Entrepreneurship is a rewarding but difficult journey. Entrepreneurs and investors alike are drawn to places where we can be surrounded by others who value what we give our time and energy to, but assuming there is one place where innovation abounds is harmful to the startup ecosystem.
As bi-coastal investors, we love the valley and the integral part it plays in ecosystem of innovation. It is a target/hunter-rich environment with access to a large talent pool. There’s no denying that there are benefits of being part of the valley, not least of which is the tendency of large companies to “shop local” in terms of acquisitions. But, much like Kevin Kelly’s viral post, You Are Not Late, assuming there is only one physical place where entrepreneurship abounds is akin to believing there’s only one place in time that’s optimal for starting a business: it’s just not true.
Here are four reasons to build something right where you are:
1. You already have access to a vibrant startup community.
Now, more than ever, there are places to find support, encouragement, ideas--and even advice--virtually. While there is no replacement for relationships in the physical world, founders and investors alike are sharing insights into how to navigate the ups and downs of starting and running a successful business.
Here are a just a few of the conversations I’ve come across recently that do one or more of these things:
- What should you value more: your users or growth? Dark Side of the Curve
- How do you hire the right people? Weird Hiring Tactics From Three Killer Startups
- Why didn’t it work? The Post-Mortem on 76 Startups
- How to deal with depression: Entrepreneurial Life Shouldn't Be This Way--Should It?
- Should I keep going? Life in the Trough of Sorrow
- How do I get more users? There Are Only a Few Ways to Scale User Growth: Here's the List
- How do I find out what my customers really want? What Not to Ask
The world is getting smaller and there is a vibrant community unlimited by a physical place -- right at your fingertips.
2. If you wait until you get to "Silicon Valley," you'll be too late.
Waiting to be at the “right place at the right time”, whether literally or figuratively, is the wrong approach. It is like saying that the only business worth starting is a unicorn (or an investment with a billion dollar exit). While some VC firms have concerned themselves with finding these one-in-a-million opportunities, many VC firms understand that there's tremendous value in investing in an idea and team and helping them become as successful as they can be. At Avalon, we have a long history of investing in early stage companies with great success, many with tremendous results. Recent research by Correlation Ventures and others shows that west coast and east cost companies generated similar VC returns, despite different entry and exit valuations.
On the East Coast, the data shows lower entry valuations and it takes less capital to get to exit, but lower exit values on average. On the West Coast, you have higher entry valuations but the exits occur higher average valuations. Bottom line? Both can be pursued with great success.
Don’t concern yourself with being in the right place or starting a billion-dollar business. Start solving a real problem right where you are in an unorthodox way and exciting things will follow. If down the road a move is the best way to continue to grow your business, that will become evident.
3. Building a company where you are will encourage experienced persons of interest to come to you.
There’s nothing as harmful as dispersing bad advice. Too many VCs, advisors and even founders bullrush their way into a company’s procedures, ripping a page out of another business' playbook. What works for one company doesn’t work for every company, and too many inexperienced voices can cause chaos and confusion.
It’s part of why I am so passionate about helping founders build an effective board. It's a tremendously effective resource when you remember not to let the inmates run the prison. Ultimately, the founder needs to own the decisions and the decisions of the board. When you allow this space to get noisy, it can be hard to make sense of the conversation--let alone decide what to do. You need to be very choosy about the voices and opinions that influence you.
4. Innovation needs diversity.
Confirmation bias, leading questions, cultural assumptions--these are all drawbacks of a community that is too homogeneous. Especially in light of what many have called a “frothy” technology market, it is of additional importance to be aware of what’s going on outside of the startup bubble.
TechCrunch recently wrote about the VP of Devil’s Advocacy, an office that requires dissention when too many people agree. This problem occurs when founders are too heads down into the product, but how much more when we remove ourselves from the real world and fall prey to groupthink.
Can we truly create effectual products and services if we don’t understand the issues and problems firsthand?
As a bi-coastal investor, we have seen the benefit of growing a business right where it is. Silicon Valley is a place we get excited about, invest in, and that has done tremendous things for the startup ecosystem. But if you start something right now and build it where you are, you will have taken the first step on the road to success.