The Small Town Advantage
At GymNext, we love to run experiments. This is something I learned from my days at Zynga and brought with me to my latest startup. We are constantly trying new things and tinkering — with our app, our website, our marketing, our business plan, and more. One of the grandest experiments of all though was my decision to launch and scale GymNext in (or near) my home in Tiny, ON.
As I mentioned in my first post, GymNext started from my garage in Tiny. As it has grown, I have constantly re-evaluated this location experiment. We’ve been through many stages of startup life and still have a few more to go, but what I’ve found so far is that through hard work, minimizing distractions and really understanding my environment and how it impacts my company, I can succeed in a smaller ecosystem and even derive certain advantages from it.
Building An Ecosystem
Although GymNext started in Tiny, Ontario, we consider many other locations home as well — Penetanguishene and Midland, which neighbour Tiny, and Barrie, which is about a 35 minute drive away. We also have ties to Markham, Toronto and Waterloo as well.
Now, if I was building a company in a larger ecosystem, say Toronto or Waterloo, then that center would be large enough to support me entirely. It would have office space, investors, seed funds, advisors/mentors, networking events and workshops, and any other offerings my startup would need to get moving.
However, since we are building outside a major center, we can’t rely solely on our small center to provide for us. It’s simply not big enough to offer everything we need. Instead, we need to branch out and link into larger ecosystems around us and to help build a stronger environment where we reside.
That means our ecosystem looks like this: Tiny (pop. 11000), where I live and the company was founded in my garage, is home. Penetanguishene (pop. 9000) is where our office & assembly/shipping facility is now located. Nearby Midland (pop. 17000) is where much of our local networking occurs and we also have relationships with employment and community support services there as well. Barrie (pop. 128 000) is the closest large city and where we are part of the local startup scene, attend networking events and workshops, access mentor/advisor services and have a number of great supporters. Markham (pop. 300 000) is where our RIC is located and we also attend networking events and workshops, and have multiple mentors/advisors too.
Additionally, I keep ties to colleagues and startups in Toronto and Waterloo. These are great ecosystems and even though we don’t reside there, it does not preclude us from accessing many of the opportunities they provide or chatting with the startups that are run there. I may simply have to get up earlier and drive further than everyone else to attend an event — a small price to pay if the event is worth it.
This has allowed me to turn what could potentially be a large disadvantage for us into what has actually been an advantage. I call it ‘small fish, small pond’.
Small Fish, Small Pond
Have you ever been really excited about attending a networking event and then you arrive and realize you know maybe three people in a room of one hundred or more. That is how every networking event or trade show in Waterloo or Toronto that I’ve ever been to has gone. You are a small fish in a big pond and it’s scary, lonely, and uncomfortable.
Conversely, when I attend a networking event in Barrie or Midland, I know it will undoubtedly draw a much smaller and less diverse crowd because our pond is so much smaller. After attending only a few events, I now easily know at least half the people that regularly attend these events and because of our tight knit community, it makes these events not just tolerable, but dare I say enjoyable. They are far more than a business card exchanges, and instead breed genuine relationships among the startups and the support system.
Regional Innovation Centers
Great resources for any entrepreneur in Ontario, no matter where you reside, are the regional innovation centers (RICs) scattered throughout the province. While Waterloo (Communitech) and Toronto (MARS) have some of the best and most well known RICs, it doesn’t mean that they are the only game in town. By plugging into our local RIC, VentureLAB, I have gained access to a wealth of advisors, mentors, training programs, funding programs, and so much more.
VentureLAB is the RIC for York Region, Simcoe County and Muskoka, but it is located in Markham. This is a large geographic space to cover and their main headquarters is located much closer to their southern border than their northern one. This is definitely a drawback for me to accessing their services (it’s not fun travelling from Tiny to Markham in the winter), but it’s certainly not a reason to shun my RIC altogether. In fact, VentureLAB has done a great job recently of expanding its programming to be more accessible for clients like myself in Simcoe and Muskoka. In the last year, VentureLAB has provided a ton of support and guidance that I have found invaluable. The workshops they have offered have really solidified my understanding of running a startup/business especially in the areas where my tech background does not lend itself to like sales, marketing and finance. They have also helped me with funding and have championed my company for a number of different programs including the $5k Boost Grant that we received.
Investors
If you are looking for non-government funding (we are completely bootstrapped so we haven’t), raising seed money from Angels could be a concern in a smaller center. But again, there are some advantages to being in a smaller market.
A few months after founding GymNext, I decided to look up the local angel group and found the website for the Georgian Angel Network. After leaving a message on the website, I was able to hop on a call 24 hours later with the managing directory Sandy. After our chat, he introduced me to two angels in their group — one of which lived on my street. I was able to set up some lunch/coffee meetings and although we didn’t go down the angel route, I now have a great advisor/friend that came out of one of those coffee meetings whose running a startup of his own in Midland.
I have also talked extensively about my location with a friend who is a Toronto area VC. I’ve asked him bluntly if he would invest in a company in a smaller center. As a big believer in investing in a team/founder first, he assures me he would have no problem writing a check — but he cautions, there likely would be a drop in valuation based on potential difficulties in finding a successful exit.
My feelings on the subject are that there is money available in every ecosystem for good companies. It may not be raining money like it might be in other locations, but with hard work, a good product, a good team and a good pitch, it’s out there.
Building a Team
The hardest part of operating in a smaller center is building a team. This is the one area that I keep coming back to and wondering if it will be the catalyst for needing to move beyond Tiny and into a center that has more engineers, more product managers, more talent in general. Maybe that day will come, but for now we have been able to minimize this disadvantage as well.
First, we have attracted applicants to our company by positioning ourselves as an alternative to the traditional urban startup. This has allowed us to bring in young, eager and talented individuals looking for a different experience than you would get in Toronto or Waterloo. I believe this strategy will continue to be a successful approach for us as we grow and scale.
Secondly, as one of the few startup opportunities in the area, we are very attractive to local talent and should be able to retain our employees in a less competitive environment vs. larger urban centers.
Lastly, we put a huge emphasis on training. We are not drawing from a big enough talent pool to target extremely specific skills or experience. Instead, we look for smart, enthusiastic employees who are willing to work hard and learn on the fly. If we are to make it in a small center, we need to create talent, and not simply recruit it.
A Different Kind of Network
When I lived in the GTA and worked in Waterloo, I had a network built primarily of people working in technology. My friends were coders like me and we matured and grew up together and are still close to this day.
When my wife and I moved to a small town, I did not contemplate how my network would change composition so drastically. Looking back at it now, it’s obvious that it was inevitable, but still I did not anticipate it.
My network today is not focused on one sector. Instead, I have friends and contacts who are teachers, doctors, nurses, mechanics, firefighters, business owners, lawyers, investment advisors, personal trainers, engineers, bank managers, and beyond.
This expansion of my network has enabled me in many ways. From having a better understanding of my target customers to receiving informal advice on all sorts of topics. However, it was when I hit a roadblock during prototyping that my network composition really made a big difference.
After spending months building my product focused on the software and hardware, I switched my focus to designing the physical enclosure. I made a little initial progress, but before long I was getting nowhere fast. I didn’t even know what to search for on Google anymore. I was completely stuck!
I play hockey every week with a group of teachers (I think I may be the only non-teacher among them, but they let me play with them anyways) and I was describing the issue to one of the players when he pointed down the bench in the direction of Garth. I didn’t know Garth outside of hockey, but found out that he is the shop teacher at the local high school. After describing my issue on the bench between shifts, he invited me into the school. There, he taught me all about CNC and 3D printing. He even helped me prototype some parts and got me unstuck. A huge obstacle was overcome and my first working prototype was complete a few weeks later. All because my network involved more than software developers and techies.
These serendipitous meetings happen all the time in a small town. Everyone is so closely linked that you are never far removed from someone who has expertise in a field different from your own. And perhaps because it’s a small town, you are probably more likely to find someone willing to go above and beyond and help you out.
Lifestyle
By far, the biggest advantage to starting a company in Tiny has been the lifestyle. While I run a tech startup which means working crazy long hours, I am still physically active, involved in my community, and have a great group of friends that regularly gets together. Most importantly though, my kids are the center of my life and I never miss anything they do.
If I ran my company anywhere else, this simply would not be possible.
My commute is only 10 minutes, and my home is situated on two gorgeous acres of mature trees with a backyard pool and swing set — at half the cost of what a similar home in Toronto or a GTA suburb would go for. My kids attend a great school with great teachers and they are in tons of different activities including swimming, hockey, baseball, basketball, skiing, gymnastics, fitness and more. Plus, we are minutes from some of the best boating, skiing, snowmobiling, biking, camping, and running trails in Ontario.
My life is both laid back and frantic at the same time — and I’ve never been happier.
Launching a tech startup in a small town may seem like an impossible dream, but after eighteen months, we are still going strong here in Tiny. We continue to learn how to utilize the strengths of our ecosystem and we strive to help our environment and community grow. GymNext is proving that you can build a technology company anywhere and that small towns can offer many advantages if you’re willing to look at things differently.
