According to Paul Graham's article The 18 Mistakes That Kill Startups, startups prosper in some places and not others. The startup "hubs" are in order: Silicon Valley, Boston, Seattle, Austin, Denver, and New York. There are most certainly advantages to starting a company in one of these areas, in particular Silicon Valley or Boston. However, there are also advantages to starting a software company outside of a startup hub. In this article, I'll relate to my own experiences starting a software company in the Pioneer Valley of Western Massachusetts as opposed to the startup hub in Boston, only a 1.5 hour drive away.
There are many reasons to start a company in the Boston area, namely the fact that it's the #2 destination for software startups, has the worlds top universities, home to hundreds of software companies, and hosts a huge pool of tech talent. Boston is a great city with history, wealth, and many attractions. I know this first hand because I frequently travel to Boston, just as I do New York. Either city is a day trip from Western Mass.
However I argue that there are just as many reasons to start a company in Western Mass as there is in Boston. Maybe even more. Here are 7 reasons why I believe Western Mass is a great place to start a software company. I believe the same argument holds true in other desirable areas to live with an educated workforce near an existing a startup hub.
1. Office Space is Cheaper
Despite being a mere 1.5 hours away, real estate in Western Mass is 1/2 to 1/3 the cost of that in Boston. This includes land, buildings, class A space, and residential housing (source, Western Massachusetts Economic Development Council). Leasing office space ranges anywhere from $3 - $10 per square in towns adjacent to Springfield and Northampton to $10 - $15 per square in space in Springfield and Northampton.
2. Salaries are Lower
Although closely related to the cost of living being lower, salaries for experienced and degreed computer scientists and engineers are much lower in Western Mass than in Boston. In today's global economy, the urge to offshore development is very high. As engineer's salaries go up, so does the pressure for founders and business leaders to send development offshore. Offshoring does not fit within the culture of our company at Atalasoft, nor does it fit my personal ambitions. By not having to pay very high salaries, we can stay competitive, and employ a team of highly skilled engineers in our own office providing better products and services, and serve our local community.
3. New England's Knowledge Corridor
There are 32 higher education institutions in the Hartford/Springfield area producing 25,000 graduates each year, one of the highest concentrations in America. Very important to software startups, are computer science graduates. UMASS in Amherst, which has a wonderful computer science program, graduates students who are recruited by the software giants such as Microsoft, Google, and Apple. Many students I speak with graduating from these schools would love to stay in the area, but cannot due to the lack of good software development jobs.
4. Shorter Commutes
The average commute to Boston or San Francisco from suburban areas is likely to be an hour and a half. Personally, I can't imagine driving more than 30 minutes to work, and I never had more than a 20 minute commute in my 10+ years living and working in the area.
5. Outdoor Lifestyle
City life isn't for everyone. Western Massachusetts appeals to an active lifestyle, with activities such as hiking, cycling, kayaking, skiing, fishing, and boating. The Connecticut river valley offers a host of rail trails, perfect for the lunch-time run or rollerblade. Again, quoting Paul Graham in his essay How to be Silicon Valley, "Most nerds like quieter pleasures. They like cafes instead of clubs; used bookshops instead of fashionable clothing shops; hiking instead of dancing; sunlight instead of tall buildings." Where in Boston can you look out your office window for a mountain view, enjoy a peaceful hour lunch run or walk on the Manhan Rail Trail, or enjoy a coffee at a local coffee shop, all in the same block?
6. Urban Centers
Northampton boasts a unique cultural downtown center with shopping, restaurants, arts, entertainment and nightlife rivaling those of major urban centers. Nearby Springfield is the 3rd largest City in Massachusetts and home of the Basketball Hall of Fame, and the Springfield Armory.
7. Loyal Employees
Cities are great for young people. However after settling down, married couples tend to move to suburbia to raise a family. In Boston and other major cities, suburbia requires buying a house you usually cannot afford and driving over an hour to work (yes, this was covered in reason 1 and 4 above). In suburban areas such as Western Mass, there is no need to relocate, housing is cheap, and employees tend to stay with one company longer, sometimes for their entire career.
While I point out some great reasons to start a company, I shouldn't fail to mention the unique challenges that are faced when starting a software company outside a startup hub. Here are 3 challenges to starting a software company outside a software hub.
1. Lack of Venture Funding
Silicon Valley and Boston have hundreds of venture capitalists ready to invest money in software companies with viable (or sometimes unviable) business plans. However they typically like to invest in companies within an hour of where they live. Driving a couple hours to a board meeting isn't all that appealing. There are other ways to start a company, such as Bootstrapping it yourself, and there are a few venture capitalists in our area such as Village Ventures. However today I field phone calls from Venture Capitalists all the time, none of them local. I'm really not sure this is a real problem in Western Mass.
2. Lack of Experienced Developers
So far Atalasoft has been fortunate in finding some very experienced employees from companies such as Adobe, Excite, and other smaller startups. However there is a limited pool of developers with this level of experience in the area, and attracting people to the area can be a challenge. So far, the pool hasn't run dry, and I continue to meet very experienced developers, many of whom have recently relocated from New York, Boston, and even Silicon Valley for the very reasons I state above. If the pool does happen to run out, there is a constant supply of very talented developers graduating from UMASS in Amherst. We attend UMASS career fairs and have hired some graduates. We bank our company's future on UMASS being 20 minutes from our office doors.
3. Lack of Supporters
I have to admit, I feel a little alone at this. There just are not that many other software companies in our area for me to share war stories with, or to seek advice from. I have met a few, and would like to meet others. There are some great local technology groups in this area involving some budding and more established companies such in the RTC, Hidden-Tech, Western Mass .NET Users Group, and Java-Python Developers Group. If you are involved in a software startup company in Western Mass, and I haven't already met you, please contact me! I would love to share war stories, take advice, and if you care to listen, even give advice.
I certainly expect that Atalasoft will continue to grow and employ more and more highly paid software developers and other technology professionals in Western Massachusetts. Possibly just the beginning of a new wave of startups that understand that the advantages of settling just outside a startup hub in an area such as the Pioneer Valley can in many cases outweigh the disadvantages. I hope this article can help with that decision and help entice other startup companies to join me and branch away from the startup hubs.