Running a Tech Start-Up. Five Reasons Why You Shouldn't Start in Silicon Valley

Tech start-ups are the most popular entrepreneurial endeavor for this generation because people who are looking to start a company want to do something that is familiar to them. And Millennials are digital natives, so of course they gravitate to a career using familiar tools.

While there is absolutely no question that tech companies make a lot of money, it is strongly encouraged that young entrepreneurs wait until their start-up scales into big sales before moving to the big city. Given the prevalence of online businesses, tech businesses can start in someone’s garage with minimal overhead costs and still be successful. With this in mind, let’s talk about some more reasons why you should rethink that move to Silicon Valley.

Here are five reasons:

1. Urbanization within cities is real.
With the rise in fossil fuel pollution, the cost of gasoline, and waiting in hours of traffic, there are some people who hate to drive. Many workers would rather be able to walk across the street from their offices, bike to the nearest location, or even roller blade. Many neighborhoods in the San Francisco area are coming to this realization and are building offices next to major food hubs along with areas that you can walk from where you live to work. For example, there is a Whole Foods right across of the SolarCity in SF and employees love to head over to grab a quick bite between meetings.

2. Higher cost of living and more competition for office space
It is absolutely no secret that San Francisco and the Bay area in general have a very high cost of living. That area is EXPENSIVE! The median cost of rent is $3200 per month. For a recent college graduate or entry-level young professional – the exact demographic that you would be targeting for your start-up’s workforce – it can be very difficult for them to live in an area with high housing costs. You would have to in turn pay higher salaries, thus driving up your overhead costs and cutting into your business profits. On the other hand, lower overhead costs mean you can offer higher starting salaries, which keeps your workers loyal and happy.

3. Too much competition from other tech companies
Silicon Valley is considered the tech capital for a reason, and for a start-up without as much name recognition, that puts you at a disadvantage. Having to compete with major companies that are headquartered in the area can be a major risk to a brand new business, particularly when recruiters from other larger companies that keep targeting your employees.

4. Some people may not want to live in Silicon Valley.
As many new companies offer telecommuting options for employees, there are some people who just don’t want to have to relocate. And with more options than ever for telework, there’s almost no reason to. You can run an Internet-based start-up from anywhere and if you get really good, you can work in your pajamas. In addition to sparing yourself and your employees the hassle of moving, you’ll provide a boost to your local community’s economy.

  1. Your target market may be closer than you think.
    Before making this big decision about starting a company, you should be thinking about who – and where – your target market is. If your market isn’t the tech industry, surrounding yourself by techies in Silicon Valley may be a disadvantage. Industries like finance and healthcare have a stronger presence in other cities that may be a better fit for you. Determine the optimal location for you. Overall, the key to success in any startup is the relationships. Network like crazy, and deliver excellent customer service and you will have tools for success.

Contributed by Roy Dekel