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+layout: post
+title: "Fallacy: Startups don't work in the Midwest"
+date: 2007-12-07 12:09
+categories: blog_archive_project
+(This post is part of my blog archiving project. This post appeared on
+on December 04, 2007.)
+**(aka I'll let you know when the Midwest stops sucking)**
+Well, the title of this blog post is a little misleading: take for
+example, [37signals](, which was the shining star
+of Web 2.0 a year or two ago, contributed to the further web 2.0
+explosion by releasing the Ruby on Rails framework free, and now has
+become as ubiquitous and useful as internet infrastructure with their
+products Basecamp, Backpack, Highrise, etc. **37signals** is, of course,
+from Chicago, Illinois. Further, there are dozens of smaller, successful
+Chicago startups that have carved out niches for themselves on the web,
+like [Threadless](, another Chicago startup that
+crowd-sources its products (successfully, I might add).
+**But the problem I've always had is hearing visionaries like [Paul
+Graham]( or Joel Spolsky
+saying you can only make startups work in big cities that are "startup
+hubs,"** like San Francisco (Silicon Valley) or New York City (where
+finance lives). They're saying that the Midwest sucks too much to
+create successful startups. Add Chicago as a "big tech city where
+startups work" to the list, and you eliminate everyone in paragraph 1.
+Chicago is, after all, a vastly different place than the majority of the
+Midwest, both in attitude and population density.
+The basic argument has become that some kid from a podunk town in
+Wisconsin or Iowa can't start the next big thing. That's **complete
+and utter BS.** Pardon the expression, but it's worth
+repeating: **It's BS.**
+**Clever heading about why it can work:**
+**The internet is, by design, decentralized.** Judging by the number of
+web-workers, co-workers, and freelancers out there today, one doesn't
+need to be in the corporate headquarters to get the job done. The same
+goes for startups. You can get broadband pretty much anywhere, and
+that's the only requirement for the startup these days. Everything
+else (hosting, support, infrastructure) is all distributed over the web,
+can happen anywhere, and is available to customers all over the world.
+You could work out of your cabana in the Caribbean as long as you have
+broadband, and no one would be the wiser. In connection with this is our
+next point:\
+**Technology is cheap and readily available**, too: laptops and servers
+(or even virtual hosting) is all the technology you really need. The
+cost of startups in this area has dropped to basically nothing. If
+you're really cash-strapped, your hackers probably already have the
+desktop or laptop they'll need to code, anyways. Virtual hosting is
+probably the killer app here for startup hosting, with services like
+Amazon's AWS (Elastic Cloud 2 and S3) leading the pack. (not
+necessarily in terms of processing power, though.) You no longer have to
+spec out several $10K servers and more expensive colo space when you
+need to scale your web app these days, you just add more server
+instances for a higher monthly fee. (And btw, yes, Milwaukee and Chicago
+both have Apple stores to get your hackers their Macbooks.)\
+As a corollary, **all the software your startup needs (programming
+languages, frameworks, databases, & editors) is available online as
+free, open source projects.** If you're an expert in the technology,
+and it lets you adapt quicker and innovate more than a big corporation
+could pull off, you've can create a better product no matter where you
+are geographically. As for your actual web app, you should probably
+write it yourself, not outsource it or hire a contractor.
+**You don't need a big team.** Have a good idea and a friend to help
+you? Good, you've got your team. You're filling all the roles of
+developer, graphic designer, systems administrator, management, and
+tester. No need for giant developer teams or marketing department.
+You'll hire a lawyer and accountant as needed, but otherwise you're
+set. It's also possible to outsource all your support in [4-Hour
+or otherwise, a FAQ on your site probably does an even better job.
+**Our cost of living is lower.** If you're familiar with Paul
+Graham's essay on [The Future of Web
+Startups](, you'll know
+that he's already made the argument that all you need to create a
+startup is a shared space for hackers to hack in, and web hosting. He
+doesn't emphasize having a fancy office, but instead starting in an
+apartment or house where bedrooms become offices and everyone lives
+together, working day and night towards a common goal of success. The
+problem of paying for expensive offices is then lowered. The difference
+is that in California (or New York City), the cost of rent is
+ridiculous. When success for your startup means just hanging on long
+enough, usually only a few more months to get profitable or sell out,
+your cost of living is important. So why pay for crazy-expensive living
+arrangements in a big Victorian or Brownstone or San Francisco's
+apartment prices? (think $1800/month studio apartments) A team, in say
+Wisconsin, working from their cheap apartment can probably crank out the
+same kind of work as these startups, for a fraction of the cost. Also,
+everything else is cheaper out here, including food, so you can eat
+pretty decent if you're willing to cook and still stay cheap. Then
+again, you can still eat only ramen and Redbull if you want to.
+**You only need an angel investor or two to start, or maybe no funding
+at all.** While VCs (Vulture Capitalists) will probably be unlikely to
+fly out to see you in farmsville, you don't need them to start out. As
+mentioned, startups are really cheap right now. So the amount you'd
+need from an initial angel investor is very low. And believe it or not,
+these potential angel investors are all over the place. They don't all
+live in fancy mansions in Washington state or whatever. Even if you
+can't find one, there's a good chance you can bootstrap your startup
+yourself, and then get funding when you've already implemented your
+million dollar idea and can demo to potential investors, or direct
+interested parties to the working web app by handing them a card with
+the URL.
+**With the net, knowledge is hardly geographical.** There's no secret
+tricks known only to a few elite in Silicon Valley. You can have world
+class hackers living anywhere and collaborating online as experts in
+that knowledge domain. The Midwest can compete in expertise with
+anywhere else. We do have smart and extremely talented hackers living
+**You don't have to take big risks**, like moving across the country
+for something that might fail. While people just out of college, the
+typical startup founders, are capable of taking big risks like that, not
+everyone wants to. Further, it becomes very costly personally if you do
+end up failing and have to move back to Wisconsin with your tail between
+your legs. Why not just stay in Wisconsin, see your family on the
+weekends, and code just as hard as those guys in Silicon Valley?
+**The Problems:**
+Obviously, **you miss out on the tech community** if you're trying to
+do a startup in the middle of nowhere. I'm often struck by how close
+and efficient the "web 2.0" crowd is out in San Fran. For example,
+watching Leah Culver (of Pownce) give a presentation on OAuth at the office (despite the fact that we already have two startups
+collaborating in this sentence) last week, I realized that planning for
+OAuth that didn't happen over mailing lists or by some big regulatory
+committee (cough, ICANN/W3C), but by going out to lunch together,
+stopping by offices, and generally sharing the problems they had and
+figuring out ways to solve them. You just can't get that kind of
+concentrated knowledge and talent out here in Wisconsin, as awesome as
+our tech community is, there's just not enough of us to make it work.
+The community out there is evident when you hear some startup founder
+twittering about dropping by another startup's offices to see what
+they're doing, or everyone is at the same party / conference / barcamp
+and the next week they've all created something new collectively.
+**Wisconsin educations are not geared towards creating hackers or
+entrepreneurs**. A common argument for startup hubs is that the colleges
+there are pumping out lots of very talented kids that are eager to break
+into the startup scene. The inverse of this is that, in my experience,
+Computer Science students in Wisconsin are getting the exact same kind
+of courses, with probably the same level of quality (most likely better,
+as you're unlikely to be getting taught by a TA at the smaller UW &
+private schools). But, I get the feeling when I talk to my CSCI
+classmates is that maybe they are smart and know "about computers,"
+but they're mostly just gamers or whatever that are in CSCI because
+they wouldn't mind being tech support at a random company, or
+wouldn't mind working on a cube farm for some corporation doing
+"computer stuff." They're not in it because they're necessarily
+passionate about programming or math or open source or changing the
+world. They just want the stable, healthy paycheck from those kinds of
+jobs. They're [the other
+80%]( of
+programmers, if they end up programming at all after college. To make a
+PG-ish generalization: Serious hackers seem to value their time, and in
+Thoreau-ish fashion aren't willing to trade it for a paycheck if the
+work isn't interesting or fulfilling enough. I should stress that this
+is my perception the **majority** of CSCI students I know here in
+Wisconsin, but I know a few that are shining examples of Midwest geek
+hackerdom. Until we teach the same sort of attitude and expectations
+that create Sergey Brins and Joel Spolskys, we're just making more
+miserable Office Space drones who are in it for the paycheck and not for
+**Public transportation sucks (aka, distances increase and people are
+too spread out).**When you've got to drive hours to cross state lines
+to get to a BarCamp or ride the train from Milwaukee into Chicago to
+catch the Reddit or Google party, you're less likely to go. So the
+tech community is less likely to concentrate in one area for any period
+of time, even an evening. Just as a personal example, Milwaukee has a
+great professional group for web designers and developers, and their
+meetings are less than an hour away if I were to drive, but so far I
+haven't been able to make it to any of their meetings. I'm even
+closer to downtown Chicago, but it's not practical to drive and the
+train schedule is lousy at best. Even though San Francisco is a big
+sprawling region, their public transportation, neighborhoods
+concentrating the tech community, and constant tech events/conferences
+trumps what we can pull off in the midwest any day.
+#### Time to prove them wrong.
+Go out there and make the next big thing. It won't cost you much,
+it's not risky, and you'll see your friends and the tech community
+every day on Twitter anyways. Work out of your apartment or on your free
+time on the weekends. Get cheap entry-level virtual hosting, and see if
+there's interest in your idea.
+This is sort of my plan, as I find moving out to California currently
+infeasible. It's uncertain whether any idea will turn out to be the
+Next Great American Startup, but on the flip side, you're just as
+likely to fail as your counterparts burning through cash in Silicon

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