If you're investing or saving 30% of your income, it's better to work somewhere with higher COL / higher pay. This way over time you accrue more wealth than you would if you were working in an area with low COL and lower pay.

For example, consider Milwaukee vs. Chicago. Chicago's a major finance and banking center, and a huge percentage of the people living there are in some kind of profession. Milwaukee's still mostly a blue collar town. This difference shows in the very different costs of living: An apartment in Milwaukee costs about half of what an equivalent one costs in Chicago, restaurants cost less for similar quality meals, drinks are way cheaper, etc.

But it does not follow that you can earn twice as much money working as a developer in Chicago. The same job in Chicago might pay a bit better, but the difference is modest. This is because the two cities are so close to each other that at least in tech they're essentially the same job market. There's even a busy commuter train connecting the two cities.

In short, it's not necessarily doing yourself a disservice if you don't move to a big city and get a high paying job. You might do yourself an even better service by moving to a small city and getting a high paying job.

If you have a 401(k) plan, you can contribute up to $17,500 of your salary each year as an elective deferral. While it's possible to come out ahead earning a lower salary in a lower cost of living area, for most folks, it's generally going to be easier to set aside the $17,500/year for retirement with a higher salary. If you have a decent employer match, a higher salary can also be meaningful over time.

Of course, it is possible to obtain the best of both worlds (make a lot of money in a low cost of living area). You don't need to be in a high cost of living area to own a profitable business or become a consultant, and folks who are self-employed can set up their own 401(k)s.

Now that I know how HN people define it, I guess my inclinations are way more towards small business than startup.

Offices in St Louis might be cheaper than San Francisco, but they're nowhere near as cheap as not having an office at all and possibly flying everyone to a common location on a quarterly basis for company all-hands.

Maybe I'm dreaming of having a large lab in the countryside, and a tiny office in the city.

For a non-trivial number of startups, the founders were already working at a big tech company in the Bay Area before they started their own company.

For others it's access to investors or really critical employees. If you want someone who can build Amazon/Facebook/Google-scale datacenters, you're not going to have much luck in St. Louis.

I've heard people calling it the Brooklyn of the Bay Area.

- there are some advantages, but it depends

- the advantages depend on your target market, the stage of your company, and your desired direction, in terms of bootstrapping vs. raising

- you can't know ahead of time which way (SF vs. STL) will be more advantageous, and you can't repeat the experience, because the second time you'll have more experience, more talent, etc. This is a path-dependent experience.

Maybe if they did the startup in SF, they'd meet an advisor who changed the direction of the company to something even better, or maybe they wouldn't, in which case low cost of living in STL is an advantage. But pointing at cost-of-living alone isn't a useful comparison.

Source: SF has 44.7% single people, St. Louis has 32.9% single people

http://www.bestplaces.net/docs/studies/solocities_list1.asp

People like proximity, they like being able to pop in and see other people. Distance is friction from a business point of view. Just as we see friction in applications as bad, so do business people see friction in business as bad. Distance is friction.

I'm bootstrapping in the UK, I love SF and would love to be there (at least part of the year!), there are a lot of advantages to having that much contact with other startups.

However, interestingly I notice that people who do what suits them best often seem to overcome geographic and financial obstacles. So I certainly wouldn't want to recommend or even suggest one way as better than the other.

You've got to balance what's right for you with what is right for others.

On a completely different note it would be great if we could swap the word 'funded' with debt everywhere it's used :-) The two words have very different connotations but mean the same thing (unless someone is just willing to GIVE you money :)) I think the word debt helps people to make more sober judgements.

So the obvious answer is that VCs are not there to provide money. They are there to provide a process/leadership to acquisition. So if you are a founder who is more interested in building something than an equity event, maybe there is a better way to do it than the VC funding route.

Maybe face time is important after all. Which makes the SV pumping of MooCs and other "disrupt education" pitches hilariously ironic and bleakly dishonest.

http://en.wikipedia.org/wiki/Network_effect

The bay area has 1) a large, talented workforce, 2) great universities, 3) lots of venture capital, as well as people who have "already done it" to give advice. Plus it's a nice place to live if you don't mind the traffic. Granted, opening an LLC costs X compared to a much cheaper Y in Nevada, but that's ultimately kind of small potatoes compared to all the things in California's favor.

That said, I'm more interested in bootstrapping something: what people like patio11, Rob Walling and company have achieved doesn't look like science fiction, and they're doing it in places that are not Silicon Valley.

For example: non-compete clauses are unenforceable in California. This makes it "unfriendly" to businesses, but much more appealing to highly skilled workers who don't want to be boxed out of their industry for two years just because they dislike their job and want to quit.