Should I move my startup to Silicon Valley?
Some background - I’m a New Delhi based founder writing this in New York at the end of a three month accelerator programme in Mountain View with 26 international startups (including those from Asia, Middle-East and Africa). Being stuck indoors due to rains in a cafe with spotty WiFi in the upper east side, I decided to throw some gyan (Hindi slang for unsought founder advice) on the subject of relocating a startup.
When you’re building a prototype, you need to be at a place where you can do it most cost-effectively. Most likely this is where you live currently, or in case of shameless Indian kids like me it is where your parents live (so you can save on rent). All you need is a laptop with a dependable broadband connection, and relocating to a “Silicon Valley of X” where you shell out a huge rental and adjust to a completely different way of life doesn’t make much sense. This is the reason why the Morpheus isn’t based out of a single city and both Sameer and Nandini spend a lot of time traveling across the country.Once you’re past the initial prototype and start testing it out in the market, it makes sense to be where the market is. If not relocating, at least consider traveling to familiarize yourself with the target geography (like the most important city) and the relevant communities. You might not get anything tangible (no cheques or purchase orders or WSJ stories) from this short visit, but it will pay off in some way later (believe in serendipity).
If your business has a strong local component (like manufacturing or local business relationships) the key team members responsible (the founders!) ought to stay put as far as possible. You’re more likely to hurt your progress than help it by choosing to handle things remotely. We might be living in the age of always-connected devices, but sh*t gets done FAR more efficiently when you’re not going back and forth on long email threads, especially across different time-zones.
The exception to the most of the above is if you get accepted into a YC or a500S, which, for most founders, is too good a deal to walk away from and comes with cash that can take care of those rents. Move your arse to Mountain View pronto, however boring and expensive it might seem, at least for the programme. After that you can let the other factors decide whether you wish to stay or move back.
A caveat - I don’t believe that founders of startups neither based nor focussed on the US markets should relocate to the valley (or say, Chile) just for a programme. Staying away from the target market and team can be injurious to (startup) health, and you should be absolutely certain you’re willing to pay the price for whatever you expect to gain from relocating for too long. People and cultures can change drastically from one city to another, or in case of San Francisco, from one micro-neighbourhood to another. For Seat 14A, the Marina guy is more likely a customer than the Mission guy. The point is, expecting to gain know-how about growing a business from the-place-that’s-done-it-all-several-times, and applying that to a completely different market, is being over-optimistic.
Of course, more often than not a startup will not be in a position to say no to cash, which makes this point moot. Apart from learning the repeatable know-how of positioning and growing a startup, the most important thing a foreign founder expects to get from spending time in the valley is investor interest (euphemism for ca$h). The latter is again hard to come by because an investor might not relate to the foreign market you’re going after, and is more comfortable with the several local entrepreneurs working in a space they understand better.
So, should you move your startup to the Silicon Valley? Think about:
- are you in build-mode or sell-mode?
- are you getting into YC/500S etc.?
- is your customer in the US or your home country? if both, can you focus on the US customer?
- does your business have a strong local component that would need remote-management?
Depending on your response to these queries the answer can switch from a resounding yes to a far less compelling maybe.
About The Guest Author
Aditya Sahay a.k.a Adi bites off more than he can chew. A serial entrepreneur, he's currently helping men look good (at a budget) at Seat 14A. Follow him on twitter @adsahay.
