Should You Move Your Company to Silicon Valley? - Eric Migicovsky, Pebble Founder

Today I want to talk about the question: Should you move your company to Silicon Valley? This is a question that's pretty close to my heart because I started my company, Pebble, in Waterloo, Ontario, and I decided to move my company to Silicon Valley after getting into YC in 2011.

The simple reason why you should probably move to Silicon Valley is if your customers are here or if you think that Silicon Valley companies or people will make the best first customers. The easy answer is yes, you should probably move to Silicon Valley because it's always better to be close to your customers. It gives you the ability to iterate much more quickly because you can quickly get feedback from your customers, build solutions for them, and iterate.

Otherwise, the question of whether you should move to Silicon Valley is a little bit more nuanced, especially now. Silicon Valley is a very expensive and intense place to start a company. There are a couple of really good reasons why you should move your company to Silicon Valley, and one pretty major reason why you should consider not moving your company to Silicon Valley.

The first is the network. It's hard to overrate how important the Silicon Valley network is for startups. In my case, I moved down to Silicon Valley and experienced things like sitting at a table at a coffee shop with a person at the other table who was working on a piece of electronics. I interrupted him and said, "Hey, what are you working on?" It turned out that he was this open-source creator that I've been following for years on the Internet.

At one point, I emailed one of the original employees on the classic Macintosh team and said, "I'm working on something similar but on the wrist instead of a big computer." Within a couple of days, we went out for lunch. That kind of thing is only possible in a place where there's a high density of tech, you know, very intense tech people, and that's what's happening here in Silicon Valley.

I'd say that the network here, the high-density network, is really important at inflection points of your company. For example, when Pebble kind of struck big on Kickstarter, that evening or that night, I was still up and had questions about what was going to happen. I ended up going out for burgers at 2:00 a.m. with a friend that I met through YC, and we basically charted out the course for the remainder of our very successful Kickstarter.

This is something that having experienced working on a company outside of Silicon Valley is pretty much only available here and can be immensely useful for an early-stage company. The second argument for basing your company here in Silicon Valley is slightly counterintuitive. People outside of Silicon Valley usually assume that because there are so many great companies that they read about on TechCrunch and the blogs here, it's hard to rise above the noise.

That's true; there are a lot of amazing companies, and sometimes it feels really bad to think about like the latest photo-sharing company raising 40 million dollars, and you know you're not able to raise that seed round, and it sucks. But at the same time, being here creates this really important sense of pressure on you to perform better than you would have if there were not other companies that were, you know, just breaking records and achieving amazing things around you.

I really felt this strongly when I was back in Canada. I felt like because the other companies around me weren't achieving amazing things every single day, it was easier to rationalize how slow my company was moving and think, "Oh, maybe I am proceeding on the normal course for my startup." When I got down here to Silicon Valley, I felt like everyone was building these amazing companies, and I needed to move faster. This turned out to be a really good forcing function for me, and I realized that, you know, the first three years of my startup I could have achieved in six months down here in Silicon Valley.

On the negative side, I gotta say that Silicon Valley is very expensive. I was paying 450 bucks a month to rent my place in Waterloo, Canadian dollars, and there was a certain amount of sticker shock to see that it cost three thousand dollars a month to rent an apartment here. That has a lot of follow-on effects. Salaries are very expensive at big tech companies, so it is harder to recruit, and this is definitely something you need to recognize before considering a move out here.

It is expensive. Some of the ways that you can mitigate this are maybe before you start your company, come out to the Bay Area and get a job at a big tech company. You'll earn a lot more money than you might be able to back home, and you can put that money away if you save carefully. For eventually when you do start your company, you'll also have the benefit of a built-in network from people that you've met through working here in Silicon Valley that you might work with when you eventually start your own company.

So there are a few important reasons why you should consider staying where you are and not moving to Silicon Valley. The first one is if your customers are all based in the city or in the region that you already are in, you should probably stay there. It's much better to be close to your customers, especially at the early stage when you're still trying to get product-market fit.

The second main reason to stay where you are is if you have some sort of built-in unfair advantage. Maybe you're commercializing technology coming out of a research lab, and you have a direct connection to the professors and to the people who created the technology that would be critical for you figuring out whether it's going to work. Or maybe you have a connection to a really good pool of potential candidates that you would like to hire, and it's even better if it's in a lower-cost place because your investment dollars might go further.

If you decide to proceed down this path of staying outside of Silicon Valley, I would highly recommend spending time in the Bay Area to build a network, especially if you're planning to proceed down the kind of YC startup—the Westies' definition of what a startup is. If you're planning to raise money, if you're planning to be a high-growth company, it's extremely valuable to build a network in the Bay Area.

That's why, you know, YC is built in kind of the perfect way for an international founder who wants to experience what it's like in the Bay Area. The program is three months. We don't require that the company moves here. We have plenty of companies that go through YC, spend the three months here, raise a seed round, and then go back to wherever they're based because they have some sort of unfair advantage back there.

So, to sum up, here's why you should probably move your startup to Silicon Valley: If the customers here are going to be your first customers, then it makes sense to base yourself close to those customers. The second one is Silicon Valley has an unparalleled network. It's an extremely high-density environment of super smart tech people who've done it before.

The third reason is that it actually provides a good forcing function for you to do better because you're constantly benchmarking yourself against other really successful companies here. But it's an expensive place to live, and it's expensive to hire. That's something that is sometimes very difficult for early-stage companies.

But at the end of the day, the weather is amazing, so you should consider it.