A discussion on the disintermediation of the venture industry.
“Yes, we’ve talked about it.“
A popular topic that everyone talks about in Silicon Valley, is moving away from Silicon Valley, and what that opportunity cost entails. My pitch at Boost VC, has always been that Silicon Valley has fertile soil for starting a business: it has Facebook, Google and Apple within 20 square miles, it has Sandhill Road where all the VCs are, It has the tourist/destination pull of people because of the successes, it has talented people and it has a higher risk tolerance than the rest of the world: Could this be over?
It’s becoming common enough that everyone knows someone who has left the Bay Area. Everyone on some level have whimsically thought about the opportunity of moving away for the lower cost of living. If you watch the H&G network long enough you start to aspire to be one of the bidders on the 7 bedroom $50,000 house in rural Nebraska. Denver and Texas seem to be the most common places where I hear people moving.
Let’s think about what has changed in Silicon Valley:
The internet. We created the monster that will ultimately defeat us :)
I think the internet is having the same impact on Silicon Valley that digital film, Youtube and Netflix had on Hollywood. For a while there were the “film” maximalists. “Film is just better.” And then people started to actually assess the cost of Film/vs digital. And they all decided unanimously “I can’t tell the difference between digital and film anymore.” Story telling is story telling, the medium used will evolve.
Same thing has happened with distribution of valuable content: “The theater is the only way to go.” Is the old way of thinking. Sure, it’s a great distribution method, but pretty soon, the consumer is going to have an equal thought process of something released straight to digital as the things they can access in a theater. In fact, I think that the latest Netflix movies are almost at Theater quality… sometimes better.
And more than that, everyone thought: “You have to make a movie in Los Angeles.” Now movies are being made everywhere. EVERYWHERE. You can access the content from anywhere. In fact, for tax purposes alone, you should not film a movie in LA.
We are in the dawn of the belief that “Silicon Valley” companies have a better shot at success than a company with deep roots in Spain, Russia or Australia. Even more than that, we are US maximalists. The internet is about to eat our lunch.
The power of Silicon Valley hasn’t been taken over, it’s been distributed. We are on an equal playing field everywhere. We all live on the internet now, an equal access playing field. Talented people are everywhere, and the prestige of Silicon Valley is slowly going to evolve, and fade. I wrote a post about how I was in the middle of Spain, speaking with people at the same knowledge level about Blockchain as elsewhere… the world’s knowledge is accessible!
50% of the Boost VC portfolio is international, because the talent is everywhere. Now, as an investor, it’s more important to build real estate on the internet over building real estate on Sand Hill Road specifically. The funds that have put real thought behind their social influence on twitter, and Facebook, I believe will net dividends in the future.
So the world used to be Theater Maximalists, now we are Netflix maximalists. The world used to think you needed to move to LA, now any kid with a camera makes movies. Silicon Valley is getting dismantled the same way.
This brings me back to my original thought, can I move?
No, but not because of the topic discussed. I think in the next 10 years, you will be able to run a dominant fund from any where in the world and have equal access to the best deal flow, but I’ll probably stay in the Bay Area, because my family and friends are here. But I know that the world is changing, I hope that I can be on the right side of history.
By Adam Draper
I ponder as a VC.
It's a quick one minute read to make you think, smile, or laugh.
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