The Google speaker pulled out a droid phone, and is showing how Google Buzz will publish your location based on GPS should you desire. 7 mins ago
« Meet Forrester’s Social Computing Analyst Team
Four Social Media Questions You Must Answer During an Economic Downturn »
Comments

The Silicon Valley Transplant CEO

Categories: Funding, VCs, Web IndustryPosted on October 6th, 2008

I’m extremely busy these past few weeks, and you’ve noticed a slow down in my posting (have you met our other analysts?), so I’m going to do a series of short blog posts, unlike my longer meaty posts.

I met with Ali Partovi, CEO of iLike today, who told me about a recent trend of what I call “Transplant CEOs” that have addresses in Silicon Valley, are often here for meetings, but their company is located in other tech hubs like Seattle, Portland, Texas, Canada and beyond. Why this pseudo address? two reasons:

1) Running a company in silicon valley is expensive, talent tends to be flighty, and cost of living is high. In other cities, take Seattle for example there’s only a handful of web companies, keeping churn to a minimum.

2) Clients, investors, and prospects tend to want their leaders to be connected to silicon valley so having the CEO in the area makes sense, even if he or she just has a second house here.

It’s amazing that even in this day an age of the digital natives, that location still is important. Well for some this isn’t anything new, way back in 2006 (I know many of you weren’t even born then) the NYTimes had a article showing that most startups had to be 20 minutes driving distance from VCs.

Share This Post:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Technorati
  • LinkedIn
  • FriendFeed
  • StumbleUpon
  • Twitter

This entry was posted on Monday, October 6th, 2008 at 1:06 pm and is filed under Funding, VCs, Web Industry. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Comments
  • Lyle
    It's also common that startups get created and gain traction in these other locations, then get funded and eventually need another CEO to take it to the next stage. It's likely that the new CEO will be found in the valley just because there are more candidates out here.
  • Most of the world's tech press is located here too, so if you want PR you've gotta be here or visit often. Mike Arrington has a crew around the world, but there's nothing like getting Mike to write about your company.
  • Rebecca Caroe
    True enough. There's a lot of power in building a business using face to face time. My investment in a trip to the Valley, San Francisco and LA in August is beginning to pay off with work passing back and forth.

    Location does matter - but it isn't the *only* thing that matters. It is possible to sidestep for a while - but there's no substitute to face to face.
  • Anon
    It's a double-edged sword.

    There's a lot of tech success happening outside the valley that simply goes unreported. If you want buzz and hype (and even some spin), having Arrington at your side can be a useful tool. But it's really dependent on your qualification for success.

    Being within 20 minutes drive from VCs is only good if you actually want VC-funding. There's a good case to made for not having or needing VC funding.

    Mark Cuban has a quotes that he shared with Arrington at the recent TechCrunch50:
    "I would not invest in your company if come to me with an exit strategy, I want a cash in pocket strategy"

    Honestly, I think the Valley is its own little self-sustaining bubble. There's definitely a benefit to having connections there, but there's not necessarily a lot of benefit of paying for the talent there. The same 100k goes a lot further in the midwest than it does in the valley.
  • Joel C
    It is not the press (or pseudo press like Scoble) that attracts companies to SV. It is money (VCs) and people (engineers, etc).

    I would argue that people like Scoble are a detriment to the overall technology environment. Instead of companies producing quality products/solutions, many get caught up in the hype of needing to be picked up by the Scobles and Techcrunches of the world.
  • Very interesting, though probably not that surprising if you break it down. At the end of the day, most of us still like to have something tangible to show for the money we spend. VCs are no different.

    As much as the money attracts the businesses, I'm sure the money also to an extent demands that the businesses be local (at least in physical location) to ensure accountability.
blog comments powered by Disqus
site design by studionashvegas proudly powered by WordPress