After the successful Startup Riot 2011 on Wednesday much of the Atlanta startup community was pumped-up and excited about our growing eco-system. Dave Wright’s announcement last night that he was moving his pre-revenue company SolidFire, which had just raised $11 million, to Boulder, CO caught many people by surprise. At our Shotput Ventures partners’ meeting last month Dave told of his plans to move to Colorado due to the need for specialized engineers with storage system experience. The Atlanta startup community, much like a startup in and of itself, has highs and lows which are part of the process of building something great.
Monday of this week Mark Suster published a piece on TechCrunch titled Can You Really Build a Great Tech Firm Outside Silicon Valley? where he outlines some of the challenges, and benefits, of building a startup outside Silicon Valley. Everything he highlights about Los Angeles is applicable here in Atlanta. Let’s look at his categories in an Atlanta context:
- Funding is different outside of Silicon Valley – Funding in Atlanta doesn’t take place unless you have (a) a proven track record/pedigree, (b) product traction (generally $100,000 in revenue), or (c) wealthy friends, family, or fools (3 Fs of angel investing). Naturally, with funding restricted to these three items there isn’t much tech investing that takes place.
- “Necessity is the mother of all invention” and drives business outside the Valley – Do you have an idea for a business application that solves real, validated corporate issues? Atlanta works great for those kind of companies (B2B SaaS is especially hot right now). If you have an idea for a consumer application that requires significant scale and network effect before monetization you’re probably better off someplace else.
- Recruiting and retention will be different outside the Valley – Atlanta is especially beneficial in this regard due to great engineering talent from Georgia Tech and throughout the Southeast, combined with low turnover (assuming you have a strong corporate culture), and a limited number of other startups in the area. Salaries and cost of living are also commensurately lower making it a great place to bootstrap or build capital-light web businesses. Did you know you can buy a decent condo in Buckhead, one of the nicest and most affluent areas in the Southeast, for under $100,000?
- There are many strategic assets outside of Silicon Valley – Atlanta has an amazing Internet security cluster, the world’s busiest airport (makes flying more affordable and efficient than most places), and tons of young professionals perfect for building out sales and services teams.
- Communities outside the Valley have matured – The Atlanta startup community is 10x more vibrant and active compared to when I moved here in 2002. If you follow @mattstech (and who doesn’t?) you’ll see that there’s a startup event most days of the week. It really is that busy. The ATDC, truly a strategic asset as well, has become the heart of the Atlanta startup community and facilitates many great events. We have a startup community in Atlanta that’s growing every year. Are we a major player? No. Do we have the right ingredients? Yes.
In the end, the most important thing we can do as a community is build meaningful, enduring companies that employ as many local people as possible and let the results speak for themselves.
What else? What would you add about the startup community in Atlanta? Oh yeah, we’re hiring a bunch of people this year, so please send referrals my way.
David Cummings on Startups 
Thanks, David! I, too, am very optimistic about Atlanta’s future as a GREAT place to build companies. I’ve been tempted to leave. But, I REALLY want to make it happen here. You are inspiration to all of us. Thanks for staying.
Jen
David this is dead on. And thanks for including ATDC. I like to think the reboot and the open nature of ATDC will lead to the kinds of connections and access and collaborations that will lead to successful startups. We are seeing it happen now.
The one thing that is absolutely dead-on-arrival here in Atlanta is copying silicon valley. Too many startups read technology pornography like Techcrunch and think they follow the same path here. It won’t work. Remember, even Facebook moved to Palo Alto rather than try to build that type of company in Boston.
Entrepreneurs, understand what works here and follow that path. Innovate in our already powerful sectors such as web services, network security, financial technology and logistics. And come see us at ATDC.
Ooops, meant to say business-business web services.
I think it’s helpful to be reminded that there’s a big difference between “difficult” and “impossible”. It’s difficult to build a tech company here, but clearly not impossible. Atlanta is changing but we have to be patient. If you review economic history, the kind of change we are hoping for takes a generation or more.
The fact that Atlanta builds tech companies that out-of-market VCs want isn’t the worst thing either. We’d of course rather keep them here, but fundamentally, the entrepreneur’s goal is typically not to “build Atlanta”, but rather to turn their innovation vision into reality, regardless of how the geography plays out. That someone living here can launch a venture that does just that is a good thing, even if part of their journey takes them away from here at some point.
I’ve only met Dave once but his reputation is, of course, top-notch. Congratulations to him and the SolidFire team, and best of luck. Knock it out of the park and be a great example of the kinds of venture that can be launched in Atlanta!
The startup community was extremely vibrant from 1996 to 2001 with all types of tech companies getting funded, many of them are now large scale businesses. If anything, it seems after 2002 the funding situation slowed following the dot com crash with newer and higher expectations set on startups due to the significant failure rate in Atlanta. Startups were getting big vauations and funded based on ideas. Because so many of these businesses failed, has caused a fear of funding early stage companies whereas the Silicon Valley companies have had some major paydays. For those that were successful, it is important that they reinvest in the tech community and their employees to branch off and launch new businesses. We are seeing some of this but not at the rate and fervor of the valley. My personal opinion is that if you have a good business it will get funded. There are many great things about Atlanta that just can’t be replicated elsewhere. I believe that Atlanta is one of the greatest places to start, launch and headquarter a business. Given the large number of Fortune 500 companies here, we must be doing something right.
Saw this article David on Austin – http://www.austinmonthly.com/AM/January-2014/Bright-Ideas/ thought you might like this.