The hype around “Silicon Valley – no longer the place to be!” seems to be everywhere in some form or another nowadays. Whether it’s in the news or some high profile former valley exec (who, by the way, probably loved the valley at some point because it helped them get mega-rich!), they are all touting the challenges associated with doing business not only in the valley but California too – and, in some cases, doing business in the USA in general! Fair argument… let’s see if we can break this down…
Doing Business in America…
It’s clearly evident that America’s ‘free market system’ isn’t what it once used to be. With recent turmoil in the financial sectors, corporate scandals, and overall poor government oversight (or lack of keeping up), it’s no wonder why new regulations are weighing down our economic progression. Add issues involving immigrant visa (H1B) availability and layer on the reverse brain drain phenomenon, and it’s clear – doing business in America is certainly challenging. Granted, there has been recent steps taken to move things forward (e.g. Startup Visa, enhanced financial regulations, etc) but like anything new, progress has its kinks that have to be worked out and, more importantly, yet to be discovered. That said, the irony, despite all of all these challenges and more, is that the world loves to do business in (and with) America because of the opportunities it affords to so many to take that chance and live the “American Dream”.
Doing Business in California… yeah, this one’s easy!
- High-unemployment (12%)
- Expensive real estate (median price for home in CA – ~$380K, in Silicon Valley – ~$529K based on comps)
- Tremendous debt obligation (close to $72B in long-term bonds outstanding and $25B budget shortfall which will continue to climb if unemployment isn’t lowered)
- Not employer friendly!
- Great weather though!
Doing Business in Silicon Valley…
Ahh… the valley. Home to some of the greatest companies in the world – the who’s who – Apple, Intel, Oracle, Facebook, Zynga, Twitter, Zoovee Ventures (that’s my company and yes, that was a shameless plug!), and countless other start-ups that are on the verge of becoming a household name. Regardless, challenges do exist. To start, look at all the issues I just pointed out about CA (to be fair, other States have issues too). Then, couple that with issues associated with America (which, to some extent, affect every state!) including immigration (check out this recent video by Tom Brokaw). Finally, look around – a lot of people doing the same thing, which leads me to ask – is the only reason why people are saying the valley is no longer the place to be because it has been replicated? Could that be it? Take a look:
Location: At one point, the valley was the de-facto place for innovation and entrepreneurship. Now, check out Silicon Alley in New York. Add the start-up scenes in LA, Boston, and DC and you’ve got ideas brewing in all corners of the US.
Venture Capital: a subject near and dear to my heart… true, the industry itself is going through some major turmoil (which I will discuss in a forthcoming blog post). However, there is no shortage of venture capitalists (including [super] Angels) or available money across this country – no longer just in the valley.
Talent: “Wanted – UX Engineer” – good luck! They are working on their own start-up or working for Facebook, Zynga, and numerous other tech companies willing to bid for their talent! More importantly, because tech hubs are popping up all over the country, the engineers may no longer need to leave where they currently are to be involved in the “hot new thing”.
Start-up Incubators: In 2005, there was YCombinator. Today, there is 500 Startups (big ups to Dave McClure!), Founder Institute, and PlugandPlay Tech Center to name just a few. And there are even more across the country including TechStars (props to Brad Feld!)
While I can’t pinpoint just one reason, it’s fair to say these are valid points but the valley is still the valley and it’s a great place to be! Whether it’s the buzz of the people, the intellectual capital (or the weather) – this is birthplace of our modern digital lives and it’s capable of taking a few bumps along the way. So, with that, I leave you with… “Often imitated but never duplicated, Silicon Valley is here to stay! Ya heard!”