Is Austin’s Next Big Technology Company Near?
Almost every day, we hear about another tech company coming to Austin. From giants like Apple and Facebook to small companies like Evernote and Revionics, California companies are setting up offices here, bringing well-paying jobs, with benefits and good prospects. But how strong is our own tech community, our homegrown companies? How competitive are we?
Top-rated research university, check. Tradition of enterprise and risk taking, check. Lots of highly-trained tech employees, check. Business-friendly economic climate, check.
So is Austin a legitimate contender for innovation excellence, a potential rival to California’s Silicon Valley? Or are we more of a tech colony, an outpost city where big tech companies can find skilled employees and pay them lower wages?
“There’s no reason that another company like Dell or Google or Apple or Facebook couldn’t start and be successful here in Austin,” said Craig Malloy, CEO of a startup company called Bloomfire. “No reason at all.”
Malloy knows about building companies, having started three of them, all in Austin. He and his partners sold their last company, LifeSize Communications, for more than 400-million dollars.
Malloy says perceptions of Austin have changed since he came here from California.
“When I first moved to Austin to get into the high tech industry here in 1994, I moved here from San Diego,” he said. “My colleagues were thinking, what, are you crazy, moving to Texas? They actually gave me a cowboy hat as a parting gift.”
Austin has grown since then, and it now offers everything an entrepreneur needs: financing, talented employees, and the specialized lawyers, accountants and PR firms that help tech companies grow. Malloy cites HomeAway, Bazaarvoice and WhaleShark as companies that are making it big.
At the top of the tech world here is another company, Austin Ventures. From its white marble and modern-art-filled headquarters at the top of a downtown office building, AV invests a cash pile of almost $4 billion. General partner Chris Pacitti says Austin doesn’t need to be Silicon Valley to be successful.
“They have a giant lead in a way that’s insurmountable, in ways, but I think all we need to be is a credible alternative, and I would say we’re already that,” Pacitti said.
Pacitti says that early Austin tech companies like Dell, Tivoli and Trilogy created a pool of experienced people who eventually left those companies and started new ones. Each new company recruits more experienced people into Austin, and the cycle continues.
“This ecosystem of successful companies spins out these now uniquely experienced entrepreneurs who can reform in a new emerging company,” he said.
Pacitti spends a lot of time recruiting executives to Austin. He says it’s often an easy sell, given our lifestyle advantages and cost of living.
That message has reached Silicon Valley, where Vivek Wadhwa writes about global competitiveness. Wadhwa says he’s pessimistic about the tech future of many areas, but not Austin. He says Austin has done everything right and will continue to grow. More than advantages like a favorable tax climate, or lots of patents spinning out of UT, or plenty of investment capital, he said, it’s the human capital that gives Austin an advantage.
“If you just focus on the people, focus on the diversity, I wouldn’t worry about anything except the people,” Wadhwa said. “It’s all people, people, people.”
So with all the pieces in place, it could be just a matter of time before Austin has its next blockbuster tech company.