It might make sense if you are bootstrapping and Phoenix is a place you want to live. (It is too hot, too conservative, and too suburban for my taste)
But if you try to raise money, you suffer from a valuation penalty for not being in Silicon Valley - just from the fact that there will be fewer interested investors. That valuation penalty is probably going to far exceed the cost savings of being outside Silicon Valley.
Yes... if only there was a technology that let us communicate with investors in other places... or better yet some sort of modern flying machine that could take us there!!
But if you try to raise money, you suffer from a valuation penalty for not being in Silicon Valley - just from the fact that there will be fewer interested investors. That valuation penalty is probably going to far exceed the cost savings of being outside Silicon Valley.