The NY Times recently published an article which intimated in no uncertain terms that to do a successful technology start up you need to be in Silicon Valley: It’s Not the People You Know. It’s Where You Are.

Rather topical, given the debate downunder as a result of the Bulletin article on Web 2.0 entrepreneurs leaving Australia for the Valley.

My take on this perennial debate is:

It’s Not Where You Are. It’s the People You Know.

Both New York VC, Fred Wilson, and Fred from We Break Stuff strongly agree.

The best view on this though comes from Erik Schwartz:

I lived and worked in Silicon Valley for 14 years. I’ve worked for:

-Big overfunded startups in the valley

-Little underfunded startups in the valley

-Big companies in the valley

-Little companies in the valley that became big while I was there

Now I’m doing a new start up, that is not in the valley.

If an entrepreneur has never worked in the valley, then I think it would behoove that entrepreneur to very seriously consider founding a company there. SiliValley has a community that is very valuable to the entrepreneur.

But I’m already a member of that community. I have all of those contacts and relationships. I communicate with that community every day via email, phone and blogs.

There is also a lot to be said for NOT founding your company in the valley. There is a serious “valley myopia”, particularly in regards to understanding mainstream customers for consumer products. This leads to a lot of people blowing smoke up their own asses (see Bubble 1.0). Infrastructure (office space, services, cost of living) are as expensive in the valley as they are in Manhattan. Traffic sucks and the public transit system is a joke.

The answer as I see it is that it is essential to have a Silicon Valley network and mindset, where you base yourself is irrelevant so long as you have good infrastructure (broadband, etc).

That said, the Valley sure is a blast and I love getting my fix (at least once a day :).

I’ll give the last word to Nik Cubrilovic, who is currently living the Valley dream:

Or you get the best of both worlds, like what we have done at Omnidrive. We keep a really thin presence in the valley and have all core engineering back in Australia and in our office in India. I split my time between the valley and Australia and take the best parts out of both (eg. fundraising, partnerships and BD, legal advice, advisors in the valley – engineers, larger office space, support, etc. in Australia and India). I don’t see why more companies don’t do this – being in the valley doesn’t mean that you need 20 people here and a huge office – you can suck up the best parts of being here.

I also know some companies that have a split between the valley and some other part of the USA – and it works well. Don’t think that you need to relocate everything to take advantage of the valley.

Ben: Coming from Australia, I had no problems registering a company, opening a bank account, getting legal representation and raising money within the first 7 days. Also my personal situation has been sorted out where I can get a phone, rent a car, have a credit card etc. and that didn’t take long either. If you need some tips shoot me an email on nik at omnidrive.com

I have worked in 10 countries on 4 continents and the valley is by far the best place to either start or do business – this whole damn place is built around and geared towards tech startups

Living here though, is something else all together 🙂

Gotta run, call coming in from …Palo Alto.