Many have asked me “Why did you move downtown? How has it been?” As a public service to fellow entrepreneurs, I’d like to share our experience…
For context, about a month ago, our company, Mass Relevance, moved 60+ people (at the time) downtown at 8th and Brazos. In our two years we’ve worked out of La Madeline at Arboretum, a house off Duval, class A space on 360, and class A space at Braker and Mopac (thank you Jon Aleshire!). We just moved into 10k square feet at 800 Brazos with expansion to add another 12k square feet.
As background, in my 5 years at Bazaarvoice we moved between 6 locations, all around the 2222 and 360 area. And prior to that, my 7 years at Dell, of course, I was in Round Rock. So this is my first downtown office. In starting Mass Relevance, and living in Cedar Park, I had no intention of moving downtown.
Why did we move downtown?
First, the majority of our young employee base wanted to be downtown, even though this is not the centerpoint of commuting. I’m not suggesting the decision was a democracy, but for the business, being downtown is believed to help with retention of our team and recruitment of future young talent.
Second, we found a place that was unique. I wasn’t interested in moving downtown for Class A cubicle farms. That doesn’t really change our environment and doesn’t create the ‘vibe’ that we wanted.
Third, we could make the place our own. It was a shell and we were able to customize the decor. That was a unique opportunity.
Fourth, it was a good deal. I’m not going to give details, but at the end of the day, downtown space is more expensive (approx. 30% more than North Austin), so I wanted to close that gap as much as possible. We were able to negotiate something we could afford.
Fifth, we have room to expand. We executed a lease larger than we needed and felt we could successfully sublease until we expand. We’re 70 employees now and we have room to grow to over 200. That’s a major consideration for fast-growing company because it’s hard to find space and on the next move it would be very hard to move back North.
Finally there are “serendipity” benefits of connecting with others downtown, clients that come to town, events, lunches, and SXSW convenience.
What are the cons of moving downtown?
As much as we believe a downtown space helps attract certain talent, it can repel others. We attract employees that can get downtown easy, and alienate the northern employee base. From Cedar Park, my commute sucks (along with a few of my colleagues). I usually get to the office early (i.e. 7-7:30am, 30 minute commute), but going home between 4:30 to 6:30 it is traffic all the way, about an hour or more. However, I travel about 50%, so only half of me can complain! Some of my colleagues take the train, but it is already overcrowded. Listening TxDot?
The cost for downtown space is higher. No getting around that.
Parking sucks. It’s costly and there’s little parking availability.
Your options are limited in terms of finding more space as you grow, especially cool space.
Is downtown critical for success?
In talking to many people about this move, there was a religious polarization. Either you ‘have’ to be downtown, or those who aren’t say it doesn’t matter. In the end, there’s no data to suggest downtown is a pre-requisite for success.
There are many successful companies in Austin that are not downtown. Bazaarvoice has over 100 developers with good retention and they have never been downtown. We hired up to 50 people who (as far as they knew) were going to work near the Domain. According to Austin Tech Map, there’s a 37 to 51 ratio of tech companies outside downtown vs. downtown. Great talent can smell a great company, and if you’re a great company outside of downtown you can attract talent.
It seems that more internet-based companies prefer downtown, especially those with young design and development talent. A cool downtown office creates a great vibe and is an attraction to many employees. As young talent moves from company to company, you may be more likely to pick up someone who wants to stay downtown.
Meetings with Austin folks outside of the company are more convenient. But as I tell my team, (for B2B) the money and the focus should be outside of Austin. Our clients are ‘out there’, as most B2B companies here have to travel to build client relationships based in major cities. You have to determine what is right for you, depending on your employee base, culture, size needs, growth needs, and what you can afford. Referral: if you need help, call Jon Aleshire.
I will say that downtown Austin has seen tremendous startup growth trajectory in the last 3 years. We are located in what some are calling the “Cyberdistrict” or Digital Downtown, as highlighted by the Statesman.
Things will continue to go well for Austin. In all my travels, when I tell people I’m from Austin, they hear only good things or are outright jealous. I get calls, LinkedIn emails and referrals from people wanting to move here. People are escaping the weather of the East and the state taxes in the West. As things continue to go well for Austin, the city needs to figure out parking, bike accessibility, and better mass transit! Post haste!
Despite the commute for me and others, in the end, our entire team is glad we’re downtown in this space. The response from the team has been incredibly positive. People love coming into ‘our’ office (I couldn’t say this if we were in a cubicle farm on the 10th floor of a bank building!). I love the vibe and the energy it creates for the team.
If you’re in the area of 8th and Brazos, stop by!