowledge that without diminishing the core point.

ch4s32• 12 years ago

I took his statement as hyperbole to make the point that those connections are less important in SV. But I don't know him, so its just my inference.

swamp40• 12 years ago

I dunno - he explains his reasoning in the same paragraph: "It’s standard practice to ask people you’ve just met for help – and as long as you aren’t annoying about it, they usually don’t mind."

scobar2• 12 years ago

The problem, I imagine, this creates is thousands of requests for help from innocently ignorant founders to a single valuable connection in SV. Each founder may only make one naive request, but important individuals are bombarded by enough to exhaust them. I admire the patience of those who continue to offer thoughtful advice and feedback, but I imagine it's quite tiring. I think resources like Sama's free startup class at Standford are a great solution.

scobar2• 12 years ago

I agree that accessing the right networks will help tremendously, but I also believe that Sama's statement is accurate. One doesn't need pre-existing connections. This almost subtle, yet much more important condition was included shortly after the quote you mentioned: "If you build something good, people will help you."

A grand vision alone won't get someone nearly as far as it may have in the late 90s. A prototype that is nearing that vision with each quickly released new iteration seems to be the entry barrier for someone with no pre-existing connections.

csallen• 12 years ago

I don't think he's saying that there is no network, or that the using the network isn't helpful. It seems like his primary point here is that your relationship to this network doesn't need to be pre-existing. If you know nobody in SV, but build something great, you will quickly get to know people.

hackuser2• 12 years ago

But he goes on to describe the Y Combinator insider network as extremely valuable, which seems to contradict the statement you quote:

Our network works because it has very strong connections. Founders are generally closer to their earliest investors and less close to their later investors. They are closest of all to the peers they were around when struggling to get their start. Therefore, YC founders are typically willing to do anything they can to help another YC founder. ...
I often ask founders what surprised them most about going through YC, and a common answer is the degree to which YC is a "meta-company". ... the connection is so strong that alumni companies get significant benefits from each other. Most YC founders tell us they get more help from other YC founders than all other friends of the company, advisors and investors put together.

benmathes• 12 years ago

You're right that it's partially true. Why the idealistic spin from @sama? Consider the incentives. One of YC's macro strengths is a silicon valley onramp.

mathattack7• 12 years ago

My impression is that Silicon Valley (like NYC) is a destination. Move to St. Louis and everyone asks where you went to high school. Not here. It doesn't take long to make a name, and there's a tradition of helping "the next one."

ch4s32• 12 years ago

This is a pretty thoughtful and to the point article. You might summarize it by saying that SV success is defined by Community and Capital. It makes a lot of sense that rich networks backed by money make an area successful. It would be interesting to explore the effect of capital from within the community vs external capital inflow.

lolwutf• 12 years ago

'I wrote this for the FT, but it's behind a paywall. Since I wrote it, I feel like it's probably ok for me to post it here.'

If the FT paid you to write it, I feel like it's probably not ok to post it where you'd like.

aganders3• 12 years ago

It's better not to go on feel either way. In most cases, a freelance writer retains copyright and the publication that paid for the work (in this case FT) is given an implicit license to use it.

anateus2• 12 years ago

Since he's not an FT employee, it's likely this could fit under the category of work made for hire, but unless his contract explicitly specified this is case, I believe he would retain the copyright: http://en.wikipedia.org/wiki/Copyright_law_of_the_United_Sta...

jgrahamc• 12 years ago

Depends on the contract. Here's the contract I've been bound by when writing freelance for The Guardian:

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With the exception of Spot Sales where royalties are payable as set out below, GNM pays freelances commission fees covering all of the following rights. The value of these rights is reviewed annually.

1 Right to use, publish or transmit the contribution in all editions of the relevant Licensed Publications anywhere in the world.

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sama• 12 years ago

they didn't pay me.

crj• 12 years ago

get paid

mercer• 12 years ago

Either way, considering the 'value' of sama to them, the FT will probably not make an issue out of this.

joshhart• 12 years ago

My biggest concern with Silicon Valley is that it will become so expensive that many potential startups are prevented from coming here. Sam also stated that housing costs were the biggest weakness.

I wonder what YC could do about this problem for it's companies. I think it would be interesting for YC to build a few high-rise live-work spaces for smaller YC companies to foster and grow the tightly-knit community. Maybe like a high-tech college campus?

ojbyrne• 12 years ago

Not sure where they would build "high-rise" anything - zoning laws would preclude that in most places in the bay area.

mahyarm• 12 years ago

Political action to allow higher density?

kqr2• 12 years ago

Recent thread on So You Want To Fix The Housing Crisis:

https://news.ycombinator.com/item?id=8549454

Basically, people need to vote if they want to see any changes.

nerfhammer2• 12 years ago

build a few high-rise

The dominant political view in the area is that building high-rise anything anywhere is something that should be stopped at all costs

_delirium• 12 years ago

True in much of Silicon Valley (especially places like Palo Alto, which want to retain a suburban layout), but there's some moderate densification going on in San Jose. It lulled for a bit during the financial crisis because a bunch of projects' financing fell through—some apartments under construction had work stopped for ~2 years. But construction seems to be back in swing again now.

Omniusaspirer• 12 years ago

Silicon Valley is already a dubious value proposition for most startups, if not outright terrible.

thisisnotatest• 12 years ago

Sam is right about "the wildly-out-of-control housing costs, which is probably the biggest weakness here right now". FYI, some Mountain View tech workers volunteer for an organization called MV Voters for Housing Diversity. See who we endorse for City Council at www.mvhousing.org, and vote tomorrow! http://www.sos.ca.gov/elections/find-polling-place.htm

In Palo Alto, there's a similar organization called Palo Alto Forward, which I know some Palantir employees are involved with. www.paloaltoforward.com

jbail• 12 years ago

Good article. It provoked a thought:

In an increasingly digital world, how long will physical proximity be an advantage?

The notion that a region could somehow have its own brand of patriotism centered around startup success merely due to density is somewhat difficult to rationalize. You can't deny SV's success relative to other technology hubs, but I'm wondering how far in the future physical proximity will continue to carry such a steep advantage

uniformlyrandom• 12 years ago

how long will physical proximity be an advantage

There is a number of articles and research papers on the subject. In short, distance matters even within the same building.

batbomb3• 12 years ago

> The focus in Silicon Valley on long-term compensation is also important. Nearly everyone wants to get rich but they’re willing to wait to do so. Conspicuous consumption isn’t that cool; not too many people drive Ferraris or talk about their vacation homes.

Instead, they talk about how healthy they are, their diets, or the climbing gym.

hawkice2• 12 years ago

I'm no fitness master myself, but, far from begrudging the paleo-crossfit-organicos out there on their latest PR (am I using the lingo right?), I'd like to say, from those of us nodding and smiling:

Being healthy is great! Keep it up! :)

Dewie• 12 years ago

I think that the point is that it is the new status-symbol.

In my experience (not Silicon Valley), status symbols in the form of material possessions have taken a back seat to status symbols in the form of fitness and "experiential materialism" (frequent travelling, exotic and varied experiences).

TulliusCicero• 12 years ago

Is that...bad?

batbomb3• 12 years ago

While it's not conspicuous consumption, it is conspicuous. I'd argue it falls in a broader category of conspicuous lifestyles.

Is there bad about owning a Ferrari?

sparkzilla• 12 years ago

For anyone interested, I have compiled many of Sam's interviews at http://newslines.org/sam-altman/

steven20122• 12 years ago

No.

The reason why Silicon Valley works is because of the intense greed that it provokes amongst everyone that comes here. Maybe "greed" is too strong of a word, because people aren't necessarily selfish, maybe "money-focused" is probably more accurate. And because anyone can come here and become a millionaire/billionaire, it draws in an immense number of hard-working people which just generally increase the level of competence, and unfortunately competitiveness, which has a positive feedback loop which causes these smart people to want to work even harder over time.

Outside Silicon Valley, all you hear about is billionaires being made day-after-day, and smart people they look at this nonsense and think "I can do that". Once the come to Silicon Valley, they get sucked into a vortex of work and money-focus that is so strong that the only way to get ahead is by working long hours and taking risks.

Think about it this way: a person who makes 120k/yr with 2 kids and a spouse who stays at home will be considered the "working poor" here. I feel sorry for anyone who tells me they have a spouse, 2 kids and a house in any place other than NYC, and are contemplating moving to the Bay Area. Everything is priced perfectly to the point where no one can afford to live in a good neighborhood with a good commute with good schools. It's like the CAP theorum, except it's more like "Good Job, Good Neighborhood, Good commute: pick one" (unless you're rich).

So, in order to get ahead, both spouses need to work, and they need to work very good jobs with long hours in order to "make it well". If you have Dual Income No Kids, it's a bit easier, but you still need to deal with oppressive traffic and high rent. It's so expensive, that all you do is think about money. And you fall into fallacies where if both spouses make #120k/yr, for a total of basically $250k/yr, you start thinking "why don't I feel rich?" or "why am I working so hard with nothing to show for it?" It's because you work 10 hr days, and then you're spending 2 hrs a day commuting, and you get into a zone where all you do is think about work, and how to buy the next iPhone because at least you have something to show for your money. Meanwhile, none of my friends outside of SV have iPhone 6's let along iPhone 5S's, many are still using iPhone 4's which are perfectly good but a bit slow, but you wouldn't be caught dead in SV with one of those relics.

So all of this money-focus necessarily squeezes out as much productivity from the best and smartest in Silicon Valley, which is why you have so much success here. If you compare SV to place like Japan or China, where the population is generally better educated, you don't get anywhere near the same level of productivity. In Japan you get high prices and long work, but there's no payoff like there is with Silicon Valley because of the social impedances, so you'll never have a Silicon Valley in Japan. In other places that purport to be another SV, even places like Austin, there just isn't the same level of greed/money focus like you have here, so I don't think you'll be able to get as much productivity. It's the sky-high prices, work-life imbalance, the startup-millionaire stories that create this unique pressure cooker environment that can't be duplicated.

coldcode• 12 years ago

SV is like the 1849 California gold rush. A few people got rich and everyone else just got dirty.

danudey• 12 years ago

I compare it to the Klondike gold rush: most of the people who got rich did so by taking money from suckers.

ThomPete2• 12 years ago

Which why the clever entrepreneur sell tools for the gold-diggers.

cfield• 12 years ago

Given the broad geographic footprint of the HN community, I'm curious what folks here think about how much of a role that a tolerance of failure plays in Silicon Valley's track record of supporting commercial innovation.

I don't know if others agree (and it's no doubt an over-generalization), but my intuition is that commercial failure lacks the stigma in Silicon Valley that it does in most other places. Much ink has been spilled on the topic and some have even suggested that Silicon Valley has a "Failure Fetish".[1]

It seems popular to trace the roots of this and other cultural features of Northern California (e.g., 60s counterculture) to the Gold Rush of 1849. But perhaps it simply another artifact of startup density that Sam suggests is so critical?

[1] A sampling from various forums: http://nymag.com/daily/intelligencer/2014/03/silicon-valley-... http://www.npr.org/2012/06/19/155005546/failure-the-f-word-s... http://www.inc.com/eric-markowitz/brilliant-failures/why-sil... http://www.entrepreneur.com/article/225202 http://blogs.berkeley.edu/2010/10/18/silicon-valleys-greates... http://paw.princeton.edu/issues/2013/03/06/pages/1054/ http://techcrunch.com/2010/10/17/japan-to-fix-your-economy-h... http://www.bizjournals.com/sanjose/blog/2012/12/does-silicon... http://www.quora.com/How-has-Silicon-Valley-developed-and-su...

clairity2• 12 years ago

sounds like it's not the place for you. a household making "only" $120k, no matter where you live, puts you in the top 15% by income in the US--hardly the "working poor" (see census data).

trying to keep up with the joneses, on the other hand, can warp your sense of relative privilege. top 15% in the US is among the top few percent in the world. keep that in mind, and that'll help assuage the negative feelings that can arise from comparing yourself to those you otherwise consider your peers.

john_b• 12 years ago

Being in the top 15th percentile of income might not be as much of a consolation if you live in the second most expensive metro area in the U.S.

jiggy2011• 12 years ago

If house prices are as bad as HN indicates I can understand how that income could put a person if not in the "working poor" then into the lower middle class.

x0x05• 12 years ago

You don't understand what it costs to live here. Keeping up with the Joneses means envy for new and shiny, not wanting a modest house, cars, kids, and retirement savings. And here, that means an income of $250k is tough to do -- one bedrooms in sf are $3500; condos in the peninsula sell for $700k+ and houses cost $1100/ft^2.

$240k married filing jointly w/ 2 kids means $5900 hits your bank account twice a month. Essentially all of one of those paychecks will go to housing in sf, or a mortgage + taxes on the peninsula. That leaves $6k per month to live off -- which is certainly doable, but between childcare (at least after school w/ both parents working, possibly more), utilities, telecomm, cars, savings, groceries, and all the miscellaneous costs of life such as clothes, doctors visits, etc -- you aren't saving much money.

ps -- it's stupid to look at national statistics for income when this is the #1 most expensive housing market in the US. At least nyc has good transport options between Manhattan and Brooklyn / Queens. Here we have caltrain or the 580.

I mean, here's a home right here [1] -- 4 bedrooms for $315k! Of course, it's in Madison, WI -- but that shows housing prices are just fine in sfbay :rolleyes:

[1] http://madison.craigslist.org/reo/4668467650.html

@smtddr: we're not discussing what most people have; we're discussing what you can get in the bay area on $240k. Otoh, if you're now claiming that keeping up with the joneses == a middle class life, ie wanting a modest house, cars, kids, and retirement savings, then the plutocrats have won.

jforman• 12 years ago

"No matter where you live" ?

The 80th percentile for household income in 2012 was $160,000. This does really crazy things to a relatively static housing supply:

http://www.sfgate.com/bayarea/article/In-growth-of-wealth-ga...

This isn't just about "keeping up with the Joneses." Most families want a) a decent home, and b) a good education for their children. I had to pay an obscene amount for a) in SF, and I was holding my breath while figuring out how to pull off b). My quality of life otherwise was relatively ordinary: I drove a Toyota and didn't go out all that much due to the newborn.

I made a princely sum compared to the average American. Had I lived in average America, I would have lived like a prince (you could literally buy a mansion for the price of my 3BR home in most places in the US). But since I lived in SF, I could only barely afford the basics. This has nothing to do with skewed expectations on quality of life — it's about the skewed economics of the city.

2pasc2• 12 years ago

What you are talking about is a new phenomenon. Silicon Valley in 2008 was different - rents were lower, and $120K with 2 kids and one income was OK. There has been a dramatic increase in rent/real estate prices in the last 6 years that has completely schewed the system and the culture. Silicon Valley has thrived in years when rents were OK, people were not greedy and yet great Companies were built.

I remember going out of Stanford in 2003 - at the time a job at Oracle for a CS MS grad was awesome - and yet, people went on to create Facebook, LinkedIn, and all these Companies, and rent were OK, salaries were good, and you had this mindset of "I am going to give this a shot" everywhere that is at the heart of Silicon Valley.

Extreme greed as you describe is a new thing. It may have been there in 99-01 but I can tell you none of that was there in 01-04 and it was much less profound in 06-09.

The reality is that all things work in cycles. People who genuinely love tech will stay, others will go back to Wall Street or Consulting.

emjaygee• 12 years ago

Except for the phone observation, he matches what I saw in say '90 completely. And replies like yours were also common even back then.

I'm inclined to agree that it's about the money.

I'm not sure that it's a good thing but it's certainly an engine that's spinning hard.

steven20122• 12 years ago

No. I've been in the Valley since the Netscape IPO. It's always been like this since at least the mid 90s.

You don't know because you came out of school at essentially the nadir of the dot-com bust, you only know how things went from shit to great to bubblicious in the last 10 years. Sure, rents have gone insane in the last 2-3 years, but rents have always been high. From 2001 to 2004/5, rents were low, traffic was great, etc, because of the sheer number of jobs lost. Per capita, the number of jobs lost in SV from the bust was worse than Detroit.

But during the dot com bubble, it was definitely like this, and the one thing you also don't realize is that the house prices were not affected by the bust, money moved from the stock market into real estate in the Bay Area. House prices went nuts during this time, until the housing bust and only now have prices surpassed 2007 prices.

But SV has always been about greed and making money.

ChuckMcM• 12 years ago

It isn't a new thing, it was rampant in 1998, some say it was rampant in 1982 as well.

Having lived through the dot com crash of the late 90's I have thought a lot about what went into that event. It is easy to be dismissive and "blame the suits" or the "bankers" but the reality is much more nuanced than that.

I have come to conclude that it depends on what goal is driving the bulk of the community. During a 'non-boom' the driving force is often engineers and designers who are spending all of their capital on solving a problem, or changing the efficiencies of an existing system to favor a different part of the value chain. You get a lot of folks thinking like that and eventually you get a couple of winners. That winning inspires other engineers to either work around similar spaces to see if they can replicate the success. A "wave" is started, whether it is "microprocessors", "the web", or "social media" or any other technology, it generates some success for people who get the value and can plug it into the bigger economy.

As that happens it starts generating economic value which gets translated into cash (the thing everyone thinks they understand).

That cash then attracts a different kind of person. Someone who can use cash to make more cash, they are meta-engineers if you will, playing off the second derivative of innovation, the change in cash flow over time. Their secret sauce is that they perceive the forces that are changing the cash flow and they speak to non-technically inclined folks about tapping that flow to send some cash their way. Imagine everyone in the world had gone wild for buying tulips, these people come in and find the folks who see people getting rich on buying and selling tulips, but don't understand tulips, or the attraction in tulips, and whisper that they know a farm that is growing outstanding tulips and will be harvesting soon.

What this other set of people have done, is to start influencing capital toward the 'new thing' but through their fingers. And they take a cut of course.

The truth is though that there has always been (and perhaps always will be) more capital than Silicon Valley can successfully convert into improvements into systems or new solutions to problems. And so this capital sits on the sideline until the third actor in our play arrives.

That is the person who is going to "get rich" in Silicon Valley. These people spin stories, stories that sound enticing and world changing. Stories about frictionless sharing or paradigm shifting. Stories about turning opportunity into massive shifts of economic power, political power, or both. They spin the story of changing the world, if only there was someone with the courage and the vision to back them in their quest. And at some point, that capital that is sitting on the sidelines "missing" this opportunity, sets aside the common sense its managers had and starts to make some big bets. Because everyone knows you need a lot of money to make a lot of money.

And that is where things have gone off the rails, at least twice before and perhaps now for a third time. Money begins to flow in, it goes to some great people, it sometimes knocks good projects off course, and it goes to some folks who are just good at talking. The the number of 'good' things that are happening with it, goes down quickly. When the diligence drops below the minimum sustainable level, the game board is set for some spectacular failures. And those failures are unavoidable, like a train engineer seeing a car on the tracks half a mile away, knowing it takes over a mile to stop the train, even with all wheels locked.

While I feel like I've analyzed the dot com crash enough to understand the mechanisms in play, I have yet to figure out any scheme or system which could prevent it from happening. That makes me sad.

basher2• 12 years ago

To be fair to Altman - his article touches on costs: "(assuming, of course, that they can afford the wildly-out-of-control housing costs, which is probably the biggest weakness here right now)"

Interesting take though, you argue that the issues generally considered the biggest problems of SV, are the cause of its success.

hugs• 12 years ago

Housing cost is the #1 reason I moved away, and the #1 reason I stay away.

I lived in Mountain View 2007 to mid-2008 for my job at Google. We were renting a house close to campus at the time and contemplated what it would cost to put down roots and stay -- most likely buying a condo or house. Every time we ran the numbers, it made no sense, so we voted with our feet and moved back to Chicago. I would love to live in the Bay Area again (there's a soft spot in my heart for the running trails of Marin County, in particular), but it still makes no financial sense. The lower cost of living in Chicago adds directly to my personal financial runway and allows me to work on what I want, when I want.

hackuser2• 12 years ago

Just as a counterpoint, what about all the free/open source software (and hardware) that is integral to the foundation and current success of SV?

ig15• 12 years ago

It's vastly easier to become a millionaire in finance than in tech.

kiyoto2• 12 years ago

I agree. I am an ex-trader in his late 20s, and most of my peers who stayed in finance have at least a million dollars in savings+assets.

driznar• 12 years ago

Can you elaborate? I'm genuinely interested in hearing from someone with experience in both industries to weigh in on this. Especially once the risks on both sides have been calculated in, since otherwise the comparison is largely meaningless.

cellis2• 12 years ago

I wouldn't say "vastly", at least not now. It is probably easier if you come from a "target" background ( went to a prestigious school, graduated MBA, worked 100-120 hr weeks as an analyst... ). But for the average joe off the street? Tech is "vastly" easier to become a millionaire. That is to say, you have zero chance of becoming a millionaire in finance without the required background, but as someone with, say, an English degree you can start a startup, get it to a series A round and presto, you're a millionaire on paper. Get it to a B round, and you're a millionaire for real.

Balgair5• 12 years ago

On the living part: My folks live in Concord and their next door neighbor just moved into assisted living at 95. Her house sold within a week for 700k to a young couple. It's a 3 bed 1 bath single story in Concord with drainage problems, mind you. Lets do the math here shall we: What is the mortgage and taxes(thanks prop13) on a place like? Well, at 4.05%, good credit, and 15% down, it's 2857.80/month just on the loan, then we have taxes at about 729.16/month and ancillary insurance and repair will round us up to about 4k/month (48k/year) on just housing for a 3 bed 1 bath. Since spending about 1/3 of your income on housing is normal, you'd need about 150k/year as a couple to afford the house next to my folk's. You simply cannot get a job out in Concord for that salary, so you need 2 working people at ~75k, which is just out of Concord's range for a young person. The only place you are going to find salary at that price is in the South Bay or the City. So now you have to ride Bart or 680 for an hour each way, putting you at at least 10 hour days. Oh, and the closer you get to SF or the further south you go, the more the houses cost. You can't win.

Mind you, they live next to my folks who pay about 120.00/month for the house since my Dad was a GI and got the house for 70k in the 70's. Same Levit-town style house, 40 fold cost difference. Neighbors with completely different lives.

And they say there isn't a bubble?

porter• 12 years ago

If it's so bad, why aren't people moving out of the valley?

rconti3• 12 years ago

Don't live in BFE Concord? Could get a 3/1 on the Peninsula for a bit more (say, 800-850). Less if you're willing to live in Daly City or EPA or something.

WalterBright3• 12 years ago

sold within a week for 700k got the house for 70k in the 70's

For perspective, the S&P 500 was at 68.56 in 1975 and began 2014 at 1848.36, a 27 fold gain. You also wouldn't be paying ongoing real estate taxes, etc. So the house bought in the 70's wasn't that great of an investment, long term.

http://www.1stock1.com/1stock1_141.htm

byEngineer• 12 years ago

And they say there is no inflation

viiralvx• 12 years ago

And this is why I'm working in Austin, Texas, and not in California after graduation!

mathattack7• 12 years ago

Having lived in NYC too, the greed there trumps the greed in Silicon Valley. The greed in NYC is money for it's own sake. The greed in Silicon Valley at least has the pretense of creating good products. The greed in Silicon Valley requires creation of value in addition to capturing it. NYC is all about capturing in.

A $4,000/month apartment in Silicon Valley gets you a good school. A $5,000/month apartment in NYC gets you a public school where 90% of the kids fail the state exams.

cm20122• 12 years ago

Manhattan is not NYC. You can rent a 1 bedroom for $1600 a month with a 20 minute train commute to Manhattan (and even less rent further away) in a great school district in Queens. I've lived in NYC my whole life, and worked in Manhattan my whole school and working life, and never paid more than $1400 a month in rent for 2 bedrooms - living with my wife and in only completely safe neighborhoods.

ThomPete2• 12 years ago

The greed in Silicon Valley does not require much more than an idea, a good network and some luck. Very few start out wanting to change the world, their companies just might end up doing it.

At least New York is honest.

pjlegato2• 12 years ago

Two observations:

- Plenty of 4k/month San Francisco apartments get you into terrible public schools.

- Inverting your point, at least people in NYC / finance are generally honest and upfront about their desire to make lots of money for its own sake; many in the SF area go around preaching nonstop about how their only motivation is to reshape society with their paradigm-shifting value-adding "wearable social network for dogs app" that will end all hunger and global poverty, and pick up your drycleaning, too.

After the wildly successful IPO, they still rehash this line; only now it's from the deck of their custom yacht moored on a private dock by their much nicer house.

Spooky232• 12 years ago

Huh? High schools in NYC are merit-based. If a kid is in a school where kids can't read, it's not the city's fault.

cylinder4• 12 years ago

Why are you comparing the suburbs (SV) to the city (NYC)? You know NYC has suburbs with great public schools too?

kiyoto2• 12 years ago

I think it's witty/funny that the OP is "Why Silicon Valley Works" while your comment aptly describes "How Silicon Valley Works".

Also, I totally agree with your comment on Japan. I think start-ups have a very tough time sustainably generating value through innovation in Japan. Taking the national psyche and tendency for risk aversion into consideration, most likely, it needs to come from either big companies or government programs (like in the 60s-80s).

jgwest• 12 years ago

Dude. You come to SV to make it. Kids, house, schools... they all need to be taken into consideration, sure... but you can't just choose one part of your lifestyle while assuming that you'll be able to continue on with no effect on the other...

Yes, it's a cooker. So what? You want the cooker, sign up... You don't want it, then pass, and start counting your already-existing chickens...

wes-exp• 12 years ago

I strongly disagree that the high cost of living is beneficial for startups. Keep in mind the very term Silicon Valley comes from chip companies (Fairchild, Intel, etc.) who came to SV because it was cheap, open farm land. There isn't a business in the world that doesn't want to optimize on costs.

Take a look at a modern SV company now: Apple. It creates lots of jobs in SV, but far more in China.

SV succeeds in spite of the costs, not because of them.

cfallin• 12 years ago

Keep in mind the very term Silicon Valley comes from chip companies (Fairchild, Intel, etc.) who came to SV because it was cheap, open farm land.

It's funny you mention Intel here -- since the 70s/80s they've continued to expand in Hillsboro, Oregon (a suburb of Portland), where they bought a lot of cheap farmland. It's worked really well for them and the ~16k people they employ in the state. The only downside is a sort of "employer lock-in" for the employees, especially the more specialized ones.

michaelochurch5• 12 years ago

I strongly disagree that the high cost of living is beneficial for startups.

You're absolutely right. High COL is good for well-connected people who get funding easily for stupid startups, because it makes the labor pool more captive. It's bad for the quality of startups.

Take a look at a modern SV company now: Apple. It creates lots of jobs in SV, but far more in China.

And then the murderous, unionbusting thugs who run the sweatshops buy real estate in California, pricing the locals out of their own housing. It's the circle of life... ?

wooyi• 12 years ago

The article talks about long term compensation for entrepreneurs. You're in it for the big payout, to change the world, to build something better. He's not talking about SV working for your everyday salary men/women who wants cheap housing and high quality of living or work life balance.

cpwright• 12 years ago

You can't build a large company with only the founders, or first couple dozen employees, to grow beyond a certain point, you are going to need those "salary men/women."

nilkn5• 12 years ago

All this is part of the reason why I've strongly been thinking of going back to school to become a doctor. What follows is mostly a rant, just to be upfront about it.

It's a really radical transition, but I really, really dislike the city-centric focus of software engineering. I hate the idea of being a contractor (I just want stable, life-long work), and I can't tell you how tired I am of crippling traffic causing me not to even want to drop by the grocery store until it's almost time for it to close. I'm not in the Bay Area, but am in one of the five largest cities in the US. I went to college not giving a shit about money or how much of it I would make, and now I find myself thinking about it most days because I have to confront the fact that I can't afford any housing near where I work. I wouldn't be so upset about it if it weren't for the traffic which makes commuting from far out an absolute nightmare.

In terms of raw numbers, it's a transition that doesn't really make sense, not for a relatively skilled developer anyway. The salaries aren't that much higher outside of surgery and a few ultra-competitive specialties, and the time and debt involved in the training are immense. Depending on any number of factors, it could be better or worse than a life in technology. The two things that are for sure are that you're not going to have financial difficulties and you're not going to be subjected to ageism (quite the opposite). If you want to be rich, medicine's probably a pretty bad choice; but if you want stable, well-paid, life-long, rewarding employment wherever you want in the country, it's among the very best options.

The most amazing part of it is that you get to directly help people every day (so you don't have to wonder if your crazy ass startup is actually "changing the world" or not), there's more demand for doctors in rural areas (not less), and most non-surgical specialties can easily work comfortably into their mid-60s (or even later, health permitting). You're also surrounded by people who, at least in the beginning, were motivated out of passion and not money- and status-seeking. (Of course, some people will change as they age and grow more successful, but not all.)

ntrepid8• 12 years ago

This sounds like a fairly idealized vision of what working in medicine is like. I have heard doctors say the same sort of thing about being a software developer. Is the grass really greener?

TheOtherHobbes• 12 years ago

Uh - remote? I've spent most of my professional life working from home.

With some extra effort, you can earn an SV salary but live in an area that has a very un-SV cost of living.

Traffic isn't an issue either.

You can network remotely. You can build companies remotely. You can even find investors remotely.

A few people are doing this already. More and more will in future.

(Are we really supposed to believe it's always better to build Internet companies in meatspace? Hmmm.)

I know there are downsides to remote working. Guess what? There are epic, catastrophic downsides to working in SV meatspace too.

I'm looking forward to the day a few decades from now when what's left of SV gets turned into a museum, while the rest of the planet gets on with doing cool fun stuff... elsewhere.

pjlegato2• 12 years ago

I'm afraid the reality of being a doctor is not quite so rosy as all that. Take a look at these before you make the decision:

- https://encrypted.google.com/search?q=doctors+suicide

- https://encrypted.google.com/search?q=doctors+unhappiness

thecage4112• 12 years ago

I'm married to a doctor and have considered medicine, but probably won't go for it.

On your individual points: 1) City-focus of software engineering. Have you considered trying to work remotely? That isn't for everyone (I couldn't do it), but it would probably solve your problem

2) Salary wise, I would worry too much unless your first priority is to really help people (more on that below). I've interacted with a lot of doctors and frankly if you are smart developer you'll most likely have a leg up intelligence wise on all but the most in demand specialities.

3) I wouldn't necessarily count on being able to directly help people every day. It depends on your speciality and where you work. A lot of private pratice places often push unnecessary procedures to make money. If you are in a non-procedure speciality or at an academic center you probably won't have those pressures. That being said, if you want a comfortable life where you can actually help people, a job at an academic center outside of a major city sounds like a great fit. I doubt you'd make much more than a software engineer though.

4) I'm not sure how to parse your statement about status-seeking. A lot of people who go into medicine are status seeking.

sopooneo• 12 years ago

I hear you friend, but I knew a few doctors that are getting pretty tired of the all the insurance nonsense they have to deal with.

Emphaticdotco2• 12 years ago

Traffic is atrocious. The driverless, grid-connected cars can't get here soon enough.

ihnorton• 12 years ago

Before you do that: become very familiar with the concept and consequences of RVUs (and, ideally, ask an active GP).

lmm2• 12 years ago

Cities are a great place to live if you find one with decent public transport. If you're already talking about a major life upheaval, have you considered coming to Europe? There are pretty cool software industries in London and Berlin at least.

YMMV, but I found living in the country pretty unpleasant, particularly as a relatively shy single person with less-mainstream hobbies; you have to drive everywhere, you have to plan a lot more in advance (just trivial things like doing your grocery shopping ahead of time), and there aren't the kind of entertainment options you get in a city.

plinkplonk• 12 years ago

If you can get in medical school and can take the income hit during your coursework and residency, go for it. Programming is best kept as a hobby (imho) unless you are building your own company. Get into a non ageist profession. Have fun. Good luck.

noname123• 12 years ago

To add to your data point, I recently transitioned as a software dev for a e-commerce company to Bioinformatics research place.

The e-commerce recently IPO'd but I didn't like the culture and lifestyle for all the reasons you've already stated in your post.

Funny enough I also applied for a software position for a hospital but I didn't take it as I consulted many of my friends who are in residency and EMR software field where they said that hospitals are onerous with regulations. So coding can be frustrating experience and turn-arounds are slow with specialists/business analysts ensuring compliance with patient privacy and clinical data accuracy.

If you're looking for a place where there's a lot of smart people who are not motivated for money, there are many software opportunities in NGOs, life sciences research where lifestyle is much more relaxed, pays actually pretty well (because people won't accept the fake carrot of big equity payout) and you get more job satisfaction IMHO. Best of luck to you.

rdl• 12 years ago

I live a 20 minute drive (after 10am or 7pm) from ~all the startups in SF (in SOMA or Midmarket). My rent would be ~$1800-2500/mo for a 1BR. (GF owns the condo, so no rent now). While Oakland is moderately "real", I've never "had to use the AK" -- it's realistically about as safe where I live as in SF (I live near a Whole Foods, after all). I do spend about $660/mo on commute ($260 parking, $100 bridge toll, $300 or so on gas and vehicle operating expenses). I could do a 50 minute BART ride for $0/mo total if I wanted, and it'd be 30 minutes if I lived a little closer to BART and worked at Twitter or Lookout instead of by Caltrain.

There are probably >10k jobs in that commute footprint I could have within a week at $150k base plus $100-300k/yr in equity. If I were a competent 5-10y experience frontend developer, maybe 50k jobs in the same range. That's without even touching Silicon Valley itself, or remote-but-through-SF-connections.

This is the advantage of SV as an employee. You can work for a startup knowing that you'd literally have a new job before the day is out if your company imploded in the morning.

IndianAstronaut• 12 years ago

You can work for a startup knowing that you'd literally have a new job before the day is out if your company imploded in the morning.

While the bubble is still going, yes. Once it pops, not so much.

blaze33• 12 years ago

I hear there are arguments for the thesis of the high greedeenness / productivity of the SV people. What strikes me is the everlasting ability to pick some facts to build a narattive.

'cause I hear you. Living in Paris, France, I could complain about the same thing. How you end up consumed by your lifestyle with nothing to show up for in your late thirties despite your top 10% career.

Still, my preffered theory about why SV works is that European middleage adventurers went west, up to California. And that the hippie movement with drug-induced introspection moved some people enough to motivate others to build their dreams, which is currently happening under our eyes.

That's just another narrative. You have to pick your facts. Both may well be true. Or simplistic as well.

Lévi-Strauss taught me I shall not pretend being an observer of the world I live in so we might ultimately never know why SV "works". Let's focus on the how, and dream of the why.

paulsutter• 12 years ago

So you start out criticizing greed, yet seem to judge lifestyle entirely on the cost of creature comforts?

Dude. If you feel purpose in your work, live in Silicon Valley. If you are driven by creature comforts, go live in a place where that's easy to afford.

endeavour• 12 years ago

This sounds just like London.

7Figures2Commas• 12 years ago

One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t. Silicon Valley is a community of outsiders that have come together. If you build something good, people will help you. It’s standard practice to ask people you’ve just met for help – and as long as you aren’t annoying about it, they usually don’t mind.

There's some truth to this, but it's not entirely accurate. The spectrum of who, what, when, where, why and how is very broad here. The top of the food chain in Silicon Valley is just as insular as Wall Street, Hollywood, etc.

Yes, the approximately 700 YC companies are all totally independent legal entities – but the connection is so strong that alumni companies get significant benefits from each other.

Not often discussed: some of those benefits are benefits until they're not. A lot of accelerator-backed startups count other startups from the same accelerator as their largest customer segment and a source of early sales traction. When the business cycle turns and "other startups" is no longer a viable customer segment, however, a lot of startups are going to see their sales decimated because they have little to no diversification.

Unlike other cities where people are mostly focused on cash compensation for this year, in Silicon Valley more people talk about equity than salaries (assuming, of course, that they can afford the wildly-out-of-control housing costs, which is probably the biggest weakness here right now).

This is simply not true. Most angel and venture-backed startups in the Bay Area today offer early employees miniscule amounts of equity, and engineers demand market rate compensation (where market rate compensation equals "what Google or Facebook would pay me if I could get a job there").

If you're a startup offering higher equity in lieu of salary, you will have a very difficult time hiring in the Bay Area. Most engineers are hip to the fact that this isn't likely to work out in their favor.

zoba• 12 years ago

Another reason I think the valley works so well is the audience its news outlets have. If you have a great product but can't get news coverage on it, its going to be hard to get growth without a large marketing budget. However, if you're friends with a friend of a Techcrunch write, its much easier to get covered and start to get a core group of users who love your product - and are tech savvy enough to understand that features that don't exist yet will be coming, and they should be patient.

If you try to bootstrap a startup without using SV's media outlets (as would be the case for people who don't have connections to these folks), you're going to have a much harder time.

basher2• 12 years ago

Is asking tech journalists you've just met to write about your startup considered annoying?

Emphaticdotco2• 12 years ago

All depends on the "how". If you make the effort to show that you understand their coverage niche, and make sure that you actually fit into it, and also have (or can package) your story as something newsworthy then go for it.

ig15• 12 years ago

I think you're vastly over estimating the impact of tech news sites. A decent front page article on techcrunch will get you a couple of thousand visitors, the vast majority of which won't be in your core customer group.

The main advantage of tech news sites is that they're read by potential investors, partners, employees, etc. rather than because they get you users.

You really need to get your early users through graft, tech news coverage won't really help you except in exceptional circumstances.

thebyrd• 12 years ago

"not too many people drive Ferraris or talk about their vacation homes" unless you're in Palo Alto, Atherton, Woodside, Saratoga, Los Gatos, Los Altos, etc.

That's probably why there's been a geographic shift to SF.

AndrewKemendo• 12 years ago

Sam misses some hugely critical pieces, for example:

1. Good IT infrastructure

2. Plurality of high tech companies' headquarters

3. Proximity to major technology focused academic institutions

4. Legal infrastructure that enables innovation

All discussed previously here:

http://www.enterpriseirregulars.com/25271/silicon-valley%E2%...

and here:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=124508

dba7dba• 12 years ago

"Nearly everyone wants to get rich but they’re willing to wait to do so.

... A focus on making a lot of money in the long term at the expense of short-term opportunities is essential to building companies that have a huge impact – they take a long time."

Sounds like a good advice for CEOs and politicians in DC. Focusing on the long term goals...

dsugarman• 12 years ago

I think the physical location is kind of a fallacy. For example, there are so many super smart and talented developers in DC working for government contractors because they may not be exposed to the startup option. Most people now have to move to Silicon Valley to focus on long term compensation, but often there is a stronger force of their local network (friend, family & significant others) who keep them stationed near by. Having quality startups in new geographical areas is probably the key ingredient to bringing in talent and capital, not the other way around.

throwmeaway212• 12 years ago

so many super smart and talented developers in DC

As one of those developers working in DC I can tell without a doubt that the majority of us do it because we get paid a large amount of money.

I make more here than I ever could in Silicon Valley. Plus the cost of living is around half. Last I checked a one bedroom in SF was around $4k per month. I pay just over $2.5k here in DC (with a parking spot!).

michaelvkpdx2• 12 years ago

The premise here is that Silicon Valley "works". What do you mean by "works"?

If you mean creating artificial wealth for a small group of already-rich folk, yes, it works. If you mean transforming one of the most naturally advantaged landscapes on earth into a traffic-choked sea of concrete where people do little more than work at creating new ways to buy and sell stuff, yes, it works. If you mean polluting what was once the most democratic communications vehicle available with social drivel and advertising, it works.

If you mean creating innovations that truly improve humanity, the Valley extremely inefficient. If you mean demonstrating that humans don't need a pleasant natural environment to survive, the Valley is on the right track.

The one thing the Valley works very well at is self-congratulation, especially among the wealthy.

tim333• 12 years ago

truly improve humanity, the Valley extremely inefficient

I think Intel, Google and Facebook have improved humanity though your tastes may vary and I enjoy Apple's shiny stuff. Those have a market cap of $1.4 tr and it's hard to think of anywhere else with similar output. Maybe like democracy it's the worse possible system apart from all the other ones?

michaelvkpdx2• 12 years ago

market cap != quality of life.

The Valley works well at convincing people that fake money is equal to the quality of real life. Market caps have nothing to do with happiness, health, and interpersonal relationships.

freshflowers2• 12 years ago

Two of those, Google and Facebook, have made it their core business to prime humanity for a lifetime of exploitation of their privacy in exchange for so relatively very little. How the f is that "improving humanity"?

michaelochurch5• 12 years ago

This was one of the best posts on this topic that I've ever seen.

Have an Indignation. You earned it. https://www.youtube.com/watch?v=EtCiP8B2xpc#t=7s

And keep the faith. Technology is important and what we value and can do will outlive the Silly Cons of the Valley.

mempko2• 12 years ago

Could not have said it better myself. I know because I tried.

Dirlewanger• 12 years ago

The one thing the Valley works very well at is self-congratulation, especially among the wealthy.

Yup, this is why everything that comes out of the Y Combinator's mouth should be inherently suspect: they have an incentive in romanticizing Silicon Valley because they profit off of your drinking the kool-aid.

larrys• 12 years ago

"I wrote this for the FT, but it's behind a paywall. Since I wrote it, I feel like it's probably ok for me to post it here."

Well legally it's either ok and the contract (written or otherwise) allows you to post a copy or it doesn't.

derwiki• 12 years ago

Interesting to hear YC classes framed as "we help each other." I thought there was a fair bit of internal fighting to end up as a "featured startup" from the batch. Conversely, my startup just went through the Hackers and Founders accelerator, where each startup is given equity in the other startups in the class. This is a great incentive to help the other founders in your incubator.

graycat2• 12 years ago

From

http://www.avc.com/a_vc/2013/02/venture-capital-returns.html...

at least on average, there is some serious question if Silicon Valley "works" at all well.

For

One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network. Remarkably, you don’t.

Well, as I recall, Sam, from one of your lectures in your current course at Stanford, both Marc Andreesseen and Ron Conway made it quite clear that they no longer take proposals from "over the transom" and, instead, learn about new investments only from their "network". Sounds quite closed and not very "open" and, instead, like an echo chamber from the past with not a very good view of the future.

Or, NSF, NIH, and DARPA will take proposals from strangers, but not Sand Hill Road.

twic• 12 years ago

I'd be interested to see a comparison of something like "dollars of revenue at ten years of age per dollar of initial investment" between Silicon Valley startups and newly formed companies of other kinds. That seems like a reasonable measure of the actual worth of a company to me, and so a decent test of whether Silicon Valley works or not.

Looking at valuations or even market caps is much less useful, because that tells you more about what's going on in investors' minds than in reality.

graycat2• 12 years ago

You have a point, but in this context necessarily works has to mean making money for the limited partners (LPs) and, there, more money than the alternatives, e.g., an index fund of the NYSE. Well, follow the link I gave to AVC.com and Fred Wilson's table of data there and have to conclude that on average information technology venture capital, and, thus, nearly necessarily also Silicon Valley, doesn't work very well.

I did mention NSF, etc.: There, Ike wanted pictures. The U-2 was not getting it done. So, one day Lockheed's Kelly Johnson walked in with a pile of papers and proposed a new plane, fly at 80,000+ feet, at Mach 3+, for 2000+ miles without refueling, and essentially impossible to shoot down. The project was approved; the plane flew as planned; and we got the pictures.

So, Kelly had a very ambitious start-up, and delivered as planned, with the project approved from work essentially just on paper.

Such work can be done. Other cases include the F-117, GPS, passive sonar, Keyhole (essentially a Hubble but before Hubble and aimed at earth instead of space).

It really is possible to do accurate evaluations of ambitious projects just on paper and, then, go forward with a quite high batting average. And this fact does partly respond to your point.

Well, NSF, NIH, DARPA, CIA, DoE, etc. can work this way, but Silicon Valley just flatly refuses to. Instead, they want another SnapChat with traction and f'get about anything more, and that means that they can't do the really valuable projects. And that's why, on average, they don't make the big bucks.

calgaryeng• 12 years ago

This is only tangentially related to "Why Silicon Valley Works", but am I the only person who is frustrated by "famous" VC's saying that "founders should stop worrying about their valuation"?

I can't get over this. This is like a used car salesman telling you not to worry about the cost of the car, just to remember that there are free weather mats included!

I feel that there is a connection here as to "why Silicon Valley" works from the perspective of VC's in a position to influence founders. However I'm not feeling particularly eloquent today and haven't fully formed these ideas.

Bahamut• 12 years ago

I thought about the valuation problem for a little bit when my company finished raising its Series B, and I came to the conclusion of not worrying about the valuation independent of hearing the quotes, as an engineer. Here's the important point - the valuation means little until an exit. Any valuation beforehand is only a step in that direction. All work needs to be done to maximize the value of the company in preparation for that day - anything along the way is a distraction from that end goal.

Granted, it is a necessary distraction for many of these companies, since they require VC funding in order to expand operations.

rvn1045• 12 years ago

'This seems like the future to me – large groups of independent companies, loosely tied together.'

This could also work against YC (Or many startups in the valley) very easily. I mean all these companies are being created in a time of easy money, what happens when the money dries out? Will they all fail? Since they are so correlated with each other's success.

rhizome2• 12 years ago

Will they all fail?

Not all of them, no, but a lot will.

general_failure• 12 years ago

Another weakness of the valley is the lack of a visa. We would have atleast 5 times the number of startups, if there was an easy way to remain in the united states and start a company for immigrants.

axavuj05• 12 years ago

Throw-away account for obvious reasons:

"Silicon Valley works because there is such a high density of people working on start-ups and they are inclined to help each other"

Bull shit. With all due respect to Sam--who no doubt knows what he's doing and saying and has become very successful--he is undoubtedly living in a bubble of his own. While I've found people generally open to the idea of chatting over a coffee, I've run across very few people that go out of their way to help. In fact, I more often find people who will either offer to help, and don't, or are so self-absorbed that they can't stop talking about how great/impressive they or their startup is without bothering to ask about you or what you're doing. I've even asked for a meeting with and gotten the following response: "I'm very busy. Let me know how you think you can help me and I'll think about it."

I've been trying to tell myself that it's just my luck: That it's not socio-economic or pedigree based (race or school) or that some people here don't have basic people skills and don't know how to carry on a conversation. That maybe it's just the luck of the draw that I run into more people that I'd classify as "ass holes" than not, but I'm coming--very late--to a sad reality: it is about socio-economic status--even more than that, it is about pedigree (yes, both race and the school you went to). It is about manners--most people don't have them. AND, it's about gender as well! I'm not a woman, but I'm willing to bet that if I was a woman, things would be a shit ton harder for me than they already are. I'm not a 20-something white male that went to Stanford and it's impossible for me to imagine how hard things would be if I had a vagina [0].

These are things we don't want to talk about. Thank god a conversation about gender is taking place, but there's another conversation about elitism and race that hasn't even started yet.

"One of the biggest misconceptions about us is that you need to have pre-existing connections to get value from the network."

Complete and utter bull. Maybe in Sam's world, sure! White? 20-something? No-kids? Harvard/Stanford? B2C? Let’s chat!

Early-40's/Late-30's? Not-white? Married w/ kids? Not-Harvard/Stanford? B2B? Nope. (Don't bother to apply to YC either).

The reason Silicon Valley works is because there's a new-boys network that helps out those that check most of the right boxes. But here’s the good news: There are other networks. Networks of people in their 40’s. Networks of people that are from a specific ethnic group. Networks of people that went to the same (non-Harvard/Stanford) business school as you that are willing to help out. Are most of these networks as big and powerful as the circles Sam roles in? Absolutely not. But are they out there? Yes. One of the marvels of Silicon Valley is that because there are so many people out here, there’s a semi-decent chance you might find someone in one of these networks that will meet you for a coffee, offer to help, and try to make something happen for you. Is it likely? No, but possible, yes? And that—the possibility of something working out despite the odds—is what entrepreneurship is about. [0] - What It's Like Raising Money As A Woman In Silicon Valley (http://www.forbes.com/sites/jeffbercovici/2014/08/07/what-it...)

rgbrgb3• 12 years ago

I'm sorry you're having a bad time, but you sound like you're caught up in a few delusions.

When someone gets coffee with a stranger they are "going out of their way to help". What more are you asking for in these conversations? Agreed, nobody's going to fund some random biz guy with no track record and "an idea" (my guess from your post, sorry if I'm wrong). Reading that as racism/elitism is counterproductive and most likely inaccurate.

Build something people want (get users) and the investor types you sound like you're pursuing will want to talk to you. Sure, a good resume can get you in the door, but the best resume isn't a list of stodgy institutions, it's a list of successful projects.

EDIT: FWIW, I agree that the deck is completely stacked against the poor. It is much easier to build something when you can borrow $20k from a rich uncle to live on for a while. It's much easier to talk to investor types if you're familiar with their world. But what I'm getting at above is that those things stop mattering the minute you've built a product people are using.

david927• 12 years ago

some random biz guy with no track record and "an idea"?

Now that's delusional. Clearly you wish that to be the case. It is not. SV is all about the gate-keepers, and they are all about profiling, which they call "signaling". If you don't fit into that mold, you are not going to receive a warm welcome; I don't care how good you are.

Read Peter Thiel's Stanford class CS183 notes. Peter explicitly says this, "It's like getting a degree at Berkeley. Okay. It's not Stanford. You can [have] a complicated story about how you had to do it because your parents had a big mortgage or something. But it's a hard negative signal to get past."

If you are a white male, in your early 20's and went to Stanford, go for it. If you're not, don't even try to play the game; it's rigged to use you, not help you.

ritchiea• 12 years ago

I'm curious what kind of help you're looking for. I actually find it a bit odd when I hear over and over that others "offering help" is a strength of SV. Mostly because you really need to do two things, 1) make a product that addresses a need 2) and work to get people using it. You can get opinions on 1 or 2, but I can't imagine not getting them crushing your business. You can seek investment and if you're doing 1 or 2 well people will want to introduce you to investors. And if you're not doing 1 or 2 well you need to figure out how to do something valuable.

I'm not saying SV isn't biased, it is flawed like anywhere else, but I think this whole "startups helping other startups" thing is a bit fluffy in the first place.

garry• 12 years ago

Complete and utter bull. Maybe in Sam's world, sure! White? 20-something? No-kids? Harvard/Stanford? B2C? Let’s chat! Early-40's/Late-30's? Not-white? Married w/ kids? Not-Harvard/Stanford? B2B? Nope. (Don't bother to apply to YC either).

YC does not discriminate in this way. We fund lots of people working on B2B and enterprise ideas, who are married with kids, who are in their 30's, 40's and yes older too. This claim is just plain false.

throwmeaway212• 12 years ago

While that may be true to a certain extent I'd be willing to bet a sizable amount of money that the majority of founders that YC funds are in fact white, male, hailing from a wealthy family, graduated from a prestigious college, and are under 30 years old.

And while you or other YC partners may defend that fact with the fallacy that it's just a numbers game, as in those are the majority of applicants, I can't help but remind you that age discrimination and class warfare is rampant in the valley.

aagha• 12 years ago

That's interesting, and good to hear.

Would YC be open to sharing anonymized data on the sitribution of YC-ers (at time of entry) by age, married (binary), # of kids and race?

geebee4• 12 years ago

What do you think of this bit?

In "Why not to start a startup"

http://paulgraham.com/notnot.html

"9. Family to support"

"This one is real. I wouldn't advise anyone with a family to start a startup. I'm not saying it's a bad idea, just that I don't want to take responsibility for advising it. I'm willing to take responsibility for telling 22 year olds to start startups. So what if they fail? They'll learn a lot, and that job at Microsoft will still be waiting for them if they need it. But I'm not prepared to cross moms."

Can you see how a statement like this might make people with kids more reluctant to apply to YC?

whiddershins• 12 years ago

I love the way people in the Startup community talk about how New York is oriented around finance. It is totally true, from the perspective of a certain group of people. New York also has a history and cultural identity that puts monetary success and business above other concerns that can arguably be traced back to its founding by Dutch traders as New Amsterdam.

That said, New York is only oriented culturally around finance from the perspective of a tiny subgroup of self-important people. The overwhelming majority of people living, working, and creating in NYC do not feel that "finance" dominates the culture, the connections, or the emphasis.

New York is the dominant hub (or close to it) for several genres of music, for television, for fashion, for theater, for many counter-culture political movements, textiles ... the list goes on and on and it will be boring if I continue to explain.

Basically, it's the kind of thing you can say if you really know nothing about New York.

cylinder4• 12 years ago

Well put. I live here and can go months before meeting someone who works in finance. There are lots of big corporations here as well as lots of artistic/creative jobs.

jknightco• 12 years ago

Thank you for this. I absolutely can't stand the comparison between the two environments. According to NYC's labor statistics [1], Finance as a whole (including all of commercial and investment banking, insurance, and real estate) makes up about 12.5% of the city's private sector jobs, and employs about as many people as the NYC local government does. For comparison, the Education and Health Services sector employs almost twice as many people (~24%), and Leisure and Hospitality about the same (11.4%).

Its much harder to find good statistics on the Bay Area because its comprised of so many different municipalities, but I would bet the Tech industry employs way more than 12.5% of private sector employees there. There's also no real "runner-up" in the region; Finance is one of the industries here, Tech is the industry in the Bay Area.

[1] http://labor.ny.gov/stats/nyc/index.shtm

schtinky• 12 years ago

Conspicuous consumption isn’t that cool; not too many people drive Ferraris

99.9% sure I saw Sam pulling out of De Anza College at SUS 2014 in a Lotus Elise.

Cacti• 12 years ago

As a software developer not-in-SV, life is great. I don't make a shit-ton (~90) but my spouse also works (~50), (and we are both young) we have no debt, our insurance is fantastic, our commute is about 15 minutes each, our house is 1/5th the cost of SV, and we are in a very good neighborhood (meaning public school district is better than any private school unless you're going for ivy prep), and shopping for practically anything is about 5 minutes away. Oh and neither of us work more than 40 hours a week.

So... yeah. There is actual life outside of SV.

2D• 12 years ago

It strikes me, as do a few other posts and comments from YC that this is an incredibly American centric view of the world. I've heard PG say "just consider moving here" but without a visa as a startup that's very difficult.

WWKong• 12 years ago

It does work if you are a VC. Tons of talented folks living in dorm like conditions (some living out their car), working long hours, in the hopes of striking it rich one day. Most fail. Some succeed proped by blogs owned by VCs. It is a nice machinery. The world mostly gets another music discovery app or another ad targeting company.

pikachu_is_cool• 12 years ago

The Silicon Valley works because of the toxic culture of "work until you die". [1]

[1] I grew up there. Never going back.

mempko2• 12 years ago

I would like to ask a.radical question. Is Silicon Valley actually working? Because if you throw a lot of money at something, even if it is bad, will make it better. Given the amount of money banks an investors are throwing at the valkey, is it successful given the output?

Why Silicon Valley Works

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