Joe Hyrkin is CEO of Issuu, a leading content publishing and marketing platform.
For the last 25 years, technology advancements have been linked to a single location: Silicon Valley. Often touted as the epicenter of tech and innovation, Silicon Valley is continuing to gain success post-pandemic and after the SV Bank shutdown (paywall).
Yet, it seems that tech startup founders and CEOs are looking to broaden their horizons when it comes to where they’re founding companies and hiring employees while creating the same type of innovation or momentum.
With hybrid and remote work becoming increasingly common, the tech ecosystem is being forced to rely on more than proximity to define the foundation of operations, culture and success.
New ecosystems are forming—some in new cities and some by leveraging communication tools popularized by the global pandemic’s work-from-home dynamic. In the cases where companies are in new locations, I believe we’ll see thriving local ecosystems develop. Eventually, these employees will stay in the company’s founding location to continue building this innovation with the next generation.
When companies form outside of SV and aren’t near easy access to VC, the founders must often prioritize profitability and sustainability in ways that aren’t as much of a focus in Silicon Valley. This has the positive effect of becoming innovative at a product and operational level. It requires a level of grit that can only serve to benefit the creation of a new ecosystem as if infusing these new locations with a tenacity-fueled DNA.
These companies work harder to survive in new locations to get the attention of global angel investors. One example is Utah; Omniture and Qualtrics formed there, and we’re now seeing next-generation companies like Domo and Lucid thrive. I’ve noticed how these types of companies’ employees created new companies, and their talented people stayed rather than uprooting for California. The same goes for companies from Australia, such as Canva. In many cases, the successful founders of companies in these ecosystems go on to fund the next generation of companies in these areas and new VCs are born, providing further nourishment and viability for others to get established.
Broaden Your Company’s Footprint
Even as new ecosystems develop, Silicon Valley remains the prime example of “startup heaven” in many ways. But why? It is a globally-known tech innovation center with generations of startups and talent moving from successful companies to fledgling companies. There’s also its proximity to leading universities, Stanford and Berkeley; SV has created a long history of people building professional networks and using them to help move new business ideas forward, whether to raise money, build partnerships or hire talent.
Starting a tech business is no easy feat; moving near competitors and like-minded companies calls for an established infrastructure, a talented resource pool and a growing marketplace that drives a competitive edge to do better or more. While we’re seeing startups shun a single location in favor of remote-first operations, being part of a location-oriented ecosystem has its benefits. Silicon Valley may be home to major tech companies, but forward-thinking entrepreneurs and business owners are taking the leap of faith to broaden their horizons. The bottom line is that companies should be—and have been—broadening their footprint globally.
Benefits Worth Exploring
Modern entrepreneurs and venture capitalists are keen to create vibrant business activity elsewhere. There’s a rise in activity in Texas, Colorado and Utah, along with Berlin and Sydney, for startups and venture growth. Again, but why these locations?
I find that a key factor is the availability of venture funds and angel investors in growing markets as well as founders and employees who have had successful exits or been part of building high-value companies who are now ready to take on new challenges in the location where they have established a home. In some areas, this outpaces the supply of local projects seeking funds, which in turn may increase the likelihood of a project receiving venture capital attention. Talent acquisition is also key to success, and these cities are home to universities with highly technical talent.
Austin, for example, is home to the University of Texas and was named one of the best job markets in 2021 (paywall). Tech giants are aware of the talent pool; Amazon, Apple and Canva have offices and employees based there.
Factors outside of the workplace also play a pivotal role in growth. Smaller hubs can offer communities the ability to grow together. By entering into a new market with access to a more saturated talent pool, businesses encourage growth across the organization. In my opinion, stepping outside of the expensive Bay Area is a win for employees and investors, as they aren’t forced to pay high real estate fees or fight traffic.
Silicon Valley has a specific atmosphere around tech, but starting beyond the bubble can mean the chance to grow alongside one another. When creating an educated workforce, businesses can lay a new foundation that’s centered around overall sustainability in order to continue growing their tech companies.
Having seen big tech companies take the trip outside of Silicon Valley to new areas filled with growth potential, I’m seeing entrepreneurs more willing to follow the same path. Whether it’s with a focus on innovation, the talent pool or sustainability and profitability, I believe we can expect to see more businesses plant their roots in these up-and-coming technology hot spots.
Though there is importance to following what moves Big Tech companies are making, they aren’t the only technology success stories out there. We should continue to be interested in the real ecosystems that had to organically evolve due to necessity. These stories are of founders with grit who created sustainable, profitable companies without the luxury of Silicon Valley.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here