High-Tech Start-Ups Put Down Roots In New Soil

ThousandStars writes "The Wall Street Journal says that 'High-tech start-ups are increasingly setting up shop in places previously not known for attracting high-tech firms. A number of cities, such as Kalamazoo, Mich., and Toledo, Ohio, are offering grant money and tax breaks to high-tech start-ups, just as the usual venture-capital hot spots, such as Silicon Valley and Boston, continue to see a pullback in venture lending.""

better places to work

[KingFeanor]

I work for a big tech company from a small city in Wisconsin. It is great. For the company, office space is cheap, internet access is cheap, energy is cheap, salaries are less than in big cities and employees are still happy. As an employee, I'm happy since I don't have traffic nightmares getting to work and home (I have a whole 5 minute commute), the cost of living is low (I live in a remodeled 3 bedroom home that is worth $120K) and in a small office (200 people) you can know everyone by name. It is a win-win deal for a tech company to locate outside the major tech areas.

I'm with Paul Graham on this: it won't work.

[bADlOGIN]

Check out How to Be Silicon valley (http://www.paulgraham.com/siliconvalley.html).

Based on the description of the right environment, we're not talking Kalamazoo or Toledo by
a long shot. Besides, didn't people try this crap en-mass before the dot.com bust?

Re:better places to work

[Anonymous Coward]

I grew up in WI, lived in Seattle for seven years, and am now in San Francisco. I'm fairly familiar with the laws regarding businesses in all three states; I started an LLC in Seattle that I never really did anything with due to my day job, while now I've been completely dedicated to a personal project for eight months and am looking into starting a real business out of it. While there are trade-offs between WA and WI -- WA has better business and tax laws, while WI has lower cost-of-living in many cases -- CA is quite clearly dead last in starting a business where physical proximity to other particular businesses or people isn't a key factor to success. I now thoroughly understand why my former employer moved their entire business, including providing handsome travel and housing packages for then-current employees, from the Bay Area up to the suburbs of Seattle.

The first big warning sign was when I saw that along with other fees and taxes, a CA LLC with absolutely no income is charged an $800 fee by the state every single year. This is four times or more of the initial fee in other states, and most other state only charge a legitimate filing fee for subsequent years -- along the lines of $50. The business taxes, plus the sales taxes, plus the income taxes, plus ridiculously high cost of living all add up to a massive inequity in ROI compared with other locations, and in return you get to live in a state on the verge of bankruptcy and your non-local business gets essentially no boost in sales due to its location. The single reason why I'm considering incorporating here is because if my business doesn't work out, this location has more jobs for my somewhat unique specialty compared with other locations. I can only see that lasting for so long, though.

Re:I'm with Paul Graham on this: it won't work.

[Anonymous Coward]

The angle on Kalamazoo is is not high tech, but biotech. It is the (former) headquarters of the Upjohn company before it was acquired by Pharmacia and then Pfizer. Around it is a very good infrastructure for pharma/biotech; many small companies were started when Pfizer gutted the old Upjohn. It is not comparable to the Big Three locations (SF Bay area, San Diego and Boston) but there is much more there than you would expect. Particularly for the size of the community.

Technology and internet access

[phorm]

Actually, it's quite interesting to see how - in terms of infrastructure - smaller cities compare to the big ones. Two years ago, I lived in a city (my hometown) of about 85,000 in BC, Canada. Internet access was generally quite fast, especially with cable providers, etc for residential. Around when I was leaving, the city in conjunction with various local businesses had been in the process of laying fiber in all areas.

After that I moved to Toronto, Ontario (population over 2,500,000). Internet and telecommunications infrastructure sucked there. Bell seems to have little motivation to upgrade lines, meaning DSL outside of certain major downtown areas could not reliably offer high speeds, either for businesses or residences. Not only that, but Bell's throttling of third-party connections was a nightmare, not just for home-user torrents, but for SSL-tunnelled connections to/from my workplace when telecommuting.

Rogers was the local cableco provided and I'd heard of similar issues with them: poor service, bad cabling, and weird issues due to throttling. I know of at least one business that bounced between Bell, Rogers, and a third-party (DSL, so unbeknownst to them still going through Bell) provider trying to get reliable connectivity.

Local tech shops had more deals and cool small items. Things like monitors or PC's/laptops weren't much of a deal though, and customer service STANK. Got a new LCD with dead pixels out of the box, and a fairly major local retailer (yes, I'm looking at you Canada Computers) refused to exchanged it. I know for a fact my local shop in the previous city would have done so.

Now I'm in back in a smaller city/town of around populatimainon 30,000. No long commutes to work. Internet via cable is fast. There's a local wifi provider who gets rather impressive speeds to all sorts of weird areas around town, and they're continuously improving service. Rent and property costs are a lot lower.

I was just musing whether it would be possible to setup a datacentre downtown. There are quite a number of buildings with space that might fit a small DC as long as the power requirements were met, though I've yet to investigate what the local providers offer for large commercial trunks.

Big cities are overrated. When I moved to Toronto I expected to find myself able to do all sorts of things, but the reality was with the longer commutes, extra work hours, and almost universally crappy service. Here, people tend to be more honest (in a smaller city you can't get away with as much without it becoming known eventually), and the quality of life is better. There may not be a huge glass-covered shopping multiplex within 10 minutes drive, but for that sort of thing a bigger city is still within driving range, and really the local stores aren't that bad except when it comes to stuff like furniture etc, and my iPhone only gets 2G service (until next year).

Screw big cities.Businesses should invest in local communities at smaller locations. Power and rent are cheaper here. Connectivity seems in many cases better. There will be likely be less location-related expenses, and I've found that there are still plenty of tech-savvy citizens available to work there, and even a good share of front-line grunts for phone support etc.