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Could High Bay-Area Prices Make Sacramento the Next Big Startup Hub?
waderoush (1271548) writes "Don't laugh. As the cost of housing spirals out of control on the San Francisco peninsula, neighboring metro regions like Sacramento are beginning to look more attractive to startup founders who prefer a Northern California lifestyle but haven't worked in the Silicon Valley gold mines long enough to become 1-percenters. Today Xconomy presents Part 1 of a two-part look at innovation in the Sacramento-Davis corridor and efforts to make the region more welcoming to high-tech entrepreneurs. In Sacramento's favor, there's a talented workforce fueled by a top-20 university (UC Davis), space for expansion, proximity to the ski mountains at Tahoe, and a far lower cost of living — the average house in Sacramento is selling for $237,000, compared to $909,000 in San Francisco. The downsides include a shortage of local investment dollars and a lower density of startups, meaning there's less opportunity for serendipitous collaboration. But locals say recent efforts to boost the local high-tech economy are working. 'I really feel like we are in a renaissance area,' says Eric Ullrich, co-founder of Hacker Lab, a Midtown Sacramento co-working space."
Choose Detroit, It's hip here, happening, it's now and Wow! plus it has all the violence that SF has except instead of targeting tech, we are equal opportunity violence targeting!
Plus houses are only $1000!
Do not look at laser with remaining good eye.
And you'll have pretty much the same result. The Valley is successful because its a self-fulfilling prophesey.
1. Startups go to the valley to because there's a ton of successful ex-startups and they want to be the next one
2. Investors go to the valley because there are a ton of successful ex-startups and they hope to jump into the next one.
3. Startups become successful (in part) because they have a large amount of available investment capital
Rinse and repeat. Unless startups start getting amazingly big without deep pocket books, or the valley becomes just so unworkable that they can't sustain the costs (still a decade away assuming no dramatic bubble popping incidents I'd say) people will continue to gravitate there and be successful. There will always be startups in every non-trivially sized city, but unless they can garner big bankrolls for growth and talent aquisition, its hard to see penetrating into the market largely enough to be 'huge successes' like their valley counterparts seem to.
Bye!
Its almost as if... economic prosperity in one area driving up prices eventually reaches a point where it encourages new business to move elswhere. You would almost expect to see similar effects where young professionals on entry level salaries get appartments in poor neighborhoods. Has anyone else ever heard of a process by which young professionals competing for lower income housing drive up the prices and price out those with less money?
Nah.... if that ever happened someone would have noticed and made up a word for it already.
"I opened my eyes, and everything went dark again"
I repeat, this is not a dig. A gut-reaction for me is Sacramento lacks the attraction of the Bay Area, which is heavy on coast (and cooler coastal weather) and year-round greenery, and which is pre-stocked with cultural diversions. But most of the tech industry happens in Silicon Valley which, frankly, doesn't have those either.
The downsides include a shortage of local investment dollars and a lower density of startups
...and that it is hot as balls there. It really is not a pleasant place to live as far as weather goes. That won't help to attract people.
If you look at the Denver area, you'll quickly see that it's not so much of a community being able to make themselves a high-tech hub, it's more about some high tech people being able to open some high-tech businesses in an area not known for being high-tech ... and succeeding.
The peripherals matter. Denver has a robust economy thanks to a large number of federal jobs. I'm not saying Denver is a "tech-hub" (well, any more than Sacramento would become a "tech-hub") but there are definitely a healthy amount of tech companies here, both small and large. We have plenty of stuff for the young employees (all the outdoors you could want, great looking women, active night life). I don't think Sacramento can compare when you look at these peripherals. Sure, it will compare favorably to Stockton or Fresno, but simply because it's a couple hours from Silicon Valley doesn't make it prime for a tech boom. You've got to want to attract young smart people, and I'm sorry, but nobody graduates and decides they're moving to Sacramento.
Someone flopped a steamer in the gene pool.
Already its a very hot start up location... the venture capital firms are active there... Its probably better then Silicon Valley at this point if you're just starting out. Its cheaper, it has a similar opportunities, and the state government isn't on a massive tax hiking binge.
For example, they're trying to jack up property taxes in California without going through proper procedure. The voters don't want it... but the government is ramming it through anyway.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Full of over-entitled punks talking shit in an incestuous echo chamber. I lived there for a few months not so long ago as part of a system roll-out job. Shopkeepers, bar staff and cab drivers said they were constantly being abused and condescended to by them. Its gotten really really bad.
When the property bubble pops there, it will be sweet.
California is not very employer friendly and has strict over time laws not to mention outrageously high taxes and rents.
It does not make business sense to start there.
Detroit, Austin, Kansas City, and even Fargo have universities, other tech companies. I dream of starting a business but I do not have 1 million dollars a year to pay for a tiny crappy office in San Fransisco. If I did get shareholders I am sure they do not appreciate all their savings going to pay rent rather than for product development. Not to mention your employers could leave in a hearts notice with Google and Apple offering 6 figures on the fly.
I know I sound conservative right now but when you start out no OT, taxes, friendly business laws, can mean you make it or die at the end of the year.
http://saveie6.com/
As someone who founded an edtech startup in Sacramento, I can say Sacramento is a great place to live without the high cost associated with living in the bay area. This lower cost of living translated into a better investment for our finical backers.
We are one of the most diverse cities in the entire world. We have some of the best produce in the world along with a lot of very good restaurants. We have more trees per capita then any other city in North America. We have one of the best bike trails in the world.
After living in SF for 10 years as an Independent Contractor, I realized that paying $3,100/month rent (house in the Presidio etc) was keeping me from doing anything productive other than working night and day on client projects or hunting for more projects when the work was done, I'd have ideas for apps and the like, but I'd be lucky to get two weeks into something only to get sucked into a project for a month or three, by which time, I'd be lucky to have another week or two to pick it up again, and by then had already forgotten where I was at and lost all momentum.
So I said fuck it, have been living out of a monthly hotel room billed as a "efficiency studio" (it has a full bath and kitchen), first in Sac and now in Fairfield, paying only $1,000/month including utils and housekeeping and have been making excellent progress creating some underlying frameworks and services that will be powering my app ideas. Yes, I still have to take clients and put down my personal projects, but now I take smaller projects for weeks at a time, not months at a a time and now my ambitions are really starting to come together, with my first round of OSS frameworks and services in reach. And while some people have looked down on me as trash for living out of a hotel instead of renting a house or apartment, fuck them. It's my life, ambition and goals, not theirs. Once I'm done, I plan on leaving the Bay Area, and hope to expat from the US and legally renounce my citizenship since I no longer view this as a Free Country under a Government that recognizes it's own Constitution, hence the desire to be as unencumbered as possible.
Seriously, Texas, home of cowboy hats, Tex-Mex and Rick Perry... Why? Three major reasons..
1. LOW (as in Zero) income tax and low corporate tax rates.
2. RIGHT to WORK state.
3. Generally a state and local government that stays out of your way as much as possible.
So why NOT Texas?
1. You don't like Tex-Mex, cowboy boots, Rick Perry, or something else about Texas for purely subjective reasons OR you've never been here and have arbitrarily decided you don't like Tex-Mex, Cowboy hats, Rick Perry or something else for no real reason.
2. It's too hot in the summer for you.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
California govt & regulations suck.
Speaking as a Reno resident (It's Sacramento, only with hookers and blackjack!), I don't like Sacramento's chances, and it's not because I think Reno's chances are any better. Part of the problem is that there won't be a "next Bay Area" - not just one, anyway. The Bay Area's preeminence in the tech industry was kind of a fluke, which resulted from a combination of various factors (strong academic interest from Stanford and Cal, defense industries sprouting up in the area, good weather, and so on). These days, the tech industry is decentralizing, which is why you have "tech corridors" in places like Raleigh-Durham, Austin, Salt Lake City (Symantec is based there), Las Vegas (Zappos), Seattle, Portland (thanks, cheap hydroelectric power!), Los Angeles ("Silicon Beach" - I remember when Venice was a ghetto), Boston... and these are just the places in this country.
The other part of the problem is that Sacramento's biggest claims to fame at this point are that it's the state capital of California (*shrug*) and it's kind of close to the Bay Area (so is Vallejo, Vacaville and Antioch). The climate is miserable (think Texas weather, only with a little less humidity, no hurricanes and without the weird bugs), the neighborhoods are extremely hit-and-miss, the culture is getting better but is still more or less non-existent, California's tax and business codes are pretty obnoxious, the physical infrastructure in Sacramento isn't quite Stockton bad but there's definitely room for improvement... yeah. Sacramento's not bad, but it's not good, either.
Don't get me wrong, I think Sacramento will get some startups to set up shop there. Some of them will probably succeed. I don't think they're going to take over the world out there, though. Venture capitalists would rather go to Denver, Seattle, Portland or Las Vegas than Sacramento, and if you're going by plane, you're not saving that much time by going to Sacramento over either of those other places.
3. The cities are islands in a sea of rural nothingness. Seriously, if you make your home in (e.g.) Austin, just try to commute somewhere else. San Antonio is a stretch (1.5-3 hours each way, depending on which sides of the city you are commuting to), and Houston and Dallas are out. Every other town is too small and too isolated to attract tech industry jobs.
This means that when a major tech industry in your chosen metro area craters, it takes YEARS for the economy to recover, and there's no other option available except for you to move. So if you move to the area seeking fame and fortune, remember to keep a deep nest egg, and don't expect to put down any deep roots.
Believe me, my family moved to Austin to follow the growing tech industry in 1983, and they ditched the place in the late 90s because they were tired of dealing with the boom-bust cycle. Since they moved, Austin crashed yet-again (Dell + Dot Com Bubble at the same time). The place has finally recovered and looks attractive again, but it will only be a short matter of time before another crash hits. So keep your nest egg close, and your roots shallow folks!
Man is the animal that laughs.
And occasionally whores for Karma.
Why put a new business in California? I've been there on business a number of times, and I just don't see it.
The climate is nice enough, but boring. No decent seasons, but I suppose it counts as a plus for some folks.
On the minus side, the politics are leftist, leading to socialist-style government regulations that are downright hostile to business. The legal climate tends to lawyers looking to sue companies for trivial violations of those regulations, like people working through their lunch break.
On the personal front, holier-than-thou environmentalism is widespread, which is hard to take given that their state has huge monocultures, puts rice farms in the desert, and pumps water from Arizona to keep the lawns in LA green.
It's pretty much the last place I would want to live, and I imagine there are plenty of other techies who would agree...
Enjoy life! This is not a dress rehearsal.
Tech innovation hubs are centered around bleeding edge academic institutions because start-ups need academics to consult for them. Sacramento does not offer this.
Isn't every "high tech hub" an instance of this working? They weren't hubs from the very beginning after all.
Not really, Silicon Valley is only in California because William Shockley's mother lived in Palo Alto and had failing health. If Shockley didn't found his company in the Bay Area it is highly unlikely that it would have the technology presence it has today. Every place that touts itself as "The next Silicon Valley" overlooks the fact that Silicon Valley started by happenstance.
Enigma