Yesterday a friend who works at a large company and is experimenting with a side project had heard from several founders that given the type of product he wanted to build, he should relocate to the valley.
I have heard many variations of this advice so I wanted to give him a framework to think through this issue.
I initially thought the debate was very simple and based on customers alone. For cutting edge early adopter customers of any type – consumer or business, there’s no better place for a startup to be than where their customers are.
Then I also looked at the problem as one that has multiple dimensions.
The dimensions are:
1. Customers. Specifically type of customers – Cutting edge consumers on smart phones – Valley. Later stage consumers using SMS on feature phone – India, etc. You get the drift.
2. Financial situation of the founder. The valley is expensive. India, not so much. You can build a product and experiment until you get some initial version or product market fit at a far lower cost than the valley. Especially if you are a non-developer founder. Even if your customers are in the valley, you can have one founder in the valley or go to the valley every few months (its tough, but possible).
3. Stage of the company. Earlier stage, with rapid iteration it is better to be where your customers are, but honestly it can be done with remote customer meetings using web conferencing.
4. Product. Most founders tend to think what they are building is unique, but that’s never the case. There would be at least 10 other folks who are aware of the problem and possibly trying to solve the same problem. If the product is relatively simple from a technology standpoint and requires a lot more business development and sales execution, then its preferable to be in the valley would be my thinking.
5. The entrepreneurs network. Most entrepreneurs dont realize that it takes significant time to build a good network of partners, investors, customers and employees that are needed to support their venture. I have found (not statistically, but just my rule of thumb) that it takes me 2 years to build a network from scratch in any new area, location or domain. If you have a network in the valley, by all means, move there, but if you dont, getting legal help, hiring the first few employees or getting the first few customers will be hard.
As I follow up to getting funded by US or Indian investors post, I had many folks reach out to tell me that it was not a fair debate. While there were pros and cons, most felt that the valley was a much better place to be.
All things equal the valley is possibly the best place in the world to start a technology startup, but that does not mean you cannot start at other places and move to the valley later.
Given the type of your customers, stage of the venture, the type of company (B2B, B2C, mobile apps, etc.), the product you are trying to build, financial situation of the founders and your “network”, you will find that going to the valley vs. staying in your home country is a very good debate and a hard decision, not a no-brainer.
I have removed the aspect of obtaining a US visa, which albeit a hard issue, is still a procedural and administrative one than strategic.