Some California VCs are mistakenly under the impression that anywhere outside the Bay Area must be Siberia. It's going to eventually bite them in terms of missed future opportunities and ROI on their funds.
Careful, don't compare Pittsburgh to an entire state. Pennsylvania doesn't have any real mountains, whereas California does. Google tests their self driving vehicles in the Lake Tahoe area, which in the winter can be much more challenging than anywhere in within 500 miles of Pittsburgh.
Navigating serious grade changes, both uphill and downhill, presents more of a challenge for trucks too, even for humans right now. The only places to really test that in the US are pretty much west of Denver.
I can tell you that 80 and 50 that head over the sierras are often closed for what would be consider relatively minor snow in Pittsburgh. Sometimes it's not even the road conditions, just lack of visibility (fog or snow). Significant ice is also fairly rare just because of level of maintenance, I suspect somewhat fueled by poor California drivers and ski resorts that push for excessive road maintenance.
On the other hand Pittsburgh gets plenty of snow, plenty of storms, and I can assure you they don't close the highways unless it's a storm of the century so bad that you'll not even be able to find cars let alone drive them. Additionally the Pittsburgh area roads have significant elevation changes, often narrow, and poorly maintained. Take for instance the top 10 steeps roads in the USA. Pittsburgh has #2 and it snows there. SF has #9 and #10, but it rarely snows there. Another puzzling factor is Pittsburgh uses a ton of salt, yet has temperature variations that often lead to snow melting from salt, then refreezing in sheets of ice or "black" ice. I've definitely skidded WAY further in the Pittsburgh on ice than I have have around Tahoe. For a year or so I was crossing 3 7200 foot passes each weekend around Tahoe and in the last 20 years I'm often up around there for various reasons.
Even the average Pittsburgh driver seems to deal with snow MUCH better than the ones I find up around Tahoe area when it snows. Even though the Pittsburgh driver is likely in a 10 year old front wheel drive econobox instead of a newish AWD SUV.
Also, eastern Pennsylvania has the Appalachian mountains, and last time I checked, they were "real."
I'd agree that Californian snow-driving skills are a joke, and that Tahoe isn't actually that difficult compared to New England winters.
However, there really are terrain types that CA has (and Google tests its self-driving cars on) that just don't exist back east. There's nothing like CA 1 on the east coast, with windy 15mph switchbacks and a sheer several hundred foot drop into the ocean if you miss a curve. Nor do they regularly have to deal with the road being closed because of rockslides, or Tesla drivers who pass you illegally.
https://en.wikipedia.org/wiki/Tejon_Pass - 4,160 ft
Tejon Pass is on I-5 in northern LA County, and it is a huge trucking route. The grade is very steep between the Central Valley and the top of the pass, and is fairly challenging for trucks. There is no equivalent to those conditions in PA.
Also, if your impression of Tahoe is only the heavily touristed parts, your view is incomplete. The mountain roads in the Sierras have no equivalent east of the Mississippi.
Tejon Pass' major difficulty is the grade, and that's about it. PA may not have a highway that matches that grade, but many come close, and there are far more tight curves, typically far worse road conditions, and bad weather season is far more common than in N LA.
Highway trucking will be the first significant deployment of autonomous vehicles. One of the big challenges is Mountain West interstates.
I do agree that the NE US is a proper testbed for bad weather city driving, since no West Coast cities have really that bad winter weather, I'm just objecting to the claim that somehow Pittsburgh captures all the challenging road conditions that autonomous vehicles will encounter.
Personally I try my best to get as far off the beaten path as I can. Tahoe and surrounding areas is a cake walk compared to Pittsburgh.
e.g. profitable.
VC limited partners invest because it has low correlation to other investments and the potential for 100% returns. If they're just getting a potential 7% (or whatever), they can buy stocks or real estate etc. at much lower risk.
I'd guess the medical startups are largely because of Cleveland Clinic and UPMC.
I had never heard of that distinction before and usually just thought of lifestyle businesses as slower growing vs faster.
a) the software platform, which might make $20k/year, but you can sell thousands of them without much incremental overhead needed; once integrated, it's also extremely sticky; low customer churn and high customer satisfaction
b) a services package, which might make $50k/year, but for every 3-4 you sell, you need to hire a new employee @ $75k/year fully-loaded overhead cost
Before you say "sell both!" - unfortunately the nature of things is such that, more or less, the founder needs to prioritize selling one or the other. Consciously or not, she is prioritizing the services revenue, and as a result about 90% of new sales are services contracts. I (and the other investors) would prefer that she prioritize software. Even if it makes them unprofitable, it would make for a much better risk-adjusted bet. And this isn't like "it's a much better bet for the investors, because they can diversify risk out in a portfolio, but the poor founder would probably be left with nothing". She understands both sides and says she wants to build up the software revenue, but the culture around her (south-eastern city) is so strongly opposed to it, that the execution has been impossible. This is a classic case of where a smaller PE firm will come in and buy it out for a few million, purposefully cut the services revenue, go hog wild selling software, and flip it a few years later for 10-20x what they paid.
Or the classic case where PE buys it, cuts services and all the staff who know anything about the product, go hog wild trying to sell software and realize that that the market isn't there and never was and the services path actually was the only the way to make inroads. The investment craters and everybody loses money.
For example, Uber and Lyft, both sell a service that requires a proportional amount of new contractors and employees, to scale.
Another would be Palantir, which sells services based off of a core software product.
How do you classify companies that are ambitious, but perform work that doesn't scale?
>she wants to build up the software revenue, but the culture around her (south-eastern city) is so strongly opposed to it, that the execution has been impossible
Do you mean the existing company culture, e.g. employees only having service-oriented skills, or the southeastern city culture, somehow being inhospitable for developing software?
I'm curious because I currently live in a southeastern city (Nashville), am about to move to another (Atlanta), and am in the beginning stages of building a B2B SAAS startup.
https://techcrunch.com/2011/04/24/what-should-you-do-with-yo...
I'm an angel investor in a few dozen tech startups, about half in the Bay Area and half spread elsewhere around the country. The biggest problem with those outside of the Bay Area is that for lack of a better term "they don't think big enough". A lot of the promising ones turn into lifestyle-type businesses (e.g. a focus on services revenue instead of software revenue) when, in my opinion, they could have achieved much greater exits. Whether justified or not, I know many other investors with a similar bias based on similar experiences.