Something touched on with the piece, but not quite hammered nearly as much as it should have been: switching costs, which have dramatically changed in the past 10-15 years.
The initial round of California VC money came from hardware startups cashing out. Hardware is tied to the physical realm, and thus locality is important - if you need to buy leftover equipment or supplies, it's way easier to get them if you're in the neighborhood as your vendor.
The next round of software startups in the 90s through early 00's had a similar switching cost with VC funding. Though we obviously had telephones and email, we had not fully transitioned into the "remote work" mindset that allows teams to collaborate regardless of distance. It was challenging for VCs to work effectively with their founders, and for founders to work effectively with their teams - which forced teams to co-locate with founders, and founders to co-locate with VCs.
You don't need the world's best software engineers to launch a startup - you can launch something with sufficient complexity to start making money in Denver, or Austin, or Chicago, or anywhere else with a reasonable supply of engineers. And now, VCs are far more tolerant of remote founders given how easy it is to stay in communication. If all that is true, why make things more economically challenging than they need to be by trying to fight the economic headwinds of California?
The initial round of California VC money came from hardware startups cashing out. Hardware is tied to the physical realm, and thus locality is important - if you need to buy leftover equipment or supplies, it's way easier to get them if you're in the neighborhood as your vendor.
The next round of software startups in the 90s through early 00's had a similar switching cost with VC funding. Though we obviously had telephones and email, we had not fully transitioned into the "remote work" mindset that allows teams to collaborate regardless of distance. It was challenging for VCs to work effectively with their founders, and for founders to work effectively with their teams - which forced teams to co-locate with founders, and founders to co-locate with VCs.
You don't need the world's best software engineers to launch a startup - you can launch something with sufficient complexity to start making money in Denver, or Austin, or Chicago, or anywhere else with a reasonable supply of engineers. And now, VCs are far more tolerant of remote founders given how easy it is to stay in communication. If all that is true, why make things more economically challenging than they need to be by trying to fight the economic headwinds of California?