I see this sentiment all the time, and it is so backwards. Startups in tech hubs tend to solve problems that people in tech hubs have.
"I'm rich and lazy, I want someone to deliver me food from my favorite restaurant and I don't care if it costs 2-3x as much and takes 90 minutes."
"I need some place to put my piles of IPO money that might appreciate because returns are down elsewhere, and also I think securities laws are confusing and bad."
These startups attract a lot of venture money because investors in tech hubs have similar problems and so they are attracted to them.
But they are fundamentally not productive. They are market makers or middlemen or financial products. There is a much lower ceiling on what people will ever be willing to pay for these kind of things relative to, say, some novel industrial software that gets purchased by multi-billion dollar companies. Those industrial companies are tech companies, make no mistake, and they are almost universally not headquartered in SF or NYC. There's also a much higher ceiling on the potential market because your customers are actually making things.
I think it depends on the problem space you're interested in solving. I'm interested in databases and data tooling, of which a very sizeable chunk of the users for that are in SV.
That's a pretty narrow definition of what's productive. Information is capital. Being able to link up a customer with an on-demand driver adds a lot of value into the system.
You're right that middlemen are productive in the generality.
But
> Being able to link up a customer with an on-demand driver adds a lot of value into the system.
This is only true if the driver's rates are something the customer is willing to pay. Finding that match is the primary job of a middleman; a lot of American services matching this basic description gloss over that part of the match entirely.
"I'm rich and lazy, I want someone to deliver me food from my favorite restaurant and I don't care if it costs 2-3x as much and takes 90 minutes."
"I need some place to put my piles of IPO money that might appreciate because returns are down elsewhere, and also I think securities laws are confusing and bad."
These startups attract a lot of venture money because investors in tech hubs have similar problems and so they are attracted to them.
But they are fundamentally not productive. They are market makers or middlemen or financial products. There is a much lower ceiling on what people will ever be willing to pay for these kind of things relative to, say, some novel industrial software that gets purchased by multi-billion dollar companies. Those industrial companies are tech companies, make no mistake, and they are almost universally not headquartered in SF or NYC. There's also a much higher ceiling on the potential market because your customers are actually making things.