Three interesting things about startups in small cities

Tomorrow night, through a strange and unexpected series of Internet events, I will be a guest on the BBC radio program Business Matters. [Edited to add: They have now posted a recording of the broadcast. I join about 15-20 minutes into the program.]

I'm pretty terrified I'll sound like a complete idiot, so I'm doing a little research to prepare. The show's producers said one thing I can expect is questions about what it's like to run a software business out of Baltimore.

Now, my own perspective is limited to what I've done here at Figure 53. We're small, we're bootstrapped, and we're not a startup.

So I decided to call Tom "TK" Kuegler, a Baltimore native and co-founder of venture capital firm Wasabi Ventures. I thought TK could share a perspective from the very other end of the spectrum.

I met TK on a panel about the "State of Startups" at Baltimore Innovation Week, and was fascinated by what he had to say. He shared such gems as his observation of an inverse relationship between the success of startups and their number of appearances in Tech Crunch. He also briefly mentioned that he gets better results from companies which come from "secondary markets" — which is to say, companies that come from anywhere but San Francisco.


The advantages of building a startup in San Francisco seem pretty self-evident, so I was totally fascinated by this hint that there is more to the story. We had no time to dig deeper that day, but this BBC program gave me an excuse to pester TK, and I wanted to share what I learned.

What I learned from TK

Consider secondary or even tertiary markets. Places like Baltimore MD, Philadelphia PA, Cincinnati OH, or Manchester NH.

TK reports that all — 100% — of his best companies come from secondary markets.

Why? Here's what he said, and please keep in mind that all wisdom is his and all potential flubs are my inability to take notes fast enough:

1) The founders tend to be older.

Founders in these cities tend to be older, which in this case means not in their mid- to late-twenties. Instead, founders in these markets tend to be in their early or late thirties. They have knowledge from a previous career, and they come back to create a startup bringing this knowledge with them. They tend to understand the deep details, and they don't need to re-learn early lessons.

2) The founders really want to do it.

As much as we might wish otherwise, it is harder to build a startup outside of the established hubs. If you build a startup in a secondary market, you're going to work twice as hard and you can't ride the wave of your environment. You're not doing it because it's cool, or because it's something everyone does. You're doing it because you have a very specific goal, and you want very badly to make it happen.

3) It's easier to get above the noise.

It's much easier to get attention in a smaller market. Even if your work isn't great at first, you can still get attention because you're one of the few players in town. Getting attention means you can get help to improve and keep going. You can attract smart people to work, or advise, or otherwise push the company further.

Thanks TK

I'll probably still sound like an idiot tomorrow night, but at least I learned something in the process. :-)

Chris Ashworth is the founder of Figure 53