Loyalty vs. Location: Why Startup Founders Should Stay Put
By Patrick Riley on April 7th, 2017
See that lush, emerald green grass blanketing your neighbor’s yard? It isn’t an accident.
Their lawn got that way from serious cultivation, watering and attention. If your yard looks like a dump by comparison, that doesn’t mean you should move. Instead, maybe it’s time to break out the fertilizer and gardening tools.
In the same way, too many startup founders are distracted by the lush promises of greener pastures. In the startup world, no destination is more alluring than the Bay Area. Combined, San Francisco and Silicon Valley attract nearly 40 percent of the nation’s venture capital activity.
As soon as a startup hits the magic number of 20 employees, entrepreneurs inevitably get wandering eyes for big cities such as San Francisco, New York, and Chicago. They consider ditching the modest communities that helped them get their start. In essence they desire to follow in the footsteps of Facebook.
Interestingly, Facebook CEO Mark Zuckerberg said in retrospect that he would have stayed in Boston, in lieu of the choice he made to move to the West Coast.
Guess what? The promise of metropolitan startup success is mostly a mirage. Instead of adding fuel to the mass exodus fire, make a difference in your own community by thinking locally.
Dance with the partner you brought
Remember when you first launched your business? You probably begged and borrowed to drum up the necessary cash, likely turning to investors and customers in your own backyard.
What about all of the mentors and advisors who helped you get started? They probably aren’t going to come with you. Meanwhile, moving across the country makes it difficult to grab a coffee and get their advice. You can certainly find new mentors, but that’s not a quick or easy process.
Want another reason to remain in your neighborhood? Look at your rent. A workspace in Kansas City rents for about $800 monthly, while a comparable Bay Area lease will set you back nearly $3,000 a month. Why waste money when you can have a longer runway to get your business off the ground?
Considering how many startups fail, why not do everything you can to give your company a fighting chance? Staying in the city that nurtured your company from a fledgling idea to a growing enterprise makes a lot of sense.
Put your money where your roots are
Want to genuinely transform your community? Provide jobs that fit people’s skills and backgrounds. If we’re going to have thriving cities where people are employed, paying taxes, and raising families, real job growth won’t come from large corporations that have been around forever. It will come from startups.
A colleague of mine recently visited a West Virginia community that was once a top coal-mining town. It’s now a city where nearly a quarter of the workforce is unemployed. These people are desperate for jobs. As startup businesses account for nearly all net new job creation in the U.S., a startup could completely revitalize the area.
While this West Virginia town is simply one example, there are plenty of other areas that were left behind as industries and business practices evolved. By encouraging startups to invest in smaller towns throughout the country, these communities can climb out of the abyss and once again take care of their residents.
Bountiful benefits of staying put
Cities need startups that begin, grow, and stay at home to promote economic and social prosperity. You’re free to leave, but staying put brings significant advantages:
1. Feed families
Nothing is as humanizing as hiring someone who has been out of work. This simple act, literally, gives people a purpose and a way to feed their families. Their talents will help grow your company. The result is an incredible impact on the whole community. Happy people with purpose build great cities.
2. Create a sticky culture
Employees stick around when they like their bosses, co-workers, and company culture. If you haven’t built a company where people enjoy working, you won’t retain employees for long. By staying where you started, you’ll avoid the uncomfortable situation of asking your employees to follow you across the country. Happy workers are loyal workers.
3. Avoid moving
Think about the last time you moved. Not exactly a bundle of laughs, right? Quite a few entrepreneurs who moved to bigger cities would say it wasn’t worth it. You’ll often hear them say they could have been just as successful if they had stayed put. For example, Iowa-based FinTech startup Dwolla started in Des Moines but moved most of its employees to San Francisco a few years ago. Fast forward a bit, and the company recently brought everyone back to Des Moines.
4. See (and revitalize) the forest
Why focus on the trees when you could have a better view of the forest? If you want your startup to last and your city to thrive, you need to take a 30,000-foot view. Develop a vision for the next 20 years, which is about how long it takes to build a thriving ecosystem of startups, investors, mentors, and customers. You can transform your city by staying put and investing locally.
5. Stay relevant
If you are building a startup in a smaller town, you’re probably kind of a big deal. Move to a big city and see how you compare to thousands of other startups competing for the same advisors, investors, resources, and talent. Suddenly, you’re not quite as special. Startup success partially relies on the ecosystem. When you change cities you have to tweak your support partners.
Your city needs you more than you realize. Before buying into the myth that you need to “upgrade” to a hub city to build momentum and boost revenue, take stock of what really counts. Plant roots and help grow a thriving ecosystem capable of making any big city startup green with envy.
This article originally appeared in YFS Magazine.