Note: This post was originally written by Zac Sweers on Quara in response to the question, What is Austin like for startups and tech companies? How does it compare to Silicon Valley?“. Zac does the best job I’ve yet read of distilling the issues facing Austin and the growth of its tech business.
There are two big issues that startups in Austin face that I think stunt their collective growth. This is based on my time there (5 years of college), interning a short time at a local start up, having a few friends found local startups, and just general observations of the startup community. I now live in Palo Alto, CA working at a startup called Flipboard.
Lack of VC presence in the area.
Living in Palo Alto now, I see VC companies’ presence everywhere. It’s just a part of the culture here. This is heavily portrayed in the great Silicon Valley TV show on HBO. There’s just a ton of money available here, and VC companies are all competing to find and fund the next big thing. Austin just doesn’t have this. The net effect of this is that there just aren’t that many viable paying startups. There’s a bunch of startups that will offer free/cheap “experience” internships to UT students, but they ultimately don’t have the capital to attract and hold down good developers.
When Austin startups need money, they almost always have to go somewhere else to get it. In SV, you have tons of options within an hour’s drive in any direction. Like vegetation growing in a desert, it’s going to be sparse until there’s water. Regardless of how you feel about the politics of VC or built with your own blood/sweat/tears (spoiler, you can do both), this is how it is in the tech world now.
(An apparent) lack of “tough love” on existing startups
There’s a fair share of startups in Austin, there’s no denying that. It’s nowhere near SV level, but it’s not a small town in southern Utah either. I’ve seen a fair share of startups borne out of programs like Longhorn Startup, but a common trend is that many of the ideas are obvious dead ends. Either the idea isn’t realistic, not a viable business plan, or it’s a solution to something that’s not really a problem. I won’t name names, but this is my general perception from my experience.
Now, the reason I say “an apparent” is because this is totally normal. There’s a ton of bad ideas getting pursued in SV too, but they’re balanced out by some really incredible success stories. Austin doesn’t have that second part. There’s no Facebook or Google that came out of Austin, no exciting new startups like Square or Snapchat making headlines.
There’s a saying: “Throw shit against the wall and seeing what sticks”. As I touched on in my first point, there’s not nearly the same amount of “shit” being thrown at the wall in Austin. I do, however, think there should be more tough love from the investors/people in charge of these incubators. A bad idea should be recognized as such, and in a place where startup funding is as comparatively scarce as it is, you’d think that investors would be more selective with their money.
The biggest problem is by far the lack of local investment. Successful startups are diamonds in the rough, and there’s just not nearly as many resources for mining the rough in Austin. This is not a problem with the engineering talent, location, culture, or anything else really. The city just can’t afford startups the same resources that SV can, plain and simple. As a result, startups tend to start or go to SV. I of course hope that can change in the future, because Austin is a great place to live.
A word about non-startup tech companies
There’s not much to say here, other than that there’s just substantially less in Austin compared to SV. Here in SV, you can quit your job one day and have 10 interviews lined up by the next day. In Austin, I don’t know that I could even name 10 tech companies I’d want to work for there. This is a problem that I think would also be solved by stimulating home grown startups. We can hope that other companies move/open branches in Austin, but honestly it’s rare and almost never for engineering.