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Here is a story told in quotes, based on a post that Mr. Arrington over at Tech Crunch wrote about the Silicon Valley culture. Feel free to follow this story as it unfolds.

From TechCrunch

…Somewhere in there the money started rolling in. Our first dime of revenue was December 2005. A few months later a lot of companies were raising $3 million A rounds, then $7 million A rounds after the YouTube acquisition. Companies started to hire marketing managers and PR firms, and spending tens of thousands of dollars on launch parties. Now, a year after the madness started, it’s even worse. Companies have to actively dodge venture capitalists to avoid raising a big round of financing.

Times are good, money is flowing, and Silicon Valley sucks.

My Response

Mike, take a look outside of the valley for a few moments. If you look at places like, well, Gainesville Florida you will see a hub of innovation that is completely disconnected from the mass of capital flow that can destroy the culture of creativity.

Out here, not every silly idea is courted by Sequoia. Even at UF, where you would think technology would flow like wine from the sheer number of students available, only a few startups (and almost none in the web technology sector) ever become more than garage ventures (Grooveshark pops out in my mind).

Last month I started a tiny (by most standards) technology conference out here and realized something important. Outside of the valley there really is innovation, you just have to be willing to do the legwork to find it. Not only that, but because all of us entrepreneurs out here have to work so much harder to be noticed, our businesses usually have some really savvy models and a lot of pretty tough leg work behind them.

The rest of the nation outside of the valley is the proving ground, and because of that I really think it might be some of the most fertile land for technological development.

At least we didn’t make Treumors (no offense to Guy)…

Mike Chimes Back

I disagree with some of what you say. I’ve worked at technology companies outside of the valley - London, Ottawa, Los Angeles - and know the tech scenes pretty well in NY, Seattle an Copenhagen as well from living there or visiting quite often. There are great startups there, sure, but the wonderful support networks just aren’t there that you have here in the valley. It’s like making movies outside of Hollywood - lots of people do, but the culture is different and it’s harder. Silicon Valley is literally perfect when things are calm here and everyone isn’t chasing the dollars. I’ve never seen anything like it anywhere else in the world. That’s why so many entrepreneurs move here, with our without a visa, to make their dreams come true.

And I return the volley

That’s a very good point. The valley is a hotbed and it really is one of the finest tech incubators that this country has seen in quite sometime, but as such it has a tendency to have these “me too” phases. What I was really trying to point out is that there is a great big country out there, and that the valley is really not necessarily the center of the tech universe.

A lot of time, when you focus only on the big whiz bang deals (which is what I think you were getting at in your article) some of the equally ground breaking, but less publicized products fall through the cracks.

When you are forced by necessity to run lean, and need more than just a “good” idea and a few Palo Alto connections to secure funding, you tend to see a lot of really interesting, really savvy business’ emerge.

I am not taking a shot at Silicon Valley in the least, all I am really saying is that easy money and plug and chug business generation does tend to produce bad bed fellows, on occasion. Then again, it also tends to produce quite a few marvels.

Brian of Brianlash joins in

From the perspective of a bootstrapping entrepreneur, your short essay couldn’t be more spot-on.

I don’t want a cash-infusion for my start-up. I’m not interested in the glam of venture capital. And I’m scared as heck about what would happen — to me and to my startup — if I didn’t have the cash crunch imposed on me that keep me disciplined.

It’s so easy to get caught up in the money. In fact, only hours ago I was talking with a buddy about a local startup that has a burn rate of $170K+ monthly without a drop of revenue. Founders’ salaries are $160K! They drive Mercedes. Live in big houses. Eat at expensive restaurants.

And they’re only a single anecdote.

I want to know what happened to the start-up mentality. What happened to committing yourself fully to your product (service), in the spirit of entrepreneurship, because you believe in that product? And so much that you’re willing to forfeit a salary in the short-run for an equity position?

I know it’s not lost entirely — that there are folks out there who WANT to eat cold pizza and work long hours with little pay, all in the interest of creating real value. But they’re hard to find. In Silicon Valley and elsewhere.

So glad you brought this issue to the fore, Mike.

And I rebut one last time

I think this really hits the nail on the head. The entire spirit behind starting a venture is supposed to be the idea of truly committing yourself to an idea. The very best management and the smartest products are created by those who first have experience and second have the fiscal discipline necessary to weather storms and burn cash at reasonable rates.

Funding should be hard to acquire, maybe not quite as hard as some institutional investors would make it, but it should be the result of a well thought out business model that can generate value for the investor.

I guess this is going slightly away from the subject, but is more inline with what Brian wrote. The Bootstrapping mentality is somewhat missing from the valley at the moment (or so it appears).

Take what you said about the press for instance. How much signal is being drowned in the valleys noise at the moment? No one without a huge credit line and the willingness to hire a well connected PR firm can get the coverage you really need to be a breakout hit in the internet startup bubble.

Everyone tries to even the playing field, but when we are being really honest with ourselves it seems (at least) that we are always attracted to the sexiest sounding products and usually those are the products who could make enough noise to get someone big to pick them up.

I am really just building on a critique here. It’s not so much a problem as a symptom of having a place with such a high concentration of really valuable, really intelligent people. I suppose having the opposite problem would be much worse.

Web 2.0 Roundup

What I was trying to get at is summed up best in my last response. Since the GUT conference I’ve realized that the tech community (myself included) spends an inordinate amount of time focused in on the few major hubs of innovation. With such a narrow focus we tend to miss the fact that exciting new startups are springing up all over the country. Some of these startups, because they are forced to run lean do not run into the problems that many Silicon Valley enterprises do. They are forced to either day slow, miserable deaths of attrition or really stand out from the crowd.

This is not to say that the valley is not the home of some of this countries most brilliant business people, but it is only a commentary on the fact that we should not be completely blinded to the rest of the world.