Why 4 emerging tech hubs are seducing startups away from Silicon Valley
If you were thinking about setting up shop in the tech capital of the world for your first office or your fourteenth it’d be wise to take a moment and ask one crucial question: Is it really worth it?
Sure, you’d be at the epicenter of innovation, surrounded by brilliant minds, mega-corporations and venture capital heavyweights imploring to get involved, but you’d also be facing some of the highest life and operating costs in America. And nothing bogs-down a business like lots of overhead.
San Francisco and San Jose ranked Nos. 3 and 4, respectively, on Kiplinger’s list of most expensive cities in the U.S. And according to the San Francisco Business Times, the average expense of commercial real estate in the Golden Gate City is at an all-time high.
So what’s your next-best alternative?( Hint: It’s not Boston or New York. Both eastern coast innovation hubs landed on Inc.’s list of the five most-expensive U.S. cities to open a new business ).
Savvy entrepreneurs will do well to check out one of the following four emerging tech hubs all of which leveraging tech ancestry and a unique combining of socio-economic ingredients to generate the ideal environment for startup success.
Outside of the usual suspects, San Diego, Los Angeles, Denver and Seattle have all seen best-in-class growth in startup fund. Blended, the four emerging tech hubs have seen more than $1.5 billion in venture capital pour into their businesses.
Mashable caught up with economic development officials from each city to assistance unpack what induces these Silicon Valley alternatives so special.
1. San Diego, CA
Why tech lives here:
Once a military town, San Diego is now a global leader in biotech and life science, mobile technology and aerospace research.
Sean Barr, SVP at the San Diego Economic Development Corporation( EDC ), tells the city’s innovation economy “grew out of necessity, ” following the Cold War, when it became clear that the city needed to reduce its reliance on defense contracts. “There was a concerted great efforts to diversify the economy and construct the required workforce and research[ facilities] that the community would need to compete, ” Barr explains.
The result was the creation of the UC San Diego which, today, graduates more engineers every year than Stanford and Cal-Berkley blended as well as rezoned business district that paved the route for research giants like the Salk Institute and Qualcomm to take root. The largest district is the Torrey Pines Mesa, home to the Salk Institute and 80 additional public and private research organizations.
Why entrepreneurs come here:
Talent pool: “Everything we hear about why people continue to grow and invest in San Diego begins and it ends with workforce and talented people that are here, ” he tells. Barr credits the local universities with rendering annual crops of talent, but also acknowledges how San Diego’s organizations both the military and R& D-focused organizations continually attract bright minds to the area. In fact, a San Diego Regional EDC study showed that the city has the second-highest concentration of science and engineering professionals in the country, building the Southern California metropolis a recruiting gold mine.
Resources: “In a community like San Diego, you can get a meeting with[ Qualcomm co-founder] Irwin Jacobs, you can get a meeting with the CEO of the Salk Institute, you can speak to the chancellor of UC San Diego they’re out in the community, they’re active. Through a couple degrees of separation, you get to know everybody pretty quickly.”
Workspaces: “We’re positioned on the southern border in a way that I think is very unique, ” Barr tells, in describing San Diego’s proximity to production resources in Northern Baja and Tijuana. “One can have a world-class research and development centre[ in San Diego] within a 15 minute drive of a world-class manufacturing facility[ in Tijuana ]. You can have the best of all worlds here in this bi-national mega-region, and be able to take advantage of a workforce that not only can create the IP you need to compete, but can also construct it locally.”
Lifestyle: “7 0 to 75 degrees all year round affords a certain kind of lifestyle, attracts a certain type of person that cares about engaging in the community and cares about being active, ” Barr tells. But the “happiness quotient” isn’t simply tied to the climate San Diego boasts the lowest commute times in the country, with annual lag days( in hours) nearly half that of San Francisco.
Talent pool: “Silicon Valley may continue to be what people think of when they believe ‘technological innovation, ‘ but LA is where you come to innovate anything and because we have this massive creative talent, it allows you to push in so many different directions, ” Rico tells. He also explains how LA’s talent pool is reaching “critical mass” thanks to early LA adopters like Snapchat and SpaceX. “There’s a big talent gold rush happening here, ” he tells. “Once you get a foothold, it starts supporting the broader ecosystem. And then it grows.”
Resources: “Because of the diversity of assets and resources and ideas here, you’re going to have much better opportunity to have creative crashes, and perhaps take your product in directions you didn’t anticipate, ” Rico tells. “This younger demographic that works in the tech-startup culture, they’re very good at self-organizing and having meet-ups and building their home communities where they share ideas and resources.” In this regard, LA offers a variety of neighborhood-specific networking organizations, like Digital LA on the West Side, Startups in the Sky in the downtown area and Pasadena Connect to the north.
Workspaces: The innovation renaissance isn’t simply happening in one part of LA it’s taking hold from Pasadena to Santa Monica to Playa Vista. Rico tells a huge driver of the city’s commercial expansion has been the introduction of 70 co-working spaces. “El Segundo, Culver City there are co-working spaces popping up in every part of this district now. These are the little ecosystems where entrepreneurs incubate and grow their companies.” The co-working phenomenon has caught hold in tech communities like LA because the spaces provide opportunities to collaborate across business while avoiding the price tag of traditional office spaces.
Lifestyle: It virtually must be said that LA’s weather is a major asset, but Rico thinks it’s more than that: LA weather can actually make industries operate better. “The fact that it’s 72 degrees and sunny in Los Angeles, you’d think it’s a good describe for quality of life and lifestyle, ” he tells. “But in places where it gets dreary,[ as soon as] it gets nice, people are awfully unproductive. Here, because it’s consistent, people are truly productive.”
Talent pool: Washington believes that Denver’s startup ethos is rooted in experimentation and boundary-pushing, where a healthy gala of failure inspires new attempts to be successful. He sees this come alive in what he calls, Denver’s “navigable social infrastructure, ” in which communal learning is encouraged. “You can pick up the phone and talk to a very successful entrepreneur, ” he tells. “I don’t know how we arrived about that culture, but it exists, and I think it’s very important.
Resources: Washington and the Office of Economic Development aren’t out to replicate Silicon Valley. Instead, they want to be a partner to build a unique startup environment that leverages the city’s unique resources and assets. And that’s why Denver entrepreneurship has its own distinct flavor. “Our greatest role is to allow a fair sum of organic growth and put ourselves in a position to recognize when things are emerging and use our assets to put fuel to the flame, ” he tells. “What we try to do is figure out what’s happening and how we can accelerate that growth.”
Workspaces: One of Denver’s biggest accomplishments in the startup arena has been sponsoring the retrofitting of workspaces for the use of small companies. These Innovation Centers help startups get off the ground without the burden of the full office set-up. “They simply need to come in and focus on innovating and growing their business, and can scale up and down very quickly, ” Washington tells. “It permits entrepreneurs to actually thrive.”
Lifestyle: How do companies persuade top talent to move to, and stay in Denver? Devote them an experience they can’t turn away. “You start by being an attractive place for smart young people to want to live whatever it takes, ” Washington tells. “Denver is aesthetically very beautiful and we not only offer an authentic urban experience, but because of the investments we’ve attained, Denver is easily navigable. Within a mile radius of downtown, you have access to all of the cultural and sports facilities.”
Talent pool: Aside from feeder schools like the University of Washington, Harris claims that Amazon.com contributes to the largest influx of Seattle tech talent, many of whom may leave the ecommerce behemoth to assistance power local startups. “Amazon hires hordes of people from all over the country, and they’re highly talented, ” he tells. “So there have been companies that set up store literally across the street from Amazon because they know that’s where their folks are, that’s where they run into them at lunch.”
Resources: In addition to being tight-knit, Harris says that Seattle’s laid-back community has attracted industries that prioritize a mission over fund. “Here, it’s about, ‘How can we do something cool together? How can I help you? How can we connect, collaborate? ‘ You don’t find a lot of capitalism-driven purposes out here, ” he tells. “And when you mix that with the smart people that are here, it makes a cool environment.”
Opportunity: Seattle’s purpose-based community extends to city hall, where Harris describes an administration that is committed to common prosperity. “Seattle was just designated as a Tech Hire city a couple weeks ago it’s a White House initiative, ” he tells. “Right now, as in other cities, there is not a great representation of people of color and women in tech chores, and that’s something our city is taking on. We’re going to use things like Tech Hire to try to make some changes.” With Tech Hire working in the city’s favor, Seattle startups will be able to attract some of the America’s most talented and diverse workers.
Lifestyle: As Harris and anyone who’s been to Seattle will tell you, the city itself is the main event. A multicultural hub of activity surrounded by the serene Peugeot Sound and lofty alpine skylines, Seattle is quite the sight to behold. There’s also plenty to do for those who wish to venture outside the city: “In Washington state there are five climate zones, so you go skiing, you can go to a rainforest, you can go to the desert, you can get to Canada three hours north and Portland three hours south, ” he says.