[tptacek]

A third issue here is that talent is cheaper in (say) MSP than in SJC/SFO. Like, a lot. It's easier to hire and easier to retain. Because locales are sticky, the level of talent available to you is likely to be comparable or better than you'll get in the valley.

Your point about the "general population" is well taken too, especially if you're a company selling to other businesses. Most of the big companies in SFBA, and most of the companies you'll talk to period if you HQ out there, are software companies. Selling software to software companies is hard. Whereas if you HQ in Atlanta, you've Home Depot, UPS, Coca Cola, big banks, and so on.

There is clearly a kind of startup that benefits from being in SFBA so I don't want to sound like I'm saying there's nothing to this "startup hub" thing.

[protagonist_h]

Actually I disagree about your "cheap talent" remark. When you are building a scalable startup, looking for cheap labor is not a good idea since it's a part of "fixed cost" you have. Moreover, you don't need that many developers nowadays to build a startup. You only need a couple really good developers, and you want to either pay them really well or have them as your co-founders. (disclaimer: I'm a programmer myself).

[tptacek]

You're not following. Broadly speaking, better talent costs more money. The more money you have to spend on talent, the better the talent you retain will be. It's not about looking for "cheap labor"; it's about being able to find, recruit, and retain better people.

Think of it as a market inefficiency (albeit one that is difficult to "fix"): the stickiness of people's locales prevents them from maximizing their opportunities and decreases demand for their services in SFBA and increases their supply in (say) MSP.

[protagonist_h]

In other words, you want to hire in places where there's a large pool of good developers, but few employers competing for them. Am I following you now?:)

[tptacek]

Correct.