Comment by SwellJoe | Hacker News Reader

Comment by SwellJoe | Hacker News Reader

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I've asked this before, but it bears repeating:

Have there been many wildly successful tech startups that were based on the premise "save money", to the point that they located themselves some place incredibly cheap (but far outside of tech industry circles)?

I'm not saying it isn't a valid business plan, as I don't know, but I can point to an awful lot of Silicon Valley startups that have been wildly successful, and no wildly successful tech startups from Idaho. It's really cheap to live in Idaho, so you've got a REALLY long runway. Why aren't there success stories? (Expand it to the whole midwest, and the story isn't remarkably better.)

Then again, Kevin Hale from Wufoo told me a great story about a technique he uses in one of his presentations (which are awesome)...he passes around printouts about the top 20 or so fastest growing companies according to Inc. Magazine, and asks questions about them, asking folks to raise their hand if the answer is "yes". One of the questions is "Is the company you're looking at based in California or Boston or New York?" and only one or two hands go up (Wufoo is based in Florida, and thus they take great satisfaction in talking about successful companies outside of the tech startup hubs). But, Inc. Magazine covers stuff that isn't tech.

I've not got data, but I'd imagine that reporting bias causes a tendency to conflate the cool web 2.0 and 90's dot-com startups with the tech sector as a whole. There are plenty of less sexy tech companies that are thriving outside of hubs. The technology sector is not a unique snowflake -- microeconomics still applies. Lowering your costs is a good thing.

The world is flat. If you've founded, say, an enterprise software firm with no interest in outside funding and you have all the employees you need, there's no reason to be in a "startup hub" unless you want to be.

"The world is flat."

I'm not sure I believe this one. I've lived in a lot of different places...and I know that I build better technology when I'm surrounded by technology people. Humans are social animals, and if your peer group is building next generation technology you're more likely to do the same...likewise, if your peer group is pushing paper, building cars, milking cows, packing chicken, etc. I suspect you're far less likely to be producing the best technology. You might be happier. You might be able to run your company for longer without raising money or running out of what you did raise. But, I doubt you're building the best technology you're capable of building. Maybe I'm unique...maybe nobody else is effected this way, but I doubt it.

Of course, if by saying "enterprise software", you mean "a market no one else is interested in, and thus I can build any old technology I want and people will have to buy mine", then sure. No matter where you are, you'll do fine. But what happens when an agile web-based competitor arrives who are using modern techniques and have hired the best nerds they could find in the technology center where they're based (which are, let's face it, better than the nerds you can find in a non-tech-focused city)?

I also have very little data, I just think the reasoning is flawed somewhere, since whenever I've met someone starting a company in the sticks (often "to save money"), it is fatally flawed from the get-go--often based on five year old thinking. I'm just suggesting that maybe there is a continuum of "tech productivity goodness" and that the Valley is near the top and Idaho is near the bottom, and placing yourself at the bottom of the continuum might be bad for your odds. Balancing other elements is certainly fine...but beware of what you're giving up by "saving money".

In my previous business I did a lot of work in out of the way places ("packing chicken" was actually true of the city where I once worked on a pretty big project, and the IT and software managers there were desperate for talent but simply couldn't hire it at any price)...you keep acting as though "once you have your employees" it doesn't matter where you are. But, employees leave, and if you're lucky your company will grow. You have to hire sometime if you survive.

I'm not saying you're wrong, but I think the evidence is much stronger that you are than that you're not.

Of course, if by saying "enterprise software", you mean "a market no one else is interested in, and thus I can build any old technology I want and people will have to buy mine", then sure. No matter where you are, you'll do fine. But what happens when an agile web-based competitor arrives who are using modern techniques and have hired the best nerds they could find in the technology center where they're based (which are, let's face it, better than the nerds you can find in a non-tech-focused city)?

Isn't it presumptuous to think that one's city would dictate one's knowledge of "modern" technology? If you're going to stagnate, you'll do it wherever you live.

I'll concede the point about local staffing but, again, if you've got your team together and build your startup so that it's profitable, you'll have no problem hiring when you need to.

  There are plenty of less sexy tech companies that are thriving outside of hubs.

This is certainly true: take East Dallas metro, for example. Richardson is the telecom hub, and there's plenty of enterprisey Java crudapp work in this area. There just isn't a tex-mex YCombinator (dang!).

My thoughts are this... You are in a low tech town, but you have a startup where you do not plan to get funding.

Well then your ultimate goal is to get exposure and users. How do you get exposure to the press in Silicon Valley if you are in Winnipeg (dont know that is where you are from but its a start)?

A blog, being part of the communities that they are apart of. Social networking sites, posting comments to articles on their blogs. ITs a lot of work, but you could honestly make it seem as if your startup is in silicon valley even though it is no where close. The key is what another user said...the world is FLAT! Take advantage of it.

Chris http://www.stampedeblog.com -- our startups blog http://www.propertystampede.com -- our startup

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