[40acres]

This is the cycle of Silicon Valley at play, and an example why despite the Exodus of many entrepreneurs and engineers SV is still the leader in software based start ups.

Take the "PayPal mafia" for instance, out of one successful company spawned others -- SpaceX, LinkedIn, Facebook (via investment cash). These companies will spawn others, so on and so forth.

It's a cycle that feeds upon itself and has been a successful model, but it does have major flaws due to "hardcoded" pattern recognition.

[hn_throwaway_99]

One thing I'd like to highlight is that this cycle is most definitely impossible in any locale with enforceable non-competes and non-solicits.

For example, Texas loves to tout its "business friendly" atmosphere, but I have personally seen people get sued over non-competes and, much worse, non-solicits. Meanwhile, see what's happening in California: https://www.shrm.org/resourcesandtools/legal-and-compliance/...

[brogrammernot]

It’s worth mentioning there’s a selection effect that takes place where the companies mentioned are successful, so the employees have more cash on hand usually to make the jump to their own venture without the normal risk attached. (E.g. - most should be able to float their own finances for 12-24 months without needing to take money out of cash flow)

I have a couple buddies who have started their own thing out of Uber and they’re doing well. The issue I see is it’s going to be pockets of companies around the gig sharing economy for Uber and similar items in rental/real estate for AirBnB.

Employees of both companies have solved some really tricky problems, and they know they can use their experience to solve another set of problems + make it easier to raise money for their venture.

Also - I do appreciate you qualified your post with SV being the lead in software companies. I think that’s still true and SV will be the lead for a long time but other cities will be cheaper + you don’t need to be in SV to find great talent anymore and you don’t need to be there to raise good capital. If you have an idea that’s solid and a decent team you’ll be able to find fundraising but it’ll be interesting to see if software stays in SV and we see the software related but more physical goods startups relocate out of SV.

SaaS businesses are so much less capital intensive than hard goods based businesses so I’d imagine those companies don’t start in SV so they can has less expenditures in areas that don’t matter.

[chii]

> It's a cycle that feeds upon itself and has been a successful model

you just don't hear about the failures out there. I bet there's much more failures than there are successes.

If it weren't, banks would've all lent out money to startups!

[thereisnospork]

> you just don't hear about the failures out there. I bet there's much more failures than there are successes.

Sure there are, but a few successes can make up for a lot of failures. Ycombinator, for instance, has been doing its thing for quite a while now and appears to be doing quite well.[1]

[1]Not personally having looked into their financials