Referencing Caterina's It's a bad time to start a company list, Jeff Griffiths figures that being in Vancouver actually helped with Flickr's success beyond the not-in-the-valley stealth mode that being in Canada imparts:
I would go even further and say that one of the critical success factors for Flickr *was* that they were not just 'toiling in obscurity', but that they were IN Vancouver. Up here we have lots of talent, a relatively low cost of living ( compared to the valley at least ), and all sorts of added lifestyle bonuses that San jose will never beat ( climbing / biking / snowboarding / music ).
And for Flickr in particular, a major part of their early success was a loyal local following of users; witness the hugeness of the Vancouver tag. I would smugly theorize that Flickr's ability to find their users was helped in a large way by their being in Vancouver, a city that seems to breed tech-obsessed shutterbugs more than most places.
I dunno, I think it's probably a bad time to start a company in San Jose, but it's hard to say when that would ever be true given Caterina's qualifications. Vancouver, on the other hand, seems to be a fine place to ( re ) start a company...
Re: talent. This is one of my major concerns: make it clear to worldwide talent that Vancouver is a great place to live (not hard) and that there are lots of companies doing interesting things here (harder). This is something I've talked at length with Zak Greant of EZ Systems, who's in the process of getting a larger EZ presence set up here in Van-groovy. Looks like he's still looking for a Sales Director and a Senior Project Manager (Matt Everard, the project manager position is one that would be a good fit for you...bug Zak about it).
The guys at The Level combine many of my most
hated distasteful words: Java, Enterprise, Portal, and Proprietary. BUT, I met with them the other day, they have a killer office looking out over the Granville/Burrard bridges, are great guys, and are working on some seriously cool stuff. Java/XSLT experts, apply within.
Identity 2.0? SXIP has work.
So, just a selection of cool Vancouver companies doing interesting, cutting edge stuff -- I'm sure there are more. Now all we need is a Sun research center overseen by Tim and Lauren, or maybe a Google North.
Move up to Vancouver and start a company, already! (or join one of the ones above).