Does Location Matter?

In a world where nearly everything can be done electronically, does it really matter where you are located? Online communities have been the primary mechanism for doing business in open source software since the very beginning with contributors spread across the globe, but we have recently been seeing many open source companies relocating to Silicon Valley. One of the most recent examples is Compiere's move from the Portland area (where I live) to Menlo Park, CA. Matt Asay is particularly concerned with the relocation of so many European open source firms to Silicon Valley.

In a virtual, or flat world, we should not need to be co-located with other vendors, venture capital firms, or other partners. This is especially true for open source firms due to the virtual nature of doing business in open source. Dana Blankenhorn, who refers to Matt as “Mark” Asay in his ZDNet Blog, does not agree. I think this is a typical case of what I think of as “old fogy syndrome” where “old” refers to a style of thinking rather than chronological age. People who think this way tend to say things like ... “we tried that 15 years ago; it didn't work then, and it won't work now” or “we've been doing it this way for 10 years so why change it now”. One of Dana's primary arguments is that venture capital investments and mergers are more likely with close physical proximity adding that “if Silicon Valley were not home to so many well-funded VCs, how would America be doing in open source?” (ZDNet). Interesting. First, I do not think of open source as an American phenomenon. Second, the reality is that VCs are expanding into other geographies. Sequoia Capital, a leading investor in technology companies, has locations in California, China, Israel, and India. The business and information technology world is evolving at a rapid pace as the world continues to flatten. As location matters less and less, fewer companies will need to relocate to follow the investment dollars.

I agree with Matt. Open source companies should not be compelled to relocate. The diversity that comes with different locations, cultures, and ideas should not be replaced by a monolithic Silicon Valley environment where people all start to think and act alike.

UPDATE 7/7/06: Big OOPS. I accidentally attributed a link to Dana Gardner, instead of Dana Blankenhorn (after I made fun of Blankenhorn for getting Matt Asay's name wrong in his post). Apologies to Dana Gardner. How embarrassing!