In real estate much of the central focus on value of property has to do with location. Real estate has and always will be a realm that is driven by location – “location, location, and location”. In the last decade, since the rise of the tech industry to the forefront of business, location has garnered more attention when it comes to finding the location for the next business venture or for expanding a current business with new branches.
In entrepreneurship, the “location heaven” is the Silicon Valley, however not all of us are convinced that this is the full truth. Is the Silicon Valley overrated, and just a haven for creating a popularity status? There is no doubt that there are a few pros to being located in the valley: competition brings out the best, non-stop networking, and incredible talent among other things. Still is it the right place for every startup?
I didn’t know anything. In Silicon Valley, you get this feeling that you have to be out here. But it’s not the only place to be. If I were starting now, I would have stayed in Boston. – Mark Zuckerberg
Differentiate between the need of moving to Silicon Valley and the want: if you don’t you couldn’t possibly realize the disadvantages of Silicon valley. Those are two completely different thoughts that don’t go together like peanut butter and jelly.
Why Not
Burn rates are a problem for a lot of startups. There are those that run to create growth over a short-period of time, and then there are those that just try to run the marathon at a good pace until there is an influx of investor funds. Then there are those that get a head of them and spend money on irrelevant facets of business – like office space and its location.
Everything costs more in the valley: workers, offices space, and professional services. Who needs to be in the Valley? Why increase your burn rate, when you don’t have to?
The number of tech hubs has grown tremendously over the last few years, so that today you can find 5-star android and ios professionals anywhere from Seattle, Austin, Boulder, Atlanta, and Portland – among others. YikYak just raised $62 million in funds – and they are nowhere near the valley (set up shop in Atlanta). Not only is office space cheaper in these areas, so is the talent, which in many cases is just as good (won’t go as to say better) – because not everyone loves the culture out west.
You say you need talent, and the valley is where it’s at. So how is one an up and coming wearables company surviving out in Texas? Atlas Wearables is creating a revolutionary wristband for fitness-tech lovers and they call Austin, Texas home – they’ve found the tech talent without making the move up north-west. Do you really think you can outbid Facebook, Adobe, eBay, Google, Apple, HP, Cisco and others? Even if you find a diamond in the rough engineer, what makes you so sure he/she won’t wander off for a much-larger paycheck with one of the big boys? In Zuckerberg’s interview with Y Combinator (back in ’11) he said, “There’s a culture out here where people don’t commit to doing things, I feel like a lot of companies built outside of Silicon Valley seem to be focused on a longer-term…You don’t have to be out here (Silicon Valley) to do this.” The cost of living is high and so is the want for a certain social status, so don’t kid yourself into thinking that you offer prospective employees something no one else can offer.
If the community locations of WeWork, ranked first in FastCompany’s “The World’s Top 10 Most Innovative Companies of 2015 in Life Events” and 15th on the list of the most innovative companies of 2015, are a sign of innovation outside of the central area of California, then D.C., Brooklyn, Miami, and Boston should also deserve attention when it comes time to pick a location for your startup.
College campuses are beginning – slowly – to understand the evolution of this thing called entrepreneurship, because that is what students are demanding. Of the top 25 undergrad and grad school for entrepreneurs (via Entrepreneur) – only 2 are from California (USC for undergrad and grad, with Stanford as tops only for grad school). What does that tell you about the landscape of talent?
Once you discover one simple fact, and that is, that everything around you, that you call life, was made up by people that are no smarter than you – Steve Jobs
Talent exists outside of the Silicon Valley, and don’t try or let anyone convince you otherwise.
Growth is imperative. Is location something that can make or break your growth?
Growth is what every entrepreneur wants from his/her startup – at least in early stages (later on profits become king and growth leads to profits). Growth takes money. Regardless of whether or not you are funded by an investor or you are bootstrapping you have to do some homework when it comes to creating a strategy for creating growth. Opening shop in the Silicon Valley does not appear anywhere on the map to increasing growth – in most cases. Kevin Hale, of Y Combinator, has clearly said that you should not get pushed into moving into the valley, especially if your market isn’t focused on clients in the San Francisco area.
MailChimp, Moz, DocuSign, StratosCard, Dollar Shave Club and hundreds of other startups are growing their company outside of the valley – regardless of if they are B2B or B2C. Is the Silicon Valley important for your company to create growth? Find your regional market, and use that as one of the cornerstones for deciding where to start business. Not all things tech need to be in the valley, and neither does every Uber-type of service.
In business, talent that works hard wins. Location is just one minor aspect of it all – yet it comes with such a high price tag. If there is one thing to learn from one of the best and most profitable companies in the Silicon Valley – it’s this: The ROI on spending money on getting a lot of customers via advertisements is lower than that of spending money on top-notch employees that know how to work. That company is Google.
Feature Image: Marcin Wichary
