I have nothing against SV, and I'm not predicting its demise. But I also know that I don't live there, probably won't ever, and don't like to travel.
In other words, I have a vested interest in making the startup scene close to me as good as it can get. I'm pretty tireless in that effort, and lucky for me, I'm not alone.
Yes, Philly does Web startups too. In the past few years pretty much all the pieces of the puzzle have fallen into place, e.g. hackers + mentors + accelerators + money + community = exits. From watching it grow, I think it's pretty clear this can happen in any decent sized city at this point.
Nevertheless, why do a startup in Philly (or any of these cities) if you can move to SV? From my perspective, the only real difference seems to me getting the best investors, i.e. those with the best domain knowledge. (Side note: I'm not saying investors are the be all and end all anyway. My last company had no investors, and so far neither does my current one.)
Yet that final difference is crumbling rapidly with AngelList, Open Angel Forum and other market shrinking efforts. In fact, the "right" investors are now actively seeking you out in these other cities. They realize things are cropping up out here and don't want to miss out on the next big thing. Also, our valuations are more reasonable, just like our house prices.
And then there are the benefits:
- You're already here and you like it. Quality of life. You may be like me--have a family and no plans on moving. Or maybe you went to school here. Or maybe you joined an accelerator for a few months. Whatever the reason, given that we have everything you need here, there is no immediate pain point forcing you out. So then quality of life becomes a benefit.
- Easier bootstrapping. Cost of living is just lower, at least in Philly. Also, it seems really easy to pick up extra consulting hours to pay the bills. I did that in Boston for several years before my last startup took off.
- The Web "stars" are more accessible. The community is smaller, which means people usually go to the same events and are just generally more approachable. Additionally, since everyone wants their local area to have a better startup scene, these people will often go out of their way to help you succeed, even more so than they would otherwise.
- Easier to get attention. Also as a function of size, if you do something noteworthy, you get noticed. This also works with consulting--it's pretty easy to make a name for yourself very quickly.
- Easier to hire. Listen to this snippet from This Week in VC about competing with Google/Facebook/etc. for talent in SV. Frankly, that doesn't happen out here.
So what's missing? I think what's missing (at least in Philly) is more ambitious startup founders. The angel investors are here, ready to invest in your company and help you succeed. There is frankly a glut of good investors and mentors. Personally, I think that's a good problem to have and will naturally work itself out.