I'm a recent graduate with a startup that might be attending YCombinator. Where would you say is the best place to base your startup? If everything works out with YC, I'd likely move to one of these places to grow the business: San Francisco, NYC, Austin or Boston.
The things that would factor into the decision:
Neither SF nor NYC have an affordable cost of living. That means you'll be paying much higher salaries as well. Then why do startups move in those hubs? Convenience and the amount of talent available. Even with the added competition from other startups, there are more people.
Another reason for the those two places is financing. VCs are going to be there as well.