What makes the bay area so cool?

The bay area, envied the world over for its industry of ideas, consistently grabs about 44% of the nation's venture capital investment. What is it about the bay area that makes it a hub for innovation?

Paul Graham ought to know. He is the founder of Y Combinator, a blend of boot camp, commune, and investor designed to help start-up companies get off the ground. Y Combinator used to alternate its activity between Boston and San Francisco every six months.

In "How to Start a Start-Up," Graham says the bay area “has the right kind of vibe.” It attracts a special kind of talent, the younger scientists, programmers, and creatives who drive innovation.

The bay area has everything they want:

• Authentic personality. Young-feeling, but not new.

• Smart people, which means universities, still tethered to their professors.

• An environment that tolerates oddness in which they feel they can best be themselves.

• Neighborhoods which are cheap, fun, and near the subway.
  

Nerds don't like to work in dreary office buildings that are a wasteland when the sun goes down. They like to head out for dinner then take the subway back to the office or lab to get some real work done, instead of going home to watch television. That's why creating business parks in the suburbs is futile.

When start-ups grow into big companies, and move to the suburbs, they still keep an r&d center near the Red Line. Otherwise they'd loose the younger talent.

What is unique about the bay area is the support system in such areas as finance, law, accounting, headhunting, and marketing, tuned to help ventures form and grow.

Ventures operating outside the bay area certainly succeed. But who would be willing to claim that a venture elsewhere wouldn't benefit from moving to the bay area?

Graham's advice to start-ups? "Get a place on the Red Line."
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Red line life line
To younger talent, the Red Line is pure magic. Its convenient, and quirky. Listen to their banter on Yelp.

Molly says: “It's supremely easy to get to anywhere worth going...I can hear the trains from my apartment, but it's worth it just to know they're there.”

John says: “I would have a difficult time functioning without it, and for that I am grateful.”

Kelly: “I like it, it's homey. I look up from my reading or video game to watch the city arrive and recede as we cross over the river. It's calming.”

Victor says: “And hey, you can go under the bay. How cool is that? It's pretty damn cool.”

Sarah says: “The seats are SO much more comfortable on the BART than on the T. :)”

But Jeffrey says: “Reupholster the seats. They're gross.”

Helen says: “I LIKE the gross aspects of public transit.“
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Graham has his favorites start-up places along the Red Line. He especially likes Berkeley, Davis, Inman, and Central.

In “Cities and Ambition” he says he always imagined that Berkeley would be the ideal place to be—that it would basically be Cambridge with good weather.

But when he finally tried living there a couple years ago, it turned out not to be. He says “it's not humming with ambition.” Its message is "live the good life."

“The people you find in Boston...are the kind of people who want to live where the smartest people are, even if that means living in an expensive, grubby place with bad weather."

There are plenty of smart people in the south. But he thinks the universities there are too spread apart, therefore diluted, while in the north, they are clustered, dozens withing a few miles of each other.

Lately, he thinks the north has the edge on ideas (in the whole world), the south the edge on ventures. Why? Investors tend to be more conservative in the north, more aggressive in the south. Facebook was started in the north. Boston investors had the first shot at them. But they said no, so Facebook moved to south and raised money there.

But for now, Graham says, "Boston just doesn't have the startup culture that the Valley does. It has more startup culture than anywhere else, but the gap between number 1 and number 2 is huge; nothing makes that clearer than alternating between them."

Since ideas are only one step upstream from economic power, says Graham, it's conceivable that the north will one day regain the edge.