Location

Silicon Valley Success Doesn't Require the Silicon Valley Address

Greater San Francisco isn't overrated, just overpriced. It pays to consider starting up where necessities, from housing to talent, haven't already been bid up to the stratosphere.
Silicon Valley Success Doesn't Require the Silicon Valley Address
Image credit: Topic Images Inc. | Getty Images
Guest Writer
CEO of Pendo
5 min read
Opinions expressed by Entrepreneur contributors are their own.

In the early days of my company, I felt the occasional urge to apologize for our location. Sure, Raleigh, NC, is my home, and I make no apologies for that. Ask anyone who knows me, and they’ll tell you that I am a proud Raleighite. But when it came to founding and funding a company with ambitions for scale, I couldn’t shake the feeling that my zip code was a liability.

In these early days, we actually advertised a San Francisco HQ address on our website while we mostly didn’t live or work there. We were hedging our bets, perhaps caving to the pressure, equivocating on a geographic choice that we now own without apology.

The origin of this insecurity isn’t hard to trace. For years, I’ve pitched Silicon Valley VCs with the same mixed reaction: love what you’re doing, but why can’t you do it here? Why I chose to hold my ground is a tale of good fortune and entrepreneurial stubbornness. In my quest to prove them wrong, I discovered that our unconventional location was actually one of our superpowers.

Related: 3 Cities That Taught Me What Tech Looks Like Outside of Silicon Valley

Doubts arise, but facts win out.

I won’t deny the benefits that come with a Silicon Valley address. There’s perhaps no place on earth with a better concentration of capital, talent and prospective customers for what we do. When I land (as I do several times a month these days) at San Francisco International airport I won’t deny the occasional twinge of doubt: this place has virtually everything going for it for tech entrepreneurship. But, for us, Raleigh remains the better choice.

I assure you this isn’t a shallow rationalization to help me sleep at night. There are proof positive benefits to starting and scaling a company with Silicon Valley ambitions without a Silicon Valley address. Of course, that doesn’t mean you should target just any city. Raleigh, NC, certainly has some unique advantages.

Cost of living.

With median home prices in a once solidly middle-class suburb like San Mateo well into the seven figures, you have to wonder how anyone but the well-heeled can make a go of it in the Bay Area. Towns like Raleigh, while no longer exactly cheap, make it much easier to create a nice life without going deeply into debt.

Related: San Francisco Rent Is So Insane, This Guy Lives in a Box for $508 a Month

Competition for talent.

In the Bay Area, compensation and perks are bid up through frothy competition for engineering talent. Places like Raleigh offer a robust pipeline of technical talent from local universities like NC State, UNC-Chapel Hill, and Duke, without a hyperactive tech economy driving wage inflation and retention challenges. And while our town still wants for executive leadership and experienced sales talent, we’ve had success recruiting those roles to the region.

Operating costs.

Everything from employee benefits to office space to event venues are cheaper in places like Raleigh. This, together with a modest adjustment in salaries, means that our runway is extended for the same dollar invested.  

Life outside work.

One of our emerging sources of talent are the North Carolina boomerangs who were raised and/or educated here only to leave in pursuit of bigger dreams. After a year or two of grinding away in places like San Francisco and New York, they’re often eager to come home. While by the measure of poke bowls per capita, Raleigh may not be San Francisco, but situated roughly equidistant between the mountains and the beach, with a funky vibe of its own, Raleigh has plenty to offer.

Related: 5 U.S. Cities Luring Tech Talent Away From Silicon Valley

Keeping it real.

In the long run, I think the most successful companies will be the ones that have institutionalized customer empathy. While you can’t argue with the innovation coming out of Silicon Valley, the day-to-day reality is becoming very far removed from the motivation and needs of ordinary humans walking the face of the earth. In places like Raleigh, we keep it in perspective. There’s more to life than post-money valuation and bubble tea. I believe this perspective can make us more empathetic problem solvers.

Community support.

A well-funded, growth-stage company would still be notable in the Bay Area, but I can’t imagine we’d have the same reception that we’ve witnessed here in Raleigh. While Raleigh is home to software giants like Red Hat and a decent handful of biotechs, it lacks the sort of exit history you often find in major markets. Exits are necessary to create sustainable ecosystems. We already know we’re creating something important and real, but it’s nice to see that sentiment echoed back wherever we go as the downtown Raleigh community cheers us on from the sidelines.

Where you choose to start and scale your company it doesn’t matter nearly as much as the problem you’ve targeted and the team you’ve assembled. But picking the right location offers certain advantages. Conventional wisdom often suggests that Silicon Valley gives you better odds of an outsized outcome, but I’d argue that this isn’t necessarily the case. There are plenty of good reasons to pursue a Silicon Valley success without the Silicon Valley address. As I look back, I’d suggest that our success so far hasn’t been in spite of our location, but in large part, because of it.

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