Greener pastures? A tale of the Minnesota startup that was
tech.mn
tech.mn
It's a shame because there is a pretty vibrant tech community in the Twin Cities. But it leans very heavily to contracting and consulting. I'd suggest going elsewhere to start a company and moving to Minnesota when you're ready to raise a family.
Obviously there's no simple button-press solution for a city to become a startup capitol, or else every city would have pressed that button by now, but I do think that the focus on Corporate Tax rates is particularly wrongheaded. Just about every survey of "Business-Friendly Tax Rates" tends to put CA, MA, and NY near the bottom, surely a higher tax rate can't be that discouraging to potential startups?
Well, angels and VCs are needed by a lot of people and MN doesn't have the environment to support a startup community.
It isn't fatal at current levels given their other properties. If you don't have those other properties, you're competing with low-tax places that also don't have those properties.
Much more germane to startup costs are the salaries (which are strongly influenced by personal & real estate tax rates), benefits (health can be 2X or more in expensive areas), and space.
I've been involved in a number of healthcare start-ups in the Twin Cities over the years, including my current VC-backed one, Bloom Health (http://gobloomhealth.com).
There's quite a bit of startup work to be found if you look around. It isn't as barren as some would have you believe.
The only drawback is lack of VCs in the area. Austin Ventures are the only girl in town and they tend to favor "seasonal CEOs" over young engineers and are extremely conservative with their investments.
I was absolutely miserable living here.
If you're young, you should head to one of the coasts. That's my opinion.
Austin would be great if I was older and in a position to buy a house/ start a family / etc
Right place at the wrong time I suppose. Just wasn't happy while I was there.
It's really a pity, too. There's some great stuff in the Twin Cities, and I think it would be well served with more diversification in availability of high tech jobs.
From what I can tell, unless you're into doing ERP/CRM consulting, EE for 3M, IT work for Target Corp, or biomedical engineering, you're pretty well SOL.
Texas is rated #11, and I am pretty sure it is not hyperbole that if all their MN staff moved to TX they could hire another developer.
http://www.taxfoundation.org/files/bp59_es.pdf
I think that the other factors mentioned in the article: innovative incentives for investors, locality to VCs and experienced (successful) startups, and a great community of developers all factor in more heavily than tax policy.
Minnesota is missing tech entrepreneurship... well, even that isn't true, as medical technology is doing quite well. Y Combinator style startups aren't. This is unfortunate, but overall changes to the economic structure of the state is hardly called for.
Haters going to hate?
Here goes, taxes are lower in South Dakota.
http://www.taxfoundation.org/research/topic/37.html
"Minnesota ranks 43rd in the Tax Foundation's State Business Tax Climate Index."
"Neighboring states ranked as follows: North Dakota (25th), South Dakota (1st), Iowa (46th) and Wisconsin (42nd)."
"Minnesota's 2008 state-level individual income tax collections were $1,493 per person, which ranked 5th highest nationally."
On my way back from Alaska in a couple of months I'm going to take a detour east to setup my domicile in South Dakota (I want to see Mount Rushmore and the Crazy Horse monument, anyway). It will save me at least a few thousand dollars next year.
On a serious note, the people in the midwest are wonderful and it would be great if there were more opportunities to launch and build startups there. But you need to build a critical mass of entrepreneurs, investors, advisors, and resources that will nurture such startups and, without that, it will remain hit or miss for any given locale that supports only intermittent startup activity. The good news is that it is possible to launch from such places (where, even a decade ago, this would have been almost unthinkable). As this piece points out, though, it is not easy to sustain the company beyond the earliest phase without the connections and resources that will facilitate growth.
It must have been many years ago. Today it is part of the union and is actually 2 states, North and South Dakota.
Kidding aside, I don't see either state as a real Mecca for start ups. The money is on the coasts. The people with the know how to get big name recognition are on the coasts.
If you want to start a bank or a paper box company, SD is cool. If you want to build a startup that needs facetime with angel investors and social ties to facebook, et al, I don't think the midwest is the place to be.
As for talent, I've learned to be patient. The right people do come along if you wait. I've posted jobs several times and I get new applicants each time that restore my faith in the local community.
Finding investors is pretty doable here from those around me that have received outside funding (my company is friends and family right now), and there is a noticeable interest from the government, the university, the community, and investors, in growing Madison to become a hub of innovation.
Finally, one big thing I've noticed is how under served the community is with the whole web 2.0 thing (non techies don't have time for another website). People here really value a personal touch. Couple that with less local competition and there is a lot of opportunity here.
When I was reading it I thought "sure you can!" (I was thinking about me talking to Paul Bucheit at startup school in 08) but then I realized "oh, that event was actually organized by YC too! ) :)
My point was that if we were still in Minnesota, there is a 0% chance that you or any of our awesome investors would have given us a chance. Being a part of YC gave us the chance to meet and interact with some of the greatest minds in the Valley.
Our idea is essentially a unique approach to a sales model--it's hard to convince someone of that over e-mail.
I do apologize for phrasing it incorrectly.
I know Points North (http://www.points-north.com/) managed to obtain quite a bit of angel investment about 4 years ago. I guess Lloyd and Jason just didn't know the right people. Anyway, congrats on their success outside of the Northlands :)