It's nice to see more programs like these starting up, even if they do feel a little derivative of YC. They seem like good catalysts for cities that want to get new businesses operating in them.
The challenge, in my opinion, is that although they can be great for the communities, I think they come at a cost for entrepreneurs.
I've done a lot of things from a distance. After art school I moved away from the city to paint. I reasoned that doing so cut costs and that I could paint well anywhere. Years later I partnered in an interaction design firm in a small town employing a similar rationale. Most recently, we've been working on our startup from Vancouver, which is beautiful and a nice place to raise a family.
In each of these instances, the logic for being away from a center (be it art, design or startup) has been sound. Additionally, there are always strong proponents in these communities to keep people doing "great things close to home." No matter how strong the logic is though, it simply doesn't hold up. There are greater opportunities for those who put themselves at the heart of the "action".
You could likely start a great company in Pennsylvania, but even with low rent and more equity, you'd still have a weaker "deal". The appeal of YC, in my opinion, is that it's so close to where people think in startup-terms and is run by people who actually live in that world.
Although some will bemoan my saying so, the closer you can get to the action, the better. There are probably some great actors in Helsinki, but I bet you'll never hear anything about them.
Well unfortunately not everyone can get into YC or save up enough money to go move to the bay area to fund themselves while developing connections.
If Google had been started in Pittsburgh, they still would have been successful. I heard about Google through IRC back in the late 90s and immediately switched from Altavista because Google was so damn good.
Incidentally, AlphaLab is new, but Pittsburgh/PA has had seed funding through InnovationWorks and IdeaFoundry for some time. It used to be more like "here's $100,000 and you are on your own." AlphaLab is trying to develop a community. Again, I think it remains to be seen how these seed funding ventures turn out. Admitting SV is the only logical choice is premature. Give it time.
> If Google had been started in Pittsburgh, they still would have been successful.
I'm not a huge Silicon Valley booster (I like MA, thankyouverymuch), but I think the idea that Google would have been able to hire as much top notch talent, as quickly as they did, in PA is nonsense.
The only way that Google could have started in PA and been as successful as they have been is if they very quickly moved to Silicon Valley (or - maybe - MA).
I'm not sure that's true. Microsoft and Amazon, for instance, did pretty well in Seattle. And Pittsburg does have CMU, whose CS program comes in right after MIT, Stanford and Berkeley's. It was probably easier for Google in the Valley. How much easier is hard to say.
It was only easy for Google because the had tons of cash to hire people when everyone was getting laid off in the tech bust. They owned the market for top people because of the rare event that many top people were on the market.
You must have missed the point. Google was successful because the founders developed a brilliant algorithm.
But in anycase, Carnegie Mellon is apparently a top CS and business school drawing talent from all over the world including SV. If you really think Google's success was because of additional talent, then I still say Pittsburgh would have been a solution.
But it is absurd to say that it can only be done in the valley. Did Microsoft go to the valley when HP and Apple had a huge presence? No. People came to them.
If it couldn't be done elsewhere, we wouldn't be working on ours in Vancouver. ;-)
Still, if I were 22 and single, I'd start my start-up in the valley without a moments hesitation.
Oh yes, and as for Microsoft--the rules are different for them. (When your revenues dwarf the GDP of some small countries you get a little more latitude.)
To be fair, small business incubators have existed for decades. And yes, I know that YCombinator is not an incubator per se, but the fundamental idea of nurturing a new cohort of startups each year with standardized terms is not exactly new.
We applied to both YC and AlphaLab last year. We ended up being a part of AlphaLab, and I'm so glad that we did. It's been a great experience so far--lots of great advisors and contacts (who knew that Pittsburgh had so many tech companies?) Also, the terms are considerably better than YC. :)
AlphaLab is now accepting applications for the next cycle and they are very similar to the YC applications, so I thought I'd mention this to everyone. Let me know if you have questions!
Nope, but I'm glad that it worked out the way that it did. AlphaLab has been a really great program so far, and the benefits of YCombinator over AlphaLab (ie, exposure to Silicon Valley folk) are not really that important to us. Pittsburgh has a surprisingly strong tech and entrepreneurial community.
oh and hurrah: "As Innovation Works utilizes funds from the Commonwealth of Pennsylvania, each company receiving funding is expected to maintain a significant presence in Pennsylvania after the program"
Yep, that's the one downside. It's the price you pay for keeping significantly more equity (AlphaLab only takes 3%) in exchange for more funding ($25K).
Pittsburgh's a great place to do a startup though. It's a great city, and really cheap as cities go. Whatever money you have for starting up goes a lot farther than it would in some other places.
Whatever money you have for starting up goes a lot farther than it would in some other places.
That depends entirely on your model. Sales in midwest/south can be problematic for startups becuase the communities they live in do not adapt to change as fast as the coasts. I found this out the hard way. In addition, if growth of your startup depends on building a community, its going to be harder to get the word out if you arent on the coasts.
The cost savings are true, and they are significant, but if you cant grow your service organically, and you cant sell to prospects easily, it wont really matter in the long run, because you'll get to spend all that saved cash in marketing.
This also depends on what you're building; there are plenty of sales opportunities in the middle of the country, just probably not in the social media space. Which is pretty saturated right now, anyway. Opportunity exists where you create it.
I applaud Pennsylvania in trying to boost their state economy through programs like this.
Which I believe is a government sponsored organization though, I'm not 100% sure -- it isn't clear to me where they get their funding, but I think its from the government.
How else would you expect them to try to bring a historically industrial/manufacturing & agriculture based economy into the 21st century?
I don't live there, but I think it's great for cities and states to try to increase the diversity of their economic bases and their cultural offerings. Long term it is a potentially VERY wise investment of taxes.
I personally don't think it's great that cities take money from me by force to fund companies I may or may not think are viable. I love what these seed funds are doing, and their is no reason a private one like YC couldn't be created in PA with those restrictions on keeping people there etc. Hell, you could make it an optional tax that citizens volunteer to pay -- just like we do with campaign funding.
"14) Do we have to stay in Pittsburgh after the program ends?
Companies are expected to remain in Pittsburgh after the end of the AlphaLab program. Our goal is to help you build a successful technology company and to add to the critical mass of flourishing tech companies in the Pittsburgh region. We believe that Pittsburgh is a great place to build a company and after your experience at AlphaLab we are confident that you will agree."
Is this a legal agreement? It is still a bit surprising to me that you are still "expected" to tie down your company to a specific location. Maybe some ex-AlphaLab-er can shine in some light here.
Basically, if after signing the agreement and being part of the program, if your company decides that it needs to go somewhere else and have no presence in PA within the next few years, you have to give back the $25K. That's it.
It's not that bad if you think about it--if you get any later-stage funding, $25K is a small price to pay to allow you to move somewhere else.
Self-enforcing. They're going to bat for you with early customers, later rounds of funding, etc. and if you don't display integrity you lose their connections and then some, I imagine.
edit: Oh, whoops! Not simply self-enforcing, as the other reply indicates. Still, I think it would be.
The challenge, in my opinion, is that although they can be great for the communities, I think they come at a cost for entrepreneurs.
I've done a lot of things from a distance. After art school I moved away from the city to paint. I reasoned that doing so cut costs and that I could paint well anywhere. Years later I partnered in an interaction design firm in a small town employing a similar rationale. Most recently, we've been working on our startup from Vancouver, which is beautiful and a nice place to raise a family.
In each of these instances, the logic for being away from a center (be it art, design or startup) has been sound. Additionally, there are always strong proponents in these communities to keep people doing "great things close to home." No matter how strong the logic is though, it simply doesn't hold up. There are greater opportunities for those who put themselves at the heart of the "action".
You could likely start a great company in Pennsylvania, but even with low rent and more equity, you'd still have a weaker "deal". The appeal of YC, in my opinion, is that it's so close to where people think in startup-terms and is run by people who actually live in that world.
Although some will bemoan my saying so, the closer you can get to the action, the better. There are probably some great actors in Helsinki, but I bet you'll never hear anything about them.