John Cook wondered in a provocative TechFlash post “why aren’t swing-for-the-fences upstarts… emerging in Seattle?” It raised a different question for me: “what drives a company to locate in a particular location?” Access to resources (talent, money, advisers…) used to dominate the answer but the internet has flattened that world significantly, especially in tech. Now, issues like taxes and regulation are playing a more significant role.
The TechFlash commentary implies that the dearth of IPO home-runs is due to a lack of infrastructure, attitude and/or talent. From the post and the comments:
- VCs are funding smaller stakes for smaller M&A exits rather than IPOs
- There are very few seasoned execs that have grown businesses from $10 to $100 million
- Microsoft develops silo type managers rather than broadly functional execs
- Seattle folks are sleepier that other tech centers with less aggressive goals
- The culture of entrepreneurship and tech transfer are more aggressive at other universities.
Certainly those items, if accurate, would reduce the number of sluggers in Seattle. As importantly, I’d point to the advertisement directly below the printed version of the article.
Idaho is encouraging businesses to relocate and enjoy superior business conditions in their state. Those of us who invest considerable effort and assume financial risk with hopes of reaping the rewards can certainly appreciate the comparisons Idaho touts on the website it targets at businesses.
Tax and regulation issues have become more central to the location decision process. In today’s electronically connected world, traditional constraints imposed by location can mostly be overcome. We’re seeing Smartsheet’s customers use our work collaboration technology to coordinate geographically disperse teams, including outsourcing development, legal, hr and marketing work to third parties connected electronically to their company. These too are geographically elsewhere. Add to that the access to paid crowdsourcing, and physical location of a company’s HQ matters even less. See my xconomy post for more examples.
Not all world beating entrepreneurs will be home grown, so we have to have compelling reasons attracting them to Seattle. We often cite the amazing outdoors aesthetic and quality of life here, but many “swing for the fences” entrepreneurs are too busy being maniacally focused on their business to care.
Whether it’s Internet research, getting a legal opinion, developing a website, or locating a company, the business incentives are all the same. Where can I get the best results for the lowest price? If Seattle wants “swing for the fences” entrepreneurs, we need to make WA state a top choice for swing for the fences financial return.