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.""

Comments

I saw it happen in the early 90's

[localroger]

A manufacturer we represent whose business center and plant was in rural Minnesota bought a competitor whose business was located in San Francisco. They decided who they wanted from the eated company and offered them jobs. Most of the SFicans were appalled at the idea of moving to the great frozen flyover wasteland, but the eater company paid for all of them to come visit for a couple of weeks. In that time they learned that they could own acres of land with three thousand square foot homes for what they had been paying for a walk-up condo, that they could commute in minutes and leave their doors unlocked without worry, and nearly all of them ended up moving to Minnesota. And most of them are still there today, even though their company eventually got eated by a European company and you now hear a lot of British accents around the place.

Re:I saw it happen in the early 90's

[Tiro]

Reminiscent of Wells Fargo, the bold SF bank that got eated by the very cautious Minnesota-based Norwest Corporation in 1998. Regarding your story, this is a fundamental aspect of capitalism: the dislocation of production from established areas to lower cost areas. That can mean Ohio to China, or San Francisco to Ohio. It is rather interesting to me that places like Gary, IN* don't rejuvenate on their own. There is definitely some cultural preference to other places, which is why there is more to the story than pure economic cost/infrastructure advantage. * Interesting that much new growth in the US Midwest comes from Mexican immigrants, for whom there is less bias against these 'boring' towns.

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

[OrangeTide]

I've heard so many of these stories about how XXX will be the new place for tech. I don't see any reason to start believing it now. If you want to relocate away from Silicon Valley or one of the other tech areas of the US, you might as well relocate to India or east Asia or somewhere that is even cheaper than Kalamazoo.

Re:Its definitely the exception, and a rare one

[fuzzyfuzzyfungus]

Sounds like you've just identified a major perk for companies that move out into the sticks...

Sooner or later, they'll just start paying in scrip, redeemable at the company store, and it'll be the good old days all over again.

I'd go to Detroit. Seriously.

[Qbertino]

People seem to forget that Shockley went to death valley because there was absolutely nothing there and you could get all the basics dirt cheap. The nutcases that started the silicon revolution did that in barns and garages and of those in the cheapest they could find. The shockley five went to start Intel in the neighbourhood and thus Silicon Valley was born.

If I where building a startup in the US today, I'd seriously consider Detroit. You can buy houses for 500$ right now in Detroit and infrastructure is just good enough to live. You could spent years there on the most minimal VC and since Detroit is so super-boring now the team actually would have a personal interest in concentrating on the thing their building.

Revolutions very often start in extremely unspectacular places, where the artists and crazies move in because they have other things to worry about than finding the best way to rake in cash. It's only a few decades later that these places become the hippest areas on the planet. Notting Hill in London, Schanzenviertel and Hafenstraße in Hamburg, etc. etc. - all the same story.