This week's poll relates to a somewhat controversial NY Times article over the weekend, which suggested that Silicon Valley is more likely to create innovative and successful tech products than elsewhere in the world. Obviously Silicon Valley has a lot going for it - it's a hub for smart Web technologists, it's swimming in VC money right now, the universities there provide a steady supply of talent, and of course the history and 'myth' of Silicon Valley is well known. So yes, the chances for success are higher for a web startup living in Silicon Valley. But does that make Silicon Valley startups inherently more innovative? This article says yes, and what's more claims that "where you live often trumps who you are."
Om Malik has already written a good response, pointing out that Skype was a Nordic creation. And he links to a piece by Vinnie Mirchandani, who rightly says that "the Valley trails other global centers when it comes to many "next-gen" areas", such as mobile and enterprise software.
Like Vinnie, I think the real value of Silicon Valley is in commercializing innovation. Indeed this is something I mentioned recently in an interview I did with a New Zealand newspaper - I said that kiwis are known for their innovation and so there's no reason innovative web startups can't be created here. But I noted that to succeed on a large global scale, kiwis will probably need to take the pilgrimage to Silicon Valley. And it's not just for the VC money - the networking is just as important.
So to this week's poll, do you think Web innovation is dependent on location?
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Any real estate left in Timbuktu? I want it!!! :)
Seriously, speaking from my basement in NJ. No way, it does not matter, in fact, its good to be outside of the valley.
Alex
Posted by: Alex Iskold | February 12, 2007 5:30 PM
I think it matters...but for the completely wrong reasons. So many new startups think they need loft space in downtown San Francisco and $10 million in venture capital to be able to create anything. These people are so caught up in the process that a VERY large portion of the time they never even product a quality product. And what's worse is venture capitalists frequently look at things like this to decide on what to fund.
Posted by: Josh P | February 12, 2007 5:51 PM
i live in san francisco; and just by being here; and being in the environment; i almost automatically get to learn how things are donw faster than, say, someone in new york.
for example, i know how iTunes store caches on the backend; i know what a mess bittorrent is, and the state of many other companies and their technologies.
Posted by: lemon obrien | February 12, 2007 6:57 PM
Silicon Valley does not have a monopoly on smart people. Innovation can happen anywhere. Why not? ICQ came out of Israel. Skype and Kazaa out of Sweden. Amazon came out of Seattle. Facebook was originally started in Boston (Harvard). 37Signals and Threadless are in Chicago.
It might be easier to get funding in the Valley, as you say, but you can create a compelling product anywhere. And once you have a good product, that people want to use, the funding will come where ever you are. (There isn't a [successful] entrepreneur in the world who would say, "I think you're the next YouTube, but I'm going to pass on the investment because you're located in Miami.")
Posted by: Josh | February 12, 2007 8:13 PM
thanks for linking to my post...
re California, hope we do not see what I wrote below again
http://dealarchitect.typepad.com/deal_architect/2005/05/californization.html
Posted by: vinnie mirchandani | February 12, 2007 8:22 PM
I agree with your vision that innovation can happen anywhere, but creating a successful company from that is much easier in Silicon Valley, due to access to VCs, cheap money in general, networking and easy access to talent.
But it is Silicon Valley today and can be London, Shanghai or Barcelona in a few years, since most of the innovators in Silicon Valley actually moved there looking for those factors, and they will move easily anywhere else where they can succeed and be able to spend there money.
I hope it will be Barcelona, because we are already there .... best regards from http://eyeOS.org
Posted by: hombrelobo | February 12, 2007 11:15 PM
Anybody can do anything! No matter where they are or what they've got.
Posted by: Theo Tonca | February 13, 2007 12:13 AM
It's all about the funding.
Innovation can happen anywhere, as many have said above; actually, I think serious, revolutionary stuff is more likely to come from elsewhere, because Silicon Valley is its own self-feeding ecosystem. If you're not subject to that environment, you're more likely to think with different rules.
However, the key is actually getting noticed, and then getting money. If you have something truly disruptive, and more importantly viral, like Skype was, it's not going to matter. But if you have a more slow-burn product that might require advertising, or some small-scale funding in order to bring in programmers etc, you're much more likely to get it off the ground if you bring it to the Valley.
My company sits in Oxford, England, and although we've graciously been discussed here on Read/Write Web twice, and in various other places (most notably on Marc Canter's blog recently), we're still advised by everyone involved with funding and web business we talk to to move to the San Francisco area. The traditional web 2.0 investment organisations don't generally want to give you money if they can't walk down the street to talk to you, and the investment companies elsewhere are still by and large wary because of the first bubble.
So innovators elsewhere are forced to bootstrap, possibly use programmers in places like Estonia or India where they trade in the ability to have personal oversight over their technical team for cost, and eat way more Ramen for longer than their US counterparts.
Posted by: Ben Werdmuller | February 13, 2007 1:57 AM
No way, innovation comes from people not places.
I wonder how many so called Valley successes were actually invented developed elsewhere and then started up there.
I am from the UK and I would kill for an area like this in the UK.
Posted by: Darren Stuart | February 13, 2007 3:41 AM
I think there's a definite advantage to being in an area where there's easy access to lots of people who are working on innovative ideas, access to funding, and access to talent. Having a network of people who are working on innovative ideas definitely helps spark additional innovation. However, I don't think that's limited to SV.
In Los Angeles, we have lots of innovation happening with a vibrant Angel community, lots of funding sources, a big media community, lots going on in wireless, social networking, healthcare, green, etc. While we definitely have challenges with geography (its too spread out for easy networking), I think its easy to underestimate what's happening in other geographies.
As a side note, I'm not sure about technology talent - I know that my company is working on lots of new, innovative start-ups that most people would love to work on and there is definitely a challenge finding good, smart technical people at all levels in Los Angeles.
Posted by: Tony Karrer | February 13, 2007 6:08 AM
While I agree that great ideas can come from anywhere, there is an incredible ecosystem in Silicon Valley that is designed to support emerging companies from the earliest seed stage. Capital aside, the sheer amount of resource organized around startups is simply without equal. There are at least a dozen non-profits running programs for startups – from networking events to angel/VC breakfasts. I’d guess there are probably a total of 15-20 events each and every week. Maybe more.
Major law firms compete for your business, with entire groups designed around an emerging technology practice. Multiple banks have complete practices setup around supporting seed and early stage companies – and do things that a regular bank wouldn’t dream of. And the list goes on from there.
None of this guarantees success of course, but it sure helps accelerate a company with a good idea. Significantly.
Posted by: Aaron Mann | February 13, 2007 6:12 AM
Sometimes people do not have a choice, I remember contacting a VC firm about funding and they said that you will need to move to California, preferably Silicon Valley and then only we can consider you.
I guess the point is, that people are forced to move to Silicon Valley because of these reasons too and that in no way means that its the hub as for new and original ideas.
Vikas.
http://www.technacular.com
Posted by: Vikas Sah | February 13, 2007 7:15 AM
Silicon value has the reputation. It has some of the brightest minds all gathered in one place. It also has the support structure in marketing, financing etc. I do think innovation is more likely to succeed coming out of there. However, a good product is always a good product and will likely succeed regardless of location.
Posted by: Adrian keys | February 13, 2007 8:58 AM
Yes it does and here you'll find out why...
http://www.paulgraham.com/siliconvalley.html
Posted by: web 2.0 innovations | February 13, 2007 10:09 AM
I was just about to post that link!
Paul Graham's essay, linked directly above, is the best thing I've read on this subject, and he definitely scoops the Times on this one.
I highly recommend reading it, and in fact, (here's a completely unbiased endorsement) reading his book, Hackers & Painters.
Ah
Posted by: superhelix | February 13, 2007 5:06 PM
The biggest challenge living out of the key hotspots is the lack of networking opportunities that lead to funding and parterships. The latter is the biggest factor: I'm certain my business would do better if I was able to socialise with the heads of ebay, Google and Amazon, as my competitors do. But unless they want to come and visit sunny Sydney regularly (which lets face it, they should!), I will have to make do with socialising with Sydney-based companies, of which there are a much smaller number. And although I could fly over and attend conferences in the US, its not the same as being part of the same community.
That being said, I don't intend for this to be a reason why I fail at starting my business (see my blog) for a chronicle of how my solo Sydney-based business building is going...
Posted by: Leith @ Birth of a Startup | February 13, 2007 6:45 PM
There are a lot of good ideas and highly skilled people in Australia and New Zealand but there is very little venture or angel capital available for start up IT companies. Australian venture capital companies are very conservative and risk adverse.
As a result, US venture capital companies should get better deals by investing more in O/S ventures.
Posted by: Murray | February 13, 2007 10:13 PM
I believe it matters mostly for the commercialization of the product - both in terms of the money and the networking. but another important factor is the marketing. The vast majority of successful internet businesses (in the western world at least) are US based. The US is the biggest market for this. If you win the US market, you have a great advantage for winning the rest of the world. And to succeed in the US, you should have an American identity - especially for customer fronting applications. You have to try to become a part of the popular culture, and this is difficult if you have a foreign identity. B2B is a slightly different thing b/c the buying behavior is different. But still, I think it matters.
Our company is based on Oslo, Norway and Krakow, Poland. We plan to go West for further growth as soon as we get out of the first Private Beta stage.
Posted by: Lars Teigen | February 14, 2007 4:36 AM
YES, YOUR PASSPORT MEANS MORE THAN YOUR TALENT!
Look at example of Million Dollar Homepage, a simplest technology launched by a British student.
Would the same person make a penny with the same idea if he lived in my Ukraine? No, absolutely not!!!
To prove or disprove this, I launched a better,
- BILLION(!) Dollar project Mini-News.com.
Read more at http://Mini-Billion.blogspot.com
Posted by: Mini-News | February 18, 2007 12:02 PM
As a Co-Founder of a new company I am curious to hear;
From any start-ups that moved to receive funding or did they just keep stabbing away at getting funding in their home town, or possibly receive funding from a VC or angel in another town.
From a VC or angel that invested a company outside of their home town.
Posted by: Austin | February 19, 2007 8:06 PM