Should Early Stage Startups Move to Austin because of Culture?
In September 2017, I spent 2 weeks in Austin, Texas to understand what makes this vibrant startup ecosystem tick. My visit took place courtesy of the Young Transatlantic Innovative Leaders Initiative (YTILI), a State Department program implemented by the German Marshall Fund of the United States. My primary mission was to learn from the impressive entrepreneurial ecosystem in Austin and draw lessons for developing the entrepreneurship education program for Beetroot Academy. This 4-part story takes stock of the Austin ecosystem based on the 4Cs framework — culture, capital, customers, and competencies. It follows up on my posts discussing why early stage startups should — or should not — move to Silicon Valley.
Should Early Stage Startups Move to Austin because of Culture?
Austin has become a veritable hotbed for startups and ranks third after Silicon Valley and New York in terms of entrepreneurial ecosystems. Any attempt to get your head around why Austin is awesome for early stage companies needs to not only look at culture, but start at culture. To be honest, it’s kind of the same for Silicon Valley, New York, Berlin, Tallinn, Stockholm, or any other place that has become a noteworthy tech hub. Openness, trust, and the ability to connect with local academic, business and customer networks are increasingly understood as key components of flourishing innovation ecosystems. An open culture is the lubricant that helps establish connections and cooperation throughout the entrepreneurial ecosystem. My previous posts on why early stage companies should move to Silicon Valley focused on the 3C framework comprising customers, capital, and competencies. Exploring Austin, however, highlighted culture as something so important that I had to add a 4th “C” to the framework.
So what about culture in Austin? Austin is different. It’s the capital of The Great State of Texas and home to an innumerable amount of higher education institutions. As such it’s the most, not to say the only, socially liberal city in Texas. But the roots of Austin’s liberal culture run deeper than governance and academia — they are intertwined with city’s unique music scene, which forms the foundation of Austin’s barn-building ethos. The 19th century settlers brought the music and seeded what became Austin’s thriving rock music scene in the 20th century. It was a time when hippies roamed free and youth were not confined by the shackles of wealth. The weirder you were, the better. The poorer you were, the so what. Today, Austinites take so much pride in their quirky legacy that “Keep Austin Weird” has become their creed.
In addition to the hippie-cum-hipster mentality, Austin is also welcoming. The southern hospitality of Texas means that people have time for people. Texans like their BBQs like they like their sermons — with a wait time of 3–5 hours. The quantity of folks who have moved to Austin for university or due to the recent tech boom means that everybody’s there to help out a new recruit. Well, almost everybody — the influx of techies from Silicon Valley has reached levels where locals shun Californians on Tinder (I’m told). No love lost though, Californians will always have each other.
So how does this culture of weirdness and trust shape entrepreneurship in Austin? In several profound ways. Without the layer of culture, Austin wouldn’t be Austin. First of all, the city is religiously tolerant of weird people — and people with weird ideas. Tolerance has long been touted as a key factor to how cities can foster contemporary economies, but it’s usually viewed from the perspective of attracting talent and building the creative class. However, tolerance of different ideas constitutes a similarly important ingredient to starting companies and developing products. It’s the interdisciplinary sex between ideas that helps breed innovation. Moreover, while novel business ideas must be torn to pieces and reassembled time again, they also need room to breathe. The educated, diverse, and liberal people of Austin form just the kind of hive mind you need to grow ideas.
The other effect of culture is that Austin doesn’t judge people based on success, at least not the material kind. Its students and hippies don’t care if you’re poor like them, as long as you bring your unique self to the party. Austin roots for underdogs and loves fighting in the corner opposite to prestige, wealth, and the establishment. In fact, the conflicting attitude towards newcomers has quite a lot do with Austin’s egalitarian culture. Tech is absolutely a boon to the city — the city has doubled in size since 1999 on the back of countless new tech jobs. Yet tech is also changing the very fabric that makes Austin awesome. Not only has it messed up traffic, at least in relative terms, but gentrification is pushing up real estate prices and making the city unaffordable for the folks who don’t see a career in tech as their personal Jesus.
Lastly, Austin’s blend of tolerance, southern hospitality and the high rate of new arrivals is a particularly potent concoction for a fledgling companies. Getting intros is easy as pie, and so far there are few social ceilings between founders and the local tech elite. Capital Factory, a mentorship driven co-working space and incubator, regroups much of the city’s entrepreneurs and tech mentors. This is the place where first-time founders can rub shoulders with seasoned entrepreneurs, experts from the labs of IBM, and every single angel investor in the area. Considering the amount of Valley techies who have recently moved to Austin, and the fact that South by Southwest turns the city into America’s de facto tech capital once a year (a phenomenon that deserves a dedicated blog post), you can see why the Austin’s culture serves as a catapult for early stage startups.
