Affordable Austin: No Longer a Tech Mecca

iStock_000000398202XSmallAustin is among the places that people are flocking to in the recession, according to BusinessWeek. Other magazines have given Austin (and all of Texas) similar praise, mostly because it’s so darn cheap to live here. But I don’t want to lie to y’all — Austin may not be the best place to build your tech startup. Or even look for that great tech job. It’s not that I don’t want more transplants coming here (I work from home, so traffic woes don’t stress me out, and more tapas bars downtown are always a good thing), but Austin has gone downhill as a tech town.

We were big in the dot-com era because we had a handful of companies (among them Tivoli, Dell (s dell), Trilogy and Silicon Labs (s SLAB)) that helped put Austin on the map. We also had a big presence in semiconductors after a 1988 decision to locate Sematech here. Applied Materials (s amat), AMD (s amd), Motorola (s MOT), Samsung and Tokyo Electron helped build a thriving chip manufacturing and design industry in the heart of Texas. Now the Austin area is full of chip designers, enterprise software experts and a few promising video transcoding startups such as Kulabyte, Media Excel and team members from RipCode. There are some one-off consumer tech companies as well, but it definitely doesn’t feel like Austin is a nexus for up-and-coming technology anymore, especially with wireless and consumer technology is becoming so crucial. The BusinessWeek article seems aware of that:

Why does Austin look so affordable? The city’s economy lagged the U.S. for much of the boom as one big driver, the tech industry, struggled. First, the dot-com bubble imploded in 2000; Intel’s chip design center stood half-built as a painful reminder of the tech bust until it was demolished in 2007. Then big local companies such as Dell and Freescale Semiconductor ran into trouble. But Austin is on the upswing, with major employers, including the state government and health-care sectors, hiring.

Austin has always depended on the state government and The University of Texas to help it through recessions. To augment that, the city has tried to cultivate several tech areas, but so far has failed to replicate the success it had with enterprise software and semiconductors. And lately even our access to the rest of the world has felt tenuous, with our broadband providers thinking about usage-based access and direct flights to California being cut. The service provider community has shrunk and the city, which has historically been a one-VC city — doesn’t have access to a ton of smart capital. We do have a lot of educated, smart people, but many of them seem to be using their tech knowledge gained here for companies based someplace else. I should know.

costchart courtesty of the Austin Chamber of Commerce