Wouldn't be surprising at all if your competitor that was acquired was absorbed or shut down within a year. For the founders - sure, that's success - they had an exit. But how is this necessarily good for the long term economics of those businesses?
The original video story on this talked about all the jobs that 'high tech entrepreneurs' create. But how long do those jobs last? Sure, there's no such thing as a 30 year job for most people any more, but isn't this type of behaviour contributing or accelerating this trend?
Whether or not we were to get acquired, it was just tough to find quality employees and the money to pay them until sales went into the black. It took about 3 years to become solvent and even then that did help luring good programmers to Idaho.
But the start was rough. Unless it's a one-person gig (and there aren't many of those out there) you need two things - bodies and money. The further you are away from metro areas the harder it is to find both - the people with the skills either left or are already working somewhere and the investors aren't multi-millionaires, they are angels with $10-20k each, sometimes $100k+.
It's possible though. That startup eventually sold but long after a more inferior competitor sold for a lot more which had more to do with their location (Cali, I think in the valley) than how well they functioned. And the company I was with sold for less than we thought it would and long after the window in which acquisition would have been ideal.
There's just no visibility outside of major (tech hub) metro areas. You don't get any buzz even if you are in magazines and the like, and you don't have the contacts that can really help you out. It's a major negative.
Pure (somewhat educated) conjecture: if that startup would've been in Seattle or Portland it would've sold much earlier and for much more than it did, maybe in year 6 instead of year 10. If in the Bay area I think it would've sold by year 3 instead of year 10.