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Summary:

Facebook CEO Mark Zuckerberg this weekend set the Internet ablaze with his comments that if he started his social network today, he would stay in Boston. I disagree. His being in Silicon Valley and being able to hire the right people contributed to the company’s success.

harvard

Could Facebook could have started in Timbuktu? Okay I am being a bit facetious, but in order to grow up it still would have needed to come to Silicon Valley, despite what what Mark Zuckerberg said this weekend. At the Y Combinator Startup School, the Facebook co-founder and CEO said that if he was starting Facebook now, he would stay in Boston. He is worried that folks in Silicon Valley think too short term and are transaction oriented.

“I knew nothing, so I had to be out here. Facebook would not have worked had I stayed in Boston. But I think that now, knowing more of what I know, I think I might have been able to pull it off. You don’t have to move out here to do this. But it’s not the only place to be. If I were starting now, I would have stayed in Boston. [Silicon Valley] is a little short-term focused and that bothers me.”

It’s no surprise that his comments got a lot of attention. While I certainly agree that the malaise of short-term thinking is quite well spread in the San Francisco Bay Area and is making people myopic, I still disagree with Zuckerberg’s viewpoint. And to be clear, I am not saying Boston or New York or London or Berlin or Tel Aviv or Shanghai are not good for starting your companies. There is nothing I would like more to see than all those cities become even bigger centers of entrepreneurial creativity.

After living in San Francisco for eight years and with many deep and close relationships, I remain ambivalent. I still think of New York as my spiritual home, more so than my actual birthplace. However, when it comes to the technology industry, the San Francisco Bay Area is the place to work and “work it.”

People + Location

There are certain kind of startups – networking companies for example — that benefit from Boston’s locale. Or media companies from being in New York. But Silicon Valley, at least for the next couple of years, has an advantage — and it is not VC money, which people mistakenly identify as Silicon Valley’s edge, or nearness to Stanford. Instead it is a very high concentration of talent and people with varied skills to accelerate and grow startups, especially those on a break-neck trajectory like Facebook was in 2007.

Facebook benefited from being in Silicon Valley because of the intangibles. How many casual conversations with Steve Jobs would Zuckerberg have had if he was not in the Valley? Or how about access to some amazing team members who helped Facebook on the right track?

The fact is that if there are many downsides to Silicon Valley, there are also upsides to this area. And whatever the faults of the Bay Area might be, one cannot argue with the richness of the talent pool. The talent pool for technology is bigger and deeper, mostly because the area known as Silicon Valley has been in business longer and has been attracting more people by the day. It is no different than Hollywood attracting cinematic talent. The bigger the talent pool, the more likely a company is to find folks with highly specialized skills needed to grow a certain kind of company.

I started following Facebook a long time ago — I wrote about them when they were just getting started, when they were hardly a media darling. They got good solid people in quick succession and that in turn put the social network on the right track. The Valley is where Facebook found the likes of Matt Cohler, Owen Van Natta and Jonathan Heiliger — and these are just the more well-known members of the Facebook team. COO Sheryl Sandberg and CTO Bret Taylor are also from around here. Just look at the sheer number of Googlers that Facebook has poached over past few years — try doing that elsewhere!

However, given that Mark Zuckerberg is headed back to Boston and Harvard on what seems like a recruiting effort, that comment makes for a great soundbite, and probably an awesome recruitment tool as well. And on that I wish him the best of luck.

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  1. Excellent post. SF bay area is the best place in the world for technology.

  2. Sillicon Valley is talent pool area and FB team should look for a Long term view or may plan to expand their operation in Sillicon Valley rather than short term

  3. I think Virginia Postrel nailed it back in 1997: Silicon Valley is short-term but resilient. http://dynamist.com/articles-speeches/asap/resilience.html

    1. Nice one to recall. Thanks Kevin.

  4. I think your LA analogy is a good one…but also, Like LA & NYC the ,industry press, marketing organizations and tools are there because of that “talent pool” and history…
    On the same note… I think Mark would have found the same feeling/opinion if he had stayed in Boston. The grass always seems greener… (As a “bohn and bread”..”Nohrth Shoah” guy.. I am Boston to the core..but know my city, it’s politics and business community better than Mark. It’s beautiful but it is also a company town ruled by “academic experts”, cold business and politics. Long term goals/vision here aren’t exactly what he thinks they are.

    1. Thanks for your personal insight there. I appreciate it. I am sure so do our other readers.

  5. I’m not sure if Mark was referring specifically to Boston or merely to the possibility of forming a successful tech company outside of Silicon Valley, but if it’s the former, I think he may have a point.

    I’ve recently attended a couple of conferences and meetups in Boston, and I’ve been amazed at the depth of talent and the truly creative startups that have emerged in the city (like Bocoup), with staff who contribute to leading open-source projects, particularly in Web technologies (e.g. jQuery). While I’ve been away for about 10 years from the city, I have to imagine that this transition did not happen overnight, so I suspect that, had Mark known then what he knows and sees now, he might have been able to grow Facebook in Boston, rather than Silicon Valley.

    1. Based on what I saw of Mark’s talk, he was agreeing with most of what this article says, but just saying the same general statement as Vasken; that there are other communities besides SF that may serve startups very well in many of those same regards.

      I don’t think anyone is questioning SF’s top rank in the list of “Valleys” though.

  6. George Harrison Thursday, November 3, 2011

    Life goes on within you, and without you.

  7. The Zuck quote you highlight — and the thrust of what he said — concurs with your title. Not sure of the purported disagreement.

    What’s probably realistic is this: if Mark both knew then what he knows now, *and had the contacts then that he has now*, indeed he could have taken a whack at Facebook from anywhere. Who am I to slight? But frankly I think contacts trump knowledge. Billions in cash would help too.

    1. Yes and no. I think in hindsight he can make that comment. I disagree that even today he can pull in that kind of talent resources in a non-SV locale. I don’t say companies can’t be built elsewhere, but there is a whole unique set of things that happened for Facebook because of its location.

  8. Zuck’s not alone in his opinion, and there are plenty of startups whose successes bear witness.

    Joel Spolsky, founder of Fog Creek and Stack Overflow, has long been on record that Silicon Valley isn’t the be-all-and-end-all of entrepreneurship. See the first video here, specifically starting at 4:55: http://techcrunch.com/2011/03/13/founder-stories-spolsky-startup/

    And the CEO of Vitrue (where I am the Director of Product Management), recently weighed in on the issue on VentureBeat: http://venturebeat.com/2011/10/31/startups-outside-silicon-valley/

    1. John

      I didn’t at any point say the startups cannot be done outside of Silicon Valley. I am talking in terms of Facebook and in terms of general availability of talent. Point I am making is that companies that are growing at a certain speed and are of a certain kind like Facebook and Google are benefit from being in the “hothouse.” I know there is a startup world outside of Silicon Valley and I am not that obsessed about the SV. However, there are inherent advantages – talent pool being one of the biggest one. IN three years I expect NYC or BErlin to have negated that advantage.

      1. I think it’s important to understand what Mark DID say. He said Facebook would have failed had he not moved to Silicon Valley. The reason? Because he had no idea what he was doing and SV offered the immediate resources to help young, clueless and ambitious entrepreneurs.

        What he did say is that, had he known THEN what he knows now, he would start it in Boston and would be successful. And knowing the huge amount of talent that is in Boston, and knowing what you’re doing…I think he was right on the money.

        The lesson. If you are just starting out and looking to start a company and new to the game, SV is the place to be. If you’ve got the experience and know-how, Boston (because of the huge amount of talent from Harvard, MIT and other local schools) or other locations like NY..is as viable a place as SV…and as Mark pointed out, has a number of upsides versus SV.

      2. Thanks for the reply Om. Sorry if I implied that you’re more hardcore on this issue than you are.

        I think the level and depth (and amount!) of talent to be found sprouting out of places like Georgia Tech shouldn’t be underestimated. Not to mention the (lower) level of resources it takes to satisfy the standard of living for that talent.

        Anyone seriously thinking about the issue will realize that there are trade-offs no matter where you are. For example, in Atlanta we benefit from a robust university community with not only Tech nearby but also Georgia State, Emory, and the Savannah College of Art and Design (SCAD). Not to mention the established corporations that have their own benefits.

        What’s the threshold of age and size for a company to “graduate” from the Valley? Notably, Google lives in old SGI caves, and Facebook is moving to Sun’s former home in Menlo Park. How many venerable, large companies still reside in the Valley? I’m asking out of some ignorance, with Google right there at the top of my browser. Apple is one that comes to mind, but the only one. Perhaps as FB and Google age that impression will change.

        I would wager that most entrepreneurs outside the Valley think about this a lot, because they have to answer the “Why aren’t you in the Valley? Shouldn’t you be in the Valley?” question a lot. Because of that constant refrain, the consensus gets generalized to “every tech startup should be in the Valley”, which it sounds like you would agree is just not true.

  9. There are pluses and minuses to any location. But the thing that makes Silicon Valley unique is the opportunity for interaction with people who can help and support your company. That may be VCs. But it also is engineers, advisors, mentors, accountants, lawyers, etc. that are experienced working with Tech start ups.

  10. Like a lot of the things he says, I believe it reflects his life and him, not the company…almost as if it’s a FaceBook status update.

  11. connectedtraveler Thursday, November 3, 2011

    So there is no talent pool in New England?

    MIT, Harvard, Worcester Poly, Dartmouth, BU, with RPI and U of Rochester not that far away.

    Things change. 15 or so years ago Apple nearly went out of business.

  12. Pooya Kazerouni Friday, November 4, 2011

    OM, he knows that there were no other place on Earth which he could have built Facebook in. He just wants other founders to think like that, so they wouldn’t move to SV and build the next Facebook.

  13. Excellent post Om.

    I agree that the Bay Area has deep technical chops. And that when it started FB choose the right place to make it happen. Boston, even NYC, back then wouldn’t have supported it.

    But in my two+ years moving back to NYC to work with start-ups after a career in LA and SF, I would say that today, even with my partiality for my hometown, the technical resources are here and building daily.

    I do need to quibble slightly that NYC’s core DNA is media. Strong certainly but the heterogeneous and dense population are equally as important. I believe that Tumblr benefited from the broad artistic community and 4Square from the pure density of an on-foot population. Same case can be made for Meet-Up.

    Great post. Just wanted to restate the changes here and to focus a light on the fact that different apps need more than technical resources but cultural depth as well. I think that cultural uniqueness of the coast and here is an important criteria of where to base your company.

    Thanks!

    1. Well said Arnold. You’re a brave man to comment in the vestigial blog comment form.

      I’d like to see an infection of opportunity in all regions. Every moment success hides in concentrated spots is another brilliant product and company lost to communication failure.

  14. Scott Germaise Friday, November 4, 2011

    So I wonder about the following… (sorry, longest blog comment I’ve ever done)…

    * How many tech folks, (from junior front end to db architects to Solr/Hadoop/Mahout/[InsertBuzzTechOfTheDay]), are transplants from NYC / Boston? And how many might want to come home at some point? Maybe some flush with cash. You know, those few who’s stock options resulted in cash as opposed to an interesting story as to why the bathroom is wall papered in stock certificates.

    * Virtual Team Utopia notwithstanding, there’s unquestionably benefits to physical co-location of resources. Anyone who’s managed remote assets within U.S. or overseas can probably tell you “Yes, you can do it and there’s value to it.” But there’s still just something about being really together at a white board. Or for hard core start-ups, the interpersonal commitment that comes from having slept in the server room in winter time because that was the only really warm place in the office. (Been there, done that.) So Detroit for cars, NYC for finance / media, etc. And SV for the BIG ‘net things? Maybe. But maybe not for long. What I love about my trips to SF is that EVERYone gets it. The conversations all get to skip the early intros and go right into depth. Still, it sometimes feels like an echo chamber. More cool for the sake of cool sometimes. NY feels more about getting down to business to at least try to have a a market oriented approach to things. Sure, some stuff will still miss, but I just get a sense that NY tries to be more business case focused.

    * And now… we’re seeing some serious progress in both Boston and NYC for tech. Not just ‘next super-cool-thing-that’s-shiny-but-maybe-not-really-useful’ startups, but core business value in eCommerce, B2B ‘boring’ tools, and yes, of course… media. In NYC, there’s multiple incubators, a reasonably vibrant angel and VC Community, Meetups, and schools and with Bloomberg, a serious government commitment to encourage it all. Perhaps even a bit more art&design-meets-tech, media-meets-tech, finance-meets-tech, and so on than out west. And for all its problems, perhaps an easier to commute within city, with four seasons, and though expensive, maybe even more sensible than SF in some venues.

    So to make a long story even longer… here’s the question again… I wonder how many of these transplants would want to come home? How many could be reverse relocation recruited. I wonder for the next Facebook trajectory like thing if it needs to be in the Valley. Or if NYC is almost ready. (Perhaps not quite, but almost.)

    * I don’t know if we’re in Internet 2.5, 3.0, 3.25a Build 02345 or whatever. But it seems that we’re only just nearing “the end of the beginning.” And I thing the beginning of the middle is going to look differently. I think the places where tech needs to be will draw tech to it, rather than tech alone being the magnet.

  15. suckerburg did not do anything but steal and market ivy league exclusivity.
    i still do not see a single original idea from the man

  16. I believe Zuck’s statement may be a little deeper within his own mind than most of us are thinking. I may be wrong, but when he said, “now, knowing more of what I know”; I think he meant, “I would have designed in all of those features in the beginning; and it would have been an instant hit now, knowing more of what I know, now.” He needed the valley for his personal learning curve more than he needed it for his company. The question he needs to be asking now is, “How do I not become Mysapce….”

  17. Ugh, this sentiment annoys me to no end. Much love for you, Om, but I think that along with a lot of the tech press, you’re too close to the bubble to see how ridiculous it is. The Internet is everywhere, even Iowa, and to suggest that you need to be there to have a shot at a successful tech start up is insane.

    I felt the same way about Seattle to some degree, but now that I’ve left it, I’ve found not only that great startups are scattered all over the world, but many of them also recruit globally to form a global, remote, workforce. And they’re winning.

    Don’t let a small handful of super-mega-winning companies overshadow the countless failures and wasted money in the valley. Not to mention that VC and a big “funding event” have nothing to do with what most people consider a successful business.

  18. near-term ism lives in Boston also. had yahoo approached with a $100M offer and FB had Boston VCs, they would have jumped on it in a heartbeat. A $100M exit is a dream exit for Boston mindsets

  19. Tatsuo.S (EN/FR/JP) Friday, November 18, 2011

    Guess am walking on different path…. – Sorry, Mark. Facebook needed Silicon Valley http://t.co/uZR0nTwu

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