I'd been thinking about commenting on Scoble's piece on Silicon Valley for awhile, but hadn't gotten around to it. Here's the bit that I thought was silly:

If you’re a geek outside of San Francisco or Redmond, it’s hard to get a job in the industry.

And, worse, if you are a fledgling company and you need to expand, if you aren’t in one of those areas it’s hard to find great potential workers.

This is part of the echo chamber kool-aid that Scoble (and others, I'm sure) have imbibed. What got me thinking about this again was this post - the author makes what I consider to be a key point:

First, I think the valley is actually an obstacle to doing business. The number one cause is the cost of housing. I work in Seattle. When I price houses in the bay area, they cost just about twice what my house costs. Since I measure salaries in median home price multiples, I’d have to take a 50% pay cut to move there. All bay area companies freak when I simply double my salary when asked about my expectations. Second, the local talent is overrated. Its young (people with low overhead who don’t mind paying $1500 for 400 square feet of living space), but inexperienced. So you need more boy wonders to get the same job done as you might if you hired seasoned professionals. Given a million$ budget, I’d prefer to hire 5 senior guys at $200k rather than 20 at $50k. I’ll get more done.

Very, very true. We happen to be looking for a Smalltalk engineer at Cincom right now (the job will be formally posted on Monday). The Valley is probably not one of the places we'll hire in, even though we have our main development office there. Why, you ask? Raw cost. The salary requirements for a developer in the valley will be at least 1.5 times those of someone living somewhere else (nearly anywhere, other than New York City). As the black bag guy says, I can hire a number of good people outside of the valley for the cost of one there - and it's only getting easier to support remote workers. Most of our engineers are located neither in the Valley nor in Cincinnati (our corporate HQ).

A great example of this kind of thing is DabbleDB. Avi started that firm well outside the valley, and has been growing it organically. I haven't asked him specifically, but I'd bet that Silicon Valley wasn't high on the list of places he and his fellow dabblers would want to go - their standard of living would drop like a rock.

I had this choice myself, actually, back in the 90's when I joined ParcPlace. HQ was in the Valley. They hired me as a trainer/consultant, and the need to travel would have dropped a lot had I moved west - regular classes were taught out there, while I always had to fly (either to CA or to a customer site) living here. On the other hand, my cost of living would have skyrocketed. At the time, my wife and I were able to afford a house that cost (1990) about $170K. The same house in the greater bay area would have been about 3X that. If you think management would have increased my salary commensurately, dream on.

Mind you, there are some flaws in what black bag says as well:

They [Europeans] also balance their lives and walk away from their computers to think now and then. They take holidays. Much was dicussed at gnomedex about the echo chamber. Europeans are better at leaving the echo chamber and experiencing life. The wide range of cultures in a smalll geographic region give them better perspective. They get 6-8 weeks of vacation, free health care, and job security/unemployment benefits lasting up to a year. Tech workers want to give this up? Don’t think so. This is a key advantage.

The cost of living in Europe is a lot higher than it is in most of the US as well. And those labor protections? They are a great deal for the workers who are employed now, but something of an impediment to getting hired in the first place. Europe is not one of the places we are looking to hire, for instance - and a large part of that is the state of labor law.

Bottom line, I think Robert needs to get outside the echo chamber (and I don't mean to Montana - that might be too far out). The Raleigh Durham area, Denver, the Dallas/Fort Worth Metroplex, and the Washington DC metro area are all large tech congregations - and all have far, far lower costs of living than the Valley (even the DC area, which, to be honest, is getting somewhat insane). Right now, if I were planning to start a firm up, the Valley is the last place I'd look. Startups are prone to failure as it is - why increase my costs from the get go?