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Speaker 1

00:00

We're working together, we're in the same room right now.

Speaker 2

00:02

Yes. We

Speaker 1

00:02

get to live in the same area, even though our personal decisions about where we live are wildly different. Completely different. Yes.

Speaker 1

00:07

We have very different lives.

Speaker 2

00:07

I don't have a yard. I have kids too. Yeah.

Speaker 2

00:10

Yeah. All right, this is Michael Seibel with Dalton Caldwell. And today we're gonna talk about, does your startup need to be in San Francisco? Oh man, we're just, we're wading into the, to the debate of the moment.

Speaker 2

00:27

So, why don't you kick it off? You've got a

Speaker 1

00:30

controversial view here.

Speaker 2

00:30

Yeah, so how about this? Yes.

Speaker 1

00:32

Usually in these videos, you and I just agree on everything. I do. It's boring.

Speaker 1

00:36

We disagree. Strongly. We have a different opinion here. I'm confident you're wrong.

Speaker 1

00:42

OK. Good start. So let me start by saying I don't think everyone's startup needs to be in San Francisco to be successful. And that you could build a successful startup and not live in San Francisco.

Speaker 1

00:55

Please, okay, please share. So a lot of the reasons that folks read the discourse about San Francisco, and man, there's a lot of discourse, is they're very fixated on the lifestyle of living in downtown San Francisco. They see all the photos on Twitter, they hear the stories. It's all over national media.

Speaker 1

01:13

Like my parents know all about San Francisco politics. My dad's like, so how's it going in San

Speaker 3

01:19

Francisco? Right. Like, okay.

Speaker 1

01:21

So for me personally, I actually prefer to not live in a dense city. I like living in a place that is warm and bright and sunny and I can walk around and like the birds are singing and like there's trees everywhere. I kind of like living in a boring place personally I'm speaking for myself where there's not a lot of distraction and I can just kind of focus on the work I'm doing.

Speaker 1

01:46

Then you know really intense stuff going on around me all the time. Also, as you know, I got small children, and just for my lifestyle and the happiness of my family, I prefer to live just in a different environment.

Speaker 2

01:59

You like having a yard?

Speaker 1

02:00

I do. Okay, so I enjoy those things.

Speaker 2

02:04

And

Speaker 1

02:04

then also I think sometimes what people forget, especially that aren't in the Bay Area, is how the actual big employers for most folks in tech are not in San Francisco. They're

Speaker 2

02:15

down south.

Speaker 1

02:16

Google and Facebook and Apple. The Apple HQ is in Cupertino, nowhere near San Francisco. All those

Speaker 2

02:20

old, boring companies. Yeah.

Speaker 1

02:22

And so clearly, in the history of this stuff, all these great companies were built outside of San Francisco. Like, if we actually look, how many of the most epic companies in the world in tech were actually built in San Francisco? Yes.

Speaker 1

02:32

It's actually not that many. And so to argue that every company has to be in San Francisco is factually wrong.

Speaker 2

02:38

Fair. And here's why you're wrong. Okay. Okay.

Speaker 2

02:43

So I live on Market Street in downtown San Francisco.

Speaker 1

02:48

Fair? Just to be clear. OK.

Speaker 2

02:52

For me, growing up, living in a city was aspirational. So I spent my high school and middle school years in a suburb of New York. And when you do that, you know.

Speaker 2

03:03

That is

Speaker 1

03:04

New Jersey, right?

Speaker 3

03:05

Whenever someone says a suburb, I'm from New York. Well, where exactly? Where in

Speaker 2

03:09

Connecticut? They're fast back.

Speaker 1

03:10

They're like, well, you know, upstate.

Speaker 3

03:12

Yeah, yeah, yes.

Speaker 2

03:14

Middle school and high school in New Jersey. And when you're growing up in a suburb in New Jersey, you know where you are is not where the action is. You know, almost by definition.

Speaker 2

03:24

And at least for me, I perceive getting to the city as part of growing up, becoming an adult. That was a big part of my mentality. 2, I like nice restaurants and nice bars and those things don't exist in the suburbs. I know someone's gonna be in the comments saying, but in my suburb, there's like, no, no, it doesn't, sorry.

Speaker 2

03:48

It's just good for where you live. Another thing that I like, especially as a startup founder, I liked having a chip on the shoulder. I liked being in a place where there are things I couldn't afford, where there are places I couldn't go unless I was more successful, where I could kind of see what success could get me. And I always felt like the suburb tried to hide that away.

Speaker 2

04:10

Like everyone was in the same kind of house in the development and like we all have our own space, we can't see each other. Like I liked seeing what if we were to make it, what I might be able to get. That was really amazing. Also, I spent my first kind of 9 years living in a city in Brooklyn.

Speaker 2

04:30

So I was used to living in an apartment. That was never weird for me. And there are a bunch of amazing newer companies, Uber, Airbnb, DoorDash.

Speaker 1

04:41

I don't know those. Well, DoorDash was Palo Alto Food Delivery. That was their original name.

Speaker 1

04:45

So they didn't move there. They didn't start there.

Speaker 2

04:47

And they moved. They moved. So I think that my core point is that the city is the better place for a young startup founder to get ahead.

Speaker 2

05:02

Now, this is kind of a fake disagreement, because if you kind of have been parsing our words carefully, we're talking about living in the Bay Area. So I'll ask you straight up, Dalton. Would you recommend someone starts a startup outside of the area.

Speaker 1

05:18

Well, I genuinely would not.

Speaker 3

05:20

We agree. So the part we're agreeing with

Speaker 1

05:24

is that, again, think about it. We're working together. We're in the same room right now.

Speaker 2

05:27

Yes.

Speaker 1

05:27

We get to live in the same area, even though our personal decisions about where we live are wildly different. We have very different lives.

Speaker 2

05:33

I don't have a yard. I have kids, too. Yeah.

Speaker 1

05:35

And so what's cool is we get to work together. And we get to work with all these amazing people. And yet, we have very different choices on how we want to live.

Speaker 2

05:44

And that only would happen here because this place attracted both of us. Yes. And I think that what's not spoken about enough, and it's a point you make a lot, is that there are certain cities that are just better, and there are certain regions that are just better.

Speaker 2

06:01

And We can talk about all the reasons why, but if you wanna be the best in finance, you're probably gonna find yourself in New York. If you wanna be the best. Or maybe London. Or maybe London.

Speaker 2

06:10

Yeah. If you wanna be the best, I don't wanna fuck that anymore.

Speaker 1

06:14

You're not since Brexit.

Speaker 2

06:15

Yeah, Brexit kinda fucked that up. If you wanna be the best in entertainment, you're probably gonna find yourself in LA and The reason why is because when you want to be top 0.01 percent you want to be around other people who are trying to be top oh 1 percent And I think both of us wanted to be top .01% in startups. You're from Texas, I'm from fucking Jersey.

Speaker 3

06:39

Like we didn't grow up here. Yeah, that's true.

Speaker 2

06:43

We made our way here. And When you're here, you get to consume all the other people like us who are looking to be the best and willing to get in the car and make our way here to do it. So I think that's a huge, huge

Speaker 1

06:55

factor. And I just think a lot of the folks that I talk to, they have the opinion from reading Twitter and reading all this stuff that they all need to agree with you on this point. And that like, if moving to San Francisco means...

Speaker 2

07:07

You have to live downtown, in the Tenderloin.

Speaker 1

07:09

It means you have to make some really serious... It's a

Speaker 2

07:12

protest on the weekends.

Speaker 1

07:14

Yeah, but Again, I talk to people when I fund people for YC, and I think they have a lot. A lot of people have a lot of anxiety about these issues. And again, what they don't realize is, do you know how many people live in East Bay, and they live in the peninsula?

Speaker 2

07:27

It's a huge area.

Speaker 1

07:28

It's a huge area, but we all get to work together. But we get to make our own decisions.

Speaker 2

07:33

We

Speaker 1

07:33

get the benefits of living in the Bay Area and having the network effects of the city without all living in like the, like our lives are not the Twitter thread. Showing photos of what's going on in downtown San Francisco.

Speaker 2

07:44

Well, and I think that like what's tricky is that they're all of these embedded interests who I think are influencing startup founders. Right? They're the politicians who are like, oh, come to my city.

Speaker 2

07:54

Come to Miami, because like, blah, blah, blah. Like, we're trying to make it startup friendly. Those politicians, what they're looking for is tech jobs. What they really need is a Google office.

Speaker 2

08:06

They're not going to get the Google office by having a startup culture. But they're politicians. They don't realize that. There are other people who are just looking to kind of flame folks on Twitter.

Speaker 2

08:17

The easiest way you could do that is start posting shit about San Francisco socks, right? And then get into some debate. And I think like the smartest founders look past that. They look past all these like stupid debates.

Speaker 2

08:30

And 1 of the things I think they see about the Bay Area is the network effect. So why don't you go ahead? Like, what's going on here? Like, why are billion-dollar companies just seem to keep popping up after decade after decade here?

Speaker 1

08:41

Well, I think, look, network effects are powerful. We know this. This is the thing that makes things like Airbnb work, like Uber work, like all the startups.

Speaker 1

08:49

Network effects are like really powerful. That's why Facebook has any value at all, is network effects. And basically what's weird about network effects is if you're not benefiting from them, you don't know what you are missing. And a lot of the times when people want to talk about, well, I don't need to live there, blah, blah, blah.

Speaker 1

09:06

Okay, that's fair. You won't know what you're missing. It's all the things that won't happen. It's all of the people that you won't meet, all the chance encounters you won't have, all the employees you won't have, like all these surface area for luck, you know, I'd like to talk about how to maximize luck, you know, think about how many people, again, let's talk about non-tech, if you want to make it as an actor, think about how many people their story of their big break is that something happened in like Los Angeles or New York.

Speaker 1

09:33

Or a band that moved to Los Angeles or New York. Like when the actual moment happens, when someone spots them or finds them or like

Speaker 2

09:41

that. Whatever that is,

Speaker 1

09:43

the work that they did before that was to put themselves in that position. Yes. And so no 1 is going to take someone that's outside of this area and tell you, this is what you're missing out on.

Speaker 2

09:54

Can I say something? Yeah,

Speaker 1

09:55

go ahead.

Speaker 2

09:56

That's even more. I think that people here sometimes don't understand the network effects they're consuming. You and I both saw a lot of people leave the Bay Area during COVID.

Speaker 2

10:05

All of them came back. And they all said this. They don't say that as publicly. They don't say that as publicly.

Speaker 2

10:09

They all came back. Yeah. And all of them said the same thing, which was basically like, I missed the community, but I never really understood that I was consuming the community. I thought I was working all the time and da da da da.

Speaker 2

10:20

But I actually was consuming a community of people who are really into startups. And when I moved to Seattle or Austin or New York or da da da da, that community wasn't as strong. And I missed it.

Speaker 1

10:32

But isn't there weird? And there is tech there.

Speaker 2

10:33

Yeah, but there's tech there.

Speaker 1

10:34

And there is good lifestyle there, but that's not startups. Startups is

Speaker 2

10:36

different than tech, yeah. And I think that like what's so funny is that like, you know this is counterintuitive and hard when the people who don't consume the network effects don't know it exists. And the people who do consume the network effects sometimes don't realize it exists either.

Speaker 2

10:50

So this is like a subtle point. It makes sense that people would be confused by this. And then when you add in some choice photos of San Francisco, and it makes sense why people would say, why would you do this anymore? What I will say though, to kind of like finish this point is I think 1 of the slightly dangerous things that kind of sneaks into the startup game that also causes people to not want to come here is that people don't realize that they need to be aiming for greatness.

Speaker 2

11:19

I always like to equate this back to sports, where it's like, there are so few spots in the NBA, let alone on the All-Star team, let alone in the Hall of Fame. The bar is so high to get into the NBA that anytime you're a basketball player anywhere, you wanna be the best basketball player. On your high school team, on your AAU team, on the invitation, you wanna be the best basketball player anywhere because you know that like the average NBA player was the best basketball player anywhere. And I think that sometimes startup founders miss this point, and they're kind of like, I wanna be in the game versus I wanna win the game.

Speaker 2

12:02

And I think that like, it's really easy to say, well, you know, I can be in the game in Austin. I can be in the game in Seattle. There are investors there. There are

Speaker 1

12:12

people there.

Speaker 2

12:13

I can be in the game in New York. And I wish that we were more honest, that like, yeah, you can play basketball for your high school team, but that's not, that's necessary, but not sufficient to make the NBA. If you want to be a great founder who really impacts the world and helps lots and lots of users, you have to aim for great.

Speaker 2

12:33

You can't just aim for being in the game.

Speaker 1

12:34

And I actually just bring it back to statistics and odds. So let me be really precise, because I can imagine how some people will respond to some of these you're saying here, and they're going to throw anecdotes at us. They're going to say, There's this and there's this.

Speaker 1

12:46

Shopify is in Canada. Yeah. And it's true. I have nothing to take away from those things.

Speaker 2

12:51

MongoDB is in New York, and I've been told that by every fucking New York founder for a decade. MongoDB! Yeah, great.

Speaker 1

12:58

And again, Good for them, like rock and roll.

Speaker 3

13:01

They're doing well.

Speaker 1

13:02

The point is, we're actually trying to impart advice to increase your odds of success. Because just like with people that want to become Hollywood celebrities or rock stars, there's certainly anecdotes of people that were discovered and everything slipped into place for them. But if you actually just look at the numbers of how you increase the odds of success, moving to an area, moving to the big leagues was a key part of it.

Speaker 1

13:27

And so I would just encourage folks that are unsure about this debate or they don't have their mind made up to to realize that the anecdotes are true

Speaker 2

13:35

That

Speaker 1

13:35

you can do a startup outside the Bay Area. Of course. And like maybe there's a really good reason you want to do that I don't know sure who maybe there's health reasons or family like great course But if all you want to do is play the odds and optimize for success Yeah, I can't really understand why you wouldn't wanna be here.

Speaker 1

13:53

And that's not anecdotes, that's numbers.

Speaker 2

13:56

That's just numbers. Yeah, you know, it's funny, because I was thinking about this in the context of casino, where I'm like, imagine you sat down at the blackjack table but you didn't know basic blackjack strategy.

Speaker 1

14:07

You know to double down, when to split.

Speaker 2

14:08

You can

Speaker 3

14:09

still win. You can still win.

Speaker 2

14:11

You can, but like, it is so easy to get that 1 hour of instruction and that increases your odds so much. Getting into the Bay Area is so relatively easy to all the other things you have to do to succeed. Choosing where to live is so relatively easy to all the other things you have to choose correctly.

Speaker 2

14:30

Why not pick up the easy wins? It's an easy percentage multiplier. And I'm like, this game is so hard,

Speaker 3

14:38

you might as well take the easy ones.

Speaker 2

14:42

So to wrap it up, we have a strong disagreement. I think the suburbs are horrible. You clearly like them.

Speaker 2

14:49

By the end of the day, there's room for both of us.

Speaker 1

14:52

Yeah, we're both in the same ecosystem. We're both working together.

Speaker 2

14:54

Who knew? Yeah. And we're recording this video in the freaking suburbs too, which is hilarious.

Speaker 1

14:58

We are. You're right. We came to my zone to do this video.

Speaker 3

15:02

To your place to do the video.

Speaker 2

15:04

Oh man. All right. Great chat, Dalton.

Speaker 2

15:06

Thanks. Thanks. Thanks. Thanks.