Way to take my argument out of context.

First, I'm citing Feedburner to demonstrate that large Google acquisitions don't have to come from the Bay Area. Are you refuting that?

Second, if you ask me to name more Chicago startups, I'll add 37Signals, EveryBlock, Threadless, Inkling Markets, and of course Orbitz.

Third, nobody is arguing that any other city in the US, including Boston, can go toe to toe with San Francisco simply on body count. I am, however, objecting to the argument that in 2008, the only way to be successful in a web company is to be based in the same city as your potential acquirer. I'll guarantee you this: your customers will not give a shit where you're located.

just to nitpick, Orbitz totally wasn't a "startup" in the conventional sense, and certainly not the DHH sense. It was a project conceived and funded by a cartel of major airlines. The initial funding was 150 million dollars!

You're right; I'm just thinking about tech companies, but the same logic would lead someone to count MOT.

Please, can we all stop saying "just a small business"? There's no "just". It's not a bad thing.

You could argue both ways about 37signals, since if you consider Rails as one of their products, they are becoming pretty big through that. Considering the arguments made in Be Good, one can take the point of view of a startup being a startup not because it's chasing huge amounts of money or huge corporate growth, but because it's trying to make a difference in the world. 37signals certainly does that, firstly through Rails and also by providing an interesting reference point for how to design software and run a software company.

if a startup is not a small business, what is it?

It's a small business that is attempting to become either a large business or part of another large business.

37Signals is neither; it's about six people who want the company to remain small and independent. (I have no problem with that.)

It's not 37Signals's goal to stay "small"; it's their goal to grow revenue instead of people and real estate.