I Choose Austin

Guest post by Joshua Baer who helps people quit their jobs and become entrepreneurs. He founded his first startup in 1996 in his college dormitory and now teaches a class at the University of Texas for student entrepreneurs.  He’s currently the CEO of OtherInbox and Director of Capital Factory. Joshua has helped start a dozen companies, sold four of them, invested in more than fifty of them, and is a mentor to many others. You can follow him on Twitter @joshuabaer

This week I attended a panel at the Austin Technology Council’s CEO Summit titled, “Why I moved my company to California” featuring execs from 3 startups that moved from Austin to Silicon Valley and one that kept an office in Austin but moved the management team to Silicon Valley.

  • James Beshara from Crowdtilt
  • Frank Coppersmith from GameSalad
  • Matt Pfeil from DataStax
  • Tom Serres from Rally
  • Moderated by Laura Beck

Nobody was bashing Austin, but everyone on the panel seemed to agree that for tech startups Silicon Valley was almost always a better choice than Austin. Everyone also seemed to agree that Austin shouldn’t try to be a “better Silicon Valley” because that is hopeless. Tom encouraged Austin to figure out what we are good at and focus on that, but he didn’t have any suggestions as to what that might be.

Austin doesn’t want to be Silicon Valley any more than Texas wants to be California.

In particular, the reasons I heard supporting Silicon Valley were:

  • surround yourself with the thought leaders in your field
  • more investors
  • more top talent
  • things “move faster”
  • investors are willing to fund big ideas with no revenue model
  • business development easier with local companies

They are all really good reasons. It’s hard to argue with them. It’s hard not to walk away thinking that you’d be crazy not to move your tech startup to Silicon Valley.

What did I learn from this? If you ask a bunch of people why they moved to Austin they will tell you how great Austin is and if you ask a bunch of people why they moved to Silicon Valley they will tell you how great Silicon Valley is. Of course everyone thinks they made the right decision. Otherwise they would have moved back!

There is no right answer. For some people Austin is the right answer and for others its Silicon Valley. For most we’ll never know for sure.

For me, the right answer in Austin.

There are a number of trends that make it easier to do a startup in Austin than ever before:

  • it’s easy to get people to move here
  • there are more and more direct flights
  • recent success stories like BazaarVoice, HomeAway and SolarWinds
  • investment in the city by Apple, Facebook and others
  • new entrepreneurial focus at the University of Texas
  • technology makes it easier to collaborate remotely
  • social media makes it easier to keep up with fast moving trends
  • social media makes it easier to do business development remotely
  • Angel List makes it easier to raise funding
  • less funding needed because of open source and cloud computing
  • SXSW attracting national tech to Austin

I think the most important question is this: Do you want to fight your way to the top of an established hierarchy or do you want to be part of building something new?

It’s well documented that the flow of population is into Texas and Austin. We’re growing and our economy is strong. Anecdotally, I’m seeing it too. Every week I’m introduced to an entrepreneur who is moving his or her company to Austin – and the pace is increasing. I hear from engineers in Silicon Valley who tell me they don’t know where they want to work yet but they know they want to move to Austin. Top tier investors like Benchmark, Battery, First Round, Peter Thiel, and Mike Maples, Jr are actively making investments here. Things are getting better and better for entrepreneurs and for tech startups.

In Austin there is a different kind of opportunity. Opportunity to help shape the community that is growing and developing. Opportunity to be a leader and fill a void created by that growth.

That’s why I choose Austin.

Comments

  1. Well said.

  2. I dare AV to fund one Austin startup with a validated product, no business model, and a founder who hasn’t been an exec in an AV portfolio company or public co. and then not fire them for 24 months (or recruit a cadre of their execs from other exited AV companies). And while they’re at it, maybe don’t demand that the company put non-competes into people’s employment agreements. That’s what I call _venture_ capital. Austin could use some of that.

  3. I recently moved to Austin from California (from Hawaii) and I’ve heard all of the above arguments, and a few more.

    I think those who think Silicon Valley is a better place to get a Start Up going are correct as far as “business deals move faster” and “more investors are currently in Silicon Valley”.

    I think those entrepreneurs who have vision for what’s down the road are the ones who are moving to Austin, and making it work. While it’s still not quite Silicon Valley in re: to all the mind capital or funding capital available, it’s getting there. And will grow with each passing month and year, esp as California’s government increases their bankruptcy rate and aggressively goes after business owners for their Unfair portion of Taxes owed to the State.

    But — it’s kind of like what Wayne Gretzky says about why he’s such a successful Hockey player: “I skate to where the puck is GOING, not to where it’s at right now.”

    That’s Austin. Where the puck is going.

    I just wish the beach was going here too. :P

    ‘Nuff said.

  4. Half the reasons Josh gave can apply to any city. Another portion of the reasons are pretty weak.

    it’s easy to get people to move here – Same for California – Who doesn’t want to live in Cali?

    there are more and more direct flights – Not a good reason… This highlights a weakness of Austin: that there weren’t enough direct flights to begin with.

    recent success stories like BazaarVoice, HomeAway and SolarWinds – True, but pretty weak. Can’t compare with the number of success stories in other cities.

    investment in the city by Apple, Facebook and others – True. Can’t really comment on this too much because I don’t know enough.

    new entrepreneurial focus at the University of Texas – I guess. The problem is that the students at UT want to party more than they want to make businesses. These students honestly just can’t compete with Berkeley / Stanford.

    technology makes it easier to collaborate remotely – Doesn’t have to do with Austin.

    social media makes it easier to keep up with fast moving trends – Doesn’t have to do with Austin.

    social media makes it easier to do business development remotely – Doesn’t have to do with Austin.

    Angel List makes it easier to raise funding – Doesn’t have to do with Austin.

    less funding needed because of open source and cloud computing – Again, DOESN’T have to do with Austin.

    SXSW attracting national tech to Austin – Very true. Probably the best reason on this whole list.

  5. There’s really only one thing that matters in this world. And it’s live music.

  6. Anyone thinking it’s easy to get people to move to California should give this a read; one of the most non-startup-y articles about the challenges of California I’ve read in a long time and brilliant perspective on the future of Silicon Valley: http://www.forbes.com/sites/timothylee/2012/05/10/why-the-bay-area-should-have-11-million-residents-today/

    Back that story up with the top Silicon Valley trend of 2012, poaching (see: http://blog.jmhamiltonpublishing.com/2012/04/14/in-a-highly-competitive-recruiting-climate-its-not-uncommon-for-even-facebook-to-encounter-top-design-talent-playing-hard-to-get-.aspx or AngelList’s latest hackathon http://news.cnet.com/8301-32973_3-57430375-296/at-angellist-hackathon-demand-is-for-talent-poaching-tools/) and you may find yourself second-guessing the Bay Area. “More” top talent is relative and that fact is meaningless if you can neither attract, retain, or afford them.

  7. Nicely done. I’ve been pondering my response and thoughts to the panel since Fri. The room seemed collectively quiet, absorbing what the guys said. Later, some were angry and defensive. But I was so impressed and appreciative of Tom, James and Matt being so candid, so honest. And I think you put it well, Josh. For them, Silicon Valley is the best place, their best choice. For you, for me and loads of others, its Austin. Being happy where you are is a great thing for all.

  8. Having been in the “I Choose Austin” camp since 1994, I’m in full agreement with Josh. Look, everything you do in life has tradeoffs. I left Stanford for Austin in ’94 and have had amazing experiences here – at first at work. But over time, the “great experiences” encompassed my neighborhood, my friends, the music scene, ultimate frisbee… And I likely missed out on any dot-com IPOs as a result. But Austin is home, now.

    In every community you have people who put down roots and invest in the community. And you have people who float to wherever the jobs are, or wherever the gold (or gold rush) seems to be. For whatever reason, Josh and his family chose to make Austin home – and he didn’t do it halfway- and Austin startups are better for it. Our family made a similar choice- there was a time when we could have gone anywhere – and we elected to stay in Austin. The “Anon” commenters always are the ones taking shots, and missing the big picture – it isn’t just about where Austin is at this moment in time – it is about the story arc of Austin – things are on the upswing, and have been for a long time – but not in a crazy bubble way, in what feels like a more sustainable way (time will tell). Austin isn’t for everyone, but for those of us that choose Austin, it is a fantastic place to start (and grow) a business.

    I’ve been enjoying being a small part of building something new in Austin. I’m in.

  9. I recently returned from an info gathering trip in N. CA where I met with a number of VC’s and repeat entrepreneurs. There was a common theme…all believed that CA is the best place in the US to start a tech based business. No real surprise there, however, they ALL indicated that TX was a much better place for their businesses once they are in the market with revenue. CA is NOT a desirable place to have a growth stage or mature company and as cited by others on this post, companies and employees are leaving CA in ever increasing numbers for that and other reasons. The trend is expected to continue. Those of us working for and with start-ups here in TX have the opportunity and the responsibility to leverage our geographic and economic advantage to catalyze the entrepreneurial ecosystem and promote our start up successes beyond Texas. Over time, we will have more successes, retain more entrepreneurs, and attract more capital. As Mario Andretti once said “victory is a matter of staying power”.

  10. Laura, I thought one thing that is really a shame is that the four people can’t imagine any valid reason why someone would do their startup in Austin. There’s not much point arguing with someone that committed to their decision (and if there is one type of person I know who commits to a decision it is the entrepreneur).

    That speaks to a lack of perspective on their part, rather than a failure of Austin’s startup community. Most of the folks I know who have moved (in either direction) have a pretty balanced view of the tradeoffs.

  11. I think something else that hasn’t been touched on very much in the comments is the cultural difference between the startup climate in Silicon Valley vs. Austin. The trade-off is around competition v. collaboration as an avenue for innovation. Austin startup founders are much more likely to collaborate; which accelerates the velocity of the startup ecosystem in Austin. Competition as a cultural part of entrepreneurship in California makes that ecosystem much more difficult to enter. Please don’t misunderstand, I’m all for capitalism and free markets. I’m specifically referring to entrepreneurs being open with ideas, information and resources. Beyond that, some Austin entrepreneurs are enthusiastic about sharing these things. The old cloak and dagger model of shrouding every idea behind a wall of ND agreements is clunky and slow. If your idea is good enough, and you are good enough, it will only benefit from the collaborative environment in Austin. This encourages rapid iteration and peer review which serves to sharpen the great ideas and accelerate their velocity.

  12. Top 5 Reasons to Move Your Start-Up to the SF Valley.

    5. Money follows talent and talent follows money.
    4.That is where the money is.
    3.Its easier to replace me the CEO when the VC fires me.
    2.Can get prescription marijuana for my glaucoma.
    #1 reason… I can wear my hoodie all year!

  13. I lived for years in both San Mateo (Peninsula) and San Francisco (was the original QA Manager at Digg). I really liked the vibe in SF, the fact that I didn’t have a car (or car note), etc. What drove me away from the Bay Area (and back to Austin) was one single thing: The Cost of living. I made good money, but couldn’t save a dime. And unless you are ready to spend millions, forget owning a home. I couldn’t imagine raising kids out there. I came back to Austin because I can afford to bootstrap my own startup here. Unless you are ready to get in bed with some VC’s right out of the shoot (ex. you got to Stanford), it’s next to impossible to gain any traction in that environment. Here in Austin, I feel much more comfortable taking chances with my business when there is a financial risk.