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Sergey Brin: Don't Come To Silicon Valley To Start a Business ( 103

An anonymous reader shares a Business Insider report:If you're itching to start a company out of a garage, then you shouldn't pick up and move to Silicon Valley, according to Google cofounder Sergey Brin. It's easier to start a company outside the Valley than in it, he said onstage at the Global Entrepreneurship Summit. "I know that sort of contradicts what everyone here has been saying," he said with a laugh. "During the boom cycles, the expectations around the costs -- real estate, salaries -- the expectations people and employees have ... it can be hard to make a scrappy initial business that's self-sustaining," he said. "Whereas in other parts of the world you might have an easier time for that."But he adds that Silicon Valley is good for scaling that opportunity.
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Sergey Brin: Don't Come To Silicon Valley To Start a Business

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  • by Anonymous Coward

    It's a good place to run your business if your business happens to have a lot of money. You can use that money to make even more money, if you're good at that sort of thing. You can also burn through a tremendous amount of cash without anything to show for it.

    • by Anonymous Coward

      When we discuss stuff like this we need to consider that the Web 2.0 bubble has already burst. It wasn't a spectacular burst like the initial .com crash, but the burst has still happened.

      We've seen IPOs dry up.

      We're seeing little to no growth for the major incumbents, even if they haven't completely flamed out yet.

      People are tiring of Facebook, Twitter, and nonsense "social media" (with is mainly about subjecting users to ads).

      LinkedIn, one of the Web 2.0 darlings, was just bought out by Microsoft.

      The Ruby

      • Re: (Score:3, Informative)

        We've seen IPOs dry up.

        What you seen is venture capitalists and investors no longer throwing money at every potential "unicorn" (a startup with a $1B+ valuation) that comes along. A lot of these unicorns have very little to show for after blowing cash through the wazoo. One notable unicorn had to cut back on employee perks because it was costing $25K per year per employee. VCs and investors want to see profits from business operations. That's not a bubble bursting, it's reality sinking in.

        • by Anonymous Coward

          That's not a bubble bursting, it's reality sinking in.

          What the hell are you talking about? That's exactly what a bubble bursting is: it's reality sinking in.

          Expectations adjusting downward to match reality is the bubble bursting!

          The expectations that are lowered include the value of companies and their stock, the salaries that employees will receive, the demand for products and services, and the understanding of what's viable.

          You apparently don't realize that you just described the bubble bursting, while at

          • by DiSKiLLeR ( 17651 ) on Monday June 27, 2016 @01:05PM (#52399807) Homepage Journal

            Erm, no.

            It is reality sinking in but it is not a bubble bursting.

            The dot com bubble of 2000 was a bubble bursting.

            The housing crash of 2007 was a bubble bursting.

            But prices of companies, real estate, and so on regularly go up and down and sometimes go down sharply (eg. LinkedIn) when 'reality kicks in' but that that not automatically mean a bubble has burst.

            They're too different events - one is of a smaller scale the other is of a much LARGER scale that results in a large economy wide event that impacts everyone.

          • Expectations adjusting downward to match reality is the bubble bursting!


            Does this make you feel better?

            You apparently don't realize that you just described the bubble bursting, while at the same time misleading yourself into thinking it hasn't just burst!

            I lived through the bubbles bursting prior to the Dot Com Bust in 2001 and the Great Recession in 2009. Companies went out of business, empl

            • During previous "busts" most of the people I knew in companies that were making profits kept their jobs. The job losses in the Silicon Valley are seemed to be from all those companies whose money was only in stock valuations. Of course that caused ripples across the country and world and seriously hurt retirement plans of everyone who kept their jobs. But utlimately it was just another California gold rush revived, with major financial experts getting conned into investing in the new econmy. The housing

              • We really need the "experts" to focus on fundamental basics in the economy instead of irrational exuberance.

                That's what the VCs and investors are doing to the unicorns by forcing them to focus on profitable business operations and not offering endless perks for employees.

                • Everyone talks about unicorns but they were always extremely rare (thus the name).

                  • Everyone talks about unicorns but they were always extremely rare (thus the name).

                    The line I picked up from a recent WSJ article that VCs and investors were funding 20 potential unicorns per month, which is a much slower rate than last year. Unicorns that made $1B+ in real money averages to two per year.

                    • Everything is a "potential" unicorn. No one has any clue what an unfunded company is going to be worth when they have no product, no employees, and only have a business plan that says "we're going to replace Facebook!"

                      Turns out sometimes it's the company you overlook that is purchased by Google for over $1B (which greatly increases the statistics).

                    • [...] a business plan that says "we're going to get bought out by Facebook!"

                      FTFY - The dot com version had Microsoft as the fantasy buyer.

                      Turns out sometimes it's the company you overlook that is purchased by Google for over $1B (which greatly increases the statistics).

                      I worked for a company that went on a buying spree prior to the dot com bust that paid two to four times more than what each acquired company was actually worth. Something that Google found out when they bought Nest for $3.2B in 2014 and recently halted unlimited funding that the division enjoyed for showing little in return.

      • Web 3.0 is about the merger of browsers and apps with advantages of both and no longer see the distintion between the two. Apps were a temporary aberration to wall of pieces of the internet often for financial gain. No longer will there be the tyranny of of app store censors.
      • by epine ( 68316 )

        The United States can always be relied upon to do the right thing — having first exhausted all possible alternatives.

        In a similar vein, the valley can be relied upon to solve real problems — after financing all possible alternatives.

        Whatever goes on, there has never been a shortage of real problems out there. Solving a real problem ties your capital up for a longer stretch of time. No VC worth his salt would choose to do that, when the alternative is a quick in-out. After a decade where "scale

      • Oh, pish-tosh. There will always be another bubble. The region's real Estate is riding high upon one right now, and there's no shortage of fabulists remaining in the valley.
    • Most startups here only have a goal of being bought out. Actaully becoming profitable is not in the plans. Their operations consist of continually going to all the countless conferences and trade shows that may be related to their "business". Basically, they're scams. The few honest ones may have a couple people mainly acting as consultants and other work for hire.

  • Translation (Score:5, Insightful)

    by Bovius ( 1243040 ) on Monday June 27, 2016 @12:05PM (#52399301)

    "Do the riskiest part of starting a business somewhere else. Then, when it reaches maximum future potential, bring it to Silicon Valley so we can buy it out from under you for a song and make a ton of money."

    • by PPH ( 736903 )


      Location doesn't matter until it's time to put your startup under Alphabet's management. 'Future potential' is the acquisition price Google and others are willing to pay. Not the earnings potential.

      OTOH, if you want to be bought out by Microsoft, come to Seattle.

      • As far as I can tell, location doesn't matter for Google acquisitions except that if you aren't located near an appropriate Google office you may have to pack up and move post-acquisition. I suppose it *might* be a little easier to get someone to come look at you if you're in SV, but I doubt it makes much difference.

        What really matters, I think, is being somewhere that you can get the talent and resources you need to build your business. SV is good because there are lots of talented people around, but tho

    • by halivar ( 535827 )

      That "song" you sell it for is retirement in Tahiti. I envy entrepreneurs who receive the opportunity to have their work stolen thus.

  • by Thud457 ( 234763 ) on Monday June 27, 2016 @12:18PM (#52399439) Homepage Journal
    payroll's a bitch when your employees have to be millionaires to afford their very own hovel.
  • I am sure there is space at the incubator.

  • by PopeRatzo ( 965947 ) on Monday June 27, 2016 @12:28PM (#52399509) Journal

    It sounds like Sergey Brin is tired of having to wait in long lines at the In-and-Out Burger.

  • by DidgetMaster ( 2739009 ) on Monday June 27, 2016 @12:31PM (#52399543) Homepage
    There are many places around the country (or the world) that have good talent and moderate to cheap living expenses. Those are the best places to get a tech business off the ground. You will probably have more trouble finding funding for your idea, but startup costs are much lower than in Silicon Valley. I am trying to start up my own business and it is a lot of trouble to find investors. It can be depressing to read about guys with great connections in SV who get $20 million in funding for some idea with a potential of about 10% of what you think your idea will do; yet you can't seem to get even seed funding of much smaller amounts. It drives you insane when someone gets $100 million in funding for a really bad idea that you know will crash and burn in just a year or two.
    • Re: (Score:2, Informative)

      by Anonymous Coward

      I am trying to start up my own business and it is a lot of trouble to find investors.

      Is it really that capital intensive? Can you start off small?

      Here's a strategy that I've seen work time and time again: start local and small and build a profitable base (of course CYA on the IP department with patents, trademarks and copyrights - if you want.). Expand with retained earnings. Nothing proves a concept like actually being a profitable business. And it gives you leverage with investors - "I don't NEED you, I just want to get bigger faster." or "I need more capital than I have because [insert

      • No. It doesn't take a lot of capital, but it is a pretty big software project that needs a lot more work to finish. I have already invested a couple hundred thousand of my own money and thousands of hours of time. I just need more resources to finish it. It is going too slow to finish with just a few part-time guys.
      • by quetwo ( 1203948 )

        It depends on the business. Certain businesses can start off small and build up. Some require a lot of capital up front (think, hardware or biotech), where others can rent space from AWS and just pay salary for the first few employees.

    • by houghi ( 78078 )

      The thing is not that you think that others have only 1/10th of the potential. The problem is that you think you have 10* the potential.

      And don't forget they a paying into the whole package and perhaps they don't like you as a person or they like you but you are too nice or are percieved too nice or not nice enough or whatever.

      You also have no idea how hard the others worked to get where they are.

      • I was not trying to compare my project with any one other project in particular. My comment was merely pointing out how funding amounts do not always correlate to the value potential of an idea. If you have a great idea that you think has a ton of potential, it can be very easy to see lots of other ideas that seem (to you at least) to have a much lower potential, yet are able to attract lots of money. It's not that you are the wrong person, or that you idea is dumb, or that others worked harder. It is just
  • He doesn't want to have to compete with new startups for employees.
    • by Anonymous Coward


      While I don't think that he's particularly wrong, it seems a bit self-serving to push people out of the area. The advice should be to setup the business where it's affordable, but be open to hiring from anywhere, including Silicon Valley.

      My company has employees in that area and our headquarters has moved to be near Google's (just in respect to location, not as a reason), but the majority of our employees are not in the Silicon Valley area, including myself.

  • by cats-paw ( 34890 ) on Monday June 27, 2016 @12:53PM (#52399705) Homepage

    The healthcare situation in this country is so fucked up.

    At least when you are paying everybody as little as possible to get off the ground, they will have good healthcare.

    • by Anonymous Coward

      This is not flamebait - we, as a Canadian business, have the majority of our customers in the US but every attempt to onshore employees has been blocked by this medical cost wall.

      We haven't tried since Obamacare - would that drop our out of pocket by 50% to provide coverage similar to Canada?

  • Great advice (Score:4, Informative)

    by sootman ( 158191 ) on Monday June 27, 2016 @01:25PM (#52399949) Homepage Journal

    Start your company anywhere... but if you want VC money, get your ass to Sand Hill Road [] because VCs can't see past the end of their own driveway.

  • Worked and lived in Mountain View in the late 1980's; visited the peninsula many times since then.

    Got out when I realized that I would not be able to afford a house unless I hit the startup lottery.

    Also, realized I did not want to rear children in either side of Palo Alto (east or west).

    Still, having some direct experience of Silicon Valley has been useful ever since; it helped me get every job I've had since that time.

  • That's very odd to hear him talk about "self-sustaining" in Silicon Valley. I didn't think that *any* businesses started in that neck of the woods were "self-sustaining". I got the impression that everybody starts a company with somebody else's money and then sells it before they burn through all of the cash. Are there are Silicon Valley startups that have been self-sustaining in the past few decades (other than traditional businesses, of course, that actually have to ear a profit to stay alive).
  • Like I'd take advice from some nobody named "Sergey".

  • So like India for example.
  • High-Tech rednecks are a lot less expensive to hire than Hipsters and Yuppies.

    Heck I can get a website cobbled together for a case of beer and one visit to a strip club.

  • You are far less likely to get VC funding if you are not physically in the Bay Area.

    Yes, it is cheaper and easier to start a business outside of the Bay Area. But if you want the VC funding, you better be there. Then you can move your operations out...

Put not your trust in money, but put your money in trust.