Backupify was started in November 2008 in Louisville, KY. In April of 2010, we decided to move the company to Boston, and we officially opened our Boston headquarters in September. As part of the decision, we decided to focus solely on the three primary startup hubs in the United States: Boston, New York City, and Silicon Valley. This post is about my experience starting a company in the Midwest, and why I chose to move Backupify to Boston. [Editor’s note: An earlier version of this post appeared on Rob May’s blog. Backupify is a Cambridge, MA, startup focused on cloud-based data backup, archiving, and management.]
There are great entrepreneurs everywhere, even in places like Louisville. The problem is that successful startups require more than a great entrepreneur. They require an ecosystem of capital and investors, competent employees, and services and service providers that make startups easier. One common question I get is whether or not you can build a successful startup in the Midwest. Or more importantly, can you build one outside of a major startup hub?
My answer is absolutely. In many cases it won’t be as easy as building one in the Valley, but it does happen all the time. Sometimes, companies are even better off being outside the Valley because they aren’t subject to the groupthink and hype that inevitably occur in startup hubs. But I qualify this answer with one key point—there are certain types of companies that are much more difficult to build in a non-startup hub.
People tend to think about startup location in the wrong way. Most people think about where they want to live and argue about why that is a great place to do a startup. The truth is, what really matters is the type of startup, how it gets financed, and what markets you play in. If you are playing in markets where you customer is the average American, and you need little capital, or can grow slowly, or can use customer capital, then you can build a company anywhere you want to be. But building companies that need a lot of capital, grow extremely quickly (and thus need a lot of employees), or are very high-tech is extremely difficult outside of major or minor startup hubs. (Minor startup hubs include cities like Seattle, Austin, Boulder, etc…where the environment is not as ideal as the one you find in the major hubs, but at least you can find similar-minded startup folks).
Backupify was not a good fit for the Midwest because we had a difficult time finding the right technical talent, and we had a difficult time finding funding. When I first started raising money, we were able to round up about $150K on a $1M pre-money in Louisville. That was just enough money to make sure we accomplished nothing significant and was the initial impetus for looking outside