The Silicon Valley — situated in the San Francisco Bay Area of California — is certainly an exciting and dynamic environment; however, this doesn’t mean that every business should relocate there.
A perfect example is Amazon’s search for a headquarters site. According to The New York Times, cities nationwide have fiercely competed to attract Amazon, and the company recently revealed that 238 regions and cities submitted their proposals. Amazon was expected to finalize its decision in 2018, but this competitive process highlights how many locations are actively positioning themselves as prime spots for business growth.
Undoubtedly, these cities and regions are pulling out all the stops to be selected by Amazon. This intense competition shows the value and potential impact of landing such a major company.
It’s a misconception that only the “brainiest” cities—usually large coastal hubs like San Francisco and New York—will flourish. Instead, growing opportunities are emerging in cities such as Columbus, Ohio, Nashville, Tennessee, and many other small to mid-sized towns in America’s heartland.
When deciding where to establish your business, it’s crucial to thoroughly evaluate the site’s suitability for your headquarters. Understanding your company’s specific needs and assessing the location’s potential can translate to a strong return on investment and foster a distinctive business identity.
We founded Tallyfy in London in 2005 as two friends with limited technical skills but a strong vision to build a scalable business. Early on, we recognized the importance of being present in the US market to better serve our customers.
Arch Grants, a nonprofit that provides equity-free funding and pro bono services, awarded us one of their grants, which was instrumental in our decision-making.
In researching potential locations, we discovered that St. Louis boasts several Fortune 500 companies and a population aligning closely with our customer profile. This proximity enabled us to study our customers more effectively, which ultimately encouraged us to commit to the city.
Despite spending time near Silicon Valley, we realized it lacked the medium-sized companies we wanted to target. Plus, we found that securing funding from Silicon Valley investors was still possible without being physically based there.
Our primary investor is located in the US, and compared to the Bay Area, St. Louis offers more affordable talent, rent, and workspace due to less competition. Given these advantages, St. Louis became our permanent headquarters.
What Makes a City the Right Fit?
Choosing where to settle your business hinges primarily on the cost of living. Consider factors like housing expenses, overall living costs, and the strength of the local job market. Each of these elements carries advantages and disadvantages; weighing them carefully will guide a more informed decision.
Beyond affordability, consider whether clients trust that your business can thrive online or if face-to-face interactions remain critical for your operations.
In technology sectors, while in-person contact might be less crucial, startups can succeed by selecting work environments that align well with their operational needs.
2. What Level of Talent Can We Access, and at What Cost?
Telecommuting enables companies to access high-quality talent regardless of location, though salary expectations vary widely depending on expertise. Recruiting the right employees involves deciding which talent fits your company’s culture and goals.
We found San Francisco’s tech-focused culture overly concentrated on developers, which was less aligned with our vision. Conversely, St. Louis presented a more diverse talent pool, allowing us to build a different kind of business in a supportive environment.
The startup ecosystem in St. Louis played a pivotal role in our success, offering a community that favors entrepreneurial ventures above traditional businesses.
4. What Is the Cost of Living?
For online businesses, reliable internet connectivity and affordable workspace are far more critical than owning expensive office space or properties.
Many competitors in managed cloud services also face challenges establishing headquarters in traditional tech hubs like Silicon Valley, New York, or Chicago due to high costs.
5. How Do You Feel About the Location?
It’s vital for company leadership to be personally satisfied with their location. A discontented CEO can struggle to attract top talent, provide strong leadership, or maintain motivation.
Use your judgment when choosing a headquarters, but also factor in local amenities such as schools, parks, dining, entertainment, and nightlife that enhance quality of life.
4 Reasons to Stand by Your Midwest Startup Location
Psychologists Daniel Kahneman and Angus Deaton reveal that beyond a certain income, more money does not equate to greater happiness. This insight emphasizes the importance of assessing your motivations before relocating to a popular startup hub.
Ask yourself, “Is there truly a better option?” This question helps maintain objectivity and guides your decision on where to base your company.
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In today’s evolving business landscape, alternative tech hubs like cities in the Midwest, Southeast, and other emerging regions offer unparalleled advantages. Lower operational costs, access to untapped talent pools, and supportive local ecosystems can empower startups and established businesses alike to thrive. Additionally, advancements in remote work technology have reduced the dependency on traditional tech centers, allowing companies to operate effectively from diverse locations. Choosing a city that aligns with your business goals, lifestyle preferences, and growth strategy can make all the difference in long-term success.
