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

Posted by samzenpus on from the welcome-to-nowhere dept.

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.""

6 of 141 comments (clear)

  1. better places to work by KingFeanor · · Score: 5, Informative

    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.

    1. Re:better places to work by Anonymous Coward · · Score: 5, Informative

      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.

  2. I saw it happen in the early 90's by localroger · · Score: 5, Interesting

    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.

    --
    Brackets contain world's first nanosig, highly magnified:[.]
    1. Re:I saw it happen in the early 90's by Technician · · Score: 5, Insightful

      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!
  3. Its definitely the exception, and a rare one by Anonymous Coward · · Score: 5, Insightful

    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.

  4. Plus... by maz2331 · · Score: 5, Insightful

    I wouldn't move from Pittsburgh to anywhere in California for any amount of money.