Does Location Matter for Your Startup?

Speaking at a gathering of young entrepreneurs a few years ago, Mark Zuckerberg surprised some in the audience by saying that if he could do it all over again, he would have stayed in Boston and founded Facebook there, not in Silicon Valley. “There’s a culture out here where people don’t commit to doing things, I feel like a lot of companies built outside of Silicon Valley seem to be focused on a longer-term,” he said. “You don’t have to move out here to do this.”

Brad Feld, well known for his thoughts on entrepreneurship ecosystems, said something similar in an interview with Richard Florida of The Atlantic: “For decades, cities have been proclaiming themselves the next Silicon Valley. That’s nonsense — cities — and the entrepreneurial leaders — should focus on creating the best startup community for their city, based on the unique attributes of their city. Learn from the amazing things in Silicon Valley, but instead of trying to be like Silicon Valley, be the best Boulder, or best Chicago, or best New York, or best Portland. You already have an identity as a city — you don’t need to be Silicon Alley or Silicon Slopes.”

So, what role does location actually play in entrepreneurship?

According to the 2015 Kauffman Index of Entrepreneurship, while entrepreneurship is on the rise throughout the United States, much of this activity is clustered in cities in the southern and western parts of the country – metros like Denver, Austin, Miami, San Jose, Los Angeles, and Phoenix.

These findings, of course, simply confirm what we already know. While entrepreneurs can create businesses anywhere, some cities seem to be more conducive to startup activity than others. But the reasons why entrepreneurship thrives in one city will differ from the specifics in another. And just because entrepreneurship isn’t thriving somewhere today doesn’t mean it can’t take root tomorrow.

This conclusion is reinforced by Innovation that Matters, a recent report on civic entrepreneurship from 1776 in conjunction with the U.S. Chamber of Commerce. The study, which included interviews with entrepreneurs, investors, corporates, and civic leaders in eight U.S. cities, set out to synthesize the factors that healthy entrepreneurship ecosystems have in common.

Here’s how the researchers summarized their findings: “We confirmed that the ‘secret sauce’ of ecosystem development lies in the creation of effective networks that bring together broad arrays of stakeholders within an industry; facilitate open exchange of ideas; and bridge cultural gaps between different groups to promote effective collaboration.”

Palo Alto was a logical place for Facebook to set up its headquarters. But as Zuckerberg later realized, even a tech haven like that has its downsides. Compared to history-rich Boston, home of the Freedom Trail and Fenway Park, Silicon Valley tends to have a short memory and an even shorter attention span.

Here’s the bottom line: wherever you are, you can be part of building an entrepreneurial ecosystem. The “secret sauce” from that 1776 report – collaborative networks of stakeholders who engage in an open exchange of ideas – is clearly not only the domain of Silicon Valley or Boulder, Oslo or Tel Aviv, Hong Kong or Sydney. It is possible anywhere, wherever you’re reading this.