Why You Need to be in Silicon Valley

For years I didn’t believe this. I thought that you could take advantage of the benefits of Boston, Seattle, NY, Austin – cheaper talent, no echo chamber, local Universities, etc.. But I give up. I found myself telling an entrepreneur why he had to be in Silicon Valley if he wanted to succeed. Most of my points are about Consumer Internet businesses…

I won’t belabor the obvious reasons – the Investors are here, the best engineers and entrepreneurs self-select and come here, Stanford and Berkeley, yadda yadda.

Instead, here are some points that you may not have considered:

- Especially on the Consumer Internet, modern businesses are becoming winner-take-all (thanks to leverage and network effects). Therefore, if you’re 10% better than the competition, you win, likely the whole market. You need every possible edge…

- All of the companies that you need to partner with are out here. Business development doesn’t happen in formal meetings. It happens in informal coffees, parties, and relationships.

- If you are here, your network will be using all of the latest tools – Twitter, Foursquare, Quora, Nexus One, etc., before other networks in other cities will. These networks hit critical mass here earlier and are thus more valuable to the early adopters here. You’ll have a 3-month+ head start on people outside to see what’s coming next. Imagine trying to design next year’s clothing without firsthand immersion in this year’s fashion, in Milan or Paris.

Sure, it’s possible to build a great Consumer Internet business starting out somewhere else, but given that these are winner-take-all businesses, do you want to start out that far behind the curve?

Live Appearance

More of a warning so you know where not to go, I suppose…

I’ll be on a panel at the “Future of Funding” event in San Mateo on February 18th.

More information here:

The Growth of Small Firms
February 18, 2010
11:00-12:00pm

Description: There are an increasing number of venture capital firms with smaller and smaller fund sizes. These firms are starting to see some interesting returns, while remaining popular with entrepreneurs. What is working? What is not? This panel will explore how some of the small firms are investing and looking for big wins.

Fellow Panelists:
– Moderator: Matt Marshall, CEO and Editor, VentureBeat
– Mike Maples Jr., Managing Partner, Maples Investments
– Rob Hayes, Partner, First Round Capital
– Reid Hoffman, Partner, Greylock Partners

If you’d like to attend and if we know each other, please contact me and I might be able to obtain a discounted pass for you.

Extrapolating Computing

Remember when mainframes did all of the computing? And workstations were dumb terminals docked to the mainframes? The terminals had less power, but were more “mobile.”

Then everyone got a desktop. And the desktop is where you did most of your computing. And you carried around your underpowered laptop, which had to be synced with your desktop, or docked to a big screen, keyboard and mouse to be usable. The laptop had less power, but it was more mobile than the desktop.

Now most early adopters have a laptop as their main computer. And are carrying around their underpowered smartphone, which has to be synced with their laptop on a regular basis. The smartphone has less power, but well, it’s more mobile.

We’ll dock our smartphones to our laptops for a while. But, if we can extrapolate from the history of computing, the laptop is headed for the dustbin.

Which means that Apple will be ok. Google will be ok. But if Windows Mobile is any indicator, Microsoft is in deep, deep trouble.

Mencken on Politics

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. ” –H. L. Mencken

Charlie Munger on Getting Ahead

We get these questions a lot from the enterprising young. It’s a very intelligent question: You look at some old guy who’s rich and you ask,

“How can I become like you, except faster?”;

Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts… Slug it out one inch at a time, day by day, at the end of the day – if you live long enough – most people get what they deserve.

- Charlie Munger

Samuel Adams on Freedom

If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen.

- Samuel Adams