The Startup Geography Question

Dealing with lots of startups in San Antonio, one topic we discuss regularly is whether San Antonio is the right place for them to be. Sometimes it is; sometimes it is not. In general, startups have two options: 1) pick the correct business to where geography is a strategic advantage or 2) pick a different home base.

To explain, startups should locate in a place where their geography is a strategic advantage. If a city is not providing your startup with an advantage, it’s time to make a change. That means moving or picking a new idea.

There are a lot of ways that geography can help or hurt a startup:

Talent

The obvious one. If your startup is located in Death Valley, you are going to have a tough time hiring programmers. Tech talent in Silicon Valley is going to be more plentiful but much more expensive. It is easier to recruit people to New York than Spokane, WA.  In San Antonio, we have the place to move if you’re a Mexican wanting to go to America so it’s easy to attract spanish-speaking tech talent.

Customers

If you want to sell to big oil companies, your startup perhaps should be in Houston. For finance, New York. For consumer goods, Chicago is a good bet. Your home base should offer easy access to your customers. This offers plenty of advantages, like being able to offer personal customer support, among others.

Focus

In a place like San Antonio, the tech community is much smaller, but that also means it is much more focused. I know founders here (I’m one of them) who get so much love from experienced entrepreneurs. Being in a small community can help because of focus. In a big community like San Francisco, it is easy to get lost.

Resources

Electricity costs, investors, vendors, or travel options are a few resources. Rackspace, San Antonio’s most successful tech company, initially relied upon the legacy of AT&T’s fiber infrastructure through downtown. It also benefitted in that its early investors were mostly old money, so they were not susceptible to the tech downturn in the early 2000s.

San Antonio is very good for people wanting to hunt a hispanic population, especially Mexican nationals. It is good if you are doing something cloud computing related since Rackspace is here. On the other hand, if you are doing a business focused on enterprise sales to Fortune 500 oil companies, Houston will make more sense.  A business focused on social networking would be better suited to Austin and so on.

If a startup does not see their hometown providing a strategic advantage, they need to move or pick a new location.  It is easier to pick a new idea rather than a new geography.   However, if the team feels the idea would be better done elsewhere, that is a decision that should be made sooner rather than later.  It is always easier to move a business with two employees than one with two hundred.

Michael Girdley