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Summary:

Rhode Island’s efforts to drive innovation and subsequent technology jobs to the state aren’t unusual, but building a technology hub is hard. I’ve watched Austin, Texas, where I live and work, fight to get to the point where it can claim to be a technology center […]

Rhode Island’s efforts to drive innovation and subsequent technology jobs to the state aren’t unusual, but building a technology hub is hard. I’ve watched Austin, Texas, where I live and work, fight to get to the point where it can claim to be a technology center and then continue fighting to stay there.

To get there, a city needs three things. Money, big companies and good weather. That last one isn’t a joke; quality of life is important. For example, many people want to live in Austin, while few want to live in Houston. So even though there are a lot of huge companies, money, and a real effort by folks at places like the Houston Technology Center and Startup Houston, building an information economy there is going to be a challenge. Blame it on the humidity. The same goes for places like Tulsa, Okla., Detroit and even Chicago, where weather or other factors such as crime make it hard to convince people to live there. (Note to the Chambers of Commerce in named cities: I said hard, not impossible).

Big companies can push technology innovation in a number of ways. They can act as customers for local startups and also contribute executive talent — preferably talent that has struck it rich with stock options and can work for free or invest in other startups. Dellionaires made great angel investors during the 90s.

If the big companies were venture-backed, their investors are likely happy to back other startups in the region, especially those with executives from former portfolio companies. In Austin, Tivoli, which went public in 1995 and later sold to IBM, fueled most of the enterprise software startups that helped the city make a name for itself in industries other than silicon.

Finally, there are the venture capitalists. Austin initially only had a few of them, but Austin Ventures helped fund scores of startups and bring to the area investors from both coasts. As the boom hit, venture firms sprouted like mushrooms, but only a few remain today. Sadly, AV isn’t really funding many of the social sites that are hot today, nor does it have a clean technology focus that Austin is trying to push.

The fact that Austin is missing those key ingredients of money and big companies has left me kind of down on the city’s technology community right now. There are thousands of talented people, but few folks willing to fund them and few big public companies with growth. It’s 65 degrees and sunny today, but good weather is only part of the equation.

  1. I didn’t know you were an Austin res, glad to hear.

    Having just moved from MI to Austin I can see your points in full bloom. At least Austin has tech momentum (perception), even if the reality isn’t there. Other cities (MI especially) have a press conference but no momentum, and no real investment in the kind of high tech that inspires entrepreneurs. Like college football recruiting, hot areas need (in addition to your concepts) superstars to attract future talent. These superstars need to attract attention, support their alma-mater, etc.

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  2. One of the better high tech job incubators in Toronto offers one thing that everyone needs. Cheap rent. Plus some built in high speed access. Give the right people those two things and they can grow. Once things pick up for the companies their rent goes up.

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  3. In addition to the three criteria, there are two more that are crucial for a high-tech hub: 1) world-class research university, 2) liberal culture. The 1st is quite obvious in that most innovation is still done at universities, and their offspring of young grads every year feeds the high-tech cycle locally. Their energy and skills are necessary for a high-tech culture to thrive. The 2nd is not quite so obvious but equally important – creative, thinking-class people do not want to be hindered by the status quo nor a conservative culture. I think this is the very reason why Austin is a high-tech hub in a state that is fundamentally a conservative state. You also forgot to mention that Boston, even with its bad weather is still a high-tech startup hub. Lots of innovation there with a progressive culture and several top universities. Interestingly enough, the internet startup scene is not so hot there, only because the local venture capitalists are very risk-averse in their attitude towards investments opposite to west coast vc’s.

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  4. I didn’t know you lived in Austin, either. I went to UT-Austin, then went to California (LA, SF, SD), worked in tech there for 7 years, then moved back to Austin because of the high cost of housing in CA.

    I’ve lived here for 3 years now, and I’m very disappointed there is hardly any consumer tech job options here. As far as weather goes, the weather is hot/humid here from May through September/October. Then when cedar fever season hits from late December through early February, and you’ve only got about 5-6 months of decent weather (if you don’t like the heat and humidity).

    Surprisingly Austin within “the loop” (basically the inner part of the city) is a little too junky for me. It just hasn’t progressed that much. And property taxes are astronomical, I guess to make up for no state income tax.

    So I’m planning on moving back to CA unless some miracle opportunity arises here. Just not enough interesting in consumer tech going on here.

    Stacey, I’d be interested in meeting up occasionally with other consumer tech/Internet folks here in Austin to share thoughts and observations about living and working in Austin from a consumer tech/Internet perspective. Interested in meeting up with other folks like me occasionally? I’ll organize it.

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  5. [...] Recipe for a High-Tech Hub To get there, a city needs three things. Money, big companies and good weather. That last one isn’t a joke; quality of life is important. For example, many people want to live in Austin, while few want to live in Houston. So even though there are a lot of huge companies, money, and a real effort by folks at places like the Houston Technology Center and Startup Houston, building an information economy there is going to be a challenge. Blame it on the humidity. The same goes for places like Tulsa, Okla., Detroit and even Chicago, where weather or other factors such as crime make it hard to convince people to live there. (Note to the Chambers of Commerce in named cities: I said hard, not impossible). [...]

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  6. Good point on weather – Bangalore is a classic example in India.

    This sleepy town a few hours from the great Southern city of Mysore was chosen after India’s independence as a hub for the new indigenous aerospace industry because the weather was very pleasant and cool – apart from being a nice place for scientists and engineers to work, air-conditioning would not be required to keep equipment and circuitry dust-free, which is a big problem in India.

    Suddenly when India’s economy opened up you had this great cosmopolitan town with lots of tech talent and a global Y2K scare … the rest as they say is …

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  7. John,

    @John, you’re right, there are only a handful of pure consumer tech startups in Austin. I’m racking my brain trying to think of them, but here’s a quick list:

    HomeAway.com
    HomeDepot.com
    BazaarVoice (sort of)
    ApartmentRatings.com (Internet Brands)
    GigaNews
    ExpertVillage.com (Demand Media)
    iTaggit.com
    BedAndBreakfast.com
    qipit.com
    pickaprof.com
    NaturallyCurly.com
    ApartmentHomeLiving.com
    uShip.com

    Then there are some new ones:

    MindBites
    PeoplePad
    DwellGo.com
    OtherInbox.com

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  8. @ John: There is the Austin Tech Happy Hour, but it’s not entirely useful. I’ve been to a few events but didn’t get much out of it. Are you going to Barcamp?

    @ Jeremy: pluck.com is another one.

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  9. @NewToAustin: I didn’t include Pluck because their target customers are newspapers. By the same token BazaarVoice isn’t a pure consumer play either since they’re selling services to e-commerce sites.

    What’s interesting to me is how many of the consumer startups in Austin were bootstrapped or raised their initial funding outside of Austin.

    Here a few others I just thought of:

    Minggl, CreditCards.com, Indeed, Slacker (hq in San Diego), Shangby

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  10. Stacey Higginbotham Thursday, February 28, 2008

    For those of you in Austin, I’d steer you to the Austin Startup web site at http://www.austinstartup.com/ or make your voices known to Alicia Ring at the Austin Technology Council. I’d love to meet with consumer-facing tech startups in town. As for more startups, there’s UCareer.net and Bones in Motion. There’s also an investment group that funds consumer-facing sites such as RottenNeighbor.com (I learned about them at Austin Startup).

    @Roy, weather is my catch-all for quality of life. I consider a liberal (or maybe educated) population to be part of a good quality of life. As for the university, I think it’s important, but am torn on whether it contributes more to quality of life and talent or if it should stand alone.

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