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  1 +---
  2 +layout: post
  3 +title: "Fallacy: Startups don't work in the Midwest"
  4 +date: 2007-12-07 12:09
  5 +categories: blog_archive_project
  6 +---
  7 +
  8 +(This post is part of my blog archiving project. This post appeared on
  9 +[bytecodex.wordpress.com](http://bytecodex.wordpress.com/2007/12/04/fallacy-startups-dont-work-in-the-midwest/)
  10 +on December 04, 2007.)
  11 +
  12 +**(aka I'll let you know when the Midwest stops sucking)**
  13 +
  14 +Well, the title of this blog post is a little misleading: take for
  15 +example, [37signals](http://37signals.com/), which was the shining star
  16 +of Web 2.0 a year or two ago, contributed to the further web 2.0
  17 +explosion by releasing the Ruby on Rails framework free, and now has
  18 +become as ubiquitous and useful as internet infrastructure with their
  19 +products Basecamp, Backpack, Highrise, etc. **37signals** is, of course,
  20 +from Chicago, Illinois. Further, there are dozens of smaller, successful
  21 +Chicago startups that have carved out niches for themselves on the web,
  22 +like [Threadless](http://threadless.com/), another Chicago startup that
  23 +crowd-sources its products (successfully, I might add).
  24 +
  25 +**But the problem I've always had is hearing visionaries like [Paul
  26 +Graham](http://www.paulgraham.com/startuphubs.html) or Joel Spolsky
  27 +saying you can only make startups work in big cities that are "startup
  28 +hubs,"** like San Francisco (Silicon Valley) or New York City (where
  29 +finance lives). They're saying that the Midwest sucks too much to
  30 +create successful startups. Add Chicago as a "big tech city where
  31 +startups work" to the list, and you eliminate everyone in paragraph 1.
  32 +Chicago is, after all, a vastly different place than the majority of the
  33 +Midwest, both in attitude and population density.
  34 +
  35 +The basic argument has become that some kid from a podunk town in
  36 +Wisconsin or Iowa can't start the next big thing. That's **complete
  37 +and utter BS.** Pardon the expression, but it's worth
  38 +repeating: **It's BS.**
  39 +
  40 +**Clever heading about why it can work:**
  41 +
  42 +**The internet is, by design, decentralized.** Judging by the number of
  43 +web-workers, co-workers, and freelancers out there today, one doesn't
  44 +need to be in the corporate headquarters to get the job done. The same
  45 +goes for startups. You can get broadband pretty much anywhere, and
  46 +that's the only requirement for the startup these days. Everything
  47 +else (hosting, support, infrastructure) is all distributed over the web,
  48 +can happen anywhere, and is available to customers all over the world.
  49 +You could work out of your cabana in the Caribbean as long as you have
  50 +broadband, and no one would be the wiser. In connection with this is our
  51 +next point:\
  52 +
  53 +**Technology is cheap and readily available**, too: laptops and servers
  54 +(or even virtual hosting) is all the technology you really need. The
  55 +cost of startups in this area has dropped to basically nothing. If
  56 +you're really cash-strapped, your hackers probably already have the
  57 +desktop or laptop they'll need to code, anyways. Virtual hosting is
  58 +probably the killer app here for startup hosting, with services like
  59 +Amazon's AWS (Elastic Cloud 2 and S3) leading the pack. (not
  60 +necessarily in terms of processing power, though.) You no longer have to
  61 +spec out several $10K servers and more expensive colo space when you
  62 +need to scale your web app these days, you just add more server
  63 +instances for a higher monthly fee. (And btw, yes, Milwaukee and Chicago
  64 +both have Apple stores to get your hackers their Macbooks.)\
  65 +
  66 +As a corollary, **all the software your startup needs (programming
  67 +languages, frameworks, databases, & editors) is available online as
  68 +free, open source projects.** If you're an expert in the technology,
  69 +and it lets you adapt quicker and innovate more than a big corporation
  70 +could pull off, you've can create a better product no matter where you
  71 +are geographically. As for your actual web app, you should probably
  72 +write it yourself, not outsource it or hire a contractor.
  73 +
  74 +**You don't need a big team.** Have a good idea and a friend to help
  75 +you? Good, you've got your team. You're filling all the roles of
  76 +developer, graphic designer, systems administrator, management, and
  77 +tester. No need for giant developer teams or marketing department.
  78 +You'll hire a lawyer and accountant as needed, but otherwise you're
  79 +set. It's also possible to outsource all your support in [4-Hour
  80 +Workweek](http://www.amazon.com/4-Hour-Workweek-Escape-Live-Anywhere/dp/0307353133/)fashion,
  81 +or otherwise, a FAQ on your site probably does an even better job.
  82 +
  83 +**Our cost of living is lower.** If you're familiar with Paul
  84 +Graham's essay on [The Future of Web
  85 +Startups](http://www.paulgraham.com/webstartups.html), you'll know
  86 +that he's already made the argument that all you need to create a
  87 +startup is a shared space for hackers to hack in, and web hosting. He
  88 +doesn't emphasize having a fancy office, but instead starting in an
  89 +apartment or house where bedrooms become offices and everyone lives
  90 +together, working day and night towards a common goal of success. The
  91 +problem of paying for expensive offices is then lowered. The difference
  92 +is that in California (or New York City), the cost of rent is
  93 +ridiculous. When success for your startup means just hanging on long
  94 +enough, usually only a few more months to get profitable or sell out,
  95 +your cost of living is important. So why pay for crazy-expensive living
  96 +arrangements in a big Victorian or Brownstone or San Francisco's
  97 +apartment prices? (think $1800/month studio apartments) A team, in say
  98 +Wisconsin, working from their cheap apartment can probably crank out the
  99 +same kind of work as these startups, for a fraction of the cost. Also,
  100 +everything else is cheaper out here, including food, so you can eat
  101 +pretty decent if you're willing to cook and still stay cheap. Then
  102 +again, you can still eat only ramen and Redbull if you want to.
  103 +
  104 +**You only need an angel investor or two to start, or maybe no funding
  105 +at all.** While VCs (Vulture Capitalists) will probably be unlikely to
  106 +fly out to see you in farmsville, you don't need them to start out. As
  107 +mentioned, startups are really cheap right now. So the amount you'd
  108 +need from an initial angel investor is very low. And believe it or not,
  109 +these potential angel investors are all over the place. They don't all
  110 +live in fancy mansions in Washington state or whatever. Even if you
  111 +can't find one, there's a good chance you can bootstrap your startup
  112 +yourself, and then get funding when you've already implemented your
  113 +million dollar idea and can demo to potential investors, or direct
  114 +interested parties to the working web app by handing them a card with
  115 +the URL.
  116 +
  117 +**With the net, knowledge is hardly geographical.** There's no secret
  118 +tricks known only to a few elite in Silicon Valley. You can have world
  119 +class hackers living anywhere and collaborating online as experts in
  120 +that knowledge domain. The Midwest can compete in expertise with
  121 +anywhere else. We do have smart and extremely talented hackers living
  122 +here.
  123 +
  124 +**You don't have to take big risks**, like moving across the country
  125 +for something that might fail. While people just out of college, the
  126 +typical startup founders, are capable of taking big risks like that, not
  127 +everyone wants to. Further, it becomes very costly personally if you do
  128 +end up failing and have to move back to Wisconsin with your tail between
  129 +your legs. Why not just stay in Wisconsin, see your family on the
  130 +weekends, and code just as hard as those guys in Silicon Valley?
  131 +
  132 +**The Problems:**
  133 +
  134 +Obviously, **you miss out on the tech community** if you're trying to
  135 +do a startup in the middle of nowhere. I'm often struck by how close
  136 +and efficient the "web 2.0" crowd is out in San Fran. For example,
  137 +watching Leah Culver (of Pownce) give a presentation on OAuth at the
  138 +Justin.tv office (despite the fact that we already have two startups
  139 +collaborating in this sentence) last week, I realized that planning for
  140 +OAuth that didn't happen over mailing lists or by some big regulatory
  141 +committee (cough, ICANN/W3C), but by going out to lunch together,
  142 +stopping by offices, and generally sharing the problems they had and
  143 +figuring out ways to solve them. You just can't get that kind of
  144 +concentrated knowledge and talent out here in Wisconsin, as awesome as
  145 +our tech community is, there's just not enough of us to make it work.
  146 +The community out there is evident when you hear some startup founder
  147 +twittering about dropping by another startup's offices to see what
  148 +they're doing, or everyone is at the same party / conference / barcamp
  149 +and the next week they've all created something new collectively.
  150 +
  151 +**Wisconsin educations are not geared towards creating hackers or
  152 +entrepreneurs**. A common argument for startup hubs is that the colleges
  153 +there are pumping out lots of very talented kids that are eager to break
  154 +into the startup scene. The inverse of this is that, in my experience,
  155 +Computer Science students in Wisconsin are getting the exact same kind
  156 +of courses, with probably the same level of quality (most likely better,
  157 +as you're unlikely to be getting taught by a TA at the smaller UW &
  158 +private schools). But, I get the feeling when I talk to my CSCI
  159 +classmates is that maybe they are smart and know "about computers,"
  160 +but they're mostly just gamers or whatever that are in CSCI because
  161 +they wouldn't mind being tech support at a random company, or
  162 +wouldn't mind working on a cube farm for some corporation doing
  163 +"computer stuff." They're not in it because they're necessarily
  164 +passionate about programming or math or open source or changing the
  165 +world. They just want the stable, healthy paycheck from those kinds of
  166 +jobs. They're [the other
  167 +80%](http://www.codinghorror.com/blog/archives/001002.html) of
  168 +programmers, if they end up programming at all after college. To make a
  169 +PG-ish generalization: Serious hackers seem to value their time, and in
  170 +Thoreau-ish fashion aren't willing to trade it for a paycheck if the
  171 +work isn't interesting or fulfilling enough. I should stress that this
  172 +is my perception the **majority** of CSCI students I know here in
  173 +Wisconsin, but I know a few that are shining examples of Midwest geek
  174 +hackerdom. Until we teach the same sort of attitude and expectations
  175 +that create Sergey Brins and Joel Spolskys, we're just making more
  176 +miserable Office Space drones who are in it for the paycheck and not for
  177 +passion.
  178 +
  179 +**Public transportation sucks (aka, distances increase and people are
  180 +too spread out).**When you've got to drive hours to cross state lines
  181 +to get to a BarCamp or ride the train from Milwaukee into Chicago to
  182 +catch the Reddit or Google party, you're less likely to go. So the
  183 +tech community is less likely to concentrate in one area for any period
  184 +of time, even an evening. Just as a personal example, Milwaukee has a
  185 +great professional group for web designers and developers, and their
  186 +meetings are less than an hour away if I were to drive, but so far I
  187 +haven't been able to make it to any of their meetings. I'm even
  188 +closer to downtown Chicago, but it's not practical to drive and the
  189 +train schedule is lousy at best. Even though San Francisco is a big
  190 +sprawling region, their public transportation, neighborhoods
  191 +concentrating the tech community, and constant tech events/conferences
  192 +trumps what we can pull off in the midwest any day.
  193 +
  194 +#### Time to prove them wrong.
  195 +
  196 +Go out there and make the next big thing. It won't cost you much,
  197 +it's not risky, and you'll see your friends and the tech community
  198 +every day on Twitter anyways. Work out of your apartment or on your free
  199 +time on the weekends. Get cheap entry-level virtual hosting, and see if
  200 +there's interest in your idea.
  201 +
  202 +This is sort of my plan, as I find moving out to California currently
  203 +infeasible. It's uncertain whether any idea will turn out to be the
  204 +Next Great American Startup, but on the flip side, you're just as
  205 +likely to fail as your counterparts burning through cash in Silicon
  206 +Valley.

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