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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.""
Hiring is the problem. If you require highly specific skill sets you end up paying relocation... and who knows how well the relocation itself goes for the candidate.
My wife & I left silicon valley about 5 years ago at the tail-end of the dot-com bust. I had a GREAT time there, aside from the worthless options and 80-hour work weeks. We thought it was time to start a family, and wanted a bigger, less-expensive house, no traffic, slower quality of life. We were willing to trade a premium salary for it.
WHAT A HUGE MISTAKE.
Turns out that when you're in a smaller town, you have NO OTHER employment options. What happens if you don't like your little tech company? uh, you're screwed. In Silicon Valley you always had a network three deep that could get you a fun, interesting job in a little bit. You had options. A backup plan. In smaller towns you're running without a safety net. If you leave the relocated tech-company, you've got the small-town mindset and businesses. I see plenty of craigslist ads that read, "must have 5 years networking experience, cisco preferred. Be able to build and administer our 50-person network. References required. $10/hr, contract only." I'm seriously NOT kidding.
I wish I could completely rewind my experience and still be in silicon valley. Higher rents, more traffic, silly housing prices and all.
The economy is moving online. Soon, it won't matter anymore where you live and who you work with.
And I'm not talking about the scams such as "make $100K working from home". I mean real, legitimate, value-added work (like programming), that you do wherever you want, whenever you want, as long as you deliver a good product.
Problem is, and all jokes about single engineers aside, that means the spouse has to find something viable in that location as well. Some professions are pretty portable, others aren't. But it's not just about where you can lure a single person.
Plus, if you lose your job, suddenly you're in Toledo where there's not that many other companies. At least in the Bay Area, you know you have multiple options to switch to should you want to. Without having to sell your house which no one wants or needs to buy. (Admittedly this is a chicken-and-egg problem; if enough companies move to Toledo or wherever, this goes away.)
I wouldn't move from Pittsburgh to anywhere in California for any amount of money.
Pittsburgh has Carnegie-Mellon. Kalamazoo doesn't.
What we see on a state by state basis to attract jobs while at the same time we try to make the evil multinational corporations pay (Obama and taxes) we may start to see many start ups simply avoid the US.
Intel has been accused many times of avoiding paying taxes for the massive tax breaks they get to have a location in the Portland Oregon area, but most people don't realize they not only pay salaries taxed by the state, they also are taxed for their property. Nike also in the area has a much lower inventory tax because they don't have a fab full of multi million dollar manufacturing tools. To attract Intel, the city of Hillsboro had to adjust for this.
Failure to do this would let them have a larger piece of nothing, With no concessions for the value of the factory equipment Intel would have built elsewhere. The clean water and moderate electricity rates are what attracted them. High local tax areas could soon erase the advantages.
I am afraid that Obama's economic plan will drive the rest of large manufacturing overseas. The Union obligations are already having a severe toll on the auto industry without the help of taxes driving them out of business.
Tax the rich simply is to send them elsewhere in a global market where conditions are better.
The truth shall set you free!
I think Gary is a special case. It has an appalling crime rate, for one: they've only recently managed to get themselves off the list of top ten crime-ridden places in the United States. I also suspect that an element of racism (not necessarily overt, but racism nonetheless) prevents companies from even considering places like Gary, which is overwhelmingly populated by African Americans. Kalamazoo and Toledo are, by comparison, lily white.
Turns out that when you're in a smaller town, you have NO OTHER employment options. What happens if you don't like your little tech company? uh, you're screwed.
It depends on the size of community you're in.
I would think sticking with places (giving US examples) like Atlanta, Chicago, Philadelphia, Portland, Seattle, Boston, etc., would help people avoid some of the headaches of Silicon Valley, but still give you decent options.
I'm sure somewhere like Erie, PA is nice place (pop. 103,650), but your options techie choices will be limited. Stick with 600,000 and up, and you'll probably have a decent amount of variety:
http://en.wikipedia.org/wiki/List_of_United_States_cities_by_population
I'm curious to know if there are any statistics or studies on population and technological need. Presumably the more mid-sized (200+ employees) there are in an area, the more need there is for IT professionals.
I don't know what Obama policies you are referring to, unless it is closing offshore tax loopholes.
This thinking is prevalent. The value a multinational corporation makes or is worth is often up for debate. Often the tax rates are based on the company bottom line regardless of how much of the work is done where.
Examples are Nike where most labor is overseas and Intel where the US fabs produce the chips that are packaged overseas. The completed product is made in 2 countries. If both countries try to tax for the total income, the company will most likely shut down operations in the expensive place.
It is true that a few tax havens exist where the corp headquarters is just a seal in a box somewhere in the Cayman Islands and this is a problem.
On the other hand, how much of the value of a completed microprocessor is manufactured in the USA and how much is manufactured in China.
http://www.eetimes.com/showArticle.jhtml?articleID=198000380 Some corporations have manufacturing in many places. Often the government will look at any overseas operation as a tax loophole. Closing these tax loopholes may mean the corporation may close operations altogether in the business unfriendly countries. The result is loss of jobs and a trade deficit as that country now has to rely more and more on foreign imports like the US. The US is rapidly becoming a service industry nation writing software and providing medical services, but most goods are imported. Try it, Visit Wal * Mart and look to see where the products are made. Notice an abundance of American brands?
Sony, Toshiba, Mitsubishi, Hitachi, Samsung, Panasonic, Pioneer, HP, Asus, Lexmark, Philips, Visio, RCA, Olevia, Viore, Sanyo, AOC, Wenzel, Coleman, Rubbermaid, Kalisto, etc.. Some of the above are built in the US. Many US brands are now just importers who re-brand.
The truth shall set you free!
You would be surprised at how many people live in those areas or want to because of family or whatever with the skill sets your looking for.
Ohio state and Michigan state both have top notch computer science courses as well as many niche courses in the same area. Plus you have people who moved to where the work was who would like to move back or closer to their real home.