Hey startups: You don’t live in Silicon Valley

You can’t follow everything Silicon Valley sez.

There’s a big gap between your expectations as a startup founder and how investors outside of Silicon Valley might think. Your expectations are based on the information you consume from startup influencers — who are likely in the Valley. But, the non-traditional tech investors you might have access to will evaluate your ideas based on how they made their money. The sooner you realize this, the better off you’ll be.

I’m so far ahead of my time, I’m bout to start another life
Look behind you, I’m bout to pass you twice — Jay Z, Hovi Baby

The majority of the best startup education comes from Silicon Valley. It makes sense then that startups learn how to build a software enterprise from SF-based tech stars, shape-shifting their business model after every a16z podcast episode and morphing their go-to-market strategy after every essay written by Paul Graham. But, this causes a lot of problems for founders who try to live by Silicon Valley rules outside of Silicon Valley. The communities these founders actually live in, and the investors they have closer access to have wildly different value systems than Silicon Valley based thought-leaders.

Because of these diverging ideas on building startups with high growth potential, many prominent figures in tech warn against building outside of the Bay Area. San Francisco knows software companies better than anybody, and the area boasts the most advanced infrastructure and risk appetite to supercharge them. But moving isn’t possible for everyone, nor is it sustainable — or logical, for every startup with high-growth potential to relocate to SF.

We all can’t follow Silicon Valley rules and advice. Like this piece often stated: “Don’t waste your time on a business plan.”

Steve Blank, the iconic serial-entrepreneur and grandfather of the Lean Startup movement often repeats this famous Mike Tyson quote when talking about business plans: “Everyone has a plan ‘til they get punched in the mouth.” He then continues, “no plan survives first contact with customers”. What he’s advising you to do is get in front of users/customers as quickly as possible, skipping the business planning phase that will change dramatically anyway. I get his logic — and largely agree, but this is not helpful advice to founders who reside outside the valley.

Sometimes an investor will ask you to send them your deck and/or executive summary before they decide whether to meet with you. I wouldn’t do that. It’s a sign they’re not really interested. — Paul Graham, How to Raise Money

Many notable tech personalities will tell you its a waste of time to build a business plan — much less a pitch deck/presentation as Paul Graham, founder of Y Combinator does above. It would be nice if we lived in a world that worked this way. We don’t. And from what I hear, every Y Combinator startup that pitches on Demo Day has a pitch deck that compliments their presentation, so I’m confused on his logic when he says this. Going further, PG adds this:

Fundraising usually takes off fast for the startups that are most successful at it, and they’re thus able to excuse themselves by saying that they haven’t had time to make a deck.

I really admire Paul Graham, he’s well accomplished, has helped a lot of entrepreneurs, and deserves our respect. But, I think this is way-off advice for founders looking to his essays for counsel. If he still feels this way (as that post was written three years ago), that’s a shame. If he no longer feels this way, I hope he’d go back and add an update. Not removing the lines, but notating his change of heart.

The foundational reason I disagree with these ideas is that they reek of privilege. I don’t mean racism, but classism and location-ism. Much in the way of “If you just went and got a better job, you wouldn’t be struggling financially”, or “If you just moved to San Francisco, your startup would be funded”. This post isn’t about classism, so I won’t go into the systemic issues that make the concept of pulling ones-self up by their own bootstraps illogical. This is about location-ism, and the fact that while there is money outside of Silicon Valley, you can’t follow Silicon Valley rules to get it.

What the rest of the world wants, in Part 2.

Note: For this article, I use San Francisco and Silicon Valley interchangeably. Said, Captain Obvious.

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