Before we launched our company, my co-founder and I debated geography.
He wanted to launch our company in San Francisco; I wanted to stay in the UK. He explained that, in northern California, we’d have unparalleled access to clients, capital, and talent. I countered that, if we stayed in London, we’d never be distracted by nice weather.
Never have I been so lucky to lose an argument. We owe much of our early-stage success to the city of San Francisco.
The City as a Startup Ecosystem
Prior to launch, I hadn’t given much credence to the belief that a city can shape a company’s future. Only by experiencing San Francisco as an entrepreneur have I come to understand the real importance of geography.
Here, we have access to the most expansive startup ecosystem in the world. The networks are phenomenal. I meet a handful of new entrepreneurs every day, many of whom have become mentors and friends. There are also nearly 150 accelerators and incubators combined, along with 260 VC firms. New collaborative working spaces pop up all the time. The culture of entrepreneurship has given us the resources and inspiration we need to grow.
However, there’s a downside. Here, we’re small fish in a big pond. Because there are so many tech startups, competition for talent is fierce. When entrepreneurship is the norm, not the exception, it’s that much harder to stand out from the crowd.
How to Choose Your Startup City
While San Francisco is the right place for us, that doesn’t mean it’s right for everyone. Deciding where to launch is a big deal for you and your company. Here are a few questions that can help you choose wisely:
1. Will you have access to talent?
If you want to grow your business, you’ll need to hire skilled people. Being able to make those hires locally (i.e., quickly) could be the difference between success and failure. Universities are a great source of potential talent, so look for academic programs nearby that are relevant to the work you do.
2. How close are you to potential clients?
Business deals take time to close, and Skype is no substitute for face-to-face interaction. You need to be able to meet with your clients in person at any point in time. Doing so helps foster meaningful relationships and customer loyalty.
3. Does a city’s competitive advantages balance its disadvantages?
Plenty of tech companies resist the lure of San Francisco’s startup ecosystem and choose to launch in Asia or Europe instead. Though they’re sacrificing access to clients and capital, they’re getting skilled labor at a lower cost, which may ultimately serve as a long-term advantage.
4. Do you like the city itself?
What does this city offer in terms of culture and entertainment? Sure, you’ll spend most of your waking life working, but you still have to get out and decompress sometimes. Loving the place you live can be a big help in dealing with the challenges you’ll encounter while running a company.
5. How much will I pay in taxes and insurance?
This is the question to ignore. Though the answer matters, it’s less important than most people think. Sure, we’d all love to pay less tax, but if you’re paying tax on profit, you’re doing something right. It’s not easy for a startup to make money, and if your host city can propel you into the black, you’re in the right place.
Your birthplace determines your citizenship, and the same is true for your business. Make sure your company is born in a place where it can grow. Don’t choose a city simply because it’s the cheapest to run a company there. Choose the best.