[sdiwakar]

The major difference I see between starting a company somewhere in the USA versus outside of the US (at least from my sheltered Australian perspective) is access to an engaged market.

Not to mention that the risk culture outside of the US is very different to what most American born entrepreneurs appreciate.

So while starting a company outside of a US tech-hub is definitely possible (and makes sense for many things) a web-startup gains some value from being surrounded by other complementary startups. It seems to spawn a culture whereby engineers at one firm are friends with engineers at another - allowing natural partnerships to form. Silicon Valley seems to attractive like people, accelerating the process.

In Australia, software engineers are hard to find and at least in Sydney - the best engineers get absorbed by the likes of the banks, Google, Atlassian et al.

Summing up, while its great that you can pull of starting in Philly (or anywhere else) - its probably still easier to start a company in Silicon Valley because of its start-up gravitational pull.