The Secret Startup City That Isn’t Silicon Valley
I’ve been procrastinating writing this piece because I’m hesitant to tell you about the best kept secret.
This secret has affordable living, good schools and safe neighborhoods, all equipped with tree lined streets and bike lanes. It has the freshest, locally grown food and expertly crafted coffee and beer. This treasure is a diverse and cultural hub with rich history and celebrated art. It’s a day trip to both the mountains and the ocean. Throughout the year, this little known gem hosts concerts, professional sporting events and festivals. I know what you’re thinking but don’t worry… this secret always has an available parking spot.
For the past ten years this secret has been quietly reinventing itself and recently it’s been gaining national attention. It’s been creeping it’s way onto Best Of lists. Remember when Oprah was just a mediocre daytime talk-show host and then suddenly she was giving away cars? Or when Apple was an unexceptional computer company and then they released the iPod? Yeah. My secret is kinda like that.
You may know it by it’s less flattering nicknames: Cow Town, The Big Tomato or Sac. Yep, I’m talking about Sacramento. But don’t be too quick to judge… the capital of California is so much more than the place you drive through on your way to Tahoe.
In 2009, after growing a very successful real estate business in the Sacramento area, I had a revolutionary idea to create a paperless solution for the real estate industry. Equipped with tons of talent and venture capital, the most obvious place for my tech start-up was Silicon Valley. However the cost of starting a company in the Bay Area was (and still is) astronomical and I certainly didn’t have a conveniently located garage like Steve Jobs, Larry Page or Dave Packard. I decided I would take a risk on Sacramento, and it turned out to be one of the best decisions I would ever make.
Sacramento, by all accounts, is unconventional and vastly uncharted when it comes to tech startups, but the City of Trees promises big returns, big successes and plenty of conveniences along the way. So here’s the deal, if you promise not to increase traffic or the cost of living, I’ll share with you the benefits of starting a tech enterprise in Sacramento.
Location
While you don’t need to leave Sacramento, it’s nice to have both Lake Tahoe and the Bay Area approximately 90 miles away. A weekend retreat to Tahoe? A lunch meeting in San Francisco? No problem! Take that, subtract the horrendous Bay Area traffic and throw in a thriving downtown and you have a fantastic urban hub to meet your personal and professional needs.
This should be obvious but I would be amiss if I didn’t mention Sacramento’s close proximity to the Silicon Valley. The Silicon Valley is not only the epicenter of the biggest concentration of venture capitalist money in the world but it is also home to the movers and shakers of the tech industry. In a short two hour drive you could be pitching Jack Dorsey, Chris Sacca or Marc Benioff.
Affordability
The most obvious and most talked about benefit to Sacramento is it’s affordability. This idea is two fold. The affordable cost of living is directly proportional to the cost of running a company. It really is a win-win situation.
Let’s start with cost of living. The housing market is incredibly accessible. According to the National Association of Realtors, the median home price in Sacramento comes in at just under $300,000 whereas the median home price in the Bay Area is closer to $900,000. That is an astronomical difference. Sacramento provides an urban downtown feel (in addition to quiet suburbs) for the fraction of what it costs to live and thrive in the Bay Area. Whether you are considering a large home in a family-friendly neighborhood or an upscale loft in the heart of Midtown, you’re sure to find something affordable.
Clearly you have options other than San Francisco, but just consider the difference:
Additionally, the cost of living is directly relative to cost of talent. In Sacramento you can hire employees at a very competitive salary but still significantly less than the Bay Area. Because the cost of living is so much higher in the Bay Area, the cost of each employee increases by at least 25%.
When it came to my company, I wanted to provide that startup environment that makes the Bay Area so desirable. Because of affordable operating costs, I’m able to provide the same benefits and perks as some of the coolest startups in San Francisco — from catered lunches and endless energy drinks, to wellness reimbursements, a dog friendly office space and monthly bonuses. There are very few companies in the Sacramento region that currently provide these incentives, but I believe they are invaluable. We can attract the best of the best because we offer our employees so much more. In turn, we have an extremely high retention rate with very little employee churn. It’s satisfying to know that I can spend 6 to 12 months investing in an employee with the knowledge that they will stick around for three to five years.
Talent
When I started my company, I had three choices: outsource development, move to the Bay Area or take my chances on Sacramento. Coming from real estate, I had no idea if engineers and developers existed in Sacramento. Little did I realize, coding is not reserved for geeks in garages and Silicon Valley startups. Sacramento is home to several huge tech campuses including Apple, Intel, Hewlett-Packard and Aerojet.
I’ve found many engineers who want to build something, not just maintain an already existing product. That’s what startups offer. It’s about building something from scratch. It’s putting your stamp on something and knowing your work is going to make a difference. There’s a satisfaction in building something for the future.
Hindsight is 20/20 and I completely underestimated Sacramento’s level of talent, from development to sales and everything in between. We’ve had no problems acquiring quality employees. The talent pool may not be as wide here, but we’re not competing with the saturation of startups the Bay Area faces either.
Growth and Innovation
Historically, Sacramento was known for the Gold Rush. Then it became a government town. Currently the City is prioritizing Sacramento 3.0, a place that encourages new technology to grow its economy.
The biggest addition to Sacramento will be the finished construction of the Golden 1 Center, opening fall 2016. It will be one of the most technologically advanced and environmentally sustainable arenas in the world. The Golden 1 Center will go down in history as a major milestone for the City of Sacramento. And I’m not the only one who thinks so. 500 Startups, a global venture capital seed fund and startup accelerator, has announced that they are partnering with the City of Sacramento to “develop the startup ecosystem in Sacramento.”
So now it’s up to you, you brave entrepreneur. I know you aren’t averse to risk otherwise you wouldn’t be interested in the startup world. But I can tell you with some certainty that you are increasing your odds of success by planting your roots in Sacramento.
Consider the facts: Sacramento can hold it’s own but it’s also centrally located. You don’t have to live in a box truck in a parking lot. With two universities and a population upwards of 1.4 million, there is an abundance of quality talent. And lastly, Sacramento is a city in progress with leadership who is investing in economic growth and development. It’s undeniable that Sacramento is going to transform in the next three to five years.
So the question remains, what’s stopping you from capitalizing on our capital?
p.s. we’re hiring!
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