This is Michael Seibel with Dalton Caldwell. Today we're going to talk about: does your startup need to be in San Francisco? Oh, man. We're wading into the debate of the moment. Why don't you kick it off? You've got a controversial video.

How about this? Yes. Usually in these videos, you and I just agree on everything.

I do. It's boring.

We disagree.

Strongly.

We have a different opinion here.

I'm so confident you're wrong.

Okay. Good start. Let me start by saying I don't think every startup needs to be in San Francisco to be successful, and that you could build a successful startup and not live in San Francisco.

Please. Please share.

A lot of the reasons that folks read the discourse about San Francisco — and man, there's a lot of discourse — is they're very fixated on the lifestyle of living in downtown San Francisco. They see all the photos on Twitter, they hear the stories, it's all over national media. My parents know all about it. My dad's like, so how's it going in San Francisco?

For me personally, I actually prefer not to live in a dense city. I like living in a place that is warm and bright and sunny, and I can walk around and the birds are singing and there are trees everywhere. I like living in a boring place, personally — I'm speaking for myself — where there's not a lot of distraction and I can just focus on the work I'm doing. Not really intense stuff going on around me all the time. Also, as you know, I've got small children and just for my lifestyle and the happiness of my family, I prefer to live in a different environment.

You like having a yard?

I do. Okay, I enjoy those things. I think sometimes what people forget, especially those who aren't in the Bay Area, is that the actual big employers for most folks in tech are not in San Francisco.

They're down south, yeah.

Google and Facebook and Apple — the Apple HQ is in Cupertino, nowhere near San Francisco.

All those old, boring companies, yes.

Clearly, in the history of this stuff, all these great companies were built outside of San Francisco. Look at how many of the most epic companies in the world in tech were actually built in San Francisco. It's actually not that many. To argue that every company has to be in San Francisco is factually wrong.

It's fair. Here's why you're wrong. I live on Market Street. Just to be clear. For me, growing up, living in a city was aspirational. I spent my high school and middle school years in a suburb of New York. When you do that, you know.

I know — it's New Jersey, right? Whenever someone says "suburb", thank you. I'm from New York. Well, where exactly?

We're from Connecticut. They're back.

They're like, well, upstate.

Middle school and high school in New Jersey. When you're growing up in a suburb of New Jersey, you know where you are is not where the action is.

It's true.

You know. Almost by definition. At least for me, I perceived getting to the city as part of growing up, becoming an adult. That was a big part of my mentality. Two, I like nice restaurants and nice bars. Those things don't exist in the suburbs. I know someone's going to be in the comments saying, but in my suburb there's — no, no, it doesn't. Sorry. It's just good for where you live.

Another thing that I like, especially as a startup founder, is having a chip on my shoulder. I liked being in a place where there were things I couldn't afford, where there were places I couldn't go unless I was more successful, where I could see what success could get me. I always felt like the suburb tried to hide that away. Everyone was in the same kind of house in the development, and we all have our own space. We can't see each other. I like seeing what, if we were to make it, I might be able to get. That was really amazing.

Also, I spent my first nine years living in a city in Brooklyn. I was used to living in an apartment. That was never weird for me. There are a bunch of amazing newer companies: Uber, Airbnb, DoorDash.

I don't know those. Well, DoorDash was Palo Alto Food Delivery. That was the original name. They didn't move there. They didn't start there.

And they moved. They moved. I think my core point is that the city is the better place for a young startup founder to get ahead. Now, this is kind of a fake disagreement because if you've been parsing our words carefully, we're talking about living in the Bay Area. I'll ask you straight up, Dalton. Would you recommend someone start a startup outside of the Bay Area?

Yeah. Well, I genuinely would not.

We agree.

The part we're agreeing on is that, again, think about it — we're working together, we're in the same room right now. We get to live in the same area, even though our personal decisions about where we live are wildly different. We have very different lives.

I don't have a yard. I have kids too.

What's cool is we get to work together and we get to work with all these amazing people. Yet we have very different choices on how we want to live.

That would only happen here because this place attracted both of us. I think that what's not spoken about enough, and it's a point you make a lot, is that there are certain cities that are just better, and there are certain regions that are just better. We can talk about all the reasons why, but if you want to be the best in finance, you're probably going to find yourself in New York. If you want to be the best in entertainment, you're probably going to find yourself in LA. The reason why is because when you want to be top 0.001%, you want to be around other people who are trying to be top 0.001%. I think both of us wanted to be top 0.01% in startups. You're from Texas, I'm from fucking Jersey — we didn't grow up here.

Yeah, that's true.

We made our way here, and when you're here you get to be around all the other people like us who were looking to be the best and willing to get in the car and make our way here to do it. I think that's a huge, huge fact.

I think a lot of the folks that I talk to have the opinion from reading Twitter and reading all this stuff that they all need to agree with you on this point. They're like, if moving to San Francisco means...

If they live downtown, in the Tenderloin.

They're like, it means you have to make some really serious...

If there are protests on the weekends.

Yeah. But again, I talk to people when I find people. I think a lot of people have a lot of anxiety about these issues. Again, what they don't realize is, do you know how many people live in the East Bay and on the peninsula?

It's a huge area.

It's a huge area. We all get to work together. We get to make our own decisions. We get the benefits of living in the Bay Area and having the network effects of the city without all living in — our lives are not the Twitter thread showing photos of what's going on in downtown San Francisco.

One, I think what's tricky is that there are all of these embedded interests who I think are influencing startup founders. The politicians who are like, oh, come to my city, come to Miami, because we're trying to make it startup-friendly. Those politicians — what they're looking for is tech jobs. What they really need is a Google office. They're not going to get the Google office by having a startup culture, but those politicians didn't realize that. There are other people who are just looking to flame folks on Twitter. The easiest way you could do that is start posting shit about San Francisco and then get into some debate. I think the smartest founders look past that. They look past all these stupid debates, and one of the things I think they see about the Bay Area is the network effect. So what's going on here? Why do billion-dollar companies just seem to keep popping up decade after decade here?

Well, I think, look, network effects are powerful. We know this. This is the thing that makes things like Airbnb work, Uber work — all the startups. Network effects are really powerful. That's why Facebook has any value at all: network effects. Basically what's weird about network effects is if you're not benefiting from them, you don't know what you're missing. A lot of the times when people want to talk about, well, I don't need to live there, blah, blah, blah — okay, that's fair. You won't know what you're missing. It's all the things that won't happen. It's all the people that you won't meet, all the chance encounters you won't have, all the employees you won't have. All these surface areas for luck. I like to talk about how to maximize luck. Think about how many people — again, let's talk about non-tech. If you want to make it as an actor, think about how many people's story of their big break is that something happened in Los Angeles or New York, or a band that moved to Los Angeles or New York. When the actual moment happens when someone spots them or finds them or...

That lucky moment.

Whatever that is. The work that they did before that was to put themselves in that position. No one is going to take someone that's outside of this area and tell you this is why, this is what you're missing out on.

I think the people here sometimes don't understand the network effects they're consuming. You and I both saw a lot of people leave the Bay Area during COVID. All of them came back. And they also...

They don't say that as publicly.

They don't say that as publicly. They all came back, yeah. All of them said the same thing, which was basically, I missed the community, but I never really understood that I was consuming the community. I thought I was working all the time and da-da-da. But I actually was consuming a community of people who were really into startups. When I moved to Seattle or Austin or New York or da-da-da, that community wasn't as strong. I missed it.

But isn't there tech there? There is good lifestyle there, but that's not startups.

Yeah, but there's tech there. Startups are different than tech, yeah. I think what's so funny is that this is counterintuitive and hard: the people who don't consume the network effects don't know what exists, and the people who do consume the network effects sometimes don't realize it exists either. This is a subtle point. It makes sense that people will be confused by this. When you add in some choice photos of San Francisco, it makes sense why people would say, why don't you do this anymore?

What I will say though to finish this point is I think one of the slightly dangerous things that sneaks into this startup game that also causes people not to want to come here is that people don't realize that they need to be aiming for greatness. I always like to equate this back to sports where there are so few spots in the NBA, let alone on the All-Star team, let alone in the Hall of Fame. The bar is so high to get into the NBA that anytime you're a basketball player anywhere, you want to be the best basketball player on your high school team, on your AAU team, on the invitation. You want to be the best possible player anywhere because you know that the average NBA player was the best basketball player anywhere.

I think that sometimes startup founders miss this point. They're kind of like, I want to be in the game versus I want to win the game. I think it's really easy to say, well, I can be in the game in Austin. I can be in the game in Seattle. There are investors there. There are people there. I can be in the game in New York. I wish that we were more honest. Yeah, you can play basketball for your high school team. But that's necessary but not sufficient to make the NBA. If you want to be a great founder who really impacts the world and helps lots and lots of users, you have to aim for greatness. You can't just aim for being in the game.

I actually just bring it back to statistics and odds. Let me be really precise, because I can imagine how some people will respond to some of the things you're saying here. They're going to throw anecdotes at us. They're going to say, there's this, and there's this.

Shopify is in the middle of it.

And it's true. I have nothing to take away from those things.

MongoDB is in New York, and I've been told that by every fucking New York founder. For a decade. MongoDB.

Yeah, great. Again, good for them — rock and roll. But the point is, we're actually trying to impart advice to increase your odds of success because just like with people that want to become Hollywood celebrities or rock stars, there are certainly anecdotes of people that were discovered and everything slipped into place for them. But if you actually just look at the numbers of how you increase the odds of success, moving to an area, moving to the big leagues was a key part of it. I would just encourage folks that are unsure about this debate or don't have their mind made up to realize that the anecdotes are true — you can do a startup outside of the area. Maybe there's a really good reason you want to do that. I don't know, sure. Maybe there are health reasons or family. Great, of course. But if all you want to do is play the odds and optimize for success, I can't really understand why you wouldn't want to be here. I think that's not anecdotes. That's numbers.

That's just numbers. Yeah. It's funny because I was thinking about this in the context of a casino. I'm like, imagine you sat down at the blackjack table, but you didn't know basic blackjack strategy.

You know when to double down, when to split. You can still win.

You can still win. You can, but it is so easy to get that one hour of instruction and that increases your odds so much. Getting to the Bay Area is so relatively easy compared to all the other things you have to do to succeed. Choosing where to live is so relatively easy compared to all the other things you have to choose correctly. Why not pick up the easy wins? It's an easy percentage multiplier. I'm like, this game is so hard, you might as well take the easy ones.

So to wrap it up, we have a strong disagreement. I think the suburbs are horrible. Dalton clearly likes them. But at the end of the day, there's room for both of us.

Yeah, we're both in the same ecosystem. And we're both working together.

And we're recording this video in the fricking suburbs, too.

We came to my place to do the video.

All right. Great chat.