[yourapostasy]

It isn't cost of office space people are pointing out though, but cost of residential space. At least 30%, and more commonly 50% in SV/SF, of your company's salary compensation goes out to residential shelter payments. That's the low-hanging fruit to address if you want to reduce employee salaries.

Especially for a startup in like a stealth stage where the initial talent pool is already selected, and you don't really need all the touted soft benefits of the SV talent ecosystem when you are head-down in secretive development, it's advantageous to stay out of the high living expense metro areas. Living in flyover country during that period with the fully-communicated intent to the team that you will move to SV/high-COL-metro-area once you reach a specific level of financial success with specific commensurate salary adjustments for them, yields 15%+ salary cost savings from residential shelter cost differentials alone (plus other cost of living adjustments on top of that), and lets your initial employees plan ahead life events.

Now that startups are increasingly tapping the Millenial generation cohort for their talent, who statistically are already more indebted at their stage of life than previous generations, starting up in a very low cost of living area can be a bigger selling point for recruiting.