This is a transcript from the included video.
Hi there, this is Greg Boyce from Auburndale Technology, and I’m looking to talk to you today about a trend I’ve been seeing in terms of entrepreneurship and business startup.
At a micro level when you’re looking to start a business what makes sense is to go to where the talent is.
“Distribution of Financial Wealth in the U.S.” by Randy Coffey is licensed under CC BY-NC-ND 4.0
A great example of this that we’d see in the news in the past year or so is Amazon looking to open up a new campus somewhere, and all of the cities are looking to get Amazon to go there. Because Amazon brings jobs, and that’s a great thing for the American people…
Right. Well, there’s another way to look at it.
Cities want to attract the biggest companies because the biggest companies bring the most jobs. They try to get these big multinational companies to open up offices in their locations.
Now these companies do bring jobs. They bring great jobs. Great paying jobs. And they are looking for the best and brightest talent, which may or may not be local.
Businesses come here and they bring people with them to do the work. They will also attempt to hire locally, but generally the people that they are going to be hiring are people who have migrated here for other reasons.
These are going to be people who moved here for the previous great paying job, or they came here for college, and this is the place to start up a tech job or a tech company.
So you end up with this cycle. It’s a cycle of people chasing work, and work chasing people, and cities trying to attract both of them.
For the individuals who manage to get these great high paying jobs it’s a great thing, except the businesses are competing for the best talent, and that means that they are going to pay these people more. So what you’re doing is you’re bringing in a large group of people who are going to raise the costs for everyone.
Because if you have all of these great paying jobs coming into a confined area, what it is going to do is it is going to drive up your costs for real estate. You’re going to have more competition for rental apartments. You’re going to have more competition for houses for sale. And you’re going to be competing against people who are bringing in all of this money.
Maybe this can help in terms of tax revenue. You bring in the company and bring in the people, all of these people are making money, you’re going to have a lot of money coming into the state.
Here in Massachusetts that is definitely what has been going on. There’s plenty of tax revenue to pay for expenses. There’s always going to be a battle for what the money gets spent on, but we can’t say that we don’t have people paying high income tax to the state and to the federal government from our state. We have lots of money
You can look at the west coast as well in the Bay area. We all know how difficult it is to live in the Bay area these days if you’re not working in one of these giant companies. Facebook and Google and every other tech company out there, they are putting the costs up and out of the reach of individuals.
So, what’s an alternate strategy? Well, if you’re trying to get started as an individual and your ultimate goal is your run your own business, then the last thing you want to do is move somewhere where the costs of living are too high. You want to lower your costs so that you can have more runway.
Let’s say you have existing money to start your business. You managed to get a loan from someone you know. Maybe like me you’ve decided to take your retirement and invest that in your own business in order to be able to be able to build something for yourself. Well, your money is going to last a lot longer in a place where the costs are lower.
That’s one of the reasons after 20 years working in Cambridge Massachusetts, I’ve relocated to the Worcester area. Costs are much lower here. But the added bonus is that I’m not surrounded by people with the same skill sets as me anymore.
In this area my skills are a rarity, and it is something that could very much help people in my area. But the problems are different. I’ve got 20 years of experience knowing what a tech company needs from someone with tech experience. I come here, and their problems are all different. I need to invest in figuring out what the problems around here are that I can solve. That requires working with people and getting to know people.
And it also requires opportunity. Providing and locating opportunities. An opportunity can be something like finding that person with the great idea that needs my experience in order to to make it happen. Opportunity can also go the other way. I can be the one to provide an opportunity with someone with a great tech background but that doesn’t…
I should clarify that.
By great tech background what I mean is somebody who understands technology. Someone who has put in the effort to understand how things work. Someone who has the drive to learn and the skills to understand. Not someone with the best degree. Not someone who already has a tech job. But somebody who given the right opportunity could achieve great things, but they need that opportunity and that leadership. And again, that’s not something you’re going to find in the place that is full of tech people, and requires that you have an incredibly high paying job just to make ends meet.
From the perspective of an individual, you’re much better off going somewhere that your costs are lower, and finding people of a similar mindset. Someone you could work with. People who want to collaborate with you, because at the end of the day the way that you are successful is by working with others and together you can all build each other up.
Would you rather be yet another tech person working together within a giant company? Trying to achieve their goals? Or would you rather find people around you that you can work with, and bring different sets of skill sets that they need.
I’ve made my choice and I would recommend thinking about what your choices are.
The same strategies apply regardless of what industries you’re talking about. My experience in technology, but at the end of the day, whatever the common skill set is in your area, you may find that bringing those skills to an area that needs them is much more effective than trying to compete against everyone else who is just like you.
This sort of mindset and this sort of change of direction that can bring opportunity to people who won’t otherwise have it.
Looking around it seems pretty clear to me why throughout our country there are certain areas that are doing great, while many other areas are struggling.
It’s the same dynamic that makes us successful in tech cities are what’s draining success out of other places. It’s a brain drain. We’re pulling all of the people with talent into a few locations. We’re taking all of the money and throwing it into those areas.
We’re investing in success rather than investing in potential.
So, just something to think about. I’d love to hear your feedback.
Thank you very much.