Replicating Silicon Valley

VC bloggers are a growing category and I struggle to keep track of everyone who is doing it now. But honestly there are few, if any, that do it as well as Paul Graham who isn’t really a VC and who isn’t really a blogger either.

Paul is an entrepreneur who has formed Y Combinator to “microfund” first time entrepreneurs who are willing to drop everything and work night and day on an idea. I think Paul is still an entrepreneur at heart, and he’s playing a game most often considered angel investing. But I call him a VC because I think our industry needs more people like Paul working in it.

Paul is also not really a blogger.  He doesn’t post in the conventional sense.  He writes long essays when he feels the urge to post them. He doesn’t seem to be caught up in the techcrunch/memorandum/technorati groupthink which is refreshing.

So when Paul writes one of his long missives, I read them.

His latest two essays are really one long think piece on replicating Silicon Valley here in the US and overseas.

How To Be Silicon Valley

Why Startups Condense In America

I do take a bit of offense at Paul's comments about New York City in this post on the Union Square Ventures weblog. I believe that after Silicon Valley and Boston, there is no city in the US that has a more vibrant startup economy than New York City and it is often underlooked as it was by Paul in his first essay. So I had to defend my turf.

Comments

[curmudgeonly troll]

That Graham dude is pretty smug.

Lots of sweeping statements that vary from the questionable to the ridiculous.

I'll make a few of my own - people are tribal, like-minded people flock to the same places, those places develop comparative advantage for the activities of the people they attract. You can't turn NY into Silicon Valley. It's like putting Coyote Ugly in the Vegas NY-NY casino and telling people it's the meatpacking distruct. But you can do startups that leverage NY's comparative advantage.

[Ben Rodda]

I do think there is a definite East/West Coast bias when it comes to start-ups. I'm with a start-up in Tech-Valley (Albany NY area) and people act surprised that there is ANYTHING worth while going on here. Of course they never consider that we have several excellent colleges(RPI is the main start-up generator around here) and we are one of the hottest places around for nanotech research.
But every tech conference I get looks from people who treat you as inferior because you geographical location doesn't have the branding or pedigree that they do. With all this work that they are doing to smash barriers and make it so that anyone can work anywhere they still have this "If your anybody or worth anything you would be here, not in the backwaters."

[JayR]

I've been around the venture scene in New York almost as long as Fred. To me, Paul Graham's thoughts about New York are another variation of the same crap I constantly hear, sometimes from my own colleagues, about how people in New York just don't get entrepreneurship, how we're great at financial engineering but just don't have the shiny bubbly optimism that they have in the Valley, as if there were something in the water.

I find the PWC statistics informative, but I don't think they really tell the story of what is going on in New York (or, in truth, any geographic area with a radius of more than 50 miles). The statistics consolidate the entire New York metropolitan area, and I would argue that northern New Jersey should be considered its own market. Virtually all of the biotech and much of the communications activity is centered there. The workforces are different, the strategic players are different (e.g., Big Pharma vs. Big Media) and many of the investors are different. There isn't much linking those markets other than physical access to New York City.

The "real" New York startup scene is in media, entertainment/convergence, advertising and promotion, real estate, financial services and information - the industries that really define New York. I agree with Paul Graham and you as to what the magic ingredients are, and in theory New York has all of them. (I would add one additional ingredient - a success story, a company that "made it", which New York has had plenty of over the years). But I think that where New York does not measure up to places like Boston, Silicon Valley and Austin is how our educational institutions participate in the local entrepreneurial culture (which, contrary to popular West Coast perception, is alive and well). We don't have enough faculty members taking on active roles in the startup ecosystem. The linkage between the angel community and the universities is not as strong as in other places. We don't have enough young graduates from engineering programs choosing startups rather than Wall Street. The university incubator programs are not generally well-known. This problem is not an easy one to solve - it requires long-term solutions, money (public and private grants) and a lot of patience. But there is nothing inherently wrong with New York as a startup locale and perhaps more right than in the other well-known centers.

And for the record, I don't know if a small expensive apartment in New York is any worse
than an overpriced tract house in Palo Alto. Certainly our food is better.

[Zoli Erdos]

Fred, is the copy of this post on goBig (http://www.gobignetwork.com/blog/ViewStoryComments.aspx?StoryID=15911&ReturnURL=BlogSearch.aspx%3fpage%3d2%26pagesize%3d10%26SortBy%3d1%26Terms%3d%26view%3dlatest&ReturnText=Return+to+search+results) your authorized contribution or a ripoff?

Thanks.

[justin]

jayr,

you have 4 paragraphs of persuasive points and go and ruin it all in the last sentence:

"Certainly our food is better."

que?

you must mean palo alto v. nyc, which is perhaps arguable, but gtf outta here if you're suggesting nyc beats sf.

it's the cheese (and all the other food that is actually grown here) stupid

[Chris Gilbey]

If you're going to talk food (and wine).... Sydney is the place, hands down. Unfortunately we a much more risk-adverse investment community here. Or should that read, they just don't get technology. And the universities in Australia just don't foster the kind of entrepreneurialism that is done so well by graduates of Stanford for example. So its not just whether you have a university nearby - its about the kind of mentality that is constructed at the school....

[Rajan]

Hi fred,

Everyone of us wants our own city to be the next silicon valley. I am from India and I wish so much that next silicon valley is from Bangalore or Hyderabad.(http://rajan.wordpress.com/2006/05/28/silicon-valley-elsewhere/)

But as my friend points in the comments of my post , it is israel that is poised best to be the next silicon valley.

Cheers,
Rajan

[JayR]

The food comment was targeted towards the Valley, rather than San Francisco proper. But as long as the topic was raised ...:)

The most important foods for the startup culture are pizza and Chinese food. I'd give SF an edge on Chinese, but NY a distinct advantage on pizza.

[sosatie]

PG does seem to get up some people's noses and I think the reason is he's so damn smart that he cannot be simply ignored. I find it interesting that his his latest post has found some chink in VC armour, getting responses from both yourself and Guy Kawasaki -- it's worth the read
http://blog.guykawasaki.com/2006/06/how_to_kick_sil.html