Tech Hubs for Starting Up Outside of Silicon Valley

May 3, 2015

6:00 pm

“Culture eats strategy for breakfast” warns a popular quote. Just like company culture isn’t a force to be reckoned with, the cultural differences across tech communities can be striking.

For anyone considering where to start or move your company, these takeaways come from deciding where to launch my telehealth startup, Well Connected Now, after sponsoring entrepreneurial community events like Tech in Motion as a Microsoft Product Marketing Manager and Tech Evangelist.

Signs of a Strong Startup Launch City

When choosing where to start your company, try to spot some themes or genres among the local startups. For example, how would you characterize the tech community, its size, and expertise?  Are the local startups mostly B2B or consumer focused? Are there specialized industry clusters you don’t necessarily see elsewhere?

Tristan Handy from RJMetrics also suggests using tech meet-ups as a tool for understanding local communities’ “human capital“. In other words, meet-up community sizes can actually signal how much talent could contribute to local innovation, and help you compare it to other cities. Since entrepreneurs are so often passion-driven, these communities’ interests (often demonstrated as tech talk themes or big local companies) also offer a peak into local industry genres.

How interested your community is in your startup’s industry can signal how difficult it could be to raise funding, and recruit your specialized team as quickly down the line.  Here are some community clusters where certain startups can have a special advantage:

New York City 

Finance, Fashion, Ad Tech, Healthcare, Education

  • New York City’s talent pool is largely influenced by its financial, advertising, and fashion meccas, plus ZocDoc,WeWork, Warby Parker, BirchBox, theMuse, RockHealth, & General Assembly’s teams, investors, and early adopters.
  • Local founders may also find it easier to recruit ambitious transplants and more affordable interns, since NYC houses alumni from strong local university programs, especially in fashion design, advertising, and journalism, and a large Ivy League overflow, including from Harvard’s now twice-as-large CS department.

Seattle 

B2B, Enterprise Software, Real Estate, Data Analytics, E-Commerce

  • Many Seattle startups target more B2B or mature audiences through real estate, remodeling, and family focused startups. Big data, digital marketing, gaming, e-commerce, and lead-gen models are also common.
  • Since the majority of Microsoft and Amazon’s teams live in the area, the work-related conversations here tend to dive into different corners of these companies, instead of across startup industries.
  • Although Zillow, Redfin, Tableau, Porch, and Avalara also call Seattle home, your odds for meeting a Microsoft or Amazon employee can still be 3/4.
  • If you’re considering an enterprise business or any model tied to these corporate brands’ portfolios though, think of how much easier it could be to recruit expert talent locally.
  • Their technology also fuels the local community. You’ll see it through the Windows Phones in the meet-up crowds and hear it in the case studies covered at the University of Washington. Local founders are also often Microsoft and Amazon alums here – and the VCs are into it.

Fundraising & Recruiting Can Be Easier Elsewhere

You’ll find skilled talent and funding easier in places with communities passionate about your industry. Groupon and Grubhub largely fuel Chicago’s startup community, for example, while Microsoft and Amazon fuel Seattle’s. If you were building an ecommerce company or a new enterprise productivity tool, guess which city would be a better recruiting hub for you? On that note, consider the schools and companies you might find your recruits, and establish a presence nearby.

Remember too, not all tech hub cities have top-notch engineers or investors nearby. For example, while Seattle has an overflow of enterprise-trained engineers, Washington, DC houses more self-educated career-changers. Many of the most talented engineers are also self-taught, but it is important to consider what a junior team could mean for the technical quality of your product, even if the engineers are eager and less expensive.  When choosing your investors, their professional experience also makes a difference. While you may find a ton of Angel Investors in Santa Monica that are eager to ride the tech trend, raising money in Austin or Seattle may be much more difficult, especially when it comes to venture capital. The advice you’d get from any of these 3 cities’ investors might also not be half as insightful as someone’s from Silicon Valley, and that’s just based on their undeniably broader exposure to startups and tech.

VCs and Angel investors will also typically invest in multiple companies in the same industry. Since their funding generally comes with some level of mentorship, their personal expertise and interests will often guide their investment strategy. Given this, local industry clusters of companies like the following also typically signal a cluster of local investors betting on these industries, especially as many investors prefer to keep their portfolio companies nearby:

  • Silicon Valley: Mobile Apps, Enterprise Software, SaaS, Finance, Healthcare
  • Santa Monica: Entertainment, Consumer Mobile Apps
  • Washington, D.C. –Big Data, Social Good
  • Portland, OR – Apparel, Sports, Design
  • Miami, FL – Tourism, Real Estate, Education

Wherever you start, don’t underestimate the power of local culture

Consider how the cultural caricature of your launch city can also influence your fundraising, recruiting, and marketing. Seeing how differently direct New Yorkers, polite Seattle-ites, and trendy SoCal meet-up attendees responded to my product demos, for example, taught me that my pitches needed to be localized. From the dress code to the types of questions asked, even the 6 West Coast tech hubs (San Francisco, Palo Alto, Seattle, Santa Monica, San Jose, and Portland) were like night and day.

International tech communities can also be especially different, so check up on the local culture before you launch as an expat. Consider, for example, is socializing with strangers common there? Meet-ups actually look very different in Tokyo and San Francisco – one’s a classroom with laptops & minimal chatting, while the Bay Area event’s more of a networking party. Meanwhile in Switzerland, going anywhere but home to your family after work can actually seem strange.

If you’re also considering leveraging offshore engineers, make sure you understand how their culture tends to communicate the unexpected. With some teams from India or China, for example, you might need to read between the lines of evasive responses instead of rely on direct signals. When issues arise, the cultural desire to please authority with what they want to hear can sometimes override the contradictory US need for transparency. Make sure you also investigate the local labor laws… Even mega-corporations have trouble hiring and firing in some of these legally-unique countries.

My Point

Silicon Valley is not the only place to start a company. Depending on your industry, a different tech hub city may actually be a much more strategic home for you and your growing team. Recruiting, fundraising, and gaining traction can all be much easier in communities already passionate about the problems you’re solving. Proximity to your ideal market also directly influences strategic partnerships, investment decisions, and frankly, your chances for succeeding.

Thanks for reading! If you’ve noticed any other tech hub city patterns or want to chat more, please comment below, tweet me @abdilisa  or email lisa@wellconnectednow.com

 

Image Credit: Flickr/Startup Mena

Did you like this article?

Get more delivered to your inbox just like it!

Sorry about that. Try these articles instead!

After growing up in San Francisco, studying Psychology & Science, Technology, & Society at Stanford, marketing a mobile payments start-up in Palo Alto, and moving to Seattle for roles in Product Marketing, Tech Evangelism, & Search Advertising at Microsoft, Lisa Abdilova realized how much tech hub city environments influence start-ups and vice-versa. As a Product Marketing Manager, Lisa coordinated over 100 experiential tech meet-up sponsorships in 20 tech hub cities around the world to shift tech enthusiasts' brand perception of Microsoft. Lisa analyzed the roots of our tech community's highly opinionated, and deep-seated beliefs to help MS Ventures, OneDrive, Outlook.com, Bing, and IE romance the skeptics. With Tech in Motion's help, Lisa reached over 270,000 techies, and lifted this tech audience's brand perception by 300-600%. Now back in mental health advocacy as the Founder/CEO of Well Connected Now, Lisa Abdilova connects professionals to professional help: mentors, coaches, and therapists. Read more: http://insights.wired.com/profile/LisaAbdilova#ixzz3WFpGgmg6 Follow us: @Wiredinsights on Twitter | InnovationInsights on Facebook

Leave a Reply

  • (will not be published)
Startup_Mixology_300x250