Silicon Valley Is For Scale (Not For Search)

Silicon Valley is paradise for late stage startups: tons of investors, the highest concentration of experienced talent, and an entire region built around scaling technology companies.

But it’s these same advantages that are actually disadvantages in the early days of most startups. To understand why Silicon Valley might actually be the worst place to start a startup but the best place to scale a startup, let’s first define what a startup is.

I like Steve Blank’s definition: an early stage startup is a temporary organization designed to find a repeatable and scalable business model. Everything is uncertain in the early days: the product, the customer, and the business model.

And it’s in these very early days, before a startup has found that repeatable and scalable business model, that it’s critical to talk to users and build something that they want.

Not to raise money. Not to bulk up the organization with talent. Not to start scaling.

Premature scaling is the cause of death of most startups and why the mortality rate of startups is so high. Its symptoms include running out of money, blaming timing, and having unit economics which just don’t work.

Unless your market is tech companies or high income tech workers, the best place to find them is not Silicon Valley. I’ve found from talking to dozens of local business owners within Silicon Valley that they’re actually more averse to working with startups than business owners elsewhere because they’re constantly being bombarded to try startup products. And consumers in Silicon Valley are not representative of the general population.

Silicon Valley is also famously expensive. Expensive housing, expensive offices, and expensive talent – double almost anywhere else. This is usually fine after you’ve raised lots of money post product market fit, because the exponential payoff of the company accumulating top talent are greater than the inflation of operational expenses like payroll.

But it’s disastrous beforehand.

Because it shortens runway and breeds a culture of people quitting early stage projects to work on startups that are ready to hyper-scale. Employees in this environment tend to choose startups based on expected rapid increases in the value of their equity, not on doing the hard work over years of finding a model that works.

But what about the benefit of having the highest density of technology experts?

The proliferation of online content has spread this benefit globally. All of the top venture capitalists and startup founders have dozens of readily available interviews and videos and blog posts books online. You can study them to absorb those lessons on demand, from anywhere in the world. That’s way more efficient than the old way of trying to live near them to synthesize the best practices of building a startup.

All of the best knowledge of Silicon Valley is now available globally to everyone between YouTube, podcasts, and books.

This isn’t to say that Silicon Valley doesn’t have any benefits. It certainly does.

But most of their value can only be capitalized on after reaching PMF and being ready to scale. Before that, those vitamins digest like poison.

Because Silicon Valley serves as the best place to scale a startup: financing, top talent, and valuable advisors shooting to the companies ready for them. A startup is only ready to scale, though, once it has validated product market fit.

The companies not ready to scale bear the same costs of living in Silicon Valley, only to watch their talent defect to those that are ready. They get distracted with trying to signal success (for status within the tech ecosystem) instead of building something people want.

So, if you’re building a startup with global ambitions that has validated PMF and is ready to scale, Silicon Valley might be the best place to be.

Otherwise – save money, retain core talent better, focus on customers, buy yourself more runway, and iterate your model outside of Silicon Valley until it’s time to scale.