Not All Unicorns Are Born In Silicon Valley
I started my first company when I was an 18-year-old college freshman. Back then, my choice of where to launch my company was made for me. I was a broke college kid who went to school at the only place willing to give me a full ride — the University of Alabama in Huntsville. So naturally, when I decided to launch my service for connecting college tutors with kids needing tutoring, I did so in Huntsville, AL.
Back then, Huntsville was known for a couple of things: Space Camp and defense contracting. Huntsville’s Redstone Arsenal is home to Marshall Space Flight Center, Space & Missile Defense, and other high-tech defense and space-related agencies. So Huntsville has a long history of being a city full of really intelligent people with highly technical skillsets. We literally have a lot of rocket scientists. In fact, Huntsville is the third most technical workforce in the country.
What Huntsville was not known for was tech startups. In 2005, when I launched Appleton (my first company), Huntsville wasn’t the type of place that appealed to the young, t-shirt-wearing workforce typically associated with scrappy consumer tech. The food scene was pretty lame, high-gravity beers were still illegal in the state, rich cultural experiences were hard to find, and the nightlife was non-existent.
Even given its humble beginnings in a Huntsville college dormroom, Appleton went on (after a couple of pivots) to become a highly successful on-demand staffing company for schools. We were doing the gig economy before it was cool.
When I decided to launch my next company, I had the financial means, the personal network, and the credibility to do so anywhere I wanted. As a single 30-year-old guy with nothing tying me down and a successful tech company under my belt, I set out to find a new city in which to launch my next venture.
My short list was Boston, New York, and (of course) Silicon Valley. After all, building a great tech company is largely dependent on your ability to get the best talent on your team. The natural thought process for any aspiring founder is to go where the best talent can be found. Also, as a single guy, I wanted to go somewhere with a great social scene.
I visited all three cities multiple times and connected with old friends in each city to learn more about the tech community and the lifestyle each offered. I was fortunate that my network included many highly successful founders of tech companies, venture capitalists, and brilliant technologists. My goal was to figure out which city would provide me everything I needed to ensure my new startup had the best chance of success. I researched real estate, met with recruiters, visited cool office spaces, went on a whirlwind culinary tour, etc.
Each city offered its own unique appeal. Boston’s historic streets and small town feel coupled well with the intellectual vibes of Cambridge. New York was… well, the amazing unsleeping metropolis we all love, full of cool bars, amazing restaurants, and lots of culture. San Francisco offered up amazing weather, unparalleled technical talent, and all the trappings of a vibrant city.
All three seemed like amazing places to launch a startup, and, as expected, all three have large startup scenes with lots of interesting companies.
So imagine my surprise when my network of respected people in tech were all saying the same thing: “don’t launch here.” My New York, Boston, and San Francisco friends all felt the same way about their respective cities. I couldn’t believe what I was hearing.
But, as I listened closely, I started to realize what was driving their sentiments. Each community has become oversaturated with tech startups. All the things that I found appealing about each city were also appealing to every other founder of a tech company. What wasn’t as well appreciated was the high cost of living, the vicious competition for talent, and the difficulty startups faced in standing out in the crowd.
In each city, I found respected tech leaders telling me about how challenging it was to get the best talent. The top engineers and designers are in high demand, and competing with the tech giants, as well as a seemingly endless pool of startups in each city, makes it very difficult to attract and retain really good talent. The costs are also much higher than in other cities. Cool office space is expensive, and salaries are inflated due to the cost of living. Real estate prices are so high that I questioned my own ability to live in a nice place. Not surprisingly, New York City, Boston, and San Francisco are consistently ranked among the most expensive metros in the US.
It was becoming apparent to me that my initial assumptions about the best places to launch a startup were not as enlightened as I had once thought. I was left asking myself, “if not Silicon Valley, then where?”.
Oddly enough, I found that all the things people complained about in the three cities that I initially wanted to launch in were the exact opposite from what I had experienced living and working in Huntsville. I was in a community with ample technical talent, where my startup offered a welcome contrast to the slower pace of the space and defense industry. The cost of living was extremely low (Huntsville is ranked among the most affordable metros in the US), and the competitive salaries we offered allowed our workforce to have a high-quality of life. All of this meant that attracting and (more importantly) retaining top talent was not as challenging as it would have been if I launched my tech company in a major metro.
Even better, over the last 10 years or so, Huntsville has become a vibrant city with a lot to offer. The historic downtown has been revitalized, bringing with it a booming food and craft beer scene, as well as richer artistic and cultural experiences. The economy is strong, and the cost of starting and running a business is low. All of this is wrapped in a warm and inviting small-town feel that keeps Huntsville on the top of “best places to live” lists nationally (for more on Huntsville, check out this short video).
As unexpected as it was, I found myself acknowledging that perhaps the best place to launch a startup was right in front of me all along.
So many aspiring founders find themselves in the same trap that I did. Popular opinions make us feel that we have to go to Silicon Valley or a similar major metro in order to be a successful tech startup. However, more of us are beginning to realize that there are a lot of cities like Huntsville out there. As contrarian as it may sound, I believe that many of these “under the radar” communities offer a better environment for success than the de facto choice of Silicon Valley. Even the vaunted VC community of Sand Hill Road is starting to realize that other communities offer some distinct advantages to startups. In fact, the Unicorns include companies like Domo (American Fork, UT), Kabbage (Atlanta, GA), and Jetsmarter (Fort Lauderdale, FL).
So to all of the aspiring founders of tech startups, I encourage you to be open-minded about where you choose to launch your company. Being in Silicon Valley is not a requirement for success. What is required is finding a place where your company can offer something compelling and attractive to the talent you will need. Consider going against the conventional wisdom like I did and launching your next venture somewhere other than the Valley.
