From friends I've talked with, the benefits of the valley are real, but diminishing. At the same time downsides are increasing: cost of living, homelessness, real estate prices (though I read these are coming down a bit). I've been told the benefit has been the ease of networking, and likely will always be so. As startup hubs grow around the country this networking benefit will start to be there. It is already there in some places such as Austin and Boston.
There are a number of hubs in the country now, with most outside the valley focusing on one or more niches. Some of these are:
- Nanotechnology in Boston and Middlesex-essex, MA
- Healthcare Boston, New York City, and the Twin Cities of Minnesota. Big investments though are being made in Kansas, Ohio, Texas, and Pennsylvania
People have been saying this for a very long time. I did a startup in Pittsburgh back in ~2009, and this was exactly what everyone was saying. My cofounder is still doing startups in the same space(ish), but in the Bay Area now.
That doesn't mean it won't ever come to pass, but I am still skeptical. (And I live in Austin now... but the startup I work for is still fundamentally based in the Bay.)
This is a strong argument: people have been talking about the distribution of work with every new invention (phone call, fax, email, and now video conferencing). And they don't just mean moving from San Fran to Austin (where people speak the same language, and you can hire citizens, and the currency is the same and you drive on the same side of the street), but to India and China.
And yet, and yet, and yet the same centers of industry persist. Movies in LA, Oil in Houston, Finance in NYC and tech in San Fran.
I am sure the arguments for the persistence are well rehearsed and can be looked up but I just want to underscore one feature: winner take all.
Whichever argument you find compelling as to why these industries congregate, (networking is easier, money is easier to get, you have everything you need in one place, ambitious people go there and so on) it has to be such that the #1 place has an enormous advantage over the #2 place. If your argument does not have that structure, it doesn't really explain why everyone congregates.
And if your argument does have that property (some winner-take-all mechanism), then after covid and zoom force a redistribution, so long as that small advantage maintains, the dominant city will re-assert itself.
Things have been changing. Hollywood makes fewer movies than ever before and most of the work has moved elsewhere. Tv shows for networks are still made there but with so many additional channels more shows are being made elsewhere.
Pittsburgh,Detriot were never in a position to overtake the valley. California offers too much and the valley is not moving to another citt. But less companies feel the need to be in the valley because the internet provides a virtual space.
Oil is being replaced with renewable power so that shift won't affect who the oil capital is but it will reduce it's imporance.
Finance and New York fit culturally well together like California dreams and high tech startups.
Is “SaaS” traditionally considered a niche like the others? The concept seems very broad as opposed to others like Fintech or Healthcare. I would consider a category like “APIs” to be overbroad, and SaaS seems to be similar. I’m very open to being wrong though.
Plus, SaaS is more like a horizontal niche (though I would really call it a layer, with, e.g. shrink-wrapped software being another horizontal layer), while fintech, healthcare etc. are vertical layers[1]. In fact, the industry jargon term (outside of the narrow world of tech, at least), is "verticals". Ask any marketing guy. Verticals are usually defined by the business domain they apply to.
[1] E.g.: you can have a fintech SaaS and a healthcare shrinkwrapped app, and vice versa, and so on.
The other benefit of locating in Silicon Valley is convenient access to multiple first and second tier universities. Many startups are founded to commercialize research done in those schools. Only a few other areas have a similar concentration of top schools.
Harvard isn't just pretty close to Boston. It's right across the river. If you stand on the campus of Boston University you can look across the Charles river and see the campus of both Harvard and MIT. That's 3 top 50 schools within sight of each other. BC, Northeastern, and Tufts are just a few miles away from BU. That's 6 top tier universities all within a few miles of each other.
I thought this was something I'd like to hear the wisdom of the HN crowd on, so I submitted "Ask HN: What do you see as the current non-valley startup hubs?"
Also, Chicago is a major hub for Logistics Tech. I work for a startup that recently moved their head-quarters from NYC to Chicago, due to the talent there.
Northern Virginia for any sort of federal work, though it's not the same situation since the clearance requirements disqualify most non-citizens, people of foreign birth, or just most people at all since most people don't have security clearances. Still fertile ground for people who meet the requirements, though.
Agreed. I think defense startups are different animals though, based on my experience as a contractor in startup size defense contracting firms in the past. I could see different networking circles, different hiring requirements (you mentioned clearances), different software setups (I've worked on teams where using git over ssh not allowed on government networks). I plan the curate the results from this ask into https://github.com/BillBarnhill/AwesomeStartupHubs, and will include defense hubs there too.
>>> real estate prices (though I read these are coming down a bit)
That's not really the case. It's people moving out of SF. The Bay Area (and surrounding suburbs) real estate market is hotter than ever. Just had a friend move there and finding a place to buy is basically you willing to bid over asking price.
This is happening in Seattle. You can maybe buy a small condo downtown or on Capitol Hill for a deal right now. But as Seattle is a city of neighborhoods, if you want a house, you're paying 200k over asking price against 10-20 offers right now.
There are a number of hubs in the country now, with most outside the valley focusing on one or more niches. Some of these are:
- Nanotechnology in Boston and Middlesex-essex, MA
- Healthcare Boston, New York City, and the Twin Cities of Minnesota. Big investments though are being made in Kansas, Ohio, Texas, and Pennsylvania
- SaaS in Austin,TX
- Education in Boston
- Fintech in New York City