There is a huge difference between founding a startup in the midwest and being an engineer in the midwest. I believe that gets lost in a lot of the rhetoric from both sides. I love hiring engineers in the midwest. Consistently great work ethics, etc, etc.
On the other hand, if you're an entrepreneur, you don't live in SF and you're building a consumer internet startup, you're fucked. Primarily because your access to capital is so limited it's ridiculous. Most people that live in the midwest aren't able to put in the time required to build out the relationships needed to successfully fundraise in the Valley.
The other side of the coin: If you live in SF and your VC backed startup doesn't experience massive growth then you're fucked. In a cheaper city you can be ramen profitable, or a lifestyle business, or just a regular business or whatever.
On the other hand, if you're an entrepreneur, you don't live in SF and you're building a consumer internet startup, you're fucked. Primarily because your access to capital is so limited it's ridiculous. Most people that live in the midwest aren't able to put in the time required to build out the relationships needed to successfully fundraise in the Valley.