Tony Wright (dot com) - Latest Comments

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

clinicaltrials — Mon, 29 Jun 2009 14:54:44 -0000

If you move to CA for your 50% increase in chance you have to factor in how the expense of moving will limit you cash flow

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

Michael Dunham — Fri, 19 Jun 2009 19:45:45 -0000

There's always the PWC Money Tree https://www.pwcmoneytree.com/MTPublic/ns/nav.js... - it's more about the funding end - but interesting

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

Array — Sat, 13 Jun 2009 15:40:26 -0000

Actually, I remember Bellevue :) was called number one of 100 best places to live and launch new business.

http://money.cnn.com/galleries/2008/fsb/0803/ga...

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

webwright — Sat, 13 Jun 2009 03:37:09 -0000

I don't recall ever defining success in that post, or any other. But one
measure of success is certainly having a line of previously-spurned buyers
waiting in line when you're ready to move on.

Regardless, whether you or I define an exit as the target isn't really the
question. Every single early stage investor defines it that way and a large
percentage of entrepreneurs want to eventually sell their company and move
onto other things. When you're ready to move onto other things, liquidity
is very common measure of success. Which is not to say that building to
flip is a smart path. That data doesn't talk about the truth of exits--
which is that the vast majority of exits aren't 1-2 year flips. The
idea-to-exit-in-18-months bullshit isn't the norm. Most companies that are
bought in this world are real (and oftentimes profitable) businesses that
have been built and run for many years.

The truth is that success is complicated and subjective, which is why you
won't see me trying to define it any time soon.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

MarinaMartin — Sat, 13 Jun 2009 01:38:50 -0000

Okay, I won't quibble with your dataset, but I will quibble with your definition of success. I'd die before I sold a company of mine to Yahoo or Google; it's like volunteering your seven-year-old child for ritual Mayan sacrifice. (Yea, I realize that walking away from many millions would be difficult, but if I'm not seeking a buyer, I'd never be in the theoretical position of being able to refuse.) If profit is your sole incentive, then sure, acquisition is the ideal, but I'm not putting in 90-hour weeks to watch my hard work be killed (Dodgeball, Jaiku) or irreparably maimed (Flickr). A better success metric would be "still operating and in the black after five years" regardless of acquisition.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

bobv — Sat, 13 Jun 2009 01:37:34 -0000

NY and NJ are really the same place. You're basically separating a city from its suburbs.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

Ben Kuo — Fri, 12 Jun 2009 23:19:22 -0000

Our numbers say Silicon Valley = 6.2% acquisition rate, Southern California (LA/San Diego) = 9.0% acquisition rate. We already track the two areas separately (www.silicontap.com = Silicon Valley, www.socaltech.com = Southern California).

Due to our tracking/historical I believe Southern California is probably very accurate (we've got 10+ years of data), Silicon Valley not as much.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

blah — Fri, 12 Jun 2009 22:18:37 -0000

In this page, theres a Tony trivia "Currently bouncing around between Silicon Valley and Seattle, WA."
If valley isnt a big deal, why bother bouncing?

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

webwright — Fri, 12 Jun 2009 20:13:12 -0000

That'd be interesting, but it'd require some map research or some geocoding
work. I believe Crunchbase has city info, but I don't know the location of
all of the suburbs of the big two (who the heck knows where Santa Milano or
Los Fractos or San Barbarino are? I sure as heck don't off the top of my
head).

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

Gene — Fri, 12 Jun 2009 20:07:31 -0000

For CA, can you break out by SF-Bay Area versus LA & San Diego?

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

webwright — Fri, 12 Jun 2009 19:39:16 -0000

True!

One of the things obvious common traits with states that did "well" is that
they have lots of companies with great cash positions that love to buy
startups. While I'm sure that Google and Microsoft will buy companies
anywhere in the world, it's easier to start the conversation if they are
local (and probably much easier to do the deal). And, as you say, the most
important thing is to be near your customers. Entertainment startups might
do better in LA and advertising startups might do better to be in NYC.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

Eric Koester — Fri, 12 Jun 2009 19:29:31 -0000

Good Post. I always love the post backed up by some data.

The other interesting point is that is oftentimes over looked or forgotten is the importance of having your business be in the right location relative to your industry. For companies that would be a good target of MSFT or AMZN, locate there. Or if you are a business that will need talent or technology from one of the US National Labs, then locate near there.

I don't think any choice can be black or white -- obviously lots of shades of grey.

Great post.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

abscondment — Fri, 12 Jun 2009 16:36:24 -0000

Yep. Lowering the confidence interval causes each item to gravitate towards the raw percentage - which will definitely (I think) be a higher value than the lower bound.

I'd bet consumers don't spend that much time scrutinizing the percentages of ratings - they look, read reviews, and make a decision. To me, this seems less jarring than putting the "1 out of 1" item (or state) above the "99 out of 100" one.

But I guess the good news is that (sampling questions notwithstanding) even using a statistical *lower bound*, Washington stacks up very well against California.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

webwright — Fri, 12 Jun 2009 16:13:14 -0000

Yaw, CrunchBase is a limited dataset. On my last post, someone pointed out that the question is dangerously close to dissertation country... It'd be a pretty big task to do the question justice.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

webwright — Fri, 12 Jun 2009 16:11:47 -0000

Yaw, I know there is a sample size problem and vaguely recalled math from my stats class a decade ago which could do better things with the data than I did. I knew there's be someone with better stats-fu than I have! :-)

Still the "discount" for the smaller states seems pretty dramatic. In Evan's example of consumer ratings for example. If you took a product with 188 out of 2739 reviews as positive (6.9%) and ranked it above one that had 26 out of 317 reviews as positive (8.4%), I think that would feel weird/wrong to most consumers who weren't mathematicians ("but, come on, consumers! You WANT a 97.5% confidence interval, don't you?!"). Maybe a lower confidence interval? I dunno.

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

Ben Kuo — Fri, 12 Jun 2009 15:48:51 -0000

btw, relevant site for PacNW:
http://www.nwinnovation.com

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

Ben Kuo — Fri, 12 Jun 2009 15:48:21 -0000

I think you're going to get lots of sampling errors here, due to self-selectivity of the dataset in Crunchbase (or any other database, for that matter).

We collect our own data (we run a subscription database with similar data covering venture capital and mergers/acquisitions) and a quick query finds that we have WA with 67 acquisitions and 941 startups/tech firms in our database, or a 7.1% acquisition rate; CA has 681 acquisitions and 8,050 companies in our database, or 8.4% acquisition. But, you can skew the data any which way based on what the date range you select is, how comprehensive the coverage is of that state (for example, we have good data on California, Washington, Oregon, Colorado, Utah, and Texas--because that's the focus of our sites--but less in-depth listings of acquisitions in Georgia, Florida, Massachusetts, etc.). The same goes for any database which isn't 100% comprehensive (and there aren't any out there, IMHO).

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

abscondment — Fri, 12 Jun 2009 14:43:33 -0000

Interesting -- but it looks like you've made one of the statistical mistakes written about here: http://bit.ly/19CJAd

The short version is, California's percentage is more probable because there are more data; Washington's is less likely because there are fewer data.

Using the formula provided in the post, the percentages at a 97.5% confidence interval appear as:

{"CA"=>[2739, 188, "5.98%"],
"NY"=>[692, 34, "3.54%"],
"MA"=>[386, 20, "3.38%"],
"TX"=>[323, 19, "3.80%"],
"WA"=>[317, 26, "5.66%"],
"FL"=>[254, 3, "0.40%"],
"NJ"=>[227, 8, "1.80%"],
"IL"=>[180, 9, "2.65%"],
"VA"=>[164, 7, "2.08%"],
"CO"=>[133, 7, "2.57%"],
"PA"=>[131, 2, "0.42%"],
"GA"=>[117, 2, "0.47%"],
"MD"=>[94, 4, "1.67%"],
"NC"=>[80, 1, "0.22%"],
"AZ"=>[77, 1, "0.23%"]}

(See methodology at http://gist.github.com/128830)

Re: Should you move your startup to the Valley? Depends on where you are (Data included!)

John Cook — Fri, 12 Jun 2009 14:37:24 -0000

Good post Tony. I am actually writing about this today, wtih Gaurav Oberoi moving back to Seattle and Jeff Lawson at Twilio moving to the Bay Area.

Mind if I use the chart?

John Cook

Re: Just How Important is the Valley? Let’s Look at some Data.

iiijjjiii — Thu, 14 May 2009 18:23:50 -0000

We put together some stats using the Crunchbase data. The numbers are fairly similar to what you've reported. Some exceptions: the acquisition rate in Silicon Valley doesn't appear to have declined in the last few years although it may have flattened, and the State of Washington appears to have the highest acquisition rate of all, just ahead of the Silicon Valley.

The stats can be viewed here
http://igeejo.com/crunchbase_stats.txt

Cheers
Jim Karsten

Re: Just How Important is the Valley? Let’s Look at some Data.

Wall Street no more. — Wed, 06 May 2009 19:22:20 -0000

Great work- kudos.

Re: How We Handle Sales Calls

Dr Wright — Wed, 06 May 2009 14:42:43 -0000

that is a great canned response! I dont know why I did not think of something similar. I often get solicits from 'video companies" who want to become the production company for the Wright Place TV Show. I have never gotten good video from someone I had to pick off the street and was not familiar with their work. I have my A team, my B team and my C teams ( to work around schedules) and I never buy that way either!

Dr. Letitia Wright
The Wright Place TV Show
http://wrightplacetv.com
www.twitter.com/drwright1

Re: Comments Change - Using Disqus!

John — Mon, 27 Apr 2009 00:42:20 -0000

I'm thinking of using Disqus, but I'm concerned about picky things like the text wrapping, paragraph tags, line-break tags, and exactly what HTML tags are added automatically. I already learned, for example, that you can use paragraph tags in your comment, and that if you don't, Disqus just adds a bunch of "br" tags when you hit the Enter key for a new line.

For example, in your comment above, the line-wrapping is a mess, but I'm guessing that's because you replied from your e-mail client, and Disqus isn't doing any smart "format=flowed" layout as most e-mail clients do.

Okay -- enough testing. Just one more thing, some code!

public class Hello { public static void main(String[] args) throws Exception { System.out.println("Hello, world!"); } }

Re: Just How Important is the Valley? Let’s Look at some Data.

webwright — Sun, 19 Apr 2009 00:15:19 -0000

Heh-- I didn't notice BuddyTV on the list (I actually bump into Andy a lot
at events here in Seattle). If I had, I probably would've pulled it. The
list is definitely not perfectly accurate. I'd LOVE to see someone dig in
using the CrunchBase API. I just pulled it from the blog I linked to, who
in turn pulled it from TechCrunch and a few other sources.

I think you're dead on about capital efficiency. The "right amount" of
capital for a lot of companies is certainly heading south.

I kinda feel like there is a early phase of a company that ends with the
founders hopefully saying, "Holy crap! We're really onto something!" I
think reaching that point used to be a lot more expensive. That being said,
once you reach that point, it's not always cheap to go from "onto something"
to "changing the world".

Re: Just How Important is the Valley? Let’s Look at some Data.

Brad Hefta-Gaub — Sat, 18 Apr 2009 23:44:27 -0000

Tony,

Great post. I love that you looked at this question with data in hand. I agree that without "the denominator" as you mentioned you can't really calibrate if there's an "edge" to being in the Valley.

You mentioned this, but I think it's worth reiterating, that in the (old) VC startup game, having access to large amounts of capital was critical, and the Valley clearly has an edge with that metric. However, I think this is changing. Startups will always need access to the "right amount" of capital to grow their business, but it could be that trends toward more capitally efficient companies and business models/strategies will further skew results away from the valley.

Speaking of capitally efficient... I see you have BuddyTV listed as an exit for Seattle, WA, I'm pretty sure Andy and David would disagree... they're still independent and working on making it big.