THE BRAZEN CAREERIST- Why ask why: Starting a company in a big city is stupid
One of the reasons I moved from New York City to Madison, Wisconsin is that I knew I would start another company. People ask me how I picked Wisconsin. The bottom line is that I wanted to be able to support my family and take the wild risks that come with having a startup.
Here are some things to think about when you know you are going to do a startup, and you know you are going to move.
1. The first stage of a startup is constipation, which can happen anywhere.
The beginning of a company is slow and meandering. You develop a bunch of revenue models that are either so lackluster that they are not worth your time, or so outstandingly huge that they are not believable.
During this time, it does not matter where you live. You are not hiring. You are not pitching your business because you don't have a pitch. And you are probably not spending much money because you know the near future does not include a lot of money coming in.
2. Angel funding is about fun, and you can get money in any state.
You will need to get your first funding from people who live near you. This is because angels typically do not need more money— after all, they are investing in a crazy, half-baked idea that has a one in ten chance of making any money.
So the angels are investing in a startup to have fun. They think the entrepreneur is cool, they think the idea is sexy, and they will tell their friends about it at cocktail parties. There are some things you cannot buy in life, and one of them is street cred. But angels try to do this with their startup investments.
As a person who had to pitch her social media company in Wisconsin without using the word blog, I can tell you with certainty that angels do not need to understand your business to be able to sniff out if you're the real deal. They invest because they like the person. You can get that funding anywhere. If you are likable.
3. If you stay small, you can stay put.
Most companies do not grow to be 50-100 people. If nothing else, that number of employees is usually out of the sweet spot of the founders who are managing the company. So they usually sell or go under before they get huge.
If you are not going to get big, you do not need to take in venture capital. And if you are not going to take in venture capital, then you don't need to be where the big VCs are: New York and California. There is also the talent issue– if you need 50 developers who are great with Ruby on Rails, that's gonna be hard in Tulsa. But finding three, that's possible. Especially if you can train one or two.
4. If you live in the boondocks, you need to fly.
Research from Babson College suggests that traits that make a successful entrepreneur do not point to a single personality type, but what differentiates successful entrepreneurs is networking skills.
So while you don't need your network in your backyard (which you would have automatically if you lived in Northern California), you do need to be able to fly to your network frequently. The network you can build by just showing up in California or New York is unprecedented. And while LinkedIn is great for getting a bus dev guy, it's not great for meeting entrepreneurs and swapping stories. You need to show up.
I try to fly to each coast once a month. I book myself back-to-back for three days, and then I return to Wisconsin to decompress.
Penelope Trunk has started several companies and worked for many more.