# Silicon Valley's edge is capital access, not scarce talent

Markdown copy of https://realalpha.app/s/silicon-valleys-edge-is-capital-access-not-scarce-talent/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Jack Selby](https://realalpha.app/people/jack-selby/) · Jack Selby is a Managing director at Thiel Capital, early PayPal team member, and Clarium Capital cofounder. · Joined PayPal as an original employee, led international operations, and co-founded Clarium Capital with Peter Thiel.
- Host: [David Weisburd](https://realalpha.app/people/david-weisburd/)
- Show: How I Invest
- Episode: [Peter Thiel's 27-Year Partner on the AI Bubble, the Venture Capital Crisis, and the PayPal Mafia](https://realalpha.app/v/4VjI-3FcHSg/), Nov 4, 2026
- Moment: 6:48 to 12:34 of the episode (6 min), playing on https://realalpha.app/s/silicon-valleys-edge-is-capital-access-not-scarce-talent/; the episode from there: https://realalpha.app/v/4VjI-3FcHSg/?t=408

## Quote

> “It is not a **human capital network effect**. There are plenty of smart people that live in these other places.”
> — [Jack Selby](https://realalpha.app/people/jack-selby/) at [10:20](https://realalpha.app/v/4VjI-3FcHSg/?t=620) · How I Invest

## Takeaways

1. He sees capital access—not local talent—as the main geographic advantage.
2. Carvana is his example of a company that could have been built outside the coasts.
3. His network can connect noncoastal founders with hires, customers and investors.

## About this segment

Jack Selby argues that startup talent exists across the country, while venture capital clusters on the coasts and pulls founders there. His fund aims to bridge that capital network without requiring founders to relocate.

From “Peter Thiel's 27-Year Partner on the AI Bubble, the Venture Capital Crisis, and the PayPal Mafia”, Nov 4, 2026. [Watch the full episode](https://realalpha.app/v/4VjI-3FcHSg/)

## Transcript

From the transcript How I Invest publishes with the episode.

[7:01](https://realalpha.app/v/4VjI-3FcHSg/?t=421) So you're on your second fund, and it's quite contrarian, which doesn't come as a surprise to me. Today, roughly 90% of capital goes to three states, California, New York, and Massachusetts. Right. And in many ways, that's actually becoming more lopsided. It's getting closer to a 100% than it is to 80%. That's right. Why do you think that that's inefficient? Private markets. As the AI euphoria continues to hit new highs, venture capital continues to chase these AI shiny toy deals, and those deals are predominantly based in the three coastal states, so New York, California, Massachusetts.

[7:41](https://realalpha.app/v/4VjI-3FcHSg/?t=461) And that's just the reality of the market that we live in. And so the good news, though, if you will, glass half full with this dynamic, is that if you get away from those three states, if you go to the other 47 states, which is where 290 plus people live and where, you know, more than three quarters of our GDP economically come from, you can find deals that are much more reasonably priced. And, essentially, it's a bet that there are some smart, investable entrepreneurs that live in these other places, and that's the bet that we're taking at CopperSky.

[8:06](https://realalpha.app/v/4VjI-3FcHSg/?t=486) What's an example of a company that's outside of these three states that you felt were... Was mis... Mispriced? An example that I often give, you know, coming from Arizona, which is where I moved, after PayPal to get out of the get out of the onerous tax regime of California. So I've been a a proud Arizona resident for almost twenty five years. But example that I give is probably the most prominent example of a tech company coming out of Arizona is Carvana.

[8:29](https://realalpha.app/v/4VjI-3FcHSg/?t=509) And so Ernie Garcia junior was the same year at Stanford as my younger brother. So I've known Ernie for a long time in his executive team. And so when Ernie was trying to start Carmana back in the day, he and his dad went up and down Sandhill Road and tried to raise money from all the prominent VC firms. And they had no success because the VC perspective at the time that an online used car marketplace was not sufficiently tech for the the Silicon Valley Sandhill crowd to get involved.

[8:54](https://realalpha.app/v/4VjI-3FcHSg/?t=534) So Ernie's into... Ernie and his dad had to go back to Arizona and essentially fund the business from their own family. And fast forward today, Carvana is a $65,000,000,000 market cap company. And so I give you all this because as a frame, I think I can find the next Carvana. And the next Carvana should come out of a place like Phoenix or Milwaukee or Cincinnati or one of these noncoastal places. And in fact, with emphasis, the next Carvana should absolutely not be built in Palo Alto.

[9:20](https://realalpha.app/v/4VjI-3FcHSg/?t=560) That would be a very illogical place to build a company like Carvana. Why? Because the cost of living is higher. The quality of life is lower. The cost of human capital is higher. Carvana is a tech enabled, AI enabled business, but it doesn't need to be in Palo Alto. Now to give it balance, if you're building the next Anthropic, you should probably be based in Palo Alto. But if you're building almost any other type of technology company, AI enabled company, you can build that elsewhere because AI is not geofenced to just work in Palo Alto.

[9:51](https://realalpha.app/v/4VjI-3FcHSg/?t=591) Going back to where we started, this concept of talent magnet Mhmm. The the best argument that I have for starting in San Francisco and also New York and and Massachusetts is that you could amalgamate the very top talent much faster. In a world where you could have companies with 20 employees making 100,000,000 plus revenue, location becomes even more important. Why is that wrong? I completely respectfully disagree with that premise.

[10:21](https://realalpha.app/v/4VjI-3FcHSg/?t=621) And so people will often allude to this network effect that exists in Silicon Valley, and I think it's a false narrative. Here's why. So it is a network effect, but it's a different type of network effect. It is not a human capital network effect. There are plenty of smart people that live in these other places. What is the network effect is that financial network effect because that's where the money Yes.

[10:42](https://realalpha.app/v/4VjI-3FcHSg/?t=642) That's where the capital formation has taken place, and then the argument becomes circular. So if there's no money in Milwaukee and you wanna build the next Carvana, you feel as if you have to move to Palo Alto, not because there are other smart people there that will help you build carbon. There are plenty of those types back in Milwaukee. You move to Palo Alto because that's where the money is. So you get stuck in this circular argument that's impossible to get out of.

[11:01](https://realalpha.app/v/4VjI-3FcHSg/?t=661) It's similar to the Thiel fellowship, which the Thiel fellowship, their whole thesis was, well, the reason all the smart people come from the Ivy League schools and graduate from there is because there's a signaling effect where you must go from that big... From those schools in order to to build something great. And the Thiel fellowship, their thesis was that we could posit that we'll give you that same signaling effect, and you don't have...

[11:24](https://realalpha.app/v/4VjI-3FcHSg/?t=684) Actually have to go to the university. So the education is not the necessary condition. It's the branding and the social proof that you need in order to become successful. I think that's right. And so this is actually part of my pitch when I meet an entrepreneur in one of these noncoastal places. And so to be precise, what I say to him or her is I say, hey. Listen. I can give you the advantage as if you were living in Palo Alto as you build your company without actually having to live in Palo Alto.

[11:48](https://realalpha.app/v/4VjI-3FcHSg/?t=708) So what do I mean? So for example, if you wanted to hire a c suite level person, I could help you do that. I could dip into my Rolodex from Silicon Valley and help you find that person. If you wanted to sell into one of the big public or private companies, Myer Network knows most of these people. We could help you do that. If you wanted to go open the doors with one of the Sand Hill Road firms, which otherwise is very hard to do, even if you lived in Palo Alto, much less if you lived in Milwaukee, I can help you do that.

[12:11](https://realalpha.app/v/4VjI-3FcHSg/?t=731) So the list goes on and on. So I bring the optionality, the bridge back to Silicon Valley, but again, without actually having to live there. Just to push a little bit more on this. So you mentioned Milwaukee. Let's just double click on that. Mhmm.