Location matters for your startup

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18 months ago I relocated from my home town of Glasgow, to London, just 400 miles away. An important reason for the move was because I had just started working on my new startup, Teamly, and I know that location matters, even when running an internet business. Don’t kid yourself otherwise, your chance of success is seriously improved when you’re in a startup hub.

18 months later and moving to London has proved to be a smart move, for all the expected reasons, as well as  the unexpected recognition by the UK Government of London’s startups with the launch a year ago of “TechCity“.

Y-Combinator partner Paul Graham recently wrote an essay, “Why startup hubs work“:

If you’re in a startup hub, unexpected good things will probably happen to you, especially if you deserve them.  

And it’s not just the increased likelihood of serendipity, but to do your best work, who you hang around with matters.

Jim Rohn said:

“You are the average of the five people you spend the most time with.”

London VC Nic Brisbourne blogged about the need to be around the right people:
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All creatives, including entrepreneurs, need to hang out with others in order to do the best work, and so creatives of different types congregate in hot spots for their activity.  For tech entrepreneurs that is Silicon Valley and to a lesser (but increasing) extent London, New York, Berlin and Tel Aviv.

Hanging out with likeminded people is only possible when they are nearby and accessible.

What better way to get to know people than to have coffee with them? VC Mark Suster blogged onWhy you need to take 50 coffee meetings. He says whether hiring (or being hired), building rapport with journalists, raising money or understanding customer needs, you need to get out of the building and meet people face-to-face. If you’re not in the right location you could probably still have your 50 meetings, but would you be meeting the right people?

The quantity and quality of meetings – whether planned or by chance – will be influenced by what Brad Feld callsEntrepreneurial Density.

Following his formula, I’ve calculated the entrepreneurial density of some of the top startup cities, using Startup Digest subscriber numbers as an inexact, but best guess at the size of the startup community, divided by the general population in the metro area, using figures from Wikipedia . (Then I’ve multiplied by 10,000 to get an integer).

  • Boulder: 52
  • San Francisco: 30
  • Austin: 15
  • Boston: 10
  • Seattle: 8
  • New York: 6
  • Washington DC: 6
  • Berlin: 5
  • London: 4
  • Chicago: 3
  • Los Angeles: 3
  • Paris: 2
Paul Graham again:

The problem is not that most towns kill startups. It’s that death is the default for startups, and most towns don’t save them. Instead of thinking of most places as being sprayed with startupicide, it’s more accurate to think of startups as all being poisoned, and a few places being sprayed with the antidote.

Finally, here’s a few examples from my last trip to Silicon Valley:

1. At TechCrunch Disrupt I (literally) bumped into the founder of a long-established and very successful enterprise software startup, and ended up talking to him for an hour, and getting some great advice. He wasn’t even attending Disrupt, he’d come along for his buddy’s book launch. (His buddy was Eric Ries!).

2. I got an intro from a Scottish ex-pat, to a Palo Alto VC, who in turn connected me with one of Google’s Mountain View engineers responsible who worked on Google Apps from the start. Again, a long conversation and great advice followed.

3. Another entrepreneur friend tweeted an entrepreneur, and suggested coffee. That coffee meeting resulted in an introduction to Matt Mullenweg of WordPress, a really great intro for my friend given what his start is doing.

4. I was parking my rental car on University Avenue, Palo Alto when I looked up and saw an entrepreneur I know from London walking down the street. So I quickly jumped out the car and ran over to say hi. The guy he was with turned out to be James Hong, founder of Hot or Not.

Thanks for reading, I’d love to know your thoughts. Have you relocated, if so why? Would you NOT relocate, if so, why not? 

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39 Responses to Location matters for your startup

  1. I’ve not relocated and in practice can’t – not without funding or a large enough revenue stream to justify the increased costs and family disruption. and if we had funding and/or the large enough revenue stream, what would be the need to relocate?

    Having said that, I try to regularly attend start-up events for the learning opportunities and the serendipity and have met some interesting people there. On the other hand I’ve taken a meeting with a successful entrepreneur in a rural hotel reception, so serendipity, like learning opportunities, happens everywhere!

    And on entrepreneurial density, I’ve done the calculation and where I live scores 22. And if it turns out there is another startup person here, it’d be 44 :)

  2. So what do you suggest for Eastern Europe city entrepreneurs?

    • I know a bunch of guys in London from Eastern Europe who moved here, it’s not difficult, you don’t need a visa, you just need to work out how you can afford to live in London!

      • Part-time-gigolo says:

        Part-time straight gigolo?Doesn’t require a lot of time,so you can study/work hustle 23 hours a day,sometimes 22.Just have to find a geek niche sophisticated clientele
        Scott,I’d like to know where can I see some stats of which language/framework is prevalent in London?
        RoR vs Django or Pylons?What do you think?Also do you know of any communities for those frameworks?
        The reason I’m asking is that in the beginning in order to find a cofounder,the bigger the pool the better,same with recruiting.
        Would you suggest screening for potential cofounders at networking events like opencoffeemeetup or just hanging around uni campuses and meeting new people?
        You can write back here or to the email I’ve submitted.Thank you.Great post

  3. I considered briefly moving to Silicon Valley many years ago but am glad that I did not. The calculation was simple: My then fiance would not have become my, still long suffering, wife!

    But as it turns out it was a great thing for our startup. Whilst we had two cofounders over there and two here, it turned out that it was a lot easier attracting the talent we needed here and a nightmare over there.

    At exit there were 5 in Silicon Valley, 25 in Horsham and another 6 in Houston, Hong Kong and The Netherlands (branch offices of the UK office).

    In case you are wondering Horsham (entrepreneurial density = zippo) is halfway between London (where I lived) and Brighton (where my cofounder lived).

    Having said that we did bootstrap so never needed the access to capital that is so much higher in Silicon Valley. For me that’s the big reason to be in Silicon Valley rather than the entrepreneurial density.

    Great post.

  4. I’m also from Glasgow and I’ve been thinking (and working) for a while now about starting up on my own. I feel that when you are living (and to an extent immersed) in a city, it can be hard to see the problems you may experience. I had always believed that it was possible to create the “next big thing” in Glasgow, or even Scotland. The often touted “Scotland created all these things in the past so why can’t it now” in reality just doesn’t add up to mean anything. History is after all history.

    I’m not sure I now believe the next big thing is possible in Scotland – apart from in that little bit in the back of my head that doesn’t want to let go. After visiting Silicon Valley last year it became apparently how much harder you have to work for the same level of return (on your time). It’s easy to then say I will have to work even harder but it just doesn’t work like that. No amount of effort can throw opportunities towards you in the same way that living in The Valley will. It was disheartening – though really it was just confirming what I suppose I already knew.

    Despite this, what can you do? Some things in life are just bound by other priorities, including location. The only thing you can say is you just have to give it a shot from wherever you happen to be sitting.

    • Gregg, sorry, I hope this hasn’t disheartened you further, that wasn’t the intention.

      So don’t worry if you really can’t move, you can of course build something great anywhere… so give it a shot. Make sure you subscribe to the Scotland Startup Digest and attend the Rookie Oven events as well.

      • Hi Scott. Don’t worry, you didn’t dishearten me! I’ve never let reality get in the way of things :-)

        That said, I would encourage any Scottish entrepreneurs to try to visit The Valley. YCombinator Startup School last year was a great experience if nothing else.

      • Absolutely agree. Get on a plane and go visit! It’s only about 500 for a return flight. Definitely money well spent.

  5. michaelmior says:

    Toronto seems notably absent from this list.

  6. bfeld says:

    Neat calculation. It would be super useful to do this same calc with a number of other indicators and see how they correlate. I’ll use this for inspiration to do this!

    • Thanks for inspiring me with your blogs! And if I can help at all with this exercise, let me know.

      So what do you think of Boulder as the most startup entrepreneur dense city on the planet? :)

      • As a start-up in Boulder (and former @Techstars summer staffer) I’m familiar with the scene. It’s all about community, everyone here helps everyone else, those that have ‘made it’ open their doors & offer their experience to those trying to.

        I’m writing this @TradaCodeSpace a free, open to the public work space graciously sponsored by @nielr1 & @trada.

  7. Awesome post Scott and so true. That’s why every couple of weeks I’m on a plane to Boston..! Yes the office is based in Scotland, but all those great biotech entrepreneurs are over in Beantown – so it makes sense to hope on a plane and go join them. Serendipity is a wonderful thing…And never ceases to amaze me how it works when you consciously get to hang out with likeminded people.

  8. Candemir Orsan says:

    Good post. A reply to your closing question:

    I am moving to Boulder in a week. In addition to the amazing start-up community this town has created, the other top reason for my move is simply that’s where I want to live.

    IMO basing a re-location decision purely based on the community may backfire. I really believe in working at a location where you love to live. There is a priceless benefit in being able to say “I love it here” when you are seeing the sky for the first time after a 72hr fire drill.

    What do others think?

  9. As a Brit living in Silicon Valley, I found the geography and naming of cities there surprising.

    Before I went there I had assumed San Francisco was in Silicon Valley and it was the biggest city – both untrue. While San Francisco is considered to part of the “Silicon Valley” scene – it’s not actually in the valley. And San Jose has a larger population.

    And there are a whole set of tiny “cities” there: Mountain View, Palo Alto, Cupertino, Sunnyvale, Los Altos… In the UK, we’d call them town or suburbs – they’re all smaller than many London boroughs. But according to US Postal Service they’re all cities, so that’s probably what’s in your database.

    If you calculated a density number for Silicon Valley, I’m sure it would be higher than Colorado or San Francisco.

    • To be clear, I used the number of subscribers for the silicon valley startup digest, and compared that with the population for the entire SF bay metro area.

  10. Anonymous says:

    Where does Portland fall in your list?

  11. Rick C says:

    What a great metric, thanks so much Scott! How about San Diego?

  12. Great post Scott! What about Oslo?

  13. [...] blogged just last week about why I believe location matters to any startup, and while I still think London is a good place to be for many, for me, Silicon Valley is where I [...]

  14. [...] TechMeetup are invaluable in Scotland. Scott Allison, CEO of Teamly, recently blogged on why “Location Matters for Your Startup“, in the post Scott shows how the right location will provided a higher density of the people [...]

  15. brisbourne says:

    Hi Scott – nice post, and tks for the mention. Within big cities the trick is to try and reduce the denominator by concentrating the startup activity on one area – e.g. London’s Tech City, or even San Francisco’s SOMA.

    That way you get the chance meetings and easy get togethers which are the key. It seems that every time I go to Old Street now I bump into one or two people I know.

  16. Part-time-gigolo says:

    While,I wouldn’t say that location is an irrelevant factor,from what I follow a lot of the “hot”,”up-and-coming”,”emerging” hubs is hardly more than unjustified noice,regardless lack of substance.

    The news sites have to pump out new content,from time to time they write about a city that has a few startups,some other sites,due to lack of content straight up copy or reframe the article.After enough of media coverage,the talented people would believe something is actually happenning there,relocate,most will fail,some will make it and there will be even more noise,this time maybe relevant.

    But the fact is that there’s first far too much noise for nothing,which causes startups and tech people to relocate,not vice-versa.

    I’ve been to Berlin and it’s definitely one of the coolest cities I’ve been to.However,it’s startup scene is tremendously overhyped lately.Articles in NYTimes:Go to Berlin to start a startup,because.. the nightlife is legendary haha.By that way of thinking,let’s all relocate to Ibiza-partying and doing drugs is a cultural thing there,even amongst people who’ve never taken drugs before.How awesome is that..?

  17. [...] Location matters for your startupSilicon Valley is not the only home for startups, they can be found all over the world. A few succeed in isolation, but those working in clusters are far more likely to succeed because the talent is attracted to those areas and proximity leads to startups helping each other. Scott Allison shares his reasons for relocating to London and density of Startup Digest readers by city as a surrogate metric for startup clusters.TweetLocation Does Matter for a Startup http://bit.ly/nPcHlj #Startup [...]

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