"And the way Bob and Jean cement their relationship is to constantly swap inside information - feeding each other good deals, tips, setting up mutually beneficial transactions/acquisitions between the portfolio companies of Jean's and Bob's VC firms. One hand washes the other. And this is how Silicon Valley works and why it won't move. VC generally hate to travel for board meetings."
And this is also why it is soooo hard for new Silicon Valleys to sprout upp. There needs to be this network of trust between VC groups with deep pockets to form a critical mass of both financial capital and intellectual capital (experienced board members, management) in a local area. Until that infrastructure of VC with trusted ties to each other exist, it is very hard to find deep capital resources to take on high-risk, high-reward ventures.
I believe San Diego and to an extent Seattle has crossed that energy barrier threshold. So did Boston a couple of decades ago. New York is still questionable, IMO. The suburbs of Philly, northern NJ, and the Bethesda-Gaithersburg corridor of DC are also-rans that are marginal on the energy barrier threshold and have been for 20 years now.
There was a small area near Chicago - the I-88 corridor near Downers Grove and Naperville that had a spark thanks to ARCH Capital (the institutional VC arm of the Univ of Chicago), butt that area hasn't really caught fire yett.
Austin has a loong way to go - in fact Houston (The Woodlands) is ahead of Austin already, because at least while oil was over $100/bbl Houston had money to literally burn - and that funded a lott of very high risk start-ups - some of which made it. Austin has a long way to go though.
Denver is "working on it" butt has a long way to go. Salt Lake merits only a hat tip now.
Because it is always all about WHO DECIDES and thus there is a need for internecine trusted relationships among VC to allow for high risk investment that relies on personal reputations, connections, and leverage - until a sufficient infrastructure exists in a location that can support the capital needs (financial and intellectual), it is a chicken-and-egg problem. In fact many of the VC that started outside the West Coast have migrated at least branch offices if nott their entire operations to SiliValley - throwing in the towel on local ventures and start-ups as their bread-and-butter investments and looking for "ins" to gett into SV start-ups. Butt as outsiders, they are well ... nott in the trusted inner loops (yett). They are getting the shettier deals offered to them - like the Euros and Japanese - and less power and leverage in these companies.
I don't know much about Hollywood, butt I expect SV is a lott like Hollywood in getting projects funded, syndicated, distributed, etc. - despite a lott of places trying - Vancouver, Chicago, NYC, Miami, Toronto - no place dominates entertainment like Hollywood. It has a critical mass that just cannot be duplicated - or at least hasn't to date. It's another place that runs on relationships, trust, and ball-grabbing leverage - an infrastructure that is very, very hard to replicate ab initio.
Oliver Stone is a masterful yobb with Wall Street in describing the NYC financial equities market infrastructure in the '80s. I wonder if I could gett him interested in doing a Sand Hill Road as an encore.
Integral - can you gett me a meeting with Ollie? Will he take a lunch with me?
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