The Advantages of Building a Startup in a Smaller Tech Community
I'm a believer in startups. The opportunity, the economic advantages, the inspiring founders. All of it.
While there's much to be said about companies moving from a smaller tech community (e.g., Honolulu), to a bonafide tech hub (e.g. San Francisco) I actually think there are good reasons why companies should stick around.
Here's just a few benefits of staying put:
- Shelter from hype cycles
- Less proximity bias and “drinking of the kool-aid"
- Can stay under the radar
- Less distractions - You can grind and unwind
- Cheaper cost of living / higher quality of life overall (I understand this is highly subjective)
- Community champions: Big fish, little pond means the community decision makers will likely be more aware and interested in ensuring your success (theoretically at least)
- Access to community leaders. Government leaders, economic development associations, etc.
In general, the following applies:
To start - stay home
To scale - move to the hub
There are great examples of companies who have stayed in smaller communities and done quite well (for Hawaii: Hobnob).
On the same token, many have relocated and continued to be successful (for Hawaii: Areametrics).
If you're a tech founder in a smaller hub, ask yourself these questions to help answer the "should I stay or should I go now?" query:
- Can I find the right talent? This often comes down to building a distributed team and if you want and are able to do that. Not all are - but it's a huge competitive advantage in my book. And it allows you to typically find high quality talent cheaper than a major tech hub like Silicon Valley.
- Do I need investment capital? If so, how much do I need? This a good thing to know no matter where your startup is located. Think forward to Series C/ D and work backwards.
- Is investment capital available? Angel investment groups, connections you may have, government grants or other funding sources you can tap into. The quantity is important, but refer to question #2 on how much you think you'll need (your investors will ask for that anyways).
- Are there unique advantages to staying here? Geographic, natural resources, quality of life, lower cost of living etc.
- Can I justify the cost of relocation? Do a cost-benefit analysis of moving your company to the major tech hub. Because Silicon Valley will impact your burn rate. That isn't necessarily a bad thing, just something to be aware of.
- What does my board of advisors say? Ask the people you trust in your business. Those you've sought out for their council, and especially those who have invested in your company.
- What does my heart tell me? Be honest with yourself. Do I need to go in order to come back? Do I stick it out? It comes down to conviction and commitment.
We are citizens of a digital and global world. Building software products is easier and cheaper then ever.
At the end of the day - if you're an entrepreneur building, keep grinding.
Maintain a pulse on the company and community and you'll know what to do.