Articles

Why Tech Start-Ups Are Moving to the Heartland

Wednesday, January 04, 2017

For all the attention that Silicon Valley gets, a huge amount of tech-oriented startup activity can be found across the "Silicon Prairie," a vast swath of terrain that extends from Chicago to Denver.  Entrepreneurs are flocking to cities large and small across the Midwest for their hometown hospitality, lower cost of living, and rich talent bases.

A trio of entrepreneurs from the Lincoln, Nebraska, area talked about the benefits of growing their businesses in the region during "Power to the Small," a panel discussion presented by Inc. and Windstream. 

 They also discussed the challenges that come with launching companies away from the coasts,* such as establishing critical business connections and an innate regional humility that can impact certain elements of marketing

Lower Costs, Great Talent

Chris Davis, co-founder of Travefy, an online group travel planner, believes that his tech-centric company could not exist in a large metropolitan area. 

"If we were in New York or San Francisco, we wouldn't be around," he said. "We've had a number of competitors who tried to do the same thing as us and they burned out of money in six months" because of the costs that come with being based in those areas.

He noted that Lincoln has a surprisingly large concentration of technology and marketing talent, due to the presence of companies such as Hudl, a local startup that provides video tools for more than 100,000 local, regional and national sports teams.

Peer-to-Peer Mentors

Jennifer Rosenblatt, who grew up in Florida, has launched two businesses in Lincoln -- a marketing design firm and, most recently, MusicSpoke, a marketplace for musicians.

"I don't think I could have started either of my businesses in Tampa because it's too big, it's too corporate and it's too conglomerate," she said. "The business community in Lincoln is amazing, with lots of peer-to-peer mentorships available, and the cost of living is low."

Stephanie Jarrett and her husband have worked at large PR firms in New York and a tech company in San Francisco.  They relocated to Lincoln in order to found Bulu Box, an e-commerce business that offers monthly subscriptions to health, nutrition, and weight loss products.

"I feel like a big fish in a small pond, rather than just being one of the thousands of startups in Silicon Valley," she said. "Beyond that, there's a real camaraderie here. Other entrepreneurs genuinely want you to succeed, because they feel your success will help them. People are always happy to meet for coffee and share information."

A Too-Well-Kept Secret

Jarrett does think that a Midwest location requires a certain kind of legwork to make certain things happen. "When I worked in New York, I would often sit in rooms with people who had direct connections to big PR firms, law firms, and media outlets," she said. "If you want to make a connection to those firms from Nebraska, it usually requires extra steps: You have to find someone who knows someone who knows someone."

As for the inherent modesty of Midwesterners, it can be a double-edged sword.  "In the Midwest, people talk about keeping their head down, working hard, and being humble," she said. "Some will say that's a big strength, but it can also be a pitfall in the startup world because we have a lot of success stories in Lincoln that people on the East and West coasts don't know about. We need to bang the drum more about our successes."

*The fastest-growing states for technology jobs in the first half of 2015 were Minnesota, Utah, Nebraska, and Michigan, according to a Dice.com analysis of Bureau of Labor Statistics data.