Start Your Company Where You Want To Live – Period

image001A version of this article previously appeared on Forbes.

I am writing this article while sitting on a rooftop deck, overlooking the ocean in Baja, Mexico. The warm sea breeze and chilled beers are no doubt influencing my thinking, but sometimes it takes a change in latitude to gain a change in attitude (sorry Mr. Buffet, I couldn’t resist).

My uber-relaxed state of mind aside, I have always believed that the key to personal and professional success is to select a locale that will facilitate your lifestyle and hobbies. Thus, the “best” place for you to start your company is the community you want to live in. Period.

The days of entrepreneurs having to move to New York, LA or Silicon Valley to ensure their startup’s success are long over. Don’t believe the hype.

Sound like crazy advice? Maybe, but it’s exactly what my wife and I did over twenty years ago.

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Santa Barbara Dreaming

When my wife and I arrived in Santa Barbara in the early 1990’s, we did not know a single person. However, we knew we wanted to live in Santa Barbara and we were not willing to sacrifice our entrepreneurial dreams to live in paradise.

For the first decade, nearly every venture capitalist I met posed the same question, “Santa Barbara is a great town, but when are you going to move your company to the Valley?” My response was equally consistent, “Never.”

Dozens of successful startups later, investors no longer ask this question of Santa Barbara entrepreneurs.

Home Field Advantage

Although relocating worked out for me and my wife, if your hometown facilitates the pursuit of your life’s passions, you might be best served staying put.

There are obvious reasons to migrate your company to an established entrepreneurial community, such as Silicon Valley, New York or LA. However,  there are also significant countervailing advantages accrued when you fire up your venture outside of these startup Meccas.

1. Home Field – The most obvious benefit is the ability to leverage your professional network of potential employees, investors and partners. When you relocate to a new area, tremendous energy must be invested in establishing a new network. This time and effort is better spent building your business.

2. ROI – It is markedly less expensive to start a venture outside of the Meccas. Real estate, salaries and operating expenses tend to be cheaper in secondary markets. This allows ventures in these markets to gain a larger return on their investor’s capital, which results in less dilution and more value in the hands of the Founders and employees.

3. Loyalty – Employees in secondary markets tend to remain with their companies longer, primarily because these employment markets tend to be less tumultuous than the Meccas.

4. Cool Fish, Small Pond – One of the most impactful advantages of establishing your company in a smaller market is that it allows you to become one of the cool companies in your region. Expertcity (creator of GoToMeeting, acquired by Citrix) became one of the hippest companies to work for in Santa Barbara, primarily because of our healthy corporate culture. This cool factor attracted the most talented folks in town and facilitated recruiting executives from outside our market.

5. Flying Low – There is a distinct advantage, especially in a venture’s early days, of remaining relatively obscure. This allows companies to determine their product / market fit without negatively impacting their reputation. Once your company begins to gain traction, you can gain recognition with the same level of success as the companies in the Mecca markets, irrespective of your locale.

6. First-hand Love – Your hometown contains life-long friends and family members who can offer you and your spouse invaluable empathy and understanding. Such emotional support can certainly be delivered remotely. However, there is no substitute for in-person, heart-to-heart discussions that are not held among harried vacations or holiday celebrations. Such, intimate and nourishing conversations seldom occur when loved ones are remote.

Life Ain’t Your Hobby

With few exceptions, high tech companies can be located nearly anywhere without suffering debilitating disadvantages which would have been the death knell of companies a decade ago.

Thus, lead with your hobbies. Want to surf? Establish your startup in a beach town. If you are a competent entrepreneur you will make it work. If you are not, being located in the heart of the most ideal tech Mecca won’t matter.

Who knows? You might be able to surf in Baja and run your company from a rooftop deck, overlooking the ocean while sipping a cold, adult beverage.

Stranger things have happened…

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never Tweet about that killer burrito I just ate.

John Greathouse

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara’s Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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