The Pros and Cons of Silicon Valley for Tech Startups

by | Oct 20, 2015 | Entrepreneurs, Startups

Silicon Valley is home to the largest and most successful technology companies in the United States, including Google, Facebook, Twitter, Apple, and Yahoo. Along with a mild climate and a picturesque locale on the famous San Francisco Bay, Silicon Valley is full to the brim with the best, brightest, and richest people in America’s technology industry.

The region largely owes itself to Stanford University electrical engineer and administrator Frederick E. Terman, who first joined the faculty in 1925. He felt that the Stanford engineering department was deficient, especially compared to east coast universities like MIT, and sought to bolster their program. After World War II, he became dean of the university, began focusing on microwave electronics, and solicited military contracts to fund academic research. Terman, in fact, was the man that encouraged William Hewett and David Packard of HP to start their company.

In 1951, Terman created the Stanford Industrial (now Research) Park, which granted long-term leases on university land for tech companies. Soon, Kodak, GE, Lockheed Martin and others started their companies in Silicon Valley, cementing it as America’s premier high-technology manufacturing region. Today, it is the mecca for tech, with a quarter of a million IT workers on the ground and companies like Adobe, Cisco, eBay, Netflix and Pixar headquartered there, too.

With all the exciting innovation going on in Silicon Valley, could there even be a negative side to living and working there? While most of the tech giants don’t seem to be thinking of moving their company out of the Valley anytime soon, other companies, like Snapchat and Sherbert, have packed up for other cities.

Every American city has its pros and cons for both living and working environments, and Silicon Valley is no different. In the next two sections, I’m going to take you through the pros and cons of Silicon Valley, from the perspective of someone who is living their dream, and someone who wants out. Which seems like the more accurate story, and what elements of it cause you to either desire to startup in Silicon Valley or try elsewhere?

The Pros

“Not only is this California—it’s also a place where startups launch every single day, a place of birth, new ideas, and rapid innovation. Is there any place more advantageous to start a tech company than Silicon Valley? Not if you’re looking for the best people in the business to help you get ahead—and that includes advice and financing. There are Venture Capitalists everywhere, and they are definitely interested in investing in the next big thing. There’s an event happening every day, enormous opportunities to network and learn, and Silicon Valley is a big community where you can always find someone to have a beer with and chat about ideas.”

The Cons

“Silicon Valley is not for everyone. If you don’t have a unique idea, or connections in the field, you may not want to bother. There’s a lot of opportunity—and money—but it is also hyper-competitive, meaning for every VC you find there’s a company out there looking for them. For every restaurant you go to, you’ll hear 10 conversations about valuations, and for every coffee shop you order a cup in, you’ll be wall to wall with aspiring entrepreneurs just like you. Really, even if you’re unique, it’s hard to stand out. Renting is 87% more expensive than the US average. A small, one-bedroom apartment can cost between $1000-$3500 a month, and a small home usually starts around $500,000. In fact, the median home price has reached $1,000,000. If you can succeed outside of Silicon Valley, you may want to consider it—places like Boston, Seattle, Portland and Austin are tech-friendly and much cheaper.”

Is Silicon Valley Right for Your Company?

Heading out to Silicon Valley is a gamble. For the cost of living, you should be confident that your idea is novel and that you’re going to hustle harder than literally anyone else in the country to make your dream happen on the Bay.

For companies like ours, living outside Silicon Valley (in San Diego) is just fine. There is a work-life balance, it is much more affordable than the San Francisco area, and NoBorder Productions can run its business just as efficiently here.

The Takeaway

Tech companies can certainly survive outside Silicon Valley—it’s up to each and every entrepreneur to consider their personality, their company’s style, and the business’s overall needs and goals to determine if Silicon Valley is a good fit.

If you are driven, intense, desire to live and breathe the Silicon lifestyle every day, and have the capital (or at least the courage!) to live the San Francisco life, you may find Silicon Valley to be perfect for you. Looking for something a little less fast-paced, expensive, and competitive? There are plenty of places across the country for tech companies to shine.

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That’s why today we want to share this nice infographic with you. Enjoy!

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92101 CA, San Diego