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Why Location, Location, Location is a Myth

Why Location Location Location is a MythDuring the industrial revolution, manufacturing companies were typically located on rivers for power, transportation, and I guess, water. Today, things are different. Today's rivers - power grids, high-speed internet, express mail - are everywhere.

When it comes to retail, real estate, and restaurants, location is indeed everything. Otherwise, as they say in Jersey, forgetaboutit.

Sure, there's a good reason why Silicon Valley, for example, is still the high-tech mecca after all these years. But that same phenomenon is also responsible for a host of other mini-meccas popping up all over the world and in some rather unusual places.

The reason why businesses tend to aggregate in certain locations is largely determined by the development of an ecosystem. To me, the best way to understand that is, well, would you believe nature? I mean, where do you think the term ecosystem came from?

Anyway, here's a fascinating little story that will explain it all:

I live on beautiful, sandy beachfront property, but it's like no beach you'll ever see. That's because it's 1500 feet above sea level and a good 20 miles from the ocean.

You see, 10 million years ago, the area where I live was underwater and about 300 miles south in the vicinity of Los Angeles. Powerful tectonic forces related to the San Andreas Fault uplifted the earth and created the coastal mountain range now known as the Santa Cruz Mountains - home to an entire ecosystem of animals, insects, and plants found nowhere else on earth.

In fact, our coastal redwood trees - the mighty Sequoias - are not only the tallest living things in the world, but can also live for 2000 years or more. And somehow, among mountain peaks and evergreen forests that stretch for hundreds of miles, are dessert-like chaparral and sandy beaches. I know it sounds crazy, but it's true. You can't take three steps around here without stepping on fossilized sand dollars and sea shells.

So, why the geology lesson? Simple. Nature is a competitive system where only the fittest survive. Just like business.

So it should come as no surprise that Silicon Valley grew out of fruit orchards and a school, Stanford University. Stanford leased some buildings to a few high-tech startups to raise money and, over the next 50 years, an entire ecosystem of venture capitalists, law firms, and thousands of other high-tech startups sprung into being.

But that hasn't stopped mini high-tech meccas from springing up all over America, indeed, and all over the world. Sometimes it's a university, other times it's a company like Microsoft or IBM. But all it takes is an idea, a few bucks, some entrepreneurial spirit, and before you know it, an entire ecosystem of companies has grown up where there once was nothing. Like giant Sequoias growing out of sandy beaches.

It can happen almost anywhere. Just ask the founders of Nokia (Tampere, Finland), Infosys (Bangalore, India), Mazda (Hiroshima, Japan), Micron (Boise, Idaho), Texas Instruments (Dallas, Texas), IBM (Endicott, New York), Microsoft (Redmond, Washington), or Gateway (Sioux City, Iowa). In fact, Gateway's demise began shortly after moving its headquarters to California. Coincidence?

So, if you're into technology, don't let anyone tell you you've got to live in Silicon Valley or in the shadow of any particular university or company. Instead, start your own mecca. Create your own ecosystem. You may have more trouble finding funding and talent, but you'll also have a lot less competition for it, as well.

And yes, high-tech's just an example. With rare exception, the same is true of just about any industry.

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Image: erjkprunczyk via Flickr
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