PG, you mention that there are 5-6 startup hubs worldwide. I think you mentioned Silicon Valley and Cambridge. Where are the other 3-4? Are they too in the US?
You've just mentioned my reservation about London: because cost of living - a startup's main costs in the beginning - is so much higher than the rest of Europe, your increased burn rate would have to be justified by increased opportunities. Or are all startup hubs expensive to live in?
No. London shares with NYC the problem of being a big city and thus expensive to live in. Some of the other places are quite cheap. SV is. SF is expensive, but SV is a huge expanse of cheap, month-to-month apts.
Cheap startup hubs probably don't exist. They are hubs because everybody moves there, which inevitably makes housing expensive. The trouble with London is that if your funding is in USD or EUR the exchange rate exacerbates the problem.
There are upsides too, however. Many european countries require entrepreneurs to make very high social security contributions regardless of earnings. In some cases as high as EUR 350 for earnings of 0, so that counts towards the burn rate as well. In the UK the basic rate of NI contributions for the self-employed is GBP 2 (USD 4) a week, which covers health insurance excluding dental.
I would also assume that Tallinn might be a good place for startups (definitely a fun place in any case). Didn't Estonia provide free high-speed wireless to the entire population? Plus, it's a beautiful area -- I loved my visit there.
The University of Waterloo has a policy that any IP developed by profs or grad students is owned by them rather than the university. In addition Waterloo was the first school to do co-op in engineering when it was founded in 1957 (and still has the largest co-op program in the world.) This adds up to an ungodly number of startups coming outof Waterloo. Something like 10-15% of all startups in Canada.
The UW computer science school is actually named after David Cheriton, the Waterloo grad who introduced Sergey and Larry to investors, and made a few billion out of his stake in Google. More damningly perhaps, Microsoft hires more engineers from Waterloo than anywhere else :)
Perhaps Ottawa HAD more (in the telecommunications boom), but Waterloo is really bustling with startups.
Some examples:
Open Text, Rim, Maple, Descartes and the list goes on and on.
Also, a lot of companies are putting offices into Waterloo's research park, including Google.
I wouldn't consider OpenText, RIM, Maple or Descartes as start-ups (they were once start-ups yes, but not any more)... but yes.. there are a lot of start-ups in Waterloo.
"followed by Cambridge/Boston" -- really? When I lived there, it was very very hard to find technical people that were not "corporate drones". I new maybe of only one or two startup (I am not sure they ended up anywhere). Most other companies are "enterprise oriented", such as VM-ware types.
I remember attending few session at an incubator close to MIT campus. The speeches were given for people that had build products like "scanners" for airports, and government etc.. not software oriented One thing I remember, this guy from HBS, with a very smug attitude ( maybe b/c he got into haavad he thought he was better than everybody). Not a hacker friendly atmosphere at all. Most people there were the "business" types, that had "ideas" and buzzwords, but very low on concrete implementation and treated technical skills just as a commodity that could bought off in India.
Boston is not "eccentric" and "whacky" enough to support an environment with lots of startups with crazy and novel ideas.
Here is few facts:
You don't see naked people in the streets on Boston's fairs. It is mostly family/9-5-er or young students, which tells you about the general population of the place. If you are in your mid 20s, and out of school, it is not a good place to be.
You can't buy alcohol on Sundays You can't have wine/beer in a coffee place (Puritanism at max)
Most coffee/food places around Harvard sq. and Davis sq (the artsy part) closed by MIDNIGHT!!! WTF? Most good programmers I know are most efficient at midnight, and having things/places to get "fuel", (coffee and food) and some re-energizing is very important.
For many reasons, I think NYC would be a better place for a startup, if it wasn't so damn expensive, which kills ideas that have no business model right away. But as a place is very vibrant, lots of stuff to do, good looking women, and lots of money around, which are motivators for people to try harder and make it happen.
The only thing that the Boston/Cambridge are has is it's student population. -- which not surprisingly moves out somewhere else after school, and that it is a very walk-able city. You can walk to places, take the T (subway), which is very cool.
Personally, I like SF a lot, but I would never live in the South Bay. All those seas of parking lots and the "drive everywhere" culture is very depressing and soul drenching. Efficient for big corporations like HP and Yahoo, but I can't see it being good for a small start up.
My preference for startups: SF beats them all. NYC second (if it wasn't so damn expensive), but it has bonus point for being so close to the old media advertising, then Cambridge/Boston (for having so many college kids around).
I think, Eastern Europe is going to become more prominent in the IT world. You have lots of smart and well educated people at sciences, still cheap, and with a good sense of entrepreneurship (unlike India or China, which see life more as a career, eastern europeans are new to capitalism, and view this time as a great opportunity). It will take a decade or so, but you will see more things coming out from places like Hungary, Croatia, Romania etc. I doubt it will ever be a single large European "hub".
Part of the reason for SV's attraction for tech startups (besides Stanford) was that it originally was a much more 'family friendly' place than contemporary San Francisco. Naked people, free flowing booze, drugs and late night parties are more important to media than tech hubs. Hence the difference between Hollywood and Mountain View.
And is there still a place left on earth with any kind of entrepreneurial activity without Indians and Chinese involved? People from those cultures have for centuries spread out all over the world, leaving everything behind to follow trading opportunities. Outside Japan and Korea, their diaspora seem to own pretty much anything worth owning in both Asia and Africa. And quite a bit of America as well. At least from my experience, they seem about the unlikeliest candidates for the 'corporate drone' stereotype one can possibly choose. Once the general population in those countries starts having access to even 1950's level of US higher education spending, there's bound to be a lot of entrepreneurial activity there.
"When I lived there, it was very very hard to find technical people that were not "corporate drones". I knew maybe of only one or two startup (I am not sure they ended up anywhere)."
The startups are there, you just have to know where to look (i.e. have friends that also work for startups). They are very "enterprisey"; Boston doesn't do consumer startups the way the West Coast does.
The culture is also very different here: on the East Coast, there's this notion of paying your dues before you're ready to start your own thing. You're expected to suffer (probably a legacy of Boston's Puritan heritage) before you're ready to strike it big. A typical Bostonian startup's path involves working for 10-30 years at one of the area businesses in your field, then gathering up some professional colleagues and striking out on your own, often building some tool that your former employer wants to buy.
My former boss was dead-set against me striking out on my own - he doesn't believe I've "paid my dues" and have enough industry experience to make it. The idea of striking out into an unproven market, discovering it as you go along, and building your product on the way is complete anathema to the Boston startup scene. Here, you're often expected to have a customer in hand (usually your former employer) when you approach venture capitalists, along with a team averaging 20-30 years industry experience or serious research background.
Almost all the startup founders I know here fit that pattern. Avici's founders had all worked for BBN for about 30 years. Avid's technical founder had worked for DEC for several years. I think much of Stratus's initial team came from DEC. Cybersmith's team came from Stratus and DEC. One former employer spun off of Cybersmith. Another's founder had been a trader on Wall Street (this was a financial software). One of the other places I interviewed was a spinoff of Eze Castle, where the product had originally been developed.
I'd recommend Boston for any older founders in the audience. Move to Boston, spend 5-10 years working at area companies while you build up professional contacts, and then strike out on your own. Boston doesn't have the prejudice against older entrepreneurs that you'll find in SV, because for most of the industries here, age is an asset and not a liability. Plus, it's a good place to raise a kid: the Boston suburbs (particularly to the west and northwest) are very safe, have good schools, strong senses of community, and lots of leafy wooded areas.
Nearly all the young startup-type folk I know - the ones without families, at least - are moving out to California though. Their youth is an asset and not a liability there, and they get to work on generally cooler problems.
Beijing - home to Sina, Sohu, Google China, IBM Software Lab, Microsoft and two world class universities (Tsinghua and Beijing University). There are also tons of smaller startups started by both native Chinese entrepreneurs as well as foreigners. The energy level is incredible there.
my only concern with Bejing as opposed to Shanghai is how well they enforce certain laws (since it is the capital). Granted fighting corruption is one thing, but the better they enforce laws like censorship (that hinder creativity), the worse for business in general...
Look at Singapore (which is the model that China eventually wants to be for better or worse)... it's so repressed and 50's clean that you have natives with masters degrees who don't know how to have sex (no I am not making this up - this was news five years ago).
Singapore offsets its population and innovation problem through gov sponsored immigration (typically favoring the west) and a laissez faire attitude on taboo industries like biotech (an attitude that China shares).
Bangalore and Mumbai (formerly Bombay) are also quite large from what I understand, but I haven't dealt enough with that market to know exactly how large they are.
Hosting a lot of startups doesn't turn a particular town or region into a startup hub. I don't know China well to talk about it, but I've never heard about cool successful startups in China. Maybe it's like here, in Academgorodok, Russia: a lot of IT companies, but they all are outsourcers or small players. Have you ever heard about startup from Academgorodok?
What about the top few in the US. Of course Silicon Valley is tops, followed by Cambridge/Boston. But after that, perhaps:
Boulder, Los Angeles, New York, Austin, Seattle.
I know that several countries have tried to replicate the Silicon Valley model to various degrees of success. I think by far Silicon Valley is at the top of the list with the others lagging far behind but I can't think of where in the world there would be good startup hubs.
I could be wrong, but based on my personal experience Japanese culture at large frowns heavily at risk (especially if you've already failed once). People tend to look down on you unless you work for big respectable company 'x' with respectable title 'y'. Not to mention it's very difficult living on the cheap in Japan. You'll have much better luck in NY...
