This is an account of my interaction with Michael Seibel. I met him at virtual Y Combinator office hours for Stanford students and alumni. He believes that the Silicon Valley still matters despite the new normal of remote work.
– Gobi Dasu, founder of LD Talent.
Michael is a public personality so we are reporting on his thoughts, like journalists, based on what we observed. He wasn’t involved in the writing of this article.
1. The Silicon Valley still matters in the New Normal of Remote Work.
Michael said that the vast majority of companies, whose products we all use, are from the Silicon Valley. These include FANG as well as Airbnb and Dropbox. He said that these companies succeeded because they were part of an important startup ecosystem. Namely, there are important city effects. The valley has greater density of software experts than anywhere else in the world. And, it has lots of founder-friendly investors and funds. For instance, we at LD are thankful to Michael of YC and all the other Silicon Valley funds and accelerators. Many of them listed LD as a resource for their portfolio companies recently.
We at LD have a different view. However, we can’t help but respect the strength of evidence behind Michael’s claims. At LD, we are all about distributed teams, #locationdoesnotmatter, majority world companies, remote work, and decentralization of the internet powers. We think that the whole point of the internet is to democratize power. The internet should prevent, not bolster, the elitism that Silicon Valley represents. Yet, we cannot argue with the pure facts that Michael puts forward. He is right that the Silicon Valley is currently better than the rest of the world combined at producing software companies. Yet, we believe that our generation may change this in the next 30 years.
2. Twitter and Techcrunch don’t represent reality says Michael Seibel
I asked Michael about whether the physical location of the Silicon Valley even matters anymore. The new normal of remote work on the internet has made the workplace = slack and zoom. Michael might have thought my question was far-fetched, but he kindly answered it. I think he had the impression that I was looking at Twitter and Techcrunch a lot. I wasn’t but his point is still important. He mentioned that Twitter is the most visceral. It is full of people who don’t do startups or tech talking about startups and tech. They pose flamy worded questions that exaggerate the situation. Everyone is not leaving the Silicon Valley, some are. Property values are not crashing forever in the valley.
He went on to talk about jobs in the Silicon Valley versus elsewhere. People on Twitter were talking about how people are going to leave the valley. This is exacerbated by the recent remote work pushes by FB and TWTR. They were talking about how salaries are going to drop. They discussed how startups need to focus on hiring distributed teams of developers mostly outside the valley. Michael suggested that this kind of talk is sensationalized and silly. He went on to talk about how most startups shouldn’t worry about this since they’re not ready for this worry.
3. City effects are why Silicon Valley still matters. Overabundance.
Michael described city effects in terms of the word “overabundance”. He said the Silicon Valley is triple threat because it has an overabundance of
- software people
- capital, specifically venture capital
- startup experience
We at LD think this is a strong answer. However, we think it’s also completely changing with the new normal of 100% remote work and distributed teams. The internet is a vast superset of the Silicon valley when it comes to talent. Equity crowdfunding is more popular than before. Also, you also need way less money when you’re hiring from all over the world. As long as you’re not blowing all your money on expensive social media ads like most startups do. Finally as all advice is given online now, it doesn’t seem like sharing startup experience is physically constrained. That being said Michael’s points about capital and connections are still valid to a certain extent. This is because connections are built over time and are influenced by our prior physical selves before the virtual new normal began.
4. Nationalistic Businesses are Stupid. Silicon Valley success is not nationalistic.
This is a point that we at LD really agree with. Being the ecommerce platform of India (Flipkart, acquired by Walmart) is not special. Being the ecommerce platform of the world (Amazon) is special. The Facebook of Russia (VKontakte) is not as good as Facebook itself. The point of startups are to scale to the world not to some specific nationality.
This is important. The purpose of technology and the internet is to break down physical barriers. Technology let firms access all people and markets. The point is to create and share unique ideas for all humanity. It is not to copy one idea from culture to culture. So, I completely agree with Michael on this point.
5. Most startups die before needing to worry about the topics around new normal workplaces.
The question Michael was referring to here is whether Silicon Valley matters anymore given the new normal. And, specifically whether Silicon Valley talent matters.
Michael said that for startups this question really shouldn’t matter. He said that where you hire your 20th employee doesn’t matter. There’s a 99% chance that your startup will never get there in the first place.
At LD Talent, we may have a different opinion. But, we really respect Michael’s emphasis on prioritization of what’s important right now. It’s so true that startups fail because they prioritize the wrong things and go after a market that doesn’t exist.
What’s also true though is that startups fail because they run out of money and they have the wrong team.
Many valley startups raise millions in seed capital. But, they spend almost all of that cash on high Silicon Valley salaries and social media ads. And 9 out of 10 of them go bust. Isn’t that such a waste? They could be so much leaner. Startup teams could be internationally distributed. They could use slack based work sessions to manage projects prudently. They could spend 5K to 50K instead of 5M and build companies that are more effective with better runway.
There is another point regarding “the wrong team”. I think that there is this widespread notion that Stanford roommates forming a Silicon Valley dream team is the only way successful startups can be built. Then if they become successful they can start hiring people in Austin and Raleigh and Bangalore and Prague. At LD Talent, we respect Michael’s perspective on dream team formation. However, we think this line of thinking is too location based for a new normal where everyone is working online. We feel it’s more likely to find the wrong cofounding team if you constrain your search arbitrarily to people within 10 miles of you or even people in the same country as you. People are building trust across borders thanks to the rise of remote work. Even for cofounding equity relationships.
While Silicon Valley centric and somewhat aligned to pre new normal paradigms, Michael’s arguments still bring forward some age old truths. It’s simply true that startup economics are different from traditional businesses. Startups need the absolute best people. They are shooting for scale so 20/hr versus 200/hr is not what they’re trying to optimize on. The founders need to be plugged into the Silicon Valley network. They need to be focused on addressing a huge market with a disruptive solution. Having the right team in the right place at the right time matters more than salaries, rate, and distributed teams, is . Michael advocates plugging into the Silicon Valley network. At LD, we think the new normal has rendered a holy grail, physical location for internet startups (i.e. the Silicon Valley) ironically meaningless.
We are thankful to Michael for sharing his valuable insights. We may have different opinions, but Michael inspires us and has taught us so much.
