If you are building a startup, it really helps to be in a city like New York

Okay, first, there is this:

Y Combinator is in the Valley. Y Combinator has done something remarkable. I think Y Combinator is the reason we have a new species in town: the super angel. But Y Combinator is in the Valley. Being in the Valley, in the Valley alone is a disadvantage. People don’t buy servers anymore. They have Amazon web services. Times have changed. Some of the best programmers I know are self taught people. All the material you need to teach yourself programming is available online for free. And so the idea that you have to be in the Valley to be part of the action, well, that is passe.

Passe? That might be overstating it. The Valley has great strengths. I’d qualify what Techstars is saying there – location still matters, though the Valley is not the only location that matters.

I lived in Virginia for most of 10 years, and worked for odd startups like Monkeyclaus. While I was in Virginia, I was willing to go along with the argument that you could be anywhere and build a successful startup. Eventually I stopped believing that and moved to New York City.

Successful startups have emerged from diverse places, so clearly it is possible. But is it likely? This is a question I started asking myself a lot, toward the end of my time in Virginia. Are you likely to start a successful startup in Virginia? If yes, then where are they?

If you put some time into, you can find some of the startups that have come out of Virginia. To name a few:

AOL

Hotelicopter

Rosetta Stone

If you go search Google, you’ll find a bunch of sites that theoretically list startups in Virginia. But go look at an actual list, such as Beltway Startups, and you realize that a lot of these are older, established businesses, that maybe just happen to be investing more in their web presence, or they happen to be in software. A lot of them cater to the government, which makes sense for businesses in Virginia and Maryland. There is nothing wrong with that, but when I hear the word “startup” I normally do not think of a business that has been around for 40 years and makes most of its money supplying the government. I use the word to mean something like what Peter Drucker talks about in his 1985 book Innovation and Entrepreneurship: a company that is trying to bring about radical change.

Very few successful startups have come out of Virginia. This could change, but for now, the statement is true. There are many smart people in Virginia, but if they are ambitious, and focused on tech, they tend to migrate else where. What’s somewhat common, in that regard, is a story like what happened with Reddit – Steve Huffman and Alexis Ohanian met at the University of Virginia, but then soon got out of there. Or, if I might offer a personal anecdote, Darren Hoyt and I met in Virginia, and we worked for a startup there, but both of us had moved to New York City by the time we started WPQuestions.com.

Why can’t a place like Virginia be a world capitol of startups? I think Richard Florida covers this fairly well in his book The Rise Of The Creative Class. Creative people tend to congregate in the cities. He has argued that tolerance of gays can be used as a fast heuristic for determining which areas are going to do well. In any era, there is going to be some group that faces discrimination, and tolerance of that group will offer a litmus test of that society’s openness to new ideas. 100 years ago it was tolerance of Jews that marked which nations were open to innovation and which were not. Nowadays, its the gays.

As Richard Florida says, creative people will flock to the cities that offer tolerance, culture, infrastructure, connections and money. These are things that a place like New York City offers, and Virginia does not.

Some people will read this and argue: if you believe that location matters, then you should move to the Valley, it’s clearly the world capitol of startups, and offers everything just listed: tolerance, culture, infrastructure, connections and money. I’d argue though that the top centers offer different mixes of those attributes, and the mix matters a great deal, both in terms of personal preference, and also in terms of the changing circumstances of the world. New York City, for instance, has a long history as a center of publishing, broadcast and the arts, and so it remains a vital center for anything having to do with content.

At this moment, New York’s rise as a center for startups seems inevitable. Partly that is due to its strengths. Partly that is due to the fact that there are now a critical mass of us here that want to make it happen. Certainly, I personally want to make it happen, and will work toward that goal, with whatever limited resources I can bring to the task.

Nevertheless, I disagree with the dismissive tone of Techstars’s criticism of Ycombinator. Being in the Valley will not be a disadvantage during the foreseeable future. Location does matter, and Ycombinator is in a fantastic location.