Hacker News Reader

Comment by danschumann | Hacker News Reader

I'm deeply involved in the "beckoning" portion this article mentions. I volunteered at a conference in Green Bay, Wisconsin hosting Steve Case on his 'Rise of the Rest' tour. It's truly needed. We're consistently ranked top for small businesses (by %), but lowest for startups. Lots of people have little lawn and snow care businesses, but people move away if they want to start something larger. I think the key is to build a solid community, even if very small. The city should pick a block and try to put as many tech companies there as possible, giving them incentives. The higher density, the more tech culture can catch on. Mostly people need good examples of people who have made it or are making it. It's definitely catching on.

View on HN

I'm bullish on tech startups in the midwest, but not on this playbook for accumulating them.

In particular: I do not understand the benefit of designating a block (or any geographic area in the city) and then incentivizing tech companies to move there. What's the benefit? Moral support?

One of the greatest advantages cities in the midwest have over NYC and SFBA is that it's inexpensive to set up an office. That comes in part from having a whole city's worth of open spaces to pick from. What's the advantage to trying to centralize them? I've seen this tried in Chicago at places like 1871 and I just don't get it: it seems like weirdly expensive, constrained, noisy space whose only benefit is proximity to the kinds of companies that would also take on expensive, constrained, noisy spaces.

Meanwhile, isn't the biggest disadvantage to the midwest the limited funding options? I'm a fan of the kinds of companies that don't have this problem because they "fund" from customer revenue. But if we're talking about replicating the SFBA startup market in Green Bay, we should probably start by engaging with the fact that investors will not fund the same companies in Green Bay that they will in Mountain View or SOMA.

I do not understand the benefit of designating a block (or any geographic area in the city) and then incentivizing tech companies to move there. What's the benefit? Moral support?

Serendipity. One of the advantages of SF, is the high density, which results in more fortuitous chance meetings.

it seems like weirdly expensive, constrained, noisy space whose only benefit is proximity to the kinds of companies that would also take on expensive, constrained, noisy spaces.

Expensive, crowded, and noisy don't necessarily contribute to serendipity.

Meanwhile, isn't the biggest disadvantage to the midwest the limited funding options?

I think the idea is that another startup hub somewhere else can show a degree of success and start attracting early funding, perhaps in some kind of niche.

What he said. And you can get all the benefits without increasing the cost. Like I said the city should incentivize it. Downtown Oshkosh is pretty much the same price as everywhere else Oshkosh.

I should be up-front and say that I am extremely skeptical about the value of this kind of social serendipity for creating viable startups. I think social networks are important, but really they're so anchored to status that if you're the kind of person who was going to benefit from them, you were going to benefit no matter where you lived.

But as for the rest of your message, you're basically asking the same question I am. Why try to cram all the startups into some weird "startup block"?

Later

Put it this way: to believe that cities should start centralized startup districts, don't you have to believe that distance is so unimportant to startups that it's fine to be in a locale that has 1/1000th the number of startups as SFBA, but also so important that you prescribe what cross streets they set up on in your own town?

don't you have to believe that distance is so unimportant to startups that it's fine to be in a locale that has 1/1000th the number of startups as SFBA, but also so important that you prescribe what cross streets they set up on in your own town?

One would have to believe that networks and modern infrastructure can make certain factors of distance unimportant, while one can still encourage enough beneficial interactions in a smaller community outside of SFBA. This is why I brought up the idea of a particular niche. It seems very unlikely one could compete in all areas, while there have been many historical precedents for explosions in rates of creative realization and/or production resulting from concentrations of specialists in a particular craft.

The real problem with distance being unimportant in tech, is that any such bloom could be quickly drawn to SFBA and relocated there. For such a thing to work, there would need to be something else keeping the group of specialists in the outlying community.

How many VC's invest in Green Bay? How much money do they have? How big of investments will they make? How much do they bring to the table in terms of advice and contacts? What kind of businesses are they looking for?

You won't get start-ups until someone brings money. Instead of setting aside a city block, they should charter three round trip flights a week from San Jose Jet Center to the Green Bay airport and subsidize the tickets.

In my opinion, the problem is less about the founders and early employees as it is about the scaling. It’s a lot easier to convince young college graduates (as older folks will want/need much more compensation when working for a risky startup) to join a company in hip, trendy metro areas than it is to convince them to work in, say, Wisconsin. I suspect that is why companies that intend to scale prefer to move to larger metro areas, even if that means going from a more rural part of a state to a bigger city like Madison.

That being said, I have noticed quite a few specialist technical/consulting firms popping up all over my native Upstate New York. Those firms don’t need the armies of employees the way a Google or an Uber does, so I think that they can offer a higher pay to cost of living ratio and attract strong talent, kind of like Tom Cruise in The Firm, accepting a lower salary to work in Memphis but taking home more net income than if he had gone to New York.

Right and the thing about scaling is that it is not the money. It is the talent and the opportunities. It takes sustained effort to build over many years. It requires decent schools turning out decent talent that feed companies that hire more talent. Like the parent said, if there is only one game in town, that is high risk. You can't play get-a-raise ping pong if there aren't the companies to do so with.

The other problem is at acquisition time. EVP of Google don't want to hire a team in BFE, Wisconsin or Lancaster, PA. They know those people aren't moving to SV and the EVP isn't taking two flights and an hour train/car to visit that remote office. Tech startups in these areas have to be more focused on revenue and not IPO and Acquihire.

It might help if mid-western companies paid equivalent salaries as on the coasts.

There seems to be this attitude in the Midwest that lower CoL justifies lower salaries, as if there's no need to compensate for lower QoL with money.

Given equal salary, hordes of people will choose Midwestern winters over SF rent. But this attitude of "I don't have to pay you as much because land is dirt cheap, never mind that it's on a flat prairie in -20F weather" needs to be reversed. Especially since most of that land isn't ever appreciating, so I'm just paying rent to the bank instead of to a landlord anyways.

Midwestern companies: don't do CoL adjustments if you aren't also willing to do QoL adjustments.

> There seems to be this attitude in the Midwest that lower CoL justifies lower salaries, as if there's no need to compensate for lower QoL with money.

As a local Midwesterner, they don't do this because many people here don't want to think their QoL is lower and some will even feign offense that you implied their QoL is any lower than anywhere else.

Ironically, this bites them in the ass in wages.

Companies don't pay people fairly out here because they don't have to. Most of the locals have convinced themselves that their QoL isn't any lower. Their own employees proudly display their own below-market wages as evidence of why their home is a great place to live, they are essentially negotiating their own wages downward. It's a pure win-win for most companies, why would they want to disrupt that process?

I explain it to people this way when they ask why I left the Midwest: the Midwest is the Walmart of America. It's large, cheap, and the quality of most aspects of life is relatively low (weather, food, social life, career growth, etc.). But if it's all you can afford, it's a better place to be than somewhere expensive.

You guys are doing all this theorizing, but I live in the Midwest because that is where my family is. That's part of QoL.

There are so many great universities in the Midwest graduating tons of engineers, so they do have a foot in the door already. Most leave for the coasts, even if they do fall in love with the area (I did).

They shoot that foot off though. Companies in those regions optimize for hiring cheap and replaceable, such processes will ward off real talent who realize they need to move elsewhere to have a upper middle-class lifestyle.

Don't get me wrong though I definitely see the QOL that can be had with smaller incomes in such places and intend to move out of the Bay Area etc. eventually.

The other thing that's really starting to change things is remote work. There's no reason most developers need to be anywhere as long as they can get high speed internet.

Reply on news.ycombinator.com