19 Mar Why You Should Start a Company in Silicon Valley: 10 reasons why European companies shouldn’t open an office
Although many entrepreneurs are dreaming to have their company based in Silicon Valley I do not think is the right decision. Very often is a huge mistake that cost a lot of time and money.
I don’t mean you shouldn’t open operations in US. There are many good places in the states to open your US office, my preferred places are: Dallas, Atlanta and New York. However, I am sure there are many other suitable cities across America.
Here you have my 10 reasons:
1. Time Difference
With the continental Europe you are going to have 9 hours difference. It means 16:00 Berlin is 8:00 in Palo Alto. If your team is not working double shift the overlap is going to be minimum. Business Objects pointed out this fact as one of the worst problems when the landed in US. Many of the French staff complaint about working so late in order to help the US Team.
2. Very Expensive People
Salaries in the Bay Area are 20-40% the salaries. For instance according to www.salary.com the average base salary for Sr. Java Programmer in San Jose is around 115.000$, in Dallas is around 96.000$ and in Miami is around 93.000$. Just base salary,on top of you have bonus, fridge benefits, Stock Options… The difference could be around 40.000$ including everything! See the charts below:
In the Valley people have hundreds of job opportunities in one hour drive. Cisco Systems voluntary turnover ran at less than 10% through, although it is headquartered in Silicon Valley, where turnover averaged 25-30%. And, we are talking about CISCO here!
4. Non-compete agreements are no enforceable
The non-compete is non enforceable (and has been for years in California) but the confidentiality agreement still stands, and is remains enforceable. So, you can expect your best employee to jump into your worst competitor without problem.
5. Retaining talent far more difficult
You are going to have HQs of google, Apple, Cisco, Oracle and many more very near you. Do you thing is it going to be easy to keep your most talented employee?
6. No direct fly from your city
If you are based in Paris, London, Madrid or Frankfurt you are very lucky. You are going to have a direct flight to San Francisco. Even though, some of the flight schedules are horrible you lose two complete working days because you are not flying overnight. With a plane departing 9:00CET and returning 9:00PCT you waste one working day at every end.
7. Can you afford it?
The Valley is extremely expensive at all levels, not only for hiring people. Think carefully about office rent, apartments for relocated staff, plane tickets, and the like. Well, if you live in central London or Paris then no worries!
8. Me too Effect
Expect that your relocated staff ask for a unreasonable salary rise when they know the high cost of living and the salary of the locals.
9. You have compelling reason to be there
Don’t be a kid! “Google is going to acquire my company in two years” is not a compelling reason. Perhaps if you are in the hardware industry and you are going to supply a key part for the new ipad you have to be there. Just be realistic.
10. The weather sucks
Do you want to go to the beach? They say that you can. Sure at 12:00 after the fog with your coat otherwise you will catch a cold. Do you want swim? With neoprene suit no problem at all.
Think about it!